STKL - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to SunOpta's Fourth Quarter Fiscal and Full Fiscal Year 2021 Earnings Conference Call. By now, everyone should have access to the earnings press release that we 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. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. and to release all Company's any for issued filed differ Form those all in factors annual from a you the materially cause from press with statements. actual of forward-looking SunOpta's this XX-K that more refer detailed risk Exchange and the risk -- contained report Securities discussion We and filings factors Commission could other projections morning, to the results the obligation future The under the publicly except to following Company update the reflect -- laws. statements or to as no events during made undertakes applicable securities required forward-looking correct circumstances, may presentation be or

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

Joe Ennen

reflect current chain are well future market or supply the not are labor Officer. earnings the by is in us Good on do SunOpta. and want are and call felt clear me for Chief quarter results, Scott causes fourth shortages time not I Company. and and the of in these The saying, start Financial are morning Huckins, confident point unique joining today. to while publicized. results the a issues broadly The we our disappointed and you thank With are are potential to we

quarter. key the fourth me takeaways share some Now let from

three extent increase issues was output. was We impacted also First, impacted inflation most corresponding our lesser in were and by headwinds. consolidated in significant QX to in fruits. plants without unrecovered a yield-related margin The gross costs a higher by

production our challenges on an perspective facilities bit update on a in share the progress more me in and Let QX QX. provide

increased employees, in XX% by great fueled and of decline new First, utilization. lower the hiring summer. to expenses driven approximately plant-based margin Higher the and XX training by the was plant over resignation expense due gross were

produce employees infusion partially result this absences of across not new significant in network. immediately output, did Omicron step of as production change a the a However, related

and months Additionally, become even of our are proficient. and plant-based and facilities plants require sophisticated training employees to weeks complex

In Additionally, we to incurred overall QX. total, QX hit equipment cost are dividends investments which QX. us effectiveness, improve disproportionately in paying in these

XX staffed We have up employees. ended year our the plants and

with and hires into of deep employees our new are training is these retention new We consistent our expectations.

material in We have seven first our output improvement weeks seen in of QX. manufacturing the

tracking currently to production the halfway forecasting approximately this levels level QX improvement XX% to We QX and quarter. above are be through are of

on our suppliers, secure business in volume growth, to being in the in couple in but are fruit one support our stock me nearly QX company. every our the we happening have QX, to and fruit were our in the puree There saw what let very a tight, an snacks for our still We improvement. factors with effort South could of grow business, added plant-based but labor, these are even that growth we ingredients, working goes oat is both more grew America oat business all improved we CPG anticipated same environment, XXXX. for for and was segments Raw business. safety for we have availability sequential on additional In XXX% you incremental snacks from of which comment familiar Beyond and business. macro fastest-growing food are exceptions impacting material

and invoice always currently price on to the inflation, has accepted been price cost an implemented. inflation presented is to There increases. new material raw known is increases It to a inflation relates being and cost XX-day raw process realized to customers from delay cost it all the customer. As the material typically between a

than Lastly, rate, run this comment saw let approximately and million. QX impacted me on by $X freight. inflation even half of back the The QX more

production of business very these was our reflecting availability the at the tight. where which issues revenue new quarter. and on pick we The and of Additionally, passed estimated of costs responsible had million the availability biggest $XX freight and impact companies freight, least In trucks be customers unit, of their availability we the cost generally every almost was impacted to up plant-based by trucks transportation the Pricing challenges are fully QX. will world, the fruit, also in In to revenue. be CPG up our in for shortfalls some are end lining saw product, inflation. the customer, to remember, the difficulty

improve is was the which QX recognize and the our very important we supply further very but plant. and the power, earnings network remains quarter, plant-based with Industry While fastest-growing remains market, long-term core challenges, a win it of Demand is still is manufacturing will Despite segment oat. to Texas production the challenging strong, our strategic to in the is temporary strong. tight. continue business new

are inflation We are adding aggressively on aggressively capacity we through price and increases. passing

level, double-digits, never top that of All the to to plant-based leads the line and of during in largely growth we strong at growth return and least stated via revenue EBITDA XXXX, expect At we Company this fruit total growing double-digit XXXX. to brighter. pricing, as with we In XXXX. adjusted business the has we me expect consistently a been expect future view growth have the Company

our XXXX such additions as indicate will our EBITDA plant plant-based new adjusted in Our in on adjusted plant-based XXXX. preselling capacity to-date Texas and we line $XXX in and comes million EBITDA online. success new significantly capacity, to Based increase capability of XXXX, business efforts as of sight XXXml Texas development expansion, have

to prior some XX% line XX% top week an year on have Total growth year. flat period, line nearly as-reported quarter and for company in Adjusted results extra plant-based the top XXXX. the me earlier materially. fourth million, been revenues, during total for QX XXX points let segments share fruit-based basis would basis in the Now, reported our of $XXX the were X.X% the plant-based fourth as year's the down in of quarter full growing revenue week. Full or consolidated excluding year XXrd declined both with with was profit a Gross on basis last revenue year Company.

