Revenue increased 13% adjusted for
dispositions, acquisitions, foreign exchange and
commodities
All segments delivered revenue growth, on an
adjusted basis, and gross margin improvement
Adjusted EBITDA more than doubled
YOY
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 financial
results for the first quarter ended March 28, 2020.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
First Quarter 2020 Highlights:
- Revenues of $335.9 million for the first quarter of 2020,
compared to $305.3 million in the first quarter of 2019, an
increase of 10.0%. Adjusted for dispositions, acquisitions, foreign
exchange and commodity prices, revenues grew by 13.2%.
- Gross margin increased 380 basis points to 13.0% from 9.2% in
the prior year.
- Earnings attributable to common shareholders of $1.3 million or
$0.01 per diluted common share in the first quarter of 2020,
compared to $23.7 million or $0.26 per diluted common share in the
first quarter of 2019. Earnings 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 earnings¹
excluding disposed operations of $0.9 million or $0.01 per common
share during the first quarter of 2020, compared to an adjusted
loss of $7.6 million or $0.09 per common share during the first
quarter of 2019.
- Adjusted EBITDA¹ excluding disposed operations of $24.3 million
or 7.2% of revenues for the first quarter of 2020, versus $11.1
million or 3.6% of revenues in the first quarter of 2019.
“We are well into executing our turnaround plan. We delivered an
outstanding first quarter, with 13% adjusted revenue growth and the
second highest adjusted EBITDA in the Company’s history. The growth
and margin strength were broad based, across all three operating
segments,” said Joe Ennen, Chief Executive Officer of SunOpta. “Our
focus and investment in plant-based foods and beverages continues
to be a significant driver of revenue and margin growth. We
generated 30% adjusted revenue growth in this key segment and
doubled gross profit versus prior year. We remain well positioned
to capitalize on the rapidly growing plant-based trend. We also
continue to make progress on our capital investments to expand
capacity and capabilities, supported by our recent preferred equity
capital raise. Our Fruit-Based Food and Beverages segment is
performing in-line with previously communicated expectations and
our productivity initiatives to improve margins are on track. We
generated 9% revenue growth in our fruit platform and continued to
deliver sequential improvements in gross margin. We have sold
through the vast majority of higher priced 2019 inventory related
to last year’s supply constraints. We have successfully taken
pricing action, delivered productivity improvements and are
entering the 2020 procurement season in a very healthy position.
Finally, our Global Ingredients segment contributed 6% adjusted
revenue growth and saw strong improvement in gross margin. We are
successfully executing our strategy of investing and focusing on
key ingredient categories, where we can maximize our return on
capital.”
“Looking ahead for the remainder of 2020, we remain focused on
our key initiatives and remain confident in our ability to drive
further year-over-year adjusted EBITDA improvement. We have
successfully responded to the evolving environment of COVID-19. We
have followed government advice as it evolved and are very focused
on the health and safety of our employees. Our facilities are
operating effectively and uninterrupted and we have maintained high
levels of service to all of our customers. We remain well
positioned in large and growing categories with strong market
positions and are successfully executing our turnaround strategy,”
continued Ennen.
First Quarter 2020 Results
Revenues for the first quarter of 2020 were $335.9 million, an
increase of 10.0% compared to $305.3 million in the first quarter
of 2019. Excluding the impact on reported revenues of the soy and
corn business sold in February 2019, changes in commodity-related
pricing and foreign exchange rates and excluding the impact of the
acquisition of Sanmark in April 2019, revenues in the first quarter
of 2020 increased by 13.2% compared with the first quarter of
2019.
The Global Ingredients segment generated revenues of $128.4
million, a decrease of 4.8% compared to $134.8 million in the first
quarter of 2019. Excluding the impact of the disposed soy and corn
business, and changes in commodity-related pricing and foreign
exchange rates, Global Ingredients revenue in the first quarter of
2020 increased 5.5% compared to the prior year period, which
reflected higher volumes in certain organic ingredient product
categories and of premium juice products.
The Plant-Based Foods and Beverages segment generated revenues
of $106.2 million during the first quarter of 2020, an increase of
30.7% compared to $81.3 million in the first quarter of 2019.
Excluding sunflower price variances, Plant-Based segment revenues
in the first quarter increased 29.7% compared to the prior year
period, reflecting higher volumes of aseptic beverages, broth
offerings, and ingredient extraction.
The Fruit-Based Foods and Beverages segment generated revenues
of $101.4 million during the first quarter of 2020, an increase of
13.7% compared to $89.2 million in the first quarter of 2019.
