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Press release from GlobeNewswire (a Nasdaq OMX company)

SunOpta Announces Record Second Quarter and First Half 2012 Results

Thursday, August 09, 2012

SunOpta Announces Record Second Quarter and First Half 2012 Results13:45 EDT Thursday, August 09, 2012TORONTO, Aug. 9, 2012 (GLOBE NEWSWIRE) -- SunOpta Inc. ("SunOpta" or "the Company") (Nasdaq:STKL) (TSX:SOY), a leading global company focused on natural, organic and specialty foods, today announced financial results for the quarter ended June 30, 2012. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted. For the second quarter of 2012, the Company reported earnings of $8.1 million or $0.12 per diluted common share, as compared to earnings of $4.4 million or $0.07 per diluted common share for the quarter ended July 2, 2011, an 85% increase in earnings over the second quarter of last year. Excluding discontinued operations, earnings for the second quarter of 2012 were $7.6 million or $0.11 per diluted common share versus $5.6 million or $0.08 per diluted common share in the prior year. These earnings are a second quarter record for the Company after excluding one-time items in certain prior years. Included in earnings for the second quarter were approximately $1.7 million in pre-tax severance, acquisition and start-up costs ($1.1 million after tax), offset by a $0.7 million after tax gain on the sale of Purity Life Natural Health Products and approximately $0.7 million in tax adjustments that lowered the Company's effective tax rate. Prior year earnings from continuing operations included pre-tax gains on the sale of assets of $3.0 million and a favorable adjustment of a legal claim of $0.5 million. For the second quarter of 2012, the Company reported quarterly revenues of $282.3 million versus revenues of $275.2 million for the quarter ended July 2, 2011, a year over year increase of 2.6%. Excluding the impact of changes including foreign exchange rates, commodity-related pricing, acquisitions and rationalized product lines, revenues increased approximately 5% on a consolidated basis. The increase in consolidated revenues in the second quarter was driven by strong growth in integrated packaged food product categories within SunOpta Foods and the steel products segment within Opta Minerals Inc. These increases were somewhat offset by the effect of lower commodity grain sales, albeit at improved margins, and decreased volumes in the Company's European organic ingredients operation. Operating income1 for the second quarter of 2012 increased to $14.3 million or 5.1% of revenues versus $9.8 million or 3.6% of revenues in the prior year, a year over year increase of 46.7%. This increase was primarily led by a significant improvement in operating income in the Grains and Foods Group versus the prior year. For the quarter ended June 30, 2012, the Company realized EBITDA1 of $19.4 million as compared to $14.2 million for the quarter ended July 2, 2011, a year over year increase of 36.6%. For the two quarters ended June 30, 2012, the Company reported earnings of $14.0 million or $0.21 per diluted common share, as compared to earnings of $9.5 million or $0.14 per diluted common share for the two quarters ended July 2, 2011, a 48% increase in earnings compared to last year. Excluding discontinued operations, earnings for the two quarters ended June 30, 2012 were $13.0 million or $0.19 per diluted common share versus $11.1 million or $0.17 per diluted common share in the prior year. These earnings are a first half record for the Company after excluding one-time items in certain prior years. Included in earnings for the two quarters ended June 30, 2012 were approximately $2.2 million in pre-tax severance, acquisition and start-up costs ($1.4 million after tax), offset by a $0.7 million after tax gain on the sale of Purity Life Natural Health Products and approximately $0.7 million in tax adjustments that lowered the Company's effective tax rate. Prior year earnings from continuing operations included pre-tax gains on the sale of assets of $3.0 million and favorable settlement of a legal claim of $0.5 million. For the two quarters ended June 30, 2012, the Company reported revenues of $541.6 million versus revenues of $520.5 million for the two quarters ended July 2, 2011, a year over year increase of 4.1%. Excluding the impact of changes including foreign exchange rates, commodity-related pricing, acquisitions and rationalized product lines, revenues increased approximately 6% on a consolidated basis. The increase in consolidated revenues in the first two quarters of 2012 was driven by strong growth in integrated packaged food product categories within SunOpta Foods and the steel products segment within Opta Minerals Inc. These increases were somewhat offset by the effect of lower commodity grain sales, albeit at improved margins, and decreased volumes in the Company's European organic ingredients operation. Operating income1 for the two quarters ended June 30, 2012 increased to $27.1 million or 5.0% of revenues versus $21.5 million or 4.1% of revenues in the prior year, a year over year increase of 26.1%. This increase was primarily led by improved operating income in