Plant-Based revenue growth of 21.4%, driving 9.7% total Revenue growth

Loss from continuing operations was $0.9 million vs. loss of $5.1 million in PY

Adjusted EBITDA increased 60.8% to $16.1 million

SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL) (TSX:SOY), a leading healthy food and beverage company focused on plant-based foods and beverages and fruit-based foods and beverages, today announced financial results for the second quarter ended July 3, 2021.

All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.

Second Quarter 2021 Highlights:

  • Revenues of $202.3 million for the second quarter of 2021 increased 9.7%, reflecting 21.4% growth in plant-based partially offset by an anticipated decline in fruit-based, of 1.9% in the second quarter.
  • Gross margin increased 40 basis points to 13.0% from 12.6% in the prior year.
  • Loss from continuing operations was $0.9 million compared to a loss from continuing operations of $5.1 million in the prior year. Loss from continuing operations included $4.1 million of other expenses in the second quarter related to the previously announced exit from the Company’s South Gate, California fruit ingredient processing facility.
  • Adjusted earnings¹ attributable to common shareholders was $0.1 million or $0.00 per diluted common share in the second quarter of 2021, compared to an adjusted loss of ($7.9) million or ($0.09) per diluted common share in the second quarter of 2020.
  • Adjusted EBITDA¹ of $16.1 million, or 8.0% of revenues for the second quarter of 2021, up 60.8% versus $10.0 million or 5.4% of revenues in the second quarter of 2020.

“We delivered another strong performance; with second quarter Adjusted EBITDA increasing over 60% fueled by 21% revenue growth in plant-based. Strong execution of our strategies has resulted in EBITDA growth of over 50% in five of the last six quarters. Volume gains, mix, insulated contract pricing and our continued focus on productivity initiatives helped to drive a 40 basis point improvement in gross margin. This improvement overcame a volatile commodity environment, while also absorbing around 110 basis points of additional depreciation expense from capacity expansions and supply chain cost inflation. We continue to see strong flow-through with a 260 basis point increase in the Adjusted EBITDA margin,” said Joe Ennen, Chief Executive Officer. “In our plant-based business unit our three-pronged go-to-market strategy is amplifying our growth rate as we saw solid gains in each of co-manufacturing and own brand portfolio, more than offsetting retail private label declines from the COVID-19 rebalancing of demand. While plant-based remains our primary growth driver, we are encouraged by recent activity in our fruit snacks business, where demand has been very strong. We continue to be optimistic about the long-term momentum in plant-based as the strength of our platform continues to produce growth for existing customers as well as attracting new customers.” Ennen continued, “I am pleased to announce that we are in the final stages of negotiating a lease for the construction of a new mega facility in the Dallas-Fort Worth area. At 275,000 square feet in size, this greenfield facility is by far the largest capex project we have undertaken and will support significant long-term growth in our plant-based business. We expect the facility to be operational by late 2022.”

Second Quarter 2021 Results

Revenues of $202.3 million for the second quarter of 2021 were up 9.7% compared to the second quarter of 2020 as the 21.4% growth in Plant-Based Foods and Beverages was partially offset by a 1.9% decrease in Fruit-Based Foods and Beverages.

The Plant-Based Foods and Beverages segment generated revenues of $111.4 million during the second quarter of 2021, an increase of 21.4% compared to $91.7 million in the second quarter of 2020. Strong demand for our oat-based product offerings remained a key growth driver and we realized gains in foodservice reflecting the lifting of restrictions related to COVID-19. In addition, revenues from the recent acquisition of the Dream and WestSoy brands contributed $4.7 million to the second quarter. Partially offsetting these factors was normalization of at-home consumption, which resulted in anticipated softer retail volumes for plant-based beverages and everyday broth offerings.

