TORONTO--(BUSINESS WIRE)--May 8, 2019--
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL) (TSX:SOY), a
leading global company focused on organic, non-genetically modified and
specialty foods, today announced financial results for the first quarter
ended March 30, 2019.
“We delivered adjusted revenue growth of 6.2% during the first quarter
of 2019, with strong commercial results across the Healthy Beverage,
Healthy Snacks and international organic sourcing operations. On an
adjusted basis, these businesses generated revenue growth versus prior
year of 6.0%, 13.6% and 12.2% respectively in the quarter reflecting
strong execution in on-trend categories," said Joe Ennen, Chief
Executive Officer at SunOpta. “We have made progress on our fruit margin
optimization plan and are on track with our automation investments to
reduce production costs. We continue to expect the benefits of the first
phase of our margin optimization plan to be realized by the fourth
quarter of 2019. However, as anticipated, fruit margins continued to
weigh on consolidated EBITDA margins during the first quarter,
offsetting gains in the Healthy Beverage, Healthy Snacks and
international organic sourcing operations. With a robust sales pipeline,
strong positioning in on-trend, healthy food categories, and the right
team to drive execution of our margin optimization plan, I am confident
we can deliver improving results as the year progresses. In 2019, we
remain focused on strengthening our product portfolio, accelerating
customer-centric innovation, and improving profitability in frozen fruit
through pricing and productivity, with the objective to create
sustainable, long-term shareholder value.”
All amounts are expressed in U.S. dollars and results are reported in
accordance with U.S. GAAP, except where specifically noted.
First Quarter 2019 Highlights:
-
Revenues of $305.3 million for the first quarter of 2019, compared to
$312.7 million in the first quarter of 2018, a decrease of 2.4%.
Adjusted for divested and disposed operations, foreign exchange,
commodity prices, and a new contract manufacturing arrangement,
revenues grew 6.2% during the first quarter.
-
Net income attributable to common shareholders of $23.7 million or
$0.27 per common share in the first quarter of 2019, compared to a
loss attributable to common shareholders of $6.3 million or $0.07 per
common share in the first quarter of 2018. Net income in the first
quarter of 2019 included a pre-tax gain on the sale of the specialty
and organic soy and corn business of $45.6 million.
-
Adjusted loss¹ of $7.9 million or $0.09 per common share during the
first quarter of 2019, compared to an adjusted loss of $6.4 million or
$0.07 per common share during the first quarter of 2018.
-
Adjusted EBITDA¹ excluding disposed operations of $11.1 million or
3.6% of revenues for the first quarter of 2019, versus $11.0 million
or 3.5% of revenues in the first quarter of 2018.
-
Completed sale of specialty and organic soy and corn business for
gross proceeds of $66.5 million, subject to certain post-closing
adjustments.
First Quarter 2019 Results
Revenues for the first quarter of 2019 were $305.3 million, a decrease
of 2.4% compared to $312.7 million in the first quarter of 2018.
Excluding the impact on reported revenues of disposed business including
the soy and corn business (sold in February 2019) and exit from flexible
resealable pouch and nutrition bar product lines (exited in fiscal
2018), changes in commodity-related pricing and foreign exchange rates,
and a profit-neutral change to a co-manufacturing agreement with one of
our customers, revenues in the first quarter of 2019 increased by 6.2%
compared with the first quarter of 2018.
The Global Ingredients segment generated revenues of $128.0 million, a
decrease of 6.1% compared to $136.3 million in the first quarter of
2018. Excluding the impact on revenues from the divested soy and corn
business, and changes in commodity-related pricing and foreign exchange
rates, Global Ingredients revenue in the first quarter increased 9.7%.
Adjusting for the items noted above, sales of internationally-sourced
organic ingredients grew 12.2% during the quarter, mainly driven by
increased demand for cocoa, fruits, oils and coffee, partially offset by
lower volumes of nuts, seeds and sugars. Sales of domestically-sourced
ingredients declined 9.8% during the quarter, primarily reflecting lower
inshell and kernel sunflower volumes, partially offset by higher roasted
snack and ingredient volumes.
The Consumer Products segment generated revenues of $177.2 million
during the first quarter of 2019, an increase of 0.5% compared to $176.3
million in the first quarter of 2018. Excluding the impact of
commodity-related pricing, sales of resealable pouch and nutrition bar
products in the first quarter of 2018, and a profit-neutral change to a
co-manufacturing agreement with one of our customers, Consumer Products
revenue in the first quarter increased by 3.9%. The growth primarily
reflects a 6.0% increase in the Healthy Beverage platform consisting of
higher sales of aseptic plant-based beverages and the expansion of broth
products combined with a 13.6% revenue increase in the Healthy Snack
platform driven by in part by increased customer promotions, and to a
lesser extent a 0.2% increase in the Healthy Fruit platform as higher
volume offset lower realized pricing.
