SunOpta Announces Record Third Quarter Results
TORONTO, Nov 6, 2007 (PrimeNewswire via COMTEX News Network) -- SunOpta Inc. (SunOpta or the Company) (Nasdaq:STKL) (TSX:SOY) today announced record results for the third quarter ended September 30, 2007. All amounts are expressed in U.S. dollars.
The Company achieved record revenues for the three months ended September 30, 2007, realizing its 40th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the quarter increased by 41.4% to $205,666,000 as compared to $145,463,000 in the third quarter of 2006, led by a 45.2% 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 21.6% on a consolidated basis and includes internal growth of 24.8% within the SunOpta Food Group.
Operating income(1) for the quarter increased 154.4% to $9,025,000 as compared to $3,547,000 in 2006, driven by increases in segment operating income within the SunOpta Food Group and led by the SunOpta Grains and Foods Group and the SunOpta Distribution Group. Net earnings for the quarter increased 234.4% to $5,096,000 or $0.08 per diluted common share as compared to $1,524,000 or $0.03 per diluted common share for the same period in the prior year. These results were realized despite significant costs and investment spending within the Company's healthy fruit snack business and SunOpta BioProcess Inc., and the unfavorable impact of the rising Canadian dollar on Canadian based overhead costs.
For the nine months ended September 30, 2007, the Company has achieved record revenues of $597,083,000 versus $434,520,000 in the same period of the prior year, an increase of 37.4%. Net earnings for the same period increased 76.8% to $15,696,000 or $0.25 per diluted common share as compared to $8,879,000 or $0.15 per diluted common share for the same period in 2006.
In the third quarter, the SunOpta Food Group reported increased revenues of $184,402,000 as compared to $127,003,000 in the third quarter of 2006, a 45.2% increase. Segment operating income increased to $8,480,000 versus $2,625,000 in 2006, an increase of 223.1%. This increase was realized despite additional corporate cost allocations of $1,657,000 versus the prior year. The increase in segment operating income reflects improved results in the SunOpta Grains and Foods Group due to strong sales of non-GMO and organic grains and grain based ingredients, increased sales of aseptic and extended shelf life packaged beverage products and is reflective of the significant turnaround that has been realized within the Group's sunflower operations. The SunOpta Ingredients Group realized improved segment operating income due to higher volumes of oat and soy fiber and dairy based ingredients plus the beneficial impact of process improvement and cost rationalization initiatives within the Group's processing operations. The SunOpta Distribution Group realized strong improvement in segment operating income due to continued growth in the natural and organic grocery sector combined with ongoing margin improvement initiatives. These increases were partially offset by a decline in Fruit Group segment operating income as the Group continued to invest in operational improvements and expanded capacity within its healthy fruit snack operations. These investments will significantly increase capacity and address ongoing processing inefficiencies which have significantly impacted this business during 2007. The healthy fruit snack business expects to realize improved results in the fourth quarter and a $2 million profit turnaround in 2008.
Opta Minerals' revenue increased to $20,485,000, due primarily to the acquisitions of Bimac Corporation in late 2006 and Newco a.s. during the quarter, offset by cyclical weakness in the foundry and steel industries. Segment operating income for the quarter increased by 10.7% to $2,236,000 from $2,020,000, due primarily to the acquisitions completed, offset by product mix and reduced sales of higher margin desulphurization products which are sold into the steel industry. The Group continues to pursue strategic transactions and new product development to complement its existing product portfolio.
SunOpta BioProcess Inc. recorded revenues of $779,000 in the quarter ended September 30, 2007 as compared to $1,573,000 in the prior year which included the sale of a pilot plant to a Chinese customer. The Group continues to work toward completing current proprietary pre-treatment and fiber preparation equipment projects and is pursuing a number of cellulosic ethanol projects in both North America and around the world. With the increasing interest in cellulosic ethanol due to raw material supply and cost issues in traditional ethanol markets, the Company has increased development and commercial activities and continues to responsibly invest in personnel and technological advancements deemed essential to execute on the potential of this growing market.
