News Column

SunOpta Announces Second Quarter 2014 Results

August 12, 2014

TORONTO, Aug. 12, 2014 (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 second quarter ended July 5, 2014. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.

Second Quarter 2014 Highlights

• Revenues of $338.3 million, an increase of 8.7% on a consolidated basis, and 12.6% within SunOpta Foods after excluding the impact of changes in commodity prices and foreign exchange rates• Operating incomeš of $16.8 million, or 5.0% of revenues• EBITDAš of $22.7 million, or 6.7% of revenues• Earnings from continuing operations of $8.7 million, or $0.13 per diluted common share• Cash provided by operations of $33.2 million



(comparisons above are to the quarter ended June 29, 2013)

"We continued to see the benefits of our operational realignment and re-positioned go-to-market strategy in the second quarter, leading to record revenues and earnings for the Company," commented Steve Bromley, Chief Executive Officer of SunOpta. "During the quarter we realized strong revenue growth and improved operating income as a percentage of revenues, consistent with our stated objectives of growing our top line while at the same time improving our margin profile.

Year-to-date 2014 Highlights

• Revenues of $671.8 million, an increase of 13.1% on a consolidated basis, and 14.4% within SunOpta Foods after excluding the impact of changes in commodity prices and foreign exchange rates• Operating incomeš of $28.8 million, or 4.3% of revenues• EBITDAš of $40.6 million, or 6.0% of revenues• Earnings from continuing operations of $15.3 million, or $0.23 per diluted common share



(comparisons above are to the two quarters ended June 29, 2013)

Bromley continued, "We continue to believe that interest in healthy eating is a key long term global trend and we are well positioned to capitalize on future growth via our integrated natural and organic foods platform. Our management team remains focused on our three core strategies of becoming a pure-play natural and organic foods company, growing our value-added consumer products and ingredients portfolio, and leveraging our integrated platform in support of our long-term financial targets."

Second Quarter 2014 Results

Revenues increased 8.7% to a record $338.3 million compared to $311.2 million in the second quarter of 2013. Excluding the impact of changes in commodity prices and foreign exchange rates, consolidated revenues increased 10.5% and SunOpta Foods revenues increased 12.6% versus the prior year. All core foods operating segments realized increased revenues versus the prior year. The increase in revenues was led by higher demand for internationally sourced organic raw materials both domestically and abroad, and continued growth in consumer packaged categories including aseptic beverages, frozen foods, and re-sealable pouch products. This growth more than offset lower commodity grain sales and declines within Opta Minerals Inc.

Operating incomeš was $16.8 million, or 5.0% of revenues, compared to $13.3 million, or 4.3% of revenues in the second quarter of 2013. SunOpta Foods operating income, including corporate services, was $15.2 million, or 5.0% of revenues, compared to $12.4 million, or 4.5% of revenues in the prior year. The growth in operating income was driven by increased volume and margins on organic raw materials, increased volume of consumer products including aseptic beverages and healthy snacks, improved performance in sunflower operations, as well as improved margins at Opta Minerals as a result of cost reductions and product mix. These positive factors were partially offset by margin pressure experienced in value-added ingredients as a result of decreased production volumes, lower organic feed and specialty corn margins, and increased corporate costs to drive efficiency in the operating segments.

Earnings from continuing operations for the second quarter of 2014 were $8.7 million, or $0.13 per diluted common share, compared to a loss of $15.3 million, or $0.23 per common share, during the second quarter of 2013. Included in the results for the second quarter of 2013 was a non-cash impairment charge of $21.5 million after tax, or $0.32 per common share, related to a write-down of the Company's investment in Mascoma Corporation. Excluding this charge and the impact of discontinued operations, earnings from continuing operations for the second quarter of 2013 were $0.10 per diluted common share.

EBITDAš was $22.7 million in the second quarter of 2014, compared to $18.7 million in the prior year.

