SunOpta Announces Q4 and 2006 Year End Results
TORONTO--Feb. 22, 2007--SunOpta Inc. (SunOpta or the Company) (Nasdaq:STKL) (TSX:SOY) today announced results for the fourth quarter and year ended December 31, 2006. All amounts are expressed in U.S. dollars.
The Company achieved record revenues for the three months ended December 31, 2006, realizing its 37th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the fourth quarter increased by 33.9% to $163,506,000 compared to $122,070,000 in the fourth quarter of the prior year. Fourth quarter revenues were the highest of any quarter in the Company's history and reflect continued strong growth in core business segments.
For the year ended December 31, 2006 revenues increased 40.3% to $598,026,000 as compared to $426,101,000 in the prior year. Internal growth of 16.1% was realized during the year with 18.4% internal growth realized within the SunOpta Food Group.
Net earnings in the quarter rose 33.4% to $2,080,000 or $0.04 per diluted common share as compared to $1,559,000 or $0.03 per diluted common share in the fourth quarter of 2005, after absorbing pre-tax costs of $1,601,000 related to the frozen fruit recall previously announced by SunOpta's subsidiary, Cleugh's Frozen Foods Inc. These costs include $822,000 of direct expenses incurred by SunOpta and our affected customer and $779,000 in costs to voluntarily rework product that was produced during the period in question. This recall was an isolated incident and the Company has captured all the known costs within the fourth quarter.
Net earnings for the year were $10,959,000 or $0.19 per diluted common share as compared to $13,558,000 or $0.24 per diluted common share in the previous year which included a dilution gain of $0.08 per diluted common share related to the initial public offering of Opta Minerals. The 2006 results also include a significant segment operating loss within the Company's sunflower business of $3,948,000 due to very poor crop conditions as compared to segment operating income in the previous year of approximately $2,000,000.
Segment operating income within the SunOpta Food Group increased from $4,670,000 in the fourth quarter of 2005 to $5,385,000, reflecting a 15.3% increase despite the costs associated with the previously noted recall. Segment operating income for the year in the SunOpta Food Group was $23,007,000 as compared to $16,245,000 in 2005, a 41.6 % increase. Segment operating earnings growth for 2006 was lead by a 323.0% increase in the SunOpta Canadian Food Distribution Group, a 102.2% increase in the SunOpta Fruit Group and a 39.8% increase in the SunOpta Ingredients Group, partially offset by a 26.9% decrease in the Grains and Foods Group due to the sunflower issue.
Opta Minerals Inc. realized a significant increase in both revenues and operating income in the fourth quarter and year as compared to 2005. Revenues in the fourth quarter were $16,071,000, representing an 87.7% increase versus revenues of $8,562,000 in the fourth quarter of 2005. Segment operating income increased to $1,462,000 in the quarter, an increase of 263.7%. For the year Opta Minerals achieved revenues of $64,261,000 versus $34,659,000, an increase of 85.4%, and segment operating income increased 80.6% to $6,876,000 as compared to $3,808,000 in the previous year.
Interest in the SunOpta BioProcess Group's technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol remains high and the Group is now rapidly expanding its staff and pursuing additional supply contracts and partners. Results for the fourth quarter primarily reflect work on the Celunol contract. Equipment has been shipped as well with respect to the contract with Abener Energia S.A. Both of these contracts are expected to be completed in the first half of 2007. During the fourth quarter the Group's proprietary technology was commissioned in China and is currently being operated around the clock in the production of cellulosic ethanol. The Group has been working diligently on its previously announced financing to raise approximately $30 million into this business, which will be used primarily in the construction and ownership cellulosic ethanol production facilities in Canada in partnership with Greenfield Ethanol, Inc.
SunOpta has confirmed revenue guidance for 2007 of $740 to $760 million and earnings guidance of $0.35 to $0.40 per diluted common share reflecting continued growth, further leverage in selling, general and administration costs and improved margins resulting from product mix, cost reductions including automation projects and a focus on higher plant utilization. This guidance reflects an approximate increase in revenues of 25% and approximately 100% in net earnings per share.
The Company remains well positioned for future growth, augmented by the post year end equity financing which raised gross proceeds of $53.8 million, leaving the Company with a long term debt to equity ratio of approximately 0.33:1.00 and providing financial resources to grow the Company through a combination of internal growth and strategic acquisitions for the next several years. The Company had total assets at December 31, 2006 of $404,730,000 and net book value of $3.06 per share.