The Company remains well positioned for future growth with working capital of $154,778,000 and total assets of $571,603,000. Capital additions in the quarter were $9,562,000 including approximately $1,500,000 for the acquisition of a soymilk manufacturing facility during the quarter, as compared to $2,143,000 for the same period in the prior year. The long-term debt to equity ratio at September 30, 2007 was 0.35:1:00, 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 $4.11 from $3.94 at June 30, 2007.
Steve Bromley, President and Chief Executive Officer of SunOpta commented, "We are quite pleased with our third quarter results, driven by solid internal growth of over 20% in the quarter. We continue to see strong growth prospects within each of our operating segments and are positioning the Company to realize these opportunities. Last year we stated that our sunflower business would see a turnaround of $4,000,000 year over year and we are pleased to report that these results have actually increased by over $5,000,000 after just nine months. We expect that the significant investments being made within our healthy fruit snack business and SunOpta BioProcess Inc., which have impacted the third quarter operating results, are a wise investment for the long-term and will provide excellent returns. Based on our results to date, we are pleased to reconfirm our revenue guidance of $775,000,000 to $800,000,000 for fiscal 2007 as well as confirm our net earnings guidance in the range of $0.35 to $0.40 per share, albeit at the lower end of the range, after absorbing the previously mentioned investment spending in our fruit snack operations and SunOpta BioProcess Inc."
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 Inc. (TSX:OPM) (66.6% owned by SunOpta), a producer, distributor, and recycler of environmentally friendly industrial materials; and the 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.
The SunOpta Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3958
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 definedas net earnings before other income, interest expense (net),income taxes and minority interest. This is a non-GAAPmeasurement.
SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the three months ended September 30, 2007 and 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
------------------------------------------------------------------
September 30, September 30,
2007 2006
$ $
-----------------------------------------------------------
Revenues 205,666 145,463 41.4%
Cost of goods sold 167,805 122,771 36.7%
------------------------------------
Gross profit 37,861 22,692 66.8%
Warehousing and distribution
expenses 5,198 3,853 34.9%
Selling, general and
administrative
expenses 22,947 14,464 58.7%
Intangible amortization 1,017 671 51.6%
------------------------------------
Earnings before the following 8,699 3,704 134.9%
Interest expense, net (1,973) (1,746) 13.0%
Other expense 234 (15) -1660%
Foreign exchange 326 (157) -307.6%
------------------------------------
(1,413) (1,918) -26.3%
------------------------------------
Earnings before income taxes 7,286 1,786 308.0%
Provision for income taxes 1,751 (66) -2753%
------------------------------------
Net earnings before minority
interest 5,535 1,852 198.9%
====================================
Minority interest 439 328 33.8%
------------------------------------
Net earnings for the period 5,096 1,524 234.4%
====================================
Net earnings per share for
the period
- Basic 0.08 0.03
====================================
- Diluted 0.08 0.03
====================================
SunOpta Inc.
Condensed Consolidated Statements of Earnings
For the nine months ended September 30, 2007 and 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
------------------------------------------------------------------
September 30, September 30,
2007 2006
$ $
-----------------------------------------------------------
Revenues 597,083 434,520 37.4%
Cost of goods sold 484,263 360,854 34.2%
------------------------------------
Gross profit 112,820 73,666 53.2%
Warehousing and distribution
expenses 15,105 11,345 33.1%
Selling, general and
administrative expenses 66,935 42,251 58.4%
Intangible amortization 3,012 1,952 54.3%
------------------------------------
Earnings before the following 27,768 18,118 55.3%
Interest expense, net (5,701) (4,893) 16.5%
Other expenses (172) (294) -41.5%
Foreign exchange 635 232 173.7%
------------------------------------
(5,238) (4,955) 5.7%
------------------------------------
Earnings before income taxes 22,530 13,163 71.2%
Provision for income taxes 5,870 3,424 71.4%
------------------------------------
Net earnings before minority
interest 16,660 9,739 71.1%
====================================
Minority interest 964 860 12.1%
------------------------------------
Net earnings for the period 15,696 8,879 76.8%
====================================
Net earnings per share for
the period
- Basic 0.25 0.16
====================================
- Diluted 0.25 0.15
====================================
SunOpta Inc.
