SunOpta Inc. (Nasdaq:STKL; TSX:SOY) announced results for the three and nine month periods ended September 30, 2006.
The Company achieved record revenues for the third quarter, realizing its 36th consecutive quarter of increased revenue growth versus the same quarter in the previous year.
Revenues increased by 26.5% to US$145,463,000 as compared to US$114,950,000 in Q3 2005. The revenue growth represents consolidated internal growth of 15.8% and growth via acquisitions of 10.7%.
For the nine months ended September 30, 2006 revenues increased 42.9% to US$434,520,000 as compared to US$304,031,000 in the prior year. This increase reflects internal growth of 17.7% plus growth via acquisitions of 25.2%.
Net earnings in the quarter were US$1,524,000 or $0.03 per diluted common share as compared to $2,088,000 or $0.04 per diluted common share in the prior year including the effects of the losses on sunflower. Operating earnings for the nine months ended September 30, 2006 have increased 43.0% to $18,350,000, including the impact of the losses on sunflower, as compared to $12,835,000 in the prior year.
On a year to date basis, the SunOpta Food Group reported increased revenues and operating earnings, as compared to 2005. In the third quarter revenues increased 21.6% while operating earnings decreased 17.5%. On a year to date basis revenues increased 39.4% and operating earnings increased 52.2%. The improved operating earnings for the nine months were driven by strong growth in aseptic packaged products, the rebound in sales of oat fiber and addition of soy fiber, growth in organic private label fruit and tomato based products, growth in private label packaged products, revenue and cost improvements in the Canadian distribution operations and the full year effect of acquisitions completed during 2005.
The Sunflower business is expected to return to profitability in Q4 with the harvest of the new crop. The Company expects a $4 million operating earnings improvement in its sunflower business over the next 12 months. During the quarter the SunOpta Food Group acquired the business and assets of Purity Life Health Products, a profitable distributor with revenues of approximately $50 million, providing a wide range of natural and organic beauty aids and health care supplements, strategically expanding capabilities within the Canadian Food Distribution Group.
Opta Minerals realized revenue growth of 98.2% in the third quarter and 84.7% for the first nine months of 2006, due primarily to the February acquisition of Magnesium Technologies Corporation and internal growth driven by abrasive operations that were commissioned during 2005. Operating earnings for the third quarter increased 113.1% and for the first nine months of the year increased 59.0%. Opta Minerals continues to pursue strategic transactions to complement its existing product portfolio and on October 4, 2006 the Group acquired Bimac Corporation (Bimac). Bimac provides consumable products to the steel industry to prevent heat loss, reduce oxidization, and remove impurities.
There continues to be a high interest in the SunOpta BioProcess Group’s technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol. Results for the third quarter primarily reflect the supply of proprietary steam explosion equipment to China Resources Alcohol Corporation (CRAC) for use in production of cellulosic ethanol from corn stover. The Group is expected to complete its current contract with Abener Energia S.A. of Seville Spain by the end of the year and its contract with Celunol Inc. in early 2007. The Group is actively seeking additional supply contracts and partners to further leverage its technology and overall leadership position in cellulosic ethanol.
SunOpta has reconfirmed its revenue guidance of $585 – $600 million for the 2006 year. Earnings guidance has been impacted by the write down within the Company’s sunflower business. Excluding losses realized within sunflower operations, the Company expects to realize its annual earnings guidance figures.
The Company remains well positioned for future growth with net working capital of $88,501,000 and total assets of $368,655,000. Year to date net capital spending is $6,967,000 compared to $10,082,000 for the same period in the prior year. The long term debt to equity ratio at September 30, 2006 was 0.43:1:00, providing the Company further financial resources to invest in internal growth, capital projects and execute on its acquisition program. Equity per outstanding common share has grown to $3.06 versus $2.83 at December 31, 2005.
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