Revenue from continuing operations increased
18% to $182.8 million, driven by volume growth
Earnings from continuing operations of $3.8
million compared to a loss of $2.8 million in the prior
year
Adjusted EBITDA from continuing operations
of $22.6 million, an increase of 21%
Raising 2024 outlook
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL)
(TSX:SOY), an innovative and sustainable manufacturer fueling the
future of food, today announced financial results for the first
quarter ended March 30, 2024.
All amounts are expressed in U.S. dollars and results are
reported in accordance with U.S. GAAP, except where specifically
noted.
First Quarter 2024 highlights:
- Revenues of $182.8 million increased 18.0% compared to $155.0
million in the year earlier period, driven by 23.5% volume growth
partially offset by a 5% price reduction for pass-through commodity
pricing
- Gross profit of $31.7 million increased 31.8% compared to $24.1
million in the prior year period
- Operating income of $10.2 million compared to $0.5 million in
the prior year period
- Earnings from continuing operations were $3.8 million compared
to a loss of $2.8 million in the prior year period
- Adjusted EBITDA from continuing operations1 increased 20.8% to
$22.6 million, or 12.3% of revenues, compared to $18.7 million and
12.0% of revenues in the prior year period.
“SunOpta’s first quarter performance was defined by excellent
revenue growth across our portfolio of products, customers, and
channels, which continue to see healthy, broad-based demand,” said
Brian Kocher, Chief Executive Officer of SunOpta. “We are
encouraged by the progress of our capacity investments and our
operational improvement initiatives, which are supporting
significant volume growth, driving our revenue trajectory and
enabling us to improve gross margin. Based on the strength of first
quarter results, the relentless pursuit of operational excellence,
our robust pipeline of opportunities and confidence in our business
momentum, we are increasing our 2024 outlook.”
First Quarter 2024 Results
Revenues increased 18.0% to $182.8 million for the first quarter
of 2024. The increase was driven by a favorable volume/mix impact
of 23.5%, partially offset by a price reduction of 5.0% due to pass
through of commodity prices, together with a 0.6% revenue reduction
related to our exit from the smoothie bowls category in March 2024.
Volume/mix reflected volume growth for oat milks and creamers,
protein shakes, broths, teas, and fruit snacks, partially offset by
softer demand for other varieties of plant-based milks.
Gross profit increased by $7.6 million to $31.7 million for the
first quarter, compared to $24.1 million in the prior year period.
As a percentage of revenue, gross profit margin was 17.4% compared
to 15.5% in the first quarter of 2023. Adjusted gross margin1 was
17.5% compared to 19.3% in the first quarter of 2023. The 180-basis
point decrease in adjusted gross margin reflected the impact of
incremental depreciation of new production equipment for capital
expansion projects, together with higher inventory reserves,
partially offset by plant production volumes that drove favorable
plant utilization.
Operating income was $10.2 million, or 5.6% of revenue in the
first quarter of 2024, compared to operating income of $0.5
million, or 0.3% of revenue in the first quarter of 2023. The
increase in operating income was primarily driven by higher gross
profit.
Earnings from continuing operations were $3.8 million for the
first quarter of 2024 compared with a loss of $2.8 million in the
prior year period. Diluted earnings per share from continuing
operations attributable to common shareholders (after dividends and
accretion on preferred stock) was $0.03 for the first quarter
compared with a diluted loss per share of $0.03 in the prior year
period.
Loss from discontinued operations was $1.4 million or $0.01 per
diluted share in the first quarter of 2024 versus earnings of $4.2
million or $0.04 per diluted share in the year earlier period.
Adjusted earnings from continuing operations1 were $1.9 million
or $0.02 per diluted share in the first quarter of 2024 compared to
adjusted earnings from continuing operations of $1.8 million or
$0.02 per diluted share in the first quarter of 2023.
Adjusted EBITDA from continuing operations1 was $22.6 million or
12.3% of revenue in the first quarter of 2024 compared to $18.7
million and 12.0% of revenue in the first quarter of 2023.
Please refer to the discussion and table below under “Non-GAAP
Measures”.
Balance Sheet and Cash Flow
As of March 30, 2024, SunOpta had total assets of $671.8 million
and total debt of $258.8 million compared to total assets of $669.4
million and total debt of $263.2 million at year end fiscal 2023.
During the first quarter of 2024, cash provided by operating
activities of continuing operations was $7.4 million compared to
$6.7 million during the first quarter of 2023. The increase in cash
provided mainly reflected the increase in operating income,
partially offset with increases in working capital mainly due to an
increase in inventory supporting increased demand. Investing
activities of continuing operations consumed $4.2 million of cash
during the first quarter of 2024 down from $25.4 million in the
prior year, reflecting the completion of certain major capital
projects, including the construction of our new plant-based
beverage facility in Midlothian, Texas and $3.3 million in proceeds
from the sale of smoothie bowls.
