Summary of SunOpta FY Conference Call (November 18, 2025) Company Overview - **Company**: SunOpta (NasdaqGS:STKL) - **Industry**: Packaged Food and Beverage Key Points Industry and Market Dynamics - The consumer packaged goods (CPG) industry, including restaurants, faced challenges in 2025, with volume and traffic pressures [3][4] - SunOpta operates in growing categories, particularly plant-based beverages and fruit snacks, with the latter growing over 20% [4][5] - The plant-based beverage segment is experiencing high single-digit growth, supported by health and wellness trends [4][20] Demand and Capacity - SunOpta has pulled forward capital investments to meet increased demand, with fruit snack lines fully subscribed and aseptic processing lines 50% subscribed [5][14] - The company anticipates a 25% increase in fruit snack capacity, translating to approximately $40 million in annualized revenue [14] - Aseptic facility improvements are expected to yield a 10% capacity increase, equating to about $65 million in revenue potential [14] Operational Challenges - The company faced a $10 million headwind to EBITDA in Q4 due to operational complexities from increased volume and maintenance issues [6][11] - Wastewater system constraints at the Midlothian facility have impacted operations, but a solution is expected to be implemented by Q2 2026 [11][13] Financial Performance and Projections - SunOpta aims to achieve gross margins of over 20% by the second half of 2027, with expected improvements in Q3 and Q4 of 2026 [57] - The company maintains a leverage ratio of 2.8 times and prioritizes deleveraging while investing in capital projects [40][41] - Long-term ROIC targets are set at 16-18%, with both new projects expected to contribute positively [59] Customer and Market Position - SunOpta's customer base is diversified, with only one customer exceeding 10% of total revenue, indicating low customer concentration risk [26] - The company is well-positioned in the private label market, benefiting from a shift towards value among consumers [20][21] Innovation and R&D - SunOpta has a robust R&D team, with 21 food scientists dedicated to developing solutions for customer needs, including low-sugar and protein-infused products [51][30] - Continuous innovation is a key strategy for maintaining market share and meeting evolving consumer demands [30][32] Future Outlook - The company expects to see incremental progress in revenue and EBITDA growth, with a CAGR of 8-10% for revenue and 13-17% for EBITDA over the long term [65] - Key milestones include the resolution of wastewater issues, the ramp-up of new capital projects, and sustained revenue growth [62][64] Risks and Concerns - Potential risks include the competitive landscape and the possibility of new capacity from competitors, although current market conditions suggest limited new entrants [42][45] - The company is cautious about pricing strategies, ensuring that they maintain value while managing costs associated with tariffs and raw materials [48][60] Conclusion - SunOpta is positioned for growth in the packaged food and beverage industry, with strong demand in plant-based products and fruit snacks, supported by strategic investments and operational improvements [67]

Core Insights - SunOpta's shares fell 20% following disappointing earnings despite a revenue increase of 16.6% year-over-year to $205.4 million, raising concerns about profitability due to a significant decline in gross profit margin from 17% to 12.4% [1] Financial Performance - Revenue for SunOpta reached $205.4 million, marking a 16.6% increase compared to the previous year [1] - The company raised its sales forecast for the full year, indicating optimism in sales growth [1] - Gross profit margin decreased by 4.6 percentage points, from 17% to 12.4%, highlighting rising costs impacting profitability [1] Market Reaction - The stock experienced a 20% drop in the morning session, reflecting a strong negative reaction from investors to the earnings report [1] - SunOpta's shares have shown volatility, with 17 moves greater than 5% in the past year, indicating significant market sensitivity to news [3] Historical Context - The stock had previously gained 26.8% six months ago after reporting strong first quarter results that exceeded analysts' expectations [4] - Year-to-date, SunOpta's stock is down 49.1%, trading at $3.94 per share, which is 50.1% below its 52-week high of $7.89 [5] - An investment of $1,000 in SunOpta shares five years ago would now be worth $546.46, reflecting a substantial decline in value over time [5]

Core Insights - SunOpta reported quarterly earnings of $0.05 per share, exceeding the Zacks Consensus Estimate of $0.03 per share, and up from $0.02 per share a year ago, representing an earnings surprise of +66.67% [1] - The company achieved revenues of $205.41 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 6.98% and increasing from $176.22 million year-over-year [2] - SunOpta has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Financial Performance - The earnings surprise of +66.67% indicates strong performance relative to expectations, with a previous quarter surprise of +100% [1][2] - The current consensus EPS estimate for the upcoming quarter is $0.09, with projected revenues of $219.9 million, and for the current fiscal year, the EPS estimate is $0.18 on revenues of $805 million [7] Market Position - SunOpta shares have underperformed the market, losing about 31.3% since the beginning of the year, while the S&P 500 has gained 15.1% [3] - The Zacks Industry Rank places the Food - Miscellaneous sector in the bottom 30% of over 250 Zacks industries, indicating potential challenges for stock performance [8] Future Outlook - The sustainability of SunOpta's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The estimate revisions trend for SunOpta was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [6]

