SunOpta Announces First Quarter Results
TORONTO--May 8, 2007--SunOpta Inc. (SunOpta or the Company) (Nasdaq:STKL) (TSX:SOY) today announced results for the first quarter ended March 31, 2007. All amounts are expressed in U.S. dollars.
The Company achieved record revenues for the three months ended March 31, 2007, realizing its 38th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the quarter increased by 37.6% to $183,440,000 as compared to $133,312,000 in the first quarter of 2006, led by a 39.4% 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 16.1% on a consolidated basis and includes internal growth of 20.2% within the SunOpta Food Group.
Operating income (1) for the quarter increased by 32.3% to $7,976,000 or 4.3% of net revenue as compared to $6,031,000 or 4.5% of net revenue in 2006, driven by solid increases in operating income within the SunOpta Grains and Foods Group, the SunOpta Canadian Food Distribution Group and Opta Minerals Inc. Net earnings in the quarter were $3,850,000 or $0.063 per diluted common share as compared to $3,012,000 or $0.053 per diluted common share in the prior year.
The SunOpta Food Group reported increased revenues of $166,262,000 as compared to $119,271,000 in 2006, a 39.4% increase. Segment operating income increased to $7,935,000 versus $6,829,000 in 2006. This increase includes additional corporate cost allocations of $1,169,000. Excluding these allocations, segment operating income increased 33.3%. The improved segment operating income was driven by strong growth in packaged soymilk products, a rebound in sales and margins of sunflower products, revenue gains and improved margins within the SunOpta Canadian Food Distribution Group, growth in global sourcing of fruit based products and increased sales of frozen fruits and ingredients. During the quarter the Company's fruit bar operations realized significant revenue growth but experienced a number of transitional operations issues as a result of the major increase in product demand. A major capacity and equipment upgrade is in process with new equipment scheduled to come on line late in the third quarter. The SunOpta Ingredients Group experienced solid growth in fiber sales, offsetting the termination of a significant soluble fiber manufacturing contract which occurred early in the second quarter of 2006.
Opta Minerals realized revenue growth of 26.2% in the first quarter, due primarily to the acquisitions of Magnesium Technologies Corporation and Bimac Corporation during 2006. Segment operating income for the first quarter increased 45.0% due primarily to strong operating margins in the companies acquired. Opta Minerals continues to pursue strategic transactions and new product development to complement its existing product portfolio.
There continues to be a high interest in the SunOpta BioProcess Group's technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol. Results for the first quarter reflect percentage completion of contracts related to the provision of the Group's proprietary pre-treatment and fiber preparation equipment, offset by an increase in personnel and development related costs as the Group expands and positions for future growth. The Group is actively seeking additional supply contracts and partners to further leverage its technology and overall leadership position in cellulosic ethanol.
The Company remains well positioned for future growth with net working capital of $129,416,000 and total assets of $428,270,000. Year to date net capital spending was $5,377,000 as compared to $2,755,000 for the same period in the prior year. The long term debt to equity ratio at March 31, 2007 was 0.31:1:00, providing the Company further financial resources to invest in internal growth, capital projects and execute on its acquisition program. Equity per outstanding common share has grown to $3.72 versus $3.06 at December 31, 2006.
Steve Bromley, President and Chief Executive Officer of SunOpta commented, "We are very pleased with our first quarter results, driven by solid internal growth of over 20% within our vertically integrated food operations. These earnings are consistent with our expectations for the first quarter and we are pleased to reconfirm our annual revenue guidance of $740 to $760 million and net earnings guidance of $0.35 to $0.40 per share. We are confident that there is ample opportunity to drive bottom line growth and we have implemented a number of operational improvements and cost cutting initiatives which are expected to improve margins going forward. Fiscal 2007 is off to a good start and we are most excited by our internal growth, acquisition and profit improvement opportunities."
About SunOpta Inc.
SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food, supplements and health and beauty markets. 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 (soon to become SunOpta BioProcess Inc.) 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.
SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the three months ended March 31, 2007 and 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
March 31, March 31,
2007 2006 Change
$ $
----------------------------------------------------------------------
Revenues 183,440 133,312 37.6%
Cost of goods sold 148,599 109,684 35.5%
---------------------------
Gross profit 34,841 23,628 47.5%
Warehousing and distribution expenses 4,938 3,429 44.0%
Selling, general and administrative
expenses 21,026 13,416 56.7%
Intangible amortization 983 544 80.7%
---------------------------
Earnings before the following 7,894 6,239 26.5%
Interest expense, net (1,911) (1,399) -36.6%
Other expense (189) (85) -122.4%
Foreign exchange 82 (208) 139.4%
---------------------------
(2,018) (1,692) 19.3%
---------------------------
Earnings before income taxes 5,876 4,547 29.2%
Provision for income taxes 1,823 1,403 29.9%
---------------------------
Net earnings before minority interest 4,053 3,144 28.9%
---------------------------
Minority interest 203 132 53.8%
---------------------------
Net earnings for the period 3,850 3,012 27.8%
---------------------------
Net earnings per share for the period
- Basic 0.06 0.05
===========================
- Diluted 0.06 0.05
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SunOpta Inc.