Excluding the impact of commodity price fluctuations, Fruit-Based
segment revenues in the first quarter increased 9.1% compared to
the prior year period, primarily reflecting increased retail
volumes and pricing for frozen fruit.
Gross profit was $43.7 million for the quarter ended March 28,
2020, an increase of $15.5 million compared to $28.2 million for
the quarter ended March 30, 2019. As a percentage of revenues,
gross profit for the quarter ended March 28, 2020 was 13.0%
compared to 9.2% for the quarter ended March 30, 2019, an increase
of 3.8%. The Plant-Based Foods and Beverages segment accounted for
$10.6 million of the increase in gross profit, primarily due to
higher sales and production volumes of plant-based beverages,
broths and plant-based ingredients, and improved plant utilization
and productivity-driven cost savings. The Fruit-Based Foods and
Beverages segment increased gross profit by $3.1 million in the
quarter due to increased gross margin, reflecting increased sales,
pricing and productivity improvements. The Global Ingredients
segment accounted for $1.9 million of the increased gross profit in
the quarter primarily due to increased pricing spreads for organic
ingredients and premium juice products and productivity
improvements in our factories.
Segment operating income¹ was $11.5 million, or 3.4% of revenues
in the first quarter of 2020, compared to operating income of $0.3
million, or 0.1% of revenues in the first quarter of 2019. The
increase in operating income year-over-year was primarily
attributable to the $15.5 million increase in gross profit,
partially offset by a year-over-year unfavorable foreign exchange
impact of $3.4 million within our Mexican frozen fruit and European
organic ingredient operations and increased reserves for credit
losses included in SG&A expenses, due to a weaker economic
outlook.
Other income of $1.3 million for the first quarter of 2020
reflected the settlement of a dispute arising from a prior business
acquisition, offset by employee termination and facility closure
costs, mainly related to the consolidation of our corporate office
functions.
Adjusted EBITDA¹ was $24.3 million or 7.2% of revenues in the
first quarter of 2020, compared to $10.9 million or 3.6% of
revenues in the first quarter of 2019. Excluding disposed
operations, adjusted EBITDA for the quarter ended March 30, 2019
was $11.1 million.
The Company reported earnings attributable to common
shareholders for the first quarter of 2020 of $1.3 million, or
$0.01 per diluted common share, compared to earnings of $23.7
million, or $0.26 per diluted common share during the first quarter
of 2019. Earnings 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 earnings¹ in the first quarter of 2020 was $0.9 million
or $0.01 per common share, compared to an adjusted loss of $7.9
million or $0.09 per common share in the first quarter of 2019.
Please refer to the discussion and table below under “Non-GAAP
Measures - Adjusted Earnings/Loss”.
Balance Sheet and Cash Flow
At March 28, 2020, SunOpta’s balance sheet reflected total
assets of $894.4 million and total debt of $469.3 million. During
the first quarter of 2020, cash provided by operating activities
was $34.7 million, compared to $1.0 million during the first
quarter of 2019. The $33.8 million increase in cash provided by
operating activities primarily reflects the improved year-over-year
operating results, along with more efficient working capital
management. Cash used in investing activities was $9.7 million in
the first quarter of 2020, compared with $8.0 million in the first
quarter of 2019, an increase in cash used of $1.7 million,
including a higher level of capital expenditures related to the
expansion of our ingredient extraction capabilities.
Conference Call
SunOpta plans to host a conference call at 9:00 A.M. Eastern
time on Wednesday, May 6, 2020, to discuss the first quarter
financial results. After opening remarks, there will be a question
and answer period. This conference call can be accessed via a link
on SunOpta’s website at www.sunopta.com under the “Investors
Relations” section. To listen to the live call over the Internet,
please go to SunOpta’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 1 (833) 979-2699 or International dial-in number 1 (236)
714-2200 using Conference ID 7369963. If you are unable to listen
live, the conference call will be archived and can be accessed for
approximately 90 days on the Company’s website.
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
belief that investment in plant-based foods and beverages will
continue to be a significant driver of revenue and margin growth,
and our ability to drive further year-over-year adjusted EBITDA
improvement. Generally, forward-looking statements do not relate
strictly to historical or current facts and are typically
accompanied by words such as “continue”, “expect”, “believe”,
“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; 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, 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 March 28, 2020 and
March 30, 2019
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
March 28, 2020
March 30, 2019
$
$
Revenues
335,949
305,275
Cost of goods sold
292,229
277,069
Gross profit
43,720
28,206
Selling, general and administrative
expenses
27,206
26,248
Intangible asset amortization
2,721
2,742
Other income, net
(1,298
)
(43,512
)
Foreign exchange loss (gain)
2,334
(1,104
)
Earnings before the following
12,757
43,832
Interest expense, net
8,280
8,739
Earnings before income taxes
4,477
35,093
Provision for income taxes
1,130
9,498
Net earnings
3,347
25,595
Loss attributable to non-controlling
interests
(14
)
(54
)
Earnings attributable to SunOpta
Inc.
