Company Reiterates Expectations to Achieve Mid-Term Targets
Announces Governance and Management Transitions
Provides Update on Value Creation Plan
TORONTO--(BUSINESS WIRE)--
SunOpta Inc. ("SunOpta") (Nasdaq:STKL) (TSX:SOY), a leading global
company focused on organic, non-genetically modified and specialty
foods, today announced financial results for the third quarter ended
October 1, 2016. All amounts are expressed in U.S. dollars and results
are reported in accordance with U.S. GAAP, except where specifically
noted. SunOpta today also highlighted its expectations to achieve
previously disclosed mid-term targets, announced governance and
management changes and provided an update on the value creation plan
under development with assistance from its partner, Oaktree Capital
Management, L.P. ("Oaktree").
Third Quarter 2016 Highlights:
-
Revenues of $348.7 million for the third quarter of 2016, versus
$348.1 million in the second quarter of 2016 and $277.2 million in the
third quarter of 2015, an increase of 25.8% versus the prior year
period.
-
Loss from continuing operations of $3.4 million or $0.04 per diluted
common share in the third quarter of 2016, compared to a loss from
continuing operations of $0.2 million or $0.00 per diluted common
share in the third quarter of 2015. Adjusted earnings per diluted
common share were $6.3 million or $0.07 per diluted common share
during the third quarter of 2016, compared to $4.7 million or $0.07
per diluted common share during the third quarter of 2015.
-
Adjusted EBITDA¹ of $26.7 million or 7.6% of revenues for the third
quarter of 2016, versus $13.2 million or 4.8% of revenues in the third
quarter of 2015.
Year-to-Date 2016 Highlights:
-
Revenues of $1,049.2 million for the first three quarters of 2016,
versus $828.8 million in the first three quarters of 2015, an increase
of 26.6%.
-
Loss from continuing operations of $17.1 million or $0.20 per diluted
common share, compared to earnings from continuing operations of $10.6
million or $0.15 per diluted common share during the same period in
2015. Adjusted earnings per diluted common share were $13.1 million or
$0.15 per diluted common share for the first three quarters of 2016,
compared to $16.5 million or $0.24 per diluted common share during the
first three quarters of 2015.
-
Adjusted EBITDA¹ of $72.3 million, or 6.9% of revenues year to date,
versus $44.0 million, or 5.3% of in the same period of 2015.
Governance and Management Transitions
President and Chief Executive Officer Rik Jacobs and Chair of the Board
Alan Murray will be stepping down from their respective positions, Mr.
Jacobs effective November 11, 2016 and Mr. Murray effective today.
Current SunOpta Director Katrina L. Houde will serve as interim CEO and
Director Dean Hollis has been appointed Chair of SunOpta's Board of
Directors. The Board has initiated a search process for a CEO.
"On behalf of the Board, I would like to thank Rik and Alan for their
years of service and wish them well in their future endeavors," said
Dean Hollis, Chairman of SunOpta. "The Company has gone through a
significant amount of change in a relatively short period of time and
they were tireless in their efforts to provide a strategic vision, keep
the Company on track to meet its stated mid-term targets, while also
playing key roles in a review process to produce an outcome that could
benefit all of the Company's stakeholders."
Added Hollis, "The Board would also like to thank Kathy for taking on
the role of interim CEO. Her significant operating experience as well as
her deep contacts with the SunOpta management from her 15 years on the
Board of SunOpta provides a strong foundation for this interim role. She
will be supported by the Operations Transformation Committee of the
Board and the substantial resources that Oaktree has committed to
SunOpta as it progresses a plan to help the Company realize its
potential and create value for all shareholders."
Value Creation Plan Update
As announced on October 7, 2016, SunOpta, with the assistance of
Oaktree, is conducting a thorough review of the Company's operations,
management and governance, with the objective of maximizing the
Company's ability to deliver long-term value to its shareholders.
Through this review, management and the Board have developed a value
creation strategy built on four pillars: portfolio optimization,
operational excellence, go-to-market effectiveness and process
sustainability.
The Company continues to believe it has the ability to achieve its
mid-term targets, in the timeframe provided, as furnished in April 2016.
These targets were established based on a fulsome review of the
Company's platforms and, on a consolidated basis, targeted EBITDA margin
of between 8.5% and 10.5% of sales.
In order to support our efforts to meet or exceed the mid-term targets,
the Company, together with Oaktree, has continued to make progress on
its value creation plan. Key updates include:
Portfolio Optimization
-
SunOpta continues to review its product offerings and is focused on
simplifying the portfolio. The Company will invest in areas where it
has a structural advantage and will assess the impact of exiting
product lines where SunOpta is not effectively positioned.
-
The Company has announced the intention to close its juice processing
and packaging facility in San Bernardino, CA. The closure is expected
to generate at least $4.0 million of EBITDA improvement annually,
which should start to be realized in the first quarter of 2017.
Operational Excellence
-
SunOpta is committed to ensure quality performance and improve
operational excellence and has also identified significant savings
opportunities in procurement and logistics.
-
The Company plans to engage third party support in manufacturing,
procurement and logistics to enhance quality and capture savings.
Go-to-Market Effectiveness
-
The Company is working to optimize the customer and product mix in
existing channels and is also exploring opportunities across new
channels to identify unmet market demand.
-
The foodservice channel offers a substantial opportunity for the
Company and additional resources will be deployed to develop this area.
-
SunOpta's sales efforts will be reorganized by channel, rather than
geography.
Process Sustainability
-
The Company is focused on simplifying and strengthening the
organization, improving plant operating levers, augmenting asset
flexibility and capacities, investing in systems that can provide
detailed data on supply chain and manufacturing processes to support
commercial strategies and optimize working capital.
-
SunOpta will develop and incentivize a culture rooted in
accountability, results and continuous improvement.
-
SunOpta has created a Project Management Office to manage all critical
activities and work streams.
"The strategic investment by Oaktree was a first step in the positive
changes this Board and management intend to bring to SunOpta," said
Katrina L. Houde, interim-CEO. "The due diligence that Oaktree undertook
was extensive and allowed them to immediately bring forward
recommendations for a value creation framework that will drive more
reliable results, reshape our operating platform to focus our product
portfolio and marketing support resources, and allow us to truly instill
a system and culture of operational excellence that is achievable and
sustainable over the long-term."
Added Houde, "There is broad recognition that SunOpta is a unique
company with quality products and a number of competitive advantages
that can be fully developed. While we have known that focus and
execution were paramount to success, working with Oaktree has allowed
the Company to immediately address several legacy issues, identify
opportunities to drive margin expansion, invest in ways that augment
revenue growth, all while continuing to innovate and pursue the highest
of quality control standards."
