TORONTO – SunOpta, Inc. on Sept. 27 said it intends to exit its nutrition bar product lines and operations in Carson City, Nev. The Toronto-based company is working with nutrition bar customers to expedite the process and aims to complete the exit by the end of the fiscal year, which should be about the end of 2017.
|David Colo, c.e.o. of SunOpta|
“The planned discontinuation of our nutrition bar operations reflects our continued efforts to optimize our portfolio to focus on product lines where the company is effectively positioned to generate long-term profitable returns,” said David Colo, chief executive officer of SunOpta. “The decision to cease operations at Carson City is accretive to EBITDA and allows us to redeploy both our financial and human resources towards more profitable segments of our business where we have enhanced strategic positioning.”
SunOpta in an Aug. 9 earnings call said it had hoped to improve profit performance at the facility. Mr. Colo in the call noted operational issues were leading to inefficient production and gross margin losses.
Nutrition bars accounted for $13 million of SunOpta’s revenue in fiscal-year 2016 and $11 million of revenue during the first half of 2017. SunOpta had total revenues of $1,346.7 million in fiscal-year 2016 and $666.5 million in the first half of this fiscal year.
SunOpta expects discontinuing the bar product lines to be positive to EBITDA in future earnings periods. The company expects to incur charges of about $8 million to $9.5 million relating to the facility closure, including about $5 million to $6 million of non-cash charges for asset write-downs and about $3 million to $3.5 million of cash expenditures for severance and other facility closure costs.
The recovery of working capital after the full wind-down of operations is expected to largely offset the cash charges. The non-cash and cash charges are expected to be recognized during the third and fourth quarters of fiscal-year 2017.“I want to thank all of our employees associated with our Carson City operations for their hard work and dedication,” Mr. Colo said. “Each employee has contributed to our goal of bringing well-being to life in their own way and has had a meaningful impact at SunOpta.”