3,361
25,649
Dividends and accretion on Series A
Preferred Stock
(2,025
)
(1,995
)
Earnings attributable to common
shareholders
1,336
23,654
Earnings per share (1)
Basic
0.02
0.27
Diluted
0.01
0.26
SunOpta Inc.
Consolidated Statements of Operations
(continued)
For the quarters ended March 28, 2020 and
March 30, 2019
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
March 28, 2020
March 30, 2019
(1)
Earnings per share
Numerator for basic earnings per share
Earnings attributable to SunOpta Inc.
$
3,361
$
25,649
Less: dividends and accretion on Series A
preferred stock
(2,025
)
(1,995
)
Earnings attributable to common
shareholders
$
1,336
$
23,654
Denominator for basic earnings per
share
Basic weighted-average number of shares
outstanding
88,161
87,475
Basic earnings per share
$
0.02
$
0.27
Numerator for diluted earnings per
share
Earnings attributable to SunOpta Inc.
$
3,361
$
25,649
Less: dividends and accretion on Series A
preferred stock
(2,025
)
-
Earnings attributable to common
shareholders
$
1,336
$
25,649
Denominator for diluted earnings per
share
Basic weighted-average number of shares
outstanding
88,161
87,475
Dilutive effect of the following:
Stock options and restricted stock
units
1,136
191
Series A preferred stock(a)
-
11,333
Diluted weighted-average number of shares
outstanding
89,297
98,999
Diluted earnings per share
$
0.01
$
0.26
(a)
For the quarter ended March 30, 2019, it
was more dilutive to assume the Series A Preferred Stock was
converted into Common Shares and, therefore, the numerator of the
diluted earnings per share calculation was adjusted to add back the
dividends and accretion on the Series A Preferred Stock and the
denominator was adjusted to include 11,333,333 Common Shares
issuable on an if-converted basis.
SunOpta Inc.
Consolidated Balance Sheets
As at March 28, 2020 and December 28,
2019
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
March 28, 2020
December 28, 2019
$
$
ASSETS
Current assets
Cash and cash equivalents
2,670
1,498
Accounts receivable
149,651
121,445
Inventories
272,475
323,546
Prepaid expenses and other current
assets
35,484
35,985
Income taxes recoverable
1,864
7,480
Total current assets
462,144
489,954
Property, plant and equipment
186,815
184,550
Operating lease right-of-use
assets
65,246
68,433
Goodwill
28,316
28,422
Intangible assets
147,285
150,009
Deferred income taxes
1,129
-
Other assets
3,481
1,991
Total assets
894,416
923,359
LIABILITIES
Current liabilities
Bank indebtedness
224,864
245,536
Accounts payable and accrued
liabilities
122,765
133,529
Customer and other deposits
1,632
37
Income taxes payable
1,725
1,272
Other current liabilities
749
802
Current portion of long-term debt
3,300
2,987
Current portion of operating lease
liabilities
16,579
17,215
Current portion of long-term
liabilities
2,000
4,286
Total current liabilities
373,614
405,664
Long-term debt
241,106
242,204
Operating lease liabilities
49,350
52,020
Long-term liabilities
1,908
2,011
Deferred income taxes
10,416
9,027
Total liabilities
676,394
710,926
Series A Preferred Stock
84,549
82,524
EQUITY
SunOpta Inc. shareholders’
equity
Common shares
318,958
318,456
Additional paid-in capital
37,813
35,767
Accumulated deficit
(213,595
)
(214,931
)
Accumulated other comprehensive loss
(11,580
)
(11,271
)
131,596
128,021
Non-controlling interests
1,877
1,888
Total equity
133,473
129,909
Total equity and liabilities
894,416
923,359
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters ended March 28, 2020 and
March 30, 2019
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
March 28, 2020
March 30, 2019
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings
3,347
25,595
Items not affecting cash:
Depreciation and amortization
8,922
8,302
Amortization of debt issuance costs
939
655
Deferred income taxes
260
7,327
Stock-based compensation
2,447
(163
)
Unrealized loss on derivative
contracts
556
112
Gain on settlement of contingent
consideration obligation
(2,286
)
-
Gain on sale of business
-
(45,579
)
Other
(90
)
(62
)
Changes in non-cash working capital, net
of business sold
20,654
4,801
Net cash flows from operating
activities
34,749
988
Investing activities
Purchases of property, plant and
equipment
(9,689
)
(7,974
)
Net proceeds from sale of business
-
64,876
Net cash flows from investing
activities
(9,689
)
56,902
Financing activities
Decrease under line of credit
facilities
(19,754
)
(54,661
)
Borrowings under long-term debt
155
1,852
Repayment of long-term debt
(597
)
(723
)
Payment of cash dividends on Series A
Preferred Stock
(1,700
)
(1,700
)
Proceeds from the exercise of stock
options and employee share purchases
101
228
Payment of debt issuance costs
(2,073
)
(314
)
Other
(4
)
221
Net cash flows from financing
activities
(23,872
)
(55,097
)
Foreign exchange loss on cash held in a
foreign currency
(16
)
(58
)
Increase in cash and cash equivalents in
the period
1,172
2,735
Cash and cash equivalents - beginning of
the period
1,498
3,280
Cash and cash equivalents - end of the
period
2,670
6,015
SunOpta Inc.
