November 6, 2012

SunOpta Announces Record Third Quarter and Year-to-Date Earnings

TORONTO, Nov. 6, 2012 (GLOBE NEWSWIRE) -- SunOpta Inc. ("SunOpta" or the "Company") (Nasdaq:STKL) (TSX:SOY), a leading global company focused on natural, organic and specialty foods, today announced financial results for the third quarter ended September 29, 2012. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.

Third Quarter 2012 Highlights:

  • Revenues increased to $279.3 million, an increase of 8.7% versus Q3 2011
  • Operating income increased to $12.7 million, an increase of 72% versus Q3 2011
  • Operating margin increased to 4.5% of revenues versus 2.9% in Q3 2011
  • Earnings of $5.8 million, an increase of 72% versus Q3 2011 and a record for the Company
  • Earnings per diluted common share increased to a record $0.09 versus $0.05 in Q3 2011
  • EBITDA increased to $17.8 million, an increase of 50.5% versus Q3 2011

"We are very pleased with our third quarter financial results, reflecting higher revenues and a 72% increase in both operating income and earnings versus the prior year," commented Steve Bromley, SunOpta's Chief Executive Officer. "We continue to execute on our core strategies focused on streamlining our organization, growing our value-added packaged foods and ingredients portfolio, and leveraging our existing platform. We are pleased with our progress to-date and remain confident in our opportunities to grow our global integrated natural and organic foods platform."

Third Quarter 2012 Results

Revenues for the third quarter increased 8.7% to $279.3 million as compared to $257.0 million in the third quarter of 2011. Excluding the impact of changes including foreign exchange rates, commodity-related pricing, acquisitions and rationalized product lines, revenues increased approximately 6% on a consolidated basis versus the prior year. The increase in consolidated revenues in the third quarter was driven by strong growth across integrated grains-based food product categories within SunOpta Foods and higher sales within Opta Minerals Inc. as a result of recent acquisitions. These increases were somewhat offset by the effect of lower fiber and fruit ingredients sales and decreased revenues in the Company's European organic ingredients operation.

Operating income1 increased 72.4% to $12.7 million, or 4.5% of revenues, for the third quarter of 2012 as compared to $7.4 million, or 2.9% of revenues, for the same period last year. This increase was led by a significant improvement in operating income in the Grains and Foods Group versus the prior year as a result of increased volumes of aseptically packaged grains-based beverages and strong organic grains and feedstuff sales, as well as significantly improved results in Opta Minerals and reduced selling, general and administrative costs due in part to streamlining and rationalizations completed over the past year.

Earnings for the third quarter of 2012 were $5.8 million, or $0.09 per diluted common share, as compared to $3.4 million, or $0.05 per diluted common share, for the third quarter of 2011. These earnings are a third quarter record for the Company after excluding certain non-recurring items in prior years. Third quarter earnings include the impact of approximately $0.9 million in pre-tax severance, acquisition and start-up costs ($0.5 million after-tax).

For the quarter ended September 30, 2012, the Company realized EBITDA1 of $17.8 million as compared to $11.9 million for the third quarter of 2011, a year-over-year increase of 50.5%.

The effective tax rate for the third quarter of 2012 was 39.1% as compared to 27.3% in the third quarter of 2011. The increase in the effective tax rate is primarily a result of increased earnings in higher tax jurisdictions in 2012 and the net effect of certain tax credits that were realized in the third quarter of 2011.

Year-to-Date 2012 Results

For the first three quarters of 2012 revenues increased 5.6% to $821.0 million versus revenues of $777.5 million in the same period last year. Excluding the impact of changes including foreign exchange rates, commodity-related pricing, acquisitions and rationalized product lines, revenues increased approximately 5% on a consolidated basis. The increase in consolidated revenues for the first three quarters was driven by strong growth within integrated packaged food product categories and higher sales within Opta Minerals Inc. as a result of recent acquisitions. Those increases were somewhat offset by the effect of lower fiber and fruit ingredients sales and decreased revenues in the Company's European organic ingredients operation.

