Record quarterly Plant-Based revenue of
$119.5 million, a 12.4% increase YOY
Gross margin improved 130 basis
points
Earnings from continuing operations of $1.7
million vs. $4.0 million loss in PY
Adjusted EBITDA increased 33.5% to $18.3
million
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL)
(TSX:SOY), a leading healthy food and beverage company focused on
plant-based foods and beverages and fruit-based foods and
beverages, today announced financial results for the first quarter
ended April 3, 2021.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
First Quarter 2021 Highlights:
- Revenues of $207.6 million for the first quarter of 2021 were
flat with the prior year as strong 12.4% growth in plant-based was
offset by planned SKU and customer rationalization in
fruit-based.
- Plant-Based revenues have grown 47.0% from Q1 2019, while
Fruit-Based revenues have declined 1.1%, resulting in a 21.8%
increase in consolidated revenues from Q1 2019
- Gross margin increased 130 basis points to 14.4% from 13.1% in
the prior year.
- Earnings from continuing operations of $1.7 million compared to
a loss from continuing operations of $4.0 million in the prior
year
- Adjusted earnings¹ attributable to common shareholders was $1.3
million or $0.01 per diluted common share in the first quarter of
2021, compared to an adjusted loss of $5.4 million or $0.06 per
diluted common share in the first quarter of 2020.
- Adjusted EBITDA¹ of $18.3 million, or 8.8% of revenues for the
first quarter of 2021, versus $13.7 million or 6.6% of revenues in
the first quarter of 2020.
“We continued to execute well against our strategic plan in the
first quarter, driving strong growth in plant-based revenue and
productivity improvements in our fruit-based business leading to a
significant increase in Adjusted EBITDA. We set a new quarterly
record in plant-based with revenue of $119.5 million, reflecting
growth of over 12% on top of a 30% increase a year earlier,
illustrating the underlying strength of SunOpta’s competitive
position,” said Joe Ennen, Chief Executive Officer. “Gross margin
in fruit-based improved 170 basis points, benefitting from a lower
cost structure and rationalization of marginally profitable SKUs
and customers and Adjusted EBITDA of $18.3 million was up 34%
versus last year. Following the first quarter, we completed the
acquisition of two plant-based beverage brands, Dream and WestSoy,
that are highly synergistic to current operations. In addition, we
continue to be pleased with our new business development efforts.
Tailwinds in plant-based, our focus on operational excellence, and
our strong financial position enable us to capitalize on a robust
pipeline of potential opportunities as we seek to fuel the future
of food.”
First Quarter 2021 Results
Revenues of $207.6 million for the first quarter of 2021 were
flat with the first quarter of 2020 as the 12.4% growth in
Plant-Based Foods and Beverages was offset by planned decreased
revenue from Fruit-Based Foods and Beverages.
The Plant-Based Foods and Beverages segment generated revenues
of $119.5 million during the first quarter of 2021, an increase of
12.4% compared to $106.2 million in the first quarter of 2020.
Compared with the first quarter of 2019, the Plant-Based segment
has grown 47.0%. Higher demand for our oat-based product offerings,
coupled with increased retail sales volumes of other plant-based
beverages were key growth drivers in the first quarter. Partially
offsetting these growth areas was lower demand in the foodservice
channel, which has not fully recovered to pre-COVID-19 levels.
The Fruit-Based Foods and Beverages segment generated revenues
of $88.2 million during the first quarter of 2021, a decrease of
13.0% compared to $101.4 million in the first quarter of 2020.
Planned SKU and customer rationalization efforts contributed to the
decline in fruit-based product revenues along with supply
constraints for certain fruit varieties, which limited blended
frozen fruit offerings. These declines were partially offset by
growth in fruit snacks stemming from new business development
efforts.
Gross profit was $30.0 million for the first quarter of 2021, an
increase of $2.8 million compared to $27.2 million in the prior
year period. As a percentage of revenues, gross profit margin was
14.4% in the first quarter of 2021 compared to 13.1% in the first
quarter of 2020, an increase of 130 basis points. The Plant-Based
Foods and Beverages segment accounted for $2.1 million of the
increase in gross profit, primarily due to higher sales volumes of
plant-based beverages and plant-based ingredients. The Fruit-Based
Foods and Beverages segment increased gross profit by $0.7 million
in the quarter, reflecting strong fruit snack volumes, increased
pricing, rationalization of marginally profitable business and cost
savings from productivity initiatives in frozen fruit
operations.
