Overview

SunOpta is a company that delivers customized supply chain solutions and innovation for top brands, retailers, and foodservice providers across a broad portfolio of beverages, broths, and better-for-you snacks. The company’s products are distributed through retail, club, foodservice, and e-commerce channels across North America.

Business Environment and Fiscal 2025 Outlook

• The U.S. has imposed new tariffs on imports, including from Canada and Mexico, which will result in additional costs for SunOpta and its suppliers. SunOpta plans to implement targeted pricing actions to pass through substantially all of the incremental tariff costs to customers.
• The potential inflationary impact of tariffs may also slow economic growth and reduce household savings, which could impact consumption of certain SunOpta products.
• Despite the tariff uncertainty, SunOpta is projecting higher year-over-year revenues for fiscal 2025, driven by organic volume growth in its beverages and snacks categories. The company anticipates an improved gross margin profile, though the pass-through of tariff costs may result in an increase in revenues and a decrease in gross margin.
• SunOpta expects operating income growth and increased cash flows, driven by the higher gross profit and lower SG&A spending as a percentage of revenue.

Consolidated Results of Operations

Table 1: Consolidated Results for Q1 2025 vs. Q1 2024

• Revenues increased 9.3% driven by favorable volume/mix, partially offset by lower pricing and the exit from the smoothie bowls category.
• Gross profit decreased 2.4%, with gross margin declining 180 basis points, due to investments in labor and infrastructure, incremental depreciation, and temporary wastewater treatment issues.
• Operating income increased 3.6%, reflecting lower stock-based compensation expense, partially offset by the decrease in gross profit.
• Earnings from continuing operations were $4.8 million, up 26.7% from the prior year.
• Adjusted earnings from continuing operations were $5.3 million, or $0.04 per diluted share, compared to $1.9 million, or $0.02 per diluted share, in the prior year.
• Adjusted EBITDA from continuing operations increased $0.5 million to $22.4 million.

Liquidity and Capital Resources

• SunOpta has a $180 million term loan and $85 million revolving credit facility, with $171 million outstanding on the term loan and $38.8 million utilized on the revolving facility as of March 29, 2025.
• The company utilizes a receivables sales program and customer supply chain finance programs to improve working capital efficiency and access liquidity.
• SunOpta is also financing certain purchases through extended payables facilities to enhance cash flows.
• Capital expenditures for fiscal 2025 are estimated at $30-$35 million, to be funded primarily through operating cash flows and the revolving credit facility.
• The company’s Board of Directors has approved a $25 million share repurchase program.
• SunOpta believes its operating cash flows, credit facilities, and other financing programs will be adequate to meet its needs for the foreseeable future.

Non-GAAP Measures

SunOpta uses the following non-GAAP measures to evaluate its performance:

• Adjusted Gross Margin: Excludes unusual items like wastewater treatment charges and start-up costs.
• Adjusted Earnings from Continuing Operations: Excludes unusual items like wastewater charges, start-up costs, and gains/losses on asset sales.
• Adjusted EBITDA from Continuing Operations: Excludes interest, taxes, depreciation, amortization, stock-based compensation, and unusual items.

These non-GAAP measures provide users with a meaningful, consistent comparison of the company’s profitability and operating performance.