Year-to-date 2014 Results

Revenues increased 13.1% to a record $671.8 million, compared to $594.0 million in the first half of 2013. The increase in consolidated revenues was driven by strong demand for internationally sourced organic raw materials, continued growth in consumer packaged categories including aseptic beverages, frozen foods, and re-sealable pouch products, as well as new value-added ingredient business. This growth more than offset lower commodity grain sales and declines within Opta Minerals Inc. Fiscal 2014 will be a 53-week year, and the extra week fell in the first quarter, resulting in a 27-week first half versus 26 weeks in the prior year. Excluding the extra week of sales, as well as the impact of changes in commodity prices and foreign exchange rates, revenues in SunOpta Foods increased 14.4% versus the prior year and consolidated revenues increased 12.1%.

Operating incomešfor the first half of 2014 was $28.8 million, or 4.3% of revenues, compared to $24.0 million, or 4.0% of revenues, in the first half of 2013. Operating earnings were driven by increased volume and margins on organic raw materials, improved performance in the sunflower category, and increased volume of consumer products including aseptic beverages, frozen foods and healthy snacks, offset by margin pressure experienced in Opta Minerals due to cyclical market weakness, lower organic feed margins, and increased corporate costs to drive efficiency in the operating segments.

Earnings for the first half of 2014 were $15.3 million, or $0.23 per diluted common share, compared to a loss of $10.2 million, or $0.15 per common share, during the first half of 2013 due mainly to the $21.5 million non-cash impairment of the Company's investment in Mascoma Corporation recognized in the prior year. Excluding this charge and the impact of discontinued operations, first half earnings for 2013 were $0.17 per diluted common share.

EBITDAš was $40.6 million in the first half of 2014, compared to $34.8 million in the prior year.

Balance Sheet

The Company's balance sheet remains strong and at July 5, 2014 reflected a net debt to equity ratio of 0.49 to 1.00. Cash provided by operations was $33.2 million during the second quarter, a record for the Company, and $20.6 million for the first half of 2014, reflecting improved earnings and working capital efficiency. At July 5, 2014, the Company had total debt outstanding of $174.0 million, net debt of $167.3 million, total assets of $703.0 million, shareholders' equity of $344.1 million and a net book value of $5.14 per outstanding share.

Conference Call

The Company plans to host a conference call at 9:00 A.M. Eastern Time on Wednesday, August 13, 2014 to discuss the results for the second quarter of 2014 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 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 66.0% 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=3958

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, the expected benefits of our operational realignment, our positioning to capitalize on future industry growth trends and our continued focus on our three core strategies. The terms and phrases "continue", "well-positioned", "believe", "remains", leveraging" 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, delayed or unsuccessful product development efforts, potential product recalls, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, potential covenant breaches under our 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.

SunOpta Inc.
Consolidated Statements of Operations
For the quarter and two quarters ended July 5, 2014 and June 29, 2013
(Unaudited)
(Expressed in thousands of U.S. dollars, except per share amounts)
 
 Quarter endedTwo quarters ended
 July 5, 2014June 29, 2013July 5, 2014June 29, 2013
 $ $$ $
      
Revenues338,288 311,170671,815 593,995
      
Cost of goods sold294,219 274,187590,319 522,762
      
Gross profit44,069 36,98381,496 71,233
      
Selling, general and administrative expenses25,680 22,83950,218 45,750
Intangible asset amortization1,092 1,2002,220 2,448
Other expense (income), net137 647(1,004) 1,012
Foreign exchange loss (gain)546 (356)223 (941)
      
Earnings from continuing operations before the following16,614 12,65329,839 22,964
      
Interest expense, net2,010 2,2384,158 3,928
Impairment loss on investment-- 21,495-- 21,495
      
Earnings (loss) from continuing operations before income taxes14,604 (11,080)25,681 (2,459)
      
Provision for income taxes5,607 3,95810,064 7,233
      
Earnings (loss) from continuing operations8,997 (15,038)15,617 (9,692)
      
Loss from discontinued operations, net of income taxes-- (302)-- (360)
      