Segment operating income¹ was $6.1 million, or 2.9% of revenues
in the first quarter of 2021, compared to segment operating income
of $2.8 million, or 1.3% of revenues in the first quarter of 2020.
The increase in operating income year-over-year was primarily
attributable to the $2.8 million increase in gross profit plus a
$1.4 million decrease in foreign exchange losses within our frozen
fruit operations, partially offset by higher variable compensation
and increased headcount to support plant-based growth
initiatives.
Adjusted EBITDA¹ was $18.3 million or 8.8% of revenues in the
first quarter of 2021, compared to $13.7 million or 6.6% of
revenues in the first quarter of 2020.
Loss from continuing operations attributable to common
shareholders for the first quarter of 2021 was $0.3 million, or
$0.00 per diluted common share, compared to a loss of $6.0 million,
or $0.07 per diluted common share during the first quarter of
2020.
Adjusted earnings¹ in the first quarter of 2021 was $1.3 million
or $0.01 per common share, compared to an adjusted loss of $5.4
million or $0.06 per common share in the first quarter of 2020.
Please refer to the discussion and table below under “Non-GAAP
Measures”.
Balance Sheet and Cash Flow
At April 3, 2021, SunOpta had total assets of $643.6 million and
total debt of $137.5 million compared to total assets of $894.4
million and total debt of $469.3 million a year earlier, primarily
reflecting the divestiture of Tradin Organic (Global Ingredients
segment) and improved operating performance. During the first
quarter of 2021, cash used in operating activities of continuing
operations was $7.0 million compared to cash provided of $23.7
million during the first quarter of 2020, reflecting increased
inventories due to a stronger start to our seasonal fruit
procurement season. Investing activities from continuing operations
consumed $7.9 million of cash in the first quarter of 2021 versus
$9.0 million in the prior year, primarily driven by purchases of
capital equipment. In addition, in the first quarter of 2021, we
paid $13.4 million to settle accrued transaction costs related to
the divestiture of Tradin Organic.
Acquisition of Dream and WestSoy
On April 15, 2021, SunOpta acquired the Dream and WestSoy brands
for $33 million. The two brands generate approximately $40 million
of revenue annually, of which $15-$20 million is incremental to
SunOpta given the existing production of all of the WestSoy
products, and approximately one-half of the Dream products. Once
the remaining Dream volume is fully insourced, the brands are
expected to contribute an additional $6-$8 million of adjusted
EBITDA in fiscal year 2022.
Conference Call
SunOpta plans to host a conference call at 9:00 A.M. Eastern
time on Wednesday, May 12, 2021, to discuss the first quarter
financial results. After opening remarks, there will be a question
and answer period. Investors interested in listening to a live
webcast of the conference call can access a link on SunOpta's
website at www.sunopta.com under the "Investors" section or
directly here. Investors interested in listening to the live call
over the telephone must pre-register for the conference call via a
link on SunOpta's website at www.sunopta.com under the "Investors
Relations" section or directly at Event Lobby (EVENT: 3081417)
(on24.com). Upon registration, investors will be provided with the
dial-in information, passcode and individual ID. Investors will
also receive a confirmation email. Investors are encouraged to
register at least 15 minutes prior to the scheduled call time and
can register earlier at any time to receive the conference details.
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.
¹ See discussion of non-GAAP measures
About SunOpta Inc.
SunOpta Inc. is a leading company specializing in the sourcing,
processing and production of organic, natural and non-GMO
plant-based and fruit-based food and beverage products.
