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SunOpta Announces First Quarter Results; Revenues Increase 55% - Operating Earnings Increase 84%

May 02,2006
SunOpta Announces First Quarter Results; Revenues Increase 55% - Operating Earnings Increase 84%

TORONTO--May 2, 2006--SunOpta Inc. (SunOpta or the Company) (NASDAQ:STKL) (TSX:SOY) today announced results for the three months ended March 31, 2006. All amounts are expressed in U.S. dollars.

The Company achieved record revenues for the three months ended March 31, 2006, realizing its 34th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the quarter increased by 54.6% to $133,312,000 as compared to $86,223,000 in the first quarter of the prior year, led by a 52.5% increase in revenues within the Company's vertically integrated natural and organic food operations. The Company's revenue growth in the quarter reflects an internal growth rate of 18.1%, and growth via acquisitions of 36.5%.

Operating earnings(1) for the quarter increased by 83.9% to $6,031,000 or 4.5% of net revenue as compared to $3,280,000 or 3.8% of net revenue in the previous year, driven by a 104% increase in operating earnings within the SunOpta Food Group. Net earnings in the quarter were $3,012,000 or $0.053 per diluted common share as compared to $6,605,000 or $0.116 per diluted common share in the prior year. Excluding a net unusual gain realized in the first quarter of 2005 related to the initial public offering of Opta Minerals Inc., net earnings per diluted common share increased 47.2% from $0.036 per diluted common share in the prior year.

Gross margin as a percentage of revenue increased to 17.7% in the quarter versus 15.6% in the fourth quarter of 2005. This increase of 2.1% reflects improved product mix and operating efficiencies combined with the impact of ongoing cost reduction initiatives. Selling, general and administrative costs as a percentage of revenue decreased to 10.5% of revenues versus 10.9% in the fourth quarter of 2005 and 11.4% in the first quarter of 2005. This reduction reflects the benefits from leveraging costs as the Company grows combined with continued cost reduction efforts.

All operating segments within the SunOpta Food Group reported increased revenues and operating earnings versus 2005. Revenues increased 52.5% while operating earnings increased 104.3%. The strong results were driven by record aseptic soymilk revenues, the strong rebound in sales of oat fiber, growth in private label fruit based products and continued momentum and cost improvement in the Canadian distribution operations.

Opta Minerals realized strong growth in the quarter as a result of internal growth of 14.6% combined with the February acquisition of Magnesium Technologies Corporation. Internal growth was driven by strong performance of abrasive operations including facilities that were commissioned during 2005. Opta Minerals continues to pursue strategic acquisitions to complement their existing product portfolio.

The SunOpta Bioprocess Group is in the final stages of completion on its EUR 4.7 million contract with Abener Energia S.A. of Seville Spain. Delivery of equipment is expected to commence during the second quarter. Interest in the Group's technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol remains high and the Group is actively pursuing a number of exciting commercial ventures.

The Company continues to be well positioned for future growth with net working capital of $75,368,000 and total assets of $334,969,000. The long term debt to equity ratio at March 31, 2006 was 0.41:1:00, providing the Company further financial resources to invest in internal growth and execute on its acquisition program, all centered on achieving a run rate of $1 billion in revenues by the end of 2007. Equity per outstanding common share has grown to $2.88 versus $2.68 in the same period in 2005.

Jeremy Kendall, Chairman and Chief Executive Officer of SunOpta commented, "I am extremely pleased with our continued growth and improvement in operating earnings in the quarter. This improvement reflects the results of numerous initiatives which have been implemented, all focused on positioning SunOpta for sustainable growth and improved profitability. The Company is a market leader in the key growth areas of organic, fiber enriched foods, whole grains, fruits and vegetables and private label products, and we will continue to position the Company for future growth in the healthy foods market segments."

About SunOpta Inc.

SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food markets. For the last seven consecutive years, SunOpta was included in Profit magazine's 'Profit 100' list of the 100 fastest growing companies in Canada. The Company has three business units: the SunOpta Food Group, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; the Opta Minerals Group, a producer, distributor, and recycler of environmentally friendly industrial materials; and the SunOpta BioProcess Group which engineers and markets proprietary steam explosion technology systems for the pulp, bio-fuel and food processing industries. Each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.

