\nSunOpta Inc. (\u201cSunOpta\u201d or the \u201cCompany\u201d) (Nasdaq:STKL) (TSX:SOY), the 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 today announced financial results for the first quarter ended March 29, 2025.\n<\/p>\n
\nAll amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.\n<\/p>\n
First quarter 2025 highlights:<\/b><\/p>\n \n\u201cFirst quarter results exceeded our expectations, and we again delivered double-digit volume growth driven by broad-based gains across segments, products and customers,\u201d said Brian Kocher, Chief Executive Officer of SunOpta. \u201cEfforts to unlock latent capacity are ahead of schedule and our margin improvement initiatives are expected to deliver quarterly sequential margin increases throughout 2025. We are also seeing growth in our sales pipeline, reflecting incremental opportunities from both existing and potential new customers. In addition to our focus on improving margins, we remain tightly focused on optimizing cash flow and deleveraging – efforts that provide optionality and flexibility, positioning us to drive higher returns and long-term value for shareholders.\u201d\n<\/p>\n First Quarter 2025 Results<\/b><\/p>\n \nRevenues increased 9.3% to $201.6 million for the first quarter of 2025. The increase was driven by favorable volume\/mix of 12.2%, partially offset by a price reduction of 1.7% due to the pass through of certain raw material cost savings, together with a 1.3% impact related to our exit from the smoothie bowls category in March 2024. Growth in volume\/mix reflected volume increases for plant-based beverages, broth and fruit snacks.\n<\/p>\n \nGross profit decreased by $0.8 million, or 2.4%, to $30.3 million for the first quarter, compared to $31.1 million in the prior year period. As a percentage of revenues, gross profit margin was 15.0% compared to 16.8% in the first quarter of 2024. Adjusted gross margin\u00b9 was 15.3% compared to 17.0% in the first quarter of 2024. The 170-basis point decrease reflects investments in talent and infrastructure to improve long-term margins, the inefficiencies related to temporary volume limitations resulting from the excess wastewater issue at our Midlothian, Texas, facility, and incremental depreciation related to assets recently placed in service but not fully utilized as production ramps up. These factors were partially offset by higher sales and production volumes for beverages, broths and fruit snacks driving improved plant utilization.\n<\/p>\n \nOperating income was $10.5 million up from $10.1 million in the first quarter of 2024, reflecting lower stock-based compensation in the first quarter of 2025, partially offset by a non-recurring gain on the sale of the smoothie bowl product line in the first quarter of 2024, together with lower gross profit.\n<\/p>\n \nEarnings from continuing operations were $4.8 million for the first quarter of 2025 compared with earnings of $3.8 million in the prior year period. Diluted earnings per share from continuing operations attributable to common shareholders (after accretion on preferred stock) was $0.04 for the first quarter compared with diluted earnings per share of $0.03 in the prior year period (after dividends and accretion on preferred stock).\n<\/p>\n \nAdjusted earnings\u00b9 from continuing operations were $5.3 million or $0.04 per diluted share in the first quarter of 2025 compared to adjusted earnings from continuing operations of $1.9 million or $0.02 per diluted share in the first quarter of 2024.\n<\/p>\n \nAdjusted EBITDA\u00b9 from continuing operations was $22.4 million in the first quarter of 2025 compared to $21.9 million in the first quarter of 2024.\n<\/p>\n \nPlease refer to the discussion and table below under \u201cNon-GAAP Measures\u201d.\n<\/p>\n Balance Sheet and Cash Flow<\/b><\/p>\n \nAs of March 29, 2025, SunOpta had total assets of $690.7 million and total debt of $260.6 million compared to total assets of $668.5 million and total debt of $265.2 million at year end fiscal 2024. During the first quarter of fiscal 2025, cash provided by operating activities of continuing operations was $22.3 million compared to $7.4 million during the first quarter of 2024. The increase in cash provided from operating activities mainly reflected improved working capital efficiency. Investing activities of continuing operations consumed $15.2 million of cash during the first quarter of fiscal 2025 compared to $4.2 million in the first quarter of fiscal 2024, reflecting higher capital expenditures, intangible asset purchase of increased wastewater allowance together with the non-recurring proceeds from the sale of the smoothie bowl product line in 2024. Leverage was 2.9x, compared to 3.0x at the end of fiscal 2024 and we continue to expect to be at our 2.5x leverage target by the end of 2025.\n<\/p>\n Capital Allocation Priorities and Share Repurchase Authorization<\/b><\/p>\n \nOur capital allocation priorities are to achieve our leverage target of 2.5 times, followed by investing in growth capex, with the third priority being returning capital to shareholders. While our immediate plans are to achieve our 2.5x leverage target, since we currently do not envision needing growth capex in 2025, we would like to be positioned for opportunistic share repurchases if we are trending ahead of plan and have excess cash available while still being able to meet our leverage target. Accordingly, on May 5, 2025, the Company\u2019s board of directors approved a share repurchase program, authorizing the Company to purchase up to an aggregate $25 million of the Company\u2019s common shares. The size and timing of repurchases, if any, will be determined by the Company\u2019s management and will depend upon a multitude of factors, including the Company\u2019s progress towards its leverage target, financial position, capital allocation priorities, market conditions, regulatory requirements and other considerations.\n<\/p>\n Tariffs<\/b><\/p>\n \nTariffs continue to be an evolving situation that we continue to monitor. While our employees, production facilities, and customers are predominately located in the U.S. (in 2024, 98% of revenue was to U.S. based customers), we source a portion of our raw material ingredients and packaging globally, and a portion of our fruit snack products are imported into the U.S. from our Niagara, Ontario, facility. In response to these tariffs, we started communications with our customers at the beginning of the year and we intend to pass-through substantially all the incremental costs to our customers, similar to our pass-through pricing of raw material cost increases.\n<\/p>\n 2025 Outlook2<\/sup><\/b><\/p>\n \nFor fiscal 2025, the Company is raising its outlook reflecting the strong first quarter and continues to expect strong growth in revenue and adjusted EBITDA:\n<\/p>\n\n
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