Adjusted EBITDA more than doubled YOY for
the fourth consecutive quarter
Revenue increased 6.4%, with growth across
each segment
13.3% gross margin, YOY improvement for the
fourth quarter in a row, with each segment delivering expanded
margins
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 third quarter ended September 26, 2020.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
Third Quarter 2020 Highlights:
- Revenues of $315.0 million for the third quarter of 2020,
compared to $295.9 million in the third quarter of 2019, an
increase of 6.4%. Adjusted for foreign exchange and commodity
prices, revenues grew by 5.4%.
- Gross margin increased 440 basis points to 13.3% from 8.9% in
the prior year.
- Earnings attributable to common shareholders was a loss of $2.8
million or $0.03 per diluted common share in the third quarter of
2020, compared to a loss of $13.8 million or $0.16 per diluted
common share in the third quarter of 2019.
- Adjusted EBITDA¹ of $22.8 million, or 7.2% of revenues for the
third quarter of 2020, versus $9.9 million or 3.4% of revenues in
the third quarter of 2019.
“A 6.4% increase in revenue combined with our best gross margin
percentage in over eight years, produced a 129% gain in adjusted
EBITDA versus the prior year. We are proud of the fact that we have
doubled adjusted EBITDA four quarters in a row. With this
accomplishment as a backdrop, and the momentum we feel we have
going forward, we believe it is safe to say that SunOpta is no
longer a turnaround story, we are quite simply a sustainable growth
story. We are having a great year. For three consecutive quarters,
all three of our business segments have delivered topline growth
and margin expansion, led once again by the very strong performance
of our plant-based business unit. The execution of our plan is
showing in our results, and we are investing for future growth to
ensure consistent, sustainable results,” said Joe Ennen, Chief
Executive Officer of SunOpta. “Consumer demand in our core
categories continues to be impressive. Our focus and investment in
plant-based foods continues to be a source of strength and recent
investments that come on-line during the fourth quarter set us up
for continued strong growth over the coming years. With a strong
pipeline of new business opportunities, strong consumer demand and
a continued focus on execution, we are confident in our ability to
continue to drive growth and shareholder value.”
Third Quarter 2020 Results
Revenues for the third quarter of 2020 were $315.0 million, an
increase of 6.4% compared to $295.9 million in the third quarter of
2019. Excluding the impact of changes in commodity-related pricing
and foreign exchange rates, revenues in the third quarter of 2020
increased by 5.4% compared with the third quarter of 2019.
The Global Ingredients segment generated revenues of $123.3
million, an increase of 8.8% compared to $113.4 million in the
third quarter of 2019. Excluding the impact of changes in
commodity-related pricing and foreign exchange rates, Global
Ingredients revenue in the third quarter of 2020 increased 8.3%
compared to the prior year period, which reflected higher volumes
in certain organic ingredient product categories and for premium
juice products.
The Plant-Based Foods and Beverages segment generated revenues
of $99.0 million during the third quarter of 2020, an increase of
7.9% compared to $91.8 million in the third quarter of 2019.
Excluding sunflower commodity price variances, Plant-Based segment
revenues in the third quarter increased 6.6% 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 and lower sales of sunflower
seeds.
The Fruit-Based Foods and Beverages segment generated revenues
of $92.6 million during the third quarter of 2020, an increase of
2.0% compared to $90.8 million in the third quarter of 2019.
Excluding the impact of commodity price fluctuations, Fruit-Based
segment revenues in the third quarter increased 0.7% compared to
the prior year period, primarily reflecting increased retail
volumes of fruit snacks and frozen fruit, partially offset by lower
foodservice demand for frozen fruit and fruit preparations as a
result of COVID-19.
