TORONTO, Nov 3, 2004 (CCNMatthews via COMTEX) -- SunOpta Inc. (SunOpta or the Company) (STKL) (CA:SOY) today announced results for the three months and nine months ended September 30, 2004. All amounts are expressed in U.S. dollars.
The Company achieved record revenues for the three months ended September 30, 2004, realizing its 28th consecutive quarter of record revenue growth compared to the same quarter in the previous year. Revenues in the quarter increased by 59% to $80,142,000 as compared to $50,384,000 in the third quarter of the prior year. For the nine months ended September 30, 2004, revenues increased 55% to $223,588,000 from $144,436,000 in 2003.
Net earnings for the third quarter increased by 26% to $2,767,000, or $0.05 per diluted common share, as compared to $2,195,000 or $0.04 per diluted common share in the third quarter of 2003 (adjusted to U.S. GAAP). For the nine months ended September 30, 2004 net earnings were a record $10,663,000, an increase of 85% over the same period in 2003. Net earnings in 2003 included the recognition of certain tax loss carryforwards resulting in a low effective income tax rate. Earnings before income taxes increased by 52% in the third quarter of 2004, and by 104% in the nine months ended September 30, 2004, when compared to the same periods in 2003.
The third quarter results included a number of unusual operating expenses related to addressing the requirements of Sarbanes-Oxley, certain period costs incurred in the preparation of the initial public offering of Opta Minerals Inc., the Company's environmental division, and fees related to recent changes to the Company's banking arrangements. These costs totaled approximately $600,000 pre-tax.
The Company also stated that as a result of the poor soybean crop quality and low yields in 2003, the Company's specialty beans purchase contracts were insufficient to meet sales contracts late in the third quarter, resulting in incremental costs versus expectation, of approximately $500,000 pre-tax. The Company expects the 2004 soybean crop to improve significantly from 2003 and does not expect any shortage in soybean supply in the fourth quarter with margins returning to normal.
In addition, the Company incurred certain integration costs related to its Toronto and Montreal-based distribution operations during the third quarter which had a negative impact of approximately $600,000 pre-tax. These operations are expected to improve in the fourth quarter.
Internal revenue growth rate in the third quarter was 12%. Excluding grain revenues impacted by the short crop yield in 2003, the internal growth rate was 18% in the third quarter, in line with the Company's expectations and the year to date internal revenue growth rate of 19%. The Company's grain revenues impacted by the poor crop quality and yield in 2003 decreased 20% in the nine months ended September 30, 2004 when compared to the same period in 2003.
The Company continues to maintain a strong balance sheet, with working capital of $65,046,000 and total assets of $208,400,000. The long-term debt to equity ratio as at September 30, 2004 was 0.26 to 1.00. The Company has cash resources, including available lines of credit and an acquisition line, of approximately $50,000,000. These resources will be employed in the future to generate further shareholder value through internal growth projects and acquisitions.
Jeremy N. Kendall, Chairman and CEO of SunOpta commented that "on October 27, 2004, we pre-announced expected revenues and net earnings for the third quarter in order to provide timely disclosure of the issues the Company faced in recent months. As disclosed in our announcement, we're confident that a number of these issues are one-time or unusual in nature, and that the impact on future results will be minimized. I am delighted with our continued growth in both our revenues and net earnings and we remain focused on building shareholder value."
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 six 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 that engineers and markets clean pulping systems using patented steam explosion technology. Each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.