Gross profit was $28.2 million for the quarter ended March 30, 2019, a
decrease of $5.5 million compared to $33.7 million for the quarter ended
March 31, 2018. Consumer Products accounted for $3.7 million of the
decrease in gross profit, reflecting the impact of the weather-related
delay to the fruit season in central Mexico and continued margin
pressure in frozen fruit. The delay resulted in commodity price
inflation due to a short supply of frozen fruit from Mexico, unfavorable
production variances due to lower yields related to crop quality, rework
of bulk inventories and substitution of higher-cost U.S.-grown product,
and lower plant utilization at our Mexican frozen fruit facility. The
negative impact to gross profit from the weather-related delay is
estimated to be $1.6 million in the first quarter of 2019. In addition,
the decrease in gross profit reflected lower volumes and plant
utilization for fruit ingredients due to reduced demand. These factors
were partially offset by increased sales volume and productivity-driven
cost savings for aseptic beverages and snacks. Global Ingredients
accounted for $1.8 million of the decrease in gross profit primarily due
to the sale of the soy and corn business, and a modest decline in gross
profit from sunflower and international manufacturing facilities, which
more than offset improved gross profit in international organic
ingredients driven by a gain on commodity futures contracts used to
hedge the Company’s organic cocoa position and higher sales volumes.
As a percentage of revenues, gross profit for the quarter ended March
30, 2019 was 9.2% compared to 10.8% for the quarter ended March 31,
2018, a decrease of 1.6%. On a pro forma basis that excludes the gross
profit from disposed businesses, as well as costs of $0.1 million to
transition certain production activities to a new contract manufacturer
in the first quarter of 2019, the gross profit percentage for the first
quarter of 2019 would have been approximately 9.5%, compared with 10.7%
for the first quarter of 2018.
Segment operating income¹ was $0.3 million, or 0.1% of revenues in the
first quarter of 2019, compared to $1.7 million, or 0.5% of revenues in
the first quarter of 2018. The decrease in operating income
year-over-year was primarily attributable to $5.5 million lower gross
profit, partially offset by a $2.0 million reduction in SG&A due to the
sale of the soy and corn business and rationalized overhead, lower
employee-related benefit costs, professional fees, and other cost
reduction measures, and a $2.1 million decrease in foreign exchange
losses. Excluding the operating results of disposed businesses, as well
as SG&A expenses related to employee retention and transition costs, our
segment operating income would have been $1.0 million for the first
quarter of 2019, compared with $0.9 million for the first quarter of
2018.
Other income for the first quarter of 2019 includes the pre-tax gain on
sale of the soy and corn business of $45.6 million along with the
reversal of $2.1 million of previously recognized stock-based
compensation expense. These other income amounts were offset mainly by
employee termination and recruitment costs of $3.5 million.
Adjusted EBITDA¹ was $10.9 million or 3.6% of revenues in the first
quarter of 2019, compared to $12.4 million or 4.0% of revenues in the
first quarter of 2018. Excluding disposed operations, adjusted EBITDA
for the quarter ended March 30, 2019 was $11.1 million, compared with
$11.0 million for the quarter ended March 31, 2018.
The Company reported income attributable to common shareholders for the
first quarter of 2019 of $23.7 million, or $0.26 per diluted common
share, compared to a loss of $6.3 million, or $0.07 per diluted common
share during the first quarter of 2018. Adjusted loss¹ in the first
quarter of 2019 was $7.9 million or $0.09 per common share, compared to
$6.4 million or $0.07 per common share in the first quarter of 2018.
Please refer to the discussion and table below under “Non-GAAP Measures
- Adjusted Earnings/Loss”.
Balance Sheet and Cash Flow
At March 30, 2019, SunOpta’s balance sheet reflected total assets of
$921.7 million and total debt of $454.2 million. During the first
quarter of 2019, cash provided by operating activities was $1.0 million,
compared to $7.5 million during the first quarter of 2018. The $6.5
million decrease in cash provided by operating activities reflects the
receipt of income tax refunds in the first quarter of 2018 and lower
quarter-over-quarter operating results. Excluding net proceeds from the
sale of the soy and corn business of $64.9 million, cash used in
investing activities was $8.0 million in the first quarter of 2019,
compared with $6.0 million in the first quarter of 2018, an increase in
cash used of $2.0 million. The increase in cash used reflected a higher
net level of capital expenditures during the first quarter of 2019,
mainly related to the expansion of aseptic beverage capacity and
addition of automation equipment in the Company’s frozen fruit and cocoa
processing facilities.
