Plant-Based revenue growth of 16.0%, driving
3.6% total Revenue growth
Loss from continuing operations was $3.0
million vs. loss of $3.9 million in Q3 2020
Adjusted EBITDA increased 8.4% to $15.6
million
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL)
(TSX:SOY), a leading healthy food and beverage company focused on
plant-based foods and beverages and fruit-based foods and
beverages, today announced financial results for the third quarter
ended October 2, 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 $198.5 million for the third quarter of 2021
increased 3.6% reflecting 16.0% growth in plant-based foods and
beverages partially offset by a 9.7% decline in fruit-based foods
and beverages.
- Gross margin decreased 220 basis points to 11.8% from 14.0% in
the third quarter of 2020, reflecting temporary supply chain
challenges and incremental depreciation expense.
- Loss from continuing operations was $3.0 million compared to a
loss from continuing operations of $3.9 million in the third
quarter of 2020. The loss included $2.8 million of business
development, facility consolidation and project costs for capacity
expansion.
- Adjusted earnings¹ attributable to common shareholders was $1.1
million or $0.01 per diluted common share in the third quarter of
2021, compared to an adjusted loss of ($5.8) million or ($0.06) per
diluted common share in the third quarter of 2020.
- Adjusted EBITDA¹ of $15.6 million, or 7.9% of revenues for the
third quarter of 2021, was up 8.4% versus $14.4 million or 7.5% 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%, reflecting
our sustained competitive advantages and incredibly strong consumer
demand. On a two-year stack basis, plant-based revenue was up
23.9%. Moreover, our oat platform was a significant contributor to
growth in the quarter. We delivered Adjusted EBITDA growth of 8.4%,
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 $198.5 million for the third quarter of 2021 were up
3.6% compared to the third quarter of 2020 as 16.0% growth in
Plant-Based Foods and Beverages was partially offset by a 9.7%
decrease in Fruit-Based Foods and Beverages.
The Plant-Based Foods and Beverages segment generated revenues
of $114.9 million during the third quarter of 2021, an increase of
16.0% compared to $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 $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 $83.6 million during the third quarter of 2021, a decrease of
9.7% compared to $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 $23.4 million for the third quarter, a decrease
of $3.5 million compared to $26.8 million in the prior year period.
As a percentage of revenues, gross profit margin was 11.8% in the
third quarter of 2021 compared to 14.0% in the third quarter of
2020, a decrease of 220 basis points. The Plant-Based Foods and
Beverages segment accounted for $1.0 million of the decrease in
gross profit, reflecting lower plant utilization, largely driven by
labor 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 $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 income¹ was $3.9 million, or 2.0% of revenues
in the third quarter of 2021, compared to segment operating income
of $3.1 million, or 1.6% 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 EBITDA¹ was $15.6 million or 7.9% of revenues in the
third quarter of 2021, compared to $14.4 million or 7.5% of
revenues in the third quarter of 2020.
Loss from continuing operations attributable to common
shareholders for the third quarter of 2021 was $3.8 million, or
$0.04 per diluted common share, compared to a loss of $6.7 million,
or $0.07 per diluted common share during the third quarter of
2020.
Adjusted earnings¹ in the third quarter of 2021 was $1.1 million
or $0.01 per common share, compared to an adjusted loss of $5.8
million or ($0.06) per common share in the third quarter of
2020.
Please refer to the discussion and table below under “Non-GAAP
Measures”.
Balance Sheet and Cash Flow
As of October 2, 2021, SunOpta had total assets of $749.1
million and total debt of $220.3 million compared to total assets
of $921.4 million and total debt of $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 $5.1 million from continuing operations
compared to cash provided by operating activities of $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 $17.4 million of
cash during the third quarter of 2021 versus $11.3 million in the
prior year, primarily due to capacity expansion initiatives.