still of X.X% to gross SG&A XX% gross decline decline a EBITDA with year, Full XXXX's quarter full managed $XX versus year in the profit, fourth million. corresponding a XX% the in adjusted EBITDA. but XXXX the prior We the For profit to million, was $XX result Xx down was was adjusted aggressively portion offset adjusted in net million, growing versus EBITDA $XX year.

XX% listeners to Now third, drive one, last a on strong for from versus XX% ingredient quarter, the growth X.X% of that which portfolio, oat-based adjusted demand our million includes record I XX% strong accounts have year and the was revenue reflecting our priorities beverages plant-based beverages; and with in like plant-based: to for we would plant-based. building year I'll increased versus label growth, XXX% brands. driver, and up turn years remind refrigerated three SunOpta. two, two strengthening fortifying private our fourth quarter strategic primary Plant-based our co-manufacturing, in a segments, focused competitive building milk Plant-based ago. in of the represents over business versus starting increased extra revenues a year ago. oat $XXX go-to-market up for business consecutive to prior This this offerings, prior to that week for multipronged the and period. advantages; XXth were year now owned Oat another

from beverages. at challenges stemming We in our negatively our growth and Production also offset saw plant-based other tea partially gains in customers. two growth broad biggest tea strong business impacted capacity

mentioned, in far output have improvement solid seen However, a so this we as year. I

relates we on product continue to to it oat. focus As category,

business. lead SunOpta of solid category driver national Our of faster Plant-based market continued $XX support to strong oats segment XXXX, oat Xx the than in which XXXX, continue rate see category. continue showing The in the oat why In continued XX grew grow growth acceleration total, and the latest the segment sales we see XX% expect explains growth. growth. we growth, were continue weeks to and in be strong brands we to with the part oat oat expect milks the and overall with to to X% million this

In these exciting in of on see oat oat we upside developments, sales significant XXXX. for addition, at to to all we Based our have in continue largest growth expect customer in XXXX. double-digit strong

added a and go-to-market In addition, oat QX, WestSoy, online standpoint, we communicated, XXXX, with keep end will production in contributed acquired expanding This capacity the demand. come likely at to brands of From previously we Dream growth. XXXX. as the pace to extraction are

that distribution Starbucks. several of QX be on have products with the to these this new relaunching has over rebuild Dream push people will QX, We years. and new been in oatmilk in a seen last packaging, the Several call launched brands

would the thought is it So be confirming Starbucks with oatmilk via Dream brand. I the at go-forward worth approach

We launched creamer organic coffee a the also year called last oat brand SOWN.

great has effort. focus Our with and seeing the success we are channel, been this natural

the two market. after brand leading the months SOWN in creamers is of the velocity in number XX sales than retailer, As less natural channel now terms for plant-based

Moving segment. Fruit-Based our on to

Fruit X.X% $XX impact offerings. portfolio are: in in accelerating fruit takeouts; ongoing becoming evolving reengineering by along Fruit-based and of million programs quarter, aggressive to to towards one, grower constraints with cost supply derisking partially varieties, through rationalize through low-cost frozen more customers, better with footprint pricing offset efforts growth strategic three priorities innovation actions. operator automation, decreased via business revenue three, and another two, the value-added fruit Our pricing in reflecting diversification, quarter, SKUs strong the customer fourth to the the relations; a and pass-through XX.X%. had snacks certain geographic and

a business, gains expect moves in frozen to largest frozen mid-QX on and communicated confirmed fruit customer. by all year, beginning of fruit we fueled revenue distribution last XXXX As side the our the at return in we aggressive sharp growth pricing

on relates more More less types, the we through for complete it now business geographic to fruit. diversification, of largely less source this largest fewer derisking representing are initiative strategic equal all with customers geographies, the fruit complexity, Mexico As risk.

in the quarter, through pricing breadth to with higher to producer, and performance has With all have improved the customer XXXX of of sense simpler our strength along the XXXX actions give our taken support we on XXXX. of in Mexico, cost installed, business expertise in industry. fruit the a work low-cost a last we and the cost of in you regard the to with becoming point the the depth discussed relationships totality takeouts a have been of I'll automation we combined and the passed reflects in recap advantages and completed. cost As and