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
belief that we will be able to capitalize on our pipeline of
potential opportunities and the expected contribution to our
adjusted EBITDA resulting from the acquisition of the Dream and
WestSoy brands. Generally, forward-looking statements do not relate
strictly to historical or current facts and are typically
accompanied by words such as “expect”, “believe”, “anticipate”,
“estimates”, “continue”, “can”, “will”, “target”, "should",
"would", "plans", "becoming", "intend", "confident", "may",
"project", "potential", "intention", "might", "predict", “budget”,
“forecast” or other similar terms and phrases intended to identify
these forward-looking statements. Forward-looking statements are
based on information available to the Company 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
including, but not limited to, the Company’s actual financial
results; uninterrupted operations and service levels to our
customers during COVID-19; current customer demand for the
Company’s products and the additional anticipated demand due to
COVID-19; general economic conditions; continued consumer interest
in health and wellness; the Company’s ability to maintain product
pricing levels; planned facility and operational expansions,
closures and divestitures; cost rationalization and product
development initiatives; alternative potential uses for the
Company’s capital resources; portfolio optimization and
productivity efforts; the sustainability of the Company’s sales
pipeline; the Company’s expectations regarding commodity pricing,
margins and hedging results; improved availability and field prices
for fruit; procurement and logistics savings; freight lane cost
reductions; yield and throughput enhancements; and labor cost
reductions. Whether actual timing and results will agree with
expectations and predictions of the Company is subject to many
risks and uncertainties including, but not limited to,
unanticipated issues or delays with the integration of the Dream
and WestSoy brands with our current product portfolio; potential
loss of suppliers and customers as well as supply chain, logistics
and other disruptions resulting from or related to COVID-19;
unexpected issues or delays with the Company’s structural
improvements and automation investments; failure or inability to
implement portfolio changes, process improvements, go-to-market
improvements and process sustainability strategies in a timely
manner; changes in the level of capital investment; local and
global political and economic conditions; consumer spending
patterns and changes in market trends; decreases in customer
demand; delayed or unsuccessful product development efforts;
potential product recalls; working capital management; availability
and pricing of raw materials and supplies; potential covenant
breaches under the Company’s 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. The
Company undertakes no obligation to publicly correct or update the
forward-looking statements in this document, in other documents, or
on its website to reflect future events or circumstances, except as
may be required under applicable securities laws.
SunOpta Inc.
Consolidated Statements of Operations
For the quarters ended April 3, 2021 and
March 28, 2020
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
April 3, 2021
March 28, 2020
$
$
Revenues
207,640
207,597
Cost of goods sold
177,651
180,424
Gross profit
29,989
27,173
Selling, general and administrative
expenses
20,874
19,933
Intangible asset amortization
2,194
2,271
Other expense, net
1,615
555
Foreign exchange loss
836
2,210
Earnings from continuing operations
before the following
4,470
2,204
Interest expense, net
1,660
7,665
Earnings (loss) from continuing
operations before income taxes
2,810
(5,461
)
Provision for (recovery of) income
taxes
1,138
(1,497
)
Earnings (loss) from continuing
operations
1,672
(3,964
)
Earnings from discontinued operations
-
7,325
Net earnings
1,672
3,361
Dividends and accretion on preferred
stock
(1,953
)
(2,025
)
Earnings (loss) attributable to common
shareholders
(281
)
1,336
Basic and diluted earnings (loss) per
share
From continuing operations
(0.00
)
(0.07
)
From discontinued operations
-
0.08
Basic and diluted earnings (loss) per
share
(0.00
)
0.02
Weighted-average common shares
outstanding (000s)
Basic
96,120
88,161
Diluted
96,120
88,161
SunOpta Inc.
Consolidated Balance Sheets
As at April 3, 2021 and January 2,
2021
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
April 3, 2021
January 2, 2021
$
$
ASSETS
Current assets
Cash and cash equivalents
754
251
Accounts receivable
88,227
72,724
Inventories
165,342
147,748
Prepaid expenses and other current
assets
18,449
21,665
Current income taxes recoverable
7,113
6,935
Total current assets
279,885
249,323
Property, plant and equipment
187,976
158,048
Operating lease right-of-use
assets
33,182
35,172
Goodwill
3,998
3,998
Intangible assets
131,123
133,317
Deferred income taxes
1,847
-
Other assets
5,614
5,757
Total assets
