SunOpta Announces Second Quarter 2010 Results

Aug. 12, 2010 (Newsfile Corp.) --

Toronto, Ontario--(August 10, 2010) - SunOpta Inc. (“SunOpta” or “the Company”) (NASDAQ:STKL; TSX:SOY), a leading global company focused on natural, organic and specialty foods and natural health products, today announced financial results for the period ended July 3, 2010. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted. Please note that as a result of the June 2010 sale of the Company’s Food Distribution assets, all results from operations related to this business have been excluded from operating results and are now reported as discontinued operations for all comparable periods.

For the second quarter of 2010 the Company realized revenues of $235.9 million versus second quarter 2009 revenues of $216.1 million, a year over year increase of 9.2% . Revenues in SunOpta Foods were $212.7 million, an increase of 5.5% versus the second quarter of 2009. After adjusting for movements in foreign exchange rates and commodity prices, revenues in SunOpta Foods increased approximately 6.9% versus the second quarter of 2009, reflecting continued momentum in the natural and organic foods sector. All operating segments realized increased revenues and operating income¹ year over year.

For the second quarter of 2010 the Company reported net income on a GAAP basis of $20.5 million or $0.31 per diluted common share versus net income in the second quarter of 2009 of $1.8 million or $0.03 per diluted common share. Included in the results of the second quarter was a gain on the sale of the Canadian Food Distribution assets of $13.8 million or $0.21 per diluted common share.

Earnings from operations¹ for the second quarter of 2010 were $6.7 million or $0.10 per diluted common share. Earnings from operations¹ for the second quarter include additional pre-tax costs of approximately $1.3 million, including legal and professional fees and costs related to ongoing facility and operational rationalizations.

Operating income¹ increased to $11.8 million or 5.0% of revenues versus operating income¹ in the prior year of $4.6 million or 2.1% of revenues. Operating income¹ in SunOpta Foods increased to $12.8 million or 6.0% of revenues versus $6.8 million or 3.4% in the prior year.

EBITDA¹ for the second quarter of 2010, excluding the benefits of one-time gain items and contributions from discontinued operations increased 75% to $15.8 million versus $9.0 million in 2009, indicative of the improved operating performance realized in the business.

For the year to date period ended July 3, 2010 the Company has realized revenues of $453.3 million versus year to date second quarter 2009 revenues of $407.4 million, a year over year increase of 11.3% . Revenues in SunOpta Foods for the period were $411.6 million, an increase of 8.8% versus the first half of 2009. After adjusting for movements in foreign exchange rates and commodity prices, the increase in food revenues remained constant at approximately 8.8% versus the first half of 2009. Year to date all operating segments have realized increased revenues and operating income¹ versus the prior year.

¹ See discussion and reconciliation of Non-GAAP Measures

Year to date the Company has realized net income on a GAAP basis of $25.1 million or $0.38 per diluted common share versus net income in 2009 of $0.1 million or $0.00 per diluted common share. Included in the year to date results was a gain on the sale of the Canadian Food Distribution assets of $13.8 million or $0.21 per diluted common share.

Earnings from operations¹ for the first half of 2010 were $11.3 million or $0.17 per diluted common share. Earnings from operations in the first half also include additional pre-tax costs of approximately $3.6 million, including legal and professional fees and costs related to ongoing facility and operational rationalizations.

Year to date the Company has realized operating income¹ of $20.8 million or 4.6% of revenues versus operating income¹ in the prior year of $3.0 million or 0.7% of revenues. Operating income¹ in SunOpta Foods increased to $24.2 million or 5.9% of revenues versus $8.8 million or 2.3% in the prior year.

The Company has realized EBITDA¹ through the six month period ended July 3, 2010 of $29.2 million versus $11.7 million in the prior year, an increase of 150%, excluding the benefit of one-time items and the benefit of discontinued operations.

At July 3, 2010 the Company’s balance sheet reflects a current working capital ratio of 1.71 to 1.00, long-term debt to equity ratio of 0.33 to 1.00 and total debt to equity ratio of 0.43 to 1.00. During the second quarter the Company generated cash from continuing operations of $16.6 million versus $11.0 million in the prior year, due primarily to increased earnings from operating activities. At July 3, 2010 the Company has total assets of $500.8 million and a net book value of $3.84 per outstanding share.

At quarter-end, the Company is in compliance with all banking covenants.