Conference Call
SunOpta plans to host a conference call at 9:00 A.M. Eastern
time on Wednesday, November 10, 2021, to discuss the third quarter
financial results. After opening remarks, there will be a question
and answer period. Investors interested in listening to the live
webcast can access a link on SunOpta's website at www.sunopta.com
under the "Investor Relations" section or directly here. A replay
of the webcast will be archived and can be accessed for
approximately 90 days on the Company's website. Investors
interested in listening to the live call over the telephone can
join by calling US: 833-513-0545, or International: 1-778-560-2569
conference ID: 2496984.
¹ See discussion of non-GAAP measures
About SunOpta Inc.
SunOpta Inc. is a leading company specializing in the sourcing,
processing and production of organic, natural and non-GMO plant-
and fruit-based food and beverage products.
Forward-Looking Statements
Certain statements included in this press release may be
considered "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities legislation, which are based on
information available to us on the date of this release. These
forward-looking statements include, but are not limited to, our
belief that investment in plant-based foods and beverages will
continue to be a significant driver of revenue and margin growth,
and our ability to drive further year-over-year adjusted EBITDA
improvement. Generally, forward-looking statements do not relate
strictly to historical or current facts and are typically
accompanied by words such as “continue”, “expect”, “believe”,
“anticipate”, “estimates”, “can”, “will”, “target”, "should",
"would", "plans", "becoming", "intend", "confident", "may",
"project", "potential", "intention", "might", "predict", “budget”,
“forecast” or other similar terms and phrases intended to identify
these forward-looking statements. Forward-looking statements are
based on information available to the Company on the date of this
release and are based on estimates and assumptions made by the
Company in light of its experience and its perception of historical
trends, current conditions and expected future developments
including, but not limited to, the Company’s actual financial
results; uninterrupted operations and service levels to our
customers during the COVID-19 pandemic; current customer demand for
the Company’s products and the additional anticipated demand due to
the COVID-19 pandemic; general economic conditions; continued
consumer interest in health and wellness; the Company’s ability to
maintain product pricing levels; planned facility and operational
expansions, closures and divestitures; cost rationalization and
product development initiatives; alternative potential uses for the
Company’s capital resources; portfolio optimization and
productivity efforts; the sustainability of the Company’s sales
pipeline; the Company’s expectations regarding commodity pricing,
margins and hedging results; improved availability and field prices
for fruit; procurement and logistics savings; freight lane cost
reductions; yield and throughput enhancements; and labor cost
reductions. Whether actual timing and results will agree with
expectations and predictions of the Company is subject to many
risks and uncertainties including, but not limited to, potential
loss of suppliers and customers as well as supply chain, logistics
and other disruptions resulting from or related to the COVID-19
pandemic; unexpected issues or delays with the Company’s structural
improvements and automation investments; failure or inability to
implement portfolio changes, process improvements, go-to-market
improvements and process sustainability strategies in a timely
manner; changes in the level of capital investment; local and
global political and economic conditions; consumer spending
patterns and changes in market trends; decreases in customer
demand; delayed or unsuccessful product development efforts;
potential product recalls; working capital management; availability
and pricing of raw materials and supplies; potential covenant
breaches under the Company’s credit facilities; and other risks
described from time to time under "Risk Factors" in the Company's
Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q
(available at www.sec.gov). Consequently, all forward-looking
statements made herein are qualified by these cautionary statements
and there can be no assurance that the actual results or
developments anticipated by the Company will be realized. The
Company undertakes no obligation to publicly correct or update the
forward-looking statements in this document, in other documents, or
on its website to reflect future events or circumstances, except as
may be required under applicable securities laws.
SunOpta Inc.