The Fruit-Based Foods and Beverages segment generated revenues of $90.9 million during the second quarter of 2021, a decrease of 1.9% compared to $92.7 million in the second quarter of 2020. The decline was attributable to lower retail volumes in frozen fruit stemming from normalization of at-home consumption compared to elevated COVID-19 driven levels in the prior year, the planned rationalization of lower-margin SKUs and customers, and industry-wide raspberry and blackberry supply constraints. Rebounding demand and new customers drove strong volume growth in fruit snacks, which, along with rising foodservice demand, partially mitigated the declines in retail frozen fruit.

Gross profit was $26.3 million for the second quarter, an increase of $3.1 million compared to $23.3 million in the prior year period. As a percentage of revenues, gross profit margin was 13.0% in the second quarter of 2021 compared to 12.6% in the second quarter of 2020, an increase of 40 basis points. The Plant-Based Foods and Beverages segment accounted for $3.2 million of the increase in gross profit, reflecting higher volumes in plant-based beverages and ingredients plus contributions from Dream and WestSoy, partially offset by higher depreciation and transportation expenses. Gross profit in the Fruit-Based Foods and Beverages segment decreased by $0.1 million in the quarter as lower volumes of retail frozen fruit, higher strawberry prices, foreign exchange impacts and increased transportation costs were largely offset by fruit snack volume growth and corresponding plant utilization increases, volume growth of fruit-based toppings in advance of our Southgate processing facility closure, and productivity improvements.

Segment operating income¹ was $1.7 million, or 0.9% of revenues in the second quarter of 2021, compared to segment operating loss of ($0.4) million, or (0.2%) of revenues in the second quarter of 2020. The increase in operating income year-over-year was primarily attributable to higher gross profit partially offset by an increase in SG&A stemming from transition and integration costs related to the acquisition of Dream and WestSoy.

Adjusted EBITDA¹ was $16.1 million or 8.0% of revenues in the second quarter of 2021, compared to $10.0 million or 5.4% of revenues in the second quarter of 2020.

Loss from continuing operations attributable to common shareholders for the second quarter of 2021 was $1.7 million, or $0.02 per diluted common share, compared to a loss of $7.7 million, or $0.09 per diluted common share during the second quarter of 2020. The loss from continuing operations in the second quarter included other expenses of $4.1 million related to the Company’s decision to exit its fruit ingredient processing facility and transition certain production to other facilities.

Adjusted earnings¹ in the second quarter of 2021 was $0.1 million or $0.00 per common share, compared to an adjusted loss of ($7.9) million or ($0.09) per common share in the second quarter of 2020.

Please refer to the discussion and table below under “Non-GAAP Measures”.

Balance Sheet and Cash Flow

At July 3, 2021, SunOpta had total assets of $742.2 million and total debt of $206.2 million compared to total assets of $909.4 million and total debt of $448.9 million a year earlier, primarily reflecting the sale of the Global Ingredients business and improved operating performance. During the second quarter of 2021, cash used in operating activities was $39.1 million from continuing operations compared to cash provided by operating activities of $0.5 million during the second quarter of 2020, primarily reflecting increased inventories due to seasonal fruit purchases, replenishing a shortfall in frozen strawberry supply in 2020 related to COVID-19-driven demand for fresh fruit, together with the impacts of higher commodity prices and lower retail sales demand for frozen fruit in 2021. Investing activities from continuing operations utilized $32.4 million of cash during the second quarter of 2021 versus $5.9 million in the prior year, primarily due to the acquisition of Dream and WestSoy and significant investments to support continued strong growth in Plant-Based Foods and Beverages.

Conference Call

SunOpta plans to host a conference call at 9:00 A.M. Eastern time on Wednesday, August 11, 2021, to discuss the second quarter financial results. After opening remarks, there will be a question and answer period. Investors interested in listening to the live webcast can access a link on SunOpta's website at www.sunopta.com under the "Investor Relations" section or directly here. A replay of the webcast will be archived and can be accessed for approximately 90 days on the Company's website. Investors interested in listening to the live call over the telephone can join by calling US: 833-513-0545, or International: 1-778-560-2569 conference ID: 1078636.

¹ See discussion of non-GAAP measures

About SunOpta Inc.

SunOpta Inc. is a leading company specializing in the sourcing, processing and production of organic, natural and non-GMO plant- and fruit-based food and beverage products.

