Toronto / CA. (so) SunOpta Inc., a leading global company focused on plant-based foods and beverages, fruit-based foods and beverages, and organic ingredient sourcing and production, today announced financial results for the first quarter ended March 28, 2020. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
First Quarter 2020 Highlights
- Revenues of USD 335.9 million for the first quarter of 2020, compared to USD 305.3 million in the first quarter of 2019, an increase of 10.0 percent. Adjusted for dispositions, acquisitions, foreign exchange and commodity prices, revenues grew by 13.2 percent.
- Gross margin increased 380 basis points to 13.0 percent from 9.2 percent in the prior year.
- Earnings attributable to common shareholders of USD 1.3 million or USD 0.01 per diluted common share in the first quarter of 2020, compared to USD 23.7 million or USD 0.26 per diluted common share in the first quarter of 2019. Earnings in the first quarter of 2019 included a pre-tax gain on the sale of the specialty and organic soy and corn business of USD 45.6 million. Adjusted earnings excluding disposed operations of USD 0.9 million or USD 0.01 per common share during the first quarter of 2020, compared to an adjusted loss of USD 7.6 million or USD 0.09 per common share during the first quarter of 2019.
- Adjusted Ebitda excluding disposed operations of USD 24.3 million or 7.2 percent of revenues for the first quarter of 2020, versus USD 11.1 million or 3.6 percent of revenues in the first quarter of 2019.
«We are well into executing our turnaround plan. We delivered an outstanding first quarter, with 13 percent adjusted revenue growth and the second highest adjusted Ebitda in the Company’s history. The growth and margin strength were broad based, across all three operating segments,» said Joe Ennen, Chief Executive Officer of SunOpta. «Our focus and investment in plant-based foods and beverages continues to be a significant driver of revenue and margin growth. We generated 30 percent adjusted revenue growth in this key segment and doubled gross profit versus prior year. We remain well positioned to capitalize on the rapidly growing plant-based trend. We also continue to make progress on our capital investments to expand capacity and capabilities, supported by our recent preferred equity capital raise. Our Fruit-Based Food and Beverages segment is performing in-line with previously communicated expectations and our productivity initiatives to improve margins are on track. We generated 9 percent revenue growth in our fruit platform and continued to deliver sequential improvements in gross margin. We have sold through the vast majority of higher priced 2019 inventory related to last year’s supply constraints. We have successfully taken pricing action, delivered productivity improvements and are entering the 2020 procurement season in a very healthy position. Finally, our Global Ingredients segment contributed 6 percent adjusted revenue growth and saw strong improvement in gross margin. We are successfully executing our strategy of investing and focusing on key ingredient categories, where we can maximize our return on capital.»
«Looking ahead for the remainder of 2020, we remain focused on our key initiatives and remain confident in our ability to drive further year-over-year adjusted Ebitda improvement. We have successfully responded to the evolving environment of Covid-19. We have followed government advice as it evolved and are very focused on the health and safety of our employees. Our facilities are operating effectively and uninterrupted and we have maintained high levels of service to all of our customers. We remain well positioned in large and growing categories with strong market positions and are successfully executing our turnaround strategy,» continued Ennen.
First Quarter 2020 Results
Revenues for the first quarter of 2020 were USD 335.9 million, an increase of 10.0 percent compared to USD 305.3 million in the first quarter of 2019. Excluding the impact on reported revenues of the soy and corn business sold in February 2019, changes in commodity-related pricing and foreign exchange rates and excluding the impact of the acquisition of Sanmark in April 2019, revenues in the first quarter of 2020 increased by 13.2 percent compared with the first quarter of 2019.
The Global Ingredients segment generated revenues of USD 128.4 million, a decrease of 4.8 percent compared to USD 134.8 million in the first quarter of 2019. Excluding the impact of the disposed soy and corn business, and changes in commodity-related pricing and foreign exchange rates, Global Ingredients revenue in the first quarter of 2020 increased 5.5 percent compared to the prior year period, which reflected higher volumes in certain organic ingredient product categories and of premium juice products.
