Sunopta Announces Record First Quarter 2012 Results

May 08, 2012 2:00 PM EDT | Source: SunOpta Inc.

Toronto, Ontario--(Newsfile Corp. - May 8, 2012) - SunOpta Inc. (NASDAQ: STKL) (TSX: SOY) (“SunOpta” or “the Company“), a leading global company focused on natural, organic and specialty foods, today announced financial results for the quarter ended March 31, 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 first quarter of 2012, the Company reported quarterly revenues of $274.5 million versus revenues of $260.6 million for the quarter ended April 2, 2011, a year over year increase of 5.4% . These revenues represent record first quarter revenues for the Company. Excluding the impact of changes including foreign exchange rates, commodity-related pricing, the impact of acquisitions and rationalized product lines, revenues increased approximately 7.0% on a consolidated basis. The increase in consolidated revenues in the first 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 product rationalizations in SunOpta Foods which in turn led to improved earnings, plus decreased volumes across certain ingredient categories.

Operating income1 for the first quarter of 2012 increased to $13.4 million or 4.9% of revenues versus $11.6 million or 4.5% of revenues in the prior year, a year over year increase of 15.8% . This increase was driven by improved operating income in both SunOpta Foods and Opta Minerals Inc. Within SunOpta Foods the Grains and Foods Group, Consumer Products Group and International Foods Group all realized improved operating income1 versus the prior year.

For the first quarter of 2012, the Company reported earnings per diluted common share from continuing operations of $0.09 or earnings of $6.1 million, as compared to $0.08 or earnings of $5.4 million for the quarter ended April 2, 2011. After accounting for a loss from discontinued operations, earnings for the first quarter of 2012 were $5.9 million or $0.09 per diluted common share versus $5.1 million or $0.08 per diluted common share in the prior year. With the exception of the first quarter of 2005 when the Company realized a large one-time gain, these first quarter results are a record for the Company.

For the quarter ended March 31, 2012, the Company realized EBITDA1 of $18.3 million as compared to $16.4 million for the quarter ended April 2, 2011.

At March 31, 2012, the Company’s balance sheet reflects a current ratio of 1.38 to 1.00, long-term debt to equity ratio of 0.21 to 1.00 and total debt to equity ratio of 0.64 to 1.00. At March 31, 2012 the Company has total debt outstanding of $196.2 million, total assets of $669.3 million and a net book value of $4.66 per outstanding share. During the quarter the Company used cash from operating activities of $7.3 million versus $33.9 million in the prior year, indicative of ongoing efforts to leverage resources within the Company plus the impact of increased commodity costs realized in the first quarter of 2011.

Steve Bromley, President and Chief Executive Officer of SunOpta commented, “We are very pleased with our first quarter results as they reflect both continued growth in our core natural and organic foods categories, plus the positive impact of operational improvements which we have continued to implement. During the first quarter we took a number of steps to streamline our operations and organization structure and we are pleased with our results to date. We remain confident in our focus on natural and organic foods and our strategy to improve operating margins, earnings predictability and return on assets.”

The Company plans to host a conference call at 10:00 A.M. Eastern Time on Wednesday May 9th, 2012 to discuss the results for the first 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 May 9th and 16th with the toll free dial-in number 1–855-859-2056 or 404-537-3406 followed by pass code: 73382554#.

1See discussion of non-GAAP measures

About 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.

Forward-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 growth in our core natural and organic foods, the positive impact of operating improvements and our strategy to improve earnings predictability, operating margins and return on assets. The terms and phrases “continue”, “improve”, “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, 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.

For further information, please contact:

SunOpta Inc.