Steve Bromley, President and Chief Executive Officer of SunOpta commented, “We are very pleased with our second quarter and year to date results which are indicative of numerous initiatives which have been implemented, centered on improving operating results within our core business segments while at the same time improving our return on assets employed. We continue to focus on these core operating processes and believe that the initiatives are having the expected positive effect on our results. At the same time our balance sheet has also improved significantly with lower debt levels and improved return on net assets employed. Our continued focus on margin improvement and asset management combined with strong consumer interest in health and wellness positions our Company for long-term success.”

The Company plans to host a conference call at 10:00 a.m. Eastern Time on Wednesday, August 11th, 2010 to discuss these results and recent corporate developments. The conference call can be accessed via a link at the Company’s website at www.sunopta.com. Additionally, the call may be accessed with the toll free dial-in number 1-877-312-9198 or 631-291-4622. A replay number can also be accessed between August 11^th and 18^th with the toll free dial-in number 1–800-642-1687 or 706-645-9291 followed by pass code: 86530032#.

¹ See discussion and reconciliation of Non-GAAP Measures

About SunOpta Inc.

SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food and natural health markets. The Company has three business units: the SunOpta Foods, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; Opta Minerals Inc. (TSX:OPM) (66.4 % owned by SunOpta), a producer, distributor, and recycler of environmentally friendly industrial materials; and SunOpta BioProcess Inc. which engineers and markets proprietary steam explosion technology systems for the bio-fuel, pulp and food processing industries. SunOpta believes that each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.

Forward-Looking Statements

Certain statements included in this press release may be considered “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, which are based on information available to us on the date of this release. These forward-looking statements include, but are not limited to, management’s expectations regarding improving our operating results and return on assets employed and our continued focus on margin improvement. The terms and phrases “improving”, “continue”, “remain confident”, “positions”, and other similar terms and phrases are intended to identify these forward looking statements. Forward looking statements are based on information available to us on the date of this release and are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors the Company believes are appropriate in the circumstances including, but not limited to, general economic conditions, consumer trends, preferences and spending patterns, product pricing levels, current customer demand, competitive intensity, cost rationalization and product development initiatives,. Whether actual timing and results will agree with expectations and predications of the Company is subject to many risks and uncertainties including, but not limited to, global economic conditions, consumer spending patterns and changes in market trends, decreases in customer demand, potential failure of product development, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, and other risks described from time to time under “Risk Factors” in the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q (available at www.sec.gov). Consequently all forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized.

For further information, please contact:

SunOpta Inc.
Steve Bromley, President & CEO
Eric Davis, Vice President & CFO
Tony Tavares, Chief Operating Officer
Susan Wiekenkamp, Information Officer
Tel: 905-455-2528, ext 103
susan.wiekenkamp@sunopta.com
Website: www.sunopta.com

(Segment Operating Income is defined as “Earnings before the following” excluding the impact of “other expense (income), net”)

(Segment Operating Income is defined as “Earnings before the following” excluding the impact of “other expense (income), net”)

Non-GAAP Measures

In addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), the Company provides information regarding Operating Income, Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Earnings from Operations as additional information about its operating results, which are not measures in accordance with GAAP. The Company believes that these non-GAAP measures assist investors and analysts in comparing performance across reporting periods on a consistent basis by excluding items that are not indicative of the Company’s core operating performance. The non-GAAP measures of operating income, EBITDA, and earnings from operations should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

The Company defines Operating Income as “Earnings from continuing operations before the following” excluding the impact of “Other expense (income), net”; and EBITDA as Operating Income plus depreciation and amortization. The following is a tabular presentation of Operating Income and EBITDA, including a reconciliation to GAAP earnings for the period, which the Company believes to be the most directly comparable GAAP financial measure.

Earnings from operations and diluted earnings from operations per share are non-GAAP measures. During the quarter and two quarters ended July 3, 2010, the Company recognized two gains and recorded specific expenses related to these gains. As a result, earnings for the period attributable to SunOpta Inc. and earnings per diluted share for the period are adjusted to arrive at per diluted share. The following is a tabular presentation of earnings from operations and earnings from operations per diluted common share, including a reconciliation to GAAP earnings for the period attributable to SunOpta Inc. and diluted earnings per share for the period, which the Company believes to be the most directly comparable GAAP financial measure.