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 continued optimism about the long-term momentum in plant-based as the strength of our platform and that it will continue to produce customer growth and our expectation that recent investments will continue to support strong growth in plant-based. 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 July 3, 2021 and June 27, 2020

(Unaudited)

 

 

 

 

(All dollar amounts expressed in thousands of U.S. dollars, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

Two quarters ended

 

 

 

 

July 3, 2021

June 27, 2020

July 3, 2021

June 27, 2020

 

 

 

 

$

$

$

$

 

 

 

 

 

 

 

 

Revenues

202,273

 

184,401

 

409,913

 

391,998

 

 

 

 

 

 

 

 

 

Cost of goods sold

175,937

 

161,142

 

353,588

 

341,566

 

 

 

 

 

 

 

 

 

Gross profit

26,336

 

23,259

 

56,325

 

50,432

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

22,720

 

21,880

 

43,594

 

41,813

 

Intangible asset amortization

2,532

 

2,272

 

4,726

 

4,543

 

Other expense (income), net

4,661

 

(835

)

6,276

 

(280

)

Foreign exchange loss (gain)

(639

)

(517

)

197

 

1,693

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations before the following

(2,938

)

459

 

1,532

 

2,663

 

 

 

 

 

 

 

 

 

Interest expense, net

1,631

 

7,413

 

3,291

 

15,078

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

(4,569

)

(6,954

)

(1,759

)

(12,415

)

 

 

 

 

 

 

 

 

Income tax benefit

(3,651

)

(1,821

)

(2,513

)

(3,318

)

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

(918

)

(5,133

)

754

 

(9,097

)

 

 

 

 

 

 

 

 

Earnings from discontinued operations

-

 

6,140

 

-

 

13,465

 

 

 

 

 

 

 

 

 

Net earnings (loss)

(918

)

1,007

 

754

 

4,368

 

 

 

 

 

 

 

 

 

Dividends and accretion on preferred stock

(744

)

(2,604

)

(2,697

)

(4,629

)

 

 

 

 

 

 

 

 

Loss attributable to common shareholders

(1,662

)

(1,597

)

(1,943

)

(261

)

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

 

 

 

 

From continuing operations

(0.02

)

(0.09

)

(0.02

)

(0.15

)

 

From discontinued operations

-

 

0.07

 

-

 

0.15

 

 

Basic and diluted loss per share

(0.02

)

(0.02

)

(0.02

)

(0.00

)

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding (000s)

 

 

 

 

 

Basic

105,676

 

89,089

 

100,898

 

88,625

 

 

Diluted

105,676

 

89,089

 

100,898

 

88,625

 

SunOpta Inc.

 

 

Consolidated Balance Sheets

 

 

As at July 3, 2021 and January 2, 2021

 

 

(Unaudited)

 

 

(All dollar amounts expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

 

 

July 3, 2021

January 2, 2021

 

 

 

 

$

$

 

 

 

 

 

 

ASSETS

 

 

Current assets

 

 

 

Cash and cash equivalents

479

 

251

 

 

Accounts receivable

83,109

 

72,724

 

 

Inventories

229,856

 

147,748

 

 

Prepaid expenses and other current assets

15,793

 

21,665

 

 

Income taxes recoverable

7,088

 

6,935

 

Total current assets

336,325

 

249,323

 

 

 

 

 

 

 

Property, plant and equipment

187,226

 

158,048

 

Operating lease right-of-use assets

46,886

 

35,172

 

Goodwill

3,998

 

3,998

 

Intangible assets

153,664

 

133,317

 

Deferred income taxes

8,328

 

-

 

Other assets

5,819

 

5,757

 

 

 

 

 

 

 

Total assets

742,246

 

585,615

 

 

 

 

 

 

 

LIABILITIES

 

 

Current liabilities

 

 

 

Accounts payable and accrued liabilities

115,841

 

118,592

 

 

Income taxes payable

1,371

 

1,431

 

 

Current portion of long-term debt

7,597

 