Third Quarter 2016 Results
Revenues for the third quarter of 2016 were $348.7 million, essentially
flat with the second quarter of 2016 and up 25.8% compared to the third
quarter of 2015 mainly due to the 2015 acquisition of Sunrise. Revenue
was negatively impacted by approximately $5.0 million during the third
quarter due to the recall of certain sunflower products and a fire at a
third party contract manufacturing facility. Excluding the impact on
revenues in the third quarter of 2016 of business acquisitions and
associated product rationalizations, the estimated impact of the revenue
shortfall due to the sunflower kernel and the fire at a third-party
facility, and changes in commodity-related pricing and foreign exchange
rates, revenues decreased 0.9%, compared with the third quarter of 2015.
This decrease in revenues reflected lower volumes of specialty raw
materials driven by a planned reduction in contracted acres and lower
sales of frozen fruit due to timing of sales into the food service
channel, offset by increased demand for organic ingredients and growth
in aseptic beverage volumes.
The Consumer Products segment generated revenues from external customers
of $211.6 million during the third quarter of 2016, an increase of 11.6%
compared to $189.6 million in the second quarter of 2016, and an
increase of 67.0% compared to the prior year due to acquired businesses.
The sequential growth compared to the second quarter of 2016 was driven
by increased sales of both IQF fruit and beverages. Excluding the impact
of business acquisitions and associated product rationalizations and the
fire at a third-party facility, revenues in Consumer Products increased
0.6% compared to the third quarter of 2015 reflecting a 5.0% decline in
sales of frozen fruit, offset by 15.5% growth in beverages.
The Global Ingredients segment generated revenues from external
customers of $137.2 million, a decline of 13.5% compared to $158.5
million in the second quarter of 2016 and a decline of 8.9% compared to
$150.5 million in the prior year. The sequential decline was driven
primarily by lower crop input sales which are mostly sold in the second
quarter as well as normal seasonality in internationally sourced organic
ingredients. Excluding the impact on revenues of changes in
commodity-related pricing and foreign exchange rates, Global Ingredients
revenue decreased 3.1% in the third quarter of 2016, compared with the
third quarter of 2015 reflecting a 24.2% decline in domestic sourcing
from lower volumes of specialty raw materials driven by a planned
reduction in contracted acres and lower sales, partially offset by 16.0%
growth in internationally sourced organic ingredients.
Gross profit was $41.0 million for the third quarter of 2016, compared
with $36.0 million in the second quarter of 2016 and $26.3 million for
the third quarter of 2015. As a percentage of revenues, gross profit for
the third quarter of 2016 was 11.8% compared to 10.3% in the second
quarter of 2016 and 9.5% in the third quarter of 2015. Excluding the
impact of an acquisition accounting adjustment related to the sale of
Sunrise inventory and losses caused by the interruption of production in
our roasting operations, the gross profit percentage for the third
quarter of 2016 would have been approximately 12.3%, compared to 11.5%
in the second quarter of 2016. The sequential improvement in gross
profit reflects increased volumes of IQF fruit and improved production
efficiencies within our frozen fruit operations as some losses from
early season crop shortages were recovered.
Operating income¹ was $13.2 million, or 3.8% of revenues, compared to
operating income of $8.8 million or 2.5% of revenues in the second
quarter of 2016, and operating income of $4.1 million, or 1.5% of
revenues in the third quarter of 2015. The increase in operating income
year-over-year is attributable to higher gross profit, offset by a $2.9
million increase in selling, general and administrative expenses and an
increase of $2.0 million in intangible asset amortization, mainly
reflecting incremental expenses from acquired businesses. The operating
income percentage for the third quarter of 2016 would have been
approximately 4.8%, excluding the items mentioned above that impacted
gross profit, and the impact of legal costs mainly related to the Plum
dispute, which totaled $0.3 million for the quarter, and the strategic
review.
Other expense includes an impairment charge of $10.3 million, reflecting
a write-down of the carrying value of fixed assets in conjunction with
the Company's decision to exit the San Bernardino juice facility. The
Company expects to incur additional charges associated with the facility
closure over the next one to two quarters.
Adjusted EBITDA¹ was $26.7 million or 7.6% of revenues in the third
quarter of 2016, compared to $13.2 million or 4.8% of revenues in the
third quarter of 2015.
The Company reported a loss from continuing operations for the third
quarter of 2016 of $3.4 million, or $0.04 per common share, compared to
a loss from continuing operations of $0.2 million, or $0.00 per diluted
common share during the third quarter of 2015. Adjusted earnings¹ in the
third quarter were $6.3 million or $0.07 per diluted common share,
compared to Adjusted earnings¹ of $4.7 million or $0.07 per diluted
common share in the third quarter of 2015. Please refer to the
discussion and table below under "Non-GAAP Measures - Adjusted Earnings".
Year-to date 2016 Results
Revenues for the first three quarters of 2016 were $1,049.2 million, up
26.6% compared to the first three quarters of 2015 mainly due to the
acquisition of Sunrise. Revenue was negatively impacted by approximately
$8.0 million during the first three quarters due to the recall of
certain sunflower products and a fire at a third party contract
manufacturing facility. Excluding the impact on revenues in the first
three quarters of 2016 of business acquisitions and associated product
rationalizations, the estimated impact of the revenue shortfall due to
the sunflower kernel and the fire at a third-party facility, and changes
in commodity-related pricing and foreign exchange rates, revenues
increased 1.7%, compared to the prior year.
Gross profit was $108.9 million for the first three quarters of 2016,
compared with $85.1 million for the first three quarters of 2015. As a
percentage of revenues, gross profit for the first three quarters of
2016 was 10.4% compared to 10.3% in the third quarter of 2015. The gross
profit percentage for the first three quarters of 2016 would have been
approximately 11.8%, excluding the impact of an acquisition accounting
adjustment related to Sunrise's inventory sold in the first three
quarters of 2016, start-up costs related to the ramp-up of production at
our Allentown aseptic facility, and losses caused by the interruption of
production in our roasting operations.
Operating income¹ in the first three quarters of 2016 was $24.7 million,
or 2.4% of revenues, compared to $23.0 million, or 2.8% of revenues in
the first three quarters of 2015. The operating income percentage for
the first three quarters of 2016 would have been approximately 4.1%,
excluding the items mentioned above that impacted gross profit, and the
impact of legal costs mainly related to the Plum dispute, which totaled
$1.6 million year to date, and the strategic review.
