Revenue growth of 15.7% vs prior
year
Sequential revenue growth of 17.6% and gross
profit growth of 52.1%
Strong quarterly year over year revenue,
gross profit and EBITDA growth expected for the balance of the
year
Major capacity expansion projects on
track
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 2, 2022.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
First quarter 2022 highlights:
- Revenues of $240.2 million for the first quarter of 2022
increased 15.7% reflecting 13.4% growth in plant-based and 18.7%
increase in fruit-based compared to the prior year
- Gross margin decreased 270 basis points to 11.7% from 14.4% in
the prior year, primarily reflecting inflationary factors impacting
raw materials, freight, labor and utilities. Gross margin increased
270 basis points to 11.7% from 9.0% in the fourth quarter of 2021,
reflecting increased production and pricing actions.
- Net earnings from continuing operations were $0.7 million
compared to $1.7 million in the prior year.
- Adjusted earnings¹ attributable to common shareholders was $0.6
million or $0.01 per diluted common share in the first quarter of
2022, compared to earnings of $1.3 million or $0.01 per diluted
common share in the first quarter of 2021.
- Adjusted EBITDA¹ of $15.6 million, or 6.5% of revenues for the
first quarter of 2022, was down 14.7% versus $18.3 million or 8.8%
of revenues in the first quarter of 2021. Adjusted EBITDA increased
46% versus $10.7 million in the fourth quarter of 2021.
“We delivered strong first quarter results compared to Q4,
reflecting significant progress on recent initiatives to enhance
capacity and productivity coupled with robust demand across our
portfolio. Plant-based revenue increased 13.4% on a year-over-year
basis, driven by oat-based offerings up 59% and proprietary brands,
with price and volume/mix both positive factors. The sharp recovery
in our fruit-based business, where revenue increased 18.7%, was
largely influenced by recent pricing actions as well as continued
growth in fruit snacks and smoothie bowls,” said Joe Ennen, Chief
Executive Officer. “While margins were below our year-earlier
levels, we made significant progress from the fourth quarter of
2021, and believe that we have remedied production challenges in
our plants and have passed on over 90% of inflationary pressures
with price increases. I’m pleased to report that we are on track
with expansion projects, including our new plant in Texas. This is
a testimony to our focus on execution in this challenging
environment. I’m also very proud of our recently released ESG
report that outlines our framework around products, planet, people,
and governance along with highlighting progress made in 2021.
SunOpta is passionate about our commitments to sustainability as we
continue to fuel the future of food. We remain highly confident in
our strategic direction and growth outlook as well as our ability
to create significant shareholder value.”
First Quarter 2022 Results
Revenues of $240.2 million for the first quarter of 2022
increased 15.7% compared to the first quarter of 2021 reflecting
13.4% growth in Plant-Based Foods and Beverages and 18.7% growth in
Fruit-Based Foods and Beverages.
The Plant-Based Foods and Beverages segment generated revenues
of $135.5 million during the first quarter of 2022, an increase of
13.4% compared to $119.5 million in the first quarter of 2021.
Growth continued to be driven by oat-based offerings, reflecting
pricing and volume/mix factors, along with incremental revenue from
Dream and WestSoy.
The Fruit-Based Foods and Beverages segment generated revenues
of $104.7 million during the first quarter of 2022, an increase of
18.7% compared to $88.2 million in the first quarter of 2021.
Growth was driven by pricing and favorable volume/mix stemming from
strong demand for fruit snacks, and one-time incremental volumes
this quarter from one of our large frozen fruit customers, and the
recent introduction of fruit smoothie bowls.
Gross profit was $28.0 million for the first quarter, a decrease
of $2.0 million compared to $30.0 million in the prior year period.
As a percentage of revenues, gross profit margin was 11.7% in the
first quarter of 2022 compared to 14.4% in the first quarter of
2021, a decrease of 270 basis points. Gross profit in the
Plant-Based Foods and Beverages segment decreased $3.2 million. The
470-basis point decrease in Plant-Based gross margin included an
approximately 150 basis-point decline due to the dilutive effect of
pass-through pricing to recover cost inflation on raw and packaging
material. The remaining gross margin impact reflected unrecovered
raw material and freight cost inflation, due to the lag in pricing
adjustments, together with higher labor and utility rates, and
increased depreciation expense, partially offset by volume growth
and improved plant utilization. Gross profit in the Fruit-Based
Foods and Beverages segment increased by $1.2 million. Gross margin
was flat at 7.7%, despite an approximately 100 basis-point decline
due to the dilutive effect of pass-through pricing to recover cost
inflation on raw and packaging material. Excluding this pricing
effect, fruit-based gross margin reflected the benefits of
portfolio rationalizations for frozen fruit and manufacturing cost
savings from the consolidation of our fruit processing facilities
in 2021, partially offset by currently unrecovered freight and
storage cost inflation, a higher mix of low-margin fruit juice
sales, and frozen fruit inventory losses due to excess spoilage
during handling.
