Plant-Based revenue grew 9.3% (excluding the
divested Sunflower business)
Consolidated gross profit margin increased
80 basis points, or 320 basis points adjusted for start-up
costs
Net earnings from continuing operations of
$1.4 million vs. $1.0 million a year ago
Adjusted EBITDA increased 50.5% to $23.6
million
Reaffirms 2023 Outlook
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL)
(TSX:SOY), a U.S.-based global pioneer fueling the future of
sustainable, plant-based and fruit-based foods and beverages, today
announced financial results for the first quarter ended April 1,
2023.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
First Quarter 2023 highlights:
- Excluding the divested sunflower business, total company
revenues of $223.9 million were up 0.4% from the prior year period.
Plant-Based Foods and Beverages revenues increased by 9.3%,
partially offset by a 9.7% decline in Fruit-Based Foods and
Beverages revenues.
- The Plant-Based Foods and Beverages segment revenue growth was
led by a 25% increase in plant-based milk products, partially
offset by declines in lower margin broth and ingredients.
- Gross profit margin was up 80 basis points on a reported basis
and improved 320 basis points to 15.2% adjusted for startup costs
related to the new Texas plant.
- Earnings from continuing operations were $1.4 million compared
to $1.0 million in the prior year period.
- Adjusted earnings¹ attributable to common shareholders were
$6.0 million or $0.05 per diluted common share, compared to
adjusted earnings of $0.9 million or $0.01 per diluted common share
in the prior year period.
- Adjusted EBITDA¹ of $23.6 million, was up 50.5% versus $15.7
million. As a percentage of revenue, adjusted EBITDA was 10.5%
compared to 6.5% in the prior year period.
“We delivered another quarter of significant increase in
profitability as margin-focused portfolio optimization and revenue
expansion initiatives continue to flow through to profit,” said Joe
Ennen, Chief Executive Officer. “We continue to have strong
momentum in our businesses by leveraging our value proposition of
operating expertise, available capacity and strong R&D and
innovation capabilities. Plant-based milk products revenue
increased 25% year-over-year including an 89% increase in oat. This
growth was broad-based from a customer perspective and all
go-to-market approaches were positive. Strong plant-based
operational execution continues, as evidenced by a gross profit
margin of 20%, excluding start-up costs. To that point, production
start-up at our new plant in Texas continues to be on schedule,
setting the stage for strong second half growth. We remain well
positioned competitively, confident in our outlook for 2023, and
steadfast in our focus on Fueling the Future of Food.”
First Quarter 2023 Results
Excluding the divested sunflower business, total company
revenues of $223.9 million were up 0.4% from the prior year period.
Plant-Based Foods and Beverages revenues increased by 9.3%,
partially offset by a 9.7% decline in Fruit-Based Foods and
Beverages revenues.
The Plant-Based Foods and Beverages segment generated revenues
of $129.4 million, a decrease of 4.5% compared to $135.5 million in
the first quarter of 2022. Excluding the impact of our sunflower
business, which was divested in October, revenue from Plant-Based
Foods and Beverages increased 9.3%, with pricing accounting for
10.2% of the growth, partially offset by an unfavorable volume/mix
impact of 0.9%. Volume reflected continued penetration and strength
in oat-based offerings, coconut and soy milks, and teas, slightly
more than offset by declines in broth and ingredients.
The Fruit-Based Foods and Beverages segment generated revenues
of $94.5 million, a decrease of 9.7% compared to $104.7 million in
the first quarter of 2022. Pricing increased 1.3% reflecting
actions to offset inflationary pressures on fruit inventories and
operating expenses, while volume/mix declined 11.0% driven by lower
demand for frozen fruit, the impact of one-time incremental volumes
from a frozen fruit customer in 2022 that did not recur, partially
offset by strong demand and higher pricing for fruit snacks, as
well as incremental sales from our line of smoothie bowls.
Gross profit of $28.2 million for the first quarter was
relatively flat compared to the prior year period. As a percentage
of revenues, gross profit margin was 12.6% compared to 11.8% in the
first quarter of 2022, an increase of 80 basis points, as reported.