Conference Call
SunOpta plans to host a conference call at 9:00 A.M. Eastern time on
Wednesday, May 8, 2019, to discuss the first quarter financial results.
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
reduction of production costs due to the Company’s automation
investments; the expected benefits of the first phase of the Company’s
margin optimization plan; the delivery of improved results throughout
the year; the Company’s continued focus on strengthening its product
portfolio, accelerating customer-centric innovation, and improving
profitability in frozen fruit through pricing and productivity; and the
estimated impact of the weather-related delay to the fruit season in
central Mexico. Generally, forward-looking statements do not relate
strictly to historical or current facts and are typically accompanied by
words such as “expect”, “can”, “will”, "continue", “estimated”,
“believe”, “targeting”, “anticipates”, "should", "would", "plans",
"becoming", "intend", "confident", "may", "project", "potential",
"intention", "might", "predict", “budget”, “forecast” or other similar
terms and phrases intended to identify these forward-looking statements.
Forward-looking statements are based on information available to the
Company 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 including, but not limited to, unexpected issues or delays
with the Company’s automation investments, portfolio optimization and
productivity efforts, the sustainability of the Company’s sales
pipeline, the Company’s expectations regarding commodity pricing,
margins and hedging results, improved availability and field prices for
fruit, procurement and logistics savings, freight lane cost reductions,
yield and throughput enhancements, and labor cost reductions, 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, closures and divestitures, competitive
intensity, cost rationalization, product development initiatives, and
alternative potential uses for the Company’s 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, failure or inability to implement portfolio changes,
process improvements, go-to-market improvements and process
sustainability 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; availability and
pricing of raw materials and supplies; potential covenant breaches under
the Company’s 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.
Source: SunOpta Inc.
|
SunOpta Inc. |
Consolidated Statements of Operations
|
For the quarters ended March 30, 2019 and March 31, 2018
|
(Unaudited)
|
(All dollar amounts expressed in thousands of U.S. dollars, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
Revenues |
|
|
305,275
|
|
|
|
312,652
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
277,069
|
|
|
|
278,968
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
28,206
|
|
|
|
33,684
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
26,248
|
|
|
|
28,288
|
|
Intangible asset amortization
|
|
|
2,742
|
|
|
|
2,771
|
|
Other income, net
|
|
|
(43,512
|
)
|
|
|
(402
|
)
|
Foreign exchange loss (gain)
|
|
|
(1,104
|
)
|
|
|
962
|
|
|
|
|
|
|
|
|
Earnings before the following |
|
|
43,832
|
|
|
|
2,065
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
8,739
|
|
|
|
8,220
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes |
|
|
35,093
|
|
|
|
(6,155
|
)
|
|
|
|
|
|
|
|
Provision for (recovery of) income taxes
|
|
|
9,498
|
|
|
|
(1,693
|
)
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
|
25,595
|
|
|
|
(4,462
|
)
|
|
|
|
|
|
|
|
Earnings attributable to non-controlling interests
|
|
|
(54
|
)
|
|
|
(99
|
)
|
|
|
|
|
|
|
|
Earnings (loss) attributable to SunOpta Inc. |
|
|
25,649
|
|
|
|
(4,363
|
)
|
|
|
|
|
|
|
|
Dividends and accretion on Series A Preferred Stock
|
|
|
(1,995
|
)
|
|
|
(1,967
|
)
|
|
|
|
|
|
|
|
Earnings (loss) attributable to common shareholders |
|
|
23,654
|
|
|
|
(6,330
|
)
|
|
|
|
|
|
|
|
Earnings (loss) per share (1) |
|
|
|
|
|
|
Basic
|
|
|
0.27
|
|
|
|
(0.07
|
)
|
Diluted
|
|
|
0.26
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
SunOpta Inc. |
Consolidated Statements of Operations (continued)
|
For the quarters and quarters ended March 30, 2019 and March 31, 2018
|
(Unaudited)
|
(All dollar amounts expressed in thousands of U.S. dollars, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
|
|
|
|
|
|
|
|
(1) |
|
Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
Earnings (loss) attributable to SunOpta Inc.
