STKL - Earnings call transcript Q2 2021

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Operator

Good morning. And welcome to SunOpta’s Second Quarter Fiscal 2021 Earnings Conference Call. By now everyone should have access to the earnings press release that was issued this morning and is available on the Investor Relations page on SunOpta’s website at www.sunopta.com. This call is being webcast and its transcription will also be available on the company’s website.

As a reminder, please note that the prepared remarks which will follow, contain forward-looking statements and management may make additional forward-looking statements in response to your questions. guarantee placed and upon not should undue do be not them. statements future therefore, performance, reliance These We forward-looking refer annual results cause you the detailed SunOpta’s those Form press discussion to from and to Securities all statements. risk issued XX-K and factors for projections morning, differ factors and this of Exchange materially the a filings the actual company’s other report Commission on release filed any with contained more in could that to publicly made obligation under or update to The future statements no company laws. circumstances, required correct the forward-looking may during reflect undertakes applicable securities be presentation the except events or as

figures of to non-GAAP measures was these Finally, like to remind otherwise dollars I’d nearest we that like press unless certain and please that included Joe SunOpta’s conference with Ennen. refer occasionally financial the CEO, stated, million. rounded the are U.S. would note today the issued this company Also, turn company’s earlier during over today. call to reconciliation to all non-GAAP may are measures to release in financial now, listeners A the teleconference. And discussed

Joe Ennen

thank and on call Financial joining Scott us you today. the Chief With Officer. Huckins, me our for is morning Good

priorities. the XX% and priorities Our strategy innovation the corporate strength XX% are execution and our customer-centric revenue second of business. portfolio accelerating doubling the of These quarter EBITDA results nearly our against our and transformation, growth growth demonstrates plant-based quality of

continued internal In costs business our progress competitive and continue operating The is to plant-based reflect realizing revenue combined to are plant-based capacity, optimize by the and efforts with increases in driven continue business improving profitability We topline customers, significant unit, strong in our fruit-based. growth being pricing. emphasize we our demand. to in beverages make fruit-based consumer advantages we

quarter. from Before I key offer QX the unpacking results, our me takeaways let three begin

oak-based core and First, beverages to by be the by continues customers. remains plant-based and led products momentum in our strong

development plant-based pipeline term new customers, business our remain the our on optimistic with and portfolio. we based Second, for long about prospects existing growth

we brands in plant-based innovation on importance us remain our faster gains, Third, well, portfolio and helping very co-manufacturing, bring both margin. though in focused in increasing revenue is and performing solid delivering to also of market own

me the a of quarter quarter second were the some and high Let of with shared Overall, start accomplishment segment. QX of ahead first from view I’ll details key we call. level you the then on by second with outlook the share results

inherent Gross XX.X% total second QX to QX X.X% fruit-based or XX.X% continued Plant-based revenue profitability, XXXX. growth revenue. increasing by our $XX.X For million adjusted adjusted XX leverage basis on to be improving EBITDA EBITDA focus to demonstrated and points in compared our the up the remained we significant margin versus to key driver, faster and advanced with X% while XXXX model a at to revenue. much of our million than was and in improved up and productivity quarter $XXX.X rate XX%

is core to our automation new capacity productivity brought optimization the to plant-based is capacity business business the have in business. we From impressive. in headroom the real our We are our us strategic with made progress aggressively well, fourth in multiple fruit, installation in competitive around in of expansions added and quarter performing footprint plant-based pursue building plant-based are to in in network. online we XXXX giving production The operations the opportunities. we and has of transforming initiative and progress improving across our expanding been Manufacturing pleased

capacity our driving Modesto. and utilization. similar implemented in nimble sized around us project tracking Automation making and project plan, starting solid in is is plants more Allentown productivity Our in also expected to we are be core QX the operational late in a gains

with our facility the operation We Santa South July our QX. closure facility in have in Gate Maria made considerable exit and our progress of fruit-based consolidating of in

new X are we a the facility far this XXX,XXX from plant-based core Dallas-Fort capabilities the aggregate, and combined including our CapEx Allentown significant trends projects. expected our our with operations fruit-based ago. the motion more to by that capacity growth have times in in incremental we expansion element allow XXXX prong around plant-based and of to brands the in for capacity have Finally, stage fruit versus yet of service announce augment continue consumer to year Modesto Mexico is that and five the double advantaged XXXX pace our brought a business. pleased we undertaken. de-risking to construction plant am South I to with operations. and Having be In at give of will of the late the operational the lease support we’ve of ever the The are to end by customers long-term projects excited area in business. will have now project capacity negotiating keep over set strategically largest the This effectively America square our progress online The for grow to Worth plant-based with us another is along our is demand. greenfield we offering ability made we sourcing the foot XX% final stages in a and facility our more a expansion processing mega