Other expense includes an impairment charge of $10.3 million, reflecting
a write-down of the carrying value of fixed assets in conjunction with
the Company's decision to exit the San Bernardino juice facility and
$1.7 million related to the closure of the Buena Park, CA facility. The
Company expects to incur additional charges associated with the facility
closure over the next one to two quarters.
Adjusted EBITDA¹ was $72.3 million or 6.9% of revenues in the first
three quarters of 2016, compared to $44.0 million or 5.3% of revenues in
the first three quarters of 2015.
The Company reported a loss from continuing operations for the first
three quarters of 2016 of $17.1 million, or $0.20 per diluted common
share, compared to earnings from continuing operations of $10.6 million,
or $0.15 per diluted common share during the first three quarters of
2015. Adjusted earnings were $13.1 million or $0.15 per diluted common
share for the first three quarters of 2016, compared to $16.5 million or
$0.24 per diluted common share during the first three quarters of 2015.
Please refer to the discussion and table below under "Non-GAAP Measures
- Adjusted Earnings".
Balance Sheet
At October 1, 2016SunOpta's balance sheet reflected total assets of
$1,204.2 million and total debt of $546.3 million. Total debt declined
approximately $12 million from the end of the second quarter of 2016. At
October 1, 2016 leverage was approximately 5.8 times Adjusted EBITDA¹ on
a trailing four quarter adjusted basis, after eliminating the negative
impact on EBITDA from the San Bernardino juice facility.
Subsequent to the end of the third quarter, the Company announced a
strategic partnership with Oaktree Capital Management LP. On October 7,
2016, Oaktree invested $85.0 million in cumulative, non-participating
Series A Preferred Stock of the Company's subsidiary, SunOpta Foods
Inc., that are exchangeable into common shares of SunOpta Inc. in
accordance with the terms and conditions of the preferred stock. The net
proceeds from the issuance of the preferred stock were used to repay
$79.0 million of borrowings under the Company's second lien loan,
reducing the aggregate principal amount of the second lien loan to
$231.0 million. On a pro forma basis, giving effect to the reduction in
the Company's second lien loan, leverage at October 1, 2016 would be
approximately 5.0 times. Based on reduced seasonal working capital
demands, the Company expects a further decline in its debt and leverage
during the fourth quarter of 2016.
On October 9, 2016, the remaining $231.0 million aggregate principal
amount of second lien loans matured and automatically converted into a
like principal amount of term loans, bearing interest at 9.5%, with a
maturity date of October 9, 2022. On October 20, 2016, all of the
outstanding term loans were exchanged for a corresponding amount of 9.5%
senior secured second lien notes due 2022.
During the second quarter of 2016, the Company announced a voluntary
recall of certain roasted sunflower kernel products produced at its
Crookston, Minnesota facility. For the first three quarters of 2016,
estimated losses of $28.0 million were recognized in relation to the
recall. The Company carries general liability and product recall
insurance, and it expects to recover recall-related costs through these
policies, less applicable deductibles and subject to coverage limits. As
a result, during the first three quarters of 2016 the Company recorded
estimated insurance recoveries of $27.4 million for the losses
recognized to-date. These estimates reflect the amount of losses that
have been determined to be both probable and reasonably estimable. As
the Company continues to work with its customers and insurance providers
to substantiate claims received, it may need to revise its estimates in
subsequent periods.
Conference Call with accompanying presentation
SunOpta plans to host a conference call at 9:00 A.M. Eastern time on
Wednesday, November 9, 2016, to discuss the third quarter financial
results and recent corporate developments. After opening remarks, there
will be a question and answer period. This conference call can be
accessed via a link on SunOpta's website at www.sunopta.com
under the "Investors" section. To listen to the live call over the
Internet, please go to SunOpta's website at least 15 minutes early to
register, download and install any necessary audio software.
Additionally, the call may be accessed with the toll free dial-in number
1 (877) 312-9198 or International dial-in number 1 (631) 291-4622. If
you are unable to listen live, the conference call will be archived and
can be accessed for approximately 90 days on the Company's website.
¹ See discussion of non-GAAP measures
About SunOpta Inc.
SunOpta Inc. is a leading global company focused on organic,
non-genetically modified ("non-GMO") and specialty foods. SunOpta
specializes in the sourcing, processing and packaging of organic and
non-GMO food products, integrated from seed through packaged products;
with a focus on strategic vertically integrated business models.
SunOpta's organic and non-GMO food operations revolve around value-added
grain, seed, fruit and vegetable based product offerings, supported by a
global sourcing and supply infrastructure.
Forward-Looking Statements
Certain statements included in this press release may be considered
"forward-looking statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and applicable Canadian
securities legislation, which are based on information available to us
on the date of this release. These forward-looking statements include,
but are not limited to, the timing and results of our process to
identify a permanent CEO, our ability to achieve the mid-term targets
which we previously established and the results of the steps we have
taken or propose to take to achieve those targets, the amount of EBITDA
improvement expected to be generated from and the additional charges
associated with the closure of our San Bernardino, CA facility, the
anticipated decline in our debt and leverage, and the estimated losses
and related insurance recoveries associated with the sunflower recall.
Generally, forward-looking statements do not relate strictly to
historical or current facts and are typically accompanied by words such
as "expects", "will", continue", "believe", "intend", "can",
"anticipate", "confident", "should", "would", "may", "plans",
"estimate", "project", "potential", "intention", "might", "predict" or
other similar terms and phrases intended to identify these forward
looking statements. Forward looking statements are based on information
available to us on the date of this release and are based on estimates
and assumptions made by the Company in light of its experience and its
perception of historical trends, current conditions and expected future
developments as well as other factors the Company believes are
appropriate in the circumstances including, but not limited to, general
economic conditions, continued consumer interest in health and wellness,
ability to maintain product pricing levels, current customer demand,
planned facility and operational expansions, competitive intensity, cost
rationalization, product development initiatives, and alternative
potential uses for our capital resources. Whether actual timing and
results will agree with expectations and predications of the Company is
subject to many risks and uncertainties including, but not limited to,
risks associated with acquisitions generally such as the failure to
retain key management and employees, issues or delays in the successful
integration of the operations, systems and personnel of recently
acquired businesses with those of the Company, incurring or experiencing
unanticipated costs and/or delays or difficulties, future levels of
revenues being lower than expected, costs being higher than expected,
inability to realize synergies to the extent anticipated and conditions
affecting the frozen fruit industry generally; failure or inability to
implement growth strategies in a timely manner; changes in the level of
capital investment; local and global political and economic conditions;
consumer spending patterns and changes in market trends; decreases in
customer demand; delayed or unsuccessful product development efforts;
potential product recalls; working capital management and continuous
improvement initiatives; availability and pricing of raw materials and
supplies; potential covenant breaches under our credit facilities; and
other risks described from time to time under "Risk Factors" in the
Company's Annual Report on Form 10-K and its Quarterly Reports on Form
10-Q (available at www.sec.gov).
