SunOpta Inc. Q4 FY2023 earnings call

• Joe Ennen highlighted strong Q4 results with volume-driven revenue growth, adjusted EBITDA increase, and divestiture of frozen smoothie bowl business. • Brian Kocher expressed excitement about leading SunOpta, reaffirmed 2024 outlook, and outlined strategic priorities: increasing supply chain efficiency, driving growth, and disciplined capital allocation. • Greg Gaba reviewed financials, noting revenue growth, gross profit, operating income, and adjusted EBITDA increases.

Beverage and broth product group: Revenues increased 19% to $147 million, representing 81% of Q4 revenue. Fruit snacks: Revenue was up 31% to over $27 million, driven by volume growth enabled by capacity expansion in Omak, Washington.

• Reaffirmed 2024 guidance: revenue in range of $670 million to $700 million (6%-11% growth), adjusted EBITDA $87 million to $92 million (11%-17% growth). • Aiming for $125 million adjusted EBITDA run rate by end of 2025 or early 2026.

Q: About new business pipeline and how it relates to revenue assumptions without the smoothie business.

A: Brian Kocher said new business growth comes from share with existing customers, new customer acquisition, TAM expansion, and blue chip customers growing.

Q: On Texas facility ramp and utilization.

A: Brian Kocher said first two lines on track to end run rate by second quarter, third line in process.

Q: On foodservice side growth.

A: Brian Kocher said foodservice growth driven by oat products, from share gains, new customers, and TAM expansion.

Q: About share gains vs industry volumes.

A: Joe Ennen said SunOpta grew 3x faster than total plant-based category mid-single digit growth.

Q: On oat base supply and industry impact.

A: Brian Kocher said oat driving growth, Modesto extraction line coming online in Q1.

Q: About 2024 outlook high end drivers.

A: Brian Kocher said new business development and tracked channel growth turnaround could positively impact.

Q: On sales composition and growth leverage.

A: Brian Kocher said fruit snacks may have accelerated growth vs beverage and broth, but absolute dollar amount could be similar.

Q: On operations leverage and supply chain.

A: Brian Kocher said opportunity to improve supply chain efficiency across components.

Q: On SG&A evolution.

A: Greg Gaba said SG&A as percentage of revenue expected to be similar to 2023.

Q: On plant-based beverage growth verticals.

A: Joe Ennen said driven by coffee shops, consumer shift to plant-based.

Q: On EBITDA goal and Midlothian line.

A: Greg Gaba said on track for $125 million run rate by end of 2025/early 2026; Brian Kocher said Line 3 focused on plant-based milks.

Q: On free cash flow and debt pay-down.

A: Greg Gaba said debt 80% variable, 20% fixed, targeting under 3x leverage by end of 2024 second half.