Gross profit was $41.9 million for the quarter ended September
26, 2020, an increase of $15.6 million compared to $26.3 million
for the quarter ended September 28, 2019. As a percentage of
revenues, gross profit for the quarter ended September 26, 2020 was
13.3% compared to 8.9% for the quarter ended September 28, 2019, an
increase of 440 basis points. The Fruit-Based Foods and Beverages
segment increased gross profit by $9.1 million (+990 basis points)
in the quarter, reflecting increased sales, pricing, a favorable
sales mix of higher-margin retail versus foodservice sales and
higher yields and throughput resulting from the automation and
productivity initiatives implemented in our frozen fruit
manufacturing facilities. This was partially offset by lower sales
volumes and plant utilization for fruit ingredients. The
Plant-Based Foods and Beverages segment accounted for $3.4 million
of the increase in gross profit (+210 basis points), 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 lower
sales volumes and plant utilization within the sunflower and
roasting operations. The Global Ingredients segment accounted for
$3.1 million of the increased gross profit (+160 basis points) in
the quarter primarily due to increased sales, pricing spreads and
higher-margin product mix for certain organic ingredients,
manufacturing efficiencies and throughput increases for cocoa and
sunflower ingredients, and higher pricing and lower production
costs for premium juice products, partially offset by lower margin
sales to reduce inventory positions in certain organic ingredients,
an unfavorable cocoa commodity hedging result, and manufacturing
inefficiencies related to organic avocado oil production.
Segment operating income¹ was $9.4 million, or 3.0% of revenues
in the third quarter of 2020, compared to operating loss of $3.5
million, or 1.2% of revenues in the third quarter of 2019. The
increase in operating income year-over-year was primarily
attributable to the $15.6 million increase in gross profit,
partially offset by a year-over-year $1.6 million increase in
SG&A primarily related to higher employee-related variable
compensation and benefit costs, and increased reserves for credit
losses due to weaker economic conditions, partially offset by the
benefit from headcount reductions and other cost savings measures
taken in 2019, together with lower travel and marketing costs.
Adjusted EBITDA¹ was $22.8 million or 7.2% of revenues in the
third quarter of 2020, compared to $9.9 million or 3.4% of revenues
in the third quarter of 2019.
The Company reported a loss attributable to common shareholders
for the third quarter of 2020 of $2.8 million, or $0.03 per diluted
common share, compared to a loss of $13.8 million, or $0.16 per
diluted common share for the third quarter of 2019.
Adjusted loss¹ in the third quarter of 2020 was $1.3 million or
$0.01 per common share, compared to an adjusted loss of $9.9
million or $0.11 per common share in the third quarter of 2019.
Please refer to the discussion and table below under “Non-GAAP
Measures - Adjusted Earnings/Loss”.
Balance Sheet and Cash Flow
At September 26, 2020, SunOpta’s balance sheet reflected total
assets of $921.4 million and total debt of $443.8 million. During
the third quarter of 2020, cash generated by operating activities
was $20.2 million, compared to $4.3 million during the third
quarter of 2019. The $15.9 million improvement in operating cash
flow primarily reflects the improved year-over-year operating
results. Cash used in investing activities in the third quarter of
2020 was $11.8 million, compared with $7.6 million in the third
quarter of 2019, an increase in cash used of $4.2 million, mainly
related to the expansion of plant-based manufacturing capacity.
Conference Call
SunOpta plans to host a conference call at 9:00 A.M. Eastern
time on Thursday, October 29, 2020, to discuss the third 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/4696702. 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 the Company is no longer a turnaround story and that
our investment in plant-based foods and beverages and our strong
pipeline of new business opportunities, strong consumer demand and
focus on execution will continue to be a significant driver of
revenue and margin growth and shareholder value. Generally,
forward-looking statements do not relate strictly to historical or
current facts and are typically accompanied by words such as
“believe” “continue”, “expect”, “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 three quarters ended
September 26, 2020 and September 28, 2019
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
Three quarters ended
September 26, 2020
September 28, 2019
September 26, 2020
September 28, 2019
$
$
$
$
Revenues
314,981
295,941
961,874
894,220
Cost of goods sold
273,102
269,616
836,583
812,362
Gross profit
41,879
26,325
125,291
81,858
Selling, general and administrative
expenses
29,278
27,674
84,783
81,184
Intangible asset amortization
2,543
2,768
7,869
8,202
Other expense (income), net
1,030
3,323
(601
)
(39,744
)
Foreign exchange loss (gain)
679
(590
)
2,969
(1,784
)
Earnings (loss) before the
following
8,349
(6,850
)
30,271
34,000
Interest expense, net
8,017
8,864
24,233
25,857
Earnings (loss) before income
taxes
332
(15,714
)
6,038
8,143
Provision for (recovery of) income
taxes
41
(3,935
)
1,623
3,239
Net earnings (loss)
291
(11,779
)
4,415
4,904
Earnings (loss) attributable to
non-controlling interests
202
(30
)
(42
)
59
Earnings (loss) attributable to SunOpta
Inc.