Segment operating income¹ was $3.9 million, or 1.6% of revenues
in the first quarter of 2022, compared to segment operating income
of $6.1 million, or 2.9% of revenues in the first quarter of 2021.
The decrease in segment operating income was due to lower gross
profit, and increased SG&A mainly due to a special one-time
bonus accrual of $1.6 million to reward employees for improved
performance this quarter in our plants, partially offset by a
reduction in variable stock-based compensation as the performance
condition under the 2021 incentive plan was not achieved.
Adjusted EBITDA¹ was $15.6 million or 6.5% of revenues in the
first quarter of 2022, compared to $18.3 million or 8.8% of
revenues in the first quarter of 2021.
Earnings attributable to common shareholders for the first
quarter of 2022 was $3.5 million, or $0.03 per diluted common
share, compared to a loss of $0.3 million, or $0.00 per diluted
common share during the first quarter of 2021.
Adjusted earnings¹ in the first quarter of 2022 was $0.6 million
or $0.01 per common share, compared to adjusted earnings of $1.3
million or $0.01 per common share in the first quarter of 2021.
Please refer to the discussion and table below under “Non-GAAP
Measures”.
Balance Sheet and Cash Flow
As of April 2, 2022, SunOpta had total assets of $785.8 million
and total debt of $249.7 million compared to total assets of $755.1
million and total debt of $224.6 million at year end, 2021. During
the first quarter of 2022, cash provided by operating activities of
continuing operations was $15.5 million compared to cash used in
operating activities of continuing operations of $7.0 million
during the first quarter of 2021. Investing activities from
continuing operations consumed $24.5 million of cash during the
first quarter of 2022 versus $7.9 million in the prior year,
primarily driven by the new plant in Midlothian, Texas which is
expected to come online in late 2022.
2022 Outlook2
We are reaffirming our previously provided outlook for fiscal
2022, including:
Consolidated revenue range: $890 million - $930 million
Consolidated adjusted EBITDA1 range: $67 million - $75
million
Conference Call
SunOpta plans to host a conference call at 5:00 P.M. Eastern
time on Wednesday, May 11, 2022, to discuss the first quarter
financial results. After opening remarks, there will be a question
and answer period. Investors interested in listening the live
webcast can access a link on SunOpta's website at www.sunopta.com
under the "Investor Relations" section or directly here. A replay
of the webcast will be archived and can be accessed for
approximately 90 days on the Company's website. This call may be
accessed with the toll free dial-in number dial (888) 440-4182 or
International dial-in number (646) 960-0653 using Conference ID:
8338433.
¹ See discussion of non-GAAP measures
2 The Company has included certain forward-looking statements
about the future financial performance that include non-GAAP
financial measures, including Adjusted EBITDA. These non–GAAP
financial measures are derived by excluding certain amounts,
expenses or income, from the corresponding financial measures
determined in accordance with GAAP. The determination of the
amounts that are excluded from these non-GAAP financial measures is
a matter of management judgment and depends upon, among other
factors, the nature of the underlying expense or income amounts
recognized in a given period. We are unable to present a
quantitative reconciliation of the aforementioned forward-looking
non-GAAP financial measures to their most directly comparable
forward-looking GAAP financial measures because management cannot
reliably predict all of the necessary components of such GAAP
measures. Historically, management has excluded the following items
from certain of these non-GAAP measures, and such items may also be
excluded in future periods and could be significant amounts.
- Expenses related to the acquisition or divestiture of a
business, including business development costs, impairment of
assets, integration costs, severance, retention costs and
transaction costs;
- Start-up costs of new facilities and equipment;
- Charges associated with restructuring and cost saving
initiatives, including but not limited to asset impairments,
accelerated depreciation, severance costs and lease abandonment
charges;
- Asset impairment charges and facility closure costs;
- Legal settlements or awards; and
- The tax effect of the above items.
About SunOpta Inc.
SunOpta (Nasdaq:STKL) (TSX:SOY) is a U.S.-based, global pioneer
fueling the future of sustainable, plant-based and fruit-based food
and beverages. Founded nearly 50 years ago, SunOpta manufactures
natural, organic and specialty products sold through retail and
foodservice channels. SunOpta operates as a manufacturer for
leading natural and private label brands, and also proudly produces
its own brands, including SOWN™, Dream™, West Life™ and Sunrise
Growers™. For more information, visit www.sunopta.com and
LinkedIn.
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 for quarterly year over year revenue, gross profit and
EBITDA growth, our belief that we have remedied production
challenges in our plants, our expectation that the Midlothian,
Texas plant will come online in late 2022 and our previously
provided outlook for consolidated revenues and adjusted EBITDA.