Steve Bromley, President and Chief Executive Officer of SunOpta commented, "Clearly 2006 was a year of significant improvements in many of our businesses including an internal growth rate within the range of 15 to 20% which we strive to achieve plus the addition of six strategic acquisitions which are all off to great starts in their first year. We have made a number of inroads on improving profitability as we leverage our assets, capital investments, IT infrastructure and selling, general and administrative platform. Unfortunately, these improvements were tempered by the results of our Sunflower business and the expense in dealing with our recall costs. We are confident however that these incidents are behind us and in dealing with them we have strengthened our organization including our risk management procedures and quality programs. We look forward to an exciting and profitable 2007."
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 December 31, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
2006 2005 %
$ $ Change
Revenues 163,506 122,070 33.9%
Cost of goods sold 135,438 103,011 31.5%
--------------------------
Gross profit 28,068 19,059 47.3%
Warehousing and distribution expenses 4,998 3,547 40.9%
Selling, general and administrative expenses 16,773 12,190 37.6%
Intangible amortization 931 431 116.0%
--------------------------
Earnings before the following 5,366 2,891 85.6%
Interest expense, net (2,128) (1,335) (59.4%)
Other income (expense), net (853) (407) (109.6%)
Foreign exchange (418) 823 (150.8%)
--------------------------
(3,399) (919) 269.9%
--------------------------
Earnings before income taxes 1,967 1,972 (0.3%)
(Recovery of) provision for income taxes (295) 376 (178.5%)
--------------------------
Net earnings before minority interest 2,262 1,596 41.7%
Minority interest 182 37 391.9%
--------------------------
Net earnings for the period 2,080 1,559 33.4%
--------------------------
Earnings per share for the period
Basic 0.04 0.03
==================
Diluted 0.04 0.03
==================
SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the twelve months ended December 31, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
2006 2005 %
$ $ Change
Revenues 598,026 426,101 40.3%
Cost of goods sold 496,292 354,603 40.0%
--------------------------
Gross profit 101,734 71,498 42.3%
Warehousing and distribution expenses 16,114 13,455 19.8%
Selling, general and administrative expenses 59,272 41,498 42.8%
Intangible amortization 2,864 1,338 114.1%
--------------------------
Earnings before the following 23,484 15,207 54.4%
Interest expense, net (7,021) (3,417) (105.5%)
Other income (expense), net (1,147) 3,571 (132.1%)
Foreign exchange (186) 1,341 (113.9%)
--------------------------
(8,354) 1,495 (658.8%)
--------------------------
Earnings before income taxes 15,130 16,702 (9.4%)
Provision for income taxes 3,129 2,566 21.9%
--------------------------
Net earnings before minority interest 12,001 14,136 (15.1%)
Minority interest 1,042 578 80.3%
--------------------------
Net earnings for the year 10,959 13,558 (19.2%)
--------------------------
Earnings per share for the year
Basic 0.19 0.24
==================
Diluted 0.19 0.24
==================
SunOpta Inc.
Consolidated Balance Sheets
As at December 31, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars)
----------------------------------------------------------------------
2006 2005
$ $
Assets
Current assets
Cash and cash equivalents 954 5,455
Accounts receivable 73,599 57,608
Inventories 126,736 88,340
Prepaid expenses and other current assets 8,129 4,194
Current income taxes recoverable 1,829 1,847
Deferred income taxes 1,824 691
------------------
213,071 158,135
Property, plant and equipment 87,487 77,257
Goodwill 49,457 42,429
Intangible assets 47,943 15,833
Deferred income taxes 5,615 5,854
Other assets 1,157 3,355
------------------
404,730 302,863
------------------
Liabilities
Current liabilities
Bank indebtedness 40,663 20,799
Accounts payable and accrued liabilities 80,851 50,688
Customer and other deposits 957 544
Current portion of long-term debt 8,433 3,518
Current portion of long-term payables 1,736 723
------------------
132,640 76,272
Long-term debt 69,394 55,538
Long-term payables 3,607 472
Deferred income taxes 12,156 1,381
------------------
217,797 133,663
------------------
Minority Interest 10,230 9,116
Shareholders' Equity
Capital stock 112,318 106,678
Authorized
Unlimited common shares without par value
Issued
57,672,053 (December 31, 2005 - 56,587,671) common
shares
Contributed surplus 4,188 3,235
Retained earnings 51,338 40,379
Cumulative other comprehensive income 8,859 9,792
------------------
176,703 160,084
------------------
404,730 302,863
------------------
SunOpta Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2006 and 2005
Unaudited
(Expressed in thousands of U.S. dollars)
----------------------------------------------------------------------
2006 2005
$ $
Cash provided by (used in)
Operating activities
Net earnings for the year 10,959 13,558
Items not affecting cash;
Amortization 11,701 8,141
Deferred income taxes 72 776
Dilution gain, net - (6,516)
