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SunOpta: Q3 2009 Results
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SunOpta Inc., a leading global company focused on natural, organic and specialty foods and natural health products, announced financial results for the third quarter ended September 30, 2009. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
The Company realized revenues of $253.8 million in the third quarter of 2009 versus third quarter 2008 revenues of $287.7 million, a year over year decrease of 11.8%. After adjusting for revenue declines in non-food operations plus the impact on revenues due to changes in foreign exchange rates and commodity prices, food revenues declined approximately 4% in the third quarter of 2009 versus the third quarter of 2008.
For the third quarter of 2009 the Company reported a loss on a GAAP basis of ($4.7) million or ($0.07) per diluted common share. Adjusted earnings(1) for the third quarter of 2009 were $4.4 million or $0.07 per diluted common share versus adjusted earnings(1) in the third quarter of 2008 of $5.2 million or $0.08 per diluted common share. Third quarter results include the impact of additional pre-tax costs of $10.6 million including net non-cash charges after minority interest of $4.8 million related to the impairment of goodwill in the Company's subsidiary, Opta Minerals Inc., pre-tax costs of $2.6 million related to ongoing product and facility rationalization efforts which includes non-cash charges of $1.0 million, pre-tax costs of $1.5 million related to the ongoing revitalization and re-launch of a number of company owned natural health products brands and additional legal, professional and banking fees of $1.7 million related to the 2007 restatement and class action settlement, a legal action in the SunOpta BioProcess Group and costs related to banking amendments. Adjusted earnings(1) excluding the impact of foreign exchange gains for the third quarter of 2009 were $3.8 million or $0.06 per diluted common share versus adjusted earnings(1) excluding the impact of foreign exchange of $2.4 million or $0.04 per diluted common share in the third quarter of 2008.
On a segment basis both the SunOpta Grains and Foods Group and the SunOpta Ingredients Group had very strong earnings achieving their operating income targets of 6.1% and 16.4% respectively. The SunOpta Ingredients Group realized record quarterly operating income of approximately $2.9 million. Within the Fruit Group the processed fruit ingredients and healthy fruit snack segments realized strong results as compared to the prior year, offset by losses within the frozen fruit segment due to lower than expected retail sales and additional product rationalization costs as the segment is transformed. Both the International Sourcing and Trading Group and Opta Minerals Inc. returned to positive operating income in the quarter as a result of numerous cost improvements combined with improving external markets. The Distribution Group continues to evolve its business and incurred brand re-launch costs in the quarter as well as costs to reduce inventory levels and rationalize its product portfolio.
SunOpta BioProcess continues to focus on building its business and establishing strategic partnerships with companies in the energy and petrochemical sectors.
At September 30, 2009, the Company's balance sheet reflects a current working capital ratio of 1.70 to 1.00, long-term debt to equity ratio of 0.46 to 1.00 and total debt to equity ratio of 0.71 to 1.00. During the third quarter the Company generated cash from operating activities of $19.3 million including cash generated from working capital of $13.6 million, reflecting ongoing efforts to reduce working capital, especially inventories, across the Company. The Company also continued to focus on reducing debt and realized a decrease of approximately $19.5 million versus the second quarter of 2009 and a reduction of approximately $38.2 million versus the prior year. At September 30, 2009 the Company has total assets of $564.5 million and a net book value of $3.60 per outstanding share.
At September 30, 2009, the Company is in compliance with the amended financial covenants that were negotiated with its banking syndicate earlier this year. On October 30, 2009, the Company entered into a new three-year syndicated Asset-Based Lending ("ABL") credit facilities. The ABL facilities amend and replace the Company's previous credit facilities. Credit limits under the ABL facilities are based on eligible accounts receivable and inventory balances, as determined on a monthly basis. The ABL facilities also provides for a decreased interest rate premium charged on outstanding balances, which are based on new financial ratios.
For the nine months ended September 30, 2009, the Company realized revenues of $743.6 million versus revenues of $810.1 million for the nine months ended September 30, 2008. After adjusting for revenue declines in non-core food operations and the impact on revenues due to changes in foreign exchange rates and commodity prices, food revenues have declined approximately 2% versus the same period in 2008.
On a GAAP basis for the nine months ended September 30, 2009 the Company realized a loss of ($4.5) million or ($0.07) per diluted common share. Adjusted earnings(1) for the nine months ended September 30, 2009 were $9.0 million or $0.14 per diluted common share versus adjusted earnings(1) in the comparable period in 2008 of $13.5 million or $0.21 per diluted common share. The 2009 results include additional pre-tax costs of $17.3 million, including net non-cash charges of $4.8 million related to the impairment of goodwill in the Company's subsidiary, Opta Minerals Inc., pre-tax costs of $6.6 million related to ongoing product and facility rationalization efforts which includes non-cash charges of $1.0 million, pre-tax costs of $2.7 million related to the ongoing revitalization and re-launch of a number of company owned natural health products brands and additional legal, professional and banking fees of $3.2 million related to the 2007 restatement and class action settlement, a legal action in the SunOpta BioProcess Group and costs related to banking amendments. Adjusted earnings(1) excluding the impact of foreign exchange gains for the nine months ended September 30, 2009 were $8.7 million or $0.13 per diluted common share versus adjusted earnings(1) excluding the impact of foreign exchange of $10.0 million or $0.15 per diluted common share in the nine months ended September 30, 2008.
Steve Bromley, President and Chief Executive Officer of SunOpta commented: "We are pleased with the strong results within the Grains and Foods Group, Ingredients Group and certain segments of the Fruit Group, combined with improving results within our International Sourcing and Trading Group and Opta Minerals Inc. We are confident that the changes occurring in the Frozen Fruit segment of the Fruit Group and the Distribution Group will pay dividends down the road. Our balance sheet continues to improve with reduced working capital levels, tight control on capital spending and net reductions in debt. Our primary focus continues to be the improvement of operating margins and return on assets employed, to be realized through a combination of aggressive working capital management and continuous improvement initiatives. Our new ABL credit facilities, when combined with our ongoing business improvement initiatives are expected to provide the Company with the liquidity and flexibility to support our long-term goals and commitments. We are confident that our cost control, efficiency, product development and asset utilization initiatives are key to delivering long term sustainable returns as interest in health and wellness continues to gain attention around the globe."
As previously announced, the Company is not providing specific revenue and earnings guidance for 2009. The Company will continue to provide updates when appropriate related to material changes in business affairs resulting from changes in the business and related economic conditions.
The Company plans to host a conference call at 10:00 AM Eastern Time on Friday, November 6th, 2009, to discuss these results and recent corporate developments. The conference call can be accessed via a link at the Company's website at www.sunopta.com. Additionally, the call may be accessed with the toll free dial-in number 1 866 439-4712 or 212-457-9845 followed by pass code: 391845#. A replay number can also be accessed between November 6th and 16th with the toll free dial-in number 1-866-439-4729 or 212-457-9846 followed by pass code: 382427#.