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. The Company undertakes no obligation to publicly correct or
update the forward looking statements in this document, in other
documents, or on its website to reflect future events or circumstances,
except as may be required under applicable securities laws.
|
|
|
SunOpta Inc.
|
|
Consolidated Statements of Operations
|
|
For the quarters and three quarters ended October 1, 2016 and
October 3, 2015 |
|
(Unaudited)
|
|
(Expressed in thousands of U.S. dollars, except per share amounts)
|
|
|
|
|
|
|
Quarter ended
|
|
|
Three quarters ended
|
|
|
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
348,732
|
|
|
|
277,213
|
|
|
|
1,049,192
|
|
|
|
828,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
307,702
|
|
|
|
250,904
|
|
|
|
940,283
|
|
|
|
743,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
41,030
|
|
|
|
26,309
|
|
|
|
108,909
|
|
|
|
85,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
23,915
|
|
|
|
21,020
|
|
|
|
72,676
|
|
|
|
61,031
|
|
|
Intangible asset amortization
|
|
|
2,826
|
|
|
|
786
|
|
|
|
8,472
|
|
|
|
2,105
|
|
|
Other expense, net
|
|
|
10,312
|
|
|
|
3,652
|
|
|
|
22,723
|
|
|
|
4,393
|
|
|
Foreign exchange loss (gain)
|
|
|
1,068
|
|
|
|
404
|
|
|
|
3,060
|
|
|
|
(1,046
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before the following
|
|
|
2,909
|
|
|
|
447
|
|
|
|
1,978
|
|
|
|
18,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
12,178
|
|
|
|
1,103
|
|
|
|
34,748
|
|
|
|
3,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before income taxes
|
|
|
(9,269
|
)
|
|
|
(656
|
)
|
|
|
(32,770
|
)
|
|
|
15,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) income taxes
|
|
|
(5,411
|
)
|
|
|
(568
|
)
|
|
|
(15,632
|
)
|
|
|
4,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
|
(3,858
|
)
|
|
|
(88
|
)
|
|
|
(17,138
|
)
|
|
|
10,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and non-controlling interest
|
|
|
-
|
|
|
|
508
|
|
|
|
(570
|
)
|
|
|
(2,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
|
|
|
(3,858
|
)
|
|
|
420
|
|
|
|
(17,708
|
)
|
|
|
7,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) attributable to non-controlling interests
|
|
|
(503
|
)
|
|
|
106
|
|
|
|
4
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) attributable to SunOpta Inc.
|
|
|
(3,355
|
)
|
|
|
314
|
|
|
|
(17,712
|
)
|
|
|
7,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share - basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from continuing operations
|
|
|
(0.04
|
)
|
|
|
-
|
|
|
|
(0.20
|
)
|
|
|
0.15
|
|
|
- from discontinued operations
|
|
|
-
|
|
|
|
0.01
|
|
|
|
(0.01
|
)
|
|
|
(0.04
|
)
|
|
|
|
|
(0.04
|
)
|
|
|
-
|
|
|
|
(0.21
|
)
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share - diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- from continuing operations
|
|
|
(0.04
|
)
|
|
|
-
|
|
|
|
(0.20
|
)
|
|
|
0.15
|
|
|
- from discontinued operations
|
|
|
-
|
|
|
|
0.01
|
|
|
|
(0.01
|
)
|
|
|
(0.04
|
)
|
|
|
|
|
(0.04
|
)
|
|
|
-
|
|
|
|
(0.21
|
)
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (000s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- basic
|
|
|
85,619
|
|
|
|
69,181
|
|
|
|
85,529
|
|
|
|
68,199
|
|
|
- diluted
|
|
|
85,650
|
|
|
|
69,181
|
|
|
|
85,549
|
|
|
|
68,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SunOpta Inc.
|
|
Consolidated Balance Sheets
|
|
As at October 1, 2016 and January 2, 2016 |
|
(Unaudited)
|
|
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
October 1, 2016
|
|
|
January 2, 2016 |
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
1,639
|
|
|
|
2,274
|
|
|
Accounts receivable
|
|
|
173,880
|
|
|
|
117,412
|
|
|
Inventories
|
|
|
393,689
|
|
|
|
371,223
|
|
|
Prepaid expenses and other current assets
|
|
|
23,455
|
|
|
|
20,088
|
|
|
Current income taxes recoverable
|
|
|
9,390
|
|
|
|
21,728
|
|
|
Current assets held for sale
|
|
|
-
|
|
|
|
64,330
|
|
|
Total current assets
|
|
|
602,053
|
|
|
|
597,055
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
161,252
|
|
|
|
176,513
|
|
|
Goodwill
|
|
|
241,585
|
|
|
|
241,690
|
|
|
Intangible assets
|
|
|
186,603
|
|
|
|
195,008
|
|
|
Deferred income taxes
|
|
|
958
|
|
|
|
958
|
|
|
Other assets
|
|
|
11,797
|
|
|
|
7,979
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
1,204,248
|
|
|
|
1,219,203
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Bank indebtedness
|
|
|
226,651
|
|
|
|
159,773
|
|
|
Accounts payable and accrued liabilities
|
|
|
170,343
|
|
|
|
151,831
|
|
|
Customer and other deposits
|
|
|
1,029
|
|
|
|
5,322
|
|
|
Income taxes payable
|
|
|
4,189
|
|
|
|
1,720
|
|
|
Other current liabilities
|
|
|
1,208
|
|
|
|
1,521
|
|
|
Current portion of long-term debt
|
|
|
2,159
|
|
|
|
1,773
|
|
|
Current portion of long-term liabilities
|
|
|
5,365
|
|
|
|
5,243
|
|
|
Current liabilities held for sale
|
|
|
-
|
|
|
|
52,486
|
|
|
Total current liabilities
|
|
|
410,944
|
|
|
|
379,669
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
317,484
|
|
|
|
321,222
|
|
|
Long-term liabilities
|
|
|
15,828
|
|
|
|
17,809
|
|
|
Deferred income taxes
|
|
|
54,564
|
|
|
|
74,324
|
|
|
Total liabilities
|
|
|
798,820
|
|
|
|
793,024
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
SunOpta Inc. shareholders' equity
|
|
|
|
|
|
|
|
Common shares
|
|
|
299,470
|
|
|
|
297,987
|
|
|
Additional paid-in capital
|
|
|
24,931
|
|
|
|
22,327
|
|
|
Retained earnings
|
|
|
89,126
|
|
|
|
106,838
|
|
|
Accumulated other comprehensive loss
|
|
|
(10,699
|
)
|
|
|
(6,113
|
)
|
|
|
|
|
402,828
|
|
|
|
421,039
|
|
|
Non-controlling interests
|
|
|
2,600
|
|
|
|
5,140
|
|
|
Total equity
|
|
|
405,428
|
|
|
|
426,179
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
1,204,248
|
|
|
|
1,219,203
|
|
|
|
|
|
|
|
|
|
|
|
|
SunOpta Inc.