Financial Data and Key Metrics Changes - Revenue for Q3 reached $205 million, up 17% year-over-year, driven entirely by volume growth [16][19] - Gross profit increased by $2.6 million, or 11%, to $25.5 million, while gross margin decreased by 60 basis points to 12.4% [16][18] - Adjusted EBITDA rose 13% to $23.6 million compared to the prior year [18] - Earnings from continuing operations improved to $0.8 million from a loss of $6.2 million in the previous year [18] Business Line Data and Key Metrics Changes - Plant-based milk volumes increased at a high teens rate in Q3, with strong performance in the club channel and food service [6][8] - Broth volumes were up in the high single digits, while tea was the fastest-growing product category [7] - Better-for-you fruit snacks achieved 21 consecutive quarters of double-digit revenue growth, with demand significantly outpacing supply [7][8] Market Data and Key Metrics Changes - The plant-based beverage category grew 9% in food service, with increased consumer visits to coffee shops expected [8][9] - Anticipated growth of U.S. coffee shop units is approximately 20% over the next five years, benefiting the company as its products are featured in eight of the top ten coffee chains [9] Company Strategy and Development Direction - The company is focused on long-term growth, margin expansion initiatives, and value creation potential, with plans to invest in additional processing capacity [12][13] - A new aseptic processing line is being added at the Midlothian facility to meet growing demand, with a total investment of $35 million planned [20][21] - The company aims to maintain a leverage ratio under three times while investing in capacity expansion and returning excess capital to shareholders [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory despite short-term operational challenges due to accelerated demand [12][14] - The company anticipates a revenue range of $812 million to $816 million for the full year, reflecting accelerated demand and short-term costs [19] - Management acknowledged the need to address short-term cost increases while focusing on long-term operational efficiencies [11][12] Other Important Information - The company is experiencing temporary operational challenges due to increased volume demands, which have led to higher maintenance costs and inefficiencies [21][23] - The company expects to resolve wastewater limitations at the Midlothian facility by the end of Q2 2026, which will improve operational efficiency [23][24] Q&A Session Summary Question: Can you provide insights on the new investment and production capacity for broth? - Management acknowledged that the fourth quarter gross margin is expected to decline by 180-200 basis points due to increased costs and operational challenges [28][29] Question: Why is the top line not flowing through as expected in subsequent quarters? - Management explained that some volume expected in 2026 was pulled into 2025, impacting the fourth quarter results [42][43] Question: How does the company reconcile strong demand with broader consumer trends? - Management emphasized that the company operates in growing categories and has a diverse customer base, which helps mitigate risks from broader economic concerns [44][48] Question: What is the timeline for the new aseptic line and wastewater management? - The aseptic line is expected to go live in late 2026, with wastewater management improvements scheduled for completion by the end of Q2 2026 [53][54] Question: Are the new business volumes short-term or long-term commitments? - Management confirmed that the new business taken on is expected to provide long-term benefits and is not merely short-term volume [59][60]

SunOpta Inc. Earnings Presentation Q3 2025 © SunOpta Inc. 2025 1 1 Better Beverages, Better Snacks, Better Solutions SunOpta Inc. Earnings Presentation Q3 2025 General Disclosures This presentation contains forward-looking statements that reflect the Company's current views about future events and financial performance. These forward-looking statements are subject to important risks and uncertainties, as well as other factors and assumptions that could cause actual results to differ materially from those an ...

