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Press release from GlobeNewswire (a Nasdaq OMX company)

SunOpta Announces Record Third Quarter and Year-to-Date Earnings

Tuesday, November 06, 2012

SunOpta Announces Record Third Quarter and Year-to-Date Earnings14:08 EST Tuesday, November 06, 2012TORONTO, Nov. 6, 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 third quarter ended September 29, 2012. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.Third Quarter 2012 Highlights: Revenues increased to $279.3 million, an increase of 8.7% versus Q3 2011 Operating income increased to $12.7 million, an increase of 72% versus Q3 2011 Operating margin increased to 4.5% of revenues versus 2.9% in Q3 2011 Earnings of $5.8 million, an increase of 72% versus Q3 2011 and a record for the Company Earnings per diluted common share increased to a record $0.09 versus $0.05 in Q3 2011 EBITDA increased to $17.8 million, an increase of 50.5% versus Q3 2011 "We are very pleased with our third quarter financial results, reflecting higher revenues and a 72% increase in both operating income and earnings versus the prior year," commented Steve Bromley, SunOpta's Chief Executive Officer. "We continue to execute on our core strategies focused on streamlining our organization, growing our value-added packaged foods and ingredients portfolio, and leveraging our existing platform. We are pleased with our progress to-date and remain confident in our opportunities to grow our global integrated natural and organic foods platform."Third Quarter 2012 Results Revenues for the third quarter increased 8.7% to $279.3 million as compared to $257.0 million in the third quarter of 2011. 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 versus the prior year. The increase in consolidated revenues in the third quarter was driven by strong growth across integrated grains-based food product categories within SunOpta Foods and higher sales within Opta Minerals Inc. as a result of recent acquisitions. These increases were somewhat offset by the effect of lower fiber and fruit ingredients sales and decreased revenues in the Company's European organic ingredients operation. Operating income1 increased 72.4% to $12.7 million, or 4.5% of revenues, for the third quarter of 2012 as compared to $7.4 million, or 2.9% of revenues, for the same period last year. This increase was led by a significant improvement in operating income in the Grains and Foods Group versus the prior year as a result of increased volumes of aseptically packaged grains-based beverages and strong organic grains and feedstuff sales, as well as significantly improved results in Opta Minerals and reduced selling, general and administrative costs due in part to streamlining and rationalizations completed over the past year. Earnings for the third quarter of 2012 were $5.8 million, or $0.09 per diluted common share, as compared to $3.4 million, or $0.05 per diluted common share, for the third quarter of 2011. These earnings are a third quarter record for the Company after excluding certain non-recurring items in prior years. Third quarter earnings include the impact of approximately $0.9 million in pre-tax severance, acquisition and start-up costs ($0.5 million after-tax). For the quarter ended September 30, 2012, the Company realized EBITDA1 of $17.8 million as compared to $11.9 million for the third quarter of 2011, a year-over-year increase of 50.5%. The effective tax rate for the third quarter of 2012 was 39.1% as compared to 27.3% in the third quarter of 2011. The increase in the effective tax rate is primarily a result of increased earnings in higher tax jurisdictions in 2012 and the net effect of certain tax credits that were realized in the third quarter of 2011.Year-to-Date 2012 Results For the first three quarters of 2012 revenues increased 5.6% to $821.0 million versus revenues of $777.5 million in the same period last year. 