Minneapolis / MN. (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, announced financial results for the third quarter ended October 02, 2021. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
Third Quarter 2021 Highlights:
- Revenues of USD 198.5 million for the third quarter of 2021 increased 3.6 percent reflecting 16.0 percent growth in plant-based foods and beverages partially offset by a 9.7 percent decline in fruit-based foods and beverages.
- Gross margin decreased 220 basis points to 11.8 percent from 14.0 percent in the third quarter of 2020, reflecting temporary supply chain challenges and incremental depreciation expense.
- Loss from continuing operations was USD 3.0 million compared to a loss from continuing operations of USD 3.9 million in the third quarter of 2020. The loss included USD 2.8 million of business development, facility consolidation and project costs for capacity expansion.
- Adjusted earnings attributable to common shareholders was USD 1.1 million or USD 0.01 per diluted common share in the third quarter of 2021, compared to an adjusted loss of (USD 5.8) million or (USD 0.06) per diluted common share in the third quarter of 2020.
- Adjusted Ebitda of USD 15.6 million, or 7.9 percent of revenues for the third quarter of 2021, was up 8.4 percent versus USD 14.4 million or 7.5 percent of revenues in the third quarter of 2020.
«Despite recent global supply chain issues, our plant-based business produced another solid quarter of growth, delivering a record setting third quarter, more than offsetting declines in our fruit-based business. Plant-based revenues were up 16 percent, reflecting our sustained competitive advantages and incredibly strong consumer demand. On a two-year stack basis, plant-based revenue was up 23.9 percent. Moreover, our oat platform was a significant contributor to growth in the quarter. We delivered Adjusted Ebitda growth of 8.4 percent, as revenue growth and SG+A savings more than offset gross margin compression,» said Joe Ennen, Chief Executive Officer. «Gross margins were impacted by incremental depreciation, along with challenges surrounding raw material and labor availability, which is temporarily impacting the efficiency of our manufacturing plants. We continue to execute well against our strategic priorities. Demand from existing and new customers remains at unprecedented levels across our plant-based portfolio. Gross margins in fruit-based were largely impacted by raw material price inflation, which we expect to be fully passed on by the end of the fourth quarter. Capacity expansions in our plant-based segment are firmly on track; however, as is the case across the broader economy, supply chain issues are creating transitory headwinds over the near term that the team is working hard to mitigate. Nevertheless, our long-term outlook for double-digit plant-based revenue growth and continuing to improve returns on invested capital remains unchanged.»
Third Quarter 2021 Results
Revenues of USD 198.5 million for the third quarter of 2021 were up 3.6 percent compared to the third quarter of 2020 as 16.0 percent growth in Plant-Based Foods and Beverages was partially offset by a 9.7 percent decrease in Fruit-Based Foods and Beverages.
The Plant-Based Foods and Beverages segment generated revenues of USD 114.9 million during the third quarter of 2021, an increase of 16.0 percent compared to USD 99.0 million in the third quarter of 2020. Growth continued to be driven by strong demand for our oat-based product offerings as well as incremental revenue from our Dream and WestSoy acquisitions, which contributed USD 5.9 million to the third quarter, together with higher sunflower volumes and pricing. Partially offsetting these factors was softer volumes for certain other non-dairy beverages and everyday broths along with lower volumes of ready-to-eat snacks and roasted ingredients.
The Fruit-Based Foods and Beverages segment generated revenues of USD 83.6 million during the third quarter of 2021, a decrease of 9.7 percent compared to USD 92.6 million in the third quarter of 2020. Lower retail volumes in frozen fruit remained the primary factor accounting for the revenue decline, with planned rationalization of SKUs and customers, and supply constraints for certain fruit varieties. Partially offsetting these factors were the effects of pass-through pricing actions for frozen fruit, together with volume growth in fruit snacks, and rising foodservice demand.
Gross profit was USD 23.4 million for the third quarter, a decrease of USD 3.5 million compared to USD 26.8 million in the prior year period. As a percentage of revenues, gross profit margin was 11.8 percent in the third quarter of 2021 compared to 14.0 percent in the third quarter of 2020, a decrease of 220 basis points. The Plant-Based Foods and Beverages segment accounted for USD 1.0 million of the decrease in gross profit, reflecting lower plant utilization, largely driven by labour and certain raw material shortages in our plant-based beverage and ingredient operations along with higher depreciation and transportation expenses, partially offset by improved utilization, cost reductions and higher pricing in our sunflower operations. Gross profit in the Fruit-Based Foods and Beverages segment decreased by USD 2.5 million due to higher strawberry commodity prices, foreign exchange, higher transportation costs and higher production costs in our fruit snack operations stemming from raw materials constraints, partially offset by pricing actions, rationalization of marginally profitable business, and productivity improvements in our frozen fruit operations including footprint optimization.
Segment operating income was USD 3.9 million, or 2.0 percent of revenues in the third quarter of 2021, compared to segment operating income of USD 3.1 million, or 1.6 percent of revenues in the third quarter of 2020. The increase in segment operating income year-over-year was primarily attributable to a reduction in incentive compensation, which more than offset lower gross profit, as well as incremental amortization related to the acquisition of Dream and WestSoy.
Adjusted Ebitda was USD 15.6 million or 7.9 percent of revenues in the third quarter of 2021, compared to USD 14.4 million or 7.5 percent of revenues in the third quarter of 2020.
Loss from continuing operations attributable to common shareholders for the third quarter of 2021 was USD 3.8 million, or USD 0.04 per diluted common share, compared to a loss of USD 6.7 million, or USD 0.07 per diluted common share during the third quarter of 2020.
Adjusted earnings in the third quarter of 2021 was USD 1.1 million or USD 0.01 per common share, compared to an adjusted loss of USD 5.8 million or (USD 0.06) per common share in the third quarter of 2020.
Balance Sheet and Cash Flow
As of October 2, 2021, SunOpta had total assets of USD 749.1 million and total debt of USD 220.3 million compared to total assets of USD 921.4 million and total debt of USD 443.8 million a year earlier, primarily reflecting the sale of the Global Ingredients business and improved operating performance, partially offset by investments to support continued strong growth in Plant-Based Foods and Beverages. During the third quarter of 2021, cash provided by operating activities was USD 5.1 million from continuing operations compared to cash provided by operating activities of USD 8.7 million during the third quarter of 2020. The decline in cash generation was primarily due to increased working capital in 2021. Investing activities from continuing operations consumed USD 17.4 million of cash during the third quarter of 2021 versus USD 11.3 million in the prior year, primarily due to capacity expansion initiatives.