|
|
|
$
|
25,649
|
|
|
|
$
|
(4,363
|
)
|
|
|
Less: dividends and accretion on Series A preferred stock
|
|
|
|
(1,995
|
)
|
|
|
|
(1,967
|
)
|
|
|
Earnings (loss) attributable to common shareholders
|
|
|
$
|
23,654
|
|
|
|
$
|
(6,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
Basic weighted-average number of shares outstanding
|
|
|
|
87,475
|
|
|
|
|
86,810
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
|
$
|
0.27
|
|
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
Earnings (loss) attributable to SunOpta Inc.
|
|
|
$
|
25,649
|
|
|
|
$
|
(4,363
|
)
|
|
|
Less: dividends and accretion on Series A preferred stock(a) |
|
|
|
-
|
|
|
|
|
(1,967
|
)
|
|
|
Earnings (loss) attributable to common shareholders
|
|
|
$
|
25,649
|
|
|
|
$
|
(6,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
Basic weighted-average number of shares outstanding
|
|
|
|
87,475
|
|
|
|
|
86,810
|
|
|
|
Dilutive effect of the following:
|
|
|
|
|
|
|
|
|
Series A preferred stock(a) |
|
|
|
11,333
|
|
|
|
|
-
|
|
|
|
Stock options and restricted stock units
|
|
|
|
191
|
|
|
|
|
-
|
|
|
|
Diluted weighted-average number of shares outstanding
|
|
|
|
98,999
|
|
|
|
|
86,810
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
|
$
|
0.26
|
|
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For the quarter ended March 30, 2019, it was more dilutive to assume
the Series A preferred stock was converted into common shares of the
Company and, therefore, the numerator of the diluted loss per share
calculation was adjusted to add back the dividends and accretion on
the preferred stock and the denominator was adjusted to include
11,333,333 common shares issuable on an if-converted basis.
|
|
|
|
|
SunOpta Inc. |
Consolidated Balance Sheets
|
As at March 30, 2019 and December 29, 2018
|
(Unaudited)
|
(All dollar amounts expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 30, 2019
|
|
|
December 29, 2018
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
6,015
|
|
|
|
3,280
|
|
Accounts receivable
|
|
|
120,335
|
|
|
|
132,131
|
|
Inventories
|
|
|
329,930
|
|
|
|
361,957
|
|
Prepaid expenses and other current assets
|
|
|
31,456
|
|
|
|
29,024
|
|
Income taxes recoverable
|
|
|
7,096
|
|
|
|
7,029
|
|
Total current assets |
|
|
494,832
|
|
|
|
533,421
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
163,532
|
|
|
|
171,032
|
|
Operating lease right-of-use assets |
|
|
75,503
|
|
|
|
-
|
|
Goodwill |
|
|
26,292
|
|
|
|
27,959
|
|
Intangible assets |
|
|
158,223
|
|
|
|
160,975
|
|
Deferred income taxes |
|
|
182
|
|
|
|
182
|
|
Other assets |
|
|
3,162
|
|
|
|
3,169
|
|
|
|
|
|
|
|
|
Total assets |
|
|
921,726
|
|
|
|
896,738
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Bank indebtedness
|
|
|
223,989
|
|
|
|
280,334
|
|
Accounts payable and accrued liabilities
|
|
|
127,877
|
|
|
|
155,371
|
|
Customer and other deposits
|
|
|
1,543
|
|
|
|
1,445
|
|
Income taxes payable
|
|
|
4,246
|
|
|
|
2,208
|
|
Other current liabilities
|
|
|
437
|
|
|
|
862
|
|
Current portion of long-term debt
|
|
|
1,816
|
|
|
|
1,840
|
|
Current portion of operating lease liabilities
|
|
|
17,432
|
|
|
|
-
|
|
Current portion of long-term liabilities
|
|
|
4,286
|
|
|
|
4,286
|
|
Total current liabilities |
|
|
381,626
|
|
|
|
446,346
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
228,436
|
|
|
|
227,023
|
|
Operating lease liabilities |
|
|
58,910
|
|
|
|
-
|
|
Long-term liabilities |
|
|
1,259
|
|
|
|
2,079
|
|
Deferred income taxes |
|
|
15,476
|
|
|
|
8,149
|
|
Total liabilities |
|
|
685,707
|
|
|
|
683,597
|
|
|
|
|
|
|
|
|
Series A Preferred Stock |
|
|
81,597
|
|
|
|
81,302
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