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 for the first three quarters was driven by strong growth within integrated packaged food product categories and higher sales within Opta Minerals Inc. as a result of recent acquisitions. Those increases were somewhat offset by the effect of lower fiber and fruit ingredients sales and decreased revenues in the Company's European organic ingredients operation. Operating income1 for the first three quarters increased to $39.8 million, or 4.9% of revenues, versus $28.9 million, or 3.7% of revenues, in the prior year, a year-over-year increase of 37.9%. This increase was primarily led by improved operating income in the Grains and Foods Group and Opta Minerals versus the prior year. For the three quarters ended September 29, 2012, the Company reported earnings of $19.8 million, or $0.30 per diluted common share, as compared to earnings of $12.8 million, or $0.19 per diluted common share, for the same period last year, a year-over-year increase of 54.4%. Excluding discontinued operations, earnings were $18.6 million, or $0.28 per diluted common share, versus $14.8 million, or $0.22 per diluted common, share in the prior year. Included in earnings for the first three quarters of 2012 were approximately $3.1 million in pre-tax severance, acquisition and start-up costs ($1.9 million after-tax), offset by a $0.7 million after-tax gain on the sale of Purity Life Natural Health Products and approximately $0.5 million in tax adjustments that lowered the Company's effective tax rate. The effective tax rate for the first three quarters of 2012 was 34.0% as compared to 35.2% in 2011. For the first three quarters of 2012, the Company realized EBITDA1 of $54.8 million as compared to $42.2 million for the nine months ended October 1, 2011, a year-over-year increase of 29.7%.Balance Sheet The Company's balance sheet remains strong, and shareholders' equity increased to $320.2 million as of September 29, 2012. At the end of the third quarter of 2012, the Company's balance sheet reflects a current ratio of 1.51 to 1.00, and a total debt to equity ratio of 0.52 to 1.00.  At September 29, 2012, the Company had total debt outstanding of $165.0 million, total assets of $669.3 million and a net book value of $4.85 per outstanding share. For the first three quarters of 2012, the Company generated cash from operating activities of $38.0 million versus cash used in operating activities of $2.7 million in the prior year, indicative of improved earnings and improved cash provided by working capital.Conference Call Information The Company plans to host a conference call at 10:00 AM Eastern Time on Wednesday, November 7, 2012 to discuss the third quarter financial results and recent corporate developments. After opening remarks, there will be a question and answer period. This conference call can be accessed via a link at the Company's website at www.sunopta.com. To listen to the live call over the Internet, please go to the Company's website at least 15 minutes early to register, download and install any necessary audio software. Additionally, the call may be accessed with the toll free dial-in number (877) 312-9198 or international dial-in number (631) 291-4622. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days at the Company's website.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 focus on our core strategies and opportunities to grow our global integrated natural and organic foods platform. The terms and phrases "continue", "remain confident", "improve" and "execute", 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, 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 September 29, 2012 and October 1, 2011       Unaudited       (Expressed in thousands of U.S. dollars, except per share amounts)              Quarter ended Quarter ended          September 29, 2012 October 1, 2011 Change  $ $ %           Revenues 279,339   257,011  8.7%       Cost of goods sold 246,158   226,990  8.4%       Gross profit  33,181   30,021  10.5%              Selling, general and administrative expenses 19,395   20,591  -5.8% Intangible asset amortization 1,225   1,045  17.2% Other expense, net 264   7  3671.4% Foreign exchange (gain) loss (130)  1,022  -112.7%             Earnings from continuing operations before the following 12,427  7,356  68.9%        Interest expense, net 2,339   2,033  15.1%             Earnings from continuing operations before income taxes10,088   5,323  89.5%              Provision for income taxes3,947   1,451  172.0%             Earnings from continuing operations6,141  3,872  58.6%             Discontinued operations       Earnings (loss) from discontinued operations, net of taxes 112   (433) n/a Gain on sale of discontinued operations, net of taxes --   71  n/a             Earnings (loss) from discontinued operations, net of taxes 112   (362) 130.9%      Earnings6,253  3,510  