SunOpta Announces Record Second Quarter Results; Revenues Increase 33.5% and Net Earnings Increase 55.4%
TORONTO--Aug. 8, 2007--SunOpta Inc. (SunOpta or the Company) (Nasdaq:STKL) (TSX:SOY) today announced record results for the second quarter ended June 30, 2007. All amounts are expressed in U.S. dollars.
The Company achieved record revenues for the three months ended June 30, 2007, realizing its 39th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the quarter increased by 33.5% to $207,977,000 as compared to $155,745,000 in the second quarter of 2007, led by a 37.9% 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 16.2% on a consolidated basis and includes internal growth of 19.4% within the SunOpta Food Group.
Operating income (1) for the quarter increased to $11,402,000 as compared to $8,772,000 in 2006, driven by increases in segment operating income in all groups within the SunOpta Food Group and led by the SunOpta Grains and Foods Group and the SunOpta Distribution Group. Net earnings in the quarter were $6,750,000 or $0.11 per diluted common share as compared to $4,343,000 or $0.08 per diluted common share in the prior year.
For the six months ended June 30, 2007 the company has recognized record revenues of $391,417,000 versus $289,057,000 in the same period of the prior year, an increase of 35.4%. Net earnings for the period increased 44.1% to $10,600,000 or $0.17 per diluted common share as compared to $7,355,000 or $0.13 per diluted common share for the same period in 2006.
In the quarter, the SunOpta Food Group reported increased revenues of $189,264,000 as compared to $137,287,000 in the second quarter of 2006, a 37.9% increase. Segment operating income increased to $11,411,000 versus $8,168,000 in 2006, an increase of 39.7%. This increase is after additional corporate cost allocations of $1,326,000. Excluding these allocations, segment operating income increased 55.9%. The improved segment operating income was driven by the continued rebound in sales and margins within sunflower product operations, strong volumes and margins in organic grains, packaged soy milk products and food ingredients, strong demand for organic frozen fruit products and improved margins within the SunOpta Distribution Group. During the second quarter the Company's fruit bar operations continued to implement improvements designed to address ongoing operational issues which have impacted results in the first half of the year. The Company expects significant revenue and margin improvements in these operations as major capacity and equipment upgrades are completed late in the third quarter.
Opta Minerals revenue increased to $18,394,000, due primarily to the acquisition of Bimac Corporation late in 2006, offset by cyclical weakness in the foundry and steel industries. Segment operating income for the quarter declined by 14.0% to $2,061,000 from $2,396,000, due primarily to product mix and reduced sales of higher margin desulphurization products. The Group continues to pursue strategic transactions and new product development to complement its existing product portfolio.
During the quarter the Company completed a $30 million dollar financing within SunOpta BioProcess Inc.(SBI) at a post money valuation of $230 million. The funds from this financing will be used to further leverage its technology and invest directly in the production of cellulosic ethanol. SBI is working toward completion of current proprietary pre-treatment and fiber preparation equipment projects and is pursuing a number of exciting cellulosic ethanol projects in both North America and around the world.
The Company remains well positioned for future growth with working capital of $155,316,000 and total assets of $525,424,000. Capital additions in the quarter were $6,985,000 as compared to $2,069,000 for the same period in the prior year. The long term debt to equity ratio at June 30, 2007 was 0.31:1:00, providing the Company financial resources to invest in internal growth, capital projects and execute on its acquisition program. Book equity per outstanding common share has grown to $3.94 from $3.72 at March 31, 2007.
Steve Bromley, President and Chief Executive Officer of SunOpta commented, "We are very pleased with our second quarter results, driven by solid internal growth of over 19% within our vertically integrated food operations. These earnings are consistent with our expectations for the second quarter and reflect our continued dedication to the growth of our business, both top line and bottom line. Based on these results, we are pleased to increase our annual revenue guidance to $775 to $800 million and confirm our net earnings guidance of $0.35 to $0.40 per share, including the dilutive impact of the additional shares issued during the first quarter."
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; Opta Minerals Inc. (TSX:OPM) (70.4% owned by SunOpta), a producer, distributor, and recycler of environmentally friendly industrial materials; and SunOpta BioProcess Inc. (80% owned by SunOpta), 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 income and segment operating income are defined as net earnings before other income, interest expense (net), income taxes and minority interest.
SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the three months ended June 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
(Unaudited) June 30, June 30,
2007 2006 %
$ $ Change
----------------------------------------------------------------------
Revenues 207,977 155,745 33.5%
Cost of goods sold 167,859 128,399 30.7%
--------------------------
Gross profit 40,118 27,346 46.7%
Warehousing and distribution expenses 4,969 3,834 29.6%
Selling, general and administrative
expenses 22,962 14,600 57.3%
Intangible amortization 1,012 737 37.3%
--------------------------
Earnings before the following 11,175 8,175 36.7%
Interest expense, net (1,817) (1,748) 3.9%
Other expense (217) (194) 11.9%
Foreign exchange 227 597 (62.0%)
--------------------------
(1,807) (1,345) 34.3%
--------------------------
Earnings before income taxes 9,368 6,830 37.2%
Provision for income taxes 2,296 2,087 10.0%
--------------------------
Net earnings before minority interest 7,072 4,743 49.1%
Minority interest 322 400 (19.5%)
--------------------------
Net earnings for the period 6,750 4,343 55.4%
--------------------------
Net earnings per share for the period
- Basic 0.11 0.08
==========================
- Diluted 0.11 0.08
==========================
SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the six months ended June 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
(Unaudited) June 30, June 30,
2007 2006 %
$ $ Change
----------------------------------------------------------------------
Revenues 391,417 289,057 35.4%
Cost of goods sold 316,457 238,083 32.9%
-------------------------
Gross profit 74,960 50,974 47.1%
Warehousing and distribution expenses 9,907 7,492 32.2%
Selling, general and administrative expenses 43,989 27,787 58.3%
Intangible amortization 1,995 1,281 55.7%
-------------------------
Earnings before the following 19,069 14,414 32.3%
Interest expense, net (3,729) (3,147) 18.5%
Other expense (406) (279) 45.5%
Foreign exchange 309 389 (20.6%)
-------------------------
(3,826) (3,037) 26.0%
-------------------------
Earnings before income taxes 15,243 11,377 34.0%
Provision for income taxes 4,119 3,490 18.0%
-------------------------
Net earnings before minority interest 11,124 7,887 41.0%
Minority interest 524 532 (1.5%)
-------------------------
Net earnings for the period 10,600 7,355 44.1%
-------------------------
Net earnings per share for the period
- Basic 0.17 0.13
=========================
- Diluted 0.17 0.13
=========================
SunOpta Inc.
Condensed Consolidated Balance Sheets
As at June 30, 2007 and December 31, 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
(Unaudited) June 30, December 31,
2007 2006
$ $
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents 29,680 954
Accounts receivable 99,708 73,599
Inventories 171,626 126,736
Prepaid expenses and other current assets 7,896 8,129
Current income taxes recoverable - 1,829
Deferred income taxes 1,824 1,824
---------------------
310,734 213,071
Property, plant and equipment 103,675 87,487
Goodwill 54,433 49,457
Intangible assets, net 48,771 47,943
Deferred income taxes 5,349 5,615
Other assets 2,462 1,157
---------------------
525,424 404,730
=====================
Liabilities
Current liabilities
Bank indebtedness 63,813 40,663
Accounts payable and accrued liabilities 81,799 80,851
Customer and other deposits 570 957
Current portion of long-term debt 7,947 8,433
Current portion of long-term payables 1,289 1,736
---------------------
155,418 132,640
Long-term debt 68,456 69,394
Long-term payables 3,065 3,607
Deferred income taxes 12,268 12,156
---------------------
239,207 217,797
---------------------
Preference shares issued by subsidiary 26,890 -
Minority interest 10,809 10,230
Shareholders' Equity
Capital stock 166,876 112,318
Contributed surplus 4,634 4,188
Retained earnings 61,938 51,338
Cumulative other comprehensive income 15,070 8,859
---------------------
248,518 176,703
---------------------
525,424 404,730
=====================
SunOpta Inc.
Condensed Consolidated Statements of Cash Flow
For the three months ended June 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
June 30, June 30,
2007 2006
(Unaudited) $ $
----------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 6,750 4,343
Items not affecting cash
Amortization 3,496 2,731
Deferred income taxes 983 115
Minority interest 322 400
Other 307 449
Changes in non-cash working capital (21,997) 229
-----------------
(10,139) 8,267
-----------------
Investing activities
Purchase of property, plant and equipment (6,985) (2,069)
Acquisition of companies, net of cash acquired (13,380) -
Other (88) 182
-----------------
(20,453) (1,887)
-----------------
Financing activities
Increase (decrease) in bank indebtedness 32,306 (7,478)
Borrowings under long-term debt - 258
Repayment of long-term debt (1,518) (1,160)
Repayment of deferred purchase consideration - (260)
Proceeds from the issuance of common shares 887 2,107
Proceeds from the issuance of preference shares by
subsidiary 27,880 -
Other 54 (241)
-----------------
59,609 (6,774)
Foreign exchange gain on cash held in a foreign
currency 214 2
-----------------
Increase (decrease) in cash and cash equivalents
during the period 29,231 (392)
Cash and cash equivalents - Beginning of the period 449 5,068
-----------------
Cash and cash equivalents - End of the period 29,680 4,676
-----------------
SunOpta Inc.
