SunOpta Announces Third Quarter Fiscal 2024 Financial Results
Revenue from continuing operations increased 16% to $176 million, driven by volume growth
Loss from continuing operations of $5.5 million compared to a loss of $5.7 million in the prior year
Adjusted EBITDA from continuing operations increased 13% to $21.5 million
Reaffirming 2024 outlook
MINNEAPOLIS--(BUSINESS WIRE)--November 05, 2024--
SunOpta Inc. ("SunOpta" or the "Company") (Nasdaq:STKL) (TSX:SOY), an innovative and sustainable manufacturer fueling the future of food, today announced financial results for the third quarter ended September 28, 2024.
All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
Third Quarter 2024 highlights:
-- Revenues increased 15.5% to $176.2 million compared to $152.5 million in
the year earlier period, driven by 20.6% volume growth partially offset
by a 2.8% price reduction for pass-through commodity pricing
-- Gross profit increased 16.4% to $23.6 million compared to $20.3 million
in the prior year period
-- Loss from continuing operations was $5.5 million compared to a loss of
$5.7 million in the prior year period
-- Adjusted earnings(1) from continuing operations was $2.5 million compared
to $0.5 million in the prior year period
-- Adjusted EBITDA(1) from continuing operations increased 12.6% to $21.5
million, compared to $19.1 million in the prior year period.
"The third quarter unfolded as expected," said Brian Kocher, Chief Executive Officer of SunOpta. "Volume again drove our revenue growth reflecting the strength of our competitive position. Our growth remains broad based across our customers, channels and product portfolio and we continue to have a substantial pipeline of new business opportunities. We continue to make short-term investments in our supply chain to support our growth and implement processes and controls. Those productivity initiatives are gaining traction and creating a long runway for significant future incremental capacity within our existing asset base which will drive sustainable gross margin expansion. We remain confident in the direction of our business and steadfast in our focus on driving increasing returns on our invested capital and generating long-term value for shareholders."
Third Quarter 2024 Results
Revenues increased 15.5% to $176.2 million for the third quarter of 2024. The increase was driven by favorable volume/mix of 20.6%, partially offset by a price reduction of 2.8% due to the pass through of commodity costs for certain raw materials. Our exit from the smoothie bowls category in March 2024 resulted in a 2.3% reduction in revenue. Volume/mix reflected volume growth for fruit snacks, broths, plant-based beverages, and protein shakes.
Gross profit increased by $3.3 million, or 16.4%, to $23.6 million for the third quarter, compared to $20.3 million in the prior year period. As a percentage of revenues, gross profit margin was 13.4% compared to 13.3% in the third quarter of 2023. Adjusted gross margin(1) was 17.0% compared to 16.4% in the third quarter of 2023. The 60-basis point increase in adjusted gross margin reflected higher sales and production volumes partially offset by incremental depreciation of new production equipment for capital expansion projects, together with manufacturing inefficiencies.
Operating income was $1.5 million, up slightly compared to the third quarter of 2023, reflecting higher gross profit together with lower business development and employee severance costs following the divestiture of Frozen Fruit and related consolidation of our continuing operations in 2023, largely offset by higher variable compensation accruals and increased professional fees related to operational productivity initiatives.
Loss from continuing operations was $5.5 million for the third quarter of 2024 compared with a loss of $5.7 million in the prior year period. Diluted loss per share from continuing operations attributable to common shareholders (after dividends and accretion on preferred stock) was $0.05 for the third quarter compared with a diluted loss per share of $0.05 in the prior year period.
Adjusted earnings(1) from continuing operations was $2.5 million or $0.02 per diluted share in the third quarter of 2024 compared to adjusted earnings from continuing operations of $0.5 million or $0.00 per diluted share in the third quarter of 2023.
Adjusted EBITDA(1) from continuing operations was $21.5 million in the third quarter of 2024 compared to $19.1 million in the third quarter of 2023.
Please refer to the discussion and table below under "Non-GAAP Measures".
Balance Sheet and Cash Flow
As of September 28, 2024, SunOpta had total assets of $699.3 million and total debt of $289.9 million compared to total assets of $669.4 million and total debt of $263.2 million at year end fiscal 2023. During the three quarters ended September 28, 2024, cash provided in operating activities of continuing operations was $19.2 million compared to $8.4 million of cash used in operating activities of continuing operations during the same period in 2023. The increase in cash provided from operating activities mainly reflected improved working capital efficiency, together with improved profitability, driven by revenue volume growth and lower start-up costs related to our Midlothian, Texas, facility. Investing activities of continuing operations consumed $16.5 million of cash during the first three quarters of 2024 down from $37.3 million for the same period in the prior year, reflecting the completion of certain major capital projects including the construction of our new plant-based beverage facility in Midlothian, Texas.
2024 Outlook(2)
For fiscal 2024, the Company is reaffirming its outlook and continues to expect strong growth in revenue and adjusted EBITDA:
($ millions) Outlook Growth
--------- ----------
Revenue $710 - 730 13% -- 16%
Adj. EBITDA $ 88 -- 92 12% - 17%
Conference Call
SunOpta plans to host a conference call at 5:30 P.M. Eastern time on Tuesday, November 5, 2024, to discuss the third quarter financial results. After prepared 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. A replay of the webcast will be archived and can be accessed for approximately 90 days on the Company's website.
This call may be accessed with the toll free dial-in number (888) 440-4182 or international dial-in number (646) 960-0653 using Conference ID: 8338433.
(1) See discussion of non-GAAP measures (2) The Company has included certain forward-looking statements about the future financial performance that include non-GAAP financial measures, including Adjusted EBITDA. These non--GAAP financial measures are derived by excluding certain amounts, expenses or income, from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts that are excluded from these non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period. We are unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because management cannot reliably predict all the necessary components of such GAAP measures. Historically, management has excluded the following items from certain of these non-GAAP measures, and such items may also be excluded in future periods and could be significant amounts. Expenses related to the acquisition or divestiture of a business, including business development costs, impairment of assets, integration costs, severance, retention costs and transaction costs; Start-up costs of new facilities and equipment; Charges associated with restructuring and cost saving initiatives, including but not limited to asset impairments, accelerated depreciation, severance costs and lease abandonment charges; Asset impairment charges and facility closure costs; Legal settlements or awards; and The tax effect of the above items.
About SunOpta Inc.
SunOpta (Nasdaq:STKL) (TSX:SOY) is an innovative and sustainable manufacturer fueling the future of food. With roots tracing back over 50 years, SunOpta drives growth for today's leading brands by serving as a trusted innovation partner and value-added manufacturer, crafting organic, plant-based beverages, fruit snacks, nutritional beverages, broths and tea products sold through retail, club, foodservice and e-commerce channels. Alongside the company's commitment to top brands, retailers and coffee shops, SunOpta also proudly produces its own brands, including Sown$(R)$ , Dream(R) , and West Life$(TM)$ . For more information, visit www.sunopta.com and LinkedIn.
Forward-Looking Statements
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