Operating income1 for the first three quarters increased to $39.8 million, or 4.9% of revenues, versus $28.9 million, or 3.7% of revenues, in the prior year, a year-over-year increase of 37.9%. This increase was primarily led by improved operating income in the Grains and Foods Group and Opta Minerals versus the prior year.

For the three quarters ended September 29, 2012, the Company reported earnings of $19.8 million, or $0.30 per diluted common share, as compared to earnings of $12.8 million, or $0.19 per diluted common share, for the same period last year, a year-over-year increase of 54.4%. Excluding discontinued operations, earnings were $18.6 million, or $0.28 per diluted common share, versus $14.8 million, or $0.22 per diluted common, share in the prior year. Included in earnings for the first three quarters of 2012 were approximately $3.1 million in pre-tax severance, acquisition and start-up costs ($1.9 million after-tax), offset by a $0.7 million after-tax gain on the sale of Purity Life Natural Health Products and approximately $0.5 million in tax adjustments that lowered the Company's effective tax rate.

The effective tax rate for the first three quarters of 2012 was 34.0% as compared to 35.2% in 2011.

For the first three quarters of 2012, the Company realized EBITDA1 of $54.8 million as compared to $42.2 million for the nine months ended October 1, 2011, a year-over-year increase of 29.7%.

Balance Sheet

The Company's balance sheet remains strong, and shareholders' equity increased to $320.2 million as of September 29, 2012. At the end of the third quarter of 2012, the Company's balance sheet reflects a current ratio of 1.51 to 1.00, and a total debt to equity ratio of 0.52 to 1.00.  At September 29, 2012, the Company had total debt outstanding of $165.0 million, total assets of $669.3 million and a net book value of $4.85 per outstanding share. For the first three quarters of 2012, the Company generated cash from operating activities of $38.0 million versus cash used in operating activities of $2.7 million in the prior year, indicative of improved earnings and improved cash provided by working capital.

Conference Call Information

The Company plans to host a conference call at 10:00 AM Eastern Time on Wednesday, November 7, 2012 to discuss the third quarter financial results and recent corporate developments. After opening remarks, there will be a question and answer period. This conference call can be accessed via a link at the Company's website at www.sunopta.com. To listen to the live call over the Internet, please go to the Company's website at least 15 minutes early to register, download and install any necessary audio software. Additionally, the call may be accessed with the toll free dial-in number (877) 312-9198 or international dial-in number (631) 291-4622. 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.

1See discussion of non-GAAP measures

About SunOpta Inc.

SunOpta Inc. is a leading global company focused on natural, organic and specialty foods products. The Company specializes in sourcing, processing and packaging of natural and organic food products, integrated from seed through packaged products; with a focus on strategically vertically integrated business models. The Company's core natural and organic food operations focus on value-added grains, fiber and fruit based product offerings, supported by a global infrastructure. The company has two non-core holdings, a 66.2% ownership position in Opta Minerals Inc., listed on the Toronto Stock Exchange, a producer, distributor, and recycler of environmentally friendly industrial materials; and a minority ownership position in Mascoma Corporation, an innovative biofuels company.

The SunOpta Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3958

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 focus on our core strategies and opportunities to grow our global integrated natural and organic foods platform. The terms and phrases "continue", "remain confident", "improve" and "execute", and other similar terms and phrases are intended to identify these forward looking statements. Forward looking statements are based on information available to us 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 as well as other factors the Company believes are appropriate in the circumstances including, but not limited to, general economic conditions, consumer interest in health and wellness, product pricing levels, current customer demand, planned facility and operational expansions, competitive intensity, cost rationalization and product development initiatives. Whether actual timing and results will agree with expectations and predications of the Company is subject to many risks and uncertainties including, but not limited to, global economic conditions, consumer spending patterns and changes in market trends, decreases in customer demand, potential failure of product development, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, 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.

