Adjusted EBITDA more than doubled YOY for
the third consecutive quarter propelled by 6.1% revenue growth and
strong operations execution as gross margins expanded 350 basis
points
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL)
(TSX:SOY), a leading global company focused on plant-based foods
and beverages, organic ingredient sourcing and production, and
fruit-based foods and beverages, today announced financial results
for the second quarter ended June 27, 2020.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
Second Quarter 2020 Highlights:
- Revenues of $310.9 million for the second quarter of 2020,
compared to $293.0 million in the second quarter of 2019, an
increase of 6.1%. Adjusted for foreign exchange and commodity
prices, revenues grew by 5.8%.
- Gross margin increased 350 basis points to 12.8% from 9.3% in
the prior year.
- Earnings attributable to common shareholders was a loss of $1.6
million or $0.02 per diluted common share in the second quarter of
2020, compared to a loss of $11.1 million or $0.13 per diluted
common share in the second quarter of 2019.
- Adjusted EBITDA¹ of $20.5 million or 6.6% of revenues for the
second quarter of 2020, versus $10.1 million or 3.5% of revenues in
the second quarter of 2019.
“We delivered another strong quarter, doubling adjusted EBITDA
over the prior year for the third consecutive quarter. We believe
our turnaround efforts have now taken root, setting us up for more
consistent revenue and profitability growth going forward. The
quarter represented a powerful combination of strong execution and
favorable underlying category trends. Each of our three segments
produced revenue growth and expanded gross margin during the second
quarter,” said Joe Ennen, Chief Executive Officer of SunOpta. “Our
growth continues to be led by our #1 focus area, which is
plant-based foods and beverages. Despite the negative impact on
volumes in the foodservice channel, as a result of COVID-19, we
still produced 10% growth on an adjusted basis. This growth and our
ability to offset COVID-19 impacts are a direct reflection of the
strength of our plant-based platform. We are extremely bullish on
our plant-based opportunity including a robust sales pipeline and
incremental capacity expected to come on-line in the fourth quarter
of this year.
“Within our Global Ingredients segment, we saw continued strong
growth and enhanced margin as we optimize our category investments.
We remain confident and encouraged about initiatives across our
global organization and remain well-positioned in each of our
operating segments to drive growth, improve margins and enhance
shareholder value. We continued to generate sequential and
year-over-year margin improvement in our Fruit-Based Foods and
Beverages segment, reflecting each of our initiatives to date and
remain confident that our productivity investments will further
this improvement in the second half of 2020,” continued Ennen.
Second Quarter 2020 Results
Revenues for the second quarter of 2020 were $310.9 million, an
increase of 6.1% compared to $293.0 million in the second quarter
of 2019. Excluding the impact of changes in commodity-related
pricing and foreign exchange rates, revenues in the second quarter
of 2020 increased by 5.8% compared with the second quarter of
2019.
The Plant-Based Foods and Beverages segment generated revenues
of $91.7 million during the second quarter of 2020, an increase of
11.9% compared to $81.9 million in the second quarter of 2019.
Excluding sunflower commodity price variances, Plant-Based segment
revenues in the second quarter increased 9.6% compared to the prior
year period, reflecting higher volumes of aseptic beverages, broth
offerings, and ingredient extraction partially offset by reduced
sales volumes of plant-based beverage products to foodservice
customers as a result of COVID-19.
The Global Ingredients segment generated revenues of $126.5
million, an increase of 4.7% compared to $120.9 million in the
second quarter of 2019. Excluding the impact of changes in
commodity-related pricing and foreign exchange rates, Global
Ingredients revenue in the second quarter of 2020 increased 6.9%
compared to the prior year period, which reflected higher volumes
in certain organic ingredient product categories and of premium
juice products.
The Fruit-Based Foods and Beverages segment generated revenues
of $92.7 million during the second quarter of 2020, an increase of
2.8% compared to $90.2 million in the second quarter of 2019.