|
|
Consolidated Statements of Cash Flows
|
|
For the quarters and three quarters ended October 1, 2016 and
October 3, 2015 |
|
(Unaudited)
|
|
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
Three quarters ended
|
|
|
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
|
|
|
(3,858
|
)
|
|
|
420
|
|
|
|
(17,708
|
)
|
|
|
7,681
|
|
|
Earnings (loss) from discontinued operations
|
|
|
-
|
|
|
|
508
|
|
|
|
(570
|
)
|
|
|
(2,959
|
)
|
|
Earnings (loss) from continuing operations
|
|
|
(3,858
|
)
|
|
|
(88
|
)
|
|
|
(17,138
|
)
|
|
|
10,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items not affecting cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
8,646
|
|
|
|
4,414
|
|
|
|
25,955
|
|
|
|
12,739
|
|
|
Acquisition accounting adjustment on inventory sold
|
|
|
1,890
|
|
|
|
-
|
|
|
|
13,404
|
|
|
|
-
|
|
|
Amortization and write-off of debt issuance costs
|
|
|
3,988
|
|
|
|
124
|
|
|
|
10,210
|
|
|
|
327
|
|
|
Impairment of long-lived assets
|
|
|
10,300
|
|
|
|
-
|
|
|
|
12,035
|
|
|
|
-
|
|
|
Deferred income taxes
|
|
|
(5,252
|
)
|
|
|
835
|
|
|
|
(19,760
|
)
|
|
|
697
|
|
|
Stock-based compensation
|
|
|
1,181
|
|
|
|
1,804
|
|
|
|
3,173
|
|
|
|
3,832
|
|
|
Unrealized gain on derivative instruments
|
|
|
(749
|
)
|
|
|
(1,088
|
)
|
|
|
(1,264
|
)
|
|
|
(534
|
)
|
|
Fair value of contingent consideration
|
|
|
124
|
|
|
|
235
|
|
|
|
(1,281
|
)
|
|
|
317
|
|
|
Other
|
|
|
(64
|
)
|
|
|
(581
|
)
|
|
|
343
|
|
|
|
1,237
|
|
|
Changes in non-cash working capital, net of businesses acquired
|
|
|
836
|
|
|
|
12,648
|
|
|
|
(60,943
|
)
|
|
|
(28,965
|
)
|
|
Net cash flows from operations - continuing operations
|
|
|
17,042
|
|
|
|
18,303
|
|
|
|
(35,266
|
)
|
|
|
290
|
|
|
Net cash flows from operations - discontinued operations
|
|
|
-
|
|
|
|
4,241
|
|
|
|
758
|
|
|
|
5,490
|
|
|
|
|
|
17,042
|
|
|
|
22,544
|
|
|
|
(34,508
|
)
|
|
|
5,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(5,463
|
)
|
|
|
(6,866
|
)
|
|
|
(14,803
|
)
|
|
|
(21,841
|
)
|
|
Acquisition of businesses
|
|
|
-
|
|
|
|
(6,475
|
)
|
|
|
-
|
|
|
|
(19,775
|
)
|
|
Payment of contingent consideration
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,554
|
)
|
|
|
-
|
|
|
Proceeds from sale of assets
|
|
|
-
|
|
|
|
348
|
|
|
|
-
|
|
|
|
1,292
|
|
|
Other
|
|
|
-
|
|
|
|
147
|
|
|
|
700
|
|
|
|
(778
|
)
|
|
Net cash flows from investing activities - continuing operations
|
|
|
(5,463
|
)
|
|
|
(12,846
|
)
|
|
|
(18,657
|
)
|
|
|
(41,102
|
)
|
|
Net cash flows from investing activities - discontinued operations
|
|
|
-
|
|
|
|
(785
|
)
|
|
|
1,754
|
|
|
|
(1,224
|
)
|
|
|
|
|
(5,463
|
)
|
|
|
(13,631
|
)
|
|
|
(16,903
|
)
|
|
|
(42,326
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) under line of credit facilities
|
|
|
(13,097
|
)
|
|
|
(3,206
|
)
|
|
|
258,475
|
|
|
|
31,291
|
|
|
Repayment of line of credit facilities
|
|
|
-
|
|
|
|
-
|
|
|
|
(192,677
|
)
|
|
|
-
|
|
|
Borrowings under long-term debt
|
|
|
-
|
|
|
|
-
|
|
|
|
432
|
|
|
|
-
|
|
|
Repayment of long-term debt
|
|
|
(520
|
)
|
|
|
(311
|
)
|
|
|
(11,529
|
)
|
|
|
(722
|
)
|
|
Payment of debt issuance costs
|
|
|
(1,179
|
)
|
|
|
(2,157
|
)
|
|
|
(5,545
|
)
|
|
|
(2,188
|
)
|
|
Proceeds from the issuance of common shares, net
|
|
|
-
|
|
|
|
95,344
|
|
|
|
-
|
|
|
|
95,344
|
|
|
Proceeds from the exercise of stock options
|
|
|
227
|
|
|
|
439
|
|
|
|
914
|
|
|
|
3,478
|
|
|
Proceeds from the exercise of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,879
|
|
|
Other
|
|
|
8
|
|
|
|
(179
|
)
|
|
|
(126
|
)
|
|
|
(459
|
)
|
|
Net cash flows from financing activities - continuing operations
|
|
|
(14,561
|
)
|
|
|
89,930
|
|
|
|
49,944
|
|
|
|
130,623
|
|
|
Net cash flows from financing activities - discontinued operations
|
|
|
-
|
|
|
|
(4,199
|
)
|
|
|
(1,180
|
)
|
|
|
(5,012
|
)
|
|
|
|
|
(14,561
|
)
|
|
|
85,731
|
|
|
|
48,764
|
|
|
|
125,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) on cash held in a foreign currency
|
|
|
329
|
|
|
|
(41
|
)
|
|
|
305
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents in the period
|
|
|
(2,653
|
)
|
|
|
94,603
|
|
|
|
(2,342
|
)
|
|
|
89,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations cash activity included above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Balance included at beginning of period
|
|
|
-
|
|
|
|
2,232
|
|
|
|
1,707
|
|
|
|
2,170
|
|
|
Less: Balance included at end of period
|
|
|
-
|
|
|
|
(1,626
|
)
|
|
|
-
|
|
|
|
(1,626
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of the period
|
|
|
4,292
|
|
|
|
2,154
|
|
|
|
2,274
|
|
|
|
7,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of the period
|
|
|
1,639
|
|
|
|
97,363
|
|
|
|
1,639
|
|
|
|
97,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SunOpta Inc.