Steve Bromley, President & CEO
Tony Tavares, Vice President & COO
Robert McKeracher, Vice President & CFO
John Dietrich, VP Corporate Development & Secretary
Susan Wiekenkamp, Information Officer
Tel: 905-455-2528, ext 103
susan.wiekenkamp@sunopta.com
Website: www.sunopta.com

SunOpta Inc.
Consolidated Statements of Operations
For the quarters ended March 31, 2012 and April 2, 2011
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

 

  Quarter ended     Quarter ended        

 

  March 31, 2012     April 2, 2011     Change  

 

  $   $     %  

Revenues

  274,542     260,589     5.4%  

 

                 

Cost of goods sold

  237,204     225,055     5.4%  

 

                 

Gross profit

  37,338     35,534     5.1%  

 

                 

Selling, general and administrative expenses

  22,549     22,405     0.6%  

Intangible asset amortization

  1,273     1,385     -8.1%  

Other expense, net

  368     362     1.7%  

Foreign exchange loss

  71     135     -47.4%  

 

                 

Earnings from continuing operations before the following

  13,077     11,247     16.3%  

 

                 

Interest expense, net

  2,583     1,984     30.2%  

 

                 

Earnings from continuing operations before income taxes

  10,494     9,263     13.3%  

 

                 

Provision for income taxes

  3,831     3,224     18.8%  

 

                 

Earnings from continuing operations

  6,663     6,039     10.3%  

 

                 

Loss from discontinued operations, net of income taxes

  (224 )   (291 )   23.0%  

 

                 

Earnings

  6,439     5,748     12.0%  

 

                 

Earnings attributable to non-controlling interests

  547     667     -18.0%  

 

                 

Earnings attributable to SunOpta Inc.

  5,892     5,081     16.0%  

 

                 

Earnings per share – basic

                 

     -from continuing operations

  0.09     0.08        

     -from discontinued operations

  -     -        

 

  0.09     0.08        

Earnings per share – diluted

                 

     -from continuing operations

  0.09     0.08        

     -from discontinued operations

  -     -        

 

  0.09     0.08        

 

SunOpta Inc.
Consolidated Balance Sheets
As at March 31, 2012 and April 2, 2011
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

    March 31, 2012     April 2, 2011  
    $   $  
ASSETS        

 

           

Current assets

           

     Cash and cash equivalents

  3,729     2,378  

     Accounts receivable

  113,221     94,177  

     Inventories

  237,965     240,852  

     Prepaid expenses and other current assets

  21,437     21,625  

     Current income taxes recoverable

  1,501     1,503  

     Deferred income taxes

  4,834     4,773  

 

  382,687     365,308  

 

           

Investments

  33,845     33,845  

Property, plant and equipment

  126,066     120,734  

Goodwill

  57,276     49,387  

Intangible assets

  57,214     48,624  

Deferred income taxes

  10,875     11,751  

Other assets

  1,360     1,854  
  669,323     631,503  

 

           

LIABILITIES

           

 

           

Current liabilities

           

     Bank indebtedness

  130,368     109,718  

     Accounts payable and accrued liabilities

  104,459     120,228  

     Customer and other deposits

  6,225     843  

     Income taxes payable

  2,067     1,229  

     Other current liabilities

  1,181     1,419  

     Current portion of long-term debt

  32,444     35,198  

     Current portion of long-term liabilities

  890     995  

 

  277,634     269,630  

 

           

Long-term debt

  33,383     17,066  

Long-term liabilities

  6,518     5,586  

Deferred income taxes

  28,597     24,273  

 

  346,132     316,555  
       

EQUITY

           

SunOpta Inc. shareholders’ equity

           

     Capital Stock
65,835,327 common shares (December 31, 2011 - 65,796,398)

  182,269     182,108  

     Additional paid in capital

  14,718     14,134  

     Retained earnings

  106,400     100,508  

     Accumulated other comprehensive income

  3,376     2,382  

 

  306,763     299,132  

Non-controlling interest

  16,428     15,816  

Total equity

  323,191     314,948  

 

           

 

  669,323     631,503  

 

SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters ended March 31, 2012 and April 2, 2011
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

 

  Quarter ended     Quarter ended  

 

  March 31, 2012     April 2, 2011  

 