643,625
585,615
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities
107,265
118,592
Income taxes payable
2,440
1,431
Current portion of long-term debt
7,462
3,478
Current portion of operating lease
liabilities
12,535
12,750
Current portion of long-term
liabilities
-
200
Total current liabilities
129,702
136,451
Long-term debt
130,060
66,245
Operating lease liabilities
22,541
24,582
Deferred income taxes
28,092
25,408
Total liabilities
310,395
252,686
Series A Preferred Stock
-
87,305
Series B Preferred Stock
27,727
27,595
EQUITY
SunOpta Inc. shareholders’
equity
Common shares
418,822
326,545
Additional paid-in capital
33,340
37,862
Accumulated deficit
(148,022
)
(147,741
)
Accumulated other comprehensive income
1,363
1,363
Total equity
305,503
218,029
Total equity and liabilities
643,625
585,615
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters ended April 3, 2021 and
March 28, 2020
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
April 3, 2021
March 28, 2020
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings
1,672
3,361
Earnings from discontinued operations
-
7,325
Earnings (loss) from continuing
operations
1,672
(3,964
)
Items not affecting cash:
Depreciation and amortization
8,043
7,725
Amortization of debt issuance costs
285
939
Deferred income taxes
837
344
Stock-based compensation
3,973
2,211
Other
(169
)
(2
)
Changes in operating assets and
liabilities
(21,656
)
16,424
Net cash provided by (used in) operating
activities of continuing operations
(7,015
)
23,677
Net cash provided by operating activities
of discontinued operations
-
11,072
Net cash provided by (used in) operating
activities
(7,015
)
34,749
Investing activities
Purchases of property, plant and
equipment
(9,297
)
(9,022
)
Proceeds from sale of assets
1,350
-
Net cash used in investing activities of
continuing operations
(7,947
)
(9,022
)
Net cash used in investing activities of
discontinued operations
(13,380
)
(667
)
Net cash used in investing activities
(21,327
)
(9,689
)
Financing activities
Increase (decrease) under revolving credit
facilities
41,585
(10,413
)
Borrowings of long-term debt
486
-
Repayment of long-term debt
(4,085
)
(461
)
Payment of debt issuance costs
(1,828
)
(2,073
)
Payment of cash dividends on preferred
stock
(3,420
)
(1,700
)
Proceeds from the exercise of stock
options and employee share purchases
2,640
101
Payment of withholding taxes on
stock-based awards
(6,071
)
-
Payment of share issuance costs
(262
)
-
Other
-
(4
)
Net cash provided by (used in) financing
activities of continuing operations
29,045
(14,550
)
Net cash used in financing activities of
discontinued operations
(200
)
(9,322
)
Net cash provided by (used in) financing
activities
28,845
(23,872
)
Increase in cash and cash equivalents in
the period
503
1,188
Cash and cash equivalents of discontinued
operations:
Balance at beginning of period
-
1,370
Foreign exchange loss on cash and cash
equivalents
-
(16
)
Less: balance at end of period
-
(2,437
)
Cash and cash equivalent, beginning of the
period
251
128
Cash and cash equivalents, end of the
period
754
233
SunOpta Inc.
Segmented Information
For the quarters ended April 3, 2021 and
March 28, 2020
Unaudited
(Expressed in thousands of U.S.
dollars)
Quarter ended
April 3, 2021
March 28, 2020
$
$
Segment revenues from external
customers:
Plant-Based Foods and Beverages
119,451
106,242
Fruit-Based Foods and Beverages
88,189
101,355
Total segment revenues from external
customers
207,640
207,597
Segment gross profit:
Plant-Based Foods and Beverages
23,158
21,071
Fruit-Based Foods and Beverages
6,831
6,102
Total segment gross profit
29,989
27,173
Segment operating income
(loss):
Plant-Based Foods and Beverages
13,317
13,853
Fruit-Based Foods and Beverages
(1,894
)
(4,702
)
Corporate Services
(5,338
)
(6,392
)
Total segment operating income
6,085
2,759
Segment gross profit
percentage:
Plant-Based Foods and Beverages
19.4
%
19.8
%
Fruit-Based Foods and Beverages
7.7
%
6.0
%
Total segment gross profit percentage
14.4
%
13.1
%
Segment operating income (loss)
percentage:
Plant-Based Foods and Beverages
11.1
%
13.0
%
Fruit-Based Foods and Beverages
-2.1
%
-4.6
%
Total segment operating income
percentage
2.9
%
1.3
%
Non-GAAP Measures
In addition to reporting financial results in accordance with
U.S. GAAP, the Company provides additional information about its
operating results regarding segment operating income, adjusted
earnings and adjusted earnings before interest, taxes, depreciation
and amortization (“Adjusted EBITDA”), which are not measures in
accordance with U.S. GAAP. The Company believes that segment
operating income, adjusted earnings and adjusted EBITDA assist
investors in comparing performance across reporting periods on a
consistent basis by excluding items that are not indicative of its
operating performance. The non-GAAP measures of segment operating
income, adjusted earnings and adjusted EBITDA should not be
considered in isolation or as a substitute for performance measures
calculated in accordance with U.S. GAAP.