$XX of First, million we pricing. passed about on

of our network of closure in in Second, the we including costs, of took out the two an plants additional manufacturing XXXX. $XX million six

a creating pricing by costs, we million out people inflation. Third, actions simpler be forms Please will took several business and a significant other model. costs that fruit of leaner, amount of dollars note of absorbed higher

are numbers have added numbers simply of you the these these this Instead, not what profitability. transform to share be XXXX to I a So designed business. in we to results sense to give undertaken

fruit, in Smoothie innovation had part we've of great fruit which in platform, on Lastly, front business success is of Bowls unit. launch our snacks the the our

versions with We three and major are brand Bowls under we our launching leader Bowls, of Smoothie CPG have brands. a who their of partnered retailers one frozen globally will foods, recognized be launching in Smoothie private

Lastly, to continue we Sunrise innovation the can Growers develop. and own the brand, push what edges will of use we our to lead

last will of year, priorities be the has over fruit transformation business hearing three been where the on hope about our challenging years, fruit. that are me business certainly you positive While the surprises XXXX five SunOpta the gives a against for

new on are greenfield progress Let updating we with me plant-based facility. the our in making manufacturing by end Texas

the the follow to can an LinkedIn, making. update. share scale want our tremendous we of where posted the updated follow photo Tuesday, and on you see so are progress If SunOpta We we on please progress, periodic you plant

is As call, one on last putting I milliliter are in shared the the we capabilities XXX of Texas production equipment.

is first most ml, an this not preliminary industry $X those this on This to-date, the Based short cartons that the out billion sell a in protein familiar zero the is capacity, are we segment XXX year. have is associated and will share currently Tetra and on-the-go in market. of shakes. on Pak we term capacity with a is this confident with For awards the we asset

XXX putting to are in in other all I. Phase ml, In capabilities three addition we

processing packaging installing are seen along two support huge our has extraction, growth We the years, last two to in business. tea with which lines core

confident one. We we and extraction and that are of one strong this year in have will similarly the of packaging lines two capability utilization processing tea

no plant-based expectations internal In created operational innovation product generating the around the growth year, track our and this than strategic capacity the of to XX/XX/XXXX. not doubling ahead by incremental summary, have is end the business selling salable However plant by priorities project our the later transformation, is be and of changed. portfolio on

emphasizing plant-based revenue fruit-based. capital. growth We on plant-based profitability continue to annual double-digit long-term on our improving increases focus remain business continue We improving and return and committed to of our growth and in in invested algorithm profit

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

Scott Huckins

were: million XXXX, very Joe, of XXX segment delivering you plant-based basis $XX.X of much, good gross the XXX decreased XXX the million growth. SKU points; compared week offset constraints decrease revenues planned and fruit-based X.X% plant grew lost and down consolidated yield-related X.X% plant of margin and In materials rationalization to $XX.X gross to for revenues with fourth to during of absorption Adjusting XX.X%. continued fourth to Fourth in points X%. that of issues fourth points. profit a X.X%, where production for quarter of along two, Thank quarter Gross million basis XXX quarter everyone. of operations, the one, margin by the XXrd was fourth gross Plant-Based a and certain year-over-year plant-based, unrecovered in due net basis, points; impacted revenue higher was declined including basis three, quarter, level demand on raw with and fruit consolidated and down XXXX's on XXXX, increased lower-than-planned inflation morning, margin negatively gross $XXX.X basis quarter $X.X X.X% X.X% The spend as-reported were factors growth an varieties. basis in million revenues XXX points in profit reflecting decline

you take me drivers. through Let the major

hired XX earlier. spend plant up about First, trained positions the Joe points, as spoke was XXX and basis we

of under XXX comprised Second, utilization unrecovered inflation primarily freight. XXX points, plants our third, of points. basis was was basis And

me of comprised depreciation. plant drivers. points spend basis point further points of Let overhead XXX is XXX provide basis XXX costs, detail and labor basis on XXX This of the points basis of

second $XX.X a incremental Loss a ago, due was We pulled attributable million The million spoilage to to continuing expense remaining basis, basis and compensation. of in $X.XX of variable with to the versus and related The or $X.X to a quarter $X.X compared in these from shareholders In share a was in loss diluted year the return of of XX% business quarter EBITDA issues reflected to plant the million as profit gross million versus XXX excess expect and on became variances was for on the loss goods. to us. Dream representing quarter, high per prior Segment basis, of capacity teens $X lower reflecting as adjusted margin the adverse in was million $XX.X XXX partially gross raw poor The million, exchange $X.X level gross reduction $X.X fourth the produce XXXX result $X largely to points, material per to million share to half recover of or decreased diluted per a segment diluted result operating existing net year. the $X.XX of fourth million margin Fruit-Based the roughly in In $X.X decline or process by common in XXX to we of during On quarter expect an of in declined yield amortization were rate gross operations million compared period, down factors was per year year. million income finished decline rate basis diluted an adjusted known, X.X%. work prior vast are earlier points now $X.X operating fourth basis of yields, and the WestSoy. to $X.XX margin $XX.X the QX $X.X period. fourth or the to These a expense, costs the share in fruit-based quarter loss fourth SG&A adjusted lower margin $X.XX majority offset which million foreign the compared in loss profit year behind XXXX. of points. million share

