SunOpta: Announces Q4 Fiscal 2021 Financial Results

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 fourth quarter and fiscal year ended January 01, 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 2021 highlights

  • Revenues of USD 204.2 million for the fourth quarter of 2021 decreased 0.6 percent reflecting 5.8 percent growth in plant-based offset by a 9.4 percent decline in fruit-based. Adjusting for the 53rd week in fiscal 2020, consolidated revenue growth was 2.5 percent.
  • Gross margin decreased 650 basis points to 9.0 percent from 15.5 percent in the prior year, primarily reflecting production shortfalls and yield factors stemming from labor productivity and raw material challenges.
  • Loss from continuing operations was USD 1.9 million compared to a loss from continuing operations of USD 34.3 million in the prior year.
  • Adjusted loss attributable to common shareholders was USD 1.0 million or USD 0.01 per diluted common share in the fourth quarter of 2021, compared to a loss of USD 2.5 million or USD 0.03 per diluted common share in the fourth quarter of 2020.
  • Adjusted Ebitda of USD 10.7 million, or 5.2 percent of revenues for the fourth quarter of 2021, was down 48.2 percent versus USD 20.6 million or 10.0 percent of revenues in the fourth quarter of 2020.

«Fourth quarter results were hampered by issues stemming from challenges in the macro environment. We had unexpected and therefore unrecovered inflation, yield related losses in fruit and higher costs in our plants without a corresponding increase in production. While staffing levels recovered in the fourth quarter, we were focused on training 90+ new employees, incurring all the costs but lacking the corresponding production volume. The good news is that we are seeing production quickly returning to more normal levels in the first quarter of 2022. In addition to labor productivity initiatives, pricing actions and our capacity expansion in Allentown all point to a solid recovery in profitability from our fourth quarter of 2021 levels, starting in the first quarter of 2022. Plant-based revenue rose 9.2 percent, excluding the extra week in the year-earlier period. Consumer demand remains brisk, and we continued to prioritize servicing our customers, incurring unplanned overtime and additional freight to fulfill orders, which negatively impacted Q4 profitability,» said Joe Ennen, Chief Executive Officer. «We also continued to gain from significant tailwinds stemming from our strong innovation pipeline especially in oat-based offerings where we realized USD 80 million of revenue in 2021. While we are disappointed with our fourth quarter results, we remain incredibly confident in our long-term value proposition. We are making great strides standing up our 4th aseptic plant in Midlothian, TX and early conversations with customers give us confidence in the acceleration in both revenue and profit growth it will enable in 2023. Strategically and competitively, we are well positioned to double our plant-based revenue and profits in the coming years.»

Fourth Quarter 2021 Results

Revenues of USD 204.2 million for the fourth quarter of 2021 were down 0.6 percent compared to the fourth quarter of 2020 as 5.8 percent growth in Plant-Based Foods and Beverages was offset by a 9.4 percent decrease in Fruit-Based Foods and Beverages.

The Plant-Based Foods and Beverages segment generated revenues of USD 125.1 million during the fourth quarter of 2021, an increase of 5.8 percent compared to USD 118.2 million in the fourth quarter of 2020. Oat-based offerings remained a primary growth driver along with revenue from Dream and WestSoy, which were acquired in April, 2021. We also experienced increased demand from foodservice customers and higher sunflower volumes. Partially offsetting these factors was softer volume for certain other non-dairy beverages and everyday broths. Due to supply chain disruptions, we were unable to meet some customer demand for our plant-based products in the quarter, and transport shortages prevented certain customers from picking up their orders prior to year-end.

The Fruit-Based Foods and Beverages segment generated revenues of USD 79.2 million during the fourth quarter of 2021, a decrease of 9.4 percent compared to USD 87.4 million in the fourth quarter of 2020. The decline was driven by lower volumes of retail frozen fruit due to planned rationalization of SKUs and customers, and the impact of supply constraints for certain fruit varieties on blended frozen fruit offerings. Pass-through pricing actions provided a partial offset along with volume gains in fruit snacks and increased foodservice demand.

Gross profit was USD 18.4 million for the fourth quarter, a decrease of USD 13.4 million compared to USD 31.8 million in the prior year period. As a percentage of revenues, gross profit margin was 9.0 percent in the fourth quarter of 2021 compared to 15.5 percent in the fourth quarter of 2020, a decrease of 650 basis points. The Plant-Based Foods and Beverages segment accounted for USD 8.4 million of the decrease in gross profit, reflecting the impact of labor factors stemming from turnover and wage incentives to retain employees, inflationary increases in transportation and utility rates, higher depreciation and lower production volumes. Gross profit in the Fruit-Based Foods and Beverages segment decreased by USD 5.0 million due to decreased revenue and higher fruit inventory yield losses due to excess spoilage during handling.

Segment operating loss was USD 1.6 million, or 0.8 percent of revenues in the fourth quarter of 2021, compared to segment operating income of USD 6.8 million, or 3.3 percent of revenues in the fourth quarter of 2020. The decrease in segment operating income was due to lower gross profit, year-over-year unfavorable foreign exchange impact related to the remeasurement of our Mexican operations into U.S. dollars and lower gains on Mexican peso hedging activities, and incremental amortization expense related to Dream and WestSoy, partially offset by lower SG+A expense.

Adjusted Ebitda was USD 10.7 million or 5.2 percent of revenues in the fourth quarter of 2021, compared to USD 20.6 million or 10.0 percent of revenues in the fourth quarter of 2020.

Loss from continuing operations attributable to common shareholders for the fourth quarter of 2021 was USD 2.6 million, or USD 0.02 per diluted common share, compared to a loss of USD 37.2 million, or USD 0.41 per diluted common share during the fourth quarter of 2020.

Adjusted loss in the fourth quarter of 2021 was USD 1.0 million or USD 0.01 per common share, compared to an adjusted loss of USD 2.5 million or USD 0.03 per common share in the fourth quarter of 2020.

Balance Sheet and Cash Flow

As of January 01, 2022, SunOpta had total assets of USD 755.1 million and total debt of USD 224.6 million compared to total assets of USD 585.6 million and total debt of USD 69.7 million a year earlier reflecting investments to accelerate strong growth in Plant-Based Foods and Beverages and an increase in inventory as we rebuilt our fruit inventory from the Covid depleted levels of 2020. During the fourth quarter of 2021, cash provided by operating activities was USD 19.7 million from continuing operations compared to cash provided by operating activities of USD 19.8 million during the fourth quarter of 2020. Investing activities from continuing operations consumed USD 23.3 million of cash during the fourth quarter of 2021 versus USD 11.2 million in the prior year, primarily due to capacity expansion initiatives.

2022 Outlook

  • Consolidated revenue range: USD 890 million – USD 930 million
  • Consolidated adjusted Ebitda1 range: USD 67 million -USD 75 million
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