Excluding the impact of commodity price fluctuations, Fruit-Based
segment revenues in the second quarter increased 0.8% compared to
the prior year period, primarily reflecting increased retail
volumes and pricing for frozen fruit partially offset by lower
demand for frozen fruit and fruit preparations from foodservice
customers as a result of COVID-19.
Gross profit was $39.7 million for the quarter ended June 27,
2020, an increase of $12.4 million compared to $27.3 million for
the quarter ended June 29, 2019. As a percentage of revenues, gross
profit for the quarter ended June 27, 2020 was 12.8% compared to
9.3% for the quarter ended June 29, 2019, an increase of 350 basis
points. The Plant-Based Foods and Beverages segment accounted for
$4.6 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 partially offset by wage
premiums and higher cleaning costs attributable to COVID-19. The
Global Ingredients segment accounted for $4.4 million of the
increased gross profit in the quarter primarily due to increased
pricing spreads for certain organic ingredients and premium juice
products and productivity improvements. The Fruit-Based Foods and
Beverages segment increased gross profit by $3.4 million in the
quarter, reflecting increased sales, pricing and a favorable sales
mix of higher-margin retail versus foodservice sales, and the
impact of our automation and productivity initiatives partially
offset by lower sales volumes and plant utilization for fruit
ingredients, together with wage premiums and higher cleaning costs
attributable to COVID-19.
Segment operating income¹ was $8.8 million, or 2.8% of revenues
in the second quarter of 2020, compared to operating loss of $2.5
million, or 0.9% of revenues in the second quarter of 2019. The
increase in operating income year-over-year was primarily
attributable to the $12.4 million increase in gross profit,
partially offset by a year-over-year $1.0 million increase in
SG&A primarily related to higher employee-related variable
compensation and benefit costs, partially offset by lower travel
and marketing costs and stock-based compensation expense.
Adjusted EBITDA¹ was $20.5 million or 6.6% of revenues in the
second quarter of 2020, compared to $10.1 million or 3.5% of
revenues in the second quarter of 2019.
The Company reported a loss attributable to common shareholders
for the second quarter of 2020 of $1.6 million, or $0.02 per
diluted common share, compared to a loss of $11.1 million, or $0.13
per diluted common share during the second quarter of 2019.
Adjusted loss¹ in the second quarter of 2020 was $1.4 million or
$0.02 per common share, compared to an adjusted loss of $9.0
million or $0.10 per common share in the second quarter of 2019.
Please refer to the discussion and table below under “Non-GAAP
Measures - Adjusted Earnings/Loss”.
Balance Sheet and Cash Flow
At June 27, 2020, SunOpta’s balance sheet reflected total assets
of $909.4 million and total debt of $448.9 million. During the
second quarter of 2020, cash generated by operating activities was
$2.7 million, compared to cash used in operations of $31.7 million
during the second quarter of 2019. The $34.4 million improvement in
operating cash flow primarily reflects the improved year-over-year
operating results, along with more efficient working capital
management. Cash used in investing activities in the second quarter
of 2020 was $6.3 million, compared with $12.9 million in the second
quarter of 2019, a decrease in cash used of $6.6 million.
Conference Call
SunOpta plans to host a conference call at 9:00 A.M. Eastern
time on Wednesday, August 5, 2020, to discuss the second quarter
financial results. After opening remarks, there will be a question
and answer period. Investors interested in listening to a live
webcast of the conference call can access a link on SunOpta's
website at www.sunopta.com under the "Investors" section or
directly here. Investors interested in listening to the live call
over the telephone must pre-register for the conference call via a
link on SunOpta's website at www.sunopta.com under the "Investors
Relations" section or directly at
http://www.directeventreg.com/registration/event/5755999. Upon
registration, investors will be provided with the dial-in
information, passcode and individual ID. Investors will also
receive a confirmation email. Investors are encouraged to register
at least 15 minutes prior to the scheduled call time and can
register earlier at any time to receive the conference details. If
you are unable to listen live, the conference call will be archived
and can be accessed for approximately 90 days at the company's
website.