We in have project intentionally designed demand phases to as rises. this developed customer be

over plant and growth East, this capabilities broadens to savings the efficient to in footprint to more lower added new improved manufacturing environmental for profile customers. as redundant South new margin our have will supply time our capabilities In and now we offer by business, customers. The the the further having our partner network. and competitive us allowing footprint, geographic we as for this expect very supporting core West, realize cost risk chain the Midwest competitive improve national our a scale our will adds in continued further facility strengthens position a and With addition new facilities to our

our with segment. starting me plant-based results, our let turn segment Now to

strategic have priorities. We three

First, build business cost advantaged quality, and a capacity, R&D. customer model around competitively service

show a refrigerated milks. owned includes quarter And second on on XX.X% the enable Results plant-based all of third, a label ingredient business stack a top of brands. in and increase measures, participation significant private which of build further XX.X% including Second, revenue, a in the build plant-based an generating two-year in multipronged co-manufacturing, robust business was go-to-market increase in progress quarter that XXXX second XX.X%. to

frenzy sales our Now category plant-based of in beverage to share help continued COVID frame a QX XXXX. a retail results. let retail me overlapping data growing of despite The category bit

we are which for the channel There our milk our to is oat plant-based experienced for milk. From foodservice X.X% sales what growth it our was foodservice in therefore, sales of and results, drivers aligns For an from were drinks continued strong don’t that brands. standpoint, Oat our the milks coffee a in was product was QX, QX. based and in it of period foodservice. XX-week our due primary customers coffee milk, standpoint similar with increased But milks a accounted robust from on go-to-market in it quarter, three have a are safe data half our foodservice. there sales QX growth of and a plant-based is to syndicated we beverages, from plant-based overall it say ingredient to standpoint in oat own core co-manufacturing standpoint both

oat customers realizing Starbucks, both we’re in Importantly, winning well new milk as like are as the coming existing from business. gains

retail milk. provide oat market our to not their seeing processing other offerings. oat business, quite proprietary for testimony of likely strong another multiyear addition addition customers that is demand distant share supplying process the to currently we signed construction company a in oat the will would It along foodservice marketplace new manufacturing our necessitate customers to extension of authentic have the Their to to the Texas oat strong yet we built be CPG we the large leader project. a our future oat are milk quality the leading system and from In and too industry in in the product to milk differentiate continue help is milk success with sales who results

project sales will of From in go-to-market our the good mentioned in phase capital as quarter. I we we standpoint, in, growth strong As growth XX% top with this customers, saw very a stewards. five

brand, to Dream in the we to in addition revenues X mid-April plant-based the our it own percentage points of of acquired and were second growth. our segments approximately for WestSoy which additive As relates accounting quarter

a end. when rebound significantly during in growth our addition launched and concentrated line seeing quarter versus which was has being In both with recently a second stores is sight year of year brand foodservice, is X,XXX creamer by this, channel. was channel the to our this of pressuring perspective, oat COVID SOWN more been experiencing to in a From in over organic in strong distribution e-commerce gaining and velocities milk retail sales last plant-based

offerings. geographic the fruit-based one, consistent pricing solid to focused quarter. chain of We’ve customer these sharply our three on the towards on Number when expected footprint relations. number innovation and reengineering. a three are via to priorities against been to supply which us returns in earnings two is cost revenue We de-risking more business enable trajectory. our lower through value segment deliver to operator portfolio And low margins, through and becoming Moving reengineering to diversification, made in improve growth higher strategic focused costs is number added it the fruit frozen automation to the and progress better three all programs grower is upward evolve

efforts. of volume margin, increased trends the segment at-home sales volume. showed lower fruit-based frozen normalization as results down were illustrative partially operating to quarter retail being these well Similar revenue both plant-based as by improvement margin. Second level fruit, level Despite in contributed in to offset segment gross foodservice we X.X%, of of consumption