Segmented Information
For the quarters ended March 28, 2020 and
March 30, 2019
Unaudited
(Expressed in thousands of U.S.
dollars)
Quarter ended
March 28, 2020
March 30, 2019
$
$
Segment revenues from external
customers:
Global Ingredients
128,352
134,842
Plant-Based Foods and Beverages
106,242
81,276
Fruit-Based Foods and Beverages
101,355
89,157
Total segment revenues from external
customers
335,949
305,275
Segment gross profit:
Global Ingredients
16,547
14,692
Plant-Based Foods and Beverages
21,071
10,496
Fruit-Based Foods and Beverages
6,102
3,018
Total segment gross profit
43,720
28,206
Segment operating income
(loss):
Global Ingredients
8,114
6,543
Plant-Based Foods and Beverages
13,853
2,528
Fruit-Based Foods and Beverages
(4,702
)
(5,605
)
Corporate Services
(5,806
)
(3,146
)
Total segment operating income
11,459
320
Segment gross profit
percentage:
Global Ingredients
12.9
%
10.9
%
Plant-Based Foods and Beverages
19.8
%
12.9
%
Fruit-Based Foods and Beverages
6.0
%
3.4
%
Total segment gross profit percentage
13.0
%
9.2
%
Segment operating income (loss)
percentage:
Global Ingredients
6.3
%
4.9
%
Plant-Based Foods and Beverages
13.0
%
3.1
%
Fruit-Based Foods and Beverages
-4.6
%
-6.3
%
Total segment operating income
percentage
3.4
%
0.1
%
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 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 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 net earnings/loss, which the
Company believes to be the most directly comparable U.S. GAAP
financial measure. In addition, in recognition of the sale of the
soy and corn business in the first quarter of 2019, the Company has
prepared these tables in a columnar format to present the effect of
the disposal of these operations on the Company’s consolidated
results for the current and comparative periods. 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.
Excluding
disposed operations
Disposed operations
Consolidated
Per Diluted Share
Per Diluted Share
Per Diluted Share
For the quarter ended
$
$
$
$
$
$
March 28, 2020
Net earnings
3,347
-
3,347
Loss attributable to non-controlling
interests
14
-
14
Dividends and accretion of Series A
Preferred Stock
(2,025
)
-
(2,025
)
Earnings attributable to common
shareholders
1,336
0.01
-
-
1,336
0.01
Adjusted for:
Contingent consideration settlement(a)
(2,286
)
-
(2,286
)
Costs related to the Value Creation
Plan(b)
1,995
-
1,995
Other(c)
29
-
29
Net income tax effect(d)
(135
)
-
(135
)
Adjusted earnings
939
0.01
-
-
939
0.01
March 30, 2019
Net earnings (loss)
(7,201
)
32,796
25,595
Loss attributable to non-controlling
interests
54
-
54
Dividends and accretion of Series A
Preferred Stock
(1,995
)
-
(1,995
)
Earnings (loss) attributable to common
shareholders
(9,142
)
(0.10
)
32,796
0.33
23,654
0.26
Adjusted for:
Gain on sale of soy and corn
business(e)
-
(45,579
)
(45,579
)
Costs related to Value Creation
Plan(f)
1,858
-
1,858
Product withdrawal and recall costs(g)
260
-
260
Contract manufacturer transition
costs(h)
88
-
88
Other(i)
152
-
152
Net income tax effect(d)
(826
)
12,489
11,663
Adjusted loss
(7,610
)
(0.09
)
(294
)
-
(7,904
)
(0.09
)
(a)
Reflects a gain on the settlement of the
remaining earn-out obligation related to a prior business
acquisition, which was recorded in other income.