Condensed Consolidated Balance Sheets
As at September 30, 2007 and December 31, 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
---------------------------------------------------------------------
September 30, December 31,
2007 2006
$ $
--------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents 33,364 954
Accounts receivable 97,823 73,599
Inventories 188,585 126,736
Prepaid expenses and other current assets 10,354 8,129
Current income taxes recoverable -- 1,829
Deferred income taxes 1,824 1,824
--------------------------
331,950 213,071
Property, plant and equipment 112,576 87,487
Goodwill and intangibles 55,974 49,457
Intangible assets, net 62,508 47,943
Deferred income taxes 5,674 5,615
Other assets 2,921 1,157
--------------------------
571,603 404,730
==========================
Liabilities
Current liabilities
Bank indebtedness 83,731 40,663
Accounts payable and accrued liabilities 80,384 80,851
Customer and other deposits 428 957
Current portion of long-term debt 11,089 8,433
Current portion of long-term payables 1,540 1,736
--------------------------
177,172 132,640
Long-term debt 78,993 69,394
Long-term payables 2,381 3,607
Deferred income taxes 11,730 12,156
--------------------------
270,276 217,797
--------------------------
Preference shares issued by subsidiary 27,074 --
Minority interest 13,932 10,230
Shareholders' Equity
Capital stock 168,276 112,318
Contributed surplus 4,831 4,188
Retained earnings 67,034 51,338
Accumulated other comprehensive income 20,180 8,859
--------------------------
260,321 176,703
--------------------------
571,603 404,730
==========================
SunOpta Inc.
Consolidated Statements of Cash Flows For the three months ended
September 30, 2007 and 2006 Unaudited (Expressed in thousands of U.S.
dollars, except per share amounts)
---------------------------------------------------------------------
September 30, September 30,
2007 2006
$ $
---------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 5,096 1,524
Items not affecting cash
Amortization 3,783 2,979
Deferred income taxes (3,603) 164
Minority interest 439 328
Dilution gain (793) --
Other 831 215
Changes in non-cash working capital (17,123) (11,722)
---------------------
(11,370) (6,512)
---------------------
Investing activities
Acquisition of companies,
net of cash acquired (6,204) (7,950)
Purchase of property,
plant and equipment, net (9,562) (2,143)
Other (317) (365)
---------------------
(16,083) (10,458)
---------------------
Financing activities
Increase in bank indebtedness 18,855 6,875
Borrowings under long-term debt 21,581 10,462
Repayments of long-term debt (10,784) (1,334)
Proceeds from the issuance of common shares 1,400 717
Other (424) (133)
---------------------
30,628 16,587
Foreign exchange gain (loss)
on cash held in a foreign currency 509 (236)
---------------------
Increase (decrease) in cash and cash
equivalents during the period 3,684 (619)
Cash and cash equivalents -
Beginning of the period 29,680 4,676
---------------------
Cash and cash equivalents -
End of the period 33,364 4,057
=====================
SunOpta Inc.
Condensed Consolidated Statements of Cash Flow For the nine months
ended September 30, 2007 and 2006 Unaudited (Expressed in thousands of
U.S. dollars, except per share amounts)
---------------------------------------------------------------------
September 30, September 30,
2007 2006
$ $
---------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 15,696 8,879
Items not affecting cash
Amortization 10,710 8,325
Deferred income taxes (2,292) 600
Dilution gain (793) --
Minority interest 964 860
Other 1,374 772
Changes in non-cash working capital (75,446) (18,189)
---------------------
(49,787) 1,247
---------------------
Investing activities
Acquisition of companies,
net of cash acquired (19,584) (20,147)
Purchase of property,
plant and equipment, net (21,924) (6,967)
Acquisition of patents,
trademarks and licenses (922) --
Other (1,613) (194)
---------------------
(44,043) (27,308)
---------------------
Financing activities
Increase in bank indebtedness 40,589 12,233
Borrowings under long-term debt 23,081 13,262
Repayments of long-term debt (18,288) (3,638)
Payment of deferred purchase consideration (1,468) (260)
Proceeds from the issuance
of common shares, net 54,016 3,694
Proceeds from the issuance of
preference shares by subsidiary 27,880 --
Other (45) (503)
---------------------
125,765 24,788
Foreign exchange gain (loss) on cash
held in a foreign currency 475 (125)
---------------------
Increase (decrease) in cash and cash
equivalents during the period 32,410 (1,398)
Cash and cash equivalents -
Beginning of the period 954 5,455
---------------------
Cash and cash equivalents -
End of the period 33,364 4,057
=====================
SunOpta Inc.