the Grains and Foods Group versus the prior year. For the two quarters ended June 30, 2012, the Company realized EBITDA1 of $36.9 million as compared to $30.4 million for the two quarters ended July 2, 2011. At June 30, 2012, the Company's balance sheet reflects a current ratio of 1.47 to 1.00, and a total debt to equity ratio of 0.51 to 1.00. At June 30, 2012, the Company has total debt outstanding of $159.1 million, total assets of $643.5 million and a net book value of $4.75 per outstanding share. During the quarter, the Company generated cash from operating activities of $28.8 million versus $20.5 million in the prior year, indicative of improved earnings and improved cash provided by working capital. Steve Bromley, Chief Executive Officer of SunOpta, commented, "We are very pleased with our second quarter and first half results as they reflect continued momentum in our core natural and organic foods business, plus the positive impact of operational improvements which we have continued to implement. During the quarter, we realized strong cash flows, and subsequent to quarter end announced the amendment and expansion of our syndicated credit facilities that support our core food platform in North America. These new facilities will provide additional flexibility in support of our internal growth initiatives as well as potential acquisitions. We remain confident in our focus on natural and organic foods and our strategy to improve operating margins and return on assets, and are encouraged by our progress." The Company plans to host a conference call at 10:00 A.M. Eastern Time on Friday August 10th, 2012 to discuss the results for the second quarter of 2012 and recent corporate developments. The conference call can be accessed via a link at the Company's website at www.sunopta.com. Additionally, the call may be accessed with the toll free dial-in number 1-877-312-9198 or 631-291-4622. A replay number can also be accessed between August 10th and 17th with the toll free dial-in number 1–855-859-2056 or 404-537-3406 followed by pass code: 90040467#.1See discussion of non-GAAP measuresAbout SunOpta Inc. SunOpta Inc. is a leading global company focused on natural, organic and specialty foods products. The company specializes in sourcing, processing and packaging of natural and organic food products, integrated from seed through packaged products; with a focus on strategically vertically integrated business models. The Company's core natural and organic food operations focus on value-added grains, fiber and fruit based product offerings, supported by a global infrastructure. The company has two non-core holdings, a 66.2% ownership position in Opta Minerals Inc., listed on the Toronto Stock Exchange, a producer, distributor, and recycler of environmentally friendly industrial materials; and a minority ownership position in Mascoma Corporation, an innovative biofuels company. The SunOpta Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3958Forward-Looking Statements Certain statements included in this press release may be considered "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, which are based on information available to us on the date of this release. These forward-looking statements include, but are not limited to, our continued momentum in our core natural and organic foods business, the positive impact of operational improvements, additional flexibility provided by our new credit facilities and our strategy to improve operating margins and return on assets. The terms and phrases "continued", "improve", "will provide", "remain confident" and other similar terms and phrases are intended to identify these forward looking statements. Forward looking statements are based on information available to us on the date of this release and are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors the Company believes are appropriate in the circumstances including, but not limited to, general economic conditions, consumer interest in health and wellness, product pricing levels, current customer demand, planned facility and operational expansions, competitive intensity, cost rationalization and product development initiatives. Whether actual timing and results will agree with expectations and predications of the Company is subject to many risks and uncertainties including, but not limited to, global economic conditions, consumer spending patterns and changes in market trends, decreases in customer demand, potential failure of product development, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, potential covenant breaches under our credit facilities and other risks described from time to time under "Risk Factors" in the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q (available at www.sec.gov). Consequently, all forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized.SunOpta Inc. Consolidated Statements of Operations For the quarter ended June 30, 2012 and July 2, 2011 Unaudited (Expressed in thousands of U.S. dollars, except per share amounts)            Quarter ended Quarter ended  June 30, 2012 July 2, 2011 Change  $ $ %        Revenues 282,308    275,188   2.6%       Cost of goods sold 245,220    243,209   0.8%       Gross profit  37,088    