Forward-Looking Statements

Certain statements included in this press release may constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to references to business strategies, competitive strengths, goals, capital expenditure plans, business and operational growth plans and references to the future growth of the business. These forward looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its interpretation of current conditions, historical trends and expected future developments as well as other factors that the Company believes are appropriate in the circumstance. However, whether actual results and developments will agree with expectations and predications of the Company is subject to many risks and uncertainties including, but not limited to; general economic, business or market risk conditions; competitive actions by other companies; changes in laws or regulations or policies of local governments, provinces and states as well as the governments of United States and Canada, many of which are beyond the control of the Company. 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.

(1) Operating earnings is defined as net earnings before other

income (expense), interest expense (net), income taxes and

minority interest

SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the three months ended March 31, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

----------------------------------------------------------------------
                                          March 31, March 31,
                                               2006      2005       %
                                                  $         $  Change
----------------------------------------------------------------------
Revenues                                   133,312    86,223     54.6%

Cost of goods sold                         109,684    70,587     55.4%
                                          ----------------------------

Gross profit                                23,628    15,636     51.1%

Warehousing and distribution expenses        3,429     2,604     31.7%
Selling, general and administrative
 expenses                                   13,960     9,787     42.6%
                                          ----------------------------

Earnings before the following                6,239     3,245     92.3%

Interest expense, net                       (1,399)     (302)   363.2%
Other income (expense)                         (85)    4,035  (102.1%)
Foreign exchange                              (208)       35  (694.3%)
                                          ----------------------------

                                            (1,692)    3,768  (144.9%)
                                          ----------------------------

Earnings before income taxes                 4,547     7,013   (35.2%)

Provision for income taxes                   1,403       235    497.0%
                                          ----------------------------

Net earnings before minority interest        3,144     6,778   (53.6%)
                                          ----------------------------

Minority interest                              132       173   (23.7%)
                                          ----------------------------

Net earnings for the period                  3,012     6,605   (54.4%)
                                          ----------------------------

Net earnings per share for the period

   - Basic                                    0.05      0.12   (58.3%)
                                          ============================

   - Diluted                                  0.05      0.12   (58.3%)
                                          ============================



SunOpta Inc.
Condensed Consolidated Balance Sheets
As at March 31, 2006 and December 31, 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)

----------------------------------------------------------------------
                                               March 31,  December 31,
                                                   2006          2005
                                                      $             $
----------------------------------------------------------------------

Assets

Current assets
Cash and cash equivalents                         5,068         5.455
Accounts receivable                              64,043        57,608
Inventories                                      90,325        88,340
Prepaid expenses and other current assets         6,059         4,194
Current income taxes recoverable                    759         1,847
Deferred income taxes                               691           691
                                           ---------------------------

                                                166,945       158,135

Property, plant and equipment                    82,214        77,257
Goodwill and intangibles                         76,960        58,262
Deferred income taxes                             5,543         4,473
Other assets                                      3,307         3,355
                                           ---------------------------

                                                334,969       301,482
                                           ===========================
Liabilities

Current liabilities
Bank indebtedness                                34,424        20,799
Accounts payable and accrued liabilities         48,733        50,688
Customer and other deposits                       1,538           544
Current portion of long-term debt                 6,185         3,518
Current portion of long-term payables               697           723
                                           ---------------------------

                                                 91,577        76,272

Long-term debt                                   60,479        55,538
Long-term payables                                  303           472
Deferred income taxes                             9,432             -
                                           ---------------------------

                                                161,791       132,282
                                           ---------------------------

Minority interest                                 9,259         9,116
                                           ---------------------------

Shareholders' Equity

Capital stock                                   107,539       106,678
Contributed surplus                               3,310         3,235
Retained earnings                                43,391        40,379
Cumulative other comprehensive income             9,679         9,792
                                           ---------------------------