Condensed Consolidated Balance Sheets
As at March 31, 2007 and December 31, 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
March 31, December 31,
2007 2006
$ $
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents 449 954
Accounts receivable 87,986 73,599
Inventories 132,779 126,736
Prepaid expenses and other current
assets 8,105 8,129
Current income taxes recoverable - 1,829
Deferred income taxes 1,824 1,824
-------------------------------
231,143 213,071
Property, plant and equipment 90,562 87,487
Goodwill 49,649 49,457
Intangible assets 48,109 47,943
Deferred income taxes 6,330 5,615
Other assets 2,477 1,157
-------------------------------
428,270 404,730
===============================
Liabilities
Current liabilities
Bank indebtedness 30,083 40,663
Accounts payable and accrued
liabilities 62,365 80,851
Customer and other deposits 1,382 957
Current portion of long-term debt 6,699 8,433
Current portion of long-term payables 1,198 1,736
-------------------------------
101,727 132,640
Long-term debt 66,733 69,394
Long-term payables 3,002 3,607
Deferred income taxes 12,212 12,156
-------------------------------
183,674 217,797
Minority interest 10,433 10,230
Shareholders' Equity
Capital stock 165,039 112,318
Contributed surplus 4,412 4,188
Retained earnings 55,188 51,338
Accumulated other comprehensive income 9,524 8,859
-------------------------------
234,163 176,703
-------------------------------
428,270 404,730
===============================
SunOpta Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2007 and 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
March 31, March 31,
2007 2006
$ $
----------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 3,850 3,012
Items not affecting cash
Amortization 3,431 2,615
Deferred income taxes 328 321
Minority interest 203 132
Other 236 108
Changes in non-cash working capital (36,326) (6,696)
-----------------------
(28,278) (508)
-----------------------
Investing activities
Acquisition of companies, net of cash acquired - (12,197)
Purchase of property, plant and equipment (5,377) (2,755)
Acquisition of patents, trademarks and
licences (799) -
Increase in other assets (1,331) (11)
-----------------------
(7,507) (14,963)
-----------------------
Financing activities
Increase (decrease) in bank indebtedness (10,572) 12,836
Borrowings under long-term debt and tender
facility 1,500 2,542
Repayment of term debt (5,986) (1,144)
Net proceeds from the issuance of common
shares, net of issuance costs 51,729 870
Repayment of long-term payables (1,143) (129)
-----------------------
35,528 14,975
Foreign exchange gain (loss) on cash held in a
foreign currency (248) 109
-----------------------
Decrease in cash and cash equivalents during
the period (505) (387)
Cash and cash equivalents - Beginning of the
period 954 5,455
-----------------------
Cash and cash equivalents - End of the period 449 5,068
-----------------------
SunOpta Inc.
Segmented information
For the three months ended March 31, 2007
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
Three months ended
March 31, 2007
-----------------------------------------------------
SunOpta Opta SunOpta
Food Minerals BioProcess and
Group Inc. Corporate Consolidated
$ $ $ $
Total
revenues to
external
customers 166,262 16,463 715 183,440
-----------------------------------------------------
Segment
operating
income (1) 7,935 1,447 (1,406) 7,976
-----------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
----------------------------------------------------------------------
SunOpta SunOpta
Grains Canadian SunOpta
& SunOpta SunOpta Food Food
Foods Ingredients Fruit Distribution Group
$ $ $ $ $
Total revenues
from external
customers 52,591 17,978 41,434 54,259 166,262
--------------------------------------------------
Segment
operating
income (1) 2,708 1,019 1,455 2,753 7,935
--------------------------------------------------
Three months ended
March 31, 2006
-------------------------------------------------------
Opta SunOpta
SunOpta Minerals BioProcess and
Food Group Inc. Corporate Consolidated
$ $ $ $
Total
revenues
to
external
customers 119,271 13,045 996 133,312
-------------------------------------------------------
Segment
operating
income
(1) 6,829 998 (1,796) 6,031
-------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
----------------------------------------------------------------------
SunOpta
SunOpta Canadian
Grains & SunOpta SunOpta Food SunOpta
Foods Ingredients Fruit Distribution Food Group
$ $ $ $ $
Total
revenues
from
external
customers 39,154 18,113 31,096 30,908 119,271
-----------------------------------------------------
Segment
operating
income (1) 1,793 1,706 1,500 1,830 6,829
-----------------------------------------------------
(1) (Operating Income and Segment Operating Income is defined as earnings (loss) before other income (expense), interest expense (net), income taxes and minority interest as disclosed in the companies consolidated financial statements)
CONTACT: SunOpta Inc.
Jeremy N. Kendall, Chairman
Steve Bromley, President & CEO
Joseph Riz, Executive Vice President
John Dietrich, Vice President & CFO
Susan Wiekenkamp, Information Officer
Tel: 905-455-2528, ext 103
susan.wiekenkamp@sunopta.com
Website: www.sunopta.com
or
Investment Community Inquiries:
Lytham Partners, LLC
Joe Diaz, Robert Blum or Joe Dorame
Tel: 602-889-9700 diaz@lythampartners.com SOURCE: SunOpta Inc.