89
(11,749
)
4,457
4,845
Dividends and accretion on preferred
stock
(2,844
)
(2,009
)
(7,473
)
(6,005
)
Loss attributable to common
shareholders
(2,755
)
(13,758
)
(3,016
)
(1,160
)
Loss per share
Basic
(0.03
)
(0.16
)
(0.03
)
(0.01
)
Diluted
(0.03
)
(0.16
)
(0.03
)
(0.01
)
Weighted-average common shares
outstanding (000s)
Basic
89,635
87,928
88,962
87,695
Diluted
89,635
87,928
88,962
87,695
SunOpta Inc.
Consolidated Balance Sheets
As at September 26, 2020 and December 28,
2019
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
September 26, 2020
December 28, 2019
$
$
ASSETS
Current assets
Cash and cash equivalents
938
1,498
Accounts receivable
138,968
121,445
Inventories
310,344
323,546
Prepaid expenses and other current
assets
30,112
35,985
Income taxes recoverable
8,409
7,480
Total current assets
488,771
489,954
Property, plant and equipment
194,141
184,550
Operating lease right-of-use
assets
61,071
68,433
Goodwill
28,799
28,422
Intangible assets
142,136
150,009
Deferred income taxes
3,650
-
Other assets
2,794
1,991
Total assets
921,362
923,359
LIABILITIES
Current liabilities
Bank indebtedness
199,908
245,536
Accounts payable and accrued
liabilities
144,477
133,529
Customer and other deposits
98
37
Income taxes payable
753
1,272
Other current liabilities
733
802
Current portion of long-term debt
3,292
2,987
Current portion of operating lease
liabilities
15,593
17,215
Current portion of long-term
liabilities
600
4,286
Total current liabilities
365,454
405,664
Long-term debt
240,582
242,204
Operating lease liabilities
45,984
52,020
Long-term liabilities
1,929
2,011
Deferred income taxes
18,188
9,027
Total liabilities
672,137
710,926
Series A Preferred Stock
86,956
82,524
Series B Preferred Stock
27,467
-
EQUITY
SunOpta Inc. shareholders’
equity
Common shares
325,471
318,456
Additional paid-in capital
35,726
35,767
Accumulated deficit
(217,947
)
(214,931
)
Accumulated other comprehensive loss
(10,270
)
(11,271
)
132,980
128,021
Non-controlling interests
1,822
1,888
Total equity
134,802
129,909
Total equity and liabilities
921,362
923,359
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters and three quarters ended
September 26, 2020 and September 28, 2019
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
Three quarters ended
September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
$
$
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings (loss)
291
(11,779
)
4,415
4,904
Items not affecting cash:
Depreciation and amortization
8,669
8,517
26,342
25,005
Amortization of debt issuance costs
1,019
683
3,023
2,022
Deferred income taxes
2,293
(2,732
)
5,511
2,239
Stock-based compensation
3,536
2,558
7,915
5,393
Unrealized loss on derivative
contracts
629
865
779
577
Gain on settlement of contingent
consideration obligation
-
-
(2,286
)
-
Loss (gain) on sale of business
-
1,109
-
(44,269
)
Other
219
26
118
(108
)
Changes in non-cash working capital, net
of businesses
acquired or sold
3,505
5,042
11,758
(22,146
)
Net cash flows from operating
activities
20,161
4,289
57,575
(26,383
)
Investing activities
Purchases of property, plant and
equipment
(11,842
)
(7,592
)
(27,901
)
(24,907
)
Net proceeds from sale of business
-
(3
)
-
64,672
Acquisition of business, net of cash
acquired
-
-
-
(3,341
)
Other
67
-
108
-
Net cash flows from investing
activities
(11,775
)
(7,595
)
(27,793
)
36,424
Financing activities
Increase (decrease) under line of credit
facilities
(7,549
)
4,603
(48,560
)
(6,691
)
Borrowings under long-term debt
-
565
155
2,441
Repayment of long-term debt
(809
)
(556
)
(2,150
)
(1,913
)
Payment of debt issuance costs
(3
)
-
(2,491
)
(395
)
Proceeds on issuance of preferred stock,
net of issuance costs
-
-
26,804
-
Payment of cash dividends on preferred
stock
-
(1,700
)
(1,700
)
(5,100
)
Proceeds from the exercise of stock
options and employee
share purchases
864
166
1,435
813
Payment of withholding taxes on
stock-based awards
(1,225
)
(2
)
(2,376
)
(384
)
Payment of contingent consideration
(300
)
-
(1,400
)
-
Dividend paid by subsidiary to
non-controlling interest
(66
)
(31
)
(66
)
(31
)
Other
-
(5
)
(4
)
211
Net cash flows from financing
activities
(9,088
)
3,040
(30,353
)
(11,049
)
Foreign exchange gain (loss) on cash held
in a foreign currency
15
(55
)
11
(63
)
Decrease in cash and cash equivalents in
the period
(687
)
(321
)
(560
)
(1,071
)
Cash and cash equivalents - beginning of
the period
1,625
2,530
1,498
3,280
Cash and cash equivalents - end of the
period
938
2,209
938
2,209
SunOpta Inc.
