Toronto / CA. (so) SunOpta Inc., a leading global company focused on plant-based foods and beverages, organic ingredient sourcing and production, and fruit-based foods and beverages, announced financial results for the second quarter ended June 27, 2020. All amounts are expressed in U.S. Dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
Second Quarter 2020 Highlights
- Revenues of USD 310.9 million for the second quarter of 2020, compared to USD 293.0 million in the second quarter of 2019, an increase of 6.1 percent. Adjusted for foreign exchange and commodity prices, revenues grew by 5.8 percent.
- Gross margin increased 350 basis points to 12.8 percent from 9.3 percent in the prior year.
- Earnings attributable to common shareholders was a loss of USD 1.6 million or USD 0.02 per diluted common share in the second quarter of 2020, compared to a loss of USD 11.1 million or USD 0.13 per diluted common share in the second quarter of 2019.
- Adjusted Ebitda of USD 20.5 million or 6.6 percent of revenues for the second quarter of 2020, versus USD 10.1 million or 3.5 percent of revenues in the second quarter of 2019.
«We delivered another strong quarter, doubling adjusted Ebitda over the prior year for the third consecutive quarter. We believe our turnaround efforts have now taken root, setting us up for more consistent revenue and profitability growth going forward. The quarter represented a powerful combination of strong execution and favorable underlying category trends. Each of our three segments produced revenue growth and expanded gross margin during the second quarter,» said Joe Ennen, Chief Executive Officer of SunOpta. «Our growth continues to be led by our #1 focus area, which is plant-based foods and beverages. Despite the negative impact on volumes in the foodservice channel, as a result of Covid-19, we still produced 10 percent growth on an adjusted basis. This growth and our ability to offset Covid-19 impacts are a direct reflection of the strength of our plant-based platform. We are extremely bullish on our plant-based opportunity including a robust sales pipeline and incremental capacity expected to come on-line in the fourth quarter of this year.
«Within our Global Ingredients segment, we saw continued strong growth and enhanced margin as we optimize our category investments. We remain confident and encouraged about initiatives across our global organization and remain well-positioned in each of our operating segments to drive growth, improve margins and enhance shareholder value. We continued to generate sequential and year-over-year margin improvement in our Fruit-Based Foods and Beverages segment, reflecting each of our initiatives to date and remain confident that our productivity investments will further this improvement in the second half of 2020,» continued Ennen.
Second Quarter 2020 Results
Revenues for the second quarter of 2020 were USD 310.9 million, an increase of 6.1 percent compared to USD 293.0 million in the second quarter of 2019. Excluding the impact of changes in commodity-related pricing and foreign exchange rates, revenues in the second quarter of 2020 increased by 5.8 percent compared with the second quarter of 2019.
The Plant-Based Foods and Beverages segment generated revenues of USD 91.7 million during the second quarter of 2020, an increase of 11.9 percent compared to USD 81.9 million in the second quarter of 2019. Excluding sunflower commodity price variances, Plant-Based segment revenues in the second quarter increased 9.6 percent compared to the prior year period, reflecting higher volumes of aseptic beverages, broth offerings, and ingredient extraction partially offset by reduced sales volumes of plant-based beverage products to foodservice customers as a result of Covid-19.
The Global Ingredients segment generated revenues of USD 126.5 million, an increase of 4.7 percent compared to USD 120.9 million in the second quarter of 2019. Excluding the impact of changes in commodity-related pricing and foreign exchange rates, Global Ingredients revenue in the second quarter of 2020 increased 6.9 percent compared to the prior year period, which reflected higher volumes in certain organic ingredient product categories and of premium juice products.
The Fruit-Based Foods and Beverages segment generated revenues of USD 92.7 million during the second quarter of 2020, an increase of 2.8 percent compared to USD 90.2 million in the second quarter of 2019. Excluding the impact of commodity price fluctuations, Fruit-Based segment revenues in the second quarter increased 0.8 percent compared to the prior year period, primarily reflecting increased retail volumes and pricing for frozen fruit partially offset by lower demand for frozen fruit and fruit preparations from foodservice customers as a result of Covid-19.
Gross profit was USD 39.7 million for the quarter ended June 27, 2020, an increase of USD 12.4 million compared to USD 27.3 million for the quarter ended June 29, 2019. As a percentage of revenues, gross profit for the quarter ended June 27, 2020 was 12.8 percent compared to 9.3 percent for the quarter ended June 29, 2019, an increase of 350 basis points. The Plant-Based Foods and Beverages segment accounted for USD 4.6 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 partially offset by wage premiums and higher cleaning costs attributable to Covid-19. The Global Ingredients segment accounted for USD 4.4 million of the increased gross profit in the quarter primarily due to increased pricing spreads for certain organic ingredients and premium juice products and productivity improvements. The Fruit-Based Foods and Beverages segment increased gross profit by USD 3.4 million in the quarter, reflecting increased sales, pricing and a favorable sales mix of higher-margin retail versus foodservice sales, and the impact of our automation and productivity initiatives partially offset by lower sales volumes and plant utilization for fruit ingredients, together with wage premiums and higher cleaning costs attributable to Covid-19.
Segment operating income was USD 8.8 million, or 2.8 percent of revenues in the second quarter of 2020, compared to operating loss of USD 2.5 million, or 0.9 percent of revenues in the second quarter of 2019. The increase in operating income year-over-year was primarily attributable to the USD 12.4 million increase in gross profit, partially offset by a year-over-year USD 1.0 million increase in SG+A primarily related to higher employee-related variable compensation and benefit costs, partially offset by lower travel and marketing costs and stock-based compensation expense.
Adjusted Ebitda was USD 20.5 million or 6.6 percent of revenues in the second quarter of 2020, compared to USD 10.1 million or 3.5 percent of revenues in the second quarter of 2019.
The Company reported a loss attributable to common shareholders for the second quarter of 2020 of USD 1.6 million, or USD 0.02 per diluted common share, compared to a loss of USD 11.1 million, or USD 0.13 per diluted common share during the second quarter of 2019.
Adjusted loss in the second quarter of 2020 was USD 1.4 million or USD 0.02 per common share, compared to an adjusted loss of USD 9.0 million or USD 0.10 per common share in the second quarter of 2019.
Balance Sheet and Cash Flow
At June 27, 2020, SunOpta’s balance sheet reflected total assets of USD 909.4 million and total debt of USD 448.9 million. During the second quarter of 2020, cash generated by operating activities was USD 2.7 million, compared to cash used in operations of USD 31.7 million during the second quarter of 2019. The USD 34.4 million improvement in operating cash flow primarily reflects the improved year-over-year operating results, along with more efficient working capital management. Cash used in investing activities in the second quarter of 2020 was USD 6.3 million, compared with USD 12.9 million in the second quarter of 2019, a decrease in cash used of USD 6.6 million.
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