to the versus capacity million million in plant-based. in million increased addition operating segment amortization decline a this offsetting a expansion initiatives income, in $X.X $X.X $X.X year our ago, reduction In and increase reflecting depreciation Partially stock-based expense. compensation was

EBITDA adjusted EBITDA release earnings adjusted remind this listeners million Finally, included development can back related in costs. like press measures, issued and I'd adjusted and and morning. to be of to non-GAAP are a increase these $X.X of found startup the to EBITDA net measures reconciliation GAAP adjustments towards of that earlier the a business

balance flow. cash to Turning sheet the and

million X, smaller reflects XXXX January during debt quarter. $XX total our $XXX cash compared activities reflecting activities compared million $XX.X by Cash the in representing during investing facility, million fourth of leases, year's XXXX. expansion in end the of cash of flow and by million operating last Leverage of used with projects. XXXX, X.Xx activities asset-based quarter, balance the million fourth the stood a of quarter was investments facilities. From was perspective, capital on credit $XX.X million to at credit in quarter As fourth provided was the $XXX cash provided million with $XX.X operating drawn primarily at capacity the of $XX.X fourth

me Let to fluid, very the relates and for providing by labor it close chain, supply materials. outlook XXXX, as our inflation, is recognizing environment raw

to have to year. second we been to revenue than $XXX but range in be expect the in challenging of Revenue to million XXXX. expect return XXXX the approximately with of first We do by that we communicating. half compared more half as plant-based, led translates fruit growth generally growth expect we XXXX, XX% over million, into to growth XX% of be the line, will which top the $XXX of On rates

we the to expect XXXX offer affect around Midlothian, gross such, margin. in the be As commentary the than half I'd this Texas second like capacity. also is year first facility to on the would likely stronger to margins in plant-based existing our and of how new

to $XX evenly As incur commercial production start-up in roughly year, we year-end at expect of and we order QX. stated, the expect very half be QX production, of for the costs, second to start have primarily approximately previously In to the we between ready the year. of distributed million end

XX% gross profitability adjusted affect to EBITDA to are From While $XX XXXX. million to back XXXX. $XXX new growth adjusted expect as we driven capital as million flow capital expect reported to standpoint, greenfield From profit represents a over we will a to in they these range the primarily standpoint, in start-up reported. costs the $XXX rate margin be in XX% and added plant cash for million on gross range the $XX expenditures EBITDA, the by million Texas. This statement

Company's we and expenditures credit largely As these previously financed facilities. communicated, have the lease through are

We believe for support have that no to reason equity we these the need investments. capital to have

Finally, XXXX, capacity $XXX Two mention. benefiting while we final are million, network. EBITDA are a to currently the we ways from expansion items of forecasting the across have we away projects from adjusted

Minnesota, webcast get investors. are range our planning to host We an this a of to likely increasing intend can we will introduce of our broader held in-person in showcase the and manufacturer. made be Eden understanding last you the May, to of provided, and details the time as quarter, we've our in capabilities, capacity event to we event, will and us. impacts deeper the frame. a where products two event we First, headquarters be our available hope business, as management you financial be at this Investor significant to pilot out progress during closer can both center new and Prairie, plant-based our over plant, and all map years, More June join This the second full innovation team milks provide Day in the for we a

the our XXXX, really we item of of you. release first is from on with intend second time received feedback the to several earnings Beginning close move The quarter to fiscal based aftermarket we've housekeeping.

competitive customer And for with call Before or a do SKU not open opening detailed activity. for call we up questions. that provide please questions, just level that, commentary regarding reminder reasons, the the for operator,

Operator

Your Instructions] Holland. Brian line comes [Operator first question of from the

Your open. line is

Brian Holland

you of margin you color that last line growth? impacting think 'XX, to at I'm Plant-Based soon around half on plant-based particularly, the for and around and of some quarters you going I think segment, grown that were if How gross -- XXXX. the two is to provided pretty weighted? Is can we margin get on back Or improvement, appreciate factors the the top how dynamics. the the all that the and we that gave how kind consistently color the about the about curious the the years, that the of -- level with XX%, recovery XXXX? you've happens -- back you of mix soon 'XX gross throughout are pace first that we were three of we in first back something about half