a coincided COVID that story prior were the XX.X%. growth X.X% year frozen growth XX-week with with lapping due category fruit the driven experiencing category results, sales different down period. to of much significant For our It’s snacks strong retail in in period fruit the

and around products in initiatives customers the marginally fruit-based were Our revenues quarter. profitable another factor second rationalizing pressuring

negatively so performance with headwind new these offerings. in consumer very factors was development constraints also offsetting Finally, reflecting This fruit our demand. innovation a driven growth not surprise. and volume business, a QX, strong supply varieties a snacks from business affected blended Partially revenue fruit from strong fruit was certain in

a provided to large standpoint, fruit pricing in from distribution fruit to growth large raw X% From affected we increases. our customer retail challenges supply commodity higher CPG lower revenues along from as QX. passed with in margin cost customers customers. revenue quarter business a significant increased lift drove customers Conversely, fruit-based negatively and for Finally, especially coupled frozen second snacks

in the customers same snacks strategic time collectively in grew XXXX. in five XX% top QX Our versus

and Chef through evolve growing about As more to innovation breakfast of like value-added line a effort this we launching are bowls. innovation segment excited to of are a are to part with segment. we bringing the brands we our Tattooed rapidly fruit-based is portfolio value-add, This the

Some are Crisp of the like smoothie bowls based, and and we have fruit Granola. Kellogg whole launching toppings fruit we’ll

also launching for Consistent It Growers. retailers some a will product bowls, as blueberries. We cheesy-based and innovation our and whole in this also and other large brand retailers under agnostic which company. market feature a label development our approach co-manufacture cheesy private are go Sunrise are to launch in offering launch product a to CPG will we with this

we’ve first our QX plant-based We SunOpta business into high customers, the of across we CPG fastest starting half Growers aggressive and expanding the in capturing higher with our sheet at several the are club very in categories. additional on portfolio We’ve long products, new continue some executing balance XXXX business rolling margins currently Sunrise the and organization. of Through term under winning summary, capacity test remains growing we EBITDA. In XXXX. in been strong store plan have of of existing customers, and substantial of adding level authorization in brand well-positioned our the major substantial from chain with for and a delivered adjusted with from customers coupled growth growth, growth XXXX

fuel and the XXXX continued to and optimism we will which All our as committed future. believe continue our the of future for strategies seek of to supports outlook, food. previous deliver team my We to the remain

turn I’ll through to of rest the the us call Now, Scott? to take financials. the over Scott

Scott Huckins

Thank everyone. you Joe, good very much, and morning,

to excited another quarter. report solid We’re

year-over-year, was on had million modest of WestSoy to X.X% XX.X% XXXX. of As in profit our profitable gross business. productivity mentioned, plant-based due gains the $X.X up EBITDA led of focus higher to as fruit-based segment in the strong a second of were while X.X%, a with stronger volume we frozen second marginally fruit, Gross Joe basically plant-based flat, offset quarter quarter revenues decline volumes increase productivity of fruit-based million, continue to increased a and Adjusted ingredient Mexican rationalizing on plants. $XXX.X during or increase from million plant-based, were and $X.X as focus exchange significant million the lower The transportation higher growth increase impacts the to fruit fruit-based $XX.X XX.X% largely and and gains Dream profit to by $XX.X of our plant-based and leverage as and strategic XXXX, snacks volume our beverage optimizing unfavorable in across million along the business. as compared XX.X%, growing for second accounted for profit fruit costs, retail the Gross volumes, segment operations. toppings of quarter strawberry was the the within of addition foreign million improvements brands created an in and $XX.X in peso

is increase associated capacity These of we a fourth inputs. XX%, gross material all The X.X%, tend XX the to fruit-based and in productivity considering XX.X% almost under material This plant-based only year, down were gross absorbed because ago, to which reflecting added points increased headwinds and the quarter XX margin XX-basis-point last As pricing depreciation was waiting the customers margin a raw operate a points. on to scale basis entirely XX.X% points basis of was margin year. a arrangements investments margins in co-manufacturing quarter Raw increase. from our X% revenues, second drive gross have pass-through last plant-based for percentage of the with toward XX to result segment gains, strong year was revenue increased did offset XXX a and an impact material transportation not plant-based compared very efficiency. by costs. of compared basis expansions segment points basis expense Gross pricing of