Segmented information
For the three months ended September 30, 2007 and 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
---------------------------------------------------------------------
Three months ended
September 30, 2007
------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenues
to external
customers 184,402 20,485 779 205,666
------------------------------------------------
Segment earnings
before other
income (expense),
interest expense
(net), income
taxes and
minority interest 8,480 2,236 (1,691) 9,025
-----------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Three months ended
September 30, 2007
---------------------------------------------------
SunOpta SunOpta
Grains & SunOpta SunOpta SunOpta Food
Foods Ingredients Fruit Distribution Group
$ $ $ $ $
Total revenues
from external
customers 64,824 18,242 48,580 52,756 184,402
---------------------------------------------------
Segment earnings
before other
income
(expense),
interest
expense (net),
income taxes
and minority
interest 4,204 1,735 911 1,630 8,480
---------------------------------------------------
Three months ended
September 30, 2006
---------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenues
to external
customers 127,003 16,887 1,573 145,463
---------------------------------------------------
Segment earnings
before other
income (expense),
interest expense
(net), income
taxes and
minority
interest 2,625 2,020 (1,098) 3,547
--------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Three months ended
September 30, 2006
--------------------------------------------------
SunOpta SunOpta
Grains & SunOpta SunOpta SunOpta Food
Foods Ingredients Fruit Distribution Group
$ $ $ $ $
Total revenues
from external
customers 45,740 15,268 36,733 29,262 127,003
--------------------------------------------------
Segment
earnings
before other
income (expense),
interest expense
(net), income
taxes and
minority
interest (616) 382 2,392 467 2,625
--------------------------------------------------
SunOpta Inc.
Segmented information
For the nine months ended September 30, 2007 and 2006
Unaudited
(Expressed in thousands of U.S. dollars, except per share amounts)
---------------------------------------------------------------------
Nine months ended
September 30, 2007
-------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenues
to external
customers 539,928 55,342 1,813 597,083
-------------------------------------------------
Segment
earnings
before other
income
(expense),
interest
expense (net),
income taxes
and minority
interest 27,825 5,744 (5,166) 28,403
-------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Nine months ended
September 30, 2007
-------------------------------------------------
SunOpta SunOpta
Grains & SunOpta SunOpta SunOpta Food
Foods Ingredients Fruit Distribution Group
$ $ $ $ $
Total revenues
from external
customers 182,033 54,715 144,922 158,258 539,928
-------------------------------------------------
Segment earnings
before other
income
(expense),
interest
expense (net),
income taxes
and minority
interest 11,608 4,726 5,320 6,171 27,825
-------------------------------------------------
Nine months ended
September 30, 2006
-------------------------------------------------
SunOpta
SunOpta Opta BioProcess
Food Minerals and
Group Inc. Corporate Consolidated
$ $ $ $
Total revenues
to external
customers 383,561 48,192 2,767 434,520
-------------------------------------------------
Segment earnings
before other
income
(expense),
interest
expense (net),
income taxes
and minority
interest 17,622 5,414 (4,686) 18,350
-------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
Nine months ended
September 30, 2006
-------------------------------------------------
SunOpta SunOpta
Grains & SunOpta SunOpta SunOpta Food
Foods Ingredients Fruit Distribution Group
$ $ $ $ $
Total revenues
from external
customers 134,756 50,519 107,320 90,966 383,561
-------------------------------------------------
Segment earnings
before other
income
(expense),
interest
expense (net),
income taxes
and minority
interest 3,450 3,862 6,762 3,548 17,622
-------------------------------------------------
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SOURCE: SunOpta Inc.
SunOpta Inc.
Jeremy N. Kendall, Chairman
Steve Bromley, President & CEO
Joseph Riz, Executive Vice President
John Dietrich, Vice President & CFO
Susan Wiekenkamp, Information Officer
susan.wiekenkamp@sunopta.com
905-455-2528, ext 103
www.sunopta.com
Lytham Partners, LLC
Investment Community Inquiries:
Joe Diaz
diaz@lythampartners.com
Robert Blum
Joe Dorame
602-889-9700