Minneapolis / MN. (so) SunOpta Inc., a leading global company focused on plant-based foods and beverages and fruit-based foods and beverages, announced financial results for the fourth quarter ended December 31, 2022. All amounts are expressed in U.S. Dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
Fourth Quarter 2022 highlights
- Revenues increased 8.4 percent to USD 221.3 million reflecting 10.8 percent growth in the plant-based segment and 4.5 percent growth in the fruit-based segment. Excluding the impact of the sunflower business, which was divested in October, plant-based segment revenues increased 23.5 percent versus the fourth quarter last year, with volume growth of 10.0 percent
- Gross profit increased 56.4 percent despite approximately USD 4.6 million of startup costs at the new Texas plant.
- Loss from continuing operations was USD 0.9 million compared to a loss of USD 6.1 million in the prior year period.
- Adjusted earnings¹ attributable to common shareholders was USD 2.1 million or USD 0.02 per diluted common share, compared to a loss of USD 5.2 million or USD 0.05 per diluted common share in the prior year period.
- Adjusted Ebitda¹ of USD 23.5 million, or 10.6 percent of revenues, was up 122.7 percent versus USD 10.6 million and 5.2 percent of revenues in the prior year period.
«Our significant improvement year-over-year in profitability reflects strong execution against our key priorities of driving growth and optimizing performance including maintaining high service levels and supply chain efficiency,» said Joe Ennen, Chief Executive Officer. «Plant-based growth accelerated to over 23 percent in the quarter, excluding sunflower, fueled by almost every dimension of our business. We saw double digit growth in our four largest product types, double digit increases in retail, over 30 percent growth in food service and double digit growth in sales to three of our four largest customers. Additionally, all go-to-market approaches delivered double digit growth, including 40 percent growth in our branded portfolio. This is a testament to our competitive advantages and shows we have numerous ways to win with the business model we have built. Our new state-of-the art manufacturing plant in Texas opened on time and on budget and production is ramping as expected. This facility is foundational to our ambitious growth agenda, significantly expanding our capacity, and providing us with new capabilities and enhancing the efficiency of our distribution network. We expect 2023 to be another year of significant growth for revenues and profit as we continue to leverage our strong competitive position and growing scale to realize our vision of Fueling the Future of Food.»
Fourth Quarter 2022 Results
Revenues of USD 221.3 million for the fourth quarter of 2022 increased 8.4 percent compared to the fourth quarter of 2021 driven by 10.8 percent growth in Plant-Based Foods and Beverages and 4.5 percent growth in Fruit-Based Foods and Beverages. The revenue growth reflected a 9.8 percent increase in pricing along with an 4.7 percent increase in volume/mix. Excluding the divested sunflower business, revenue grew 15.6 percent.
The Plant-Based Foods and Beverages segment generated revenues of USD 138.6 million, an increase of 10.8 percent compared to USD 125.1 million in the fourth quarter of 2021. Excluding the impact of our sunflower business, which was divested in October, revenue from Plant-Based Foods and Beverages increased 23.5 percent. Pricing accounted for 13.5 percent of the growth while volume/mix was up 10 percent, reflecting continued penetration and strength in oat-based offerings, almond-based beverages, and teas.
The Fruit-Based Foods and Beverages segment generated revenues of USD 82.7 million, an increase of 4.5 percent compared to USD 79.2 million in the fourth quarter of 2021. Pricing increased 6.4 percent reflecting actions to offset inflationary pressures on fruit inventories and operating expenses, while volume/mix declined 1.9 percent driven by lower demand for frozen fruit, partially offset by strong demand and higher pricing for fruit snacks, as well as incremental sales of recently introduced smoothie bowls.
Gross profit was USD 28.2 million for the fourth quarter, an increase of USD 10.2 million or 56.4 percent compared to USD 18.0 million in the prior year period. As a percentage of revenues, gross profit margin was 12.8 percent compared to 8.8 percent in the fourth quarter of 2021, an increase of 400 basis points. Gross profit in the Plant-Based Foods and Beverages segment increased USD 6.6 million or 46.1 percent to USD 20.8 million, while gross margin increased 360 basis points to 15.0 percent primarily due to higher volumes and pricing, partially offset by the impacts of higher manufacturing costs, and incremental depreciation expense, as well as startup expenses related to the new plant in Midlothian, Texas and other expansion projects. Gross profit in the Fruit-Based Foods and Beverages segment increased by USD 3.6 million or 95 percent to USD 7.4 million and gross margin increased 420 basis points to 9.0 percent as a result of reduced manufacturing expenses, higher pricing and reduced inventory losses partially offset by lower volumes within frozen fruit, as well as, increased sales volumes and pricing along with plant efficiencies within fruit snack operations.
Segment operating income was USD 5.2 million, or 2.4 percent of revenue in the fourth quarter of 2022, compared to segment operating loss of USD 1.7 million, or 0.8 percent of revenues in the fourth quarter of 2021. The increase in segment operating income was due to higher gross profit, partially offset by a USD 5.6 million increase in SG+A expense due to higher employee compensation costs, including incentive accruals, partially offset by reduction in expenses related to consulting and professional fees.
Earnings attributable to common shareholders for the fourth quarter of 2022 was USD 0.2 million, or USD 0.00 per diluted common share, compared to a loss of USD 6.8 million, or USD 0.06 per diluted common share during the fourth quarter of 2021.
Adjusted earnings in the fourth quarter of 2022 was USD 2.1 million or USD 0.02 per common share, compared to adjusted loss of USD 5.2 million or USD 0.05 per common share in the fourth quarter of 2021.
Adjusted Ebitda was USD 23.5 million or 10.6 percent of revenue in the fourth quarter of 2022, compared to USD 10.6 million or 5.2 percent of revenue in the fourth quarter of 2021.
In the fourth quarter of 2022, management identified certain errors related to prior year amounts, which were not material to the Company’s previously issued financial statements. These principally related to our provisions for income taxes and recognition of deferred tax assets on stock-based compensation as previously reported in fiscal 2021 and fiscal 2020. We have revised the prior year financial results accordingly. In the aggregate, these revisions had the effect of reducing the net loss in fiscal 2021 by USD 3.0 million and increasing net earnings in fiscal 2020 by USD 4.9 million. These revisions are fully described in the Company’s Annual Report on Form 10-K for fiscal 2022.
Balance Sheet and Cash Flow
As of December 31, 2022, SunOpta had total assets of USD 855.9 million and total debt of USD 308.5 million compared to total assets of USD 754.8 million and total debt of USD 224.6 million at year end fiscal 2021. During the fourth quarter of 2022, cash provided by operating activities was USD 27.5 million compared to USD 19.7 million during the fourth quarter of 2021. Investing activities of continuing operations consumed USD 20.0 million of cash during the fourth quarter of 2022 versus USD 23.3 million in the prior year, as investments in capacity expansion were partially offset by proceeds from the divestiture of the sunflower business.
2023 Outlook
For fiscal 2023, the Company expects:
| (USD in millions) | 2023 Outlook | Growth | ||||
| Revenue | USD | 1,000 to 1,050 | 7 percent to 12 percent | |||
| Adjusted Ebitda | USD | 97 to 103 | 16 percent to 23 percent |
Excluding USD 57.9 million of revenue in 2022 related to the divested Sunflower business, expected revenue growth rates in 2023 are between 14 percent to 20 percent.