Consolidated Statements of Operations
For the quarters and three quarters ended
October 2, 2021 and September 26, 2020
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars, except per share amounts)
Quarter ended
Three quarters ended
October 2, 2021
September 26, 2020
October 2, 2021
September 26, 2020
$
$
$
$
Revenues
198,479
191,659
608,392
583,657
Cost of goods sold
175,123
164,821
528,711
506,387
Gross profit
23,356
26,838
79,681
77,270
Selling, general and administrative
expenses
16,487
22,060
60,081
63,873
Intangible asset amortization
2,612
2,209
7,338
6,752
Other expense, net
1,172
1,069
7,448
789
Foreign exchange loss (gain)
336
(543
)
533
1,150
Earnings from continuing operations
before the following
2,749
2,043
4,281
4,706
Interest expense, net
2,854
7,359
6,145
22,437
Loss from continuing operations before
income taxes
(105
)
(5,316
)
(1,864
)
(17,731
)
Income tax expense (benefit)
2,929
(1,441
)
416
(4,759
)
Loss from continuing operations
(3,034
)
(3,875
)
(2,280
)
(12,972
)
Earnings from discontinued operations
-
3,964
-
17,429
Net earnings (loss)
(3,034
)
89
(2,280
)
4,457
Dividends and accretion on preferred
stock
(748
)
(2,844
)
(3,445
)
(7,473
)
Loss attributable to common
shareholders
(3,782
)
(2,755
)
(5,725
)
(3,016
)
Basic and diluted earnings (loss) per
share
From continuing operations
(0.04
)
(0.07
)
(0.06
)
(0.23
)
From discontinued operations
-
0.04
-
0.20
Basic and diluted loss per share
(0.04
)
(0.03
)
(0.06
)
(0.03
)
Weighted-average common shares
outstanding (000s)
Basic
107,255
89,635
103,017
88,962
Diluted
107,255
89,635
103,017
88,962
SunOpta Inc.
Consolidated Balance Sheets
As at October 2, 2021 and January 2,
2021
(Unaudited)
(All dollar amounts expressed in thousands
of U.S. dollars)
October 2, 2021
January 2, 2021
$
$
ASSETS
Current assets
Cash and cash equivalents
284
251
Accounts receivable
86,774
72,724
Inventories
230,891
147,748
Prepaid expenses and other current
assets
16,538
21,665
Income taxes recoverable
7,327
6,935
Total current assets
341,814
249,323
Property, plant and equipment,
net
197,037
158,048
Operating lease right-of-use
assets
48,998
35,172
Goodwill
3,998
3,998
Intangible assets, net
151,052
133,317
Deferred income taxes
597
-
Other assets
5,638
5,757
Total assets
749,134
585,615
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities
114,544
118,592
Income taxes payable
5
1,431
Current portion of long-term debt
7,734
3,478
Current portion of operating lease
liabilities
12,959
12,750
Current portion of long-term
liabilities
-
200
Total current liabilities
135,242
136,451
Long-term debt
212,588
66,245
Operating lease liabilities
38,090
24,582
Long-term liabilities
1,121
-
Deferred income taxes
25,826
25,408
Total liabilities
412,867
252,686
Series A Preferred Stock
-
87,305
Series B-1 Preferred Stock
28,001
27,595
EQUITY
SunOpta Inc. shareholders’
equity
Common shares
436,219
326,545
Additional paid-in capital
24,150
37,862
Accumulated deficit
(153,466
)
(147,741
)
Accumulated other comprehensive income
1,363
1,363
Total equity
308,266
218,029
Total equity and liabilities
749,134
585,615
SunOpta Inc.
Consolidated Statements of Cash Flows
For the quarters and three quarters ended
October 2, 2021 and September 26, 2020
(Unaudited)
(Expressed in thousands of U.S.