2024 Outlook2
For fiscal 2024, the Company is raising its outlook and
continues to expect strong growth in revenue and Adjusted EBITDA
from continuing operations:
($ millions)
Prior Outlook
Revised Outlook
Revenue
$670 – $700
$685 - $715
Adj. EBITDA from continuing operations
$87 - $92
$88 - $92
Revenue growth
6% - 11%
9% - 13%
Adj. EBITDA from continuing operations
growth
11% - 17%
12% - 17%
Conference Call
SunOpta plans to host a conference call at 5:30 P.M. Eastern
time on Wednesday, May 8, 2024, to discuss the first quarter
financial results. After prepared 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
(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 the future financial performance, including adjusted EBITDA
from continuing operations, which is a non-GAAP financial measure.
Adjusted EBITDA from continuing operations is derived by excluding
certain amounts, expenses or income, from earnings from continuing
operations determined in accordance with U.S. GAAP. The
determination of these excluded amounts 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 measure of
adjusted EBITDA from continuing operations to the most directly
comparable forward-looking GAAP financial measure because
management cannot reliably predict all of the necessary components
of earnings from continuing operations. Historically, management
has excluded the following items in the determination of certain
non-GAAP measures, including adjusted EBITDA from continuing
operations, and such items may also be excluded in future periods
and could be significant amounts.
- Expenses related to the acquisition or divestiture of a
business, 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 an innovative and sustainable
manufacturer fueling the future of food. With roots tracing back
over 50 years, SunOpta drives growth for today’s leading brands by
serving as a trusted innovation partner and value-added
manufacturer, crafting organic, plant-based beverages, fruit
snacks, nutritional beverages, broths and tea products sold through
retail, club, foodservice and e-commerce channels. Alongside the
company’s commitment to top brands, retailers and coffee shops,
SunOpta also proudly produces its own brands, including Sown®,
Dream®, and West LifeTM. For more information, visit
www.sunopta.com and LinkedIn.
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
expectation for strong growth in revenue, Adjusted EBITDA from
continuing operations, and our revised revenue growth and Adjusted
EBITDA from continuing operations growth for fiscal 2024.
Generally, forward-looking statements do not relate strictly to
historical or current facts and are typically accompanied by words
such as “expect”, “potential”, “believe”, “anticipate”,
“estimates”, “can”, “will”, “target”, "should", "would", "plans",
“continue”, "becoming", "intend", "confident", "may", "project",
"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; our exit
from, and use of proceeds from the divestiture of the assets and
liabilities of, Frozen Fruit, uninterrupted operations and service
levels to our customers; current customer demand for the Company’s
products; 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; procurement and logistics savings;
freight lane cost reductions; yield and throughput enhancements;
labor cost reductions; and the terms of our insurance policies.
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 the possibility of supply chain,
logistics and other disruptions; 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; potential additional costs
associated with the frozen fruit recall; working capital
management; availability and pricing of raw materials and supplies;
potential covenant breaches under the Company’s credit facilities;
and other risks described from time to time under "Risk Factors" in
the Company's Annual Report on Form 10-K and its Quarterly Reports
on Form 10-Q (available at www.sec.gov). Consequently, all
forward-looking statements made herein are qualified by these
cautionary statements and there can be no assurance that the actual
results or developments anticipated by the Company will be
realized. The Company undertakes no obligation to publicly correct
or update the forward-looking statements in this document, in other
documents, or on its website to reflect future events or
circumstances, except as may be required under applicable
securities laws.
SunOpta Inc.
Consolidated Statements of Operations
For the quarters ended March 30, 2024 and
April 1, 2023
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
March 30, 2024
April 1, 2023
$
$
Revenues
182,848
154,969
Cost of goods sold
151,101
130,890
Gross profit
31,747
24,079
Selling, general and administrative
expenses
22,988
23,069
Intangible asset amortization
446
446
Other expense (income), net
(1,800
)
42
Foreign exchange gain
(51
)
(11
)
Operating income
10,164
533
Interest expense, net
6,050
5,664
Earnings (loss) from continuing
operations before income taxes
4,114
(5,131
)
Income tax expense (benefit)
277
(2,304
)
Earnings (loss) from continuing
operations
3,837
(2,827
)
Earnings (loss) from discontinued
operations
(1,417
)
4,204
Net earnings
2,420
1,377
Dividends and accretion on preferred
stock
(433
)
(704
)
Earnings attributable to common
shareholders
1,987
673
Basic and diluted earnings (loss) per
share
Earnings (loss) from continuing
operations
0.03
(0.03
)
Earnings (loss) from discontinued
operations
(0.01
)
0.04
Earnings attributable to common
shareholders
0.02
0.01
Weighted-average common shares
outstanding (000s)
Basic
116,033
110,014
Diluted
117,558
110,014
SunOpta Inc.
