SunOpta (NASDAQ: STKL) reported Q4 EPS of ($0.06), $0.03 better than the analyst estimate of ($0.09). Revenue for the quarter came in at $295.8 million versus the consensus estimate of $302.81 million.

Fourth Quarter 2019 Highlights:

• Revenues of $295.8 million for the fourth quarter of 2019, compared to $320.5 million in the fourth quarter of 2018, a decrease of 7.7%. Adjusted for disposed operations, foreign exchange, commodity prices, a new contract manufacturing arrangement and the acquisition of Sanmark, revenues grew 0.8% during the fourth quarter.
• Loss attributable to common shareholders of $7.6 million or $0.09 per common share in the fourth quarter of 2019, compared to a loss attributable to common shareholders of $99.0 million or $1.13 per common share in the fourth quarter of 2018.
• Adjusted loss¹ of $5.6 million or $0.06 per common share during the fourth quarter of 2019, compared to an adjusted loss of $9.3 million or $0.11 per common share during the fourth quarter of 2018.
• Adjusted EBITDA¹ excluding disposed operations of $16.4 million or 5.5% of revenues for the fourth quarter of 2019, versus $8.2 million or 2.5% of adjusted revenues in the fourth quarter of 2018.

“I am pleased to report that SunOpta doubled adjusted EBITDA, excluding disposed operations, in the fourth quarter versus the prior year. The adjusted EBITDA results were primarily driven by strong revenue growth and margin expansion in our plant-based beverages business unit, supported by sequential improvement in frozen fruit profitability. We are confident in the outlook for continued EBITDA growth in 2020 as we expect to benefit from strong industry tailwinds and further capitalize on our industry-leading capabilities in key product categories,” said Joe Ennen, Chief Executive Officer at SunOpta.

“Within our plant-based food and beverage business unit, we grew revenue 25%, reflecting strong growth in both existing and new customers. We also saw improved gross margins as a result of higher plant utilization and significant contributions from our productivity initiatives. Our capital investments to expand our extraction capabilities are well timed, given the growing consumer demand for plant-based foods and beverages and the scarcity of capacity capable of meeting this demand. Within our fruit-based food and beverage platform, results were consistent with our expectations. Encouragingly, we had both sequential and year-over-year gross margin improvement in all product segments of our fruit business and we were able to make pricing changes with key customers to reflect higher costs and in some cases move to indexed based pricing. As we gear up for the 2020 fruit season, we remain focused on executing our fruit margin optimization activities, which include further automation to lower variable labor costs; more direct bagging; shifting to customer pricing structures that reduce risk, and completing our enhancements to business planning and leadership. 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. 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.”

Mr. Ennen continued, “As we look ahead to 2020, we expect to see continued improvement in adjusted EBITDA performance as we capitalize on our strong plant-based food and beverage momentum, execute our margin optimization strategy in our fruit business, and leverage Tradin’s unique positioning in the organic ingredient supply chain. The recent extension of our $360 million revolving asset-based credit facility reflects the support and confidence of our banking partners as we execute our turnaround plan, while providing enhanced flexibility and liquidity to support our growth plans.”

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