Segmented Information
For the quarters and three quarters ended
September 26, 2020 and September 28, 2019
Unaudited
(Expressed in thousands of U.S.
dollars)
Quarter ended
Three quarters ended
September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
$
$
$
$
Segment revenues from external
customers:
Global Ingredients
123,322
113,356
378,217
369,090
Plant-Based Foods and Beverages
99,038
91,811
296,985
255,027
Fruit-Based Foods and Beverages
92,621
90,774
286,672
270,103
Total segment revenues from external
customers
314,981
295,941
961,874
894,220
Segment gross profit:
Global Ingredients
15,041
11,975
48,021
38,744
Plant-Based Foods and Beverages
19,715
16,321
57,517
38,931
Fruit-Based Foods and Beverages
7,123
(1,971
)
19,753
4,183
Total segment gross profit
41,879
26,325
125,291
81,858
Segment operating income
(loss):
Global Ingredients
5,851
3,400
22,003
13,610
Plant-Based Foods and Beverages
13,119
8,707
37,456
15,731
Fruit-Based Foods and Beverages
(1,788
)
(10,639
)
(8,506
)
(22,204
)
Corporate Services
(7,803
)
(4,995
)
(21,283
)
(12,881
)
Total segment operating income (loss)
9,379
(3,527
)
29,670
(5,744
)
Segment gross profit
percentage:
Global Ingredients
12.2
%
10.6
%
12.7
%
10.5
%
Plant-Based Foods and Beverages
19.9
%
17.8
%
19.4
%
15.3
%
Fruit-Based Foods and Beverages
7.7
%
-2.2
%
6.9
%
1.5
%
Total segment gross profit percentage
13.3
%
8.9
%
13.0
%
9.2
%
Segment operating income (loss)
percentage:
Global Ingredients
4.7
%
3.0
%
5.8
%
3.7
%
Plant-Based Foods and Beverages
13.2
%
9.5
%
12.6
%
6.2
%
Fruit-Based Foods and Beverages
-1.9
%
-11.7
%
-3.0
%
-8.2
%
Total segment operating income (loss)
percentage
3.0
%
-1.2
%
3.1
%
-0.6
%
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 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 loss and adjusted 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 loss and
adjusted 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
$
$
$
$
$
$
September 26, 2020
Net earnings
291
-
291
Earnings attributable to non-controlling
interests
(202
)
-
(202
)
Dividends and accretion on preferred
stock
(2,844
)
-
(2,844
)
Loss attributable to common
shareholders
(2,755
)
(0.03
)
-
-
(2,755
)
(0.03
)
Adjusted for:
Costs related to the Value Creation
Plan(a)
989
-
989
Legal settlements(b)
721
-
721
Plant expansion costs(c)
245
-
245
Other(d)
255
-
255
Net income tax effect(e)
(721
)
-
(721
)
Adjusted loss
(1,266
)
(0.01
)
-
-
(1,266
)
(0.01
)
September 28, 2019
Net loss
(10,974
)
(805
)
(11,779
)
Loss attributable to non-controlling
interests
30
-
30
Dividends and accretion on preferred
stock
(2,009
)
-
(2,009
)
Loss attributable to common
shareholders
(12,953
)
(0.15
)
(805
)
(0.01
)
(13,758
)
(0.16
)
Adjusted for:
Costs related to Value Creation
Plan(f)
4,837
-
4,837
Post-closing adjustments and other costs
related to
sale of soy and corn business(g)
-
1,109
1,109
Contract manufacturer transition
costs(h)
159
-
159
Other(i)
(1,166
)
-
(1,166
)
Net income tax effect(e)
(764
)
(304
)
(1,068
)
Adjusted loss
(9,887
)
(0.11
)
-
-
(9,887
)
(0.11
)
(a)
Reflects professional fees of $0.8 million
and employee retention costs of $0.1 million recorded in SG&A
expenses, and employee termination costs of $0.1 million recorded
in other expense.