Generally, forward-looking statements do not relate strictly to
historical or current facts and are typically accompanied by words
such as “expect”, “believe”, “continue”, “anticipate”, “estimates”,
“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; inflationary
factors impacting raw materials, freight, labor and utilities;
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 or increase product pricing levels;
potential shortages or inability to secure qualified labor
personnel and construction supplies; 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, 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 2, 2022 and
April 3, 2021
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
April 2, 2022
April 3, 2021
$
$
Revenues
240,173
207,640
Cost of goods sold
212,182
177,651
Gross profit
27,991
29,989
Selling, general and administrative
expenses
21,935
20,874
Intangible asset amortization
2,612
2,194
Other expense, net
287
1,615
Foreign exchange loss (gain)
(472
)
836
Earnings from continuing operations
before the following
3,629
4,470
Interest expense, net
2,530
1,660
Earnings from continuing operations
before income taxes
1,099
2,810
Income tax expense
445
1,138
Earnings from continuing
operations
654
1,672
Earnings from discontinued operations
3,566
-
Net earnings
4,220
1,672
Dividends and accretion on preferred
stock
(755
)
(1,953
)
Earnings (loss) attributable to common
shareholders
3,465
(281
)
Basic and diluted earnings (loss) per
share
From continuing operations
(0.00
)
(0.00
)
From discontinued operations
0.03
-
Basic and diluted earnings (loss) per
share
0.03
(0.00
)
Weighted-average common shares
outstanding (000s)
Basic
107,399
96,120
Diluted
107,399
96,120
SunOpta Inc.
Consolidated Balance Sheets
As at April 2, 2022 and January 1,
2022
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
April 2, 2022
January 1, 2022
$
$
ASSETS
Current assets
Cash and cash equivalents
495
227
Accounts receivable
98,220
84,702
Inventories
217,975
220,143
Prepaid expenses and other current
assets
16,040
16,638
Income taxes recoverable
8,130
8,259
Total current assets
340,860
329,969
Property, plant and equipment, net
245,898
219,537
Operating lease right-of-use assets
43,174
47,245
Intangible assets, net
145,828
148,440
Goodwill
3,998
3,998
Other assets
6,057
5,930
Total assets
785,815
755,119
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities
135,518
121,430
Current portion of long-term debt
17,864
9,760
Current portion of operating lease
liabilities
10,104
12,203
Total current liabilities
163,486
143,393
Long-term debt
231,822
214,843
Operating lease liabilities
37,185
39,028
Long-term liabilities
4,034
2,241
Deferred income taxes
10,758
22,485
Total liabilities
447,285
421,990
Series B-1 preferred stock
28,291
28,145
SHAREHOLDERS' EQUITY
Common shares
437,451
436,463
Additional paid-in capital
24,042
23,240
Accumulated deficit
(152,617
)
(156,082
)
Accumulated other comprehensive income
1,363
1,363
Total shareholders' equity
310,239
304,984
Total liabilities and shareholders'
equity
785,815
755,119
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters ended April 2, 2022 and
April 3, 2021
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
April 2, 2022
April 3, 2021
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings
4,220
1,672
Earnings from discontinued operations
3,566
-
Earnings from continuing operations
654
1,672
Items not affecting cash:
Depreciation and amortization
9,413
8,043
Amortization of debt issuance costs
375
285
Deferred income taxes
80
837
Stock-based compensation
1,629
3,973
Other
111
(169
)
Changes in operating assets and
liabilities
3,281
(21,656
)
Net cash provided by (used in) operating
activities of continuing operations
15,543
(7,015
)
Investing activities
Additions to property, plant and
equipment
(25,722
)
(9,297
)
Proceeds from sale of assets
1,204
1,350
Net cash used in investing activities of
continuing operations
(24,518
)
(7,947
)
Net cash used in investing activities of
discontinued operations
-
(13,380
)
Net cash used in investing activities
(24,518
)
(21,327
)
Financing activities
Increase (decrease) under revolving credit
facilities
(10,305
)
41,585
Borrowings of long-term debt
22,897
486
Repayment of long-term debt
(2,395
)
(4,085
)
Payment of debt issuance costs
(506
)
(1,828
)
Proceeds from the exercise of stock
options and employee share purchases
250
2,640
Payment of withholding taxes on
stock-based awards
(89
)
(6,071
)
Payment of cash dividends on preferred
stock
(609
)
(3,420
)
Payment of share issuance costs
-
(262
)
Net cash provided by financing activities
of continuing operations
9,243
29,045
Net cash used in financing activities of
discontinued operations
-
(200
)
Net cash provided by financing
activities
9,243
28,845
Increase in cash and cash equivalents in
the period
268
503
Cash and cash equivalent, beginning of the
period
227
251
Cash and cash equivalents, end of the
period
495
754
SunOpta Inc.