3,478

 

 

Current portion of operating lease liabilities

13,017

 

12,750

 

 

Current portion of long-term liabilities

-

 

200

 

Total current liabilities

137,826

 

136,451

 

 

 

 

 

 

 

Long-term debt

198,602

 

66,245

 

Operating lease liabilities

35,644

 

24,582

 

Deferred income taxes

30,242

 

25,408

 

Total liabilities

402,314

 

252,686

 

 

 

 

 

 

 

Series A Preferred Stock

-

 

87,305

 

Series B-1 Preferred Stock

27,862

 

27,595

 

 

 

 

 

 

 

EQUITY

 

 

SunOpta Inc. shareholders’ equity

 

 

 

Common shares

435,425

 

326,545

 

 

Additional paid-in capital

24,966

 

37,862

 

 

Accumulated deficit

(149,684

)

(147,741

)

 

Accumulated other comprehensive income

1,363

 

1,363

 

Total equity

312,070

 

218,029

 

 

 

 

 

 

 

Total equity and liabilities

742,246

 

585,615

 

SunOpta Inc.

 

 

 

 

Consolidated Statements of Cash Flows

 

 

 

 

For the quarters and two quarters ended July 3, 2021 and June 27, 2020

 

(Unaudited)

 

 

 

 

(Expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

Two quarters ended

 

 

 

 

July 3, 2021

June 27, 2020

July 3, 2021

June 27, 2020

 

 

 

 

$

$

$

$

 

 

 

 

 

 

 

 

CASH PROVIDED BY (USED IN)

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

Net earnings (loss)

(918

)

1,007

 

754

 

4,368

 

Earnings from discontinued operations

-

 

6,140

 

-

 

13,465

 

Earnings (loss) from continuing operations

(918

)

(5,133

)

754

 

(9,097

)

Items not affecting cash:

 

 

 

 

 

Depreciation and amortization

8,910

 

7,655

 

16,953

 

15,380

 

 

Amortization of debt issuance costs

349

 

1,065

 

634

 

2,004

 

 

Deferred income taxes

(4,331

)

2,855

 

(3,494

)

3,199

 

 

Stock-based compensation

4,370

 

1,779

 

8,343

 

3,990

 

 

Impairment of long-lived assets

2,962

 

-

 

2,962

 

-

 

 

Other

(167

)

(25

)

(336

)

(27

)

 

Changes in operating assets and liabilities

(50,322

)

(7,714

)

(71,978

)

8,710

 

Net cash provided by (used in) operating activities of continuing operations

(39,147

)

482

 

(46,162

)

24,159

 

Net cash provided by operating activities of discontinued operations

-

 

2,183

 

-

 

13,255

 

Net cash provided by (used in) operating activities

(39,147

)

2,665

 

(46,162

)

37,414

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

Additions to intangible assets

(25,073

)

-

 

(25,073

)

-

 

Additions to property, plant and equipment

(7,306

)

(5,905

)

(16,603

)

(14,927

)

Proceeds from sale of assets

-

 

-

 

1,350

 

-

 

Other

-

 

41

 

-

 

41

 

Net cash used in investing activities of continuing operations

(32,379

)

(5,864

)

(40,326

)

(14,886

)

Net cash used in investing activities of discontinued operations

-

 

(465

)

(13,380

)

(1,132

)

Net cash used in investing activities

(32,379

)

(6,329

)

(53,706

)

(16,018

)

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

Increase (decrease) under revolving credit facilities

70,244

 

(19,469

)

111,829

 

(29,882

)

Borrowings of long-term debt

4,155

 

-

 

4,641

 

-

 

Repayment of long-term debt

(5,855

)

(617

)

(9,940

)

(1,078

)

Payment of debt issuance costs

(543

)

(415

)

(2,371

)

(2,488

)

Proceeds from the exercise of stock options and employee share purchases

4,550

 

470

 

7,190

 

571

 

Payment of withholding taxes on stock-based awards

(666

)

(1,151

)

(6,737

)

(1,151

)