¹ See discussion of non-GAAP measures
About SunOpta Inc.
SunOpta Inc. is a leading 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 our turnaround efforts are setting us up for more
consistent revenue and profitability growth going forward, our
expectations regarding the anticipated conversion of our
plant-based sales pipeline, and the timing of the incremental
capacity expected in the fourth quarter. 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 and two quarters ended
June 27, 2020 and June 29, 2019
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
Two quarters ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
$
$
$
$
Revenues
310,944
293,004
646,893
598,279
Cost of goods sold
271,252
265,677
563,481
542,746
Gross profit
39,692
27,327
83,412
55,533
Selling, general and administrative
expenses
28,299
27,262
55,505
53,510
Intangible asset amortization
2,605
2,692
5,326
5,434
Other expense (income), net
(333
)
445
(1,631
)
(43,067
)
Foreign exchange loss (gain)
(44
)
(90
)
2,290
(1,194
)
Earnings (loss) before the
following
9,165
(2,982
)
21,922
40,850
Interest expense, net
7,936
8,254
16,216
16,993
Earnings (loss) before income
taxes
1,229
(11,236
)
5,706
23,857
Provision for (recovery of) income
taxes
452
(2,324
)
1,582
7,174
Net earnings (loss)
777
(8,912
)
4,124
16,683
Earnings (loss) attributable to
non-controlling interests
(230
)
143
(244
)
89
Earnings (loss) attributable to SunOpta
Inc.
1,007
(9,055
)
4,368
16,594
Dividends and accretion on preferred
stock
(2,604
)
(2,001
)
(4,629
)
(3,996
)
Earnings (loss) attributable to common
shareholders
(1,597
)
(11,056
)
(261
)
12,598
Earnings (loss) per share
Basic
(0.02
)
(0.13
)
(0.00
)
0.14
Diluted
(0.02
)
(0.13
)
(0.00
)
0.14
Weighted-average common shares
outstanding (000s)
Basic
89,089
87,683
88,625
87,579
Diluted
89,089
87,683
88,625
87,743
SunOpta Inc.
Consolidated Balance Sheets
As at June 27, 2020 and December 28,
2019
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
June 27, 2020
December 28, 2019
$
$
ASSETS
Current assets
Cash and cash equivalents
1,625
1,498
Accounts receivable
124,279
121,445
Inventories
318,002
323,546
Prepaid expenses and other current
assets
28,103
35,985
Income taxes recoverable
5,660
7,480
Total current assets
477,669
489,954
Property, plant and equipment
190,519
184,550
Operating lease right-of-use
assets
62,248
68,433
Goodwill
28,462
28,422
Intangible assets
144,679
150,009
Deferred income taxes
2,187
-
Other assets
3,661
1,991
Total assets
909,425
923,359
LIABILITIES
Current liabilities
Bank indebtedness
204,852
245,536
Accounts payable and accrued
liabilities
132,795
133,529
Customer and other deposits
166
37
Income taxes payable
1,610
1,272
Other current liabilities
633
802
Current portion of long-term debt
3,276
2,987
Current portion of operating lease
liabilities
15,971
17,215
Current portion of long-term
liabilities
900
4,286
Total current liabilities
360,203
405,664
Long-term debt
240,785
242,204
Operating lease liabilities
47,020
52,020