78.1%              Earnings attributable to non-controlling interests449  144  211.8%             Earnings attributable to SunOpta Inc.5,804  3,366  72.4%             Earnings (loss) per share - basic       -from continuing operations0.09   0.06    -from discontinued operations --   (0.01)    0.09  0.05           Earnings (loss) per share - diluted       -from continuing operations0.09   0.06    -from discontinued operations --   (0.01)          0.09  0.05       SunOpta Inc. Consolidated Statements of Operations    For the three quarters ended September 29, 2012 and October 1, 2011  Unaudited (Expressed in thousands of U.S. dollars, except per share amounts)  Three quarters ended Three quarters ended     September 29, 2012 October 1, 2011 Change   $ $ %         Revenues 820,975   777,549  5.6%       Cost of goods sold  716,220   682,916  4.9%       Gross profit 104,755   94,633  10.7%        Selling, general and administrative expenses 61,911   61,497  0.7% Intangible asset amortization 3,653   3,078  18.7% Other expense (income), net 2,006   (2,887) 169.5% Foreign exchange (gain) loss (629)  1,176  -153.5%       Earnings from continuing operations before the following  37,814   31,769  19.0%        Interest expense, net 7,480   6,537  14.4%       Earnings from continuing operations before income taxes 30,334  25,232  20.2%        Provision for income taxes 10,302  8,875  16.1%        Earnings from continuing operations 20,032  16,357  22.5%        Discontinued operations       Earnings (loss) from discontinued operations, net of taxes 517   (2,057) n/a Gain on sale of discontinued operations, net of taxes 676  71  n/a       Earnings (loss) from discontinued operations, net of income taxes 1,193   (1,986) 160.1%       Earnings21,225  14,371  47.7%         Earnings attributable to non-controlling interests1,384  1,523  -9.1%      Earnings attributable to SunOpta Inc.19,841  12,848  54.4%       Earnings (loss) per share – basic       -from continuing operations 0.28  0.23    -from discontinued operations 0.02   (0.03)    0.30  0.20           Earnings (loss) per share – diluted       -from continuing operations 0.28   0.22    -from discontinued operations 0.02   (0.03)     0.30  0.19                  SunOpta Inc.     Consolidated Balance Sheets     As at September 29, 2012 and December 31, 2011     Unaudited     (Expressed in thousands of U.S. dollars, except per share amounts)       September 29, 2012 December 31, 2011   $ $         ASSETS            Current assets     Cash and cash equivalents 4,187  2,378  Accounts receivable 115,979  88,898  Inventories 224,556  228,455  Prepaid expenses and other current assets 22,851  21,378  Current income taxes recoverable 1,106   1,503  Deferred income taxes 4,946  4,773  Current assets held for sale --   17,923   373,625  365,308      Investments  33,845   33,845 Property, plant and equipment 135,709   120,584 Goodwill  57,008   49,387 Intangible assets 54,416   48,035 Deferred income taxes 12,435   11,751 Other assets 2,270   1,854 Non-current assets held for sale  --   739             669,308  631,503      LIABILITIES        Current liabilities    Bank indebtedness 111,237  109,718  Accounts payable and accrued liabilities 118,928  114,308  Customer and other deposits 3,493  843  Income taxes payable 3,117  1,229  Other current liabilities 3,809  1,419  Current portion of long-term debt 5,924  35,198  Current portion of long-term liabilities 569  995  Current liabilities held for sale --   5,920    247,077  269,630      Long-term debt  47,836   17,066 Long-term liabilities 6,586   5,586 Deferred income taxes 30,689   24,273    332,188  316,555              EQUITY    SunOpta Inc. shareholders' equity   Capital Stock  182,916  182,108  65,977,814 common shares (December 31, 2011 - 65,796,398)   Additional paid in capital  16,147  14,134 Retained earnings 120,349  100,508 Accumulated other comprehensive income 795  2,382    320,207   299,132 Non-controlling interest 16,913  15,816 Total equity 337,120   314,948         669,308   631,503             SunOpta Inc.     