Payment of cash dividends on preferred stock

(609

)

-

 

(4,029

)

(1,700

)

Payment of share issuance costs

(25

)

-

 

(287

)

-

 

Proceeds from issuance of preferred stock, net of issuance costs

-

 

26,804

 

-

 

26,804

 

Other

-

 

-

 

-

 

(4

)

Net cash provided by (used in) financing activities of continuing operations

71,251

 

5,622

 

100,296

 

(8,928

)

Net cash used in financing activities of discontinued operations

-

 

(3,015

)

(200

)

(12,337

)

Net cash provided by (used in) financing activities

71,251

 

2,607

 

100,096

 

(21,265

)

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents in the period

(275

)

(1,057

)

228

 

131

 

 

 

 

 

 

 

 

 

Cash and cash equivalents of discontinued operations:

 

 

 

 

 

Balance at beginning of period

-

 

2,437

 

-

 

1,370

 

 

Foreign exchange gain (loss) on cash and cash equivalents

-

 

12

 

-

 

(4

)

 

Less: balance at end of period

-

 

(1,152

)

-

 

(1,152

)

 

 

 

 

 

 

 

 

Cash and cash equivalent, beginning of the period

754

 

233

 

251

 

128

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of the period

479

 

473

 

479

 

473

 

SunOpta Inc.

 

Segmented Information

 

 

 

 

For the quarters and two quarters ended July 3, 2021 and June 27, 2020

Unaudited

 

 

 

(Expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

Two quarters ended

 

 

 

 

July 3, 2021

June 27, 2020

July 3, 2021

June 27, 2020

 

 

 

 

$

$

$

$

Segment revenues from external customers:

 

 

 

 

 

Plant-Based Foods and Beverages

111,359

 

91,705

 

230,810

 

197,947

 

 

Fruit-Based Foods and Beverages

90,914

 

92,696

 

179,103

 

194,051

 

 

 

Total segment revenues from external customers

202,273

 

184,401

 

409,913

 

391,998

 

 

 

 

 

 

 

Segment gross profit:

 

 

 

 

 

Plant-Based Foods and Beverages

19,896

 

16,731

 

43,054

 

37,802

 

 

Fruit-Based Foods and Beverages

6,440

 

6,528

 

13,271

 

12,630

 

 

 

Total segment gross profit

26,336

 

23,259

 

56,325

 

50,432

 

 

 

 

 

 

 

 

 

Segment operating income (loss):

 

 

 

 

 

Plant-Based Foods and Beverages

8,641

 

10,484

 

21,958

 

24,337

 

 

Fruit-Based Foods and Beverages

(1,447

)

(2,016

)

(3,341

)

(6,718

)

 

Corporate Services

(5,471

)

(8,844

)

(10,809

)

(15,236

)

 

 

Total segment operating income (loss)

1,723

 

(376

)

7,808

 

2,383

 

 

 

 

 

 

 

 

 

Segment gross profit percentage:

 

 

 

 

 

Plant-Based Foods and Beverages

17.9

%

18.2

%

18.7

%

19.1

%

 

Fruit-Based Foods and Beverages

7.1

%

7.0

%

7.4

%

6.5

%

 

 

Total segment gross profit percentage

13.0

%

12.6

%

13.7

%

12.9

%

 

 

 

 

 

 

 

 

Segment operating income (loss) percentage:

 

 

 

 

 

Plant-Based Foods and Beverages

7.8

%

11.4

%

9.5

%

12.3

%

 

Fruit-Based Foods and Beverages

-1.6

%

-2.2

%

-1.9

%

-3.5

%

 

 

Total segment operating income (loss) percentage

0.9

%

-0.2

%

1.9

%

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 the impacts of acquisitions and divestitures. 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 earnings/loss from continuing operations, which the Company believes to be the most directly comparable U.S. GAAP financial measure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

July 3, 2021

 

June 27, 2020

 

 

 

 

 

 

Per Share

 

 

Per Share

 

For the quarter ended

$

$

 

$

$

 

Loss from continuing operations

(918

)

