SunOpta (US:STKL)2022-02-24 21:43Financial Data and Key Metrics Changes - Q4 consolidated gross margin was impacted by higher costs in plants without a corresponding increase in output, leading to a decline of 650 basis points to 9% [6][35] - Full year revenue was $813 million, with full year plant-based revenue growing 13% on an as-reported basis [15] - Adjusted EBITDA for Q4 was $10.7 million, down from $20.6 million in the prior year, reflecting a 48% decline [42] Business Line Data and Key Metrics Changes - Plant-based revenues increased 9.2% to $125 million in Q4, marking the 13th consecutive quarter of revenue growth [18] - Fruit-based revenue decreased 9.4% to $79 million in Q4, impacted by SKU rationalization and supply constraints [26] - Plant-based beverages were the primary driver of growth, with oat-based offerings increasing over 120% year-over-year [19] Market Data and Key Metrics Changes - The oat business grew 120% in Q4, indicating strong demand despite raw material availability issues [10][85] - The fruit snacks segment saw growth accelerate to 23.5% in Q4, reflecting positive trends in consumer preferences [26] Company Strategy and Development Direction - The company aims for strong top-line growth in 2022, with plant-based products expected to grow double digits and fruit business returning to growth largely via pricing [14] - Strategic priorities include strengthening competitive advantages in plant-based, building a strong ingredient business focused on oat, and evolving the fruit-based portfolio through innovation [17][25] - The new Texas plant is expected to significantly contribute to adjusted EBITDA, with a forecast of $100 million in 2023 [14][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that Q4 results do not reflect the company's future earnings potential, attributing challenges to supply chain issues and labor shortages [5] - The company anticipates strong demand in the plant-based segment, with expectations for production to improve by approximately 15% in Q1 [9] - Management highlighted that all known raw material cost inflation has been passed to customers, with pricing adjustments expected to be fully realized by the end of Q1 [11][67] Other Important Information - The company plans to host an Investor Day in Q2 to showcase its products and provide insights into its business strategy [49] - Capital expenditures are expected to be in the range of $110 million to $115 million, primarily driven by the new plant in Texas [48] Q&A Session Summary Question: What is the expected timeline for plant-based growth recovery? - Management expects continued acceleration in plant-based growth throughout 2022, with potential for higher growth rates in the second half [55] Question: How is the $100 million EBITDA target for fiscal 2023 structured? - The target reflects confidence in the Texas plant's contribution and continued core business growth, with a combination of new business and existing operations driving profitability [57] Question: What is the outlook for sales growth in each segment throughout the year? - Core growth is expected to be driven by plant-based products, with fruit business anticipated to return to growth due to pricing actions taken in 2021 [63] Question: How is the company managing raw material supply and pricing? - The company has covered 100% of its known raw material exposure through pricing adjustments, with no unrecovered inflation reported [67] Question: What are the long-term plans for automation in response to labor disruptions? - The company is already highly automated, but will continue to explore small-scale automation opportunities to improve efficiency [69]