31,979 16.0%        Selling, general and administrative expenses 22,086   21,163 4.4% Intangible asset amortization 1,235   1,017 21.4% Other expense (income), net  1,378   (3,256) 142.3% Foreign exchange loss (gain) (581)  19   n/a       Earnings from continuing operations before the following  12,970    13,036   -0.5%        Interest expense, net 2,558    2,520   1.5%       Earnings from continuing operations before income taxes 10,412    10,516   -1.0%       Provision for income taxes 2,769    4,170   -33.6%       Earnings from continuing operations 7,643    6,346   20.4%       Discontinued operations      Gain (loss) earnings from discontinued operations, net of taxes 214    (1,233) n/aGain on sale of discontinued operations, net of taxes 676    --   n/a      Earnings (loss) from discontinued operations, net of taxes 890    (1,233) 172.2%      Earnings 8,533    5,113  66.9%        Earnings attributable to non-controlling interests 388    712   -45.5%       Earnings attributable to SunOpta Inc. 8,145    4,401   85.1%       Earnings (loss) per share - basic       -from continuing operations 0.11    0.09     -from discontinued operations 0.01    (0.02)     0.12    0.07            Earnings (loss) per share – diluted       -from continuing operations 0.11    0.08     -from discontinued operations 0.01    (0.02)     0.12    0.07        SunOpta Inc. Consolidated Statements of Operations  For the two quarters ended June 30, 2012 and July 2, 2011 Unaudited (Expressed in thousands of U.S. dollars, except per share amounts)    Two quarters ended Two quarters ended    June 30, 2012 July 2, 2011 Change  $ $ %        Revenues 541,636    520,538   4.1%       Cost of goods sold  470,062    455,926   3.1%       Gross profit 71,574   64,612   10.8%        Selling, general and administrative expenses 42,516   40,906  3.9% Intangible asset amortization 2,428   2,033  19.4% Other expense (income), net  1,742   (2,894) 160.2% Foreign exchange loss (gain) (499)  154   -424.0%       Earnings from continuing operations before the following  25,387    24,413   4.0%        Interest expense, net 5,141    4,504   14.1%       Earnings from continuing operations before income taxes 20,246    19,909   1.7%        Provision for income taxes 6,355    7,423   -14.4%       Earnings from continuing operations 13,891    12,486   11.3%       Discontinued operations       Gain (loss) from discontinued operations, net of taxes 405    (1,625) n/aGain on sale of discontinued operations, net of taxes 676    --   n/a       Earnings (loss) from discontinued operations, net of income taxes 1,081    (1,625) 172.2%      Earnings 14,972    10,861   37.9%        Earnings attributable to non-controlling interests 935    1,379   -32.2%     Earnings attributable to SunOpta Inc. 14,037    9,482   48.0%       Earnings (loss) per share – basic      -from continuing operations 0.20    0.17    -from discontinued operations 0.02    (0.02)     0.21    0.14            Earnings (loss) per share – diluted       -from continuing operations 0.19    0.17    -from discontinued operations 0.02    (0.02)     0.21    0.14        SunOpta Inc. Consolidated Balance Sheets As at June 30, 2012 and December 31, 2011 Unaudited (Expressed in thousands of U.S. dollars, except per share amounts)          June 30, 2012 December 31, 2011  $ $      ASSETS          Current assets     Cash and cash equivalents  3,247  2,378  Accounts receivable 107,080  88,898  Inventories  222,712  228,455  Prepaid expenses and other current assets 18,654  21,378  Current income taxes recoverable 1,083   1,503  Deferred income taxes 4,779  4,773  Current assets held for sale  --   17,923   357,555  365,308      Investments  33,845   33,845 Property, plant and equipment 128,256   120,584 Goodwill  56,642   49,387 Intangible assets 54,255   48,035 Deferred income taxes 11,631   11,751 Other assets 1,328   1,854 Non-current assets held for sale  --   739         643,512  631,503      LIABILITIES        Current liabilities    Bank indebtedness  97,826  109,718  Accounts payable and accrued liabilities 107,555  114,308  Customer and other deposits 4,581  843  Income taxes payable 1,412  1,229  Other current liabilities 3,504  1,419  Current portion of long-term debt  27,406  35,198  Current portion of long-term liabilities 621  995  Current liabilities held for sale  --   5,920   242,905  269,630      Long-term debt  33,905   17,066 Long-term liabilities 6,712   5,586 Deferred income taxes 30,676   24,273    314,198  316,555           EQUITY    SunOpta Inc. shareholders' equity   Capital Stock  182,604  182,108  65,832,112 common shares (December 31, 2011 - 65,796,398)   Additional paid in capital  15,489  14,134 Retained earnings 114,545  100,508 Accumulated other comprehensive income 196  2,382    312,834   299,132 Non-controlling interest 16,480  15,816 Total equity 329,314   314,948         643,512   631,503     SunOpta Inc. Consolidated Statements of Cash Flows For the quarter ended June 30, 2012 and July 2, 2011 Unaudited (Expressed in thousands of U.S. dollars, except per share amounts)    Quarter ended Quarter ended  June 30, 2012 July 2, 2011  $ $      Cash provided by (used in)          Operating activities    Earnings 8,533    5,113  Earnings (loss) from