 

 

(5,133

)

 

 

Dividends and accretion on preferred stock

(744

)

 

 

(2,604

)

 

 

Loss from continuing operations attributable to common shareholders

(1,662

)

(0.02

)

 

(7,737

)

(0.09

)

 

Adjusted for:

 

 

 

 

 

 

 

Costs related to exit from fruit ingredient processing facility(a)

4,123

 

 

 

-

 

 

 

 

Acquisition, divestiture, and related costs(b)

1,434

 

 

 

-

 

 

 

 

Plant expansion costs(c)

-

 

 

 

92

 

 

 

 

Costs related to Value Creation Plan(d)

-

 

 

 

78

 

 

 

 

Other(e)

247

 

 

 

(457

)

 

 

 

Net income tax effect(f)

(4,022

)

 

 

170

 

 

 

Adjusted earnings (loss)

120

 

0.00

 

 

(7,854

)

(0.09

)

(a)

Reflects asset impairment charges of $3.0 million and employee termination costs of $1.2 million related to the exit from our fruit ingredient processing facility, which were recorded in the other expense.

(b)

Represents third-party costs associated with completed or potential acquisitions and divestitures, including costs related to the evaluation, execution, and integration of acquisitions or completion of divestitures. For the second quarter of 2021, these costs were mainly related to the transition and integration of the acquired Dream and WestSoy brands and the assessment of post-closing adjustments related to the divestiture of Tradin Organic, which were recorded in SG&A expenses ($1.1 million) and other expense ($0.3 million).

(c)

Reflects costs related to the expansion of our plant-based extraction capabilities, which were recorded in cost of goods sold.

(d)

Reflects professional fees of $0.2 million and employee retention costs of $0.2 million recorded in SG&A expenses, and employee termination costs of $0.1 million recorded in other expense, partially 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 income.

(e)

For the second quarter of 2021, other mainly reflects a $0.5 million loss on the settlement of employment-related legal matter, partially offset by a gain related to a project cancellation, which were recorded in other expense/income. For the second quarter of 2020, other includes the reversal of previously accrued costs related to the withdrawal of certain consumer-packaged products in 2016, which was recorded in other income.

(f)

Reflects the tax effect of the preceding adjustments to earnings calculated based on our estimated annual effective tax rate.

 

 

 

 

 

July 3, 2021

 

June 27, 2020

 

 

 

 

 

 

Per Share

 

 

Per Share

 

For the two quarters ended

$

$

 

$

$

 

Earnings (loss) from continuing operations

754

 

 

 

(9,097

)

 

 

Dividends and accretion on preferred stock

(2,697

)

 

 

(4,629

)

 

 

Loss from continuing operations attributable to common shareholders

(1,943

)

(0.02

)

 

(13,726

)

(0.15

)

 

Adjusted for:

 

 

 

 

 

 

 

Costs related to exit from fruit ingredient processing facility(a)

4,123

 

 

 

-

 

 

 

 

Acquisition, divestiture, and related costs(b)

1,786

 

 

 

-

 

 

 

 

Costs related to Value Creation Plan(c)

1,432

 

 

 

1,175

 

 

 

 

Plant expansion costs(d)

-

 

 

 

92

 

 

 

 

Other(e)

247

 

 

 

(472

)

 

 

 

Net income tax effect(f)

(4,262

)

 

 

(368

)

 

 

Adjusted earnings (loss)

1,383

 

0.01

 

 

(13,299

)

(0.15

)

(a)

Reflects asset impairment charges of $3.0 million and employee termination costs of $1.2 million related to the exit from our fruit ingredient processing facility, which were recorded in the other expense.

(b)

Represents third-party costs associated with completed or potential acquisitions and divestitures, including costs related to the evaluation, execution, and integration of acquisitions or completion of divestitures. For the first two quarters of 2021, these costs were mainly related to the transition and integration of the acquired Dream and WestSoy brands and the assessment of post-closing adjustments related to the divestiture of Tradin Organic, which were recorded in SG&A expenses ($1.3 million) and other expense ($0.5 million).

