SunOpta Inc.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 29, 2024

	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to .

Commission file number: 001-34198

SUNOPTA INC.

(Exact name of registrant as specified in its charter)

CANADA		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7078 Shady Oak Road Eden Prairie, Minnesota, 55344		(952) 820-2518
(Address of principal executive offices)		(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
(Do not check if a smaller reporting company)		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	STKL	The Nasdaq Stock Market
Common Shares	SOY	The Toronto Stock Exchange

The number of the registrant's common shares outstanding as of August 2, 2024 was 116,840,837.

SUNOPTA INC.

FORM 10-Q

For the Quarterly Period Ended June 29, 2024

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Operations for the quarters and two quarters ended June 29, 2024 and July 1, 2023	5
	Consolidated Balance Sheets as at June 29, 2024 and December 30, 2023	6
	Consolidated Statements of Shareholders' Equity as at and for the quarters and two quarters ended June 29, 2024 and July 1, 2023	7
	Consolidated Statements of Cash Flows for the two quarters ended June 29, 2024 and July 1, 2023	9
	Notes to Consolidated Financial Statements	10

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4	Controls and Procedures	35

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	36
Item 1A	Risk Factors	36
Item 5	Other Information	36
Item 6	Exhibits	36

Basis of Presentation

Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q ("Form 10-Q") to the "Company," "SunOpta," "we," "us," "our" or similar words and phrases are to SunOpta Inc. and its subsidiaries, taken together.

In this report, all currency amounts presented are expressed in thousands of United States ("U.S.") dollars ("$"), except per share amounts, unless otherwise stated.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements that are based on management's current expectations and assumptions and involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and are typically accompanied by words such as "anticipate," "estimate," "target," "intend," "project," "potential," "predict," "continue," "believe," "expect," "can," "could," "would," "should," "may," "might," "plan," "will," "budget," "forecast," the negatives of such terms, and words and phrases of similar impact and include, but are not limited to, references to future financial and operating results, plans, objectives, expectations, and intentions; our expectations regarding the future profitability of our business, including anticipated results of operations, revenue trends, gross margin profile, and cash flows; our expectations regarding customer demand, consumer preferences, competition, sales pricing, and availability and pricing of raw material inputs; the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing; the anticipated sufficiency of future cash flows to enable the payments of interest and repayment of debt, working capital needs, planned capital expenditures; and our ability to obtain additional financing or issue additional debt or equity securities; our estimates for losses and related insurance recoveries associated with the withdrawal of certain batches of aseptically-packaged product in the second quarter of 2024; the outcome of litigation to which we may, from time to time, be a party; and other statements that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on certain assumptions, expectations and analyses we make in light of our experience and our interpretation of current conditions, historical trends and expected future developments, as well as other factors that we believe are appropriate in the circumstances. Whether actual results and developments will be consistent with and meet our expectations and predictions is subject to many risks and uncertainties, including those set forth under Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, under Item 1A. "Risk Factors" of this report, and in our other filings with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators.

SUNOPTA INC.

June 29, 2024 Form 10-Q

All forward-looking statements made herein are qualified by these cautionary statements, and our actual results or the developments we anticipate may not be realized. Our forward-looking statements are based only on information currently available to us and speak only as of the date on which they are made. We do not undertake any obligation to publicly update our forward-looking statements, whether written or oral, after the date of this report for any reason, even if new information becomes available or other events occur in the future, except as may be required under applicable securities laws. The foregoing factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report.

SUNOPTA INC.

June 29, 2024 Form 10-Q

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SunOpta Inc.
Consolidated Statements of Operations
For the quarters and two quarters ended June 29, 2024 and July 1, 2023
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars, except per share amounts)

		Quarter ended				Two quarters ended
		June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
		$		$		$		$
				(note 1)				(note 1)

Revenues (note 14)		170,995		141,163		353,843		296,132
Cost of goods sold		149,147		122,534		300,248		253,424

Gross profit		21,848		18,629		53,595		42,708
Selling, general and administrative expenses		17,784		16,957		40,772		40,026
Intangible asset amortization		446		446		892		892
Other income, net		(304	)	(62	)	(2,104	)	(20	)
Foreign exchange loss		1,310		92		1,259		81