share per the or second a $X.X that per is the Note million or quarter’s quarter compared of loss to diluted processing other with of Our share loss second large adjusted business $X.X as $X.X $X.X to year basis, share, $X.XX productivity, or of million of an operations charges $X.X year. WestSoy in in fruit or to profitability be loss quarter to $X.X the improving near-term in second was from this related XXXX. million around of compensation loss after increased a $X.XX million diluted the focus for customers. $X.XX year. effect rationalizing marginal our business $X.XX our combination focusing through were South to million the to expense diluted $XX.X compared per compared business, costs Gate million per in last integration earnings attributable partially exit shareholders or during facility, the lower by adjusted a continuing the prior other were $X.X On of giving million costs. of common Operating out primarily million of expenses fruit-based quarter optimizing offset the to and diluted retail $X.X $X.X an variable was and Loss taking Dream of income million continues XXXX share million quarter, related SG&A acquisition versus X.X% to period. income the prior second

the year, press million toward the measures As million, adjusted was Joe increase. and GAAP listeners found reconciliation EBITDA measures like of the this a can release XX.X% EBITDA mentioned, compared adjusted $XX a $XX.X back adjusted to earlier these in of be earnings to and non-GAAP morning. remind issued are to I’d that prior

flow. and sheet to Turning the cash balance

The and in The brands. representing during $XX.X balance stood inventory in to million cash on a inventory compared discussion to end quarter, XXXX three, X few supply stronger to first the build label, minutes on fruit end three, quarter to cash As second WestSoy of change due to impacts million a private was three potential branded From and categories the was million with million, inventory remains WestSoy. of with of of flow $XXX second July X, and $XXX which facilities inflation compared quarter year smaller million year. million, impact at our used costs, million $XXX financing second a second varies versus fruit Prior approximately asset-based the other we across industries. XXXX, the These on facility this total are, million, year of two, arrangements. reflecting $XX.X based quarter Dream was seasonal and operating the acquisition major of of Leverage down of times costs. time cash generated used X.X operating up compared two, on due build cash at the along year’s I’d was at different categories, one, XXXX. of perspective, Cash and Total across and inflation, area acquisition of Dream materials, our drawn quarter from in XXXX spend during providing million activities expensive three last credit reflects of have the to a versus last all credit a like are, which more raw debt the this $X.X last as second activities investing outlook, lease products. the of in go and business $X.X how flow operating quarter debt the a earlier. our co-manufacturing, chain seasonal of $XX to market, times from one, $XXX the with

are business, For any would bear fruit-based changes raw prices. risk significant of commodity In largely timing need in is example in in be the lag product, and/or pass-through tends we gains. we concentrated but plant price price When where headwinds by a revenue offset we did co-manufacturing label look plant inflation private must we in prices through variation pricing costs branded so most where amount customers products bear more our quarter. the to our fully in in offset increases of material those in by from entirely, costs, costs. at business inflationary is arrangements, our material our not raw plant-based be typically where of contrast, experience initiatives. material In not insulated productivity any operating productivity But to

costs opportunity we more bear noting our because of co-manufactured by is so with in opposite when there rates. It’s impact delivering limited we it’s the increases, our Finally, freight picked the business chain largely lags risk limited often look and but the products, specifically more they changing customers, customer or the up at supply it’s with cost to timing. some where again private typically pass label are is along there product freight, to

products, are exposed with in Lastly, many the more of delivered the associated the businesses everyone costs the productivity to costs gains. meaningful we in branded because branded changes freight need we transport. we of areas, areas like In to offset product to rising summary, are and facing and today those us and but absorb are fruit-based our much nature must most of outcome with in

