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SunOpta Announces Second Quarter 2022 Financial Results

August 10,2022

Revenue increased 20.4% vs. prior year to $243.5 million

Gross profit increased $8.6 million to $34.9 million and gross margin expanded 130 basis points to 14.3%

Net earnings from continuing operations of $2.5 million compared to a net loss of $0.9 million in the prior year

Adjusted EBITDA increased 38.4% to $22.3 million

Raising 2022 revenue and Adjusted EBITDA Outlook

MINNEAPOLIS--(BUSINESS WIRE)-- SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL) (TSX:SOY), a U.S.-based global pioneer fueling the future of sustainable, plant-based and fruit-based foods and beverages, today announced financial results for the second quarter ended July 2, 2022.

All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.

Second quarter 2022 highlights:

  • Revenues increased 20.4% to $243.5 million reflecting 31.0% growth in plant-based and 7.4% increase in fruit-based.
  • Gross margin increased 130 basis points to 14.3% from 13.0% in the prior year, despite approximately 140 basis points of margin dilution from pricing to recover inflationary costs.
  • Net earnings from continuing operations were $2.5 million compared to net loss of $0.9 million in the prior year.
  • Adjusted earnings¹ were $3.5 million or $0.03 per diluted common share in the second quarter of 2022, compared to adjusted earnings of $0.1 million or $0.00 per diluted common share in the second quarter of 2021.
  • Adjusted EBITDA¹ of $22.3 million, or 9.2% of revenues for the second quarter of 2022, was up 38.4% versus $16.1 million or 8.0% of revenues in the second quarter of 2021.

“Second quarter results were excellent, driven by strong revenue growth and our highest Adjusted EBITDA in company history2. Revenues were up 20.4%, and Adjusted EBITDA increased 38.4% as we continued to leverage the power of our platform to accelerate growth and increase profitability,” said Joe Ennen, Chief Executive Officer. Plant-Based revenues surged 31.0% to $145.9 million, a new quarterly record reflecting the strength of our oat-based offering and double-digit increases in volume, mix and pricing. We saw growth in nearly every customer, every channel, every product type and in every go-to-market business, reflecting the strength of our SunOpta value proposition. In Fruit-Based, revenues increased 7.4% due to demand for fruit snacks and smoothie bowls along with higher price realization in frozen fruit. “While the macro environment remains challenging, we have been able to offset the majority of inflation with pricing and our productivity initiatives continue to gain traction. The actions we have taken over the past several years to optimize our product portfolio, streamline operations and aggressively expand capacity are driving significant and sustainable momentum across our business. With a leading share in the fastest growing categories and a strong pipeline of innovation, we are well positioned to realize our vision of Fueling the Future of Food. Our increased outlook for 2022 reflects the strength of recent results, and more importantly our confidence in our ability to continue delivering significant growth and increasing value for shareholders.”

Second Quarter 2022 Results

Revenues of $243.5 million for the second quarter of 2022 increased 20.4% compared to the second quarter of 2021 driven by 31.0% growth in Plant-Based Foods and Beverages and 7.4% growth in Fruit-Based Foods and Beverages. The increase in revenues reflected a 12.2% increase in pricing along with an 8.2% increase in volume/mix.

The Plant-Based Foods and Beverages segment generated revenues of $145.9 million, an increase of 31.0% compared to $111.4 million in the second quarter of 2021. Pricing increased 13.7% driven by actions to offset inflationary pressures, together with the pass-through effect of higher sunflower commodity pricing. Volume/mix was up 17.3%, reflecting growth in oat-based offerings, other plant-based beverages and teas.

The Fruit-Based Foods and Beverages segment generated revenues of $97.6 million, an increase of 7.4% compared to $90.9 million in the second quarter of 2021. Pricing increased 10.4% reflecting actions to offset inflationary pressures, while volume/mix declined 3.0% due to lower demand for frozen fruit and our portfolio rationalization efforts, offset by strong demand for fruit snacks and smoothie bowls.

