SunOpta Inc. (NASDAQ:STKL; TSX:SOY) reported results for the third quarter and nine months ended September 30, 2005. For the third quarter the Company achieved record revenues of $115 million, up from $80 million in the comparable quarter last year; an increase of 43%. Revenue growth was led by a 47% increase in the Company’s vertically integrated food operations.
Net earnings for the third quarter were $2.1 million, or $0.04 per diluted common share, compared to $2.8 million, or $0.05 per diluted common share in the third quarter of the prior year. Net earnings in the third quarter included the first earnings from the Company’s steam explosion equipment and process technology contract to Abener Energia, S.A. The Company also realized solid earnings within its newly formed SunOpta Fruit Group segment and continued success with its Packaged Products Group, led by strong sales of private label aseptically packaged products and roasted soy and sunflower products.
The Company recently announced that it was awarded a three-year contract from a major international retailer to provide aseptic packaged soymilk. The Company expects revenues in the range of $20 million annually from this new contract commencing late in fiscal 2005.
Jeremy Kendall, Chairman and Chief Executive Officer of SunOpta stated, “While we were pleased with the top-line results for the quarter and the nine months, we remain focused on improving our bottom-line results. During the quarter we made significant progress aimed at increasing future oat fiber sales and in realizing operational efficiencies in our Toronto-based distribution business. Consequently, we believe we are now much better positioned to deliver improved operational results in the quarters to come.”
“Clearly, the fading popularity of the “low-carb” phenomenon has yielded lower oat fiber sales on a year-to-date basis. However, in addition to its nutritional benefits, our oat fiber products provide a functional advantage by adding strength to avoid breakage in products such as taco shells, crackers, pretzels and pet foods. We have seen a steady increase in oat fiber sales throughout the year by manufacturers of these types of products and we have commenced a number of new initiatives to continue to drive growth in this segment. We firmly believe that most of the obstacles in this product category have been largely overcome.”
Mr. Kendall continued, “With regards to the consolidation of our Toronto-based distribution operations, throughout the first nine months of the year the Company paid duplicate warehouse costs and maintained extra personnel to support operations as we transitioned our distributors into our new 135,000 square foot state-of-the-art facility. With the three distributors now fully operational at the new facility, duplicate warehouse costs are now virtually eliminated, headcount has been streamlined and the focus on growth has been reinstated. The savings from the consolidation of the distribution operations, as well as other cost reduction initiatives within the Canadian Food Distribution Group are expected to yield annual savings of $3.4 million. We look forward to greater efficiencies and a rededication to driving growth in this business.”
For the nine months ended September 30, 2005 revenues increased 36% to $304 million, compared to $224 million in the prior year. The Company remains on track to achieve its revenue guidance for fiscal 2005 of $415 million; which would equate to a 36% year-over-year increase. Net earnings for the nine months ended September 30, 2005 were $12.0 million, or $0.21 per diluted common share, compared to $10.7 million, or $0.20 per diluted common share, in the prior year.
SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food markets. For the last seven consecutive years, SunOpta was included in Profit magazine’s ‘Profit 100’ list of the 100 fastest growing companies in Canada. The Company has three business units: the SunOpta Food Group, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; the Opta Minerals Group, a producer, distributor, and recycler of environmentally friendly industrial materials; and the StakeTech Steam Explosion Group which engineers and markets proprietary steam explosion technology systems for the bio-fuel, food processing and pulp industries.