|
|
Segmented Information
|
|
For the quarters and three quarters ended October 1, 2016 and
October 3, 2015 |
|
Unaudited
|
|
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
Quarter ended
|
|
|
Three quarters ended
|
|
|
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Segment revenues from external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Ingredients
|
|
|
137,174
|
|
|
|
150,500
|
|
|
|
441,694
|
|
|
|
467,405
|
|
|
Consumer Products
|
|
|
211,558
|
|
|
|
126,713
|
|
|
|
607,498
|
|
|
|
361,351
|
|
|
Total segment revenues from external customers
|
|
|
348,732
|
|
|
|
277,213
|
|
|
|
1,049,192
|
|
|
|
828,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Ingredients
|
|
|
16,796
|
|
|
|
15,327
|
|
|
|
54,716
|
|
|
|
53,225
|
|
|
Consumer Products
|
|
|
24,234
|
|
|
|
10,982
|
|
|
|
54,193
|
|
|
|
31,907
|
|
|
Total segment gross margin
|
|
|
41,030
|
|
|
|
26,309
|
|
|
|
108,909
|
|
|
|
85,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Ingredients
|
|
|
7,404
|
|
|
|
4,642
|
|
|
|
24,256
|
|
|
|
23,934
|
|
|
Consumer Products
|
|
|
8,104
|
|
|
|
1,863
|
|
|
|
6,989
|
|
|
|
5,115
|
|
|
Corporate Services
|
|
|
(2,287
|
)
|
|
|
(2,406
|
)
|
|
|
(6,544
|
)
|
|
|
(6,007
|
)
|
|
Total segment operating income
|
|
|
13,221
|
|
|
|
4,099
|
|
|
|
24,701
|
|
|
|
23,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment gross margin percentage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Ingredients
|
|
|
12.2
|
%
|
|
|
10.2
|
%
|
|
|
12.4
|
%
|
|
|
11.4
|
%
|
|
Consumer Products
|
|
|
11.5
|
%
|
|
|
8.7
|
%
|
|
|
8.9
|
%
|
|
|
8.8
|
%
|
|
Total segment gross margin
|
|
|
11.8
|
%
|
|
|
9.5
|
%
|
|
|
10.4
|
%
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income percentage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Ingredients
|
|
|
5.4
|
%
|
|
|
3.1
|
%
|
|
|
5.5
|
%
|
|
|
5.1
|
%
|
|
Consumer Products
|
|
|
3.8
|
%
|
|
|
1.5
|
%
|
|
|
1.2
|
%
|
|
|
1.4
|
%
|
|
Total segment operating income
|
|
|
3.8
|
%
|
|
|
1.5
|
%
|
|
|
2.4
|
%
|
|
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Segment operating income (loss) is defined as "Earnings (loss) from
continuing operations before the following" excluding the impact of
"Other expense (income), net".)
Non-GAAP Measures
In addition to reporting financial results in accordance with U.S. GAAP,
the Company provides information regarding segment operating income,
Adjusted earnings, earnings before interest, taxes, depreciation and
amortization ("EBITDA"), and Adjusted EBITDA as additional information
about its operating results, which are not measures in accordance with
U.S. GAAP. The Company believes that these non-GAAP measures assist
investors in comparing performance across reporting periods on a
consistent basis by excluding items that are not indicative of the
Company's core operating performance. The non-GAAP measures of segment
operating income, Adjusted earnings, EBITDA and Adjusted EBITDA should
not be considered in isolation or as a substitute for performance
measures calculated in accordance with U.S. GAAP.
Adjusted Earnings
When assessing our financial performance, we use an internal measure
that excludes the results of discontinued operations as well as other
charges and gains that we believe are not reflective of normal
operations. This information is provided in order to allow investors to
make meaningful comparisons of the Company's operating performance
between periods and to view the Company's business from the same
perspective as Company management. Adjusted earnings and Adjusted
earnings per diluted share should not be considered in isolation or as a
substitute for performance measures calculated in accordance with U.S.
GAAP.
For the quarter and three quarters ended October 1, 2016, in addition to
the results of discontinued operations, the Company recognized other
expenses related primarily to business acquisitions, product withdrawal
and recall costs, plant start-up costs related to our east coast aseptic
facility, legal settlement costs and litigation-related legal fees, the
write-off of debt issuance costs, costs associated with the strategic
review process, a gain on settlement of contingent consideration, and a
gain from changes in unrecognized tax benefits. We do not believe these
charges and gains are reflective of normal business operations. These
charges and gains have been excluded to arrive at Adjusted earnings and
Adjusted earnings per diluted share.
The following is a tabular presentation of Adjusted earnings and
Adjusted earnings per diluted share, including a reconciliation to U.S.
