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]

Strategy & Growth - SunOpta aims to double its revenue by 2025, building on investments made since 2020 [16] - The company's solutions offering has sustained double-digit revenue growth, with an 11% CAGR [22] - SunOpta is targeting high single-digit revenue growth, fueled by optimizing equipment productivity [38] Financial Performance & Outlook - Q4 2024 revenue increased by 9% to $194 million, driven by a 13% volume increase [54] - Adjusted EBITDA for Q4 2024 increased by 20% to $26.1 million [54] - Full year 2024 revenue increased by 15% to $724 million, with a 21% volume increase [57] - Adjusted EBITDA for full year 2024 increased by 17% to $89 million [57] - The company projects revenue between $775 million and $805 million for FY25, representing a 7%-11% increase [60] Asset Optimization Strategy - SunOpta's Asset Optimization Strategy aims to improve gross margin by +400bps [34] - Capital expenditures are expected to decline by approximately 50%, targeting $30 million to $35 million annually [40, 42]