Long-term liabilities
1,905
2,011
Deferred income taxes
14,432
9,027
Total liabilities
664,345
710,926
Series A Preferred Stock
84,881
82,524
Series B Preferred Stock
26,895
-
EQUITY
SunOpta Inc. shareholders’
equity
Common shares
323,412
318,456
Additional paid-in capital
34,610
35,767
Accumulated deficit
(215,192
)
(214,931
)
Accumulated other comprehensive loss
(11,163
)
(11,271
)
131,667
128,021
Non-controlling interests
1,637
1,888
Total equity
133,304
129,909
Total equity and liabilities
909,425
923,359
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters and two quarters ended
June 27, 2020 and June 29, 2019
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
Two quarters ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
$
$
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings (loss)
777
(8,912
)
4,124
16,683
Items not affecting cash:
Depreciation and amortization
8,751
8,186
17,673
16,488
Amortization of debt issuance costs
1,065
684
2,004
1,339
Deferred income taxes
2,958
(2,356
)
3,218
4,971
Stock-based compensation
1,932
2,998
4,379
2,835
Unrealized loss (gain) on derivative
contracts
(406
)
(400
)
150
(288
)
Gain on settlement of contingent
consideration obligation
-
-
(2,286
)
-
Loss (gain) on sale of business
-
201
-
(45,378
)
Other
(11
)
(72
)
(101
)
(134
)
Changes in non-cash working capital, net
of businesses acquired or sold
(12,401
)
(31,989
)
8,253
(27,188
)
Net cash flows from operations
2,665
(31,660
)
37,414
(30,672
)
Investing activities
Purchases of property, plant and
equipment
(6,370
)
(9,341
)
(16,059
)
(17,315
)
Net proceeds from sale of business
-
(201
)
-
64,675
Acquisition of business, net of cash
acquired
-
(3,341
)
-
(3,341
)
Other
41
-
41
-
Net cash flows from investing
activities
(6,329
)
(12,883
)
(16,018
)
44,019
Financing activities
Increase (decrease) under line of credit
facilities
(21,257
)
43,367
(41,011
)
(11,294
)
Borrowings under long-term debt
-
24
155
1,876
Repayment of long-term debt
(744
)
(634
)
(1,341
)
(1,357
)
Proceeds on issuance of preferred stock,
net of issuance costs
26,804
-
26,804
-
Payment of cash dividends on preferred
stock
-
(1,700
)
(1,700
)
(3,400
)
Proceeds from the exercise of stock
options and employee share purchases
349
336
571
647
Payment of withholding taxes on
stock-based awards
(1,030
)
(299
)
(1,151
)
(382
)
Payment of debt issuance costs
(415
)
(81
)
(2,488
)
(395
)
Payment of contingent consideration
(1,100
)
-
(1,100
)
-
Other
-
(5
)
(4
)
216
Net cash flows from financing
activities
2,607
41,008
(21,265
)
(14,089
)
Foreign exchange gain (loss) on cash held
in a foreign currency
12
50
(4
)
(8
)
Increase (decrease) in cash and cash
equivalents in the period
(1,045
)
(3,485
)
127
(750
)
Cash and cash equivalents - beginning of
the period
2,670
6,015
1,498
3,280
Cash and cash equivalents - end of the
period
1,625
2,530
1,625
2,530
SunOpta Inc.
Segmented Information
For the quarters and two quarters ended
June 27, 2020 and June 29, 2019
Unaudited
(Expressed in thousands of U.S.
