../Morning Post
Posted August 6, 2009
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Financials

SunOpta Announces Second Quarter 2009 Results

TORONTO - SunOpta Inc. ("SunOpta" or "the Company"), a leading global company focused on natural, organic and specialty foods and natural health products, announced financial results for the second quarter ended June 30, 2009. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.

The Company realized revenues of $257.7 million in the second quarter of 2009 versus second quarter 2008 revenues of $291.9 million, a year over year decrease of 11.7%. After adjusting for revenue declines in non-food operations plus the impact on revenues due to changes in foreign exchange rates and commodity prices, food revenues declined approximately 3% in the second quarter of 2009 versus the second quarter of 2008.

Earnings for the second quarter were $1.8 million or $0.03 per diluted common share versus earnings of $0.7 million or $0.01 per diluted common share in the second quarter of 2008. The results for the second quarter of 2009 include $3.6 million of additional pre-tax costs incurred during the quarter.

Adjusted earnings(1) for the second quarter of 2009 were $4.3 million or $0.07 per diluted common share versus adjusted earnings(1) in the second quarter of 2008 of $5.1 million or $0.08 per diluted common share. 2009 results reflect the impact of additional pre-tax costs of $3.6 million incurred during the quarter, many of which are expected to provide future benefits to the Company. During the second quarter the Company incurred approximately $1.5 million pre-tax in start-up costs related to the Modesto soymilk processing and packaging facility which commenced commercial production in June 2009. The Company also incurred pre-tax severance and related costs of approximately $0.7 million as it continues to position the business for improved future performance. In addition, pre-tax costs of approximately $0.7 million were incurred related to the investment in the revitalization and re-launch of a number of company owned natural health products brands. The Company also incurred legal and professional fees of approximately $0.7 million related to a legal action in the SunOpta BioProcess Group and costs related to ongoing matters related to the 2007 financial restatement. 2008 adjusted earnings1 reflect pre-tax costs of $6.4 million related to the Company's investigation and actions into the write down in the SunOpta Fruit Group Berry Operations and subsequent financial restatement, as well as severance.

For the six months ended June 30, 2009, the Company realized revenues of $489.8 million versus revenues of $522.4 million for the six months ended June 30, 2008. After adjusting for the April 2008 acquisition of The Organic Corporation, revenue declines in non-core food operations and the impact on revenues due to changes in foreign exchange rates and commodity prices, food revenues have declined approximately 1% versus the same period in 2008.

Earnings for the six months ended June 30, 2009 were $0.1 million or $0.00 per diluted common share versus earnings of $2.2 million or $0.03 per diluted common share in the comparable period in 2008. The 2009 results reflect the impact of $5.9 million of additional pre-tax costs incurred during the first six months.

Adjusted earnings(1) for the six months ended June 30, 2009 were $4.1 million or $0.06 per diluted common share versus adjusted earnings(1) in the comparable period in 2008 of $7.5 million or $0.12 per diluted common share. 2009 results reflect the impact of additional pre-tax costs of $5.9 million. During the six months ended June 30, 2009 the Company incurred approximately $2.5 million pre-tax in start-up costs related to the Modesto soymilk processing and packaging facility which commenced commercial production in June 2009. The Company also incurred pre-tax severance and related costs of approximately $1.5 million within a number of its operating segments as it continues to position the business for improved future performance. In addition, pre-tax costs of approximately $1.2 million were incurred related to the investment in the revitalization and re-launch of a number of company owned natural health products brands. The Company also incurred legal and professional fees of approximately $0.8 million related to a legal action in the SunOpta BioProcess Group and costs related to ongoing matters related to the 2007 financial restatement. 2008 adjusted earnings1 reflect pre-tax costs of $7.7 million related to the Company's investigation and actions into the write down in the SunOpta Fruit Group Berry Operations and subsequent financial restatement, including severance.

At June 30, 2009 the Company's balance sheet reflects a current working capital ratio of 1.57 to 1.00, long-term debt to equity ratio of 0.47 to 1.00 and total debt to equity ratio of 0.80 to 1.00. The Company has total assets of $594.0 million and a net book value of $3.56 per outstanding share.

During the three month period ended June 30, 2009, cash utilized to fund working capital decreased $15.4 million versus the second quarter of 2008, indicative of efforts to reduce working capital, especially inventories, across the Company. During the second quarter the Company generated cash from operating activities of $11.5 million, reflecting a significant improvement versus cash used in operational activities in the three month period ended June 30, 2008 of $6.3 million, an improvement of $17.8 million. During the second quarter of 2009, the Company repayed debt of $5.3 million as compared to borrowing $9.8 million in the second quarter of 2008 and has realized a reduction in net debt of $44.3 million versus June 30, 2008.

As previously announced, the Company reached an agreement with its lending syndicate to extend the term on its operating facilities, scheduled for renewal on June 30, 2009, through to December 31, 2009. As part of this agreement the Company negotiated a waiver of financial covenants for the first quarter of 2009 and amended certain covenants for the balance of the fiscal year. As at June 30, 2009, the Company is in compliance with these amended financial covenants. The Company has started the process to convert its current syndicated operating lines to facilities which it anticipates will provide more flexibility and better utilize the Company's strong asset base, and is currently on target to complete this process no later than the end of the current fiscal year.

Steve Bromley, President and Chief Executive Officer of SunOpta, commented: "We are pleased with the improvement in our earnings results for the second quarter combined with continued improvement in cash generated from operations. The Company's primary focus remains the improvement of operating margins and return on assets employed, to be realized through a combination of aggressive working capital management and continuous improvement initiatives. While we are seeing some improvement in market conditions, we remain focused on our cost control, efficiency, product development and asset utilization initiatives and believe that these will position the Company for improved returns as we move forward. We remain confident that our core food operations are well positioned as interest in health and wellness continues to gain attention around the globe."

As previously announced, as a result of uncertain and rapidly changing world-wide macroeconomic conditions, the Company will not be providing specific revenue and earnings guidance for 2009. The Company will continue to provide updates when appropriate related to material changes in business affairs resulting from changes in the business and related economic conditions.

Submit press release to pressrelease@exchangemagazine.com - Editor Jon Rohr - Content published on this site represents the opinion of the individual/organization and/or source provider of the Content. ExchangeMagazine.com is non-partisian, online journal. Privacy Policy. Copyright of Exchange produced editorial is the copyright of Exchange Business Communications Inc. 2009/*.*. Additional editorials, comments and releases are copyright of respective source(s) and/or institutions or organizations.

 


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