About SunOpta Inc.
SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food and natural health markets. The Company has three business units: the SunOpta Food Group, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; Opta Minerals Inc. (TSX:OPM - News) (66.5% owned by SunOpta), a producer, distributor, and recycler of environmentally friendly industrial materials; and SunOpta BioProcess Inc. which engineers and markets proprietary steam explosion technology systems for the bio-fuel, pulp and food processing industries. SunOpta believes that each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.
The SunOpta Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3958
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, management's expectations regarding future benefits of ongoing revitalization of a number natural health products brands, benefits of new banking arrangements, continued and increasing interest in the health and wellness consumer markets, as well as cost control, product development and asset utilization initiatives and working capital management and continuous improvement measures, and overall improved returns for 2009. The terms and phrases "ongoing", "improving", "continued", "establishing", "improving", "will", "believe", "confident", "to be realized", and other similar terms and phrases are 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, applicable tax legislation, consumer trends, preferences and spending patterns, product pricing levels, current customer demand, competitive intensity, cost rationalization, product development initiatives, existing supply contracts and the terms of the Company's credit facilities. 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, global economic conditions, changes in consumer spending patterns and market trends, decreases in customer demand, potential failure of product development, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, restrictive covenants in the Company's new credit facilities and other risks described from time to time under "Risk Factors" in the Company's Annual Report of 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.
(1) Adjusted earnings is not a GAAP measure. SunOpta believes adjusted earnings (adjusted for the impact of non recurring start-up and operational costs, severance and closure costs, marketing costs in support of brand relaunches and certain professional fees) provides useful information to understand the underlying performance of the business and as a result these items have been adjusted. A reconciliation of this non-GAAP measure to GAAP is included at the end of the release.
SunOpta Inc.
Condensed Consolidated Statements of Operations
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
---------------------------------------------------------------------
September 30, September 30, %
2009 2008 change
$ $
Revenues 253,812 287,747 -11.8%
Cost of goods sold 215,610 246,439 -12.5%
-------------------------------------
Gross profit 38,202 41,308 -7.5%
Warehousing and distribution
expenses 4,736 5,288 -10.4%
Selling, general and
administrative expenses 27,434 29,445 -6.8%
Intangible asset amortization 1,567 1,486 5.5%
Other income, net (271) -- n/m
Goodwill impairment 8,341 -- n/m
Foreign exchange gain (863) (4,345) -80.1%
-------------------------------------
(Loss) earnings before the
following (2,742) 9,434 -129.1%
Interest expense, net 3,925 3,983 -1.5%
-------------------------------------
(Loss) earnings before income
taxes (6,667) 5,451 -222.3%
Provision for income taxes 197 1,043 -81.1%
-------------------------------------
(Loss) earnings for the period (6,864) 4,408 -255.7%
(Loss) earnings for the period
attributable to non-controlling
interests (2,192) 504 -534.9%
-------------------------------------
(Loss) earnings for the period
attributable to SunOpta Inc. (4,672) 3,904 -219.7%
-------------------------------------
(Loss) earnings per share for
the period
Basic (0.07) 0.06
----------------------------
Diluted (0.07) 0.06
----------------------------
SunOpta Inc.
Condensed Consolidated Statements of Operations
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
---------------------------------------------------------------------
September 30, September 30, %
2009 2008 change
$ $
Revenues 743,611 810,136 -8.2%
Cost of goods sold 633,681 682,759 -7.2%
-------------------------------------
Gross profit 109,930 127,377 -13.7%
Warehousing and distribution
expenses 13,691 16,182 -15.4%
Selling, general and
administrative expenses 81,565 91,956 -11.3%
Intangible asset amortization 4,330 4,252 1.8%
Other income, net (348) -- n/m
Goodwill impairment 8,341 -- n/m
Foreign exchange gain (582) (5,336) -89.1%
-------------------------------------
Earnings before the following 2,933 20,323 -85.6%
Interest expense, net 10,266 (10,484) -2.1%
-------------------------------------
(Loss) earnings before income
taxes (7,333) 9,839 -174.5%
(Recovery of) provision for
income taxes (36) 2,165 -101.7%
-------------------------------------
(Loss) earnings for the period (7,297) 7,674 -195.1%
(Loss) earnings for the period
attributable to non-controlling
interests (2,748) 1,565 -275.6%
-------------------------------------
(Loss) earnings for the period
attributable to SunOpta Inc. (4,549) 6,109 -174.5%
-------------------------------------
(Loss) earnings per share for
the period
Basic (0.07) 0.10
----------------------------
Diluted (0.07) 0.09
----------------------------
SunOpta Inc.
Condensed Balance Sheet
As at September 30, 2009 and December 31, 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
September 30, December 31,
2009 2008
$ $
Assets
Current assets
Cash and cash equivalents 20,721 24,755
Accounts receivable 105,100 95,129
Inventories 178,217 200,689
Prepaid expenses and other current assets 16,855 14,448
Current income taxes recoverable 713 595
Deferred income taxes 5,920 493
--------------------------
327,526 336,109
Property, plant and equipment 112,190 110,641
Goodwill 49,026 54,022
Intangible assets 62,580 63,161
Deferred income taxes 12,559 16,160
Other assets 596 954
--------------------------
564,477 581,047
--------------------------
Liabilities
Current liabilities
Bank indebtedness 59,264 67,164
Accounts payable and accrued liabilities 103,658 106,989
Customer and other deposits 574 1,228
Other current liabilities 2,920 4,437
Current portion of long-term debt 26,544 12,174
Current portion of long-term liabilities 12 1,362
--------------------------
192,972 193,354
Long-term debt 80,206 99,353
Long-term liabilities 3,471 5,017
Deferred income taxes 13,491 13,614
--------------------------
290,140 311,338
Preferred shares of a subsidiary company 28,089 27,796
Equity
SunOpta Inc. Shareholders' Equity
Capital stock 178,485 177,858
64,915,443 common shares (2008 -
64,493,320)
Additional paid in capital 7,839 6,778
Retained earnings 36,360 40,909
Accumulated other comprehensive income 11,042 1,266
--------------------------
Total SunOpta Inc. Shareholders' Equity 233,726 226,811
Non-controlling interest 12,522 15,102
--------------------------
Total Equity 246,248 241,913
--------------------------
564,477 581,047
--------------------------
SunOpta Inc.
