SunOpta Announces Second Quarter 2014 Results

13 Aug 2014 --- SunOpta, a leading global company focused on natural, organic and specialty foods, has announced financial results for the second quarter ended July 5, 2014.

Second Quarter 2014 Highlights

• Revenues of $338.3 million, an increase of 8.7% on a consolidated basis, and 12.6% within SunOpta Foods after excluding the impact of changes in commodity prices and foreign exchange rates
• Operating income of $16.8 million, or 5.0% of revenues
• EBITDA of $22.7 million, or 6.7% of revenues
•Earnings from continuing operations of $8.7 million, or $0.13 per diluted common share
• Cash provided by operations of $33.2 million

(comparisons above are to the quarter ended June 29, 2013)

"We continued to see the benefits of our operational realignment and re-positioned go-to-market strategy in the second quarter, leading to record revenues and earnings for the Company," commented Steve Bromley, Chief Executive Officer of SunOpta. "During the quarter we realized strong revenue growth and improved operating income as a percentage of revenues, consistent with our stated objectives of growing our top line while at the same time improving our margin profile.

Year-to-date 2014 Highlights 

• Revenues of $671.8 million, an increase of 13.1% on a consolidated basis, and 14.4% within SunOpta Foods after excluding the impact of changes in commodity prices and foreign exchange rates
• Operating income¹ of $28.8 million, or 4.3% of revenues
• EBITDA of $40.6 million, or 6.0% of revenues
• Earnings from continuing operations of $15.3 million, or $0.23 per diluted common share

(comparisons above are to the two quarters ended June 29, 2013)

Bromley continued, "We continue to believe that interest in healthy eating is a key long term global trend and we are well positioned to capitalize on future growth via our integrated natural and organic foods platform. Our management team remains focused on our three core strategies of becoming a pure-play natural and organic foods company, growing our value-added consumer products and ingredients portfolio, and leveraging our integrated platform in support of our long-term financial targets."

Second Quarter 2014 Results 

Revenues increased 8.7% to a record $338.3 million compared to $311.2 million in the second quarter of 2013. Excluding the impact of changes in commodity prices and foreign exchange rates, consolidated revenues increased 10.5% and SunOpta Foods revenues increased 12.6% versus the prior year. 

All core foods operating segments realized increased revenues versus the prior year. The increase in revenues was led by higher demand for internationally sourced organic raw materials both domestically and abroad, and continued growth in consumer packaged categories including aseptic beverages, frozen foods, and re-sealable pouch products. This growth more than offset lower commodity grain sales and declines within Opta Minerals Inc.

Operating income¹ was $16.8 million, or 5.0% of revenues, compared to $13.3 million, or 4.3% of revenues in the second quarter of 2013. SunOpta Foods operating income, including corporate services, was $15.2 million, or 5.0% of revenues, compared to $12.4 million, or 4.5% of revenues in the prior year. 

The growth in operating income was driven by increased volume and margins on organic raw materials, increased volume of consumer products including aseptic beverages and healthy snacks, improved performance in sunflower operations, as well as improved margins at Opta Minerals as a result of cost reductions and product mix. 

These positive factors were partially offset by margin pressure experienced in value-added ingredients as a result of decreased production volumes, lower organic feed and specialty corn margins, and increased corporate costs to drive efficiency in the operating segments.
Earnings from continuing operations for the second quarter of 2014 were $8.7 million, or $0.13 per diluted common share, compared to a loss of $15.3 million, or $0.23 per common share, during the second quarter of 2013. Included in the results for the second quarter of 2013 was a non-cash impairment charge of $21.5 million after tax, or $0.32 per common share, related to a write-down of the Company's investment in Mascoma Corporation. 

Excluding this charge and the impact of discontinued operations, earnings from continuing operations for the second quarter of 2013 were $0.10 per diluted common share.

EBITDA¹ was $22.7 million in the second quarter of 2014, compared to $18.7 million in the prior year.

Year-to-date 2014 Results 

Revenues increased 13.1% to a record $671.8 million, compared to $594.0 million in the first half of 2013. The increase in consolidated revenues was driven by strong demand for internationally sourced organic raw materials, continued growth in consumer packaged categories including aseptic beverages, frozen foods, and re-sealable pouch products, as well as new value-added ingredient business. 

This growth more than offset lower commodity grain sales and declines within Opta Minerals Inc. Fiscal 2014 will be a 53-week year, and the extra week fell in the first quarter, resulting in a 27-week first half versus 26 weeks in the prior year. 

Excluding the extra week of sales, as well as the impact of changes in commodity prices and foreign exchange rates, revenues in SunOpta Foods increased 14.4% versus the prior year and consolidated revenues increased 12.1%.

Operating incomefor the first half of 2014 was $28.8 million, or 4.3% of revenues, compared to $24.0 million, or 4.0% of revenues, in the first half of 2013. Operating earnings were driven by increased volume and margins on organic raw materials, improved performance in the sunflower category, and increased volume of consumer products including aseptic beverages, frozen foods and healthy snacks, offset by margin pressure experienced in Opta Minerals due to cyclical market weakness, lower organic feed margins, and increased corporate costs to drive efficiency in the operating segments.