Gross profit in the Plant-Based Foods and Beverages segment was
essentially flat at $20.2 million, while gross margin increased 60
basis points to 15.6%. Excluding the impact of start-up costs
related to the new plant in Midlothian, Texas, adjusted gross
margin for the Plant-Based Foods and Beverages segment was 20.0% in
the first quarter of 2023, compared to 15.3% in the first quarter
of 2022. The 470-basis point increase in adjusted gross margin
reflected an approximately 170 basis point improvement following
the sale of our lower-margin sunflower commodity business, impacts
from pricing actions taken in 2022 and the positive gross margin
impact of a mix shift in our plant-based ingredient operations with
increased internal use of oat base to support our beverage business
and lower external sales. Gross profit in the Fruit-Based Foods and
Beverages segment of $8.0 million, was flat compared to the prior
year period, while gross margin increased 80 basis points to 8.5%
mainly driven by strong revenue growth in fruit snacks, partially
offset by a higher mix of lower margin bulk frozen fruit sales.
Segment operating income¹ was $2.5 million, or 1.1% of revenue
in the first quarter of 2023, compared to segment operating income
of $4.0 million, or 1.7% of revenues in the first quarter of 2022.
The decrease in segment operating income was driven by increased
SG&A due to higher stock-based incentive compensation expense
and business development costs partially offset by a $1.7 million
foreign exchange benefit.
Earnings attributable to common shareholders for the first
quarter of 2023 were $0.7 million, or $0.01 per diluted common
share, compared to income of $3.8 million, or $0.04 per diluted
common share during the first quarter of 2022.
Adjusted earnings¹ in the first quarter of 2023 were $6.0
million or $0.05 per common share, compared to adjusted earnings of
$0.9 million or $0.01 per common share in the first quarter of
2022.
Adjusted EBITDA¹ was $23.6 million or 10.5% of revenue in the
first quarter of 2023, compared to $15.7 million or 6.5% of revenue
in the first quarter of 2022.
Please refer to the discussion and table below under “Non-GAAP
Measures”.
Balance Sheet and Cash Flow
As of April 1, 2023, SunOpta had total assets of $878.1 million
and total debt of $326.2 million compared to total assets of $855.9
million and total debt of $308.5 million at year end fiscal 2022.
During the first quarter of 2023, cash provided by operating
activities was $3.9 million compared to $15.5 million during the
first quarter of 2022. Investing activities of continuing
operations consumed $25.5 million of cash during the first quarter
of 2023 versus $24.5 million in the prior year, primarily driven by
investments in capacity expansion projects.
2023 Outlook2
For fiscal 2023, the Company reaffirms its outlook:
($ millions)
2023 Outlook
Growth
Revenue
$
1,000 – 1,050
7% - 12%
Adj. EBITDA
$
97 - 103
16% - 23%
Excluding $57.9 million of revenue in 2022 related to the
divested Sunflower business, expected revenue growth rates in 2023
are between 14% - 20%.
Conference Call
SunOpta plans to host a conference call at 5:30 P.M. Eastern
time on Wednesday, May 10, 2023 to discuss the first 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. This call may
be accessed with the toll free dial-in number dial (888) 440-4182
or International dial-in number (646) 960-0653 using Conference ID:
8338433.
1 See discussion of non-GAAP measures
2 The Company has included certain forward-looking statements
about future financial performance that include non-GAAP financial
measures, including Adjusted EBITDA. These non–GAAP financial
measures are derived by excluding certain amounts, expenses or
income, from the corresponding financial measures determined in
accordance with GAAP. The determination of the amounts that are
excluded from these non-GAAP financial measures is a matter of
management judgment and depends upon, among other factors, the
nature of the underlying expense or income amounts recognized in a
given period. We are unable to present a quantitative
reconciliation of the aforementioned forward-looking non-GAAP
financial measures to their most directly comparable
forward-looking GAAP financial measures because management cannot
reliably predict all of the necessary components of such GAAP
measures. Historically, management has excluded the following items
from certain of these non-GAAP measures, and such items may also be
excluded in future periods and could be significant amounts.
- Expenses related to the acquisition or divestiture of
businesses or assets, including business development costs,
impairment of assets, integration costs, severance, retention costs
and transaction costs;
- Start-up costs of new facilities and equipment;
- Charges associated with restructuring and cost saving
initiatives, including but not limited to asset impairments,
accelerated depreciation, severance costs and lease abandonment
charges;
- Asset impairment charges and facility closure costs;
- Legal settlements or awards; and
- The tax effect of the above items.
