Q1 2020 Adjusted EBITDA expected to double
YOY excluding disposed operations
Updated to include table and footnotes after the last paragraph
of release. No other changes to the release.
The corrected release reads:
SUNOPTA PROVIDES UPDATE ON PERFORMANCE
EXPECTATIONS
Q1 2020 Adjusted EBITDA expected to double
YOY excluding disposed operations
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL)
(TSX:SOY), a leading global company focused on plant-based foods
and beverages, fruit-based foods and beverages, and organic
ingredient sourcing and production, today announced preliminary
financial guidance for the first quarter ending March 28, 2020.
This estimate is based on January and February actuals combined
with a forecast for March. This guidance is being provided to
update shareholders on the Company’s performance and to disseminate
non-public information to the market, to facilitate the accurate
pricing of up to $60 million of preferred shares financing. Given
the attractive growth opportunities in SunOpta’s plant-based foods
and beverages segment, the proceeds will be primarily used to drive
accelerated growth in this business unit.
SunOpta estimates the following ranges of performance for the
first quarter, 2020:
- Revenue in a range of $320 to $340 million, compared with
$305.3 million in the first quarter of 2019, or $295.0 million
adjusted for disposed operations
- Net income (loss) attributable to common shareholders in a
range of ($2.0) - $ 2.0 million, compared with $23.7 million in the
first quarter of 2019. Net income in the first quarter of 2019
included a pre-tax gain on the sale of the specialty and organic
soy and corn business of $45.6 million.
- Adjusted EBITDA in a range of $21 to $25 million, compared with
$10.9 million in the first quarter of 2019, or $11.1 million
adjusted for disposed operations.
- We attribute approximately $5 -$10 million of revenue growth
and approximately ($.0.5) -$(1.5) million of Adjusted EBITDA to the
impact of COVID-19. The positive margin impact of the revenue
growth is being more than offset by an approximately $2.5 million
unrealized loss on Mexican inventory revaluation as a result of the
Peso devaluation.
“I am pleased to report that SunOpta expects to double adjusted
EBITDA, excluding disposed operations, in the first quarter of 2020
versus the prior year. The adjusted EBITDA results reflect strong
performance in all three of our business units. We continue to
deliver very strong revenue growth and margin expansion in our
plant-based beverages business unit, supported by sequential
improvement in our fruit-based segment. Our Global Ingredients
business unit is also seeing strong sequential improvement as we
moved past the previously identified non-systemic headwinds from
Q4. Overall, this continues the strong trend established in the
fourth quarter of 2019, where the plant-based segment revenue grew
by 25% and SunOpta doubled adjusted EBITDA,” said Joe Ennen, Chief
Executive Officer at SunOpta.
Mr. Ennen continued, “To support attractive strategic growth
investments in the plant-based food and beverage segment and to
provide incremental corporate liquidity, we are also exploring a
smaller debt financing package to supplement preferred equity
financing. The total of these financing efforts could be up to $85
million in value. No assurances can be given that these financing
efforts will be successful. We will provide an update at, or in
advance of, our first quarter earnings release date.”
The performance expectations disclosed in this press release are
preliminary estimates and unaudited. All preliminary performance
expectations provided in this release are subject to change pending
the completion of the Company's fiscal quarter and the Company’s
financial reporting procedures. The Company does not currently
intend to provide preliminary financial information with respect to
future periods. The Company expects to report full first quarter
financial results in early May 2020.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
¹ See discussion of non-GAAP measures
About SunOpta Inc.
SunOpta Inc. is a leading global company focused on plant-based
foods and beverages, fruit-based foods and beverages, and organic
ingredient sourcing and production. SunOpta specializes in the
sourcing, processing and packaging of organic, natural and non-GMO
food products, integrated from seed through packaged products; with
a focus on strategic vertically integrated business models.
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
expectation that we will continue to experience strong revenue and
margin expansion for the remainder of the first quarter of fiscal
2020, our potential discussions regarding debt and equity financing
alternatives and the proposed use of the proceeds of any such
financing alternatives. Generally, forward-looking statements do
not relate strictly to historical or current facts and are
typically accompanied by words such as “expect”, “believe”,
“anticipate”, “continue”, “estimates”, “can”, “will”, “targeting”,
"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 for the fourth quarter of 2019 and the first two
months of the current quarter; the anticipated demand for the
Company’s products due to COVID-19, general economic conditions;
continued consumer interest in health and wellness; the Company’s
ability to maintain product pricing levels; current customer
demand; 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
predications of the Company is subject to many risks and
uncertainties including, but not limited to, liquidity constraints
and the availability of alternative financing sources; 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.
Source: SunOpta Inc.
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 adjusted earnings before interest,
taxes, depreciation and amortization (“Adjusted EBITDA”), which are
not measures in accordance with U.S. GAAP. The Company believes
that adjusted EBITDA assists 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 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 and
foreign exchange rates, and the impacts of acquired or disposed
operations and changes in contractual relationships with customers.
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 table 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 EBITDA
The Company defines 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. The following is a tabular presentation
of adjusted EBITDA, including a reconciliation to net
earnings/loss, which the Company believes to be the most directly
comparable U.S. GAAP financial measure. The Company believes this
presentation assists investors in assessing the results of the
operations the Company has disposed and the effect of those
operations on its financial performance.
Quarter ended March 28, 2020 March 30, 2019
$
$
(all dollar amounts expressed in millions of US dollars)
(Estimated) Net earnings (loss) (2.0) to 2.0
25.6
Provision for income taxes(a)
0.1
9.5
Interest expense, net
7.7
8.7
Other expense (income), net(b)
1.3
(43.5
)
Total segment operating income
9.1
0.3
Depreciation and amortization
8.9
8.3
Stock-based compensation
3.5
1.9
Costs related to Value Creation Plan(c)
0.9
0.2
Costs related to COVID-19 precautionary measures(d)
0.5
-
Contract manufacturer transition costs(e)
-
0.1
Adjusted EBITDA 21.0 to 25.0
10.9
(a) Provision for income taxes has been estimated using an expected
effective tax rate of 31.72%. (b) Other expense for the first
quarter of 2020 reflects employee termination costs related to
office closures. Other income for the first quarter of 2019
includes the pre-tax gain on sale of the soy and corn business of
$45.6 million along with the reversal of $2.1 million of previously
recognized stock-based compensation expense, partially offset by
$3.5 million of employee termination and recruitment costs. (c) For
the first quarter of 2020, reflects professional fees recorded in
SG&A expense. For the first quarter of 2019, reflects
professional fees and employee retention costs of $0.2 million
recorded in SG&A expense. (d) For the first quarter of 2020,
reflects costs associated with preventative measures taken by the
company in response to the COVID-19 pandemic. (e) For the first
quarter of 2019, reflects costs to transition certain production
activities to a new contract manufacturer, which were recorded in
cost of goods sold.
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version on businesswire.com: https://www.businesswire.com/news/home/20200319005383/en/
Scott Van Winkle ICR 617-956-6736 scott.vanwinkle@icrinc.com
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