       
       
SunOpta Inc.      
Consolidated Statements of Operations      
For the quarter ended September 29, 2012 and October 1, 2011      
Unaudited      
(Expressed in thousands of U.S. dollars, except per share amounts)      
       Quarter ended Quarter ended  
       September 29, 2012 October 1, 2011 Change
 $ $ %
          
Revenues 279,339   257,011  8.7%
      
Cost of goods sold 246,158   226,990  8.4%
      
Gross profit  33,181   30,021  10.5%
            
Selling, general and administrative expenses 19,395   20,591  -5.8%
Intangible asset amortization 1,225   1,045  17.2%
Other expense, net 264   7  3671.4%
Foreign exchange (gain) loss (130)  1,022  -112.7%
            
Earnings from continuing operations before the following 12,427  7,356  68.9%
      
Interest expense, net 2,339   2,033  15.1%
            
Earnings from continuing operations before income taxes10,088   5,323  89.5%
            
Provision for income taxes3,947   1,451  172.0%
            
Earnings from continuing operations6,141  3,872  58.6%
            
Discontinued operations      
Earnings (loss) from discontinued operations, net of taxes 112   (433) n/a
Gain on sale of discontinued operations, net of taxes --   71  n/a
            
Earnings (loss) from discontinued operations, net of taxes 112   (362) 130.9%
      
Earnings6,253  3,510  78.1%
            
Earnings attributable to non-controlling interests449  144  211.8%
            
Earnings attributable to SunOpta Inc.5,804  3,366  72.4%
            
Earnings (loss) per share - basic      
-from continuing operations0.09   0.06   
-from discontinued operations --   (0.01)  
 0.09  0.05   
       
Earnings (loss) per share - diluted      
-from continuing operations0.09   0.06   
-from discontinued operations --   (0.01)  
       0.09  0.05   
 
 
SunOpta Inc.
Consolidated Statements of Operations   
For the three quarters ended September 29, 2012 and October 1, 2011 
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
 Three quarters ended Three quarters ended  
  September 29, 2012 October 1, 2011 Change
  $ $ %
        
Revenues 820,975   777,549  5.6%
      
Cost of goods sold  716,220   682,916  4.9%
      
Gross profit 104,755   94,633  10.7%
      
Selling, general and administrative expenses 61,911   61,497  0.7%
Intangible asset amortization 3,653   3,078  18.7%
Other expense (income), net 2,006   (2,887) 169.5%
Foreign exchange (gain) loss (629)  1,176  -153.5%
      
Earnings from continuing operations before the following  37,814   31,769  19.0%
      
Interest expense, net 7,480   6,537  14.4%
      
Earnings from continuing operations before income taxes 30,334  25,232  20.2%
      
Provision for income taxes 10,302  8,875  16.1%
       
Earnings from continuing operations 20,032  16,357  22.5%
       
Discontinued operations      
Earnings (loss) from discontinued operations, net of taxes 517   (2,057) n/a
Gain on sale of discontinued operations, net of taxes 676  71  n/a
      
Earnings (loss) from discontinued operations, net of income taxes 1,193   (1,986) 160.1%
       
Earnings21,225  14,371  47.7%
       
Earnings attributable to non-controlling interests1,384  1,523  -9.1%
     
Earnings attributable to SunOpta Inc.19,841  12,848  54.4%
      
Earnings (loss) per share — basic      
-from continuing operations 0.28  0.23   
-from discontinued operations 0.02   (0.03)  
  0.30  0.20   
       
Earnings (loss) per share — diluted      
-from continuing operations 0.28   0.22   
-from discontinued operations 0.02   (0.03)  
  0.30  0.19   
        
     
SunOpta Inc.    
Consolidated Balance Sheets    
As at September 29, 2012 and December 31, 2011    
Unaudited    
(Expressed in thousands of U.S. dollars, except per share amounts)    
  September 29, 2012 December 31, 2011
  $ $
        