Gross profit was $34.9 million for the second quarter, an increase of $8.6 million compared to $26.3 million in the prior year period. As a percentage of revenues, gross profit margin was 14.3% compared to 13.0% in the second quarter of 2021, an increase of 130 basis points. Gross profit in the Plant-Based Foods and Beverages segment increased $4.0 million to $23.9 million, while gross margin declined 150 basis points to 16.4% primarily due to the 215-basis point dilutive effect of pass-through pricing to recover cost inflation. Gross profit in the Fruit-Based Foods and Beverages segment increased by $4.5 million to $11.0 million and gross margin increased 410 basis points to 11.2% despite a 70-basis point impact from the dilutive effect of pass-through pricing to offset commodity cost inflation. Excluding the pricing effect, Fruit-Based gross margin benefited from portfolio rationalization and manufacturing consolidation.

Segment operating income¹ was $8.1 million, or 3.3% of revenues in the second quarter of 2022, compared to segment operating income of $1.7 million, or 0.9% of revenues in the second quarter of 2021. The increase in segment operating income was due to higher gross profit, partially offset by a $1.6 million increase in SG&A expenses due to higher incentive accruals partially offset by employee compensation costs related to headcount reductions in frozen fruit operations, lower business development expenses and unfavorable foreign exchange impact related to Mexican operations.

Adjusted EBITDA¹ was $22.3 million or 9.2% of revenues in the second quarter of 2022, compared to $16.1 million or 8.0% of revenues in the second quarter of 2021.

Earnings attributable to common shareholders for the second quarter of 2022 was $0.9 million, or $0.01 per diluted common share, compared to a loss of $1.7 million, or ($0.02) per diluted common share during the second quarter of 2021.

Adjusted earnings¹ in the second quarter of 2022 was $3.5 million or $0.03 per common share, compared to adjusted earnings of $0.1 million or $0.00 per common share in the second quarter of 2021.

Please refer to the discussion and table below under “Non-GAAP Measures”.

Balance Sheet and Cash Flow

As of July 2, 2022, SunOpta had total assets of $843.9 million and total debt of $296.5 million compared to total assets of $755.1 million and total debt of $224.6 million at year end fiscal 2021. During the second quarter of 2022, cash used in operating activities was $2.5 million compared to cash used in operating activities of $39.1 million during the second quarter of 2021. Investing activities of continuing operations consumed $34.1 million of cash during the second quarter of 2022 versus $32.4 million in the prior year, primarily driven by the new plant construction in Midlothian, Texas which is expected to come online in late 2022.

2022 Outlook3

We are raising our previously provided outlook for fiscal 2022, including:

($ millions)

 

Prior
Outlook

 

Revised
Outlook

Revenue

$

890 - 930

$

930 - 960

Adj. EBITDA

67 - 75

72 - 78

Revenue growth

10% - 14%

14% - 18%

Adj. EBITDA growth

10% - 24%

19% - 28%

Conference Call

SunOpta plans to host a conference call at 5:00 P.M. Eastern time on Wednesday, August 10, 2022, to discuss the second quarter financial results. After opening remarks, there will be a question and answer period. Investors interested in listening the live webcast can access a link on SunOpta's website at www.sunopta.com under the "Investor Relations" section or directly here. A replay of the webcast will be archived and can be accessed for approximately 90 days on the Company's website. This call may be accessed with the toll free dial-in number dial (888) 440-4182 or International dial-in number (646) 960-0653 using Conference ID: 8338433.

¹ See discussion of non-GAAP measures

2 Excludes the impact of the 2020 divestiture of our global ingredients business

3 The Company has included certain forward-looking statements about the future financial performance that include non-GAAP financial measures, including Adjusted EBITDA. These non–GAAP financial measures are derived by excluding certain amounts, expenses or income, from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts that are excluded from these non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period. We are unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because management cannot reliably predict all of the necessary components of such GAAP measures. Historically, management has excluded the following items from certain of these non-GAAP measures, and such items may also be excluded in future periods and could be significant amounts.

  • Expenses related to the acquisition or divestiture of a business, including business development costs, impairment of assets, integration costs, severance, retention costs and transaction costs;
  • Start-up costs of new facilities and equipment;
  • Charges associated with restructuring and cost saving initiatives, including but not limited to asset impairments, accelerated depreciation, severance costs and lease abandonment charges;
  • Asset impairment charges and facility closure costs;
  • Legal settlements or awards; and
  • The tax effect of the above items.

About SunOpta Inc.