Condensed Consolidated Statements of Cash Flow
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars) (Unaudited)
---------------------------------------------------------------------
September 30, September 30,
2009 2008
$ $
Cash provided by (used in)
Operating activities
(Loss) earnings for the period (6,864) 4,408
Items not affecting cash
Amortization 4,765 4,838
Goodwill impairment 8,341 --
Stock-based compensation 376 273
Non-cash interest accretion 322 192
Unrealized gain on foreign exchange (169) (1,655)
Deferred income taxes (1,328) (100)
Other 193 (596)
Changes in non-cash working capital, net
of businesses acquired 13,630 16,344
---------------------------
19,266 23,704
---------------------------
Investing activities
Purchases of property, plant and
equipment, net (2,163) (1,388)
Payment of deferred purchase consideration -- (1,204)
Purchase of patents, trademarks and other
intangible assets (165) (375)
Acquisition of businesses, net of cash
acquired -- (1,302)
Decrease in short-term investment 1,500 --
Other 2,041 --
---------------------------
1,213 (4,269)
---------------------------
Financing activities
Decrease in line of credit facilities (18,996) (19,716)
Repayment of long-term debt (3,141) (2,694)
Borrowings under long-term debt -- 1,999
Proceeds from the issuance of common
shares 215 557
Other (1) 340
---------------------------
(21,923) (19,514)
---------------------------
Foreign exchange gain on cash held in a
foreign currency 573 72
---------------------------
Decrease in cash and cash equivalents
during the period (871) (7)
Cash and cash equivalents - beginning of
the period 21,592 9,123
---------------------------
Cash and cash equivalents - end of the
period 20,721 9,116
---------------------------
SunOpta Inc.
Condensed Consolidated Statements of Cash Flow
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
September 30, September 30,
2009 2008
$ $
Cash provided by (used in)
Operating activities
(Loss) earnings for the period (7,297) 7,674
Items not affecting cash
Amortization 14,400 14,351
Goodwill impairment 8,341 --
Stock-based compensation 1,061 764
Non-cash interest accretion 932 628
Unrealized (gain) loss on foreign
exchange (403) (1,266)
Deferred income taxes (1,265) (25)
Other (334) (527)
Changes in non-cash working capital, net
of businesses acquired 10,786 (8,863)
---------------------------
26,221 12,736
---------------------------
Investing activities
Purchases of property, plant and
equipment, net (11,006) (6,918)
Payment of deferred purchase consideration (1,500) (1,959)
Purchase of patents, trademarks and other
intangible assets (367) (497)
Acquisition of businesses, net of cash
acquired -- (5,413)
Increase in short-term investments -- (20,000)
Other (191) 169
---------------------------
(13,064) (34,618)
---------------------------
Financing activities
Decrease in line of credit facilities (9,750) (2,735)
Repayment of long-term debt (9,670) (12,947)
Borrowings under long-term debt 716 15,074
Proceeds from the issuance of common
shares 627 817
Other 60 440
---------------------------
(18,017) 649
---------------------------
Foreign exchange gain on cash held in a
foreign currency 826 47
---------------------------
Decrease in cash and cash equivalents
during the period (4,034) (21,186)
Cash and cash equivalents - beginning of
the period 24,755 30,302
---------------------------
Cash and cash equivalents - end of the
period 20,721 9,116
---------------------------
SunOpta Inc.
Segmented Information
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
Three months ended
September 30, 2009
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
-------------------------------------------------------
Total revenues
from external
customers 237,067 16,745 -- -- 253,812
------------------------------------------------------
Segment
Operating
Income 5,957 1,290 (874) (1,045) 5,328
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
-----------------------------------------------------------
Three months ended
September 30, 2009
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta
and Ingredi Berry SunOpta Food
Foods -ents Operations IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 86,290 17,385 35,870 39,511 58,011 237,067
-----------------------------------------------------------
Segment
Operating
Income 5,257 2,859 (1,745) 374 (788) 5,957
-----------------------------------------------------------
-----------------------------------------------------------
Three months ended
September 30, 2008
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
------------------------------------------------------
Total revenues
from external
customers 257,833 29,440 474 -- 287,747
------------------------------------------------------
Segment
Operating
Income 5,598 2,536 (1,541) 2,841 9,434
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
-----------------------------------------------------------
Three months ended
September 30, 2008
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta
and Ingredi Berry SunOpta Food
Foods -ents Operations IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 88,193 16,553 39,283 51,111 62,693 257,833
-----------------------------------------------------------
Segment
Operating
Income 3,171 700 (1,047) 1,153 1,621 5,598
-----------------------------------------------------------
(Segment Operating Income is defined as "Earnings before the
following" excluding the impact of "other expense, net" and "goodwill
impairments")
SunOpta Inc.
Segmented Information
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
Nine months ended
September 30, 2009
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
------------------------------------------------------
Total revenues
from external
customers 697,669 45,810 132 -- 743,611
------------------------------------------------------
Segment
Operating
Income 16,497 429 (2,468) (3,532) 10,926
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
------------------------------------------------------
Nine months ended
September 30, 2009
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta
and Ingredi Berry SunOpta Food
Foods -ents Operations IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 250,346 47,138 113,331 113,804 173,050 697,669
-----------------------------------------------------------
Segment
Operating
Income 14,405 5,571 (2,279) (789) (411) 16,497
-----------------------------------------------------------
-------------------------------------------------------
Nine months ended
September 30, 2008
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
------------------------------------------------------
Total revenues
from external
customers 733,001 76,058 1,077 -- 810,136
------------------------------------------------------
Segment
Operating
Income 20,877 7,891 (3,181) (5,264) 20,323
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
------------------------------------------------------
Nine months ended
September 30, 2008
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta SunOpta
and Ingredi Fruit SunOpta Food
Foods -ents Group IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 247,235 50,327 117,912 116,411 201,116 733,001
-----------------------------------------------------------
Segment
Operating
Income 14,265 2,304 (7,021) 3,038 8,291 20,877
-----------------------------------------------------------
(Segment Operating Income is defined as "Earnings before the
following" excluding the impact of "other expense, net" and "goodwill
impairment")
SunOpta Inc.
Non-GAAP Reconciliation
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
For the Three Months Ended September 30,
---------------------------------------------------------------------
2009 2009 2008
GAAP Adjustments Adjusted Adjusted
Revenues 253,812 -- 253,812 287,747
Cost of goods sold 215,610 (2,251) 213,359 245,179
-----------------------------------------
Gross profit 38,202 2,251 40,453 42,568
Warehousing and distribution
expenses 4,736 -- 4,736 5,288
Selling, general and
administrative expenses 27,434 (1,987) 25,447 29,030
Intangible asset
amortization 1,567 -- 1,567 1,486
Other income, net (271) 188 (83) --
Goodwill impairment 8,341 (8,341) -- --
Foreign exchange gain (863) -- (863) (4,345)
-----------------------------------------
(Loss) earnings before the
following (2,742) 12,391 9,649 11,109
Interest expense, net 3,925 (675) 3,250 3,983
-----------------------------------------
(Loss) earnings before
income taxes (6,667) 13,066 6,399 7,126
Provision for income taxes 197 1,593 1,790 1,385
-----------------------------------------
(Loss) earnings for the
period (6,864) 11,473 4,609 5,741
(Loss) earnings for the
period attributable to
non-controlling interests (2,192) 2,422 230 504
-----------------------------------------
(Loss) earnings for the
period attributable to
SunOpta Inc. (4,672) 9,051 4,379 5,237
=========================================
(Loss) earnings per share
for the period
-----------------------------------------
Basic (0.07) 0.14 0.07 0.08
-----------------------------------------
Diluted (0.07) 0.14 0.07 0.08
-----------------------------------------
SunOpta Inc.