(c)

For the first two quarters of 2021, represents costs to complete the exit from our Santa Maria, California, frozen fruit processing facility, which were recorded in other expense. For the first two quarters of 2020, reflects professional fees of $0.5 million and employee retention costs of $0.5 million recorded in SG&A expenses; and employee termination costs of $1.1 million mainly related to the consolidation of our corporate office functions, partially offset by a $0.9 million reversal of previously recognized stock-based compensation related to forfeited awards previously granted to terminated employees recorded in other income.

(d)

Reflects costs related to the expansion of our plant-based extraction capabilities, which were recorded in cost of goods sold.

(e)

For the first two quarters of 2021, other mainly reflects a $0.5 million loss on the settlement of employment-related legal matter, partially offset by a gain related to a project cancellation, which were recorded in other expense/income. For the first two quarters of 2020, other income includes the reversal of previously accrued costs related to the withdrawal of certain consumer-packaged products in 2016.

(f)

Reflects the tax effect of the preceding adjustments to earnings calculated based on our estimated annual effective tax rate.

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 earnings/loss from continuing operations, which the Company believes to be the most directly comparable U.S. GAAP financial measure.

 

 

 

 

 

July 3, 2021

 

June 27, 2020

 

For the quarter ended

$

 

$

 

Loss from continuing operations

(918

)

 

(5,133

)

 

Income tax benefit

(3,651

)

 

(1,821

)

 

Interest expense, net

1,631

 

 

7,413

 

 

Other expense (income), net

4,661

 

 

(835

)

 

Total segment operating income (loss)

1,723

 

 

(376

)

 

 

Depreciation and amortization

8,910

 

 

7,655

 

 

 

Stock-based compensation(a)

4,370

 

 

2,215

 

 

 

Acquisition, divestiture, and related costs(b)

1,143

 

 

-

 

 

 

Costs related to Value Creation Plan(c)

-

 

 

456

 

 

 

Plant expansion costs(d)

-

 

 

92

 

 

Adjusted EBITDA

16,146

 

 

10,042

 

(a)

For the second quarter of 2020, stock-based compensation of $2.2 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 quarter of 2021, acquisition, divestiture, and related costs were mainly related to the transition and integration of the acquired Dream and WestSoy brands, which were recorded in SG&A expenses.

(c)

Reflects professional fees of $0.2 million and employee retention costs of $0.2 million recorded in SG&A expenses.

(d)

Reflects costs related to the expansion of our plant-based extraction capabilities, which were recorded in cost of goods sold.

 

 

 

 

 

July 3, 2021

 

June 27, 2020

 

For the two quarters ended

$

 

$

 

Earnings (loss) from continuing operations

754

 

 

(9,097

)

 

Income tax benefit

(2,513

)

 

(3,318

)

 

Interest expense, net

3,291

 

 

15,078

 

 

Other expense (income), net

6,276

 

 

(280

)

 

Total segment operating income

7,808

 

 

2,383

 

 

 

Depreciation and amortization

16,953

 

 

15,380

 

 

 

Stock-based compensation(a)

8,343

 

 

4,885

 

 

 

Acquisition, divestiture, and related costs(b)

1,312

 

 

-

 

 

 

Costs related to Value Creation Plan(c)

-

 

 

983

 

 

 

Plant expansion costs(d)

-

 

 

92

 

 

Adjusted EBITDA

34,416

 

 

23,723

 

(a)

For the first two quarters of 2020, stock-based compensation of $4.9 million was recorded in SG&A expenses and the reversal of $0.9 million 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 2021, acquisition, divestiture, and related costs were mainly related to the transition and integration of the acquired Dream and WestSoy brands, which were recorded in SG&A expenses.

(c)

Reflects professional fees of $0.5 million and employee retention costs of $0.5 million recorded in SG&A expenses.

(d)

Reflects costs related to the expansion of our plant-based extraction capabilities, which were recorded in cost of goods sold.

 

Reed Anderson ICR 646-277-1260 reed.anderson@icrinc.com

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