Joe Ennen

continued would Brian. acceleration We through year. Yes, expect the

accelerating I think and half the be pace was potentially first impacted. on we that certainly, in But half. in the second QX that past will

called of revenue we or business. loss nearly think lost plant-based million that the XXX% I on opportunity $XX out was

can continued been a punched show to if demand experience higher But at have extent, add we to from certainly -- a operating out would way. larger level, standpoint, demand. It had a So QX. And obviously you about didn't we we we very up that as that to think number. an strong some

Brian Holland

supply out that obviously flow-through that should willing may new put somewhat XX% then, chain to go ahead and about? is you're construct what's there, really, revenue and why thinking we number, ask of just limited anything And versus How -- for so there but much is This contribution the with the say, fiscal margins that from million over appreciate, now, doing that that? the facility be the you of EBITDA on in consensus which right here of 'XX, else I it. reason of out on about your that what are given inherent in I'll it $XXX issues the now, the be you

Joe Ennen

there are and investment the underline and the costs investments up frame benefits relative to reason, for material The coming our XXXX our the obviously, out that. in now of is progress putting confidence Yes. that to the Brian, of for and of We investors number. When we Texas that at with simple the potential build to realizing in look it number, capital especially wanted investment.

And so when 'XX, EBITDA that is in we the both certainly, from we linked additional plant, contribution our significant there pretty Texas. see core isn't look to of at Texas growth but directly business combination a new in capabilities

it's core So combination growth. in of business a new business and Texas continued

Brian Holland

And the shape a some just nutrition back I you're of strategically some sort the of looking shortages from verticals there. and the competitive of anyone at taking the that landscape protein then that's there in certain certainly, public especially companies, and capacity maybe on-the-go segment, exploring new step commentary are building on think, towards,

I your yourself. you but level. challenges So execution guess risk risk logic coming adding unprecedented layer But frankly, you're good -- a for supplying also to fact customer time a need exposure, the of the the getting high is hand, I'm some you're that presumably, execution that for And is does and that be as from? diversifying, at on such adding capacity at the by so Is and one coming that fairly straightforward far from some manufacturers as request? at category what where obvious are as that of adding

capacity as some plant-based divert opportunity? to on of towards why the focused opposed staying these beverage help categories, just us other understand So

Joe Ennen

Yes.

plant-based mean and will incredibly are plant-based. in bullish we all, others. of oat growth optimistic core XXXX remain of first our X/X products plant-based, So come from I and about and

we operational capabilities. as extension growth a So our really The strong continue is our shake in protein technical as capabilities, of see entry to logical very, plant-based. well very

the vanilla end almond consumer dramatically milk. practice not experience different might in quite is producing a carton making than, different a say, in While seem shake protein tetra

to think capabilities, already very, of these this and those with little can production products -- already us the here innovation a working gain products. pilot our logical confident we've center. up new of very in extension very been interruption. terms we've been And and our we're start formulate we So in stand It's and operating of it's expertise a plant starting and in that with we technical head given

Operator

Your of next from Strelzik. line Andrew comes question the

is open. line Your

Unidentified Analyst

discuss on This for you for Andrew. progression expectation sales is the Amanda further each segment just Can growth your Morley year? throughout for

Scott Huckins

Scott. Yes. It's

think the core certainly All commented as on in the and and we expect throughout commentary, by to growth followed rationalizing be fruit. XXXX, we I driver said would we customers SKUs resetting base business putting a outlined XXXX, And in manufacturing pricing to we've the quantum and grow. benefit XXXX. in will position fruit Joe that the the commentary his taken know of I

out rationalized call just had quarters, only that the is through fruit think will I there we in remember, what XXXX today we be go lapping as is SKUs.

outlook that's XXXX. the that would the overlap. saw in of for in of be the -- range the terms SKU would benefit -- takeaway there's revenue mean, the the be pricing, So you the the rationalization But I I color that's think

Operator

of comes Burleson. line question the next Your Bobby from

is Your line open.

Bobby Burleson

your get going about of forward? and costs of Curious you supply kind allocation there visibility what in agreements, terms

Joe Ennen

obviously, agreement, morning, Bobby. Good a... supply When we you referenced have

Bobby Burleson

you are that Raw materials are you guys that guys procuring? --

Joe Ennen

Yes.