Non-GAAP Reconciliation
For the three month periods ended September 30, 2009 and 2008
(continued)
(Expressed in thousands of U.S. dollars)
(Unaudited)
----------------------------
Three months Three Months
Ended Ended
September 30, September 30,
2009 2008
----------------------------
Impact on Impact on
(loss) (loss)
earnings earnings
before before
income taxes income taxes
----------------------------
Costs to rationalize product offerings in
the Fruit Group 2,021 --
Costs in support of brand re-launches 642 --
Non-recurring start-up and operational
costs 165 1,260
Business interruption proceeds received (577) --
----------------------------
Cost of sales 2,251 1,260
----------------------------
Marketing costs in support of brand
re-launches 904 --
Professional fees incurred in relation
to the 2007 restatement 747 1,695
Legal costs incurred related to SunOpta
BioProcess litigation 289 400
Severance costs and related plant closure
expenses 47 (1,680)
----------------------------
Selling, general and administrative
expense 1,987 415
----------------------------
Impairment of long-lived assets 997 --
Elimination of long-term liability at
Opta Minerals (1,110) --
Sale of rights in the Ingredients Group (75) --
----------------------------
Other expense, net (188) --
----------------------------
Goodwill impairment at Opta Minerals 8,341 --
----------------------------
Goodwill impairment 8,341 --
----------------------------
Non-cash amortization of amended
financing fees 675 --
----------------------------
Interest expense, net 675 --
----------------------------
Total adjustments to (loss) earnings
before income taxes 13,066 1,675
============================
Impact on Impact on
(loss) (loss)
earnings for earnings for
the period the period
attributable to attributable to
SunOpta Inc. SunOpta Inc.
-------------------------------
Tax impact of adjustments noted above 1,593 342
-------------------------------
Provision for income taxes 1,593 342
-------------------------------
Goodwill impairment and elimination
of long-term liability at Opta
Minerals (2,422) --
-------------------------------
(Loss) earnings for the period
attributable to non-controlling
interests (2,422) --
-------------------------------
Total adjustments to (loss) earnings
for the period attributable to
SunOpta Inc. 9,051 1,333
===============================
SunOpta Inc.
Non-GAAP Reconciliation
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
For the Nine Months Ended September 30,
---------------------------------------------------------------------
2009 2009 2008
GAAP Adjustments Adjusted Adjusted
Revenues 743,611 -- 743,611 810,136
Cost of goods sold 633,681 (5,434) 628,247 680,684
-----------------------------------------
Gross profit 109,930 5,434 115,364 129,452
Warehousing and distribution
expenses 13,691 -- 13,691 16,182
Selling, general and
administrative expenses 81,565 (4,906) 76,659 83,665
Intangible asset
amortization 4,330 -- 4,330 4,252
Other income, net (348) 116 (232) --
Goodwill impairment 8,341 (8,341) -- --
Foreign exchange gain (582) -- (582) (5,336)
-----------------------------------------
Earnings before the
following 2,933 18,565 21,498 30,689
Interest expense, net 10,266 (1,125) 9,141 10,484
-----------------------------------------
(Loss) earnings before
income taxes (7,333) 19,690 12,357 20,205
(Recovery of) provision for
income taxes (36) 3,670 3,634 5,149
-----------------------------------------
(Loss) earnings for the
period (7,297) 16,020 8,723 15,056
(Loss) earnings for the
period attributable to
non-controlling interests (2,748) 2,422 (326) 1,565
-----------------------------------------
(Loss) earnings for the
period attributable to
SunOpta Inc. (4,549) 13,598 9,049 13,491
=========================================
(Loss) earnings per share
for the period
-----------------------------------------
Basic (0.07) 0.21 0.14 0.21
-----------------------------------------
Diluted (0.07) 0.21 0.14 0.21
-----------------------------------------
SunOpta Inc.
Non-GAAP Reconciliation
For the nine month periods ended September 30, 2009 and 2008
(continued)
(Expressed in thousands of U.S. dollars)
(Unaudited)
----------------------------
Nine months Nine Months
Ended Ended
September 30, September 30,
2009 2008
----------------------------
Impact on Impact on
(loss) (loss)
earnings earnings
before before
income taxes income taxes
----------------------------
Non-recurring start-up and operational
costs 2,648 2,075
Costs to rationalize product offerings
in the Fruit Group 2,021 --
Costs in support of brand re-launches 1,342 --
Business interruption proceeds received (577) --
----------------------------
Cost of sales 5,434 2,075
----------------------------
Severance costs and related plant
closure expenses 1,487 264
Marketing costs in support of brand
re-launches 1,363 --
Professional fees incurred in relation
to the 2007 restatement 1,087 7,367
Legal costs incurred related to SunOpta
BioProcess litigation 969 660
----------------------------
Selling, general and administrative
expense 4,906 8,291
----------------------------
Impairment of long-lived assets 1,069 --
Elimination of long-term liability at
Opta Minerals (1,110) --
Sale of rights in the Ingredients Group (75) --
----------------------------
Other income, net (116) --
----------------------------
Goodwill impairment at Opta Minerals 8,341 --
----------------------------
Goodwill impairment 8,341 --
----------------------------
Non-cash amortization of amended
financing fees 1,125 --
----------------------------
Interest expense, net 1,125 --
----------------------------
Total adjustments to (loss) earnings
before income taxes 19,690 10,366
============================
Impact on Impact on
(loss) (loss)
earnings for earnings for
the period the period
attributable to attributable to
SunOpta Inc. SunOpta Inc.
-------------------------------
Tax impact of adjustments noted above 3,670 2,984
-------------------------------
Provision for income taxes 3,670 2,984
-------------------------------
Goodwill impairment and elimination of
long-term liability at Opta Minerals (2,422) --
-------------------------------
(Loss) earnings for the period
attributable to non- controlling
interests (2,422) --
-------------------------------
Total adjustments to (loss) earnings
for the period attributable to
SunOpta Inc. 13,598 7,382
===============================
Contact:
SunOpta Inc.
Susan Wiekenkamp, Information Officer
905-455-2528, ext 103
susan.wiekenkamp@sunopta.com
www.sunopta.com
SunOpta Inc., a leading global company focused on natural, organic and specialty foods and natural health products, announced financial results for the third quarter ended September 30, 2009. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
The Company realized revenues of $253.8 million in the third quarter of 2009 versus third quarter 2008 revenues of $287.7 million, a year over year decrease of 11.8%. After adjusting for revenue declines in non-food operations plus the impact on revenues due to changes in foreign exchange rates and commodity prices, food revenues declined approximately 4% in the third quarter of 2009 versus the third quarter of 2008.