dollars)
Quarter ended
Two quarters ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
$
$
$
$
Segment revenues from external
customers:
Global Ingredients
126,543
120,892
254,895
255,734
Plant-Based Foods and Beverages
91,705
81,940
197,947
163,216
Fruit-Based Foods and Beverages
92,696
90,172
194,051
179,329
Total segment revenues from external
customers
310,944
293,004
646,893
598,279
Segment gross profit:
Global Ingredients
16,433
12,077
32,980
26,769
Plant-Based Foods and Beverages
16,731
12,114
37,802
22,610
Fruit-Based Foods and Beverages
6,528
3,136
12,630
6,154
Total segment gross profit
39,692
27,327
83,412
55,533
Segment operating income
(loss):
Global Ingredients
8,038
3,667
16,152
10,210
Plant-Based Foods and Beverages
10,484
4,496
24,337
7,024
Fruit-Based Foods and Beverages
(2,016
)
(5,960
)
(6,718
)
(11,565
)
Corporate Services
(7,674
)
(4,740
)
(13,480
)
(7,886
)
Total segment operating income (loss)
8,832
(2,537
)
20,291
(2,217
)
Segment gross profit
percentage:
Global Ingredients
13.0
%
10.0
%
12.9
%
10.5
%
Plant-Based Foods and Beverages
18.2
%
14.8
%
19.1
%
13.9
%
Fruit-Based Foods and Beverages
7.0
%
3.5
%
6.5
%
3.4
%
Total segment gross profit percentage
12.8
%
9.3
%
12.9
%
9.3
%
Segment operating income (loss)
percentage:
Global Ingredients
6.4
%
3.0
%
6.3
%
4.0
%
Plant-Based Foods and Beverages
11.4
%
5.5
%
12.3
%
4.3
%
Fruit-Based Foods and Beverages
-2.2
%
-6.6
%
-3.5
%
-6.4
%
Total segment operating income (loss)
percentage
2.8
%
-0.9
%
3.1
%
-0.4
%
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. 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 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
$
$
$
$
$
$
June 27, 2020
Net earnings
777
-
777
Loss attributable to non-controlling
interests
230
-
230
Dividends and accretion on preferred
stock
(2,604
)
-
(2,604
)
Loss attributable to common
shareholders
(1,597
)
(0.02
)
-
-
(1,597
)
(0.02
)
Adjusted for:
Costs related to the Value Creation
Plan(a)
479
-
479
Plant expansion costs(b)
92
-
92
Other(c)
(349
)
-
(349
)
Net income tax effect(d)
17
-
17
Adjusted loss
(1,358
)
(0.02
)
-
-
(1,358
)
(0.02
)
June 29, 2019
Net loss
(8,766
)
(146
)
(8,912
)
Earnings attributable to non-controlling
interests
(143
)
-
(143
)
Dividends and accretion on preferred
stock
(2,001
)
-
(2,001
)
Loss attributable to common
shareholders
(10,910
)
(0.12
)
(146
)
-
(11,056
)
(0.13
)
Adjusted for:
Costs related to Value Creation
Plan(e)
1,675
-
1,675
Plant expansion costs(f)
311
-
311
Costs related to sale of soy and corn
business(g)
-
201
201
Contract manufacturer transition
costs(h)
201
-
201
Other(i)
(477
)
-
(477
)
Net income tax effect(d)
211
(55
)
156
Adjusted loss
(8,989
)
(0.10
)
-
-
(8,989
)
(0.10
)
(a)
Reflects employee retention costs of $0.2
million and professional fees of $0.2 million recorded in SG&A
expenses; and employee termination costs of $0.5 million (offset by
a $0.4 million reversal of previously recognized stock-based
compensation related to forfeited awards previously granted to
terminated employees) recorded in other expense.
(b)
Reflects costs related to the expansion of
our plant-based extraction capabilities at our Alexandria,
Minnesota, facility, which were recorded in cost of goods sold.
(c)
Other income includes the reversal of
previously accrued costs related to the withdrawal of certain
consumer-packaged products. These costs were recognized in other
expense in 2016.
(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 June
27, 2020 (June 29, 2019 – 27%) on adjusted earnings/loss before
tax.
(e)
Reflects employee retention and relocation
costs of $0.8 million, and professional fees of $0.2 million
recorded in SG&A expenses; and employee termination costs of
$0.7 million recorded in other expense.
(f)
Reflects costs related to the expansion of
our Allentown, Pennsylvania, plant-based beverage facility, which
were recorded in cost of goods sold.
(g)
Reflects legal fees incurred in connection
with the sale of the soy and corn business, which were recorded in
other expense.
(h)
Reflects costs to transition premium juice
production activities to new contract manufacturers, which were
recorded in cost of goods sold.
(i)
Other includes a gain related to a project
cancellation, partially offset by losses on the disposal of assets,
and business development costs, which were recorded in other
income/expense.