(b)
Reflects employee retention costs of $0.5
million and professional fees of $0.6 million recorded in SG&A
expenses; and employee termination costs of $1.0 million (offset by
a $0.5 million reversal of previously recognized stock-based
compensation related to forfeited awards previously granted to
terminated employees), and facility closure costs of $0.4 million
recorded in other expense.
(c)
Other includes losses on the disposal of
assets, which were recorded in other expense.
(d)
Reflects the tax effect of the preceding
adjustments to earnings and reflects an overall estimated annual
effective tax rate of approximately 30% for the quarter ended March
28, 2020 (March 30, 2019 – 27%) on adjusted earnings/loss before
tax.
(e)
Reflects the gain on sale of the soy and
corn business, net of transaction costs, which was recorded in
other income.
(f)
Reflects professional fees and employee
retention costs of $0.2 million recorded in SG&A expenses; and
employee termination costs of $2.9 million, recruitment costs of
$0.6 million, and facility closure costs of $0.3 million, offset by
a $2.1 million reversal of previously recognized stock-based
compensation related to forfeited awards previously granted to
terminated employees, all recorded in other expense.
(g)
Reflects product withdrawal and recall
costs that were not eligible for reimbursement under insurance
policies or exceeded the limits of those policies, including costs
related to the recall of certain sunflower kernel products
initiated in the second quarter of 2016, which were recorded in
other expense.
(h)
Reflects costs to transition certain
production activities to a new contract manufacturer, which were
recorded in cost of goods sold.
(i)
Other included insurance deductibles,
which were recorded in other expense.
We believe that investors’ understanding
of our financial performance is enhanced by disclosing the specific
items that we exclude to compute adjusted earnings/loss. However,
adjusted earnings/loss is not, and should not be viewed as, a
substitute for earnings prepared under U.S. GAAP. Adjusted
earnings/loss is presented solely to allow investors to more fully
understand how we assess our financial performance.
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 to net earnings/loss, which the Company believes to
be the most directly comparable U.S. GAAP financial measure. In
addition, as with adjusted earnings/loss presented above, the
Company has prepared these tables in a columnar format to present
the effect of the disposal of the soy and corn business on the
Company’s consolidated results for the current and comparative
periods. 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.
Excluding
disposed operations
Disposed operations
Consolidated
For the quarter ended
$
$
$
March 28, 2020
Net earnings
3,347
-
3,347
Provision for income taxes
1,130
-
1,130
Interest expense, net
8,280
-
8,280
Other income, net
(1,298
)
-
(1,298
)
Total segment operating income
11,459
-
11,459
Depreciation and amortization
8,922
-
8,922
Stock-based compensation(a)
2,906
-
2,906
Costs related to Value Creation
Plan(b)
1,036
-
1,036
Adjusted EBITDA
24,323
-
24,323
March 30, 2019
Net earnings (loss)
(7,201
)
32,796
25,595
Provision for (recovery of) income
taxes
(2,879
)
12,377
9,498
Interest expense, net
8,739
-
8,739
Other expense (income), net
2,067
(45,579
)
(43,512
)
Total segment operating income (loss)
726
(406
)
320
Depreciation and amortization
8,173
129
8,302
Stock-based compensation(a)
1,939
-
1,939
Costs related to Value Creation
Plan(b)
203
-
203
Contract manufacturer transition
costs(c)
88
-
88
Adjusted EBITDA
11,129
(277
)
10,852
(a)
For the first quarters of 2020 and 2019,
stock-based compensation of $2.9 million and $1.9 million,
respectively, was recorded in SG&A expenses, and the reversal
of $0.5 million and $2.1 million, respectively, of previously
recognized stock-based compensation related to forfeited awards
previously granted to terminated employees was recognized in other
income.
(b)
For the first quarters of 2020 and 2019,
reflects professional fees and employee retention costs of $1.0
million and $0.2 million, respectively, recorded in SG&A
expenses.
(c)
Reflects costs to transition certain
production activities to a new contract manufacturer, which were
recorded in cost of goods sold.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200506005231/en/
Scott Van Winkle ICR 617-956-6736 scott.vanwinkle@icrinc.com
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