SunOpta (Nasdaq:STKL) (TSX:SOY) is a U.S.-based, global pioneer fueling the future of sustainable, plant-based and fruit-based food and beverages. Founded nearly 50 years ago, SunOpta manufactures natural, organic and specialty products sold through retail and foodservice channels. SunOpta operates as a manufacturer for leading natural and private label brands, and also proudly produces its own brands, including SOWN®, Dream™, WestSoy™ and Sunrise Growers™. For more information, visit www.sunopta.com and LinkedIn.

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, our belief that our productivity initiatives will continue to gain traction and that we will continue to deliver significant growth and increasing value for shareholders, when we expect our new plant in Midlothian, Texas to come online and our anticipated revenue, adjusted EBITDA, revenue growth and adjusted EBITDA growth for fiscal 2022. Generally, forward-looking statements do not relate strictly to historical or current facts and are typically accompanied by words such as “continue”, “expect”, “believe”, “anticipate”, “estimates”, “can”, “will”, “target”, "should", "would", "plans", "becoming", "intend", "confident", "may", "project", "potential", "intention", "might", "predict", “outlook”, “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, the Company’s actual financial results; uninterrupted operations and service levels to our customers ; current and anticipated customer demand for the Company’s; general economic conditions; continued consumer interest in health and wellness; the Company’s ability to maintain product pricing levels; planned facility and operational expansions, closures and divestitures; cost rationalization and product development initiatives; alternative potential uses for the Company’s capital resources; 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. Whether actual timing and results will agree with expectations and predictions of the Company is subject to many risks and uncertainties including, but not limited to, potential loss of suppliers and customers as well as supply chain, logistics and other disruptions whether resulting from or related to COVID-19 or other factors; unexpected issues or delays with the Company’s structural improvements and automation investments; 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; ability to hire and/or retain qualified personnel at current compensation rates; 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.

SunOpta Inc.

Consolidated Statements of Operations

For the quarters and two quarters ended July 2, 2022 and July 3, 2021

(Unaudited)

(All dollar amounts expressed in thousands of U.S. dollars, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

Two quarters ended

 

 

 

 

July 2, 2022

July 3, 2021

July 2, 2022

July 3, 2021

 

 

 

 

$

$

$

$

 

 

 

 

 

 

 

 

Revenues

243,531

 

202,273

 

483,704

 

409,913

 

 

 

 

 

 

 

 

 

Cost of goods sold

208,633

 

175,937

 

420,815

 

353,588

 

 

 

 

 

 

 

 

 

Gross profit

34,898

 

26,336

 

62,889

 

56,325

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

24,304

 

22,720

 

46,239

 

43,594

 

Intangible asset amortization

2,612

 

2,532

 

5,224

 

4,726

 

Other expense, net

1,540

 

4,661

 

1,827

 

6,276

 

Foreign exchange loss (gain)

(127

)

(639

)

(599

)

197

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations before the following

6,569

 

(2,938

)

10,198

 

1,532

 

 

 

 

 

 

 

 

 

Interest expense, net

3,132

 

1,631

 

5,662

 

3,291

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations before income taxes

3,437

 

(4,569

)

4,536

 

(1,759

)

 

 

 

 

 

 

 

 

Income tax expense (benefit)

939

 

(3,651

)

1,384

 

(2,513

)

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

2,498

 

(918

)

3,152

 

754

 

Earnings (loss) from discontinued operations

(814

)

-

 

2,752

 

-

 

Net earnings (loss)

1,684

 

(918

)

5,904

 

754

 

 

 

 

 

 

 

 

 

Dividends and accretion on preferred stock

(760

)

(744

)

(1,515

)

(2,697

)

 

 

 

 

 

 

 

 

Earnings (loss) attributable to common shareholders

924

 

(1,662

)

4,389

 

(1,943

)

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

 

 

 

 

From continuing operations

0.02

 

(0.02

)

0.02

 

(0.02

)

 

From discontinued operations

(0.01

)

-

 

0.03

 

-

 

Basic and diluted earnings (loss) per share

0.01

 

(0.02

)

0.04

 

(0.02

)

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding (000s)

 

 

 

 

 

Basic

107,622

 

105,676

 

107,510

 

100,898

 

 

Diluted

108,667

 

105,676

 

108,495

 

100,898

 

SunOpta Inc.