Earnings (loss)8,997 (15,340)15,617 (10,052)
      
Earnings (loss) attributable to non-controlling interests289 (59)269 104
      
Earnings (loss) attributable to SunOpta Inc.8,708 (15,281)15,348 (10,156)
      
Earnings (loss) per share – basic     
- from continuing operations0.13 (0.23)0.23 (0.15)
- from discontinued operations-- ---- (0.01)
 0.13 (0.23)0.23 (0.15)
      
Earnings (loss) per share – diluted     
- from continuing operations0.13 (0.23)0.23 (0.15)
- from discontinued operations-- ---- (0.01)
 0.13 (0.23)0.23 (0.15)
      
Weighted-average number of shares outstanding (000s)     
- basic66,715 66,20266,667 66,147
- diluted68,458 67,51468,058 67,346
         
         
SunOpta Inc.
Consolidated Balance Sheets
As at July 5, 2014 and December 28, 2013
(Unaudited)
(Expressed in thousands of U.S. dollars)
 
 July 5, 2014December 28, 2013
 $ $
   
ASSETS  
Current assets  
Cash and cash equivalents6,727 8,537
Accounts receivable133,022 109,917
Inventories255,883 274,286
Prepaid expenses and other current assets20,266 16,067
Current income taxes recoverable3,541 6,116
Deferred income taxes3,950 4,806
 423,389 419,729
    
Investment12,350 12,350
Property, plant and equipment154,797 158,073
Goodwill53,600 53,673
Intangible assets45,178 47,991
Deferred income taxes12,117 12,565
Other assets1,563 1,554
    
 702,994 705,935
    
LIABILITIES  
Current liabilities  
Bank indebtedness127,967 141,853
Accounts payable and accrued liabilities125,196 129,829
Customer and other deposits3,894 3,408
Income taxes payable1,162 2,564
Other current liabilities4,000 2,114
Current portion of long-term debt6,190 6,354
Current portion of long-term liabilities249 1,034
 268,658 287,156
    
Long-term debt39,843 42,654
Long-term liabilities1,703 3,072
Deferred income taxes31,015 30,441
 341,219 363,323
   
EQUITY  
SunOpta Inc. shareholders' equity  
Common shares189,280 186,376
Additional paid-in capital20,471 19,323
Retained earnings131,556 116,208
Accumulated other comprehensive income2,812 3,397
 344,119 325,304
Non-controlling interests17,656 17,308
Total equity361,775 342,612
   
 702,994 705,935
     
     
         
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarter and two quarters ended July 5, 2014 and June 29, 2013
(Unaudited)
(Expressed in thousands of U.S. dollars)
 
 Quarter endedTwo quarters ended
 July 5, 2014June 29, 2013July 5, 2014June 29, 2013
 $ $$ $
       
CASH PROVIDED BY (USED IN)     
       
Operating activities     
Earnings (loss)8,997 (15,340)15,617 (10,052)
Loss from discontinued operations-- (302)-- (360)
Earnings (loss) from continuing operations8,997 (15,038)15,617 (9,692)
       
Items not affecting cash:      
Depreciation and amortization5,950 5,42911,786 10,849
Stock-based compensation974 8561,805 1,541
Unrealized loss (gain) on derivative instruments(406) 199219 942
Deferred income taxes1,474 5641,878 1,505
Fair value of contingent consideration-- --(1,373) --
Impairment loss on investment-- 21,495   21,495
Other(535) (219)(184) 103
Changes in non-cash working capital, net of businesses acquired16,728 15,191(9,162) (4,985)
Net cash flows from operations - continuing operations33,182 28,47720,586 21,758
Net cash flows from operations - discontinued operations-- (4,570)-- (4,608)
 33,182 23,90720,586 17,150
       
Investing activities     
Purchases of property, plant and equipment(4,063) (14,083)(7,287) (21,976)
Acquisitions of businesses, net of cash acquired-- ---- (3,828)
Payment of contingent consideration-- (1,074)(800) (1,074)
Other(35) (341)44 (838)
Net cash flows from investing activities - continuing operations(4,098) (15,498)(8,043) (27,716)
       