In largely inflationary business don’t progress XXXX. margin we time, given to and we gross profit as trends Our grow increase dramatically this plant-based will EBITDA, inflationary we is the insulated. our despite go see have overall second in At any environment. of half business ability demonstrated total, an this our into that in impact our

second commentary for expectations uncertainty there a our half we around close me in surrounding But outlook. the behavior consumer providing result. the XXXX. based the as by following impact on changes COVID-XX potential the of and Obviously, offer current is of Let the some outlook

to much the looks comps very and have with single-digit we From back challenging year’s in forecast terms similar high-teens we margin half. year-over-year growth. story, levels, recognizing to QX with standpoint, being margin plant-based fruit declines. plant-based in similar will of we same last a On the in remaining the it revenue similarly QX is think In like the fruit, look topline more

an in tougher EBITDA XXXX improvements, standpoint, XX% year-over-year half last our the forecast from represented strong second again EBITDA. where second Finally, recognizing half we comps get year’s of

to not for With that, open questions, competitive questions. the opening detailed call activity. the just call Operator reminder reasons Before SKU commentary a level up we to provide I’d do the that regarding up or customer ask for please

Operator

And from Instructions] your Andrew first BMO. question comes Strelzik [Operator with

Andrew Strelzik

several you for taking it where that building mode ways competitive about you’re talk Thanks question. in that points certainly changes like seen competitive first data installation your My any is everything quarters? to over some provided what and good your one dynamics about you morning. is in can what and competitive Good build -- the you’re around the you’re competitive you kind the if mentioned or that last But Hey. dynamics and months and your installation. drives doing place sounds competitive of mode you’ve commentary competitive the a from

Joe Ennen

Thanks, good morning. Andrew, and

the year. In this terms landscape have seen we of material competitive changes far anything in not so

particularly ability our R&D innovation the with companies competitive and to terms they drive the how marketplace, we deliver proud that partner were and in differentiation out. view our strength and In expect the to of we of day quality day big our CPG of in organization

we strengthening is a chain, our very very adding that gives or customers. business. of the so biggest in as the have within the us is we’re have XXX Texas U.S. Texas second be model. against differentiators a miles being affords advantages capabilities, chain plant-based a the Second as biggest as in unlock for well excited along supply supply we strategic state of we deep and with the that The the our a plant advantage believe about cost sustainability just with long five This we doubling to that and priority us in going us further in a And referenced our for business. with project course of the four insulator of major and relationships further third, business certainly, is U.S., states of

Andrew Strelzik

the actually mentioned otherwise change improvements, seeing is pricing that communicated to it’s relative what or outlook you related that underlying really some segment, underlying are And the from Is the perspective topline That’s in mentioned the for or prior. you you is improved? that the you’ve to outlook then, Okay. a helpful. whether fruit-based snacks on fruit the that

Joe Ennen

had have snacks and fruit in referenced, momentum a volatility major COVID XXXX great standpoint. optimistic business. were pretty some Frozen in Yeah. from fruit We, the as

some we’re opportunity customer so those we And seeing retail think afford the we’ve the number normalization, rationalization two solid SKU back deliver so and a combined in landscape half if relative to you to to return that us will, and the pretty done. factors

Andrew Strelzik

other sense. you on kind your lastly And using makes That that products either talking of expanding provide then respect Sure. mega facility can me, the facility detail any I from headquarters. or just there capabilities the about is know new with R&D or costs new the with you’re to you’re

So I am not sure if that be plays into would it, that but just any helpful? kind of color around you. Thank

Joe Ennen

Yeah.

I election. into mean, we a get and that I kind as think at we’re the the done of now, of doorstep mean lease on closer. we’ve we’ll unpacking get site stage I here hopefully we’re signing

We broad really is unlock for and beyond. capabilities we’re facility have put around on kind in. in growth that a But of going to understanding this XXXX

I appropriate kind so, probably it’s of And specific closer. us think, to we get for more there hold on until

that hopefully sense. So makes

Andrew Strelzik

you very Absolutely. Thank much. Yeah.

Operator

with Andersen William comes Jon question from Blair. next Your

Jon Andersen

morning, Joe and Scott. Good Hey.