About SunOpta Inc.
SunOpta (Nasdaq:STKL) (TSX:SOY) is a U.S.-based, global pioneer
fueling the future of sustainable, plant-based and fruit-based food
and beverages. Founded nearly 50 years ago, SunOpta manufactures
natural, organic and specialty products sold through retail and
foodservice channels. SunOpta operates as a manufacturer for
leading natural and private label brands, and also proudly produces
its own brands, including SOWN ®, Dream®, West LifeTM and Sunrise
Growers®. For more information, visit www.sunopta.com, LinkedIn and
Twitter.
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 production start-up at our plant in Texas continues to
be on schedule and the anticipated amount and growth of both
revenues and adjusted EBITDA for fiscal 2023. 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
impact of the current macroeconomic environment, including the
effects of elevated inflation, higher interest rates, and shifts in
consumer demand on the Company’s business and financial results;
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; and the Company’s expectations regarding
commodity pricing, margins and hedging results. 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 construction delays or production
issues due to labor shortages or disruptions, inability to secure
necessary supplies and materials on a timely basis or at favorable
prices; adverse weather conditions and similar risks; potential
loss of suppliers and customers as well as supply chain, logistics
and other disruptions resulting from or related to COVID-19;
unexpected issues or delays with the Company’s structural
improvements and automation investments; failure or inability to
implement portfolio changes, process improvements, go-to-market
improvements and process sustainability strategies in a timely
manner; changes in the level of capital investment; local and
global political and economic conditions; consumer spending
patterns and changes in market trends; decreases in customer
demand; delayed or unsuccessful product development efforts;
potential product recalls; working capital management; availability
and pricing of raw materials and supplies; potential covenant
breaches under the Company’s credit facilities; and other risks
described from time to time under "Risk Factors" in the Company's
Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q
(available at www.sec.gov). Consequently, all forward-looking
statements made herein are qualified by these cautionary statements
and there can be no assurance that the actual results or
developments anticipated by the Company will be realized. The
Company undertakes no obligation to publicly correct or update the
forward-looking statements in this document, in other documents, or
on its website to reflect future events or circumstances, except as
may be required under applicable securities laws.
SunOpta Inc.
Consolidated Statements of Operations
For the quarters ended April 1, 2023 and
April 2, 2022
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
April 1, 2023
April 2, 2022
$
$
Revenues
223,880
240,173
Cost of goods sold
195,677
211,817
Gross profit
28,203
28,356
Selling, general and administrative
expenses
25,430
22,210
Intangible asset amortization
2,446
2,612
Other expense, net
35
287
Foreign exchange gain
(2,211
)
(472
)
Earnings from continuing operations
before the following
2,503
3,719
Interest expense, net
5,812
2,530
Earnings (loss) from continuing
operations before income taxes
(3,309
)
1,189
Income tax expense (benefit)
(4,686
)
187
Earnings from continuing
operations
1,377
1,002
Earnings from discontinued operations
-
3,566
Net earnings
1,377
4,568
Dividends and accretion on preferred
stock
(704
)
(755
)
Earnings attributable to common
shareholders
673
3,813
Basic and diluted earnings per
share
Earnings from continuing operations
0.01
0.00
Earnings from discontinued operations
-
0.03
Earnings attributable to common
shareholders(1)
0.01
0.04
Weighted-average common shares
outstanding (000s)
Basic
110,014
107,399
Diluted
113,107
108,359
(1) The sum of individual per share
amounts may not add due to rounding.
SunOpta Inc.