dollars)
Quarter ended
Three quarters ended
October 2, 2021
September 26, 2020
October 2, 2021
September 26, 2020
$
$
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net earnings (loss)
(3,034
)
89
(2,280
)
4,457
Earnings from discontinued operations
-
3,964
-
17,429
Loss from continuing operations
(3,034
)
(3,875
)
(2,280
)
(12,972
)
Items not affecting cash:
Depreciation and amortization
8,837
7,513
25,790
22,893
Amortization of debt issuance costs
359
1,019
993
3,023
Deferred income taxes
3,315
2,311
(179
)
5,510
Stock-based compensation
1,250
3,435
9,593
7,425
Impairment of long-lived assets
-
-
2,962
-
Other
(168
)
238
(504
)
211
Changes in operating assets and
liabilities
(5,494
)
(1,976
)
(77,472
)
6,734
Net cash provided by (used in) operating
activities of continuing operations
5,065
8,665
(41,097
)
32,824
Net cash provided by operating activities
of discontinued operations
-
11,496
-
24,751
Net cash provided by (used in) operating
activities
5,065
20,161
(41,097
)
57,575
Investing activities
Additions to property, plant and
equipment
(18,386
)
(11,300
)
(34,989
)
(26,227
)
Additions to intangible assets
-
-
(25,073
)
-
Proceeds from sale of assets
950
-
2,300
-
Other
-
-
-
41
Net cash used in investing activities of
continuing operations
(17,436
)
(11,300
)
(57,762
)
(26,186
)
Net cash used in investing activities of
discontinued operations
-
(475
)
(13,380
)
(1,607
)
Net cash used in investing activities
(17,436
)
(11,775
)
(71,142
)
(27,793
)
Financing activities
Increase (decrease) under revolving credit
facilities
11,348
3,410
123,177
(26,472
)
Borrowings of long-term debt
4,739
-
9,380
-
Repayment of long-term debt
(1,849
)
(624
)
(11,789
)
(1,702
)
Payment of debt issuance costs
(181
)
(3
)
(2,552
)
(2,491
)
Proceeds from the exercise of stock
options and employee share purchases
304
864
7,494
1,435
Payment of withholding taxes on
stock-based awards
(1,576
)
(1,225
)
(8,313
)
(2,376
)
Payment of cash dividends on preferred
stock
(609
)
-
(4,638
)
(1,700
)
Payment of share issuance costs
-
-
(287
)
-
Proceeds from issuance of preferred stock,
net of issuance costs
-
-
-
26,804
Other
-
-
-
(4
)
Net cash provided by (used in) financing
activities of continuing operations
12,176
2,422
112,472
(6,506
)
Net cash used in financing activities of
discontinued operations
-
(11,510
)
(200
)
(23,847
)
Net cash provided by (used in) financing
activities
12,176
(9,088
)
112,272
(30,353
)
Increase (decrease) in cash and cash
equivalents in the period
(195
)
(702
)
33
(571
)
Cash and cash equivalents of discontinued
operations:
Balance at beginning of period
-
1,152
-
1,370
Foreign exchange gain on cash and cash
equivalents
-
15
-
11
Less: balance at end of period
-
(678
)
-
(678
)
Cash and cash equivalent, beginning of the
period
479
473
251
128
Cash and cash equivalents, end of the
period
284
260
284
260
SunOpta Inc.
Segmented Information
For the quarters and three quarters ended
October 2, 2021 and September 26, 2020
Unaudited
(Expressed in thousands of U.S.