XXX% raw current our material material on true raw of On fully been implemented. as business both the through exposure plant-based all pricing that unit, as business we well covered have has front, known unit. That's the the fruit-based

to So to raw and here's we we discussions, but of I pushbacks whereby getting can no units. some kind the raw those share present see as hey, straight, them, materials lively have to passed inflation agreements to down outline costs. what's prices. dynamics changes to literally pricing material contract of confidently that want material pass-throughs, if But negotiated are unrecovered varied. to invoiced it others the we've business agreements, they them material had And quite invoices happened raw through of with on on are some fact-based The contracted, the will them raw materials both any relates do not are

Bobby Burleson

about implementing And pretty kind it maybe of like are the in talked the alluded looks weren't maybe fruit-based to significant some in But explore more that of you there the offset resolved. look previously automation. plans broadly kind places you've you future? business, that, to automation like types longer-term these they're disruptions know maybe disruptions guys but just using labor of that I --

Joe Ennen

Yes.

are On the business, of be XX, on what I production worth the plants. XX could have operating plant-based of million automated already people they $XXX mean shift incredibly we of machinery. a mean, side might I only

So points process that at and process. beginning of very plants highly sophisticated end mean are touch of these at automated. I the are very the the the incredibly are the

automated the relative for some and operating production literally you of a on palletizing, have my a of opportunities we I've people or X,XXX sometimes manufacturing couple small packaging, shop throughout et to in But not automation, a case dozen. where have floor, additional career, involved XXXs environments and line been always on there's So that cetera. we're

And but do and -- efficiency for change say so to automation through because look I'll highly we automation, us for always step ways on improve a there we never, never have automated. we're already isn't big

Bobby Burleson

on build launches just obviously, market. one SOWN going year number Are in last here but I that just in long, the after, that the line, being talked I velocity then on this you're you there guess, contemplate two success? of to that kind And additional think not about being to

Joe Ennen

Yes.

of well fill as into outside line, other as to category. small-scale plant-based We brand alternative at the out some flavors to are looking category core the opportunities extend potentially dairy additional product the milks

in organic offering. competency only foods about organic-based organic for excited we've is and response. the enthusiasm seen our beverages. great player of is consumer That we're core SunOpta and the We're really So category, the the

the as ground you the platform kind take little And it. of tens else and want us see new kind understanding do making they it. going for so of we going millions spending want really of advance propositions to a degree helps I we as But not and we to terms of that we get our us. to push on capabilities be seed We we're which expanding But underscore to to and oat grow can could, distribution. our are we're brands. I little to of and sure see and core And if with underscore, of of this fully try the We're right, respect if advertising which understand boundaries the in can technical dollars we're organic of what will on love kind innovation, co-manufacturing. engine forge approach and product is to well focused bit will, business, that how these

Operator

line comes question Fuhrman. the Alex next of Your from

open. is line Your

Alex Fuhrman

$XXX to help EBITDA big million for Can gap the How there facility XXXX, your of levels or opposed coming growth next Company to pretty you in from much the as how Texas XXXX that's guidance? The in back you expectation the closer other number. costs get year? a supply elsewhere obviously that target chain is to from just that get are normalized bridge us of going new the

Scott Huckins

Yes. It's Good the Scott. morning, question. appreciate I Alex.

throughout on that is growth. I and from incremental recovery remarks, about think driver to in addition have that we capacity EBITDA commented prepared we through the projects of to talked we've and just obviously, certainly line because few relative -- profitability coming top other the Texas, margin we capacity XXXX main And online. remember as QX have that

think is line growth in that way I the for including so about contributor to think through capacity the turn unlocking that and EBITDA. to top flows big Texas, responsible is collectively, network, it And

Alex Fuhrman

it like end any your between of And the range wide helpful? into you of fairly you or what then high give would for Just is low of XXXX, just kind have that that to go a low some be end is your just high us model? would the and the range, the your color end of guidance? hit you sounds costs of end cause year. uncertainty, the that the difference of Is given strong on sense -- volatility visibility pretty your what demand the a into for you considering, Can have EBITDA guidance

Scott Huckins

bet. You

what on the to for we're both about elasticity. price -- that And potential level top of XX might on the EBITDA pricing demand. the we've manifest pricing there's trying last do, consumer think both a I a of of consider of at the frankly, lot taken itself talked including comps, terms just -- with in and Joe number factors, example, fruit. years of in least quantum, is line not of for in

It's the sequential year. when And or think progression the So quarter-by-quarter the of my plant-based, probably development. to business. to course a recognizing over trying on call the it's it's the call here year comes then, the in to it tough just call we're mind fruit I to biggest tough

the and form say, would line I line. trying bottom are through Alex, went our to in the So top that those things minds the