Consolidated Balance Sheets

As at July 2, 2022 and January 1, 2022

(Unaudited)

(All dollar amounts expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

 

July 2, 2022

January 1, 2022

 

 

 

 

$

$

 

 

 

 

 

 

ASSETS

 

 

Current assets

 

 

 

Cash and cash equivalents

553

 

227

 

 

Accounts receivable

83,804

 

84,702

 

 

Inventories

261,899

 

220,143

 

 

Prepaid expenses and other current assets

17,493

 

16,638

 

 

Income taxes recoverable

9,861

 

8,259

 

 

Assets held for sale

11,591

 

-

 

Total current assets

385,201

 

329,969

 

 

 

 

 

 

 

Property, plant and equipment, net

264,690

 

219,537

 

Operating lease right-of-use assets

40,990

 

47,245

 

Intangible assets, net

143,216

 

148,440

 

Goodwill

3,998

 

3,998

 

Other assets

5,827

 

5,930

 

 

 

 

 

 

 

Total assets

843,922

 

755,119

 

 

 

 

 

 

 

LIABILITIES

 

 

Current liabilities

 

 

 

Accounts payable and accrued liabilities

143,102

 

121,430

 

 

Income taxes payable

711

 

-

 

 

Current portion of long-term debt

23,055

 

9,760

 

 

Current portion of operating lease liabilities

9,933

 

12,203

 

Total current liabilities

176,801

 

143,393

 

 

 

 

 

 

 

Long-term debt

273,493

 

214,843

 

Operating lease liabilities

37,084

 

39,028

 

Long-term liabilities

-

 

2,241

 

Deferred income taxes

13,510

 

22,485

 

Total liabilities

500,888

 

421,990

 

 

 

 

 

 

 

Series B-1 preferred stock

28,442

 

28,145

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

Common shares

438,668

 

436,463

 

Additional paid-in capital

26,254

 

23,240

 

Accumulated deficit

(151,693

)

(156,082

)

Accumulated other comprehensive income

1,363

 

1,363

 

Total shareholders' equity

314,592

 

304,984

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

843,922

 

755,119

 

SunOpta Inc.

Consolidated Statements of Cash Flows

For the quarters and two quarters ended July 2, 2022 and July 3, 2021

(Unaudited)

(Expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

Two quarters ended

 

 

 

 

July 2, 2022

July 3, 2021

July 2, 2022

July 3, 2021

 

 

 

 

$

$

$

$

 

 

 

 

 

 

 

 

CASH PROVIDED BY (USED IN)

 

 

 

 

Operating activities

 

 

 

 

Net earnings (loss)

1,684

 

(918

)

5,904

 

754

 

Earnings (loss) from discontinued operations

(814

)

-

 

2,752

 

-

 

Earnings (loss) from continuing operations

2,498

 

(918

)

3,152

 

754

 

Items not affecting cash:

 

 

 

 

 

Depreciation and amortization

9,372

 

8,910

 

18,785

 

16,953

 

 

Amortization of debt issuance costs

396

 

349

 

771

 

634

 

 

Deferred income taxes

2,128

 

(4,331

)

2,208

 

(3,494

)

 

Stock-based compensation

3,970

 

4,370

 

5,599

 

8,343

 

 

Impairment of long-lived assets

-

 

2,962

 

-

 

2,962

 

 

Other

1,634

 

(167

)

1,745

 

(336

)

 

Changes in operating assets and liabilities

(22,452

)

(50,322

)

(19,171

)

(71,978

)

Net cash provided by (used in) operating activities of continuing operations

(2,454

)

(39,147

)

13,089

 

(46,162

)

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

Additions to property, plant and equipment

(37,038

)

(7,306

)

(62,760

)

(16,603

)

Proceeds from sale of assets

2,978

 

-

 

4,182

 

1,350

 

Additions to intangible assets

-

 

(25,073

)

-

 

(25,073

)

Net cash used in investing activities of continuing operations

(34,060

)

(32,379

)

(58,578

)

(40,326

)

Net cash used in investing activities of discontinued operations

(6,324

)

-

 

(6,324

)

(13,380

)

Net cash used in investing activities

(40,384

)

(32,379

)

(64,902

)

(53,706

)

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

Increase in borrowings under revolving credit facilities

31,067

 