GAAP earnings (loss) attributable to SunOpta Inc. and U.S. GAAP earnings
(loss) attributable to SunOpta Inc. on a per diluted share basis, which
the Company believes to be the most directly comparable U.S. GAAP
financial measure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Diluted Share
|
|
For the quarter ended
|
|
|
$
|
|
|
$
|
|
October 1, 2016
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to SunOpta Inc. |
|
|
(3,355
|
)
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
Adjusted for:
|
|
|
|
|
|
|
|
Costs related to rationalization of juice operations(a) |
|
|
10,300
|
|
|
|
|
|
Costs related to business acquisitions(b) |
|
|
5,515
|
|
|
|
|
|
Product withdrawal and recall costs(c) |
|
|
683
|
|
|
|
|
|
Costs related to strategic review (d) |
|
|
483
|
|
|
|
|
|
Legal settlement and litigation-related legal fees(e) |
|
|
564
|
|
|
|
|
|
Other(f) |
|
|
12
|
|
|
|
|
|
Net income tax effect on adjusted earnings(g) |
|
|
(6,629
|
)
|
|
|
|
|
Change in unrecognized tax benefits(h) |
|
|
(1,268
|
)
|
|
|
|
|
Adjusted earnings
|
|
|
6,305
|
|
|
|
0.07
|
|
|
|
|
|
|
|
|
|
|
October 3, 2015
|
|
|
|
|
|
|
|
Earnings attributable to SunOpta Inc. |
|
|
314
|
|
|
|
-
|
|
|
Loss from discontinued operations attributable to SunOpta Inc. |
|
|
(508
|
)
|
|
|
(0.01
|
)
|
|
Loss from continuing operations attributable to SunOpta Inc. |
|
|
(194
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Adjusted for:
|
|
|
|
|
|
|
|
Demurrage, detention and other related expenses(i) |
|
|
1,858
|
|
|
|
|
|
Plant expansion and start-up costs(j) |
|
|
1,525
|
|
|
|
|
|
Litigation-related legal fees(d) |
|
|
383
|
|
|
|
|
|
Other expense, net(k) |
|
|
3,652
|
|
|
|
|
|
Net income tax effect on adjusted earnings(g) |
|
|
(2,485
|
)
|
|
|
|
|
Adjusted earnings
|
|
|
4,739
|
|
|
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
Reflects the impairment of long-lived assets associated with the San
Bernardino juice facility.
|
|
(b)
|
|
|
Reflects costs related to business combinations, including an
acquisition accounting adjustment related to Sunrise's inventory
sold in the third quarter of 2016 of $1.9 million, which is
recorded in cost of goods sold; the non-cash amortization of debt
issuance costs incurred in connection with the financing related
to the acquisition of Sunrise Growers of $2.2 million, and $1.4
million of additional financing costs expensed in the third
quarter of 2016, which are recorded in interest expense.
|
|
(c)
|
|
|
Reflects a $0.7 million adjustment for the estimated lost margin
caused by the recall of certain sunflower kernel products which
reflects a shortfall in revenues against anticipated volumes of
approximately $2.9 million, less associated cost of goods sold of
approximately $2.2 million.
|
|
(d)
|
|
|
Reflects advisory costs of $0.5 million associated with the
recently completed strategic review, which are recorded in
selling, general and administrative ("SG&A") expenses.
|
|
(e)
|
|
|
Reflects litigation-related legal costs mainly associated with the
settlement of the Plum dispute, which are recorded in SG&A
expenses.
|
|
(f)
|
|
|
Other includes fair value adjustments related to contingent
consideration arrangements of $0.1 million, which are recorded in
other expense.
|
|
(g)
|
|
|
To tax effect the preceding adjustments to earnings and to reflect
an overall estimated annual effective tax rate of approximately
30% on adjusted earnings before tax.
|
|
(h)
|
|
|
Reflects the realization of previously unrecognized tax benefits.
|
|
(i)
|
|
|
Reflects additional logistics costs stemming from capacity
constraints on imports and exports within the Global Ingredients
segment, which were recorded in cost of goods sold.
|
|
(j)
|
|
|
Reflects costs related to the retrofit of our San Bernardino,
California juice facility and expansion of our Allentown,
Pennsylvania facility to add aseptic beverage processing and
filling capabilities, which were recorded in cost of goods sold.
|
|
(k)
|
|
|
Other expense, net includes severance costs of $2.7 million mainly
for our former Chief Executive Officer ("CEO") in 2015 and $0.9
million of business development costs mainly related to the
acquisition of Sunrise Growers and divestiture of Opta Minerals.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Diluted Share
|
|
For the three quarters ended
|
|
|
$
|
|
|
$
|
|
October 1, 2016
|
|
|
|
|
|
|
|
Loss attributable to SunOpta Inc. |
|
|
(17,712
|
)
|
|
|
(0.21
|
)
|
|
Loss from discontinued operations, attributable to SunOpta Inc. |
|
|
570
|
|
|
|
0.01
|
|
|
Loss from continuing operations attributable to SunOpta Inc. |
|
|
(17,142
|
)
|
|
|
(0.20
|
)
|
|
|
|
|
|
|
|
|
|
Adjusted for:
|
|
|
|
|
|
|
|
Costs related to business acquisitions(a) |
|
|
25,931
|
|
|
|
|
|
Legal settlement and litigation-related legal fees(b) |
|
|
10,850
|
|
|
|
|
|
Costs related to rationalization of juice operations(c) |
|
|
10,300
|
|
|
|
|
|
Product withdrawal and recall costs(d) |
|
|
2,680
|
|
|
|
|
|
Plant start-up costs(e) |
|
|
1,565
|
|
|
|
|
|
Costs related to strategic review (f) |
|
|
483
|
|
|
|
|
|
Write-off of debt issuance costs(g) |
|
|
215
|
|
|
|
|
|
Other(h) |
|
|
1,199
|
|
|
|
|
|
Gain on settlement of contingent consideration(i) |
|
|
(1,715
|
)
|
|
|
|
|
Net income tax effect on adjusted earnings(j) |
|
|
(19,985
|
)
|
|
|
|
|
Change in unrecognized tax benefits(k) |
|
|
(1,268
|
)
|
|
|
|
|
Adjusted earnings
|
|
|
13,113
|
|
|
|
0.15
|
|
|
|
|
|
|
|
|
|
|
October 3, 2015
|
|
|
|
|
|
|
|
Earnings attributable to SunOpta Inc. |
|
|
7,597
|
|
|
|
0.11
|
|
|
Loss from discontinued operations, attributable to SunOpta Inc. |
|
|
2,959
|
|
|
|
0.04
|
|
|
Earnings from continuing operations attributable to SunOpta Inc. |
|
|
10,556
|
|
|
|
0.15
|
|
|
|
|
|
|
|
|
|
|
Adjusted for:
|
|
|
|
|
|
|
|
Plant expansion and start-up costs(l) |
|
|
2,220
|
|
|
|
|
|
Demurrage, detention and other related expenses(m) |
|
|
1,858
|
|
|
|
|
|
Litigation-related legal fees(b) |
|
|
1,177
|
|
|
|
|
|
Other expense, net(n) |
|
|
4,393
|
|
|
|
|
|
Net income tax effect on adjusted earnings(j) |
|
|
(3,658
|
)
|
|
|
|
|
Adjusted earnings
|
|
|
16,546
|
|
|
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
Reflects costs related to business combinations, including an
acquisition accounting adjustment related to Sunrise's inventory
sold in the first three quarters of 2016 of $13.4 million, which is
recorded in cost of goods sold; the non-cash amortization of debt
issuance costs incurred in connection with the financing related to
the acquisition of Sunrise Growers of $7.8 million, as well as $2.4
million of additional financing costs expensed, which are recorded
in interest expense; and $2.4 million of integration costs related
to the closure and consolidation of our frozen fruit processing
facilities following the acquisition of Sunrise Growers, which are
recorded in cost of goods sold and other expense.
