- SunOpta (TSX:SOY) has divested from its frozen fruit business as the final step in its portfolio optimization plan
- The company closed the sale with Nature’s Touch, a company based in Quebec, for US$141 million, with proceeds to reduce leverage from 3.7x to 3.2x
- The sale is expected to enhance margins amid Q3’s volume-driven growth
- SunOpta is a sustainable plant-based food and beverage company with an almost 50-year track record
- SunOpta stock (TSX:SOY) is down by 71.07 per cent over the past year, but trades at an 85.3 per cent discount to future expected cash flows
SunOpta (TSX:SOY) has divested from its frozen fruit business as the final step in its portfolio optimization plan.
The company closed the sale with Nature’s Touch, a company based in Quebec, for US$141 million, including facilities in Edwardsville, Kansas, and Jacona, Mexico, as well as significant frozen fruit inventory.
The frozen fruit business generated US$263 million in revenue and US$15 million in adjusted EBITDA over the 12 months ending July 1, 2023.
Sale proceeds will be allocated to debt reduction, which will reduce net leverage from 3.7x in Q2 2023 to 3.4x on a pro forma basis at closing, and to 3.2x after collecting the US$20 million of seller promissory notes due in three years included in the purchase price.
“The divestiture of our frozen fruit business is a major milestone in our portfolio optimization efforts and our multi-year transformation to becoming a leading manufacturer of value-add products in plant-based and healthy snack categories,” Joe Ennen, SunOpta’s CEO, said in a statement released Friday. “This transaction is significantly accretive to margins, results in a more capital-efficient business model, strengthens our balance sheet and ensures we are singularly focused on the most attractive growth opportunities.”
SunOpta preliminary Q3 results
SunOpta expects revenue from continuing operations to increase approximately 6 per cent YoY to US$152 million in Q3, with adjusted EBITDA from continuing operations between US$18.5 million-US$19 million, driven by volume growth.
The company will release Q3 results in November 2023, when it will go into more detail about the divestiture, its improved 2024 outlook post-sale, as well as its other recent portfolio optimizations, which began in 2020 with an emphasis on core value-added, high-growth, high-margin categories.
“We are also pleased with our third quarter revenue growth from our continuing plant-based and healthy snacks operations and the strong demand we experienced across key products and categories throughout the period,” Ennen continued. “Importantly, volume was the primary factor driving our third quarter growth, reflecting market share gains and total addressable market expansion efforts. Our latest results continue to reflect the competitive advantages that underpin our value-add business model, including a scalable, geographically diverse platform with proven expertise in complex manufacturing coupled with leading innovation capabilities.”
SunOpta is a sustainable plant-based food and beverage company with an almost 50-year track record. Its brands include SOWN, Dream and West Life.
SunOpta stock (TSX:SOY) last traded at $3.90 per share. The stock is down by 71.07 per cent over the past year, but trades at an 85.3 per cent discount to future expected cash flows, according to Simply Wall Street.
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