Consolidated Balance Sheets
As at March 30, 2024 and December 30,
2023
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
March 30, 2024
December 30, 2023
$
$
ASSETS
Current assets
Cash and cash equivalents
1,487
306
Accounts receivable
67,823
64,862
Inventories
92,000
83,215
Prepaid expenses and other current
assets
20,435
25,235
Income taxes recoverable
4,070
4,717
Current assets held for sale
2,542
5,910
Total current assets
188,357
184,245
Restricted cash
9,066
8,448
Property, plant and equipment, net
317,084
319,898
Operating lease right-of-use assets
106,667
105,919
Intangible assets, net
21,415
21,861
Goodwill
3,998
3,998
Other assets
25,174
25,055
Total assets
671,761
669,424
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities
95,900
96,650
Notes payable
16,648
17,596
Current portion of long-term debt
24,882
24,346
Current portion of operating lease
liabilities
16,403
15,808
Total current liabilities
153,833
154,400
Long-term debt
233,874
238,883
Operating lease liabilities
100,500
100,102
Deferred income taxes
378
505
Total liabilities
488,585
493,890
Series B-1 preferred stock
14,637
14,509
SHAREHOLDERS' EQUITY
Common shares
464,817
464,169
Additional paid-in capital
32,413
27,534
Accumulated deficit
(330,700
)
(332,687
)
Accumulated other comprehensive income
2,009
2,009
Total shareholders' equity
168,539
161,025
Total liabilities and shareholders'
equity
671,761
669,424
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters ended March 30, 2024 and
April 1, 2023
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
March 30, 2024
April 1, 2023
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings
2,420
1,377
Earnings (loss) from discontinued
operations
(1,417
)
4,204
Earnings (loss) from continuing
operations
3,837
(2,827
)
Items not affecting cash:
Depreciation and amortization
8,576
7,050
Amortization of debt issuance costs
229
407
Deferred income taxes
-
(4,850
)
Stock-based compensation
5,299
3,892
Gain on sale of smoothie bowls product
line
(1,800
)
-
Other
(97
)
603
Changes in operating assets and
liabilities, net of divestitures
(8,642
)
2,389
Net cash provided by operating activities
of continuing operations
7,402
6,664
Net cash used in operating activities of
discontinued operations
(2,133
)
(2,797
)
Net cash provided by operating
activities
5,269
3,867
Investing activities
Additions to property, plant and
equipment
(7,548
)
(25,395
)
Proceeds received from sale of smoothie
bowls product line
3,336
-
Net cash used in investing activities of
continuing operations
(4,212
)
(25,395
)
Net cash provided by (used in) investing
activities of discontinued operations
6,300
(62
)
Net cash provided by (used in) investing
activities
2,088
(25,457
)
Financing activities
Increase in borrowings under revolving
credit facilities
250
5,573
Repayment of long-term debt
(4,782
)
(9,899
)
Borrowings of long-term debt
-
18,693
Proceeds from notes payable
33,424
10,662
Repayment of notes payable
(34,373
)
(5,433
)
Proceeds from the exercise of stock
options and employee share purchases
314
289
Payment of withholding taxes on
stock-based awards
(86
)
(249
)
Payment of cash dividends on preferred
stock
(305
)
(818
)
Payment of share issuance costs
-
(87
)
Net cash provided by (used in) financing
activities of continuing operations
(5,558
)
18,731
Net cash provided by financing activities
of discontinued operations
-
3,090
Net cash provided by (used in) financing
activities
(5,558
)
21,821
Increase in cash, cash equivalents and
restricted cash in the period
1,799
231
Cash, cash equivalents and restricted
cash, beginning of the period
8,754
679
Cash, cash equivalents and restricted
cash, end of the period
10,553
910
Non-GAAP Financial Measures
Adjusted Gross Margin
The Company uses a measure of adjusted gross margin to evaluate
the underlying profitability of its revenue-generating activities
within each reporting period. This non-GAAP measure excludes
non-capitalizable start-up costs included in cost of goods sold
that are incurred in connection with capital expansion projects.