dollars)
Quarter ended
Three quarters ended
October 2, 2021
September 26, 2020
October 2, 2021
September 26, 2020
$
$
$
$
Segment revenues from external
customers:
Plant-Based Foods and Beverages
114,870
99,038
345,680
296,985
Fruit-Based Foods and Beverages
83,609
92,621
262,712
286,672
Total segment revenues from external
customers
198,479
191,659
608,392
583,657
Segment gross profit:
Plant-Based Foods and Beverages
18,697
19,715
61,751
57,517
Fruit-Based Foods and Beverages
4,659
7,123
17,930
19,753
Total segment gross profit
23,356
26,838
79,681
77,270
Segment operating income
(loss):
Plant-Based Foods and Beverages
8,056
13,119
30,014
37,456
Fruit-Based Foods and Beverages
(3,517
)
(1,788
)
(6,858
)
(8,506
)
Corporate Services
(618
)
(8,219
)
(11,427
)
(23,455
)
Total segment operating income
3,921
3,112
11,729
5,495
Segment gross profit
percentage:
Plant-Based Foods and Beverages
16.3
%
19.9
%
17.9
%
19.4
%
Fruit-Based Foods and Beverages
5.6
%
7.7
%
6.8
%
6.9
%
Total segment gross profit percentage
11.8
%
14.0
%
13.1
%
13.2
%
Segment operating income (loss)
percentage:
Plant-Based Foods and Beverages
7.0
%
13.2
%
8.7
%
12.6
%
Fruit-Based Foods and Beverages
-4.2
%
-1.9
%
-2.6
%
-3.0
%
Total segment operating income
percentage
2.0
%
1.6
%
1.9
%
0.9
%
Non-GAAP Measures
In addition to reporting financial results in accordance with
U.S. GAAP, the Company provides additional information about its
operating results regarding segment operating income, adjusted
earnings and adjusted earnings before interest, taxes, depreciation
and amortization (“Adjusted EBITDA”), which are not measures in
accordance with U.S. GAAP. The Company believes that segment
operating income, adjusted earnings and adjusted EBITDA assist
investors in comparing performance across reporting periods on a
consistent basis by excluding items that are not indicative of its
operating performance. The non-GAAP measures of segment operating
income, adjusted earnings and adjusted EBITDA should not be
considered in isolation or as a substitute for performance measures
calculated in accordance with U.S. GAAP.
In order to evaluate its results of operations, the Company uses
certain other non-GAAP measures that it believes enhance an
investor’s ability to derive meaningful period-over-period
comparisons and trends from the results of operations. In
particular, the Company evaluates its revenues on a basis that
excludes the effects of fluctuations in commodity pricing and the
impacts of acquisitions and divestitures. In addition, the Company
excludes specific items from its reported results that due to their
nature or size, it does not expect to occur as part of its normal
business on a regular basis. These items are identified in the
tables below. These non-GAAP measures are presented solely to allow
investors to more fully assess the Company’s results of operations
and should not be considered in isolation of, or as substitutes for
an analysis of the Company’s results as reported under U.S.
GAAP.
Adjusted Earnings/Loss
When assessing its financial performance, the Company uses an
internal measure that excludes charges and gains that it believes
are not reflective of normal operations. This information is
provided to allow investors to make meaningful comparisons of the
Company’s operating performance between periods and to view the
Company’s business from the same perspective as the Company’s
management. Adjusted earnings/loss and adjusted earnings/loss per
diluted share should not be considered in isolation or as a
substitute for performance measures calculated in accordance with
U.S. GAAP.
The following is a tabular presentation of adjusted
earnings/loss and adjusted earnings/loss per diluted share,
including a reconciliation from earnings/loss from continuing
operations, which the Company believes to be the most directly
comparable U.S. GAAP financial measure.
October 2, 2021
September 26, 2020
Per Share
Per Share
For the quarter ended
$
$
$
$
Loss from continuing operations
(3,034
)
(3,875
)
Dividends and accretion on preferred
stock
(748
)
(2,844
)
Loss from continuing operations
attributable to common shareholders
(3,782
)
(0.04
)
(6,719
)
(0.07
)
Adjusted for:
Business development costs(a)
1,782
-
Workforce reduction charges(b)
499
-
Costs related to exit from fruit
ingredient processing facility(c)
479
-
Legal settlements(d)
-
721
Plant expansion costs(e)
-
245
Costs related to Value Creation
Plan(f)
-
174
Other(g)
40
294
Net income tax effect(h)
2,121
(495
)
Adjusted earnings (loss)
1,139
0.01
(5,780
)
(0.06
)
(a)
Represents third-party costs associated
with business development activities, including costs related to
the evaluation, execution, and integration of external acquisitions
and internal expansion projects, or completion of divestitures. For
the third quarter of 2021, these costs reflected the transition and
integration of the acquired Dream and WestSoy brands and project
development activities related to our new plant-based beverage
facility under construction in Texas, which were recorded in
SG&A expenses ($1.6 million), as well as the assessment of
post-closing adjustments related to the divestiture of Tradin
Organic, which were recorded in other expense ($0.2 million).