ASSETS    
       
Current assets    
Cash and cash equivalents 4,187  2,378 
Accounts receivable 115,979  88,898 
Inventories 224,556  228,455 
Prepaid expenses and other current assets 22,851  21,378 
Current income taxes recoverable 1,106   1,503 
Deferred income taxes 4,946  4,773 
Current assets held for sale --   17,923 
 373,625  365,308 
    
Investments  33,845   33,845 
Property, plant and equipment 135,709   120,584 
Goodwill  57,008   49,387 
Intangible assets 54,416   48,035 
Deferred income taxes 12,435   11,751 
Other assets 2,270   1,854 
Non-current assets held for sale  --   739 
       
   669,308  631,503 
    
LIABILITIES   
    
Current liabilities   
Bank indebtedness 111,237  109,718 
Accounts payable and accrued liabilities 118,928  114,308 
Customer and other deposits 3,493  843 
Income taxes payable 3,117  1,229 
Other current liabilities 3,809  1,419 
Current portion of long-term debt 5,924  35,198 
Current portion of long-term liabilities 569  995 
Current liabilities held for sale --   5,920 
  247,077  269,630 
    
Long-term debt  47,836   17,066 
Long-term liabilities 6,586   5,586 
Deferred income taxes 30,689   24,273 
  332,188  316,555 
       
    
EQUITY   
SunOpta Inc. shareholders' equity   
Capital Stock  182,916  182,108 
65,977,814 common shares (December 31, 2011 - 65,796,398)   
Additional paid in capital  16,147  14,134 
Retained earnings 120,349  100,508 
Accumulated other comprehensive income 795  2,382 
  320,207   299,132 
Non-controlling interest 16,913  15,816 
Total equity 337,120   314,948 

 
   
  669,308   631,503 
     
     
SunOpta Inc.    
Consolidated Statements of Cash Flows    
For the quarter ended September 29, 2012 and October 1, 2011    
Unaudited    
(Expressed in thousands of U.S. dollars, except per share amounts)    
  Quarter ended Quarter ended
  September 29, 2012 October 1, 2011
 $ $
        
Cash provided by (used in)    
        
Operating activities   
Earnings 6,253   3,510 
Earnings (loss) from discontinued operations 112   (362)
Earnings from continuing operations 6,141   3,872 
       
Items not affecting cash   
Depreciation and amortization 5,155   4,497 
Unrealized gain on foreign exchange (76)  (991)
Deferred income taxes (639)  1,114 
Stock-based compensation 713   555 
Loss on sale of property, plant and equipment --   584 
Unrealized (gain) loss on derivative instruments (3,075)  646 
Other 508   375 
Changes in non-cash working capital, net of business acquired 7,462   990 
Net cash flows from operations - continuing operations 16,189   11,642 
Net cash flows from operations - discontinued operations 313   (903)
   16,502   10,739 
Investing activities   
Acquisition of business, net of cash acquired (11,644)  (2,500)
Purchases of property, plant and equipment (5,709)  (6,082)
Payment of contingent consideration (61)  -- 
Purchases of intangible assets (56)  -- 
Other 122   411 
Net cash flows from investing activities - continuing operations (17,348)  (8,171)
Net cash flows from investing activities - discontinued operations --   (318)
  (17,348)  (8,489)
Financing activities   
Increase in line of credit facilities 56,959   4,759 
Repayment of line of credit facilities (45,295)  -- 
Borrowings under long-term debt 15,234   1,875 
Repayment of long-term debt (24,136)  (6,697)
Financing costs (1,315)  -- 
Proceeds from the issuance of common shares 257   242 
Other 53   (19)
Net cash flows from financing activities - continuing operations 1,757   160 
    
Foreign exchange gain (loss) on cash held in a foreign currency 29   (457)
    
Increase in cash and cash equivalents during the period 940   1,953 
    
Discontinued operations cash activity included above:   
Add: Balance included at beginning of period --   212 
    