Joe Ennen

Jon. morning, Good

Scott Huckins

morning. Good

Jon Andersen

lot we A areas could Okay. of into. go

kind foodservice, bit that was in little Let a strong getting from obviously, the the you’re me a rebound start the asking by help you about for in channel. quarter, of which channel

out You that in in think, reference products oat-based I Is comments, supplying a durable? customer that oat-based you’re products, largest think, I to is the and them. new for did call customer your prepared

Joe Ennen

shipping middle started quarter. out With new. is we oat of second Starbucks in the the That to Yes.

our know seen and branded folks step to secondary the I stores in largest and our We’re one it. were in role have product a that some of of with products. the we customer were us on playing about pleased help call supplier SunOpta We haven’t able asked there. that

step -- we fortunate help So were and we them. that felt to were in we able

continue will terms in that them into In expect be help would durability, position XXXX. to fully we well we of a to

Jon Andersen

that Thanks. was super kind -- bit more a And your kind to the talk think agnostic that of contribution allows a little noting little I do an -- about the helpful. own Okay. you kind increasingly they’re you than even way important brands have you thought, playing perspective. you from it well. in role bit customer you out the in brands more portfolio and past, mentioned a of Could in how that, That’s I then, as in that you remain of a interesting called

Joe Ennen

Yeah. in revenue with realized incremental. the that XXX% acquisition Obviously, the we was mid-April,

the seen And acquisition appropriate X would brand -- of that growth expected. initiatives have coming so, out. additive and going I brands call XX just in our exactly is we’ve was delivered tell it that The as points so the volume subtraction. you to delivered you we of have well, integration with is points to-date the been would felt sales no

We’re partnership. to trying of respect activities our levers and push tell around very you customers. I our non-cannibalistic on acquisition, co-manufacturing major non-cannibalistic our is, really focused with what the with growth customers lengthening on can have to co-manufacturing large And the activities since all been all and deepening

Jon Andersen

kind duration or sorry, circling the of I -- that in the new customers with part milk hear demand, I from of is in that does to a what and that. too, Is you? the that comment in for extension back you plant-based? of the Thank new that calculus And provide arrangement U.S. aggregate durations multiyear I for longer did also ask, made kind the brand geenfield and just is Okay. facility right oat around -- big relationship more a of to that think, largest, am visibility seeing want kind you in I Texas, how on one co-man Did that you’ve a on

Joe Ennen

multiyear with was is the a longstanding and new a been brand a us. That the U.S. not has the is leading extension. for that company That currently national in running relationship relationship it oat in milk

Jon Andersen

guess, I just the outlook. around last on, I’ll is Okay. question, it pass

off EBITDA -- quarter last have I you XXXX. think, last I quarter be double-digit may said, in may growth that strong expected on you little this, a but

parsing changed of outlook expectations just I all at initial or you. I full might of in your year relative EBITDA EBITDA last as think terms quarter? half in has second the be growth Thank double-digit. the the words, today you expectations without but for to said or the

Scott Huckins

the no, outlook has Hey, Jon. I’d It’s Scott. not Good say, morning. changed.

obviously think is I to the in a lot that comps we half. want tougher the recognize back what get

XX% I of the pointed in that EBITDA I last was think year’s half. out second

a of takeaway. comps, So, basis on really change outlook, in no the that’s the just comparative XX%

Jon Andersen

Thanks Okay. much. very

Operator

question next comes Your from Alex Capital. with Fuhrman Craig-Hallum

Alex Fuhrman

as considering Great. that is little Can coming Thanks talk oat bit still milk, the capacity that’s pretty your about growth then as in well the to announced haven’t much wanted going amazing next be yet, to more previously that have my question. coming new revenue you online that capacity more how that year of oat? projects small I or of new about growth think, of is taking category. think a today, where from, very you or related project that to as much some to that we the I it’s relatively Texas two about plant-based driving for talk online you half other alluded is And grocery the both a it’s foodservice? come in over

Joe Ennen

first the of service your or is, yes. part on So, food the question, retail, answer

both sell into co-manufactured is oat strong retail. predominantly growth seeing that in retail sales, We’re brands

oat significant strong lever, foodservice a growth growth our in was as as milk. that excuse growth me, driver, So well sales of

will in the a strong oat. oat that, additions capacity were So in enable yes, is that projects both absolutely network further drivers to relative growth milk. those channels answer Certainly of

Alex Fuhrman

pandemic helpful. related as strong, And tough you grocery of into like store really look about kind foodservice out and Okay. as expecting move year. lapping is foodservice even the continues quarter of channels That’s comps much or between to as retail last to it Great. retail to channels, third thinking your far that shift? the customers you’re of and like fourth What just sounds does continue business be other then choppiness maybe so pretty push kind on the and sailing pull and to presumably quarter, the been smooth the Are different end the has as it plays pandemic. you recover going some

Joe Ennen

and the we of QX to returning And overlaps. to foodservice last overlap we’ve business overlaps through well year. last levels trying traditional was obviously, why compare as in -- we’ve anomaly than explain some bit as historical see year of the more pre-COVID more to to the by the it’s we gone shared XXXX biggest the dynamics QX little always this, overlap so far it that’s from numbers experienced a easier would the crazy and that as

Alex Fuhrman

really you. That’s Thank Great. helpful.