Write-down of trademarks - 185
Minority interest 1,042 578
Other 942 1,759
Changes in non-cash working capital, net of
businesses acquired (15,212) (26,006)
-----------------
9,504 (7,525)
-----------------
Investing activities
Acquisition of companies, net of cash acquired (33,188) (20,920)
Purchases of property, plant and equipment (10,911) (14,165)
Proceeds from sale of property, plant and equipment 193 656
Other 2,510 (274)
-----------------
(41,396) (34,703)
-----------------
Financing activities
Increase in line of credit facilities 12,666 7,461
Proceeds from Opta Minerals share issuance - 14,294
Borrowings under long-term debt 15,373 25,221
Repayment of long-term debt (4,534) (6,602)
Repayment of deferred purchase consideration (356) (1,027)
Proceeds from the issuance of common shares, net of
issuance costs 4,501 946
Other (390) (984)
-----------------
27,260 39,309
-----------------
Foreign exchange gain on cash held in foreign
currency 131 293
-----------------
Decrease in cash and cash equivalents during the year (4,501) (2,626)
Cash and cash equivalents - beginning of year 5,455 8,081
-----------------
Cash and cash equivalents - end of year 954 5,455
-----------------
SunOpta Inc.
Segmented Information
For the three and twelve months ended December 31, 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
Three months ended
December 31, 2006
----------------------------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
-------------------------------------------
Total revenues to external
customers 146,892 16,071 543 163,506
-------------------------------------------
Segment Operating
Income(1) 5,385 1,462 (1,899) 4,948
-------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Three months ended
December 31, 2006
----------------------------------------------------------------------
SunOpta SunOpta
Grains Canadian SunOpta
& SunOpta SunOpta Food Food
Foods Ingredients Fruit Distribution Group
$ $ $ $ $
--------------------------------------------------
Total revenues from
external customers 50,890 15,946 35,497 44,559 146,892
--------------------------------------------------
Segment Operating
Income(1) 2,402 1,431 (361) 1,913 5,385
--------------------------------------------------
Twelve months ended
December 31, 2006
----------------------------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
-------------------------------------------
Total revenues to external
customers 530,453 64,261 3,312 598,026
-------------------------------------------
Segment Operating
Income(1) 23,007 6,876 (6,585) 23,298
-------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Twelve months ended
December 31, 2006
----------------------------------------------------------------------
SunOpta
SunOpta Canadian SunOpta
Grains SunOpta SunOpta Food Food
& Foods Ingredients Fruit Distribution Group
$ $ $ $ $
-------------------- -------- ----------------------
Total revenues
from external
customers 185,646 66,465 142,817 135,525 530,453
----------------------------------------------------
Segment Operating
Income(1) 5,852 5,293 6,401 5,461 23,007
----------------------------------------------------
SunOpta Inc.
Segmented Information
For the three and twelve months ended December 31, 2005
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
Three months ended
December 31, 2005
----------------------------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
-------------------------------------------
Total revenues to external
customers 111,296 8,562 2,212 122,070
-------------------------------------------
Segment Operating
Income(1) 4,670 402 (1,358) 3,714
-------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Three months ended
December 31, 2005
----------------------------------------------------------------------
SunOpta SunOpta
Grains Canadian SunOpta
& SunOpta SunOpta Food Food
Foods Ingredients Fruit Distribution Group
$ $ $ $ $
--------------------------------------------------
Total revenues from
external customers 39,842 16,311 29,792 25,351 111,296
--------------------------------------------------
Segment Operating
Income(1) 2,115 1,118 1,232 205 4,670
--------------------------------------------------
Twelve months ended
December 31, 2005
----------------------------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
-------------------------------------------
Total revenues to external
customers 386,541 34,659 4,901 426,101
-------------------------------------------
Segment Operating
Income(1) 16,245 3,808 (3,505) 16,548
-------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Twelve months ended
December 31, 2005
----------------------------------------------------------------------
SunOpta
SunOpta Canadian SunOpta
Grains SunOpta SunOpta Food Food
& Foods Ingredients Fruit Distribution Group
$ $ $ $ $
---------------------------------------------------
Total revenues
from external
customers 148,084 63,953 74,628 99,876 386,541
---------------------------------------------------
Segment Operating
Income(1) 8,005 3,784 3,165 1,291 16,245
---------------------------------------------------
(1) (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.