SunOpta Inc. shareholders’ equity |
|
|
|
|
|
|
Common shares
|
|
|
315,202
|
|
|
|
314,357
|
|
Additional paid-in capital
|
|
|
31,016
|
|
|
|
31,796
|
|
Accumulated deficit
|
|
|
(182,497
|
)
|
|
|
(206,151
|
)
|
Accumulated other comprehensive loss
|
|
|
(10,757
|
)
|
|
|
(9,667
|
)
|
|
|
|
152,964
|
|
|
|
130,335
|
|
Non-controlling interests |
|
|
1,458
|
|
|
|
1,504
|
|
Total equity |
|
|
154,422
|
|
|
|
131,839
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
921,726
|
|
|
|
896,738
|
|
|
|
|
|
|
|
|
|
|
|
SunOpta Inc. |
Consolidated Statements of Cash Flows
|
For the quarters ended March 30, 2019 and March 31, 2018
|
(Unaudited)
|
(All dollar amounts expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
Net earnings (loss)
|
|
|
25,595
|
|
|
|
(4,462
|
)
|
Items not affecting cash:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
8,302
|
|
|
|
8,141
|
|
Amortization of debt issuance costs
|
|
|
655
|
|
|
|
608
|
|
Deferred income taxes
|
|
|
7,327
|
|
|
|
(1,286
|
)
|
Stock-based compensation
|
|
|
(163
|
)
|
|
|
2,171
|
|
Unrealized loss on derivative contracts
|
|
|
112
|
|
|
|
1,521
|
|
Gain on sale of business
|
|
|
(45,579
|
)
|
|
|
-
|
|
Fair value of contingent consideration
|
|
|
-
|
|
|
|
(2,416
|
)
|
Impairment of long-lived assets
|
|
|
-
|
|
|
|
339
|
|
Other
|
|
|
(62
|
)
|
|
|
1
|
|
Changes in non-cash working capital
|
|
|
4,801
|
|
|
|
2,889
|
|
Net cash flows from operations
|
|
|
988
|
|
|
|
7,506
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Net proceeds from sale of business
|
|
|
64,876
|
|
|
|
-
|
|
Purchases of property, plant and equipment
|
|
|
(7,974
|
)
|
|
|
(6,735
|
)
|
Proceeds from sale of assets
|
|
|
-
|
|
|
|
700
|
|
Net cash flows from investing activities
|
|
|
56,902
|
|
|
|
(6,035
|
)
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Increase (decrease) under line of credit facilities
|
|
|
(54,661
|
)
|
|
|
309
|
|
Borrowings under long-term debt
|
|
|
1,852
|
|
|
|
-
|
|
Repayment of long-term debt
|
|
|
(723
|
)
|
|
|
(522
|
)
|
Payment of cash dividends on Series A Preferred Stock
|
|
|
(1,700
|
)
|
|
|
(1,700
|
)
|
Proceeds from the exercise of stock options and employee share
purchases
|
|
|
228
|
|
|
|
149
|
|
Payment of debt issuance costs
|
|
|
(314
|
)
|
|
|
-
|
|
Other
|
|
|
221
|
|
|
|
(40
|
)
|
Net cash flows from financing activities
|
|
|
(55,097
|
)
|
|
|
(1,804
|
)
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) on cash held in a foreign currency
|
|
|
(58
|
)
|
|
|
29
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents in the period
|
|
|
2,735
|
|
|
|
(304
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of the period
|
|
|
3,280
|
|
|
|
3,228
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of the period
|
|
|
6,015
|
|
|
|
2,924
|
|
|
|
|
|
|
|
|
|
|
|
SunOpta Inc. |
Segmented Information
|
For the quarters ended March 30, 2019 and March 31, 2018
|
Unaudited
|
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
|
|
$
|
|
|
$
|
Segment revenues from external customers: |
|
|
|
|
|
|
Global Ingredients
|
|
|
128,043
|
|
|
|
136,331
|
|
Consumer Products
|
|
|
177,232
|
|
|
|
176,321
|
|
Total segment revenues from external customers
|
|
|
305,275
|
|
|
|
312,652
|
|
|
|
|
|
|
|
|
Segment gross profit: |
|
|
|
|
|
|
Global Ingredients
|
|
|
12,872
|
|
|
|
14,635
|
|
Consumer Products
|
|
|
15,334
|
|
|
|
19,049
|
|
Total segment gross profit
|
|
|
28,206
|
|
|
|
33,684
|
|
|
|
|
|
|
|
|
Segment operating income (loss): |
|
|
|
|
|
|
Global Ingredients
|
|
|
4,723
|
|
|
|
3,102
|
|
Consumer Products
|
|
|
(1,338
|
)
|
|
|
3,316
|
|
Corporate Services
|
|
|
(3,065
|
)
|
|
|
(4,755
|
)
|