For the third quarter of 2009 the Company reported a loss on a GAAP basis of ($4.7) million or ($0.07) per diluted common share. Adjusted earnings(1) for the third quarter of 2009 were $4.4 million or $0.07 per diluted common share versus adjusted earnings(1) in the third quarter of 2008 of $5.2 million or $0.08 per diluted common share. Third quarter results include the impact of additional pre-tax costs of $10.6 million including net non-cash charges after minority interest of $4.8 million related to the impairment of goodwill in the Company's subsidiary, Opta Minerals Inc., pre-tax costs of $2.6 million related to ongoing product and facility rationalization efforts which includes non-cash charges of $1.0 million, pre-tax costs of $1.5 million related to the ongoing revitalization and re-launch of a number of company owned natural health products brands and additional legal, professional and banking fees of $1.7 million related to the 2007 restatement and class action settlement, a legal action in the SunOpta BioProcess Group and costs related to banking amendments. Adjusted earnings(1) excluding the impact of foreign exchange gains for the third quarter of 2009 were $3.8 million or $0.06 per diluted common share versus adjusted earnings(1) excluding the impact of foreign exchange of $2.4 million or $0.04 per diluted common share in the third quarter of 2008.
On a segment basis both the SunOpta Grains and Foods Group and the SunOpta Ingredients Group had very strong earnings achieving their operating income targets of 6.1% and 16.4% respectively. The SunOpta Ingredients Group realized record quarterly operating income of approximately $2.9 million. Within the Fruit Group the processed fruit ingredients and healthy fruit snack segments realized strong results as compared to the prior year, offset by losses within the frozen fruit segment due to lower than expected retail sales and additional product rationalization costs as the segment is transformed. Both the International Sourcing and Trading Group and Opta Minerals Inc. returned to positive operating income in the quarter as a result of numerous cost improvements combined with improving external markets. The Distribution Group continues to evolve its business and incurred brand re-launch costs in the quarter as well as costs to reduce inventory levels and rationalize its product portfolio.
SunOpta BioProcess continues to focus on building its business and establishing strategic partnerships with companies in the energy and petrochemical sectors.
At September 30, 2009, the Company's balance sheet reflects a current working capital ratio of 1.70 to 1.00, long-term debt to equity ratio of 0.46 to 1.00 and total debt to equity ratio of 0.71 to 1.00. During the third quarter the Company generated cash from operating activities of $19.3 million including cash generated from working capital of $13.6 million, reflecting ongoing efforts to reduce working capital, especially inventories, across the Company. The Company also continued to focus on reducing debt and realized a decrease of approximately $19.5 million versus the second quarter of 2009 and a reduction of approximately $38.2 million versus the prior year. At September 30, 2009 the Company has total assets of $564.5 million and a net book value of $3.60 per outstanding share.
At September 30, 2009, the Company is in compliance with the amended financial covenants that were negotiated with its banking syndicate earlier this year. On October 30, 2009, the Company entered into a new three-year syndicated Asset-Based Lending ("ABL") credit facilities. The ABL facilities amend and replace the Company's previous credit facilities. Credit limits under the ABL facilities are based on eligible accounts receivable and inventory balances, as determined on a monthly basis. The ABL facilities also provides for a decreased interest rate premium charged on outstanding balances, which are based on new financial ratios.
For the nine months ended September 30, 2009, the Company realized revenues of $743.6 million versus revenues of $810.1 million for the nine months ended September 30, 2008. After adjusting for revenue declines in non-core food operations and the impact on revenues due to changes in foreign exchange rates and commodity prices, food revenues have declined approximately 2% versus the same period in 2008.
On a GAAP basis for the nine months ended September 30, 2009 the Company realized a loss of ($4.5) million or ($0.07) per diluted common share. Adjusted earnings(1) for the nine months ended September 30, 2009 were $9.0 million or $0.14 per diluted common share versus adjusted earnings(1) in the comparable period in 2008 of $13.5 million or $0.21 per diluted common share. The 2009 results include additional pre-tax costs of $17.3 million, including net non-cash charges of $4.8 million related to the impairment of goodwill in the Company's subsidiary, Opta Minerals Inc., pre-tax costs of $6.6 million related to ongoing product and facility rationalization efforts which includes non-cash charges of $1.0 million, pre-tax costs of $2.7 million related to the ongoing revitalization and re-launch of a number of company owned natural health products brands and additional legal, professional and banking fees of $3.2 million related to the 2007 restatement and class action settlement, a legal action in the SunOpta BioProcess Group and costs related to banking amendments. Adjusted earnings(1) excluding the impact of foreign exchange gains for the nine months ended September 30, 2009 were $8.7 million or $0.13 per diluted common share versus adjusted earnings(1) excluding the impact of foreign exchange of $10.0 million or $0.15 per diluted common share in the nine months ended September 30, 2008.
Steve Bromley, President and Chief Executive Officer of SunOpta commented: "We are pleased with the strong results within the Grains and Foods Group, Ingredients Group and certain segments of the Fruit Group, combined with improving results within our International Sourcing and Trading Group and Opta Minerals Inc. We are confident that the changes occurring in the Frozen Fruit segment of the Fruit Group and the Distribution Group will pay dividends down the road. Our balance sheet continues to improve with reduced working capital levels, tight control on capital spending and net reductions in debt. Our primary focus continues to be the improvement of operating margins and return on assets employed, to be realized through a combination of aggressive working capital management and continuous improvement initiatives. Our new ABL credit facilities, when combined with our ongoing business improvement initiatives are expected to provide the Company with the liquidity and flexibility to support our long-term goals and commitments. We are confident that our cost control, efficiency, product development and asset utilization initiatives are key to delivering long term sustainable returns as interest in health and wellness continues to gain attention around the globe."
As previously announced, the Company is not providing specific revenue and earnings guidance for 2009. The Company will continue to provide updates when appropriate related to material changes in business affairs resulting from changes in the business and related economic conditions.
The Company plans to host a conference call at 10:00 AM Eastern Time on Friday, November 6th, 2009, to discuss these results and recent corporate developments. The conference call can be accessed via a link at the Company's website at www.sunopta.com. Additionally, the call may be accessed with the toll free dial-in number 1 866 439-4712 or 212-457-9845 followed by pass code: 391845#. A replay number can also be accessed between November 6th and 16th with the toll free dial-in number 1-866-439-4729 or 212-457-9846 followed by pass code: 382427#.
About SunOpta Inc.
SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food and natural health markets. The Company has three business units: the SunOpta Food Group, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; Opta Minerals Inc. (TSX:OPM - News) (66.5% owned by SunOpta), a producer, distributor, and recycler of environmentally friendly industrial materials; and SunOpta BioProcess Inc. which engineers and markets proprietary steam explosion technology systems for the bio-fuel, pulp and food processing industries. SunOpta believes that each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.
The SunOpta Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3958
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, management's expectations regarding future benefits of ongoing revitalization of a number natural health products brands, benefits of new banking arrangements, continued and increasing interest in the health and wellness consumer markets, as well as cost control, product development and asset utilization initiatives and working capital management and continuous improvement measures, and overall improved returns for 2009. The terms and phrases "ongoing", "improving", "continued", "establishing", "improving", "will", "believe", "confident", "to be realized", and other similar terms and phrases are 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, applicable tax legislation, consumer trends, preferences and spending patterns, product pricing levels, current customer demand, competitive intensity, cost rationalization, product development initiatives, existing supply contracts and the terms of the Company's credit facilities. 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, global economic conditions, changes in consumer spending patterns and market trends, decreases in customer demand, potential failure of product development, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, restrictive covenants in the Company's new credit facilities and other risks described from time to time under "Risk Factors" in the Company's Annual Report of 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.
(1) Adjusted earnings is not a GAAP measure. SunOpta believes adjusted earnings (adjusted for the impact of non recurring start-up and operational costs, severance and closure costs, marketing costs in support of brand relaunches and certain professional fees) provides useful information to understand the underlying performance of the business and as a result these items have been adjusted. A reconciliation of this non-GAAP measure to GAAP is included at the end of the release.
SunOpta Inc.
Condensed Consolidated Statements of Operations
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
---------------------------------------------------------------------
September 30, September 30, %
2009 2008 change
$ $
Revenues 253,812 287,747 -11.8%
Cost of goods sold 215,610 246,439 -12.5%
-------------------------------------
Gross profit 38,202 41,308 -7.5%
Warehousing and distribution
expenses 4,736 5,288 -10.4%
Selling, general and
administrative expenses 27,434 29,445 -6.8%
Intangible asset amortization 1,567 1,486 5.5%
Other income, net (271) -- n/m
Goodwill impairment 8,341 -- n/m
Foreign exchange gain (863) (4,345) -80.1%
-------------------------------------
(Loss) earnings before the
following (2,742) 9,434 -129.1%
Interest expense, net 3,925 3,983 -1.5%
-------------------------------------
(Loss) earnings before income
taxes (6,667) 5,451 -222.3%
Provision for income taxes 197 1,043 -81.1%
-------------------------------------
(Loss) earnings for the period (6,864) 4,408 -255.7%
(Loss) earnings for the period
attributable to non-controlling
interests (2,192) 504 -534.9%
-------------------------------------
(Loss) earnings for the period
attributable to SunOpta Inc. (4,672) 3,904 -219.7%
-------------------------------------
(Loss) earnings per share for
the period
Basic (0.07) 0.06
----------------------------
Diluted (0.07) 0.06
----------------------------
SunOpta Inc.
Condensed Consolidated Statements of Operations
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
---------------------------------------------------------------------
September 30, September 30, %
2009 2008 change
$ $
Revenues 743,611 810,136 -8.2%
Cost of goods sold 633,681 682,759 -7.2%
-------------------------------------
Gross profit 109,930 127,377 -13.7%
Warehousing and distribution
expenses 13,691 16,182 -15.4%
Selling, general and
administrative expenses 81,565 91,956 -11.3%
Intangible asset amortization 4,330 4,252 1.8%
Other income, net (348) -- n/m
Goodwill impairment 8,341 -- n/m
Foreign exchange gain (582) (5,336) -89.1%
-------------------------------------
Earnings before the following 2,933 20,323 -85.6%
Interest expense, net 10,266 (10,484) -2.1%
-------------------------------------
(Loss) earnings before income
taxes (7,333) 9,839 -174.5%
(Recovery of) provision for
income taxes (36) 2,165 -101.7%
-------------------------------------
(Loss) earnings for the period (7,297) 7,674 -195.1%
(Loss) earnings for the period
attributable to non-controlling
interests (2,748) 1,565 -275.6%
-------------------------------------
(Loss) earnings for the period
attributable to SunOpta Inc. (4,549) 6,109 -174.5%
-------------------------------------
(Loss) earnings per share for
the period
Basic (0.07) 0.10
----------------------------
Diluted (0.07) 0.09
----------------------------
SunOpta Inc.
Condensed Balance Sheet
As at September 30, 2009 and December 31, 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
September 30, December 31,
2009 2008
$ $
Assets
Current assets
Cash and cash equivalents 20,721 24,755
Accounts receivable 105,100 95,129
Inventories 178,217 200,689
Prepaid expenses and other current assets 16,855 14,448
Current income taxes recoverable 713 595
Deferred income taxes 5,920 493
--------------------------
327,526 336,109
Property, plant and equipment 112,190 110,641
Goodwill 49,026 54,022
Intangible assets 62,580 63,161
Deferred income taxes 12,559 16,160
Other assets 596 954
--------------------------
564,477 581,047
--------------------------
Liabilities
Current liabilities
Bank indebtedness 59,264 67,164
Accounts payable and accrued liabilities 103,658 106,989
Customer and other deposits 574 1,228
Other current liabilities 2,920 4,437
Current portion of long-term debt 26,544 12,174
Current portion of long-term liabilities 12 1,362
--------------------------
192,972 193,354
Long-term debt 80,206 99,353
Long-term liabilities 3,471 5,017
Deferred income taxes 13,491 13,614
--------------------------
290,140 311,338
Preferred shares of a subsidiary company 28,089 27,796
Equity
SunOpta Inc. Shareholders' Equity
Capital stock 178,485 177,858
64,915,443 common shares (2008 -
64,493,320)
Additional paid in capital 7,839 6,778
Retained earnings 36,360 40,909
Accumulated other comprehensive income 11,042 1,266
--------------------------
Total SunOpta Inc. Shareholders' Equity 233,726 226,811
Non-controlling interest 12,522 15,102
--------------------------
Total Equity 246,248 241,913
--------------------------
564,477 581,047
--------------------------
SunOpta Inc.
