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SunOpta Announces Fourth Quarter and Fiscal 2023 Financial Results

MINNEAPOLIS , February 28 /Businesswire/ - SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL) (TSX:SOY), a U.S.-based global pioneer fueling the future of sustainable, plant-based foods and beverages, today announced financial results for the fourth quarter and fiscal year ended December 30, 2023.

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

Fourth Quarter 2023 highlights:

  • Revenues of $181.6 million increased 13.7% compared to $159.8 million in the prior year period, driven by volume growth
  • Gross profit margin was 14.1% on a reported basis. Adjusted gross margin1 was 17.3%, down 50-basis points from the prior year period, mainly due to the 80-basis point increase in depreciation related to new production equipment.
  • Operating income of $5.1 million increased 47.8% compared to $3.4 million in the prior year period.
  • Loss from continuing operations was $1.8 million compared to $0.4 million in the prior year period mainly due to an increase in interest expense partially offset by increased gross profit.
  • Adjusted earnings1 from continuing operations of $5.7 million increased 120% compared to $2.6 million in the fourth quarter of 2022 mainly due to improved operating performance, partially offset by increases in interest expense and depreciation.
  • Adjusted EBITDA1 from continuing operations increased by 17.5% to $22.3 million, or 12.3% of revenues, compared to $19.0 million and 11.9% of revenues in the prior year period.

“Our latest results provide validation of the powerful potential of our platform. We are a growth company in growing categories and are armed with an optimized product portfolio and high-quality base of leverageable assets that provide significant runway for continued growth,” said Brian Kocher, Chief Executive Officer of SunOpta. “Fourth quarter revenues and Adjusted EBITDA exceeded expectations reflecting solid execution against our strategic priorities focused on operational excellence and growth. Volume was up double-digits and accelerated sharply from the third quarter, underscoring the strength of our competitive position and the broad-based demand we are seeing across our portfolio. Plant-based milks and fruit snacks continue to drive growth. We are gaining share with existing customers as well as adding new customers in both categories. In addition, our 330-milliliter protein shake business continues to ramp up aggressively, advancing our total addressable market expansion efforts. We are re-affirming our outlook for 2024 reflecting a high degree of confidence in the direction and trajectory of our business.”

Fourth Quarter 2023 Results

Revenues increased 13.7% to $181.6 million for the fourth quarter of 2023. The increase was driven by favorable volume/mix which was up 14.7% partially offset by a price reduction of 1.0% due to pass through of commodity prices. Volume/mix reflected broad based volume growth from oat milks and creamers, 330-milliliter protein shakes and teas, as well as increased sales volumes for fruit snacks, partially offset as expected, by lower external sales of plant-based ingredients, due to increased internal demand for oat base, as well as lower broth volumes.

Gross profit was $25.6 million for the fourth quarter, compared to $23.8 million in the prior year period. As a percentage of revenues, gross profit margin was 14.1% compared to 14.9% in the fourth quarter of 2022, a decrease of 80 basis points, as reported. Adjusted gross margin1 was 17.3% for the fourth quarter of 2023 compared to 17.8% in the fourth quarter of 2022. The 50-basis point decrease in adjusted gross margin reflected the impact of incremental depreciation of new production equipment for capital expansion projects partially offset by a positive mix shift in plant-based ingredients with increased internal use.

Operating income was $5.1 million, or 2.8% of revenues in the fourth quarter of 2023, compared to operating income of $3.4 million, or 2.1% of revenues in the fourth quarter of 2022. The increase in operating income was primarily driven by higher gross profit.

Loss from continuing operations was $1.8 million for the fourth quarter of 2023 compared to $0.4 million in the prior year period. Diluted loss per share from continuing operations attributable to common shareholders (after dividends and accretion on preferred stock) was $0.02 for the fourth quarter compared with diluted loss per share of $0.01 in the prior year period.

Loss from discontinued operations was $10.0 million or $0.09 per diluted share in the fourth quarter of 2023 versus earnings of $1.5 million or $0.01 per diluted share in the year earlier period.

Adjusted earnings1 from continuing operations was $5.7 million or $0.05 per diluted share in the fourth quarter of 2023, compared to adjusted earnings from continuing operations of $2.6 million or $0.02 per diluted share in the fourth quarter of 2022 mainly due to improved operating performance, partially offset by increases in interest expense and depreciation.

Adjusted EBITDA1 from continuing operations was $22.3 million or 12.3% of revenue in the fourth quarter of 2023 compared to $19.0 million or 11.9% of revenue in the fourth quarter of 2022.

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

Balance Sheet and Cash Flow

As of December 30, 2023, SunOpta had total assets of $669.4 million and total debt of $263.2 million compared to total assets of $855.9 million and total debt of $308.5 million at fiscal 2022 year end. During the fourth quarter of 2023, cash provided by operating activities of continuing operations was $12.0 million compared to $7.3 million during the fourth quarter of 2022. The increase in cash provided mainly reflected improved operating performance, partially offset by increased working capital and the impact of higher start-up costs and cash interest expense. Investing activities of continuing operations consumed $9.2 million of cash during the fourth quarter of 2023 down from $26.4 million in the prior year, reflecting the completion of certain major capital projects, including the construction of our new plant-based beverage facility in Midlothian, Texas.