Excluding
disposed operations
Disposed operations
Consolidated
Per Diluted Share
Per Diluted Share
Per Diluted Share
For the two quarters ended
$
$
$
$
$
$
June 27, 2020
Net earnings
4,124
-
4,124
Loss attributable to non-controlling
interests
244
-
244
Dividends and accretion on preferred
stock
(4,629
)
-
(4,629
)
Loss attributable to common
shareholders
(261
)
(0.00
)
-
-
(261
)
(0.00
)
Adjusted for:
Costs related to the Value Creation
Plan(a)
2,474
-
2,474
Plant expansion costs(b)
92
-
92
Contingent consideration settlement(c)
(2,286
)
-
(2,286
)
Other(d)
(320
)
-
(320
)
Net income tax effect(e)
(118
)
-
(118
)
Adjusted loss
(419
)
(0.00
)
-
-
(419
)
(0.00
)
June 29, 2019
Net earnings (loss)
(15,967
)
32,650
16,683
Earnings attributable to non-controlling
interests
(89
)
-
(89
)
Dividends and accretion on preferred
stock
(3,996
)
-
(3,996
)
Earnings (loss) attributable to common
shareholders
(20,052
)
(0.23
)
32,650
0.37
12,598
0.14
Adjusted for:
Gain on sale of soy and corn
business(f)
-
(45,378
)
(45,378
)
Costs related to Value Creation
Plan(g)
3,533
-
3,533
Plant expansion costs(h)
311
-
311
Contract manufacturer transition
costs(i)
289
-
289
Product withdrawal and recall costs(j)
260
-
260
Other(k)
(325
)
-
(325
)
Net income tax effect(e)
(615
)
12,434
11,819
Adjusted loss
(16,599
)
(0.19
)
(294
)
(0.00
)
(16,893
)
(0.19
)
(a)
Reflects employee retention costs of $0.7
million and professional fees of $0.8 million recorded in SG&A
expenses; and employee termination costs of $1.5 million (offset by
a $0.9 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.
(b)
Reflects costs related to the expansion of
our plant-based extraction capabilities at our Alexandria,
Minnesota, facility, which were recorded in cost of goods sold.
(c)
Reflects a gain on the settlement of the
remaining earn-out obligation related to our acquisition of
Citrusource in 2015, which was recorded in other income.
(d)
Other income includes the reversal of
previously accrued costs related to the withdrawal of certain
consumer-packaged products. These costs were recognized in other
expense in 2016.
(e)
Reflects the tax effect of the preceding
adjustments to earnings and reflects an overall estimated annual
effective tax rate of approximately 30% for the two quarters ended
June 27, 2020 (June 29, 2019 – 27%) on adjusted earnings/loss
before tax.
(f)
Reflects the recognized gain on sale of
the soy and corn business, which was recorded in other income.
(g)
Reflects employee retention and relocation
costs of $0.9 million, and professional fees of $0.3 million
recorded in SG&A expenses; and employee termination costs of
$3.5 million, recruitment costs of $0.6 million, and facility
closure costs of $0.3 million, offset by the reversal of $2.1
million of previously recognized stock-based compensation related
to forfeited awards previously granted to terminated employees, all
recorded in other expense.
(h)
Reflects costs related to the expansion of
our Allentown, Pennsylvania, plant-based beverage facility, which
were recorded in cost of goods sold.
(i)
Reflects costs to transition premium juice
production activities to new contract manufacturers, which were
recorded in cost of goods sold.
(j)
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 2016, which were recorded in other expense.
(k)
Other includes a gain related to a project
cancellation, partially offset by insurance deductibles, losses on
the disposal of assets, and business development costs, which were
recorded in other income/expense.