Financing activities     
Increase (decrease) under line of credit facilities(29,094) (7,857)(13,565) 12,782
Borrowings under long-term debt150 112210 344
Repayment of long-term debt(1,585) (1,601)(3,156) (4,020)
Proceeds from the issuance of common shares1,582 5672,247 1,231
Other19 11(79) (48)
Net cash flows from financing activities - continuing operations(28,928) (8,768)(14,343) 10,289
       
Foreign exchange gain (loss) on cash held in a foreign currency(66) 110(10) (103)
Increase (decrease) in cash and cash equivalents in the period90 (249)(1,810) (380)
       
Cash and cash equivalents - beginning of the period6,637 6,7098,537 6,840
Cash and cash equivalents - end of the period6,727 6,4606,727 6,460
         
         
SunOpta Inc.
Segmented Information
For the quarter and two quarters ended July 5, 2014 and June 29, 2013
Unaudited
(Expressed in thousands of U.S. dollars)
 
 Quarter endedTwo quarters ended
 July 5, 2014June 29, 2013July 5, 2014June 29, 2013
 $ $$ $
Segment revenues from external customers:     
Global Sourcing and Supply157,466 144,900300,824 269,809
Value Added Ingredients33,562 33,04371,310 64,548
Consumer Products112,017 95,765229,893 185,951
SunOpta Foods303,045 273,708602,027 520,308
Opta Minerals35,243 37,46269,788 73,687
Total segment revenues from external customers338,288 311,170671,815 593,995
       
Segment operating income (loss):     
Global Sourcing and Supply8,360 4,05211,418 5,725
Value Added Ingredients1,290 1,9533,637 3,953
Consumer Products8,164 8,27916,100 14,230
SunOpta Foods17,814 14,28431,155 23,908
Opta Minerals1,571 9032,596 3,366
Corporate Services(2,634) (1,887)(4,916) (3,298)
Total segment operating income16,751 13,30028,835 23,976
         
Segment operating income percentage:     
Global Sourcing and Supply5.3% 2.8%3.8% 2.1%
Value Added Ingredients3.8% 5.9%5.1% 6.1%
Consumer Products7.3% 8.6%7.0% 7.7%
SunOpta Foods5.9% 5.2%5.2% 4.6%
Opta Minerals4.5% 2.4%3.7% 4.6%
Total segment operating income5.0% 4.3%4.3% 4.0%
         
(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 U.S. GAAP, the Company provides information regarding segment 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 U.S. 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 segment operating income and EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with U.S. GAAP. 

The Company defines segment operating income as "earnings from continuing operations before the following" excluding the impact of other income/expense items; and EBITDA as segment operating income plus depreciation and amortization. The following is a tabular presentation of segment operating income and EBITDA, including a reconciliation to earnings from continuing operations, which the Company believes to be the most directly comparable U.S. GAAP financial measure:

  Quarter ended Two quarters ended
 July 5, 2014June 29, 2013July 5, 2014June 29, 2013
 $ $$ $
         
Earnings (loss) from continuing operations8,997 (15,038)15,617 (9,692)
       
Provision for income taxes5,607 3,95810,064 7,233
Interest expense, net2,010 2,2384,158 3,928
Other expense (income), net137 647(1,004) 1,012
Impairment loss on investment-- 21,495-- 21,495
Total segment operating income16,751 13,30028,835 23,976
Depreciation and amortization5,950 5,42911,786 10,849
EBITDA22,701 18,72940,621 34,825
         

CONTACT: For further information, please contact: SunOpta Inc.Steve Bromley, CEO Robert McKeracher, Vice President & CFO Susan Wiekenkamp, Information Officer Tel: 905-455-2528, ext 103 susan.wiekenkamp@sunopta.com Website: www.sunopta.com



SunOpta Inc. Logo

Source: SunOpta Inc.


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