Segmented Information
For the quarters ended April 2, 2022 and
April 3, 2021
Unaudited
(Expressed in thousands of U.S.
dollars)
Quarter ended
April 2, 2022
April 3, 2021
$
$
Segment revenues from external
customers:
Plant-Based Foods and Beverages
135,511
119,451
Fruit-Based Foods and Beverages
104,662
88,189
Total segment revenues from external
customers
240,173
207,640
Segment gross profit:
Plant-Based Foods and Beverages
19,980
23,158
Fruit-Based Foods and Beverages
8,011
6,831
Total segment gross profit
27,991
29,989
Segment operating income
(loss):
Plant-Based Foods and Beverages
8,096
13,317
Fruit-Based Foods and Beverages
784
(1,894
)
Corporate Services
(4,964
)
(5,338
)
Total segment operating income
3,916
6,085
Segment gross profit
percentage:
Plant-Based Foods and Beverages
14.7
%
19.4
%
Fruit-Based Foods and Beverages
7.7
%
7.7
%
Total segment gross profit percentage
11.7
%
14.4
%
Segment operating income (loss)
percentage:
Plant-Based Foods and Beverages
6.0
%
11.1
%
Fruit-Based Foods and Beverages
0.7
%
-2.1
%
Total segment operating income
percentage
1.6
%
2.9
%
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 management believes 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 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
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 and adjusted earnings 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 and
adjusted earnings per diluted share, including a reconciliation
from earnings from continuing operations, which the Company
believes to be the most directly comparable U.S. GAAP financial
measure.
April 2, 2022
April 3, 2021
Per Share
Per Share
For the quarter ended
$
$
$
$
Earnings from continuing operations
654
1,672
Dividends and accretion on preferred
stock
(755
)
(1,953
)
Loss attributable to common
shareholders
(101
)
(0.00
)
(281
)
(0.00
)
Adjusted for:
Start-up costs(a)
440
-
Business development costs(b)
183
169
Restructuring costs(c)
-
1,432
Other(d)
287
183
Net income tax effect(e)
(239
)
(240
)
Adjusted earnings
570
0.01
1,263
0.01
(a)
Represents incremental direct
costs incurred in connection with plant expansion projects and new
product introductions before the project or product reaches normal
production levels, including costs for the hiring and training of
additional personnel, fees for outside services, travel costs, and
plant- and production-related expenses. For the first quarter of
2022, start-up costs mainly related to new employee hires for our
plant-based beverage facility under construction in Midlothian,
Texas, and the integration of the Dream and WestSoy brands acquired
in April 2021, which were recorded in cost of goods sold.
(b)
Represents third-party costs
associated with business development activities, including costs
related to the evaluation, execution, and integration of external
acquisitions and divestitures, internal expansion projects, and
other strategic initiatives, which were recorded in SG&A
expenses.
(c)
For the first quarter of 2021,
represents costs to complete the exit from our Santa Maria,
California, frozen fruit processing facility, which were recorded
in other expense.
(d)
For the first quarter of 2022,
other includes asset impairment charges. For the first quarter of
2021, other reflects professional fees incurred in connection with
post-closing matters related to the 2020 divestiture of our global
ingredients business, Tradin Organic.
(e)
Reflects the tax effect of the
preceding adjustments to earnings calculated based on the statutory
tax rates applicable in the tax jurisdiction of the underlying
adjustment.
Segment Operating Income and Adjusted
EBITDA
The Company defines segment operating income as earnings from
continuing operations before income taxes, interest expense and
other income/expense items, and adjusted EBITDA as segment
operating income plus depreciation, amortization, stock-based
compensation, and other unusual items that affect the comparability
of operating performance as identified above in the determination
of adjusted earnings. The following is a tabular presentation of
segment operating income and adjusted EBITDA, including a
reconciliation to earnings from continuing operations, which the
Company believes to be the most directly comparable U.S. GAAP
financial measure.
April 2, 2022
April 3, 2021
For the quarter ended
$
$
Earnings from continuing operations
654
1,672
Income tax expense
445
1,138
Interest expense, net
2,530
1,660
Other expense, net
287
1,615
Total segment operating income
3,916
6,085
Depreciation and amortization
9,413
8,043
Stock-based compensation
1,629
3,973
Start-up costs(a)
440
-
Business development costs(b)
183
169
Adjusted EBITDA
15,581
18,270
(a)
For the first quarter of 2022,
start-up costs mainly related to new employee hires for our
plant-based beverage facility under construction in Midlothian,
Texas, and the integration of the Dream and WestSoy brands acquired
in April 2021, which were recorded in cost of goods sold.
(b)
For the first quarters of 2022
and 2021, business development activities were related to the
exploration of potential strategic opportunities, which costs were
recorded in SG&A expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220511005281/en/
Reed Anderson ICR 646-277-1260 reed.anderson@icrinc.com
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