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 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
$
$
$
June 27, 2020
Net earnings
777
-
777
Provision for income taxes
452
-
452
Interest expense, net
7,936
-
7,936
Other income, net
(333
)
-
(333
)
Total segment operating income
8,832
-
8,832
Depreciation and amortization
8,751
-
8,751
Stock-based compensation(a)
2,368
-
2,368
Costs related to Value Creation
Plan(b)
463
-
463
Plant expansion costs(c)
92
-
92
Adjusted EBITDA
20,506
-
20,506
June 29, 2019
Net loss
(8,766
)
(146
)
(8,912
)
Recovery of income taxes
(2,269
)
(55
)
(2,324
)
Interest expense, net
8,254
-
8,254
Other expense, net
244
201
445
Total segment operating loss
(2,537
)
-
(2,537
)
Depreciation and amortization
8,186
-
8,186
Stock-based compensation
2,999
-
2,999
Costs related to Value Creation
Plan(b)
954
-
954
Plant expansion costs(c)
311
-
311
Contract manufacturer transition
costs(d)
201
-
201
Adjusted EBITDA
10,114
-
10,114
(a)
For the second quarter of 2020,
stock-based compensation of $2.4 million was recorded in SG&A
expenses, and the reversal of $0.4 million of previously recognized
stock-based compensation related to forfeited awards previously
granted to terminated employees was recognized in other income.
(b)
For the second quarters of 2020 and 2019,
reflects professional fees and employee retention costs of $0.5
million and $1.0 million, respectively, recorded in SG&A
expenses.
(c)
For the second quarter of 2020, reflects
costs related to the expansion of our plant-based extraction
capabilities at our Alexandria, Minnesota, facility, and, for the
second quarter of 2019, reflects costs related to the expansion of
our Allentown, Pennsylvania, plant-based beverage facility, which
were recorded in cost of goods sold.
(d)
Reflects costs to transition premium juice
production activities to new contract manufacturers, which were
recorded in cost of goods sold.
Excluding
disposed operations
Disposed operations
Consolidated
For the two quarters ended
$
$
$
June 27, 2020
Net earnings
4,124
-
4,124
Provision for income taxes
1,582
-
1,582
Interest expense, net
16,216
-
16,216
Other income, net
(1,631
)
-
(1,631
)
Total segment operating income
20,291
-
20,291
Depreciation and amortization
17,673
-
17,673
Stock-based compensation(a)
5,274
-
5,274
Costs related to Value Creation
Plan(b)
1,499
-
1,499
Plant expansion costs(c)
92
-
92
Adjusted EBITDA
44,829
-
44,829
June 29, 2019
Net earnings (loss)
(15,967
)
32,650
16,683
Provision for (recovery of) income
taxes
(5,148
)
12,322
7,174
Interest expense, net
16,993
-
16,993
Other expense (income), net
2,311
(45,378
)
(43,067
)
Total segment operating income (loss)
(1,811
)
(406
)
(2,217
)
Depreciation and amortization
16,359
129
16,488
Stock-based compensation(a)
4,938
-
4,938
Costs related to Value Creation
Plan(b)
1,157
-
1,157
Plant expansion costs(c)
311
-
311
Contract manufacturer transition
costs(d)
289
-
289
Adjusted EBITDA
21,243
(277
)
20,966
(a)
For the first two quarters of 2020 and
2019, stock-based compensation of $5.3 million and $4.9 million,
respectively, was recorded in SG&A expenses, and the reversal
of $0.9 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 two quarters of 2020 and
2019, reflects professional fees, and employee retention and
relocation costs of $1.5 million and $1.2 million, respectively,
recorded in SG&A expenses.
(c)
For the first two quarters of 2020,
reflects costs related to the expansion of our plant-based
extraction capabilities at our Alexandria, Minnesota, facility,
and, for the first two quarters of 2019, reflects costs related to
the expansion of our Allentown, Pennsylvania, plant-based beverage
facility, which were recorded in cost of goods sold.
(d)
Reflects costs to transition premium juice
production activities to new contract manufacturers, which were
recorded in cost of goods sold.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005216/en/
Scott Van Winkle ICR 617-956-6736 scott.vanwinkle@icrinc.com
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