Operating income		2,612		1,196		12,776		1,729
Interest expense, net		6,410		6,565		12,460		12,229

Earnings (loss) from continuing operations before income taxes		(3,798	)	(5,369	)	316		(10,500	)
Income tax expense (benefit) (note 10)		(17	)	6,282		260		3,978

Earnings (loss) from continuing operations		(3,781	)	(11,651	)	56		(14,478	)
Net loss from discontinued operations (note 2)		(897	)	(7,187	)	(2,314	)	(2,983	)

Net loss		(4,678	)	(18,838	)	(2,258	)	(17,461	)
Dividends and accretion on preferred stock		169		(422	)	(264	)	(1,126	)

Loss attributable to common shareholders		(4,509	)	(19,260	)	(2,522	)	(18,587	)

Basic and diluted loss per share (note 11)
	Loss from continuing operations attributable to common shareholders	(0.03	)	(0.10	)	(0.00	)	(0.14	)
	Loss from discontinued operations	(0.01	)	(0.06	)	(0.02	)	(0.03	)
	Loss attributable to common shareholders⁽¹⁾	(0.04	)	(0.17	)	(0.02	)	(0.16	)

Weighted-average common shares outstanding (000s) (note 11)
	Basic	116,640		115,471		116,336		112,743
	Diluted	116,640		115,471		116,336		112,743

(1) The sum of the individual per share amounts may not add due to rounding.

(See accompanying notes to consolidated financial statements)

SUNOPTA INC.

June 29, 2024 Form 10-Q

SunOpta Inc.
Consolidated Balance Sheets
As at June 29, 2024 and December 30, 2023
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars)

		June 29, 2024		December 30, 2023
		$		$

ASSETS
Current assets
	Cash and cash equivalents	3,190		306
	Accounts receivable, net of allowance for credit losses of $114 and $303, respectively	65,326		64,862
	Inventories (note 4)	98,484		83,215
	Prepaid expenses and other current assets	17,429		25,235
	Income taxes recoverable	4,048		4,717
	Current assets held for sale (note 2)	-		5,910
Total current assets		188,477		184,245

Restricted cash (note 5)		8,227		8,448
Property, plant and equipment, net		346,909		319,898
Operating lease right-of-use assets		108,736		105,919
Intangible assets, net		20,969		21,861
Goodwill		3,998		3,998
Deferred income taxes		315		-
Other assets		27,067		25,055
Total assets		704,698		669,424

LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities	86,532		96,650
	Notes payable (note 6)	16,364		17,596
	Current portion of long-term debt (note 7)	29,306		24,346
	Current portion of operating lease liabilities	16,400		15,808
Total current liabilities		148,602		154,400

Long-term debt (note 7)		273,806		238,883
Operating lease liabilities		102,857		100,102
Deferred income taxes		325		505
Total liabilities		525,590		493,890

Series B-1 Preferred Stock (note 8)		14,773		14,509

SHAREHOLDERS' EQUITY
Common shares, no par value, unlimited shares authorized,
	116,796,472 shares issued (December 30, 2023 - 115,953,287)	469,719		464,169
Additional paid-in capital		27,816		27,534
Accumulated deficit		(335,209	)	(332,687	)
Accumulated other comprehensive income		2,009		2,009
Total shareholders' equity		164,335		161,025
Total liabilities and shareholders' equity		704,698		669,424

Commitments and contingencies (note 13)

(See accompanying notes to consolidated financial statements)

SUNOPTA INC.

June 29, 2024 Form 10-Q

SunOpta Inc.
Consolidated Statements of Shareholders' Equity
As at and for the quarters ended June 29, 2024 and July 1, 2023
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars)

	Common shares		Additional paid-in capital	Accumulated deficit		Accumulated other comprehensive income	Total
	000s	$	$	$		$	$

Balance at March 30, 2024	116,085	464,817	32,413	(330,700	)	2,009	168,539
Employee stock purchase plan	28	132	-	-		-	132
Stock incentive plan	683	4,770

SEC Form 10-Q filed by SunOpta Inc.