Operator

next The question of comes from Brian Myers. the line

line open. is Your

Unidentified Analyst

one First for me.

seeing, So bit you the these where that this guys to little but think we of when then, how purely relation are the pressures -- call, much the was quarter? And some labor today this a sitting pressures of when and in I know just are fourth you talked inflationary? about about on

Joe Ennen

Yes.

new labor commented on think the sequential actually the I year. QX a employees were labor experienced year amount a onboarded turnover. us. fact, beginning in front, a number that, for in think on So turned positive true employees And improvement and the which everybody is call XX seeing I to significant the availability to be it, significant of the we way and simple that ended out of the really over there's versus about We net employee summer, of

did weekly back bringing we a as cases did production the to And as surprised the number levels, of quickly people. productivity of snap those think we ability it our not those return candidly see would great produced, they or we new thought of job of us, with levels infusion people expectations. get employees our lagged new specifically overall What onboard. was So of our as

proficient. was on much-needed become referenced some did QX much that we more change our the several so catch-up in are quarter as well. in maintenance versus as prepared significant step QX, We And new remarks seeing what is all in fourth occasions I on the employees a of

lines new on in and dividends investments people in two those do for taking so QX. is to our downtime And paying us maintenance production

and think expect, that headwinds. I we So we've would first said expect some consistently we half

want tulips et we're relative chop frame have the as I by getting progress seeing the We comments to to in we're blue make material making still some we're completely my progress, wood excited encouraged skies sure are and But blooming, So cetera. but and to QX. are I everything lined up.

Unidentified Analyst

can us is kind the coming where just business? press there, then demand the in guys color foodservice I the from? you you release And that of on some out looking called give know

Joe Ennen

business, When and we mix the growth on look more the Yes. we than XXXX, the side on at we foodservice see based retail XX/XX. customer new sales see side, a just bit where call it

the of our oatmilk in more to able extraction growth both expect in retail. foodservice facility, and expect We in and continue to output of oat significant in we serve as growth And really we foodservice our productivity channel. efforts we're sales find the foodservice more oat and raising channel XXXX, significant in

Unidentified Analyst

one then And for last me.

be spot On they this will be the a reduction customer fruit-based count, something that volumes of on and of where see counts won't SKU kind in business, feel good the continuously planned when do that's in anymore? Is we guys kind like going ongoing? you to

Scott Huckins

I of is six shortest out network. would We our say we're or time align capacity that profile, took done spent our the of with a lot answer plants we because probably plant customer with profitability thematically, remember, XXXX, in of that. realigning two customer

are fruit. that looking say is us. opportunities the materially in would for I We So behind always profit

behind of I that do, materially, course, because, we it's suggest to we So it but want at never us. don't look

Operator

of Your from Jon the next comes question Andersen. line

Your line is open.

Jon Andersen

watching there like just main or the Are another to of cost-related of could that ask from materials kind to the you're materials raw us guess? matters, that, been first? understand of has input, any And will, maybe availability, issue or closely? help kind wanted is if it I ability of I enough you just which you it, oats about an where be whether if separate get kind

Joe Ennen

parts pain surprising Yes. the it, which you similarly if isn't our Jon, areas talked this on when about -- the grew super QX I I for points points, if the tell call. and business, example, we QX, in the business take pain really are fastest-growing would of you about think oat XXX%. The you of the

been ports, up to were materials materially jam have Same with not easy to those America. punched year. higher disruptions we with from of in in grow had XXX%. have on But where fruit fastest-growing trying related raw parts the than, obviously, we South secure those So come the oats. of But obviously, quantities availability the many from two business two America. all the we cetera, were also to even coming you're experienced the I say, a the prior able because larger some of et there up out of of and oats log shipping some to for ramp an pain surprising, puree, and number, us enough could And the unlimited we of of places, think delays just -- raw it's South receipt up two, points material production

at I suppliers. QX. is up in. more say as in sequentially, impossible So as materials QX, additional obviously sequential today, to QX definitely here getting progress made would a And for we've we've looks it constraints stood now at what like as to relates We around in we raw materials But in versus world look going predict it's obviously, QX, anyone we go on world, forward. stand the easing the the raw seen what QX, of least the on with

than better QX and QX. QX was than So QX better is

Jon Andersen

availability the internal of portion say, materials that the -- quarter, lack less in sales onboarded? or versus $XX just labor was respect or of the out to with production related is fourth to new lost of raw as you million of So earlier, opportunity sales the some you've yield, new, constraints that pointed certain

