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]

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 Data and Key Metrics Changes - The company reported a year-over-year revenue growth of 13%, driven by a 14% increase in volume across its portfolio [7][19] - Adjusted EBITDA increased by 14% to $22.7 million compared to $20 million in the prior year [21] - Earnings from continuing operations surged by 198% to $4.4 million, compared to a loss of $4.4 million in the prior year [20] Business Line Data and Key Metrics Changes - The fruit snacks category achieved its twentieth consecutive quarter of double-digit growth, now comprising 20% of total revenue, up from 10% five years ago [12][14] - Beverage and broth unit production increased by 16% and 25% respectively, while fruit snack production rose by 22% year-over-year [13][20] - The foodservice category continued to grow in mid-single digits, with oat products performing particularly well [11] Market Data and Key Metrics Changes - The company noted that all product categories, go-to-market formats, and channels experienced year-over-year growth [10] - The club channel business thrived, up over 25%, as consumers sought quality products at great value [11] - The shelf-stable plant-based beverage category is experiencing high single-digit growth, with expectations for continued acceleration [16] Company Strategy and Development Direction - The company is committed to investing in a new manufacturing line to increase output by approximately 25%, with the new capacity already oversubscribed [15][27] - The strategic focus remains on operational efficiency, gross margin improvements, and capital allocation to drive return on invested capital (ROIC) [6][26] - The long-term growth algorithm targets annual revenue growth of 8% to 10% and adjusted EBITDA growth of 13% to 17% [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute and create long-term value, despite ongoing consumer and tariff uncertainties [6][15] - The operational improvement plan is on track, with strong momentum across key growth platforms [18][94] - The company is well-positioned to capitalize on consumer trends favoring better-for-you products [17][95] Other Important Information - The company incurred $1.6 million in tariff headwinds on gross profit due to a timing lag in pass-through pricing [7][20] - Cash provided by operating activities for the first two quarters was $17.8 million, compared to $2 million in the prior year [21] - The company repurchased 163,227 common shares in the second quarter, reflecting a commitment to returning excess capital to shareholders [26] Q&A Session Summary Question: Details about the new fruit snacks plan - The new manufacturing line will primarily serve existing customers, with a mix of new opportunities, and is expected to significantly enhance capacity [31][34] Question: Adjusted gross margin progression in the back half of the year - A 90 basis point headwind from tariffs is expected in Q3, but margins should fully recover by Q4 as pricing adjustments are implemented [38][62] Question: Growth among customers in the shelf-stable plant-based beverage category - The company is gaining share primarily through existing customers outperforming their categories, with a mix of new entrants also contributing [52][54] Question: Balancing aseptic capacity for different product lines - Broth production is strategically timed to take advantage of seasonal demand, allowing flexibility in production scheduling [71][74] Question: Investment in new line and capital allocation for 2026 - The new CapEx for fruit snacks will be approximately $25 million, mainly occurring in 2026, with a focus on maintaining a solid balance sheet and leverage ratios [76][78]

Financial Data and Key Metrics Changes - The third quarter earnings performance exceeded expectations, with reported net sales increasing by 4% driven by the Sovos acquisition and organic net sales growth of 1% [5][29] - Adjusted EBIT increased by 2% year-over-year, resulting in a slight margin decrease due to lower net pricing realization [9][30] - Adjusted EPS was down 3%, with a net positive contribution from the Sovos acquisition [10][30] Business Line Data and Key Metrics Changes - Meals and Beverages division reported organic net sales growth of 6%, driven by volume and mix growth of 7% [13][35] - Snacks business experienced a 5% decline in organic net sales, primarily due to lower volume and mix [20][36] - The overall consumption of Meals and Beverages leadership brands increased by 2%, while Snacks leadership brand consumption declined by 3% [11][13] Market Data and Key Metrics Changes - In-market consumption for Meals and Beverages outpaced category consumption, while Snacks lagged behind due to competitive pressures [7][10] - The consumer environment showed a preference for home-cooked meals, leading to increased demand for Meals and Beverages products [11][62] - The Snacks category faced a 3% decline in in-market consumption, attributed to deteriorating consumer confidence and increased competition [20][72] Company Strategy and Development Direction - The company is focused on near-term in-market execution and mitigating tariff impacts while investing in brand growth and capabilities [8][27] - A growth office has been established to enhance consumer insights, brand activation, and innovation [27] - The company aims to improve efficiency and effectiveness across the organization to facilitate long-term growth [27][41] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are making more deliberate spending decisions, impacting the Snacks business negatively [6][26] - The company expects adjusted earnings to be at the low end of the guidance range due to slower recovery in the Snacks business [7][39] - There is optimism regarding the sustainability of the at-home cooking trend, which has positively impacted the Meals and Beverages division [60][64] Other Important Information - The company has estimated the net incremental headwind of tariff-related costs to be up to $0.03 to $0.05 per share for fiscal 2025 [39][40] - Capital expenditures for fiscal 2025 are expected to be approximately 4.5% of net sales, reflecting a decrease from prior guidance [41] Q&A Session Summary Question: What is the pressure on the Snacks business? - Management indicated that about two-thirds of the pressure is due to overall category performance and one-third from in-market execution, with a focus on innovation and value [45][47] Question: What are the key factors for fiscal 2026? - Management noted that recovery in the Snacks business is expected to take place in fiscal 2026, with a need for increased marketing support [52][54] Question: How sustainable is the at-home cooking trend? - Management expressed optimism about the sustainability of the at-home cooking trend, supported by the company's diverse portfolio [60][64] Question: What is the impact of tariffs on future guidance? - Management clarified that the estimated tariff impact is being phased in and should not be annualized at this time due to the evolving trade landscape [75][80] Question: What is the growth expectation for Rao's? - Management expects high single-digit growth for Rao's in fiscal 2025, with confidence in the brand's trajectory [83][84]