Condensed Consolidated Statements of Cash Flow
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars) (Unaudited)
---------------------------------------------------------------------
September 30, September 30,
2009 2008
$ $
Cash provided by (used in)
Operating activities
(Loss) earnings for the period (6,864) 4,408
Items not affecting cash
Amortization 4,765 4,838
Goodwill impairment 8,341 --
Stock-based compensation 376 273
Non-cash interest accretion 322 192
Unrealized gain on foreign exchange (169) (1,655)
Deferred income taxes (1,328) (100)
Other 193 (596)
Changes in non-cash working capital, net
of businesses acquired 13,630 16,344
---------------------------
19,266 23,704
---------------------------
Investing activities
Purchases of property, plant and
equipment, net (2,163) (1,388)
Payment of deferred purchase consideration -- (1,204)
Purchase of patents, trademarks and other
intangible assets (165) (375)
Acquisition of businesses, net of cash
acquired -- (1,302)
Decrease in short-term investment 1,500 --
Other 2,041 --
---------------------------
1,213 (4,269)
---------------------------
Financing activities
Decrease in line of credit facilities (18,996) (19,716)
Repayment of long-term debt (3,141) (2,694)
Borrowings under long-term debt -- 1,999
Proceeds from the issuance of common
shares 215 557
Other (1) 340
---------------------------
(21,923) (19,514)
---------------------------
Foreign exchange gain on cash held in a
foreign currency 573 72
---------------------------
Decrease in cash and cash equivalents
during the period (871) (7)
Cash and cash equivalents - beginning of
the period 21,592 9,123
---------------------------
Cash and cash equivalents - end of the
period 20,721 9,116
---------------------------
SunOpta Inc.
Condensed Consolidated Statements of Cash Flow
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
September 30, September 30,
2009 2008
$ $
Cash provided by (used in)
Operating activities
(Loss) earnings for the period (7,297) 7,674
Items not affecting cash
Amortization 14,400 14,351
Goodwill impairment 8,341 --
Stock-based compensation 1,061 764
Non-cash interest accretion 932 628
Unrealized (gain) loss on foreign
exchange (403) (1,266)
Deferred income taxes (1,265) (25)
Other (334) (527)
Changes in non-cash working capital, net
of businesses acquired 10,786 (8,863)
---------------------------
26,221 12,736
---------------------------
Investing activities
Purchases of property, plant and
equipment, net (11,006) (6,918)
Payment of deferred purchase consideration (1,500) (1,959)
Purchase of patents, trademarks and other
intangible assets (367) (497)
Acquisition of businesses, net of cash
acquired -- (5,413)
Increase in short-term investments -- (20,000)
Other (191) 169
---------------------------
(13,064) (34,618)
---------------------------
Financing activities
Decrease in line of credit facilities (9,750) (2,735)
Repayment of long-term debt (9,670) (12,947)
Borrowings under long-term debt 716 15,074
Proceeds from the issuance of common
shares 627 817
Other 60 440
---------------------------
(18,017) 649
---------------------------
Foreign exchange gain on cash held in a
foreign currency 826 47
---------------------------
Decrease in cash and cash equivalents
during the period (4,034) (21,186)
Cash and cash equivalents - beginning of
the period 24,755 30,302
---------------------------
Cash and cash equivalents - end of the
period 20,721 9,116
---------------------------
SunOpta Inc.
Segmented Information
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
Three months ended
September 30, 2009
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
-------------------------------------------------------
Total revenues
from external
customers 237,067 16,745 -- -- 253,812
------------------------------------------------------
Segment
Operating
Income 5,957 1,290 (874) (1,045) 5,328
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
-----------------------------------------------------------
Three months ended
September 30, 2009
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta
and Ingredi Berry SunOpta Food
Foods -ents Operations IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 86,290 17,385 35,870 39,511 58,011 237,067
-----------------------------------------------------------
Segment
Operating
Income 5,257 2,859 (1,745) 374 (788) 5,957
-----------------------------------------------------------
-----------------------------------------------------------
Three months ended
September 30, 2008
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
------------------------------------------------------
Total revenues
from external
customers 257,833 29,440 474 -- 287,747
------------------------------------------------------
Segment
Operating
Income 5,598 2,536 (1,541) 2,841 9,434
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
-----------------------------------------------------------
Three months ended
September 30, 2008
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta
and Ingredi Berry SunOpta Food
Foods -ents Operations IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 88,193 16,553 39,283 51,111 62,693 257,833
-----------------------------------------------------------
Segment
Operating
Income 3,171 700 (1,047) 1,153 1,621 5,598
-----------------------------------------------------------
(Segment Operating Income is defined as "Earnings before the
following" excluding the impact of "other expense, net" and "goodwill
impairments")
SunOpta Inc.
Segmented Information
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
---------------------------------------------------------------------
Nine months ended
September 30, 2009
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
------------------------------------------------------
Total revenues
from external
customers 697,669 45,810 132 -- 743,611
------------------------------------------------------
Segment
Operating
Income 16,497 429 (2,468) (3,532) 10,926
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
------------------------------------------------------
Nine months ended
September 30, 2009
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta
and Ingredi Berry SunOpta Food
Foods -ents Operations IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 250,346 47,138 113,331 113,804 173,050 697,669
-----------------------------------------------------------
Segment
Operating
Income 14,405 5,571 (2,279) (789) (411) 16,497
-----------------------------------------------------------
-------------------------------------------------------
Nine months ended
September 30, 2008
------------------------------------------------------
SunOpta
Food Opta SunOpta
Group Minerals BioProcess Corporate Consolidated
$ $ $ $ $
------------------------------------------------------
Total revenues
from external
customers 733,001 76,058 1,077 -- 810,136
------------------------------------------------------
Segment
Operating
Income 20,877 7,891 (3,181) (5,264) 20,323
------------------------------------------------------
The SunOpta Food Group has the following segmented reporting:
------------------------------------------------------
Nine months ended
September 30, 2008
-----------------------------------------------------------
SunOpta
Grains SunOpta SunOpta SunOpta
and Ingredi Fruit SunOpta Food
Foods -ents Group IST Distribution Group
$ $ $ $ $ $
-----------------------------------------------------------
Total
revenues
from
external
customers 247,235 50,327 117,912 116,411 201,116 733,001
-----------------------------------------------------------
Segment
Operating
Income 14,265 2,304 (7,021) 3,038 8,291 20,877
-----------------------------------------------------------
(Segment Operating Income is defined as "Earnings before the
following" excluding the impact of "other expense, net" and "goodwill
impairment")
SunOpta Inc.
Non-GAAP Reconciliation
For the three month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
For the Three Months Ended September 30,
---------------------------------------------------------------------
2009 2009 2008
GAAP Adjustments Adjusted Adjusted
Revenues 253,812 -- 253,812 287,747
Cost of goods sold 215,610 (2,251) 213,359 245,179
-----------------------------------------
Gross profit 38,202 2,251 40,453 42,568
Warehousing and distribution
expenses 4,736 -- 4,736 5,288
Selling, general and
administrative expenses 27,434 (1,987) 25,447 29,030
Intangible asset
amortization 1,567 -- 1,567 1,486
Other income, net (271) 188 (83) --
Goodwill impairment 8,341 (8,341) -- --
Foreign exchange gain (863) -- (863) (4,345)
-----------------------------------------
(Loss) earnings before the
following (2,742) 12,391 9,649 11,109
Interest expense, net 3,925 (675) 3,250 3,983
-----------------------------------------
(Loss) earnings before
income taxes (6,667) 13,066 6,399 7,126
Provision for income taxes 197 1,593 1,790 1,385
-----------------------------------------
(Loss) earnings for the
period (6,864) 11,473 4,609 5,741
(Loss) earnings for the
period attributable to
non-controlling interests (2,192) 2,422 230 504
-----------------------------------------
(Loss) earnings for the
period attributable to
SunOpta Inc. (4,672) 9,051 4,379 5,237
=========================================
(Loss) earnings per share
for the period
-----------------------------------------
Basic (0.07) 0.14 0.07 0.08
-----------------------------------------
Diluted (0.07) 0.14 0.07 0.08
-----------------------------------------
SunOpta Inc.