Consolidated Balance Sheets
As at April 1, 2023 and December 31,
2022
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
April 1, 2023
December 31, 2022
$
$
ASSETS
Current assets
Cash and cash equivalents
910
679
Accounts receivable
86,124
74,903
Inventories
200,557
207,047
Prepaid expenses and other current
assets
15,239
15,688
Income taxes recoverable
3,896
4,040
Total current assets
306,726
302,357
Property, plant and equipment, net
339,529
322,391
Operating lease right-of-use assets
81,097
82,564
Intangible assets, net
133,200
135,646
Goodwill
3,998
3,998
Deferred income taxes
8,562
3,712
Other assets
5,013
5,184
Total assets
878,125
855,852
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities
112,944
108,511
Notes payable
5,229
-
Income taxes payable
404
957
Current portion of long-term debt
43,807
38,491
Current portion of operating lease
liabilities
13,199
13,074
Total current liabilities
175,583
161,033
Long-term debt
282,371
269,993
Operating lease liabilities
76,670
77,557
Total liabilities
534,624
508,583
Series B-1 preferred stock
14,147
28,062
SHAREHOLDERS' EQUITY
Common shares
461,132
440,348
Additional paid-in capital
21,874
33,184
Accumulated deficit
(155,015
)
(155,688
)
Accumulated other comprehensive income
1,363
1,363
Total shareholders' equity
329,354
319,207
Total liabilities and shareholders'
equity
878,125
855,852
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters ended April 1, 2023 and
April 2, 2022
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
April 1, 2023
April 2, 2022
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings
1,377
4,568
Earnings from discontinued operations
-
3,566
Earnings from continuing operations
1,377
1,002
Items not affecting cash:
Depreciation and amortization
9,998
9,413
Amortization of debt issuance costs
407
375
Deferred income taxes
(4,850
)
(178
)
Stock-based compensation
3,892
1,629
Other
603
111
Changes in operating assets and
liabilities
(7,560
)
3,191
Net cash provided by operating activities
of continuing operations
3,867
15,543
Investing activities
Additions to property, plant and
equipment
(25,842
)
(25,722
)
Proceeds from sale of sunflower
business
385
-
Proceeds from sale of property, plant and
equipment
-
1,204
Net cash used in investing activities of
continuing operations
(25,457
)
(24,518
)
Financing activities
Increase (decrease) in borrowings under
revolving credit facilities
8,812
(10,305
)
Borrowings of long-term debt
18,693
22,897
Repayment of long-term debt
(10,048
)
(2,395
)
Proceeds from notes payable
10,662
-
Repayment of notes payable
(5,433
)
-
Proceeds from the exercise of stock
options and employee share purchases
289
250
Payment of withholding taxes on
stock-based awards
(249
)
(89
)
Payment of cash dividends on preferred
stock
(818
)
(609
)
Payment of share issuance costs
(87
)
-
Payment of debt issuance costs
-
(506
)
Net cash provided by financing activities
of continuing operations
21,821
9,243
Increase in cash and cash equivalents in
the period
231
268
Cash and cash equivalent, beginning of the
period
679
227
Cash and cash equivalents, end of the
period
910
495
SunOpta Inc.
Segmented Information
For the quarters ended April 1, 2023 and
April 2, 2022
Unaudited
(Expressed in thousands of U.S.
dollars)
Quarter ended
April 1, 2023
April 2, 2022
$
$
Segment revenues from external
customers:
Plant-Based Foods and Beverages
129,350
135,511
Fruit-Based Foods and Beverages
94,530
104,662
Total segment revenues from external
customers
223,880
240,173
Segment gross profit:
Plant-Based Foods and Beverages
20,165
20,345
Fruit-Based Foods and Beverages
8,038
8,011
Total segment gross profit
28,203
28,356
Segment operating income
(loss):
Plant-Based Foods and Beverages
8,277
8,461
Fruit-Based Foods and Beverages
1,785
784
Corporate Services
(7,524
)
(5,239
)
Total segment operating income
2,538
4,006
Segment gross profit
percentage:
Plant-Based Foods and Beverages
15.6
%
15.0
%
Fruit-Based Foods and Beverages
8.5
%
7.7
%
Total segment gross profit percentage
12.6
%
11.8
%
Segment operating income
percentage:
Plant-Based Foods and Beverages
6.4
%
6.2
%
Fruit-Based Foods and Beverages
1.9
%
0.7
%
Total segment operating income
percentage
1.1
%
1.7
%
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 management believes 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 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
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 and adjusted earnings 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 and
adjusted earnings per diluted share, including a reconciliation
from earnings from continuing operations, which the Company
believes to be the most directly comparable U.S. GAAP financial
measure.