(b)
Reflects a loss of $2.4 million on the
settlement of a customer claim related to the recall of certain
sunflower products in 2016, net of a $1.7 million gain on the
settlement of an unrelated legal matter, which were recorded in
other expense/income.
(c)
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.
(d)
Other includes a loss on the disposal of
assets, which was recorded in other expense.
(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 quarter ended
September 26, 2020 (September 28, 2019 – 27%) on adjusted loss
before tax.
(f)
Reflects employee retention and relocation
costs of $0.9 million, and professional fees of $0.7 million
recorded in SG&A expenses; and employee termination costs of
$3.4 million (offset by a reversal of $0.8 million of previously
recognized stock-based compensation related to forfeited awards
previously granted to terminated employees), and CFO recruitment
costs of $0.6 million recorded in other expense.
(g)
Reflects post-closing adjustments and
transaction costs incurred in connection with the sale of the soy
and corn business, which reduced the gain on sale recorded in other
income.
(h)
Reflects the write-down of assets related
to the transition of premium juice production activities to new
contract manufacturers, which was recorded in other expense.
(i)
Other includes a legal settlement gain of
$1.3 million, offset by losses on disposal of assets, which were
recorded in other income/expense.
Excluding
disposed operations
Disposed operations
Consolidated
Per Diluted Share
Per Diluted Share
Per Diluted Share
For the three quarters ended
$
$
$
$
$
$
September 26, 2020
Net earnings
4,415
-
4,415
Loss attributable to non-controlling
interests
42
-
42
Dividends and accretion on preferred
stock
(7,473
)
-
(7,473
)
Loss attributable to common
shareholders
(3,016
)
(0.03
)
-
-
(3,016
)
(0.03
)
Adjusted for:
Costs related to the Value Creation
Plan(a)
3,463
-
3,463
Legal settlements(b)
721
-
721
Plant expansion costs(c)
337
-
337
Contingent consideration settlement(d)
(2,286
)
-
(2,286
)
Other(e)
(65
)
-
(65
)
Net income tax effect(f)
(839
)
-
(839
)
Adjusted loss
(1,685
)
(0.02
)
-
-
(1,685
)
(0.02
)
September 28, 2019
Net earnings (loss)
(26,941
)
31,845
4,904
Earnings attributable to non-controlling
interests
(59
)
-
(59
)
Dividends and accretion on preferred
stock
(6,005
)
-
(6,005
)
Earnings (loss) attributable to common
shareholders
(33,005
)
(0.38
)
31,845
0.36
(1,160
)
(0.01
)
Adjusted for:
Gain on sale of soy and corn
business(g)
-
(44,269
)
(44,269
)
Costs related to Value Creation
Plan(h)
8,370
-
8,370
Contract manufacturer transition
costs(i)
448
-
448
Plant expansion costs(j)
311
-
311
Product withdrawal and recall costs(k)
260
-
260
Other(l)
(1,491
)
-
(1,491
)
Net income tax effect(f)
(1,379
)
12,130
10,751
Adjusted loss
(26,486
)
(0.30
)
(294
)
(0.00
)
(26,780
)
(0.31
)
(a)
Reflects professional fees of $1.6 million
and employee retention costs of $0.9 million recorded in SG&A
expenses; and employee termination costs of $1.6 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 a loss of $2.4 million on the
settlement of a customer claim related to the recall of certain
sunflower products in 2016, net of a $1.7 million gain on the
settlement of an unrelated legal matter, which were recorded in
other expense/income.
(c)
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.
(d)
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.
(e)
Other includes the reversal of previously
accrued costs related to the withdrawal of certain
consumer-packaged products, partially offset by a loss on the
disposal of assets, which were recorded in other
income/expense.
(f)
Reflects the tax effect of the preceding
adjustments to earnings and reflects an overall estimated annual
effective tax rate of approximately 30% for the three quarters
ended September 26, 2020 (September 28, 2019 – 27%) on adjusted
loss before tax.