70,244

 

20,762

 

111,829

 

Borrowings of long-term debt

18,206

 

4,155

 

41,103

 

4,641

 

Repayment of long-term debt

(5,174

)

(5,855

)

(7,569

)

(9,940

)

Payment of debt issuance costs

(53

)

(543

)

(559

)

(2,371

)

Proceeds from the exercise of stock options and employee share purchases

341

 

4,550

 

591

 

7,190

 

Payment of withholding taxes on stock-based awards

(882

)

(666

)

(971

)

(6,737

)

Payment of cash dividends on preferred stock

(609

)

(609

)

(1,218

)

(4,029

)

Payment of share issuance costs

-

 

(25

)

-

 

(287

)

Net cash provided by financing activities of continuing operations

42,896

 

71,251

 

52,139

 

100,296

 

Net cash used in financing activities of discontinued operations

-

 

-

 

-

 

(200

)

Net cash provided by financing activities

42,896

 

71,251

 

52,139

 

100,096

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents in the period

58

 

(275

)

326

 

228

 

Cash and cash equivalent, beginning of the period

495

 

754

 

227

 

251

 

Cash and cash equivalents, end of the period

553

 

479

 

553

 

479

 

SunOpta Inc.

Segmented Information

For the quarters and two quarters ended July 2, 2022 and July 3, 2021

Unaudited

(Expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

Two quarters ended

 

 

 

 

July 2, 2022

July 3, 2021

July 2, 2022

July 3, 2021

 

 

 

 

$

$

$

$

Segment revenues from external customers:

 

 

 

 

 

Plant-Based Foods and Beverages

145,912

 

111,359

 

281,423

 

230,810

 

 

Fruit-Based Foods and Beverages

97,619

 

90,914

 

202,281

 

179,103

 

 

 

Total segment revenues from external customers

243,531

 

202,273

 

483,704

 

409,913

 

 

 

 

 

 

 

Segment gross profit:

 

 

 

 

 

Plant-Based Foods and Beverages

23,940

 

19,896

 

43,920

 

43,054

 

 

Fruit-Based Foods and Beverages

10,958

 

6,440

 

18,969

 

13,271

 

 

 

Total segment gross profit

34,898

 

26,336

 

62,889

 

56,325

 

 

 

 

 

 

 

 

 

Segment operating income (loss):

 

 

 

 

 

Plant-Based Foods and Beverages

12,196

 

8,641

 

20,292

 

21,958

 

 

Fruit-Based Foods and Beverages

3,211

 

(1,447

)

3,995

 

(3,341

)

 

Corporate Services

(7,298

)

(5,471

)

(12,262

)

(10,809

)

 

 

Total segment operating income

8,109

 

1,723

 

12,025

 

7,808

 

 

 

 

 

 

 

 

 

Segment gross profit percentage:

 

 

 

 

 

Plant-Based Foods and Beverages

16.4

%

17.9

%

15.6

%

18.7

%

 

Fruit-Based Foods and Beverages

11.2

%

7.1

%

9.4

%

7.4

%

 

 

Total segment gross profit percentage

14.3

%

13.0

%

13.0

%

13.7

%

 

 

 

 

 

 

 

 

Segment operating income (loss) percentage:

 

 

 

 

 

Plant-Based Foods and Beverages

8.4

%

7.8

%

7.2

%

9.5

%

 

Fruit-Based Foods and Beverages

3.3

%

-1.6

%

2.0

%

-1.9

%

 

 

Total segment operating income percentage

3.3

%

0.9

%

2.5

%

1.9

%

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 management believes 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 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

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 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.

The following is a tabular presentation of adjusted earnings and adjusted earnings per diluted share, including a reconciliation from earnings from continuing operations, which the Company believes to be the most directly comparable U.S. GAAP financial measure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

July 2, 2022

 

July 3, 2021

 

 

 

 

 

 

Per Share

 

 

Per Share

 

For the quarter ended

$

$

 

$

$

 

Earnings (loss) from continuing operations

2,498

 

 

 

(918

)

 

 

Dividends and accretion on preferred stock

(760

)

 

 

(744

)

 

 

Earnings (loss) from continuing operations attributable to common shareholders

1,738

 

0.02

 

(1,662

)

(0.02

)

 