April 1, 2023
April 2, 2022
Per Share
Per Share
For the quarter ended
$
$
$
$
Earnings from continuing operations
1,377
1,002
Dividends and accretion on preferred
stock
(704
)
(755
)
Earnings attributable to common
shareholders
673
0.01
247
0.00
Adjusted for:
Start-up costs(a)
6,425
440
Business development costs(b)
731
183
Other expense, net
35
287
Net income tax effect(c)
(1,873
)
(239
)
Adjusted earnings
5,991
0.05
918
0.01
(a)
For the first quarter of 2023, start-up
costs mainly related to the ramp-up of production at our new
plant-based beverage facility in Midlothian, Texas, which were
recorded in cost of goods sold ($5.8 million) and SG&A expenses
($0.6 million). For the first quarter of 2022, start-up costs
mainly related to the hiring and training of new employees for the
Midlothian facility, together with the integration of the Dream and
West Life brands, which were recorded in cost of goods sold and
SG&A expenses.
(b)
Represents third-party costs associated
with business development activities, including costs related to
the evaluation, execution, and integration of external acquisitions
and divestitures, internal expansion projects, and other strategic
initiatives. For the first quarters of 2023 and 2022, these costs
were recorded in SG&A expenses.
(c)
Reflects the tax effect of the preceding
adjustments to earnings calculated based on the statutory tax rates
applicable in the tax jurisdiction of the underlying
adjustment.
Segment Operating Income and Adjusted
EBITDA
The Company defines segment operating income as earnings from
continuing operations before income taxes, interest expense and
other income/expense items, and adjusted EBITDA as segment
operating income plus depreciation, amortization, stock-based
compensation, and other unusual items that affect the comparability
of operating performance as identified above in the determination
of adjusted earnings. The following is a tabular presentation of
segment operating income and adjusted EBITDA, including a
reconciliation from earnings from continuing operations, which the
Company believes to be the most directly comparable U.S. GAAP
financial measure.
April 1, 2023
April 2, 2022
For the quarter ended
$
$
Earnings from continuing operations
1,377
1,002
Income tax expense (benefit)
(4,686
)
187
Interest expense, net
5,812
2,530
Other expense, net
35
287
Total segment operating income
2,538
4,006
Depreciation and amortization
9,998
9,413
Stock-based compensation
3,892
1,629
Start-up costs(a)
6,425
440
Business development costs(b)
731
183
Adjusted EBITDA
23,584
15,671
(a)
For the first quarter of 2023, start-up
costs mainly related to the ramp-up of production at our new
plant-based beverage facility in Midlothian, Texas, which were
recorded in cost of goods sold ($5.8 million) and SG&A expenses
($0.6 million). For the first quarter of 2022, start-up costs
mainly related to the hiring and training of new employees for the
Midlothian facility, together with the integration of the Dream and
West Life brands, which were recorded in cost of goods sold and
SG&A expenses.
(b)
For the first quarters of 2023 and 2022,
business development costs were recorded in SG&A expenses.
Adjusted Revenues
The following table presents adjusted revenues by segment and
consolidated, together with a reconciliation from reported
revenues. Adjusted revenues excludes revenues of the Company’s
former sunflower business, which was divested in October 2022.
Divested
Reported
Sunflower
Adjusted
Revenues
Business
Revenues
First Quarter of 2023
$
$
$
Plant-Based Foods and Beverages
129,350
-
129,350
Fruit-Based Foods and Beverages
94,530
-
94,530
Consolidated
223,880
-
223,880
First Quarter of 2022
Plant-Based Foods and Beverages
135,511
(17,163
)
118,348
Fruit-Based Foods and Beverages
104,662
-
104,662
Consolidated
240,173
(17,163
)
223,010
Change $
Plant-Based Foods and Beverages
(6,161
)
17,163
11,002
Fruit-Based Foods and Beverages
(10,132
)
-
(10,132
)
Consolidated
(16,293
)
17,163
870
Change %
Plant-Based Foods and Beverages
-4.5
%
-100.0
%
9.3
%
Fruit-Based Foods and Beverages
-9.7
%
-
-9.7
%
Consolidated
-6.8
%
-100.0
%
0.4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005336/en/
Investor Relations: Reed Anderson ICR 646-277-1260
reed.anderson@icrinc.com
Media Relations: Konnect Agency 213-988-8344
sunopta@konnectagency.com
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