Plant-based food and beverage company SanOpta (NASDAQGS:NASDAQ:) beat analysts’ expectations in the first quarter of 2024, with revenue down 18.3% year over year to $182.8 million. The company’s mid-year revenue forecast of $700 million was also 2.3% above estimates analysts. Non-GAAP earnings were $0.02 per share, compared to earnings of $0.04 per share in the same quarter last year.
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SunOpta (STKL) Q1 2024 Highlights:
- Income: $182.8 million vs. analyst estimates of $168.9 million (8.3% higher)
- earnings per share (non-GAAP): $0.02 vs. analysts’ expectations of $0.02 (consistent)
- Company raised its revenue forecast for the full year from $685 million to $700 million at the midpoint of the period, an increase of 2.2%.
- Gross Profit (GAAP): 17.4% compared to 15.2% in the same quarter last year.
- Free Cash Flow was -$2.28 million compared to -$4.42 million in the previous quarter.
- Sales volumes grew by 23.5% year on year.
- Market capitalization: $679.2 million
SunOpta (NASDAQGS:STKL) is a sustainability-focused food and beverage company that specializes in sourcing, processing and packaging natural and organic products and is committed to clean label food.
Perishable Food As America industrialized and moved away from an agricultural economy, people faced greater demands on their time. Whether it’s canned goods or snacks, packaged foods have become a convenience solution for the growing American family. Today, Americans are looking for brands that are high quality, reliable and reasonably priced. In addition, there is an increasing focus on healthy and sustainable food options. Packaged food supplies are considered a sustainable investment. People always need to eat, so these companies can enjoy constant demand as long as they stay on top of changing consumer preferences. The industry includes both multinational corporations and smaller specialist firms and is subject to food safety and labeling regulations.
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Sales GrowthSunOpta is a small consumer products company that sometimes loses money compared to larger competitors that benefit from greater brand recognition and economies of scale.
As you can see below, the company’s revenue has been declining over the past three years, declining 2.8% annually. That’s one of the worst performances in the consumer goods industry, where demand is typically flat.
SunOpta’s revenue fell 18.3% year over year to $182.8 million in the quarter, but beat Wall Street estimates by 8.3%. Looking ahead, Wall Street expects revenue to decline 3.4% over the next 12 months.
Cash Is King If you’ve been following StockStory for any length of time, you know that we focus heavily on free cash flow. Why do you ask? We believe that at the end of the day, cash is king and you can’t use accounting profits to pay the bills.
SunOpta burned through $2.28 million of cash in the first quarter, representing a negative free cash flow margin of 1.2%. The company increased its cash burn by 89.6% year over year.
Over the past two years, SunOpta’s demands to reinvest to remain relevant to consumers have strained the company’s resources. Free cash flow margins were among the worst in the consumer staples sector, averaging minus 6.2%. However, its margins have grown at an annualized rate of 8.6 percentage points over the past 12 months, suggesting the company is at least improving.
Key takeaways from SunOpta’s first quarter results. We were impressed by how significantly SunOpta beat analysts’ revenue expectations for the quarter. We were also pleased that full-year revenue guidance came in above Wall Street estimates. Stepping back, we think it was an impressive quarter that should please shareholders. Shares rose 3.7% after the earnings and are currently trading at $5.85 per share.
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