Adjusted for:

 

 

 

 

 

 

 

Facility closure costs(a)

1,287

 

 

 

-

 

 

 

 

Business development costs(b)

616

 

 

 

1,434

 

 

 

 

Start-up costs(c)

281

 

 

 

-

 

 

 

 

Costs related to exit from fruit ingredient processing facility(d)

-

 

 

 

4,123

 

 

 

 

Other(e)

253

 

 

 

247

 

 

 

 

Net income tax effect(f)

(640

)

 

 

(4,022

)

 

 

Adjusted earnings

3,535

 

0.03

 

120

 

0.00

 

(a)

 

Facility closure costs mainly related to the relocation of certain equipment from our held-for-sale Oxnard, California, frozen fruit processing facility to our Mexican facility, which were recorded in other expense.

(b)

 

Represents third-party costs associated with business development activities, including costs related to the evaluation, execution, and integration of external acquisitions and divestitures, internal expansion projects, and other strategic initiatives. For the second quarter of 2022, these costs related to our inaugural Investor Day held in June 2022 ($0.5 million), as well as specific business transactions under consideration, which were recorded in SG&A expenses. For the second quarter of 2021, these costs were mainly related to the transition of the Dream and WestSoy brands, acquired in April 2021, and professional fees incurred in connection with post-closing matters related to the 2020 divestiture of our global ingredients business, Tradin Organic, which were recorded in SG&A expenses ($1.1 million) and other expense ($0.3 million).

(c)

 

Represents incremental direct costs incurred in connection with plant expansion projects and new product introductions before the project or product reaches normal production levels, including costs for the hiring and training of additional personnel, fees for outside services, travel costs, and plant- and production-related expenses. For the second quarter of 2022, start-up costs mainly related to new employee hires for our plant-based beverage facility under construction in Midlothian, Texas, which were recorded in cost of goods sold ($0.2 million) and SG&A expenses ($0.1 million).

(d)

 

For the second quarter of 2021, represents asset impairment charges and employee termination costs related to the exit from our South Gate, California, fruit ingredient processing facility, which were recorded in other expense.

(e)

 

For the second quarters of 2022 and 2021, other mainly reflects the settlement of certain legal and contractual matters.

(f)

 

Reflects the tax effect of the preceding adjustments to earnings calculated based on the statutory tax rates applicable in the tax jurisdiction of the underlying adjustment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

July 2, 2022

 

July 3, 2021

 

 

 

 

 

 

Per Share

 

 

Per Share

 

For the two quarters ended

$

$

 

$

$

 

Earnings from continuing operations

3,152

 

 

 

754

 

 

 

Dividends and accretion on preferred stock

(1,515

)

 

 

(2,697

)

 

 

Earnings (loss) from continuing operations attributable to common shareholders

1,637

 

0.02

 

(1,943

)

(0.02

)

 

Adjusted for:

 

 

 

 

 

 

 

Facility closure costs(a)

1,287

 

 

 

-

 

 

 

 

Business development costs(b)

799

 

 

 

1,786

 

 

 

 

Start-up costs(c)

721

 

 

 

-

 

 

 

 

Costs related to exit from fruit ingredient processing facility(d)

-

 

 

 

4,123

 

 

 

 

Restructuring costs(e)

-

 

 

 

1,432

 

 

 

 

Other(f)

540

 

 

 

247

 

 

 

 

Net income tax effect(g)

(879

)

 

 

(4,262

)

 

 

Adjusted earnings

4,105

 

0.04

 

1,383

 

0.01

 

(a)

 

Facility closure costs mainly related to the relocation of certain equipment from our held-for-sale Oxnard, California frozen fruit processing facility to our Mexican facility, which were recorded in other expense.

(b)

 

Represents third-party costs associated with business development activities, including costs related to the evaluation, execution, and integration of external acquisitions and divestitures, internal expansion projects, and other strategic initiatives. For the first two quarters of 2022, these costs related to our inaugural Investor Day held in June 2022 ($0.5 million), as well as specific business transactions under consideration, which were recorded in SG&A expenses. For the first two quarters of 2021, these costs were mainly related to the transition of the Dream and WestSoy brands, acquired in April 2021, and professional fees incurred in connection with post-closing matters related to the 2020 divestiture of our global ingredients business, Tradin Organic, which were recorded in SG&A expenses ($1.3 million) and other expense ($0.5 million).

