Minneapolis / MN. (so) SunOpta Inc., a leading global company focused on plant-based foods and beverages and fruit-based foods and beverages, today announced financial results for the first quarter ended April 02, 2022. All amounts are expressed in USD and results are reported in accordance with U.S. GAAP, except where specifically noted.
First quarter 2022 highlights:
- Revenues of USD 240.2 million for the first quarter of 2022 increased 15.7 percent reflecting 13.4 percent growth in plant-based and 18.7 percent increase in fruit-based compared to the prior year
- Gross margin decreased 270 basis points to 11.7 percent from 14.4 percent in the prior year, primarily reflecting inflationary factors impacting raw materials, freight, labor and utilities. Gross margin increased 270 basis points to 11.7 percent from 9.0 percent in the fourth quarter of 2021, reflecting increased production and pricing actions.
- Net earnings from continuing operations were USD 0.7 million compared to USD 1.7 million in the prior year.
- Adjusted earnings attributable to common shareholders was USD 0.6 million or USD 0.01 per diluted common share in the first quarter of 2022, compared to earnings of USD 1.3 million or USD 0.01 per diluted common share in the first quarter of 2021.
- Adjusted Ebitda of USD 15.6 million, or 6.5 percent of revenues for the first quarter of 2022, was down 14.7 percent versus USD 18.3 million or 8.8 percent of revenues in the first quarter of 2021. Adjusted Ebitda increased 46 percent versus USD 10.7 million in the fourth quarter of 2021.
«We delivered strong first quarter results compared to Q4, reflecting significant progress on recent initiatives to enhance capacity and productivity coupled with robust demand across our portfolio. Plant-based revenue increased 13.4 percent on a year-over-year basis, driven by oat-based offerings up 59 percent and proprietary brands, with price and volume/mix both positive factors. The sharp recovery in our fruit-based business, where revenue increased 18.7 percent, was largely influenced by recent pricing actions as well as continued growth in fruit snacks and smoothie bowls,» said Joe Ennen, Chief Executive Officer. «While margins were below our year-earlier levels, we made significant progress from the fourth quarter of 2021, and believe that we have remedied production challenges in our plants and have passed on over 90 percent of inflationary pressures with price increases. I’m pleased to report that we are on track with expansion projects, including our new plant in Texas. This is a testimony to our focus on execution in this challenging environment. I’m also very proud of our recently released ESG report that outlines our framework around products, planet, people, and governance along with highlighting progress made in 2021. SunOpta is passionate about our commitments to sustainability as we continue to fuel the future of food. We remain highly confident in our strategic direction and growth outlook as well as our ability to create significant shareholder value.»
First Quarter 2022 Results
Revenues of USD 240.2 million for the first quarter of 2022 increased 15.7 percent compared to the first quarter of 2021 reflecting 13.4 percent growth in Plant-Based Foods and Beverages and 18.7 percent growth in Fruit-Based Foods and Beverages.
The Plant-Based Foods and Beverages segment generated revenues of USD 135.5 million during the first quarter of 2022, an increase of 13.4 percent compared to USD 119.5 million in the first quarter of 2021. Growth continued to be driven by oat-based offerings, reflecting pricing and volume/mix factors, along with incremental revenue from Dream and WestSoy.
The Fruit-Based Foods and Beverages segment generated revenues of USD 104.7 million during the first quarter of 2022, an increase of 18.7 percent compared to USD 88.2 million in the first quarter of 2021. Growth was driven by pricing and favorable volume/mix stemming from strong demand for fruit snacks, and one-time incremental volumes this quarter from one of our large frozen fruit customers, and the recent introduction of fruit smoothie bowls.
Gross profit was USD 28.0 million for the first quarter, a decrease of USD 2.0 million compared to USD 30.0 million in the prior year period. As a percentage of revenues, gross profit margin was 11.7 percent in the first quarter of 2022 compared to 14.4 percent in the first quarter of 2021, a decrease of 270 basis points. Gross profit in the Plant-Based Foods and Beverages segment decreased USD 3.2 million. The 470-basis point decrease in Plant-Based gross margin included an approximately 150 basis-point decline due to the dilutive effect of pass-through pricing to recover cost inflation on raw and packaging material. The remaining gross margin impact reflected unrecovered raw material and freight cost inflation, due to the lag in pricing adjustments, together with higher labor and utility rates, and increased depreciation expense, partially offset by volume growth and improved plant utilization. Gross profit in the Fruit-Based Foods and Beverages segment increased by USD 1.2 million. Gross margin was flat at 7.7 percent, despite an approximately 100 basis-point decline due to the dilutive effect of pass-through pricing to recover cost inflation on raw and packaging material. Excluding this pricing effect, fruit-based gross margin reflected the benefits of portfolio rationalizations for frozen fruit and manufacturing cost savings from the consolidation of our fruit processing facilities in 2021, partially offset by currently unrecovered freight and storage cost inflation, a higher mix of low-margin fruit juice sales, and frozen fruit inventory losses due to excess spoilage during handling.
Segment operating income was USD 3.9 million, or 1.6 percent of revenues in the first quarter of 2022, compared to segment operating income of USD 6.1 million, or 2.9 percent of revenues in the first quarter of 2021. The decrease in segment operating income was due to lower gross profit, and increased SG+A mainly due to a special one-time bonus accrual of USD 1.6 million to reward employees for improved performance this quarter in our plants, partially offset by a reduction in variable stock-based compensation as the performance condition under the 2021 incentive plan was not achieved.
Adjusted Ebitda was USD 15.6 million or 6.5 percent of revenues in the first quarter of 2022, compared to USD 18.3 million or 8.8 percent of revenues in the first quarter of 2021.
Earnings attributable to common shareholders for the first quarter of 2022 was USD 3.5 million, or USD 0.03 per diluted common share, compared to a loss of USD 0.3 million, or USD 0.00 per diluted common share during the first quarter of 2021.
Adjusted earnings in the first quarter of 2022 was USD 0.6 million or USD 0.01 per common share, compared to adjusted earnings of USD 1.3 million or USD 0.01 per common share in the first quarter of 2021.
Balance Sheet and Cash Flow
As of April 2, 2022, SunOpta had total assets of USD 785.8 million and total debt of USD 249.7 million compared to total assets of USD 755.1 million and total debt of USD 224.6 million at year end, 2021. During the first quarter of 2022, cash provided by operating activities of continuing operations was USD 15.5 million compared to cash used in operating activities of continuing operations of USD 7.0 million during the first quarter of 2021. Investing activities from continuing operations consumed USD 24.5 million of cash during the first quarter of 2022 versus USD 7.9 million in the prior year, primarily driven by the new plant in Midlothian, Texas which is expected to come online in late 2022.
2022 Outlook
We are reaffirming our previously provided outlook for fiscal 2022, including consolidated revenue range of USD 890 million to USD 930 million and consolidated adjusted Ebitda range of USD 67 million to USD 75 million.
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