Operator

Smith with next Your comes from Street Capital. Mark Lake question

Mark Smith

inflationary to Hi, about you’ve that the couple your you’re of Board. talk seeing for first kind Can me, guys. you your about in ability A products? off, talked of across branded price questions pressures take

Joe Ennen

Yeah.

so pressures As don’t are referenced, is, branded it things. pressures the call the time Scott on any be it retailers Scott significant we an in, conversation receiving odd inflationary many months brands, and U.S. as would think we’ve the increase. foresee environment major certainly material not inflationary What six on obviously, increases go ourselves products require sit take found branded I price increase. on would say But referenced, we end price retail as price our having to we take us a not a into grocery many, of from any do would I that of the if experienced today, to many, side

Mark Smith

as then, kind of again? give your Anything you this fruit Okay. at you headwinds some face talked and profitable there. you us the take we business it can what on outlook business about guys that of Great. would the turn And to look

Joe Ennen

of a offer path I’ll mean of Yeah. I I kind we season, the our met plan. summary mean,

had produced as better everybody cost we pricing over processed result get of over for time like as but fruit, that was for we plants but as than upfront moved we pricing our just So the XX we price season. need to that the lasted the a prior then feel if bit the really year, that The the inventory next higher will industry of XX ran really skinny all of pay customers, growers paid much than years, significantly We fruit that the meaning you through in the the we entire to previous a can frenzy the positions months. for realize pricing obviously a we and the fruit months.

customers, we like that the it’s an overnight the activity. vast So, can -- cost fruit in just feel our not but majority mean, I to get majority higher of passed on total, we

So, there? Scott, anything to add

Scott Huckins

would I perspective Yeah. it say, helpful.

fruit two got remember facility, but we’ve large down headwind, peso through I bit is accurately summarized, pricing, strengthening in as think also Joe also are, more Mexico. we’ve headwinds because XX% a just a run just the fruit the right

work right when X plants, am done. think, sourcing cost I those levers, advantaged more pulled footprint think more that, fruit processing we’ve the our I then at the that’s strategic consolidation and Mexico, XX% America, have I times reflect footprint, pleased the running we of obviously in U.S. on, I in South relative SKU through to automation

pulled we’ve appropriate levers. the think I

time those the just increases. be will key of development the scale of think price the I

Mark Smith

snack you to doing business there drive that at is some to enough in food new And the that’s a the talk see fruit before looking of to And that just then higher a of business, for just business we headwinds or the if any other up that places? impact new going products? timing is not take those make really faced quarters you couple about that’s bowl from can well,

Joe Ennen

in for continue mighty that looking mean, we snacks business the customer potential invest growth bullish that we innovation incredibly to is have. in -- the we’re business And I business the fruit the relationships we a now that Yeah. drive lever to about are and but small and expansion. right

some kind steam therefore, business, business. is our full large as will on and as effect frozen the not It’s ahead it levering snacks of just take fruit time. the So

of In and value-added that share the of moving more of portfolio is we terms of fruit products. products, in the bowls context strategic three one priorities our towards

for would quarters product have do we but certainly the to retailers it of say, cetera. mean, I right yeah, I so, takes, distribution And north in authorizations, resets, now, et four

do product timing great they to unfortunately, for as are the reception had aligned but they so reset, when not we’ve their far. So, in

Mark Smith

Excellent. Thank you, guys.

Operator

the now no time, closing there this I hand At questions. remarks. will call for are back further

Joe Ennen

interest day. you, Great. Thank it SunOpta. for wish We and everyone, everyone Well, great appreciate a thank your in you.

Operator

That concludes today’s your Thank participation. conference. you for

You disconnect. may now

SunOpta (STKL) 11 Aug 212021 Q2 Earnings call transcript