SOY.TO - Earnings call 4 2022

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Operator

Greetings, ladies and gentlemen, and welcome to SunOpta's Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference is being recorded.

I would now like to turn the call over to your host, Mr. Reed Anderson with ICR. Please go ahead, sir.

Unknown Executive

you Earnings us Conference thank Quarter SunOpta's and XXXX Fiscal Call. afternoon, for on joining Fourth Good

On the call Officer; and today are Joe Huckins, Financial Ennen, Chief Officer. Scott Chief Executive

press on afternoon and will and available should to have SunOpta's By page Investor its the also is was is website. now, this the transcription This on everyone call earnings company's earlier website. issued release Relations access available on the be that webcast, being

which your will note management please a remarks statements, forward-looking the As contain that and follow prepared may statements reminder, forward-looking in questions. additional make response to

These Form differ with afternoon, statements that them. reliance We future company's projections the from the of press factors and and upon should and to the you therefore, detailed SunOpta's all a risk to on annual factors report in for do undue forward-looking XX-K filings not results Securities guarantee materially refer more contained placed actual this not other Commission issued Exchange statements. be discussion in any performance, those could cause filed release

publicly laws. undertakes events or as obligation be except or to applicable reflect made correct presentation company The statements circumstances, update the future under required may during the no securities forward-looking to

with Finally, company's refer teleconference. financial included the measures financial press like The non-GAAP today. remind during release earlier reconciliation company we the would to listeners was that measures this to issued may certain non-GAAP of these

Joe. million. figures like to unless all occasionally U.S. otherwise discussed that the to and note stated, turn call to rounded I'd are please nearest today are Also, dollars now the over in

Joseph D. Ennen

in of with profitability in We growth optimization in us fruit had line thank with and profitable fruit and above, another strong and priority the solid frozen was driving very against reflecting significantly joining snacks afternoon, while execution Good our of performance revenues plant-based strong the guidance, for continuing quarter fourth key profitability. today. you

divested was of the my which sunflower the fourth quarter. of will our generally business, at prepared remarks the exclude note impact beginning Please

was me in the all Let way execution. begin volume incredible have we to success pricing we plant-based achieved much takeaways continues and growth results. fruit QX broad-based snacks growth saw business frozen both fruit continued improvement better from key some real same and revenue the offer growth, profitability before experience year, strong linked unpacking in the driven to

revenue was broad-based. over XX% QX of quarter entire in and optimize adjusted our all normalized Oat, was in history incredibly scale foodservice. as and plant-based, digits across business XXX% company soy efficiently on double-digit the remains EBITDA up and double almond, continue retail we performance million growth $XX.X in basis to coconut increases and a our In portfolio. highest with growth grew

our We of also double-digit customers. X saw each top growth in

our was the digits, to our advantages by Additionally, ways up numerous all to which own with we market were up business have we the built. double broad go have competitive This is and model to branded growth led portfolio, XX%. which win in ways we a testament shows

mentioned, very was pricing. gains Our plant-based consistent demand very and, in strong, supported in the as volume addition and quarter growth in very to was solid steady by broad-based. Customer I very

We about to talked extensively. have the profit strategies the fruit we continue segment resulting improvements from see in

execution are and with gross to with XX%. shift Mix optimization, value-added network along profit segment products better up fruit delivering results

costs inflationary all almost recover to with pricing continue customer We adjustments.

customer XX% and outstanding plant-based in over service case with XX%. over We continue fill fruit-based to rates deliver

with well as development to new growing customers our make gains existing proposition to We competitive value continue in continue as customers. as advantages and attract business

less first in operation. production first We on greenfield to We capital Texas continue to XXX,XXX XX execute from Bulldozer months. expansion plans plant than in in with foot our our square went now

positioned XXXX execution and for business well the durable in are we XXXX. for in momentum year has created solid another Lastly, strong

starting results, we X segment our remain priorities. focused to with turn strategic I'll on plant-based, where Now

one, Number up pricing split multipronged revenues includes three, double balanced $XXX million business both an winning approximately with building our fourth the co-manufacturing, and and XX-XX that growth number two, XX% fortifying factors in digits. to competitive a Plant-based number owned volume up go-to-market were brands. oatmeal quarter advantages; private strengthening and with label and between

pathways employ profitable, the results with full choice. growth. frequently across of These and sustainable categories partner of providing once why underscore a again the industry-leading our and competitive platform innovation, of spectrum and strength we channels are for customers multiple driving We capabilities our

segment, XX% accounted for the milk total over revenue. of core Within and increased segment plant-based XX% revenue the

with growth XX%, further also customer outstanding by to business deliver the continued to strong rate driven accelerating tea results Our demand.

a Finally, in efforts from third at sales select driven recovery solid promotional customers. the part quarter, XX%, grew by

continue milks, the types see portfolio plant-based of product our as growth across rates. strength X we on Focusing to double-digit experienced broad X

and almond Oat with continues a up in of was low soy double XX%, up was oat products Milk our digits. XX%. up plant-based from be all and service milk to reflecting gains strong mid-teens driver milk growth revenue was up food Coconut

Next, category I'll scan some on provide the milk its on performance recent plant-based retail data. based context and

we retail data food untracked plant-based only roughly scan the captures reminder, with X/X would service club and volume. a milks As shelf-stable representing X/X estimate of total of

We in milk solid continue the see to overall category. growth plant-based

milk units units our continues while grew with dollars by to XX% In with the XX XX%, be plant-based quarter, dollars growing and oat weeks led X%. that fourth declined growing growth total coincide X%. Category milk

would better very Looking beyond in channels, strong growth in suggest Plug. scan than food and retail growth our service business results

and fourth which command up our results approach. biggest at that sales business reflecting channel branded total in customer. service helped our growth very branded was by propel Club, further a the includes customer, go-to-market XX% our overall reflecting and strong channel, making oat SunOpta's Looking Oatmilk our Dream a food strong significant XX% increased along with in retail gains growth had milk. up in The Foodservice, customer brands Dream XX%, top-performing performance. from large quarter

younger In addition, by resurgence we continue in consumers. led to soy see some milk