(b)
For the third quarter of 2021, represents
severance and related benefit charges recorded in other expense,
which were related to workforce reduction actions in our frozen
fruit operations to reduce overhead costs.
(c)
For the third quarter of 2021, reflects
inventory and equipment relocation costs related to the exit from
our fruit ingredient processing facility, which were recorded in
other expense.
(d)
For the third quarter of 2020, reflects a
loss of $2.4 million from the settlement of a customer claim
related to the recall of certain sunflower products in 2016, net of
a $1.7 million gain from the settlement of an unrelated legal
matter, which were recorded in other expense/income.
(e)
For the third quarter of 2020, reflects
start-up costs related to the expansion of our plant-based
extraction capabilities, which were recorded in cost of goods
sold.
(f)
For the third quarter of 2020, reflects
employee retention costs of $0.1 million recorded in SG&A
expenses, and employee termination costs of $0.1 million recorded
in other expense.
(g)
Other includes losses on the disposal of
assets, which were recorded in other expense.
(h)
Reflects the tax effect of the preceding
adjustments to earnings calculated based on our estimated annual
effective tax rate.
October 2, 2021
September 26, 2020
Per Share
Per Share
For the three quarters ended
$
$
$
$
Loss from continuing operations
(2,280
)
(12,972
)
Dividends and accretion on preferred
stock
(3,445
)
(7,473
)
Loss from continuing operations
attributable to common shareholders
(5,725
)
(0.06
)
(20,445
)
(0.23
)
Adjusted for:
Costs related to exit from fruit
ingredient processing facility(a)
4,602
-
Business development costs(b)
3,568
-
Costs related to Value Creation
Plan(c)
1,432
1,349
Workforce reduction charges(d)
499
-
Legal settlements(e)
163
721
Plant expansion costs(f)
-
337
Other(g)
124
(178
)
Net income tax effect(h)
(2,141
)
(863
)
Adjusted earnings (loss)
2,522
0.02
(19,079
)
(0.21
)
(a)
For the first three quarters of 2021,
reflects closure costs related to the exit from our fruit
ingredient processing facility, including asset impairment charges
of $3.0 million, employee termination costs of $1.2 million, and
inventory and equipment relocation costs of $0.5 million, which
were recorded in the other expense.
(b)
Represents third-party costs associated
with business development activities, including costs related to
the evaluation, execution, and integration of external acquisitions
and internal expansion projects, or completion of divestitures. For
the first three quarters of 2021, these costs reflected the
transition and integration of the acquired Dream and WestSoy brands
and project development activities related to our new plant-based
beverage facility under construction in Texas, which were recorded
in SG&A expenses ($2.9 million), as well as the assessment of
post-closing adjustments related to the divestiture of Tradin
Organic, which were recorded in other expense ($0.7 million).
(c)
For the first three quarters of 2021,
represents costs to complete the exit from our Santa Maria,
California, frozen fruit processing facility, which were recorded
in other expense. For the first three quarters of 2020, reflects
professional fees of $0.5 million and employee retention costs of
$0.6 million recorded in SG&A expenses; and employee
termination costs of $1.1 million mainly related to the
consolidation of our corporate office functions, partially offset
by a $0.9 million reversal of previously recognized stock-based
compensation related to forfeited awards previously granted to
terminated employees recorded in other income.
(d)
For the first three quarters of 2021,
represents severance and related benefit charges recorded in other
expense, which were related to workforce reduction actions in our
frozen fruit operations to reduce overhead costs.