Total segment operating income
|
|
|
320
|
|
|
|
1,663
|
|
|
|
|
|
|
|
|
Segment gross profit percentage: |
|
|
|
|
|
|
Global Ingredients
|
|
|
10.1
|
%
|
|
|
10.7
|
%
|
Consumer Products
|
|
|
8.7
|
%
|
|
|
10.8
|
%
|
Total segment gross profit percentage
|
|
|
9.2
|
%
|
|
|
10.8
|
%
|
|
|
|
|
|
|
|
Segment operating income (loss) percentage: |
|
|
|
|
|
|
Global Ingredients
|
|
|
3.7
|
%
|
|
|
2.3
|
%
|
Consumer Products
|
|
|
-0.8
|
%
|
|
|
1.9
|
%
|
Total segment operating income
|
|
|
0.1
|
%
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures
In addition to reporting financial results in accordance with U.S. GAAP,
the Company provides additional information about its operating results
regarding segment operating income, adjusted earnings and adjusted
earnings before interest, taxes, depreciation and amortization
(“Adjusted EBITDA”), which are not measures in accordance with U.S.
GAAP. The Company believes that segment operating income, adjusted
earnings and adjusted EBITDA assist investors in comparing performance
across reporting periods on a consistent basis by excluding items that
are not indicative of its operating performance. The non-GAAP measures
of segment operating income, adjusted earnings and adjusted EBITDA
should not be considered in isolation or as a substitute for performance
measures calculated in accordance with U.S. GAAP.
In order to evaluate its results of operations, the Company uses certain
other non-GAAP measures that it believes enhance an investor’s ability
to derive meaningful period-over-period comparisons and trends from the
results of operations. In particular, the Company evaluates its revenues
on a basis that excludes the effects of fluctuations in commodity
pricing and foreign exchange rates, and the impacts of disposed
operations and changes in contractual relationships with customers. In
addition, the Company excludes specific items from its reported results
that due to their nature or size, it does not expect to occur as part of
its normal business on a regular basis. These items are identified in
the tables below. These non-GAAP measures are presented solely to allow
investors to more fully assess the Company’s results of operations and
should not be considered in isolation of, or as substitutes for an
analysis of the Company’s results as reported under U.S. GAAP.
Adjusted Earnings/Loss
When assessing its financial performance, the Company uses an internal
measure that excludes charges and gains that it believes are not
reflective of normal operations. This information is provided 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 the Company’s management. Adjusted earnings/loss and
adjusted earnings/loss per diluted share should not be considered in
isolation or as a substitute for performance measures calculated in
accordance with U.S. GAAP.
The following is a tabular presentation of adjusted earnings/loss and
adjusted earnings/loss per diluted share, including a reconciliation
from net earnings/loss, which the Company believes to be the most
directly comparable U.S. GAAP financial measure. In addition, in
recognition of the sale of the soy and corn business in the first
quarter of 2019, and the previous exit from flexible resealable pouch
and nutrition bar product lines and operations, the Company has prepared
these tables in a columnar format to present the effect of the disposal
of these operations on the Company’s consolidated results for the
current and comparative periods. The Company believes this presentation
assists investors in assessing the results of the operations the Company
has disposed and the effect of those operations on its financial
performance.
