MINNEAPOLIS — It’s the dawn of “a new SunOpta,” Joseph D. Ennen, chief executive officer of SunOpta Inc., told analysts during the company’s third-quarter conference call to discuss financial results.
Against the backdrop of a sizeable loss primarily related to the divestiture of its frozen fruit operations at the end of the third quarter, Mr. Ennen said the company now is positioned to optimize its product portfolio for growth and profitability.
“Let me say welcome to the new SunOpta,” Mr. Ennen said during a Nov. 8 conference call with analysts. “With the divestiture of the frozen fruit business, we have completed the heavy lifting around our portfolio transformation that began in 2020 with the divestiture of our global ingredients business, the sunflower business in 2022; and finally, frozen fruit last month. Over the last several years, we’ve been very focused on aggressively investing in our plant-based and snacks businesses, and the results of these investments are now more obvious.
“The new SunOpta is a focused, high-growth, competitively advantaged business operating in very attractive categories.”
But before turning the page, SunOpta dealt with a difficult third quarter. The company sustained a loss of $145.82 million in the third quarter ended Sept. 30, which compared with a loss of $11.93 million in the same period a year ago. The most recent quarter included more than $140.14 million in losses from discontinued operations.
Adjusted earnings in the quarter totaled $452,000, which compared with $2.43 million a year ago. Adjusted EBITDA from continuing operations was $19.09 million, up from $17.66 million in the same period a year ago.
Revenues increased 5.9% to $152.54 million from $144.02 million.
Highlights during the third quarter included growth in oat milk, creamers, teas and protein shakes, Mr. Ennen said. In addition, the company’s fruit snacks business continued to deliver “very strong growth” with revenues up 16% to $24 million, driven by increases in volume and led by private label growth, he said.
The performance of the “new SunOpta,” though, has been far more promising, Mr. Ennen said.
“On a pro forma basis, factoring in our Q4 outlook, in the last 36 months, the new SunOpta has grown revenue approximately 40% and EBITDA has grown 45%,” he said. “Over this time, our EBITDA margins have consistently been in the 10% to 12% range. We have achieved this impressive growth in revenue and EBITDA in a highly efficient manner with SG&A only up 5% in those 36 months, and SG&A has declined as a percentage of revenue every year for the last three years.
“Additionally, going forward, the divestiture has reduced the working capital needs of the business by over $100 million. The capital investments we made in 2021 and 2022 have been fueling this revenue and EBITDA growth, and we are excited about the future growth prospects for the new SunOpta as we further optimize the investments we have made.”
Looking ahead, Mr. Ennen identified several strategic priorities for SunOpta, including operational, capital allocation and growth.
“We are focused on sweating our assets to gain maximum value from the investments we have made to fuel growth organically,” he said. “We believe there is significant opportunity to do this over the next several years. …We have come out of a large investment cycle, and we are focused on demonstrating and creating strong returns for shareholders. … We are a growth company, and our focus is on share gains with existing customers, adding new customers and TAM expansion.”