(e)
For the first three quarters of 2021,
reflects a $0.5 million loss from the settlement of
employment-related legal matter, partially offset by a gain related
to a project cancellation, which were recorded in other
expense/income. For the first three quarters of 2020, reflects a
loss of $2.4 million from the settlement of a customer claim
related to the recall of certain sunflower products in 2016, net of
a $1.7 million gain from the settlement of an unrelated legal
matter, which were recorded in other expense/income.
(f)
Reflects costs related to the expansion of
our plant-based extraction capabilities, which were recorded in
cost of goods sold.
(g)
For the first three quarters of 2021,
other includes losses on the disposal of assets, which were
recorded in other expense. For the first three quarters of 2020,
other includes the reversal of previously accrued costs related to
the withdrawal of certain consumer-packaged products in 2016,
partially offset by losses on disposal of assets, which were
recorded in other income/expense.
(h)
Reflects the tax effect of the preceding
adjustments to earnings calculated based on our estimated annual
effective tax rate.
Segment Operating Income/Loss and Adjusted
EBITDA
The Company defines segment operating income/loss as net
earnings/loss before income taxes, interest expense and other
income/expense items, and adjusted EBITDA as segment operating
income/loss plus depreciation, amortization, non-cash stock-based
compensation, and other unusual items that affect the comparability
of operating performance as identified above in the determination
of adjusted earnings/loss. The following is a tabular presentation
of segment operating income/loss and adjusted EBITDA, including a
reconciliation to earnings/loss from continuing operations, which
the Company believes to be the most directly comparable U.S. GAAP
financial measure.
October 2, 2021
September 26, 2020
For the quarter ended
$
$
Loss from continuing operations
(3,034
)
(3,875
)
Income tax expense (benefit)
2,929
(1,441
)
Interest expense, net
2,854
7,359
Other expense, net
1,172
1,069
Total segment operating income
3,921
3,112
Depreciation and amortization
8,837
7,513
Stock-based compensation
1,250
3,435
Business development costs(a)
1,628
-
Plant expansion costs(b)
-
245
Costs related to Value Creation
Plan(c)
-
120
Adjusted EBITDA
15,636
14,425
(a)
For the third quarter of 2021, third-party
business development costs reflected the transition and integration
of the acquired Dream and WestSoy brands and project development
activities related to our new plant-based beverage facility under
construction in Texas, which were recorded in SG&A
expenses.
(b)
For the third quarter of 2020, reflects
costs related to the expansion of our plant-based extraction
capabilities, which were recorded in cost of goods sold.
(c)
For the third quarter of 2020, reflects
employee retention costs recorded in SG&A expenses.
October 2, 2021
September 26, 2020
For the three quarters ended
$
$
Loss from continuing operations
(2,280
)
(12,972
)
Income tax expense (benefit)
416
(4,759
)
Interest expense, net
6,145
22,437
Other expense, net
7,448
789
Total segment operating income
11,729
5,495
Depreciation and amortization
25,790
22,893
Stock-based compensation(a)
9,593
8,320
Business development costs(b)
2,940
-
Costs related to Value Creation
Plan(c)
-
1,103
Plant expansion costs(d)
-
337
Adjusted EBITDA
50,052
38,148
(a)
For the first three quarters of 2020,
stock-based compensation of $8.3 million was recorded in SG&A
expenses and the reversal of $0.9 million of previously recognized
stock-based compensation related to forfeited awards previously
granted to terminated employees was recognized in other income.
(b)
For the first three quarters of 2021,
third-party business development costs reflected the transition and
integration of the acquired Dream and WestSoy brands and project
development activities related to our new plant-based beverage
facility under construction in Texas, which were recorded in
SG&A expenses.
(c)
Reflects professional fees of $0.5 million
and employee retention costs of $0.6 million recorded in SG&A
expenses.
(d)
Reflects costs related to the expansion of
our plant-based extraction capabilities, which were recorded in
cost of goods sold.
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version on businesswire.com: https://www.businesswire.com/news/home/20211110005502/en/
Reed Anderson ICR 646-277-1260 reed.anderson@icrinc.com
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