Value Creation Plan
Since the fourth quarter of 2016, the Company has been implementing its
Value Creation Plan with the objective of maximizing the Company’s
ability to deliver long-term value to its shareholders. In the first
quarter of 2019, actions under the Value Creation Plan included the sale
of the soy and corn business and related cost rationalization, as well
as the CEO transition. In the first quarter of 2018, actions under the
Value Creation Plan included the continued exit from flexible resealable
pouch and nutrition bar operations and the consolidation of roasted
snack operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
|
|
|
|
|
|
|
|
|
|
|
|
|
disposed operations
|
|
|
Disposed operations
|
|
|
Consolidated
|
|
|
|
|
|
|
Per Diluted Share
|
|
|
|
|
|
Per Diluted Share
|
|
|
|
|
|
Per Diluted Share
|
For the quarter ended |
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
March 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
(7,201
|
)
|
|
|
|
|
|
32,796
|
|
|
|
|
|
|
25,595
|
|
|
|
|
Add: loss attributable to non-controlling interests
|
|
|
54
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
54
|
|
|
|
|
Less: dividends and accretion of Series A Preferred Stock
|
|
|
(1,995
|
)
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(1,995
|
)
|
|
|
|
Earnings (loss) attributable to common shareholders
|
|
|
(9,142
|
)
|
|
|
(0.10
|
)
|
|
|
32,796
|
|
|
|
0.33
|
|
|
23,654
|
|
|
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of soy and corn business
|
|
|
-
|
|
|
|
|
|
|
(45,579
|
)
|
|
|
|
|
|
(45,579
|
)
|
|
|
|
Costs related to the Value Creation Plan(a) |
|
|
1,858
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
1,858
|
|
|
|
|
Product withdrawal and recall costs(b) |
|
|
260
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
260
|
|
|
|
|
Contract manufacturer transition costs(c) |
|
|
88
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
88
|
|
|
|
|
Other(d) |
|
|
152
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
152
|
|
|
|
|
Net income tax effect(e) |
|
|
(826
|
)
|
|
|
|
|
|
12,489
|
|
|
|
|
|
|
11,663
|
|
|
|
|
Adjusted loss
|
|
|
(7,610
|
)
|
|
|
(0.09
|
)
|
|
|
(294
|
)
|
|
|
-
|
|
|
(7,904
|
)
|
|
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(4,420
|
)
|
|
|
|
|
|
(42
|
)
|
|
|
|
|
|
(4,462
|
)
|
|
|
|
Add: loss attributable to non-controlling interests
|
|
|
99
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
99
|
|
|
|
|
Less: dividends and accretion of Series A Preferred Stock
|
|
|
(1,967
|
)
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(1,967
|
)
|
|
|
|
Loss attributable to common shareholders
|
|
|
(6,288
|
)
|
|
|
(0.07
|
)
|
|
|
(42
|
)
|
|
|
-
|
|
|
(6,330
|
)
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment on contingent consideration(f) |
|
|
(2,500
|
)
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(2,500
|
)
|
|
|
|
Costs related to Value Creation Plan(g) |
|
|
984
|
|
|
|
|
|
|
1,211
|
|
|
|
|
|
|
2,195
|
|
|
|
|
Product withdrawal and recall costs(b) |
|
|
323
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
323
|
|
|
|
|
Other(h) |
|
|
(7
|
)
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
Net income tax effect(d) |
|
|
221
|
|
|
|
|
|
|
(315
|
)
|
|
|
|
|
|
(94
|
)
|
|
|
|
Adjusted loss
|
|
|
(7,267
|
)
|
|
|
(0.08
|
)
|
|
|
854
|
|
|
|
0.01
|
|
|
(6,413
|
)
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Reflects costs incurred and expensed in connection with the Value
Creation Plan, consisting of professional fees and employee
retention costs of $0.2 million recorded in SG&A expenses; and
employee termination costs of $2.9 million, recruitment costs of
$0.6 million, and facility closure costs of $0.3 million, net of the
reversal of $2.1 million of previously recognized stock-based
compensation related to forfeited awards previously granted to
terminated employees, all recorded in other expense.
|
(b)
|
|
Reflects product withdrawal and recall costs that were not eligible
for reimbursement under insurance policies or exceeded the limits of
those policies, including costs related to the recall of certain
sunflower kernel products initiated in the second quarter of 2016,
which were recorded in other expense.
|
(c)
|
|
Reflects costs to transition certain production activities to a new
contract manufacturer, which were recorded in cost of goods sold.
|
(d)
|
|
Other included insurance deductibles, which were recorded in other
expense.
|
(e)
|
|
Reflects the tax effect of the preceding adjustments to earnings and
reflects an overall estimated annual effective tax rate of
approximately 27% for the quarter ended March 30, 2019 (March 31,
2018 – 26%) on adjusted earnings/loss before tax.
|
(f)
|
|
Reflects a fair value adjustment of $2.5 million to reduce the
contingent consideration obligation related to a prior business
acquisition, based on the results for the business in fiscal 2018,
which was recorded in other income.
|
(g)
|
|
Reflects the write-down of remaining flexible resealable pouch and
nutrition bar inventories of $0.1 million recorded in cost of goods
sold; and consulting fees, and employee recruitment and relocation
costs of $0.3 million recorded in SG&A expenses; and asset
impairment, lease obligation and employee termination costs of $1.8
million recorded in other expense.