The Plant-Based Foods and Beverages segment generated revenues of USD 106.2 million during the first quarter of 2020, an increase of 30.7 percent compared to USD 81.3 million in the first quarter of 2019. Excluding sunflower price variances, Plant-Based segment revenues in the first quarter increased 29.7 percent compared to the prior year period, reflecting higher volumes of aseptic beverages, broth offerings, and ingredient extraction.
The Fruit-Based Foods and Beverages segment generated revenues of USD 101.4 million during the first quarter of 2020, an increase of 13.7 percent compared to USD 89.2 million in the first quarter of 2019. Excluding the impact of commodity price fluctuations, Fruit-Based segment revenues in the first quarter increased 9.1 percent compared to the prior year period, primarily reflecting increased retail volumes and pricing for frozen fruit.
Gross profit was USD 43.7 million for the quarter ended March 28, 2020, an increase of USD 15.5 million compared to USD 28.2 million for the quarter ended March 30, 2019. As a percentage of revenues, gross profit for the quarter ended March 28, 2020 was 13.0 percent compared to 9.2 percent for the quarter ended March 30, 2019, an increase of 3.8 percent. The Plant-Based Foods and Beverages segment accounted for USD 10.6 million of the increase in gross profit, primarily due to higher sales and production volumes of plant-based beverages, broths and plant-based ingredients, and improved plant utilization and productivity-driven cost savings. The Fruit-Based Foods and Beverages segment increased gross profit by USD 3.1 million in the quarter due to increased gross margin, reflecting increased sales, pricing and productivity improvements. The Global Ingredients segment accounted for USD 1.9 million of the increased gross profit in the quarter primarily due to increased pricing spreads for organic ingredients and premium juice products and productivity improvements in our factories.
Segment operating income was USD 11.5 million, or 3.4 percent of revenues in the first quarter of 2020, compared to operating income of USD 0.3 million, or 0.1 percent of revenues in the first quarter of 2019. The increase in operating income year-over-year was primarily attributable to the USD 15.5 million increase in gross profit, partially offset by a year-over-year unfavorable foreign exchange impact of USD 3.4 million within our Mexican frozen fruit and European organic ingredient operations and increased reserves for credit losses included in SG+A expenses, due to a weaker economic outlook.
Other income of USD 1.3 million for the first quarter of 2020 reflected the settlement of a dispute arising from a prior business acquisition, offset by employee termination and facility closure costs, mainly related to the consolidation of our corporate office functions.
Adjusted Ebitda was USD 24.3 million or 7.2 percent of revenues in the first quarter of 2020, compared to USD 10.9 million or 3.6 percent of revenues in the first quarter of 2019. Excluding disposed operations, adjusted Ebitda for the quarter ended March 30, 2019 was USD 11.1 million.
The Company reported earnings attributable to common shareholders for the first quarter of 2020 of USD 1.3 million, or USD 0.01 per diluted common share, compared to earnings of USD 23.7 million, or USD 0.26 per diluted common share during the first quarter of 2019. Earnings in the first quarter of 2019 included a pre-tax gain on the sale of the specialty and organic soy and corn business of USD 45.6 million.
Adjusted earnings in the first quarter of 2020 was USD 0.9 million or USD 0.01 per common share, compared to an adjusted loss of USD 7.9 million or USD 0.09 per common share in the first quarter of 2019.
Balance Sheet and Cash Flow
At March 28, 2020, SunOpta’s balance sheet reflected total assets of USD 894.4 million and total debt of USD 469.3 million. During the first quarter of 2020, cash provided by operating activities was USD 34.7 million, compared to USD 1.0 million during the first quarter of 2019. The USD 33.8 million increase in cash provided by operating activities primarily reflects the improved year-over-year operating results, along with more efficient working capital management. Cash used in investing activities was USD 9.7 million in the first quarter of 2020, compared with USD 8.0 million in the first quarter of 2019, an increase in cash used of USD 1.7 million, including a higher level of capital expenditures related to the expansion of our ingredient extraction capabilities.