Condensed Consolidated Statements of Cash Flow
For the six months ended June 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------
June 30, June 30,
2007 2006
(Unaudited) $ $
----------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 10,600 7,355
Items not affecting cash
Amortization 6,927 5,346
Deferred income taxes 1,311 436
Minority interest 524 532
Other 544 557
Changes in non-cash working capital (58,323) (6,467)
-----------------
(38,417) 7,759
-----------------
Investing activities
Purchase of property, plant and equipment (12,362) (4,824)
Acquisition of companies, net of cash acquired (13,380) (12,197)
Acquisition of patents, trademarks and licences (887) -
Other (1,331) 171
-----------------
(27,960) (16,850)
-----------------
Financing activities
Increase in bank indebtedness 21,734 5,358
Borrowings under long-term debt 1,500 2,800
Repayment of term debt (7,504) (2,304)
Repayment of deferred purchase consideration (1,089) (260)
Proceeds from the issuance of common shares 52,616 2,977
Proceeds from the issuance of preference shares by
subsidiary 27,880 -
Other - (370)
-----------------
95,137 8,201
Foreign exchange (loss) gain on cash held in a
foreign currency (34) 111
-----------------
Increase (decrease) in cash and cash equivalents
during the period 28,726 (779)
Cash and cash equivalents - Beginning of the period 954 5,455
-----------------
Cash and cash equivalents - End of the period 29,680 4,676
-----------------
SunOpta Inc.
Segmented Operations
For the three months ended June 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
----------------------------------------------------------------------
Three months ended
June 30, 2007
------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenue 189,264 18,394 319 207,977
------------------------------------------
Segment operating
income 11,411 2,061 (2,070) 11,402
------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Three months ended
June 30, 2007
--------------------------------------------------
SunOpta
Grains SunOpta SunOpta
& SunOpta SunOpta Distribution Food
Foods Ingredients Fruit Group Group
$ $ $ $ $
Total revenues
from external
customers 64,618 18,495 54,908 51,243 189,264
-------------------------------------------------
Segment
operating
income 4,695 1,972 2,955 1,789 11,411
-------------------------------------------------
Three months ended
June 30, 2006
------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenue 137,287 18,260 198 155,745
------------------------------------------
Segment operating
income 8,168 2,396 (1,792) 8,772
------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Three months ended
June 30, 2006
--------------------------------------------------
SunOpta
Grains SunOpta SunOpta
& SunOpta SunOpta Distribution Food
Foods Ingredients Fruit Group Group
$ $ $ $ $
Total revenue 49,862 17,138 39,491 30,796 137,287
-------------------------------------------------
Segment
operating
income 2,273 1,774 2,870 1,251 8,168
-------------------------------------------------
SunOpta Inc.
Segmented Operations
For the six months ended June 30, 2007 and 2006
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
----------------------------------------------------------------------
Six months ended
June 30, 2007
------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenue 355,526 34,857 1,034 391,417
------------------------------------------
Segment operating
income 19,346 3,508 (3,476) 19,378
------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Six months ended
June 30, 2007
--------------------------------------------------
SunOpta
Grains SunOpta SunOpta
& SunOpta SunOpta Distribution Food
Foods Ingredients Fruit Group Group
$ $ $ $ $
Total revenue 117,209 36,473 96,342 105,502 355,526
-------------------------------------------------
Segment
operating
income 7,403 2,991 4,410 4,542 19,346
-------------------------------------------------
Six months ended
June 30, 2006
------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenue 256,558 31,305 1,194 289,057
------------------------------------------
Segment operating
income 14,997 3,394 (3,588) 14,803
------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Six months ended
June 30, 2006
--------------------------------------------------
SunOpta
Grains SunOpta SunOpta
& SunOpta SunOpta Distribution Food
Foods Ingredients Fruit Group Group
$ $ $ $ $
Total revenues
from external
customers 89,016 35,251 70,587 61,704 256,558
-------------------------------------------------
Segment
operating
income 4,066 3,480 4,370 3,081 14,997
-------------------------------------------------
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
Joe Dorame
Tel: 602-889-9700
diaz@lythampartners.com
SOURCE: SunOpta Inc.