|
(h)
|
|
Other included the accretion of contingent consideration obligations
and gain/loss on the sale of assets, which were recorded in other
expense/income.
|
|
|
|
Segment Operating Income/Loss and Adjusted EBITDA
The Company defines segment operating income/loss as net earnings/loss
before income taxes, interest expense and other income/expense items,
and adjusted EBITDA as segment operating income/loss plus depreciation,
amortization, non-cash stock-based compensation, and other unusual items
that affect the comparability of operating performance as identified
above in the determination of adjusted earnings/loss. The following is a
tabular presentation of segment operating income/loss and adjusted
EBITDA, including a reconciliation to net earnings/loss, which the
Company believes to be the most directly comparable U.S. GAAP financial
measure. In addition, as with adjusted earnings/loss presented above,
the Company has prepared these tables in a columnar format to present
the effect of the disposals of the soy and corn business, and flexible
resealable pouch and nutrition bar operations on the Company’s
consolidated results for the current and comparative periods. The
Company believes this presentation assists investors in assessing the
results of the operations the Company has disposed and the effect of
those operations on its financial performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
|
|
|
|
|
|
|
|
|
|
disposed operations
|
|
|
Disposed operations
|
|
|
Consolidated
|
For the quarter ended |
|
|
$
|
|
|
$
|
|
|
$
|
March 30, 2019 |
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
(7,201
|
)
|
|
|
32,796
|
|
|
|
25,595
|
|
Provision for (recovery of) income taxes
|
|
|
(2,879
|
)
|
|
|
12,377
|
|
|
|
9,498
|
|
Interest expense, net
|
|
|
8,739
|
|
|
|
-
|
|
|
|
8,739
|
|
Other expense (income), net
|
|
|
2,067
|
|
|
|
(45,579
|
)
|
|
|
(43,512
|
)
|
Total segment operating income (loss)
|
|
|
726
|
|
|
|
(406
|
)
|
|
|
320
|
|
Depreciation and amortization
|
|
|
8,173
|
|
|
|
129
|
|
|
|
8,302
|
|
Stock-based compensation(a) |
|
|
1,939
|
|
|
|
-
|
|
|
|
1,939
|
|
Costs related to Value Creation Plan(b) |
|
|
203
|
|
|
|
-
|
|
|
|
203
|
|
Contract manufacturer transition costs(c) |
|
|
88
|
|
|
|
-
|
|
|
|
88
|
|
Adjusted EBITDA
|
|
|
11,129
|
|
|
|
(277
|
)
|
|
|
10,852
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(4,420
|
)
|
|
|
(42
|
)
|
|
|
(4,462
|
)
|
Provision for (recovery of) income taxes
|
|
|
(1,702
|
)
|
|
|
9
|
|
|
|
(1,693
|
)
|
Interest expense (income), net
|
|
|
8,235
|
|
|
|
(15
|
)
|
|
|
8,220
|
|
Other expense (income), net
|
|
|
(1,611
|
)
|
|
|
1,209
|
|
|
|
(402
|
)
|
Total segment operating income
|
|
|
502
|
|
|
|
1,161
|
|
|
|
1,663
|
|
Depreciation and amortization
|
|
|
7,928
|
|
|
|
213
|
|
|
|
8,141
|
|
Stock-based compensation
|
|
|
2,171
|
|
|
|
-
|
|
|
|
2,171
|
|
Costs related to Value Creation Plan(b) |
|
|
413
|
|
|
|
-
|
|
|
|
413
|
|
Adjusted EBITDA
|
|
|
11,014
|
|
|
|
1,374
|
|
|
|
12,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For the first quarter of 2019, stock-based compensation of $1.9
million was recorded in SG&A expenses, and the reversal of $2.1
million of previously recognized stock-based compensation related to
forfeited awards previously granted to terminated employees was
recognized in other income.
|
(b)
|
|
For the first quarter of 2019, reflects professional fees and
employee retention costs of $0.2 million recorded in SG&A expenses.
For the first quarter of 2018, reflects the write-down of remaining
flexible resealable pouch and nutrition bar inventories of $0.1
million recorded in cost of goods sold; and consulting fees, and
employee recruitment and relocation costs of $0.3 million recorded
in SG&A expenses.
|
(c)
|
|
Reflects costs to transition certain production activities to a new
contract manufacturer, which were recorded in cost of goods sold.
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190508005112/en/
Source: SunOpta Inc.
Scott Van Winkle
ICR
617-956-6736
scott.vanwinkle@icrinc.com