Non-GAAP Reconciliation
For the three month periods ended September 30, 2009 and 2008
(continued)
(Expressed in thousands of U.S. dollars)
(Unaudited)
----------------------------
Three months Three Months
Ended Ended
September 30, September 30,
2009 2008
----------------------------
Impact on Impact on
(loss) (loss)
earnings earnings
before before
income taxes income taxes
----------------------------
Costs to rationalize product offerings in
the Fruit Group 2,021 --
Costs in support of brand re-launches 642 --
Non-recurring start-up and operational
costs 165 1,260
Business interruption proceeds received (577) --
----------------------------
Cost of sales 2,251 1,260
----------------------------
Marketing costs in support of brand
re-launches 904 --
Professional fees incurred in relation
to the 2007 restatement 747 1,695
Legal costs incurred related to SunOpta
BioProcess litigation 289 400
Severance costs and related plant closure
expenses 47 (1,680)
----------------------------
Selling, general and administrative
expense 1,987 415
----------------------------
Impairment of long-lived assets 997 --
Elimination of long-term liability at
Opta Minerals (1,110) --
Sale of rights in the Ingredients Group (75) --
----------------------------
Other expense, net (188) --
----------------------------
Goodwill impairment at Opta Minerals 8,341 --
----------------------------
Goodwill impairment 8,341 --
----------------------------
Non-cash amortization of amended
financing fees 675 --
----------------------------
Interest expense, net 675 --
----------------------------
Total adjustments to (loss) earnings
before income taxes 13,066 1,675
============================
Impact on Impact on
(loss) (loss)
earnings for earnings for
the period the period
attributable to attributable to
SunOpta Inc. SunOpta Inc.
-------------------------------
Tax impact of adjustments noted above 1,593 342
-------------------------------
Provision for income taxes 1,593 342
-------------------------------
Goodwill impairment and elimination
of long-term liability at Opta
Minerals (2,422) --
-------------------------------
(Loss) earnings for the period
attributable to non-controlling
interests (2,422) --
-------------------------------
Total adjustments to (loss) earnings
for the period attributable to
SunOpta Inc. 9,051 1,333
===============================
SunOpta Inc.
Non-GAAP Reconciliation
For the nine month periods ended September 30, 2009 and 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)
For the Nine Months Ended September 30,
---------------------------------------------------------------------
2009 2009 2008
GAAP Adjustments Adjusted Adjusted
Revenues 743,611 -- 743,611 810,136
Cost of goods sold 633,681 (5,434) 628,247 680,684
-----------------------------------------
Gross profit 109,930 5,434 115,364 129,452
Warehousing and distribution
expenses 13,691 -- 13,691 16,182
Selling, general and
administrative expenses 81,565 (4,906) 76,659 83,665
Intangible asset
amortization 4,330 -- 4,330 4,252
Other income, net (348) 116 (232) --
Goodwill impairment 8,341 (8,341) -- --
Foreign exchange gain (582) -- (582) (5,336)
-----------------------------------------
Earnings before the
following 2,933 18,565 21,498 30,689
Interest expense, net 10,266 (1,125) 9,141 10,484
-----------------------------------------
(Loss) earnings before
income taxes (7,333) 19,690 12,357 20,205
(Recovery of) provision for
income taxes (36) 3,670 3,634 5,149
-----------------------------------------
(Loss) earnings for the
period (7,297) 16,020 8,723 15,056
(Loss) earnings for the
period attributable to
non-controlling interests (2,748) 2,422 (326) 1,565
-----------------------------------------
(Loss) earnings for the
period attributable to
SunOpta Inc. (4,549) 13,598 9,049 13,491
=========================================
(Loss) earnings per share
for the period
-----------------------------------------
Basic (0.07) 0.21 0.14 0.21
-----------------------------------------
Diluted (0.07) 0.21 0.14 0.21
-----------------------------------------
SunOpta Inc.
Non-GAAP Reconciliation
For the nine month periods ended September 30, 2009 and 2008
(continued)
(Expressed in thousands of U.S. dollars)
(Unaudited)
----------------------------
Nine months Nine Months
Ended Ended
September 30, September 30,
2009 2008
----------------------------
Impact on Impact on
(loss) (loss)
earnings earnings
before before
income taxes income taxes
----------------------------
Non-recurring start-up and operational
costs 2,648 2,075
Costs to rationalize product offerings
in the Fruit Group 2,021 --
Costs in support of brand re-launches 1,342 --
Business interruption proceeds received (577) --
----------------------------
Cost of sales 5,434 2,075
----------------------------
Severance costs and related plant
closure expenses 1,487 264
Marketing costs in support of brand
re-launches 1,363 --
Professional fees incurred in relation
to the 2007 restatement 1,087 7,367
Legal costs incurred related to SunOpta
BioProcess litigation 969 660
----------------------------
Selling, general and administrative
expense 4,906 8,291
----------------------------
Impairment of long-lived assets 1,069 --
Elimination of long-term liability at
Opta Minerals (1,110) --
Sale of rights in the Ingredients Group (75) --
----------------------------
Other income, net (116) --
----------------------------
Goodwill impairment at Opta Minerals 8,341 --
----------------------------
Goodwill impairment 8,341 --
----------------------------
Non-cash amortization of amended
financing fees 1,125 --
----------------------------
Interest expense, net 1,125 --
----------------------------
Total adjustments to (loss) earnings
before income taxes 19,690 10,366
============================
Impact on Impact on
(loss) (loss)
earnings for earnings for
the period the period
attributable to attributable to
SunOpta Inc. SunOpta Inc.
-------------------------------
Tax impact of adjustments noted above 3,670 2,984
-------------------------------
Provision for income taxes 3,670 2,984
-------------------------------
Goodwill impairment and elimination of
long-term liability at Opta Minerals (2,422) --
-------------------------------
(Loss) earnings for the period
attributable to non- controlling
interests (2,422) --
-------------------------------
Total adjustments to (loss) earnings
for the period attributable to
SunOpta Inc. 13,598 7,382
===============================
Contact:
SunOpta Inc.
Susan Wiekenkamp, Information Officer
905-455-2528, ext 103
susan.wiekenkamp@sunopta.com
www.sunopta.com