Additionally, the Company’s measure of adjusted gross margin may
exclude other unusual items that are identified and evaluated on an
individual basis, which due to their nature or size, the Company
would not expect to occur as part of its normal business on a
regular basis. The Company believes that disclosing this non-GAAP
measure provides investors with a meaningful, consistent comparison
of its profitability measure for the periods presented. However,
the non-GAAP measure of adjusted gross margin should not be
considered in isolation or as a substitute for gross margin
calculated based on gross profit determined in accordance with U.S.
GAAP.
The following table presents a reconciliation of adjusted gross
margin from reported gross margin calculated in accordance with
U.S. GAAP.
For the quarter ended
March 30, 2024
April 1, 2023
Reported gross margin
17.4%
15.5%
Start-up costs(a)
0.2%
3.7%
Adjusted gross margin
17.5%
19.3%
Note: percentages may not add due to
rounding.
(a)
Represents incremental direct costs
incurred in connection with plant expansion projects and new
product introductions before the project or product reaches normal
production levels, including costs for the hiring and training of
additional personnel, fees for outside services, travel costs, and
plant- and production-related expenses. For the first quarter of
2024, start-up costs related to the ramp-up of production on a
third line at our plant-based beverage facility in Midlothian,
Texas, together with an expansion of our ingredient extraction
operations at our Modesto, California, facility. For the first
quarter of 2023, start-up costs included in cost of goods sold
mainly related to the ramp-up of production on the first two lines
at our Midlothian, Texas, facility.
Adjusted Earnings from Continuing
Operations and Adjusted EBITDA from Continuing
Operations
In addition to reporting financial results in accordance with
U.S. GAAP, the Company provides additional information about its
operating results regarding adjusted earnings from continuing
operations and adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA”) from continuing
operations, which are not measures in accordance with U.S. GAAP.
The Company believes that adjusted earnings from continuing
operations and Adjusted EBITDA from continuing operations 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. 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.
The following are tabular presentations of adjusted earnings
from continuing operations and Adjusted EBITDA from continuing
operations, including a reconciliation from earnings (loss) from
continuing operations, which the Company believes to be the most
directly comparable U.S. GAAP financial measure.
March 30, 2024
April 1, 2023
Per Share
Per Share
For the quarter ended
$
$
$
$
Earnings (loss) from continuing
operations
3,837
(2,827
)
Dividends and accretion on preferred
stock
(433
)
(704
)
Earnings (loss) from continuing operations
attributable to common
shareholders
3,404
0.03
(3,531
)
(0.03
)
Adjusted for:
Gain on sale of smoothie bowls product
line(a)
(1,800
)
-
Start-up costs(b)
327
6,425
Business development costs(c)
-
731
Other
-
42
Net income tax on adjusting items(d)
-
(1,873
)
Adjusted earnings from continuing
operations
1,931
0.02
1,794
0.02
March 30, 2024
April 1, 2023
For the quarter ended
$
$
Earnings (loss) from continuing
operations
3,837
(2,827
)
Income tax expense (benefit)
277
(2,304
)
Interest expense, net
6,050
5,664
Depreciation and amortization
8,576
7,050
Stock-based compensation
5,299
3,892
Adjusted for:
Gain on sale of smoothie bowls product
line(a)
(1,800
)
-
Start-up costs(b)
327
6,425
Business development costs(c)
-
731
Other
-
42
Adjusted EBITDA from continuing
operations
22,566
18,673
(a)
Reflects the pre-tax gain on sale of the
smoothie bowls product line, which is recorded in other income.
(b)
For the first quarter of 2024, start-up
costs related to the ramp-up of production on a third line at our
plant-based beverage facility in Midlothian, Texas, together with
an expansion of our ingredient extraction operations at our
Modesto, California, facility, and are recorded in cost of goods
sold. For the first quarter of 2023, start-up costs mainly related
to the ramp-up of production on the first two lines at our
Midlothian, Texas, facility, and are recorded in cost of goods sold
($5.8 million) and SG&A expenses ($0.6 million).
(c)
Represents third-party costs associated
with business development activities, which are inclusive of costs
related to the evaluation, execution, and integration of external
acquisitions and divestitures, internal expansion projects, and
other strategic initiatives. For the first quarter of 2023,
business development costs related to the divestiture of our frozen
fruit business, which was completed in October 2023. These costs
are recorded in SG&A expenses.
(d)
Reflects the tax effect of the adjustments
to earnings calculated based on the statutory tax rates applicable
in the tax jurisdiction of the underlying adjustment, net of
deferred tax valuation allowances.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508006860/en/
Investor Relations: Reed Anderson ICR 646-277-1260
investors@sunopta.com
Media Relations: Claudine Galloway SunOpta 952-295-9579
press.inquiries@sunopta.com
SunOpta (NASDAQ:STKL)
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