(c)

 

Represents incremental direct costs incurred in connection with plant expansion projects and new product introductions before the project or product reaches normal production levels, including costs for the hiring and training of additional personnel, fees for outside services, travel costs, and plant- and production-related expenses. For the first two quarters of 2022, start-up costs mainly related to new employee hires for our plant-based beverage facility under construction in Midlothian, Texas, and the integration of the Dream and WestSoy brands, which were recorded in cost of goods sold ($0.6 million) and SG&A expenses ($0.1 million).

(d)

 

For the first two quarters of 2021, represents asset impairment charges and employee termination costs related to the exit from our South Gate, California fruit ingredient processing facility, which were recorded in other expense.

(e)

 

For the first two quarters of 2021, represents costs to complete the exit from our Santa Maria, California frozen fruit processing facility, which were recorded in other expense.

(f)

 

For the first two quarters of 2022, other mainly reflects the settlement of certain legal and contractual matters, together with asset impairment charges. For the first two quarters of 2021, other mainly reflects the settlement of certain legal and contractual matters.

(g)

 

Reflects the tax effect of the preceding adjustments to earnings calculated based on the statutory tax rates applicable in the tax jurisdiction of the underlying adjustment.

Segment Operating Income and Adjusted EBITDA

The Company defines segment operating income as earnings from continuing operations before income taxes, interest expense and other income/expense items, and adjusted EBITDA as segment operating income plus depreciation, amortization, stock-based compensation, and other unusual items that affect the comparability of operating performance as identified above in the determination of adjusted earnings. The following is a tabular presentation of segment operating income and adjusted EBITDA, including a reconciliation to earnings from continuing operations, which the Company believes to be the most directly comparable U.S. GAAP financial measure.

 

 

 

 

 

July 2, 2022

 

July 3, 2021

 

For the quarter ended

$

 

$

 

Earnings (loss) from continuing operations

2,498

 

(918

)

 

Income tax expense (benefit)

939

 

(3,651

)

 

Interest expense, net

3,132

 

1,631

 

 

Other expense, net

1,540

 

4,661

 

 

Total segment operating income

8,109

 

1,723

 

 

 

Depreciation and amortization

9,372

 

8,910

 

 

 

Stock-based compensation

3,970

 

4,370

 

 

 

Business development costs(a)

616

 

1,143

 

 

 

Start-up costs(b)

281

 

-

 

 

Adjusted EBITDA

22,348

 

16,146

 

(a)

 

Business development activities were related to our Investor Day and the exploration of potential strategic opportunities in the second quarter of 2022, and the integration of the Dream and WestSoy brands in the second quarter of 2021, which costs were recorded in SG&A expenses.

(b)

 

For the second quarter of 2022, start-up costs mainly related to new employee hires for our plant-based beverage facility under construction in Midlothian, Texas, which were recorded in cost of goods sold.

 

 

 

 

 

July 2, 2022

 

July 3, 2021

 

For the two quarters ended

$

 

$

 

Earnings from continuing operations

3,152

 

754

 

 

Income tax expense (benefit)

1,384

 

(2,513

)

 

Interest expense, net

5,662

 

3,291

 

 

Other expense, net

1,827

 

6,276

 

 

Total segment operating income

12,025

 

7,808

 

 

 

Depreciation and amortization

18,785

 

16,953

 

 

 

Stock-based compensation

5,599

 

8,343

 

 

 

Business development costs(a)

799

 

1,312

 

 

 

Start-up costs(b)

721

 

-

 

 

Adjusted EBITDA

37,929

 

34,416

 

(a)

 

Business development activities were related to our Investor Day and the exploration of potential strategic opportunities in the first two quarters of 2022, and the integration of the Dream and WestSoy brands in the first two quarters of 2021, which costs were recorded in SG&A expenses.

(b)

 

For the first two quarters of 2022, start-up costs mainly related to new employee hires for our plant-based beverage facility under construction in Midlothian, Texas, and the integration of the Dream and WestSoy brands acquired in April 2021, which were recorded in cost of goods sold.

 

Reed Anderson
ICR
646-277-1260
reed.anderson@icrinc.com

Source: SunOpta Inc.

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