SunOpta Inc. (NASDAQ:STKL; TSX:SOY) has announced results for the three months ended March 31, 2006.
The Company achieved record revenues for the three months ended March 31, 2006, realizing its 34th consecutive quarter of increased revenue growth versus the same quarter in the previous year. All amounts are expressed in U.S. dollars. Revenues in the quarter increased by 54.6% to $133,312,000 as compared to $86,223,000 in the first quarter of the prior year, led by a 52.5% increase in revenues within the Company’s vertically integrated natural and organic food operations. The Company’s revenue growth in the quarter reflects an internal growth rate of 18.1%, and growth via acquisitions of 36.5%.
Operating earnings for the quarter increased by 83.9% to $6,031,000 or 4.5% of net revenue as compared to $3,280,000 or 3.8% of net revenue in the previous year, driven by a 104% increase in operating earnings within the SunOpta Food Group. Net earnings in the quarter were $3,012,000 or $0.053 per diluted common share as compared to $6,605,000 or $0.116 per diluted common share in the prior year. Excluding a net unusual gain realized in the first quarter of 2005 related to the initial public offering of Opta Minerals Inc., net earnings per diluted common share increased 47.2% from $0.036 per diluted common share in the prior year.
Jeremy Kendall, Chairman and CEO commented, “I am extremely pleased with our continued growth and improvement in operating earnings in the quarter. This improvement reflects the results of numerous initiatives which have been implemented, all focused on positioning SunOpta for sustainable growth and improved profitability. The Company is a market leader in the key growth areas of organic, fiber enriched foods, whole grains, fruits and vegetables and private label products, and we will continue to position the Company for future growth in the healthy foods market segments.”
Gross margin as a percentage of revenue increased to 17.7% in the quarter versus 15.6% in the fourth quarter of 2005. This increase of 2.1% reflects improved product mix and operating efficiencies combined with the impact of ongoing cost reduction initiatives. Selling, general and administrative costs as a percentage of revenue decreased to 10.5% of revenues versus 10.9% in the fourth quarter of 2005 and 11.4% in the first quarter of 2005. This reduction reflects the benefits from leveraging costs as the Company grows combined with continued cost reduction efforts.
All operating segments within the SunOpta Food Group reported increased revenues and operating earnings versus 2005. Revenues increased 52.5% while operating earnings increased 104.3%. The strong results were driven by record aseptic soymilk revenues, the strong rebound in sales of oat fiber, growth in private label fruit based products and continued momentum and cost improvement in the Canadian distribution operations.
Opta Minerals realized strong growth in the quarter as a result of internal growth of 14.6% combined with the February acquisition of Magnesium Technologies Corporation. Internal growth was driven by strong performance of abrasive operations including facilities that were commissioned during 2005. Opta Minerals continues to pursue strategic acquisitions to complement their existing product portfolio.
The SunOpta Bioprocess Group is in the final stages of completion on its EUR 4.7 million contract with Abener Energia S.A. of Seville Spain. Delivery of equipment is expected to commence during the second quarter. Interest in the Group’s technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol remains high and the Group is actively pursuing a number of exciting commercial ventures.
The Company continues to be well positioned for future growth with net working capital of $75,368,000 and total assets of $334,969,000. The long term debt to equity ratio at March 31, 2006 was 0.41:1:00, providing the Company further financial resources to invest in internal growth and execute on its acquisition program, all centered on achieving a run rate of $1 billion in revenues by the end of 2007. Equity per outstanding common share has grown to $2.88 versus $2.68 in the same period in 2005.
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