discontinued operations 890    (1,233) Earnings from continuing operations 7,643    6,346      Items not affecting cash    Depreciation and amortization 5,018   4,439  Unrealized loss (gain) on foreign exchange (195)  246  Deferred income taxes 1,630   3,216  Stock-based compensation 740   552  Gain on sale of property, plant and equipment --   (3,824) Unrealized loss (gain) on derivative instruments 1,215   (233) Other 368   322 Changes in non-cash working capital  12,547   9,720 Net cash flows from operations - continuing operations 28,966  20,784 Net cash flows from operations - discontinued operations (168)  (303)   28,798   20,481 Investing activities    Purchases of property, plant and equipment, net (6,995)  (5,297) Proceeds on sale of property, plant and equipment --    2,773 Payment of contingent consideration (327)  --   Purchases of intangible assets --    (8) Other (129)  (441) Net cash flows from investing activities - continuing operations (7,451)  (2,973) Net cash flows from investing activities - discontinued operations 12,147   (16)   4,696   (2,989)Financing activities    Decrease in line of credit facilities (29,534)  (14,124) Borrowings under long-term debt 285   --  Proceeds from the issuance of common shares 266   534 Repayment of long-term debt (3,793)  (4,722) Financing costs (1,084)  (161) Other (26)  793 Net cash flows from financing activities - continuing operations (33,886)  (17,680)      Foreign exchange gain on cash held in a foreign currency (90)  41      Decrease in cash and cash equivalents during the period (482)  (147)      Discontinued operations cash activity included above:    Add: Balance included at beginning of period --    212  Less: Balance included at end of period --    (212)      Cash and cash equivalents - beginning of the period 3,729   5,508      Cash and cash equivalents - end of the period 3,247   5,361    SunOpta Inc. Consolidated Statements of Cash Flows For the two quarters ended June 30, 2012 and July 2, 2011 Unaudited (Expressed in thousands of U.S. dollars, except per share amounts)    Two quarters ended Two quarters ended  June 30, 2012 July 2, 2011  $ $      Cash provided by (used in)          Operating activities    Earnings 14,972   10,861  Earnings (loss) from discontinued operations 1,081   (1,625) Earnings from continuing operations 13,891   12,486      Items not affecting cash    Depreciation and amortization 9,791   8,857 Unrealized loss (gain) on foreign exchange (93)  969 Deferred income taxes 3,716   4,721 Stock-based compensation 1,328   981 Gain on sale of property, plant and equipment --   (3,824) Unrealized loss (gain) on derivative instruments 1,897   (3,918) Other 709   (66) Changes in non-cash working capital, net of business acquired (9,383)  (32,893) Net cash flows from operations - continuing operations 21,856   (12,687) Net cash flows from operations - discontinued operations (316)  (735)   21,540    (13,422)Investing activities    Acquisition of business (17,530)  --   Purchases of property, plant and equipment (11,914)  (9,174) Proceeds on sale of property, plant and equipment --    2,773   Payment of contingent consideration (327)  --   Purchases of intangible assets (25)  (67) Other (206)  (441) Net cash from investing activities - continuing operations (30,002)  (6,909) Net cash flows from investing activities - discontinued operations 12,134   (70)   (17,868)  (6,979)Financing activities    Increase (decrease) in line of credit facilities (10,526)  28,427  Borrowings under long-term debt 19,373   37  Proceeds from the issuance of common shares 423   747  Repayment of long-term debt (10,823)  (6,726) Financing costs (1,175)  (186) Other (29)  821  Net cash from financing activities - continuing operations (2,757)  23,120       Foreign exchange gain on cash held in a foreign currency (46)  211             Increase in cash and cash equivalents during the period 869   2,930       Discontinued operations cash activity included above:    Add: Balance included at beginning of period --    308  Less: Balance included at end of period --    (212)      Cash and cash equivalents - beginning of the period 2,378   2,335       Cash and cash equivalents - end of the period 3,247   5,361     SunOpta Inc. Segmented Information For the quarter ended June 30, 2012 and July 2, 2011 Unaudited (Expressed in thousands of U.S. dollars)            Quarter ended  June 30, 2012   SunOpta Foods $ Opta Minerals $ Corporate Services $ Consolidated $Total revenues from external customers 251,094   31,214   --   282,308            Segment Operating Income (Loss) 14,035   1,817   (1,504) 14,348               SunOpta Foods has the following segmented reporting:                      Quarter ended  June 30, 2012   Grains and Foods $ Ingredients $ Consumer Products $ International Foods $ SunOpta Foods $Total revenues from external customers 136,004  20,486  49,091  45,513  251,094             Segment Operating Income (Loss) 10,496  839  170  2,530  14,035                        Quarter ended  July 2, 2011   SunOpta Foods $ Opta Minerals $ Corporate Services $ Consolidated $Total revenues from external customers  250,401    24,787    --    275,188            Segment Operating Income (Loss)  9,848    2,159    (2,227)  9,780               SunOpta Foods has the following segmented reporting:                       Quarter ended July 2, 2011   Grains and Foods $ Ingredients $ Consumer Products $ International Foods $ SunOpta Foods $Total revenues from external customers  125,108   23,700   47,747   53,846   250,401             Segment Operating Income (Loss)  5,280   1,661   122   2,785   9,848              (Operating Income (Loss) is defined as "Earnings from continuing operations before the following" excluding the impact of "Other expense, net")    SunOpta Inc. Segmented Information For the two quarters ended June 30, 2012 and July 2, 2011 Unaudited (Expressed in thousands of U.S. dollars)                                                                                                                                                                                                                                           Two quarters ended June 30, 2012     SunOpta Foods Opta Minerals Corporate Services Consolidated   $ $ $ $            Total revenues from external customers 482,090   59,546   --   541,636              Segment Operating Income (Loss) 25,588   4,898   (3,357) 27,129               SunOpta Foods has the following segmented reporting:                                                                                                                                                                                                                                                   Two quarters ended June 30, 2012   Grains and Foods Ingredients Consumer Products International Foods SunOpta Foods   $ $ $ $ $           Total revenues from external customers 257,179   42,135   94,243   88,533   482,090              Segment Operating Income (Loss) 18,882   2,068   (5) 4,643   25,588                                                                                                                                                                                                                                           Two quarters ended July 2, 2011     SunOpta Foods Opta Minerals Corporate Services Consolidated   $ $ $ $Total revenues from external customers  474,145   46,393   --   520,538             Segment Operating Income (Loss)  21,272   4,610  (4,363)  21,519              SunOpta Foods has the following segmented reporting:                                                                                                                                                                                                                                         Two quarters ended July 2, 2011   Grains and Foods Ingredients Consumer Products International Foods SunOpta Foods   $ $ $ $ $Total revenues from external customers  240,375    49,636    83,691    100,443    474,145              Segment Operating Income (Loss)  11,568    4,627    (356)  5,433    21,272               (Operating Income (Loss) is defined as "Earnings from continuing operations before the following" excluding the impact of "Other expense, net")1Non-GAAP Measures In addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), the Company provides information regarding Operating Income and Earnings before interest, taxes, depreciation and amortization ("EBITDA") as additional information about its operating results, which are not measures in accordance with GAAP. The Company believes that these non-GAAP measures assist investors in comparing performance across reporting periods on a consistent basis by excluding items that are not indicative of the Company's core operating performance. The non-GAAP measures of operating income and EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.  The Company defines Operating Income as "Earnings from continuing operations before the following" excluding the impact of "Other expense, net"; and EBITDA as Operating Income plus depreciation and amortization. The following is a tabular presentation of Operating Income and EBITDA, including a reconciliation to GAAP earnings, which the Company believes to be the most directly comparable GAAP financial measure:        Quarter ended June 30, 2012 Quarter ended July 2, 2011  $ $      Earnings from continuing operations 7,643    6,346        Provision for income taxes 2,769    4,170   Interest expense, net 2,558    2,520   Other expense (income), net 1,378    (3,256) Operating income 14,348    9,780   Depreciation and amortization 5,018    4,439   Earnings before interest, taxes, depreciation and amortization (EBITDA) 19,366    14,219                      Two quarters ended June 30, 2012 Two quarters ended  July 2, 2011  $ $      Earnings from continuing operations 13,891    12,486        Provision for income taxes 6,355    7,423   Interest expense, net 5,141    4,504   Other expense (income), net 1,742    (2,894) Operating income 27,129    21,519   Depreciation and amortization 9,791    8,857   Earnings before interest, taxes, depreciation and amortization (EBITDA) 36,920    30,376  CONTACT: For further information, please contact: SunOpta Inc. Steve Bromley, President & CEO Robert McKeracher, Vice President & CFO Susan Wiekenkamp, Information Officer Tel: 905-455-2528, ext 103 susan.wiekenkamp@sunopta.com Website: www.sunopta.com