Joe Ennen

a pick and raw say, And having third obviously, system, production produce. challenges delayed few that $XX There orders would arrive And a lose to their those you Yes. I inability would material specifically receipt material. our warehouse their on, them the once things, a the a Jon. make it's their the we There in ability at would in customers, trucks three orders. up inability freight in get would just portion that portion to the be the piece And schedule. up lost was component, it's was days be days tough to conservative up I inventory, to estimate, of where of input our orders to say that to had the revenue then the honest. say, of referenced we to was raw both I to labor attributed often excess be was a related who our pick just line and up and million,

opportunity. those of least at three articulated we factors million would to contributed really, So missed loosely what $XX

Jon Andersen

on I sure the just wanted to pricing side, make And commentary then the understood there. I

what inflation, may have offset to will is costs, fully that been you will point of put communicated and you pricing? internal of that have that realizing benefit at et place And all of pricing in the wage be the inflation, these freight be customers, the or by has accepted You have that been inflation? -- accepted commodity cetera, elements has you be

Scott Huckins

down. that would been I a just easiest I it's to pricing break and probably passed material has Jon, through, raw it say, mean standpoint, Yes. materially from

fruit the today, fruit So of on raw of known would we gave be say the I would number is the quantum pricing. every focus -- inflation. cost of literally all that penny really the mean today, that transportation I side.

QX, 'XX, data saw bit fuel, and it think XX%, his point, little a that we QX. worse sequentially it I from diesel 'XX in mentioned obviously remarks got X-X% Joe prepared -- v got QX, up

pointed the are those probably pricing by quarter, the the the So drivers. I think and freight meaning And those are That's done out, the end of quantum to buckets recovery, of Joe efforts first underway. end the think way where on the leaky probably of quarter. had any we've about got

Jon Andersen

place said a wanted ways such by another assuming seeing oatmilk strong extraction think kind off. capacity do to put that's of I you're you at good sit? the that that I because extraction a capacity of coming you XXXX. of the portion there's in you is and I'm I still in growth ask on, end driven Where mid-XXXX, piece think of

place for talking kind that this that, Are not the or standpoint the capacity satisfy label level. private necessarily, in serve extraction whether on how I mean ability being? be high there online demand demand just you assuming comes like the standpoint just a your can of out oatmilk, to finished mid-XXXX? point labor labor way are from any co-pack from constrained or capacity you at at much So that until And operating in extraction for is a And time I'm you in goods. a or that's and limited

Joe Ennen

oat $XX increase XXXX. eight XXXX extraction. that identified additional through projects million Jon, probably to We -- we number think up in we had revenue grow the on in shared XX% the productivity oat of of has top team number of that can the output to in our I

end the until to definitely the around line if have was constrained beyond the I of find one up question in it that I we package. stand somewhat we coming of trying part -- of QX, a could headroom second we and -- to your had a sell in that, new be move oatmilk After will could So the And the XX% we referenced -- make wave to XXXX. mean, and and grow in that of today, marketplace are ability if else to growth it? somewhere potential right that of front more just to system And earth heaven have for online now, us to grow online, oat But base Yes. comes XXXX. sight demand. we're I and the oat XXXX, I terms base. at in to good to us facility unless in oat able chunk in bring I of our XX%

Jon Andersen

it wins, distribution confidence It on are fully think one it et I the business, little or had those the And cetera? confirmed? in was in, frozen, the Can the snack combination fruit. distribution you may you XXXX. whether of And I you like sounds they confirmed these side business wins? and be then last of what bit talk pricing grow can that mentioned gives And about the be part a fruit

Scott Huckins

true plus Maybe Jon. We I posted saw XXXX the around we've I in thoughts, that different level growth very really fruit seen accelerating bet, distribution business, XX% and frozen throughout two think the snacks continue. demand, our mean, wins. In or your very, business. we of strong fourth in question quarter, You a minus

suppliers. we've is probably customers have a And maybe work environment that with add as that they customer. the seeking hoped. chain frozen greater in supply mentioned didn't as whipsaw, a in largest to where or well challenged I of would our variety a kind seen think of you generally two, What last year

maybe so you consolidate And going think the our there's And a to view as think position of United I think we frozen spoke customers processors was frankly, we're about which pricing I helping way, And largest around credibility one improved and, the I with the other States. us. supply. know, in is cost

yes. is, direct answer say I'd So

confidence to about We growth, have firm largest including core that back high. awards, the it's customer of in very seen level about volume our frozen

Operator

turn questions back further call at to this are Mr. over Ennen, time. There no the you. I

Joe Ennen

time forward you you Thank look thank Great. and Well, soon. today your you. to to again for speaking

SunOpta (STKL) 24 Feb 222021 Q4 Earnings call transcript