$   $  

Cash provided by (used in)

       

Operating activities

           

     Earnings

  6,439     5,748  

     Loss from discontinued operations

  (224 )   (291 )

     Earnings from continuing operations

  6,663     6,039  

Items not affecting cash

           

     Depreciation and amortization

  4,853     4,833  

     Unrealized loss on foreign exchange

  102     723  

     Deferred income taxes

  2,331     1,476  

     Stock-based compensation

  588     429  

     Unrealized loss (gain) on derivative instruments

  682     (3,685 )

     Other

  341     (389 )

Changes in non-cash working capital, net of business acquired

  (22,657 )   (42,844 )

Net cash flows from operations - continuing operations

  (7,097 )   (33,418 )

Net cash flows from operations - discontinued operations

  (161 )   (485 )

 

  (7,258 )   (33,903 )

Investing activities

           

Acquisition of business

  (17,530 )   -  

Purchases of property, plant and equipment

  (4,932 )   (3,909 )

Purchases of patents, trademarks and other intangible assets

  (25 )   (81 )

Other

  (77 )   -  

Cash from investing activities - continuing operations

  (22,564 )   (3,990 )
             

Financing activities

           

Increase in line of credit facilities

  19,008     42,551  

Borrowings under long-term debt

  19,088     37  

Proceeds from the issuance of common shares

  157     213  

Repayment of long-term debt

  (7,030 )   (2,004 )

Financing costs

  (91 )   (25 )

Other

  (3 )   28  

Cash from financing activities - continuing operations

  31,129     40,800  

Foreign exchange gain on cash held in a foreign currency

  44     170  

 

           

Increase in cash and cash equivalents during the period

  1,351     3,077  

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

  3,729     5,508  

 

SunOpta Inc.
Segmented Information
For the quarters ended March 31, 2012 and April 2, 2011
Unaudited
(Expressed in thousands of U.S. dollars)

   
Quarter ended
March 31, 2012
 
  SunOpta
Foods
$
    Opta
Minerals
$
    Corporate
Services
$
    Consolidated
$
 

Total revenues from external customers

  246,210     28,332     -     274,542  

 

                       

Segment Operating Income (Loss)

  12,011     3,081     (1,647 )   13,445  

 

SunOpta Foods has the following segmented reporting:

Quarter ended
March 31, 2012
 
  Grains and
Foods Group
$
    Ingredients
Group
$
    Consumer
Products
Group
$
    International
Foods Group
$
    SunOpta
Foods
$
 

Total revenues from external customers

  121,175     21,649     45,152     58,234     246,210  

 

                             

Segment Operating Income (Loss)

  8,386     1,229     (175 )   2,571     12,011  

 

Quarter ended
April 2, 2011
 
  SunOpta
Foods
$
    Opta
Minerals
$
    Corporate
Services
$
    Consolidated
$
 

Total revenues from external customers

  238,983     21,606     -     260,589  

 

                       

Segment Operating Income (Loss)

  11,044     2,451     (1,886 )   11,609  

 

SunOpta Foods has the following segmented reporting:

Quarter ended
April 2, 2011
 
  Grains and
Foods Group
$
    Ingredients
Group
$
    Consumer
Products
Group
$
    International
Foods Group
$
    SunOpta
Foods
$
 

Total revenues from external customers

  115,267     25,936     35,944     61,836     238,983  

 

                             

Segment Operating Income

  6,288     2,966     (478 )   2,268     11,044  

 

(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     Quarter ended  
    March 31, 2012     April 2, 2011  

 

$   $  

Earnings from continuing operations

6,663 6,039

 

           

Provision for income taxes

  3,831     3,224  

Interest expense, net

  2,583     1,984  

Other expense, net

  368     362  

     Operating income

  13,445     11,609  

Depreciation and amortization

  4,853     4,833  

     Earnings before interest, taxes, depreciation and amortization (EBITDA)

  18,298     16,442  
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