SunOpta Inc. (STKL) Reports Mixed Q3 Results Amid Strategic Shifts
Revenue from continuing operations up by 5.9% to $152.5 million, driven by volume growth.
Adjusted EBITDA from continuing operations increased by 8.1% to $19.1 million.
Loss from continuing operations reported at $5.7 million, compared to earnings of $2.4 million in the prior year.
Divestiture of frozen fruit operations marks a strategic pivot for the company.
On November 8, 2023, SunOpta Inc. (NASDAQ:STKL), a leader in sustainable, plant-based foods and beverages, released its financial results for the third quarter ended September 30, 2023. The company reported a revenue increase from continuing operations by 5.9% to $152.5 million, primarily attributed to a 5.5% growth in volume. However, the company faced a loss from continuing operations of $5.7 million, a downturn from the $2.4 million earnings reported in the same period last year.
Financial Performance Overview
The reported gross profit margin stood at 13.3%, with adjusted gross margin, excluding start-up costs, at 16.4%. This represents a decrease from the previous year's 17.8%, mainly due to increased depreciation from new production equipment. Operating income was $1.5 million, or 1.0% of revenue, a decrease from the prior year's $6.6 million, or 4.6% of revenues. The diluted loss per share from continuing operations was $0.05, compared to earnings of $0.01 per share in the prior year.
Strategic Developments and Outlook
SunOpta's CEO, Joe Ennen, highlighted the company's revenue growth driven by products such as protein shakes, oat milk, and snacks. The divestiture of the frozen fruit operations post-quarter is seen as a strategic move to optimize the product portfolio for growth and profitability. This divestiture also aims to reduce debt and strengthen the balance sheet, potentially leading to shareholder benefits such as a share repurchase program.
We are confident in our direction and believe that we remain well positioned to deliver significant long-term sustainable growth and value for shareholders," said Joe Ennen, SunOpta Chief Executive Officer.
The company maintains its Q4 outlook for continuing operations and has provided a 2024 outlook anticipating strong revenue and adjusted EBITDA growth.
Balance Sheet and Cash Flow
As of September 30, 2023, SunOpta had total assets of $746.7 million and total debt of $314.8 million. Cash used in operating activities of continuing operations was $25.9 million, compared to cash provided of $9.3 million during the same quarter in the previous year. The increase in cash used was mainly due to start-up costs and higher cash interest expenses.
Divestiture of Frozen Fruit
The divestiture of the frozen fruit segment was completed on October 12, 2023, for an aggregate purchase price of approximately $141 million. This move is expected to streamline SunOpta's operations and focus on its core business segments.
Conference Call and Investor Relations
SunOpta plans to host a conference call to discuss the third quarter financial results. Investors can access a live webcast on SunOpta's website or via the provided toll-free dial-in numbers.
For a detailed analysis of SunOpta Inc. (NASDAQ:STKL)'s financials and strategic initiatives, investors and interested parties are encouraged to visit GuruFocus.com for comprehensive reports and investment tools.
Explore the complete 8-K earnings release (here) from SunOpta Inc for further details.
This article first appeared on GuruFocus.