Consolidated Statements of Cash Flows     For the quarter ended September 29, 2012 and October 1, 2011     Unaudited     (Expressed in thousands of U.S. dollars, except per share amounts)       Quarter ended Quarter ended   September 29, 2012 October 1, 2011  $ $         Cash provided by (used in)             Operating activities    Earnings 6,253   3,510  Earnings (loss) from discontinued operations 112   (362) Earnings from continuing operations 6,141   3,872          Items not affecting cash    Depreciation and amortization 5,155   4,497  Unrealized gain on foreign exchange (76)  (991) Deferred income taxes (639)  1,114  Stock-based compensation 713   555  Loss on sale of property, plant and equipment --   584  Unrealized (gain) loss on derivative instruments (3,075)  646  Other 508   375  Changes in non-cash working capital, net of business acquired 7,462   990  Net cash flows from operations - continuing operations 16,189   11,642  Net cash flows from operations - discontinued operations 313   (903)    16,502   10,739 Investing activities    Acquisition of business, net of cash acquired (11,644)  (2,500) Purchases of property, plant and equipment (5,709)  (6,082) Payment of contingent consideration (61)  --  Purchases of intangible assets (56)  --  Other 122   411  Net cash flows from investing activities - continuing operations (17,348)  (8,171) Net cash flows from investing activities - discontinued operations --   (318)   (17,348)  (8,489)Financing activities    Increase in line of credit facilities 56,959   4,759  Repayment of line of credit facilities (45,295)  --  Borrowings under long-term debt 15,234   1,875  Repayment of long-term debt (24,136)  (6,697) Financing costs (1,315)  --  Proceeds from the issuance of common shares 257   242  Other 53   (19) Net cash flows from financing activities - continuing operations 1,757   160       Foreign exchange gain (loss) on cash held in a foreign currency 29   (457)      Increase in cash and cash equivalents during the period 940   1,953       Discontinued operations cash activity included above:    Add: Balance included at beginning of period --   212       Cash and cash equivalents - beginning of the period 3,247   5,361       Cash and cash equivalents - end of the period 4,187   7,526                   SunOpta Inc.     Consolidated Statements of Cash Flows     For the three quarters ended September 29, 2012 and October 1, 2011     Unaudited     (Expressed in thousands of U.S. dollars, except per share amounts)      Three quarters ended Three quarters ended  September 29, 2012 October 1, 2011   $ $         Cash provided by (used in)             Operating activities    Earnings 21,225   14,371  Earnings (loss) from discontinued operations 1,193   (1,986) Earnings from continuing operations 20,032   16,357          Items not affecting cash    Depreciation and amortization 14,946   13,354  Unrealized gain on foreign exchange (169)  (22) Deferred income taxes 3,077   5,835  Stock-based compensation 2,041   1,536  Gain on sale of property, plant and equipment --   (3,240) Unrealized gain on derivative instruments (1,178)  (3,272) Other 1,217   310  Changes in non-cash working capital, net of business acquired (1,921)  (31,903) Net cash flows from operations - continuing operations 38,045   (1,045) Net cash flows from operations - discontinued operations (3)  (1,638)    38,042   (2,683)Investing activities    Acquisition of businesses, net of cash acquired (29,174)  (2,500) Purchases of property, plant and equipment (17,623)  (15,256) Proceeds on sale of property, plant and equipment --   2,773  Payment of contingent consideration (388)  --  Purchases of intangible assets (81)  (67) Other (84)  (30) Net cash from investing activities - continuing operations (47,350)  (15,080) Net cash flows from investing activities - discontinued operations 12,134   (388)    (35,216)  (15,468)Financing activities    Increase in line of credit facilities 46,434   33,186  Repayment of line of credit facilities (45,296)  --  Borrowings under long-term debt 34,607   1,912  Repayment of long-term debt (34,959)  (13,423) Financing costs (2,490)  (186) Proceeds from the issuance of common shares680 989 Other 24   802  Net cash from financing activities - continuing operations (1,000)  23,280          Foreign exchange gain (loss) on cash held in a foreign currency (17)  (246)               Increase in cash and cash equivalents during the period 1,809   4,883          Discontinued operations cash activity included above:    Add: Balance included at beginning of period --   308          Cash and cash equivalents - beginning of the period 2,378   2,335       Cash and cash equivalents - end of the period 4,187   7,526       SunOpta Inc. Segmented Information For the quarter ended