Cash and cash equivalents - beginning of the period 3,247   5,361 
    
Cash and cash equivalents - end of the period 4,187   7,526 
     
     
     
SunOpta Inc.    
Consolidated Statements of Cash Flows    
For the three quarters ended September 29, 2012 and October 1, 2011    
Unaudited    
(Expressed in thousands of U.S. dollars, except per share amounts)    
 Three quarters ended Three quarters ended
 September 29, 2012 October 1, 2011
  $ $
        
Cash provided by (used in)    
        
Operating activities   
Earnings 21,225   14,371 
Earnings (loss) from discontinued operations 1,193   (1,986)
Earnings from continuing operations 20,032   16,357 
       
Items not affecting cash   
Depreciation and amortization 14,946   13,354 
Unrealized gain on foreign exchange (169)  (22)
Deferred income taxes 3,077   5,835 
Stock-based compensation 2,041   1,536 
Gain on sale of property, plant and equipment --   (3,240)
Unrealized gain on derivative instruments (1,178)  (3,272)
Other 1,217   310 
Changes in non-cash working capital, net of business acquired (1,921)  (31,903)
Net cash flows from operations - continuing operations 38,045   (1,045)
Net cash flows from operations - discontinued operations (3)  (1,638)
   38,042   (2,683)
Investing activities   
Acquisition of businesses, net of cash acquired (29,174)  (2,500)
Purchases of property, plant and equipment (17,623)  (15,256)
Proceeds on sale of property, plant and equipment --   2,773 
Payment of contingent consideration (388)  -- 
Purchases of intangible assets (81)  (67)
Other (84)  (30)
Net cash from investing activities - continuing operations (47,350)  (15,080)
Net cash flows from investing activities - discontinued operations 12,134   (388)
   (35,216)  (15,468)
Financing activities   
Increase in line of credit facilities 46,434   33,186 
Repayment of line of credit facilities (45,296)  -- 
Borrowings under long-term debt 34,607   1,912 
Repayment of long-term debt (34,959)  (13,423)
Financing costs (2,490)  (186)
Proceeds from the issuance of common shares680 989
Other 24   802 
Net cash from financing activities - continuing operations (1,000)  23,280 
       
Foreign exchange gain (loss) on cash held in a foreign currency (17)  (246)
       
     
Increase in cash and cash equivalents during the period 1,809   4,883 
       
Discontinued operations cash activity included above:   
Add: Balance included at beginning of period --   308 
       
Cash and cash equivalents - beginning of the period 2,378   2,335 
    
Cash and cash equivalents - end of the period 4,187   7,526 
 
 
 
SunOpta Inc.
Segmented Information
For the quarter ended September 29, 2012 and October 1, 2011
Unaudited
(Expressed in thousands of U.S. dollars)
 
Quarter ended
September 29, 2012
     SunOpta   Corporate  
     Foods Opta Minerals Services Consolidated
   $ $ $ $
 
Total revenues from external customers
 246,359 32,980   --  279,339  
              
Segment operating income (loss)10,835 3,280  (1,424) 12,691 
              
SunOpta Foods has the following segmented reporting:
         
Quarter ended
September 29, 2012
   Grains and   Consumer International SunOpta
   Foods Ingredients Products Foods Foods
  $ $ $ $ $
Total revenues from external customers 139,917  20,273  41,636  44,533  246,359 
           
Segment operating income (loss) 8,780  878  (544) 1,721  10,835 
              
Quarter ended
October 1, 2011
    SunOpta   Corporate  
    Foods Opta Minerals Services Consolidated
   $ $ $ $
Total revenues from external customers 232,909    24,102   --  257,011 
              
Segment operating income (loss)  8,563    1,606   (2,806) 7,363
              
SunOpta Foods has the following segmented reporting:
 
Quarter ended
October 1, 2011
   Grains and   Consumer International SunOpta
  Foods Ingredients Products Foods Foods
  $ $ $ $ $
Total revenues from external customers  121,596   21,966   42,066   47,281   232,909 
              
Segment operating income  4,394   2,065   205   1,899   8,563 
              
(Segment operating income (loss) is defined as "Earnings from continuing operations before the following" excluding the impact of "Other expense [income], net".)
 
