TORONTO, Feb 22, 2007 (BUSINESS WIRE) -- SunOpta Inc. (SunOpta or the Company) (STKL) (CA:SOY) today announced results for the fourth quarter and year ended December 31, 2006. All amounts are expressed in U.S. dollars.
The Company achieved record revenues for the three months ended December 31, 2006, realizing its 37th consecutive quarter of increased revenue growth versus the same quarter in the previous year. Revenues in the fourth quarter increased by 33.9% to $163,506,000 compared to $122,070,000 in the fourth quarter of the prior year. Fourth quarter revenues were the highest of any quarter in the Company's history and reflect continued strong growth in core business segments.
For the year ended December 31, 2006 revenues increased 40.3% to $598,026,000 as compared to $426,101,000 in the prior year. Internal growth of 16.1% was realized during the year with 18.4% internal growth realized within the SunOpta Food Group.
Net earnings in the quarter rose 33.4% to $2,080,000 or $0.04 per diluted common share as compared to $1,559,000 or $0.03 per diluted common share in the fourth quarter of 2005, after absorbing pre-tax costs of $1,601,000 related to the frozen fruit recall previously announced by SunOpta's subsidiary, Cleugh's Frozen Foods Inc. These costs include $822,000 of direct expenses incurred by SunOpta and our affected customer and $779,000 in costs to voluntarily rework product that was produced during the period in question. This recall was an isolated incident and the Company has captured all the known costs within the fourth quarter.
Net earnings for the year were $10,959,000 or $0.19 per diluted common share as compared to $13,558,000 or $0.24 per diluted common share in the previous year which included a dilution gain of $0.08 per diluted common share related to the initial public offering of Opta Minerals. The 2006 results also include a significant segment operating loss within the Company's sunflower business of $3,948,000 due to very poor crop conditions as compared to segment operating income in the previous year of approximately $2,000,000.
Segment operating income within the SunOpta Food Group increased from $4,670,000 in the fourth quarter of 2005 to $5,385,000, reflecting a 15.3% increase despite the costs associated with the previously noted recall. Segment operating income for the year in the SunOpta Food Group was $23,007,000 as compared to $16,245,000 in 2005, a 41.6 % increase. Segment operating earnings growth for 2006 was lead by a 323.0% increase in the SunOpta Canadian Food Distribution Group, a 102.2% increase in the SunOpta Fruit Group and a 39.8% increase in the SunOpta Ingredients Group, partially offset by a 26.9% decrease in the Grains and Foods Group due to the sunflower issue.
Opta Minerals Inc. realized a significant increase in both revenues and operating income in the fourth quarter and year as compared to 2005. Revenues in the fourth quarter were $16,071,000, representing an 87.7% increase versus revenues of $8,562,000 in the fourth quarter of 2005. Segment operating income increased to $1,462,000 in the quarter, an increase of 263.7%. For the year Opta Minerals achieved revenues of $64,261,000 versus $34,659,000, an increase of 85.4%, and segment operating income increased 80.6% to $6,876,000 as compared to $3,808,000 in the previous year.
Interest in the SunOpta BioProcess Group's technology and equipment for the pre-treatment of biomass for the production of cellulosic ethanol remains high and the Group is now rapidly expanding its staff and pursuing additional supply contracts and partners. Results for the fourth quarter primarily reflect work on the Celunol contract. Equipment has been shipped as well with respect to the contract with Abener Energia S.A. Both of these contracts are expected to be completed in the first half of 2007. During the fourth quarter the Group's proprietary technology was commissioned in China and is currently being operated around the clock in the production of cellulosic ethanol. The Group has been working diligently on its previously announced financing to raise approximately $30 million into this business, which will be used primarily in the construction and ownership cellulosic ethanol production facilities in Canada in partnership with Greenfield Ethanol, Inc.
SunOpta has confirmed revenue guidance for 2007 of $740 to $760 million and earnings guidance of $0.35 to $0.40 per diluted common share reflecting continued growth, further leverage in selling, general and administration costs and improved margins resulting from product mix, cost reductions including automation projects and a focus on higher plant utilization. This guidance reflects an approximate increase in revenues of 25% and approximately 100% in net earnings per share.
The Company remains well positioned for future growth, augmented by the post year end equity financing which raised gross proceeds of $53.8 million, leaving the Company with a long term debt to equity ratio of approximately 0.33:1.00 and providing financial resources to grow the Company through a combination of internal growth and strategic acquisitions for the next several years. The Company had total assets at December 31, 2006 of $404,730,000 and net book value of $3.06 per share.
Steve Bromley, President and Chief Executive Officer of SunOpta commented, "Clearly 2006 was a year of significant improvements in many of our businesses including an internal growth rate within the range of 15 to 20% which we strive to achieve plus the addition of six strategic acquisitions which are all off to great starts in their first year. We have made a number of inroads on improving profitability as we leverage our assets, capital investments, IT infrastructure and selling, general and administrative platform. Unfortunately, these improvements were tempered by the results of our Sunflower business and the expense in dealing with our recall costs. We are confident however that these incidents are behind us and in dealing with them we have strengthened our organization including our risk management procedures and quality programs. We look forward to an exciting and profitable 2007."
About SunOpta Inc.
SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food, supplements and health and beauty markets. 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 SunOpta BioProcess Group (soon to become SunOpta BioProcess Inc.) which engineers and markets proprietary steam explosion technology systems for the pulp, bio-fuel and food processing industries. Each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to references to business strategies, competitive strengths, goals, capital expenditure plans, business and operational growth plans and references to the future growth of the business. These forward looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its interpretation of current conditions, historical trends and expected future developments as well as other factors that the Company believes are appropriate in the circumstance. However, whether actual results and developments will agree with expectations and predications of the Company is subject to many risks and uncertainties including, but not limited to; general economic, business or market risk conditions; competitive actions by other companies; changes in laws or regulations or policies of local governments, provinces and states as well as the governments of United States and Canada, many of which are beyond the control of the Company. 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.