                                                163,919       160,084
                                           ---------------------------

                                                334,969       301,482
                                           ===========================



SunOpta Inc.
Condensed Notes to Consolidated Financial Statements
For the three months ended March 31, 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share and share
amounts)
----------------------------------------------------------------------

                                                   Three months ended
                                                       March 31, 2006
                           -------------------------------------------
                                                 SunOpta
                           SunOpta      Opta  BioProcess
                              Food  Minerals         and
                             Group      Inc.   Corporate Consolidated
                                 $         $           $            $
                           -------------------------------------------

    Total revenues to
     external customers    119,271    13,045         996      133,312
                           -------------------------------------------

    Segment earnings
     before other income
     (expense), interest
     expense (net), income
     taxes and minority
     interest                6,829       998      (1,796)       6,031
                           -------------------------------------------

    Other income (expense)                                        (85)
                           -------------------------------------------

    Interest expense, net                                       1,399
                           -------------------------------------------

    Provision for income
     taxes                                                      1,403
                           -------------------------------------------

    Minority interest                                             132
                           -------------------------------------------

    Net earnings                                                3,012
                           -------------------------------------------


    The SunOpta Food Group has the following segmented reporting:

                                                   Three months ended
                                                       March 31, 2006
                  ----------------------------------------------------
                                                     SunOpta
                   SunOpta                          Canadian  SunOpta
                    Grains     SunOpta SunOpta          Food     Food
                   & Foods Ingredients   Fruit  Distribution    Group
                         $           $       $             $        $
                  ---------------------------------------------------

    Total revenues
     from external
     customers      39,154      18,113  31,096        30,908  119,271
                   ---------------------------------------------------

    Segment
     earnings
     before other
     income
     (expense),
     interest
     expense
     (net), income
     taxes and
     minority
     interest        1,793       1,706   1,500         1,830    6,829
                   ---------------------------------------------------


SunOpta Inc.
Condensed Notes to Consolidated Financial Statements
For the three months ended March 31, 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------

                                                    Three months ended
                                                        March 31, 2005
                            ------------------------------------------
                                                  SunOpta
                            SunOpta      Opta  BioProcess
                               Food  Minerals         and
                              Group      Inc.   Corporate Consolidated
                                  $         $           $            $
                            ------------------------------------------

    Total revenues to
     external customers     78,205     7,738         280       86,223
                            ------------------------------------------

    Segment earnings before
     other income
     (expense), interest
     expense (net), income
     taxes and minority
     interest                3,343       837        (900)       3,280
                            ------------------------------------------

    Other income                                                4,035
                            ------------------------------------------

    Interest expense, net                                         302
                            ------------------------------------------

    Provision for income
     taxes                                                        235
                            ------------------------------------------

    Minority interest                                             173
                            ------------------------------------------

    Net earnings                                                6,605
                            ------------------------------------------



    The SunOpta Food Group has the following segmented reporting:

                                                    Three months ended
                                                        March 31, 2005
                   ---------------------------------------------------
                                                      SunOpta
                    SunOpta                          Canadian SunOpta
                   Grains &     SunOpta SunOpta          Food    Food
                      Foods Ingredients   Fruit  Distribution   Group
                          $           $       $             $       $
                   ---------------------------------------------------

    Total revenues
     from external
     customers       31,180      15,153   6,390        25,482  78,205
                   ---------------------------------------------------

    Segment
     earnings
     before other
     income
     (expense),
     interest
     expense
     (net), income
     taxes and
     minority
     interest         1,612         676     365           690   3,343
                   ---------------------------------------------------

CONTACT: SunOpta Inc.
Jeremy N. Kendall, Steve Bromley,
John Dietrich, Susan Wiekenkamp,
905-455-2528, ext 103
email: susan.wiekenkamp@sunopta.com
Website: www.sunopta.com
or
Investment Community Inquiries
Lytham Partners, LLC
Joe Diaz, Robert Blum, Joe Dorame, 602-889-9700
diaz@lythampartners.com

SOURCE: SunOpta Inc.

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