In order to evaluate its results of operations, the Company uses
certain other non-GAAP measures that it believes enhance an
investor’s ability to derive meaningful period-over-period
comparisons and trends from the results of operations. In
particular, the Company evaluates its revenues on a basis that
excludes the effects of fluctuations in commodity pricing. In
addition, the Company excludes specific items from its reported
results that due to their nature or size, it does not expect to
occur as part of its normal business on a regular basis. These
items are identified in the tables below. These non-GAAP measures
are presented solely to allow investors to more fully assess the
Company’s results of operations and should not be considered in
isolation of, or as substitutes for an analysis of the Company’s
results as reported under U.S. GAAP.
Adjusted Earnings/Loss
When assessing its financial performance, the Company uses an
internal measure that excludes charges and gains that it believes
are not reflective of normal operations. This information is
provided to allow investors to make meaningful comparisons of the
Company’s operating performance between periods and to view the
Company’s business from the same perspective as the Company’s
management. Adjusted earnings/loss and adjusted earnings/loss per
diluted share should not be considered in isolation or as a
substitute for performance measures calculated in accordance with
U.S. GAAP.
The following is a tabular presentation of adjusted
earnings/loss and adjusted earnings/loss per diluted share,
including a reconciliation from earnings/loss from continuing
operations, which the Company believes to be the most directly
comparable U.S. GAAP financial measure.
April 3, 2021
March 28, 2020
Per Share
Per Share
For the quarter ended
$
$
$
$
Earnings (loss) from continuing
operations
1,672
(3,964
)
Dividends and accretion on preferred
stock
(1,953
)
(2,025
)
Loss from continuing operations
attributable to common shareholders
(281
)
(0.00
)
(5,989
)
(0.07
)
Adjusted for:
Costs related to Value Creation
Plan(a)
1,432
1,097
Acquisition, divestiture, and related
costs(b)
352
-
Other
-
(15
)
Net income tax effect(c)
(240
)
(538
)
Adjusted earnings (loss)
1,263
0.01
(5,445
)
(0.06
)
(a)
For the first quarter of 2021, reflects
costs to complete the exit from our Santa Maria, California, frozen
fruit processing facility, which were recorded in other expense.
For the first quarter of 2020, reflects professional fees of $0.3
million and employee retention costs of $0.2 million recorded in
SG&A expenses; and employee termination costs of $0.5 million
recorded in other expense.
(b)
Represents costs associated with completed
or potential acquisitions and divestitures, including costs related
to the evaluation, execution, and integration of acquisitions or
completion of divestitures, which were recorded in SG&A
expenses ($0.2 million) and other expense ($0.2 million).
(c)
Reflects the tax effect of the preceding
adjustments to earnings calculated based on our estimated annual
effective tax rate.
Segment Operating Income/Loss and Adjusted
EBITDA
The Company defines segment operating income/loss as net
earnings/loss before income taxes, interest expense and other
income/expense items, and adjusted EBITDA as segment operating
income/loss plus depreciation, amortization, non-cash stock-based
compensation, and other unusual items that affect the comparability
of operating performance as identified above in the determination
of adjusted earnings/loss. The following is a tabular presentation
of segment operating income/loss and adjusted EBITDA, including a
reconciliation from earnings/loss from continuing operations, which
the Company believes to be the most directly comparable U.S. GAAP
financial measure.
April 3, 2021
March 28, 2020
For the quarter ended
$
$
Earnings (loss) from continuing
operations
1,672
(3,964
)
Provision for (recovery of) income
taxes
1,138
(1,497
)
Interest expense, net
1,660
7,665
Other expense, net
1,615
555
Total segment operating income
6,085
2,759
Depreciation and amortization
8,043
7,725
Stock-based compensation(a)
3,973
2,670
Acquisition, divestiture, and related
costs(b)
169
-
Costs related to Value Creation
Plan(c)
-
527
Adjusted EBITDA
18,270
13,681
(a)
For the first quarter of 2020, stock-based
compensation of $2.7 million was recorded in SG&A expenses and
the reversal of $0.5 million of previously recognized stock-based
compensation related to forfeited awards previously granted to
terminated employees was recognized in other income.
(b)
Represents professional fees incurred in
connection with the evaluation of potential acquisitions and
divestitures, which were recorded in SG&A expenses.
(c)
For the first quarter of 2020, reflects
professional fees of $0.3 million and employee retention costs of
$0.2 million recorded in SG&A expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210512005307/en/
Reed Anderson ICR 646-277-1260 reed.anderson@icrinc.com
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