|
|
(b)
|
|
|
Reflects the charge recorded in connection with the settlement of
the Plum dispute, which is recorded in other expense. Also
includes $1.6 million (2015 - $1.2 million) of litigation-related
legal costs mainly associated with the Plum dispute, which are
recorded in SG&A expenses.
|
|
(c)
|
|
|
Reflects the impairment of long-lived assets associated with the
San Bernardino juice facility.
|
|
(d)
|
|
|
Reflects costs of $1.1 million associated with a voluntary
withdrawal of private label orange juice in the first quarter of
2016, as well as $0.6 million associated with the recall of
certain sunflower kernel products, net of expected insurance
recoveries, which are recorded in other expense. Also includes a
$1.0 million adjustment for the estimated lost margin caused by
the sunflower recall, which reflects a shortfall in revenues
against anticipated volumes of approximately $6.4 million, less
associated cost of goods sold of approximately $5.4 million.
|
|
(e)
|
|
|
Plant start-up costs relate to the ramp-up of production at our
Allentown, Pennsylvania facility following the completion of the
addition of aseptic beverage processing and filling capabilities
in the fourth quarter of 2015, which are recorded in cost of goods
sold. These start-up costs reflect the negative gross margin
reported by the facility as the facility ramped up to break-even
production levels.
|
|
(f)
|
|
|
Reflects advisory costs of $0.5 million associated with the
recently completed strategic review, which are recorded in SG&A
expenses.
|
|
(g)
|
|
|
Reflects the write-off to interest expense of $0.2 million of
remaining unamortized debt issuance costs related to our North
American credit facilities, which were replaced by the Global
Credit Facility.
|
|
(h)
|
|
|
Other includes severance costs of $0.6 million and fair value
adjustments related to contingent consideration arrangements of
$0.6 million, which are recorded in other expense.
|
|
(i)
|
|
|
Reflects the gain on settlement of the contingent consideration
obligation related to Niagara Natural, which is recorded in other
income.
|
|
(j)
|
|
|
To tax effect the preceding adjustments and to reflect an overall
estimated annual effective tax rate of approximately 30% on
adjusted earnings before tax.
|
|
(k)
|
|
|
Reflects the realization of previously unrecognized tax benefits.
|
|
(l)
|
|
|
Reflects costs related to the retrofit of our San Bernardino,
California juice facility and expansion of our Allentown,
Pennsylvania facility to add aseptic beverage processing and
filling capabilities, which were recorded in cost of goods sold.
|
|
(m)
|
|
|
Reflects additional logistics costs stemming from capacity
constraints on imports and exports within the Global Ingredients
segment, which were recorded in cost of goods sold.
|
|
(n)
|
|
|
Other expense, net included severance costs of $2.7 million mainly
for our former CEO and $1.4 million of business development costs
mainly related to the acquisitions of Sunrise and Citrusource, as
well as the divestiture of Opta Minerals.
|
|
|
|
|
|
Segment Operating Income, EBITDA and Adjusted
EBITDA
The Company defines segment operating income as "earnings (loss) from
continuing operations before the following" excluding the impact of
other income/expense items; EBITDA as segment operating income plus
depreciation and amortization; and Adjusted EBITDA as EBITDA excluding
certain charges and gains that affect the comparability of operating
performance. The following is a tabular presentation of segment
operating income, EBITDA, and Adjusted EBITDA, including a
reconciliation to earnings (loss) from continuing operations, which the
Company believes to be the most directly comparable U.S. GAAP financial
measure:
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
Three quarters ended
|
|
|
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
October 1, 2016
|
|
|
October 3, 2015 |
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
|
(3,858
|
)
|
|
|
(88
|
)
|
|
|
(17,138
|
)
|
|
|
10,640
|
|
Provision for (recovery of) income taxes
|
|
|
(5,411
|
)
|
|
|
(568
|
)
|
|
|
(15,632
|
)
|
|
|
4,838
|
|
Interest expense, net
|
|
|
12,178
|
|
|
|
1,103
|
|
|
|
34,748
|
|
|
|
3,171
|
|
Other expense, net
|
|
|
10,312
|
|
|
|
3,652
|
|
|
|
22,723
|
|
|
|
4,393
|
|
Total segment operating income
|
|
|
13,221
|
|
|
|
4,099
|
|
|
|
24,701
|
|
|
|
23,042
|
|
Depreciation and amortization
|
|
|
8,646
|
|
|
|
4,414
|
|
|
|
25,955
|
|
|
|
12,739
|
|
Stock based compensation
|
|
|
1,181
|
|
|
|
950
|
|
|
|
3,173
|
|
|
|
2,978
|
|
EBITDA
|
|
|
23,048
|
|
|
|
9,463
|
|
|
|
53,829
|
|
|
|
38,759
|
|
Adjustments (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs related to business acquisitions
|
|
|
1,890
|
|
|
|
-
|
|
|
|
13,554
|
|
|
|
-
|
|
Demurrage, detention and other related expenses
|
|
|
-
|
|
|
|
1,858
|
|
|
|
-
|
|
|
|
1,858
|
|
Product withdrawal and recall costs
|
|
|
683
|
|
|
|
-
|
|
|
|
983
|
|
|
|
-
|
|
Plant start-up costs
|
|
|
-
|
|
|
|
1,525
|
|
|
|
1,565
|
|
|
|
2,220
|
|
Litigation-related legal fees
|
|
|
564
|
|
|
|
383
|
|
|
|
1,850
|
|
|
|
1,177
|
|
Costs related to strategic review
|
|
|
483
|
|
|
|
-
|
|
|
|
483
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
|
26,668
|
|
|
|
13,229
|
|
|
|
72,264
|
|
|
|
44,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The adjustments include all adjustments in the preceding tables
of Adjusted Earnings that affect cost of goods sold and selling,
general and administrative expenses.
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161109005170/en/
ICR for SunOpta Inc.
Scott Van Winkle, 617-956-6736
Managing
Director
Scott.VanWinkle@icrinc.com
Source: SunOpta Inc.
News Provided by Acquire Media