(g)
Reflects the gain on sale of the soy and
corn business, net of transaction costs and post-closing
adjustments, which was recorded in other income.
(h)
Reflects employee retention and relocation
costs of $1.8 million, and professional fees of $1.0 million
recorded in SG&A expenses; and employee termination costs of
$6.9 million (offset by the reversal of $2.9 million of previously
recognized stock-based compensation related to forfeited awards
previously granted to terminated employees), CEO and CFO
recruitment costs of $1.2 million, and facility closure costs of
$0.3 million, all recorded in other expense.
(i)
Reflects costs to transition premium juice
production activities to new contract manufacturers, which were
recorded in cost of goods sold and other expense.
(j)
Reflects costs related to the expansion of
our Allentown, Pennsylvania, plant-based beverage facility, which
were recorded in cost of goods sold.
(k)
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 2016 sunflower product recall, which were recorded
in other expense.
(l)
Other includes settlement gains resulting
from a legal matter and a project cancellation, offset by losses on
disposal of assets, and insurance deductibles, 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 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 loss presented above, the Company has
prepared these tables in a columnar format to present the effect of
the disposals 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
$
$
$
September 26, 2020
Net earnings
291
-
291
Provision for income taxes
41
-
41
Interest expense, net
8,017
-
8,017
Other expense, net
1,030
-
1,030
Total segment operating income
9,379
-
9,379
Depreciation and amortization
8,669
-
8,669
Stock-based compensation
3,536
-
3,536
Costs related to Value Creation
Plan(a)
935
-
935
Plant expansion costs(b)
245
-
245
Adjusted EBITDA
22,764
-
22,764
September 28, 2019
Net loss
(10,974
)
(805
)
(11,779
)
Recovery of income taxes
(3,631
)
(304
)
(3,935
)
Interest expense, net
8,864
-
8,864
Other expense, net
2,214
1,109
3,323
Total segment operating loss
(3,527
)
-
(3,527
)
Depreciation and amortization
8,517
-
8,517
Stock-based compensation
3,327
-
3,327
Costs related to Value Creation
Plan(a)
1,615
-
1,615
Adjusted EBITDA
9,932
-
9,932
(a)
For the third quarters of 2020 and 2019,
reflects professional fees and employee retention costs of $0.9
million and $1.6 million, respectively, recorded in SG&A
expenses.
(b)
For the third quarter of 2020, 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.
Excluding
disposed operations
Disposed operations
Consolidated
For the three quarters ended
$
$
$
September 26, 2020
Net earnings
4,415
-
4,415
Provision for income taxes
1,623
-
1,623
Interest expense, net
24,233
-
24,233
Other income, net
(601
)
-
(601
)
Total segment operating income
29,670
-
29,670
Depreciation and amortization
26,342
-
26,342
Stock-based compensation(a)
8,810
-
8,810
Costs related to Value Creation
Plan(b)
2,434
-
2,434
Plant expansion costs(c)
337
-
337
Adjusted EBITDA
67,593
-
67,593
September 28, 2019
Net earnings (loss)
(26,941
)
31,845
4,904
Provision for (recovery of) income
taxes
(8,779
)
12,018
3,239
Interest expense, net
25,857
-
25,857
Other expense (income), net
4,525
(44,269
)
(39,744
)
Total segment operating loss
(5,338
)
(406
)
(5,744
)
Depreciation and amortization
24,876
129
25,005
Stock-based compensation(a)
8,265
-
8,265
Costs related to Value Creation
Plan(b)
2,772
-
2,772
Plant expansion costs(c)
311
-
311
Contract manufacturer transition
costs(d)
289
-
289
Adjusted EBITDA
31,175
(277
)
30,898
(a)
For the first three quarters of 2020 and
2019, stock-based compensation of $8.8 million and $8.3 million,
respectively, was recorded in SG&A expenses, and the reversal
of $0.9 million and $2.9 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 three quarters of 2020 and
2019, reflects professional fees, and employee retention and
relocation costs of $2.4 million and $2.8 million, respectively,
recorded in SG&A expenses.
(c)
For the first three quarters of 2020,
reflects costs related to the expansion of our plant-based
extraction capabilities at our Alexandria, Minnesota, facility,
and, for the first three 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/20201029005195/en/
Scott Van Winkle ICR 617-956-6736 scott.vanwinkle@icrinc.com
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