 
 
SunOpta Inc.
Segmented Information
For the three quarters ended September 29, 2012 and October 1, 2011
Unaudited  
(Expressed in thousands of U.S. dollars)
 
   
Three quarters ended
September 29, 2012
    SunOpta   Corporate  
     Foods Opta Minerals Services Consolidated
    $ $ $ $
Total revenues from external customers   728,449  92,526   -- 820,975 
              
Segment operating income (loss)   36,423  8,178  (4,781) 39,820 
         
SunOpta Foods has the following segmented reporting:
 
         
Three quarters ended
September 29, 2012
   Grains and   Consumer International SunOpta
  Foods Ingredients Products Foods Foods
   $ $ $ $ $
Total revenues fromexternal customers 397,096  62,408  135,879  133,066  728,449 
              
Segment operating income (loss) 27,662  2,946  (549) 6,364  36,423 
           
Three quarters ended
October 1, 2011
    SunOpta   Corporate  
    Foods Opta Minerals Services Consolidated
   $ $ $ $
Total revenues fromexternal customers   707,054   70,495   -- 777,549 
              
Segment operating income (loss)  29,835   6,216   (7,169)  28,882 
           
SunOpta Foods has the following segmented reporting:
         
Three quarters ended
October 1, 2011
  Grains and   Consumer International SunOpta
   Foods Ingredients Products Foods Foods
  $ $ $ $ $
Total revenues fromexternal customers  361,971   71,602   125,757   147,724   707,054 
              
Segment operating income (loss)  15,962   6,692   (151)  7,332   29,835 
              
(Segment operating income (loss) is defined as "Earnings from continuing operations before the following" excluding the impact of "Other expense [income], net".)
 

1Non-GAAP Measures

In addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), the Company provides information regarding Operating Income and Earnings before interest, taxes, depreciation and amortization ("EBITDA") as additional information about its operating results, which are not measures in accordance with GAAP. The Company believes that these non-GAAP measures assist investors in comparing performance across reporting periods on a consistent basis by excluding items that are not indicative of the Company's core operating performance. The non-GAAP measures of Operating Income and EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. 

The Company defines Operating Income as "Earnings from continuing operations before the following" excluding the impact of "Other expense [income], net"; and EBITDA as Operating Income plus depreciation and amortization. The following is a tabular presentation of Operating Income and EBITDA, including a reconciliation to GAAP earnings, which the Company believes to be the most directly comparable GAAP financial measure:

         Quarter ended Quarter ended
         September 29, 2012 October 1, 2011
 $ $
             
Earnings from continuing operations 6,141   3,872 
     
Provision for income taxes 3,947   1,451 
Interest expense, net 2,339   2,033 
Other expense, net 264   7 
Operating income 12,691   7,363 
Depreciation and amortization 5,155   4,497 
Earnings before interest, taxes, depreciation and amortization (EBITDA) 17,846   11,860 
             
             
         Three quarters ended Three quarters ended
         September 29, 2012 October 1, 2011
 $ $
             
Earnings from continuing operations 20,032   16,357 
    
Provision for income taxes 10,302   8,875 
Interest expense, net 7,480   6,537 
Other expense (income), net 2,006   (2,887)
Operating income 39,820   28,882 
Depreciation and amortization 14,946   13,354 
Earnings before interest, taxes, depreciation and amortization (EBITDA) 54,766   42,236 
             
CONTACT: For further information, please contact:

         SunOpta Inc.

         Rob McKeracher, Vice President & CFO

         Susan Wiekenkamp, Information Officer

         Tel: 905-455-2528, ext 103

         susan.wiekenkamp@sunopta.com

         Website:  www.sunopta.com


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