2024 Outlook2

For fiscal 2024, the Company is re-affirming its outlook and continues to expect strong growth in revenue and Adjusted EBITDA:

($ millions)

 

2024 Outlook

 

 

 

Growth

Revenue

$

670 – 700

 

 

 

6% - 11%

Adj. EBITDA

$

87 - 92

 

 

 

11% - 17%

Conference Call

SunOpta plans to host a conference call at 5:30 P.M. Eastern time on Wednesday, February 28, 2024, to discuss the fourth quarter financial results. After opening remarks, there will be a question and answer period. Investors interested in listening to 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 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 businesses or assets, including business development costs, 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 food and beverages. Founded 50 years ago, SunOpta manufactures 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®, West LifeTM. 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 protein shake business will ramp aggressively, our expectation for strong growth in revenue and Adjusted EBITDA and our anticipated Revenue, Adjusted EBITDA, Revenue growth and Adjusted EBITDA growth for fiscal 2024. Generally, forward-looking statements do not relate strictly to historical or current facts and are typically accompanied by words such as “continues”, “expect”, “believe”, “anticipate”, “estimates”, “can”, “will”, “target”, "should", "would", "plans", "becoming", "intend", "confident", "may", "project", "intention", "might", "predict", “budget”, “forecast” or other similar terms and phrases intended to identify these forward-looking statements. Forward-looking statements are based on information available to the Company on the date of this release and are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments including, but not limited to, the Company’s actual financial results; our exit from, and use of proceeds from the divestiture of the assets and liabilities of, Frozen Fruit, uninterrupted operations and service levels to our customers; current customer demand for the Company’s products; 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; procurement and logistics savings; freight lane cost reductions; yield and throughput enhancements; the cost of the frozen fruit recall; labor cost reductions; and the terms of our insurance policies. 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 the possibility of supply chain, logistics and other disruptions; 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; potential additional costs associated with the frozen fruit recall; working capital management; availability and pricing of raw materials and supplies; potential covenant breaches under the Company’s credit facilities; and other risks described from time to time under "Risk Factors" in the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q (available at www.sec.gov). Consequently, all forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized. The Company undertakes no obligation to publicly correct or update the forward-looking statements in this document, in other documents, or on its website to reflect future events or circumstances, except as may be required under applicable securities laws.

SunOpta Inc.

Consolidated Statements of Operations

For the quarters and years ended December 30, 2023 and December 31, 2022

(Unaudited)

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

 

 

Quarter ended

Year ended

 

December 30,

2023

December 31,

2022

December 30,

2023

December 31,

2022

 

$

$

$

$

 

 

 

 

 

Revenues

181,624

 

159,790

 

630,297

 

591,395

 

 

 

 

 

 

Cost of goods sold

155,983

 

135,974

 

541,680

 

491,665

 

 

 

 

 

 

Gross profit

25,641

 

23,816

 

88,617

 

99,730

 

 

 

 

 

 

Selling, general and administrative expenses

19,597

 

19,605

 

78,000

 

78,469

 

Intangible asset amortization

446

 

446

 

1,784

 

1,784

 

Other expense, net

475

 

243

 

455

 

1,651

 

Foreign exchange loss (gain)

66

 

101

 

110

 

(107

)

 

 

 

 

 

Operating income

5,057

 

3,421

 

8,268

 

17,933

 

 

 

 

 

 

Interest expense, net

7,518

 

4,312

 

26,909

 

13,156

 

 

 

 

 

 

Earnings (loss) from continuing operations before income taxes

(2,461

)

(891

)

(18,641

)

4,777

 

 

 

 

 

 

Income tax expense (benefit)

(709

)

(464

)

3,269

 

896

 

 

 

 

 

 

Earnings (loss) from continuing operations

(1,752

)

(427

)

(21,910

)

3,881

 

Earnings (loss) from discontinued operations

(9,982

)

1,481

 

(153,108

)

(8,722

)

Net earnings (loss)

(11,734

)

1,054

 

(175,018

)

(4,841

)

 

 

 

 

 

Dividends and accretion on preferred stock

(429

)

(830

)

(1,981

)

(3,109

)

 

 

 

 

 

Earnings (loss) attributable to common shareholders

(12,163

)

224

 

(176,999

)

(7,950

)

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

 

 

 

Earnings (loss) from continuing operations

(0.02

)

(0.01

)

(0.21

)

0.01

 

Earnings (loss) from discontinued operations

(0.09

)

0.01

 

(1.34

)

(0.08

)

Earnings (loss) attributable to common shareholders

(0.11

)

0.00

 

(1.55

)

(0.07

)

 

 

 

 

 

Weighted-average common shares outstanding (000s)

 

 

 

 

Basic

115,793

 

107,861

 

114,226

 

107,659

 

Diluted

115,793

 

107,861

 

114,226

 

110,247

 

 

SunOpta Inc.

Consolidated Balance Sheets

As at December 30, 2023 and December 31, 2022

(Unaudited)

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

 

 

December 30, 2023

December 31, 2022

 

$

$

 

 

 

ASSETS

 

 

Current assets

 

 

Cash and cash equivalents

306

 

679

 

Accounts receivable

64,862

 

59,545

 

Inventories

83,215

 

74,439

 

Prepaid expenses and other current assets

25,235

 

15,535

 

Income taxes recoverable

4,717

 

4,040

 

Current assets held for sale

5,910

 

148,119

 

Total current assets

184,245

 

302,357

 

 

 

 

Restricted cash

8,448


STORY TAGS: Webcast, Conference Call, Earnings, Sustainability, Environment, Other Manufacturing, Specialty, Food/Beverage, Organic Food, Manufacturing, Retail, United States, North America, Canada, Minnesota,

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