Financial Performance - Revenue from continuing operations increased 16.8% to $205.4 million compared to $175.9 million in the prior year period[7] - Earnings from continuing operations were $0.8 million, a significant improvement from a loss of $6.2 million in the prior year[11] - Adjusted EBITDA from continuing operations increased 13.4% to $23.6 million compared to $20.8 million in the prior year[12] - Adjusted earnings per share from continuing operations were $0.05 compared to $0.02 in the prior year[12] - Operating income increased significantly to $6,866 compared to $807 in the same quarter last year, reflecting a substantial operational improvement[23] - Net earnings from continuing operations were $816, a turnaround from a loss of $6,214 in the prior year quarter[23] - Adjusted earnings from continuing operations for the first three quarters ended September 27, 2025, were $15,645,000, up from $5,859,000 in the prior year, representing a growth of 167%[30] - Adjusted EBITDA from continuing operations for the third quarter ended September 27, 2025, was $23,580,000, compared to $20,788,000 in the same quarter of 2024, indicating a year-over-year increase of 13.6%[33] - The company’s earnings from continuing operations attributable to common shareholders for the third quarter were $816,000, compared to a loss of $6,351,000 in the same quarter of 2024[30] Revenue Outlook - The company is updating its 2025 revenue outlook to $812 - 816 million, and for 2026, the outlook is $865 - 880 million[15] - Revenues for the quarter ended September 27, 2025, were $205,410, an increase of 16.8% compared to $175,856 for the same quarter in 2024[23] - Reported revenue for the third quarter ended September 27, 2025, was $5,962,000, compared to $1,784,000 for the same period in 2024, reflecting a significant increase[30] Cash Flow and Assets - Cash provided by operating activities of continuing operations was $34.1 million for the first three quarters of fiscal 2025, compared to $19.2 million in the prior year[13] - Cash provided by operating activities of continuing operations was $34,124, up from $19,221 in the same period last year[25] - Total assets as of September 27, 2025, were $694.1 million, with total debt of $265.8 million[13] - Total assets as of September 27, 2025, increased to $694,102 from $668,527 at the end of December 2024[24] - Current liabilities rose to $193,426 from $169,434, primarily due to an increase in accounts payable and short-term debt[24] - Total debt as of September 27, 2025, is $265,785,000, with net debt at $263,560,000 after accounting for cash and cash equivalents of $2,225,000[37] Operational Developments - A new aseptic manufacturing line is being announced at the Midlothian, Texas facility, which is already over 50% subscribed and expected to come online in late 2026[6] - The company reported a net loss from discontinued operations of $1,814 in the previous year, which has been eliminated in the current reporting period[25] - The company incurred asset impairment charges of $2,565,000 in the third quarter of 2025, which were not present in the same quarter of 2024[33] - The exit from aseptic totes resulted in charges of $1,423,000 in the third quarter of 2025, with no comparable charges in the previous year[33] Financial Ratios - The company expects to maintain a net leverage ratio of 2.8x through the end of the fiscal year[13] - Net leverage as of September 27, 2025, is 2.8x, compared to 3.0x as of December 28, 2024[37] - The company’s accumulated deficit improved to $(346,511) from $(355,982) year-over-year, indicating a reduction in losses[24] Other Financial Metrics - Gross profit increased by $2.6 million, or 11.4%, to $25.5 million, with a gross margin of 12.4%[9] - Gross profit for the quarter was $25,467, resulting in a gross margin of 12.4%, while the adjusted gross margin improved to 13.6%[27] - The reported gross margin for the third quarter was 14.1%, while the adjusted gross margin was 14.7%[30] - Interest expense, net for the third quarter was $5,424,000, a decrease from $6,762,000 in the prior year[33] - The company reported a loss on sale of receivables of $603,000 in the third quarter, compared to $236,000 in the same period of 2024[33] - Wastewater haul-off charges for the third quarter amounted to $1,145,000, down from $2,180,000 in the same quarter of the previous year[33] - The weighted-average common shares outstanding increased slightly to 118,245, compared to 116,841 in the same quarter last year[23]

Core Insights - SunOpta Inc. will participate in the Stephens Annual Investment Conference scheduled for November 18-20, 2025, in Nashville, Tennessee [1] Company Overview - SunOpta Inc. specializes in providing customized supply chain solutions and innovation for various sectors, including beverages, broths, and healthier snack options [1]

Core Insights - Leon Cooperman has increased his passive stake in SunOpta to 6.7 million shares, representing a 5.6% ownership in the company [1]. Company Summary - SunOpta is experiencing increased interest from notable investors, as evidenced by Cooperman's stake increase [1]. - The current stake of Cooperman indicates a significant level of confidence in SunOpta's future prospects [1]. Industry Context - The involvement of seasoned investors like Leon Cooperman may reflect broader trends in the industry, where established figures are seeking opportunities in companies like SunOpta [2].

Core Insights - SunOpta Inc. is recognized for its production of plant-based beverages, particularly soy and oat milk, although the dairy industry prefers not to label them as "milks" [1] Company Overview - SunOpta Inc. operates in the health-food sector, focusing on plant-based products [1] Market Position - The company is positioned within a growing market for plant-based alternatives, catering to increasing consumer demand for healthier beverage options [1]

Core Insights - SunOpta Inc. is recognized for its production of plant-based beverages, particularly soy and oat milk, although the dairy industry prefers not to label them as "milks" [1] Company Overview - SunOpta Inc. operates in the health-food sector, focusing on plant-based products [1] Market Position - The company is positioned within a growing market for plant-based alternatives, catering to increasing consumer demand for healthier beverage options [1]