Shares of SunOpta Inc. on Thursday soared 18 percent after the organic food and beverage giant reported fourth-quarter adjusted net income of $5.6 million, or $0.06 per share, beating analysts estimates by 3 cents, on revenues of $296 million, down 7.7 percent.
The Toronto-based company (NASDAQ:STKL) said it doubled adjusted EBITDA to $16.4 million, or 5.5 percent of revenues, for the quarter ended Dec. 28, excluding disposed operations. The marked increase was due mainly to strong revenue growth and margin expansion in its new plant-based beverages business unit and improvement in its frozen fruit profitability.
SunOpta said it has established two new segments: Plant-Based Foods and Beverages segment and Fruit-Based Foods and Beverages segment.
The Plant-Based Foods and Beverages (PBFB) segment, which includes aseptic beverages, ingredient extraction and sunflower operations, generated fourth-quarter revenues of $106.4 million, up 25 percent over the previous fourth quarter, “reflecting higher volumes of aseptic beverages, broth offerings, and ingredient extraction.”
The Fruit-Based Foods and Beverages (FBFB) segment, which includes Sunrise frozen fruit, fruit ingredients and fruit snacks, generated fourth-quarter revenues of $79.7 million, down 11.7 percent, “reflecting lower volumes with one large food service customer, partially offset by higher pricing.”
The already existing Global Ingredients segment generated fourth-quarter revenues of $109.7 million, dropping more than 24 percent. SunOpta also said it has folded its Amsterdam-based Tradin Organic operations and its premium juice program into its Global Ingredients segment, based on shared raw material sourcing.
Overall fourth quarter gross profit was $33.4 million, up 57 percent compared to the previous fourth quarter.
The PBFB segment accounted for nearly a third of the increase in gross profit due to a boost in revenue and gross margin.
The FBFB segment accounted for about 12 percent of SunOpta’s overall gross profit increase due to increased gross margin.
Meanwhile, a $2.5 million decline in gross profit in the Global Ingredients segment is blamed on lower volumes and pricing spreads for certain organic ingredients.
“We still have considerable work to do to achieve acceptable margin levels in this business, but we are tracking in line with our turnaround plan,” said SunOpta CEO Joe Ennen. “Within Tradin Organic, which is part of our Global Ingredients segment, our margin rate remains relatively consistent in spite of the inherent volatility in a commodity-based business and production inefficiencies in our cocoa business.”
SunOpta’s stock on Thursday rose to an intraday high of $2.81, up 18 percent, before closing at $2.70, a 13.5 percent increase. The company’s shares have a 52-week trading range between $1.30 – its lowest level since 2009, and $4.72. SunOpta has a market cap of $237.6 million.
SunOpta is a vertically integrated company involved in the sourcing, processing and packaging of organic and non-GMO value-added grain, seed, fruit and vegetable-based food products such as frozen fruit and plant-based beverages, as well as fruit snacks and nutrition bars for retail, foodservice and branded food customers.