September 29, 2012 and October 1, 2011 Unaudited (Expressed in thousands of U.S. dollars)  Quarter endedSeptember 29, 2012      SunOpta   Corporate        Foods Opta Minerals Services Consolidated   $ $ $ $ Total revenues from external customers 246,359 32,980   --  279,339                 Segment operating income (loss)10,835 3,280  (1,424) 12,691                 SunOpta Foods has the following segmented reporting:          Quarter endedSeptember 29, 2012    Grains and   Consumer International SunOpta    Foods Ingredients Products Foods Foods   $ $ $ $ $Total revenues from external customers 139,917  20,273  41,636  44,533  246,359             Segment operating income (loss) 8,780  878  (544) 1,721  10,835                 Quarter ended October 1, 2011     SunOpta   Corporate       Foods Opta Minerals Services Consolidated   $ $ $ $Total revenues from external customers 232,909    24,102   --  257,011                Segment operating income (loss)  8,563    1,606   (2,806) 7,363                SunOpta Foods has the following segmented reporting:   Quarter ended October 1, 2011    Grains and   Consumer International SunOpta   Foods Ingredients Products Foods Foods   $ $ $ $ $Total revenues from external customers  121,596   21,966   42,066   47,281   232,909                Segment operating income  4,394   2,065   205   1,899   8,563                 (Segment operating income (loss) is defined as "Earnings from continuing operations before the following" excluding the impact of "Other expense [income], net".)      SunOpta Inc. Segmented Information For the three quarters ended September 29, 2012 and October 1, 2011 Unaudited   (Expressed in thousands of U.S. dollars)      Three quarters endedSeptember 29, 2012     SunOpta   Corporate        Foods Opta Minerals Services Consolidated    $ $ $ $Total revenues from external customers   728,449  92,526   -- 820,975                Segment operating income (loss)   36,423  8,178  (4,781) 39,820            SunOpta Foods has the following segmented reporting:            Three quarters endedSeptember 29, 2012    Grains and   Consumer International SunOpta   Foods Ingredients Products Foods Foods    $ $ $ $ $Total revenues fromexternal customers 397,096  62,408  135,879  133,066  728,449                Segment operating income (loss) 27,662  2,946  (549) 6,364  36,423              Three quarters ended October 1, 2011     SunOpta   Corporate       Foods Opta Minerals Services Consolidated   $ $ $ $Total revenues fromexternal customers   707,054   70,495   -- 777,549                Segment operating income (loss)  29,835   6,216   (7,169)  28,882              SunOpta Foods has the following segmented reporting:           Three quarters ended October 1, 2011   Grains and   Consumer International SunOpta    Foods Ingredients Products Foods Foods   $ $ $ $ $Total revenues fromexternal customers  361,971   71,602   125,757   147,724   707,054                Segment operating income (loss)  15,962   6,692   (151)  7,332   29,835                 (Segment operating income (loss) is defined as "Earnings from continuing operations before the following" excluding the impact of "Other expense [income], 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 [income], 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 Quarter ended          September 29, 2012 October 1, 2011  $ $              Earnings from continuing operations 6,141   3,872        Provision for income taxes 3,947   1,451  Interest expense, net 2,339   2,033  Other expense, net 264   7  Operating income 12,691   7,363  Depreciation and amortization 5,155   4,497  Earnings before interest, taxes, depreciation and amortization (EBITDA) 17,846   11,860                                       Three quarters ended Three quarters ended          September 29, 2012 October 1, 2011  $ $              Earnings from continuing operations 20,032   16,357       Provision for income taxes 10,302   8,875  Interest expense, net 7,480   6,537  Other expense (income), net 2,006   (2,887) Operating income 39,820   28,882  Depreciation and amortization 14,946   13,354  Earnings before interest, taxes, depreciation and amortization (EBITDA) 54,766   42,236               CONTACT: For further information, please contact: SunOpta Inc. Rob McKeracher, Vice President & CFO Susan Wiekenkamp, Information Officer Tel: 905-455-2528, ext 103 susan.wiekenkamp@sunopta.com Website: www.sunopta.com