XX product innovation, consumer soy soy was nutrition products and shelf-stable in gains non-GMO the milk. of weeks, fastest-growing the the by brand in interest protein in Life West and content fueled brand profile distribution the superior Our last of category

of ability across Private label our distribution. work reflecting shows the very it the up rose innovation. edges base, huge major strong, XX%, pricing Co-man to new broad-based and and customers and with a gains revenue not broth was also XX%, category by driven While channels.

profit As Plant-based the it XXXX, These growth. needed to instrumental all doubled X of including revenue in now double have are fueling XX% and relates to capacity growth complete. expansion been last months. since our projects, capacity our projects XX gross in has segment projects

many volatility given Texas, equipment availability and them months Our XXX time at over completed We've greenfield been was an the which past budget, of the XX plants month. experienced everything the to labor. from on macro on employees, our cross steel have for other in of is around Midlothian, over amazing plant training feat a hired and to

and steadily protein months. manufacturing over X production the expect QX exciting currently even product begin to shake in nearing we volumes next are expect line, is as salable to is more our Maybe commissioning on and XXX-milliliter initial that ramp We completion planned.

several many their customers Over months, and posted prospective been our current positive. have top and of past the reactions visits overwhelmingly with we

location in as business attractive XXXX and development as existing wins be we capacity standpoint will were customers go to by both Overall, new customers. our with several for well. both well business quite as importantly, geographic These from customers. enabled and its Texas, SunOpta expanding continues just as a onboarding

reengineering mix fruit-based footprint on strategic fruit geographic our and frozen Moving one, diversification, grower becoming X and in our cost and to towards evolving the customer derisking shift portfolio operator programs segment. via automation, relations; through business offerings. takeouts; more are: Recall three, innovation low-cost two, priorities the pricing value-added through better and the aggressive

Fourth by nearly in a revenues fruit over expected of as fruit consumer increase volume growth of growth strategies. up X we XX% moderation from continuation all came of partially Impressively, by reflecting to seen the X%, offset Segment fruit a saw strong XX% this quarter fully surge in demand were year. trends these frozen results in the in snacks, continue we've shift driven execution reflect mix. in We fruit snacks.

across innovations is CPG retail a bright and This increased Snacks. combined capacity to core to ability points leverage continued with for future and our key major growth customers

margin snacks portfolio efficiencies in reduced Importantly, scale-related and expansion rationalization across entire the captured portfolio fruit base we we benefited cost manufacturing fruit. our as significant frozen from in and delivered food-based

in trajectory. our similar nearly followed doubled Gross fruit-based profit segment the dollars in a improvement margin fourth and quarter

ESG our initiatives. progress We to made in Turning the year. significant

towards to sustainable continue chain, packaging real make waste progress joined our have our in plans. We We progress in transparency solutions. towards to significant made and we X supply enhance

improved food recognized industry at Investor Day, food and be XXXX, our we and beverage In company. to be a as our a a outlined B- X to average of CDP C. score and goals the is beverage As sustainability we above of

environmental a runs which to company, nonprofit investors, a is and their system CDP familiar, companies manage governments not those For disclosure for impacts.

consistent sustainability recent our sustainability goals in significantly clearly again capacity, growth good report delivered and and reshape year our the plans Additionally, we very to In significant outlines portfolio for expanded business as multiyear with most a summary, was SunOpta and our our continue XXXX for heritage. operating revenues profitability.

our very a additional competitive and position with to leverage addressable in tailwinds propel will XXXX capture that platform expand our further strong entered We share strong our numerous business, market.

and long-term we June outlook ago quarters plant-based on returns increasing unchanged growth and We remain XXXX invested of with our in profit for Our of double-digit first Investor XXXX. from shared our what increases Day to is revenue largely several at you algorithm capital. annual committed

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

Scott Huckins

much, revenues sunflower afternoon, everyone. divested were and year-over-year very you up million $XXX reported Joe, good and of excluding Thank as quarter XX%, the grew business. Fourth X.X%

excluding X.X% XX%. X% fruit increased up XX%, increased Fruit-based with volume Plant-based a which revenue by XX%. snacks, grew revenues up sunflower pricing strong led and

higher XX% impact of Consolidated excluding of XXX XX.X% costs $XX Texas points basis million basis basis margin for effect of XXX costs input million to our from of start-up dilutive the headwind the to gross XX was increased points XX% and through points customers. profit to gross plant. Consolidated despite approximately passing of up and costs $XX start-up $X.X was million to up

to Texas. impact we was start-up to if up excluding margin points for XXX Gross In increased basis in to XXX costs the higher segment-level gross $XX profit Texas. exclude plant-based, plant-based points have start-up costs basis XX% up for of and been million million, was would $XX and XX% XX%

divestiture. basis both XXX The Of margin in million X%. In XX% increased the to XXX $X sunflower increase gross growth gross the due reflected points to gross margin, margin volume and profit gross level to fruit-based, approximately segment increase and points pricing. rose in was basis

fruit in The frozen efficiencies improvement lower in increases plant and gross driven by and manufacturing operations. growth, in our price pricing fruit significant costs and increased snack margin was volume

like gross by to driven that EBITDA growth, expansion. would increasing is profit on reiterate I our focus

quarter compared see loss operating to a income gain. a pleased are gross $X.X We along higher $X.X in the fourth million to reflecting through Segment mostly profit P&L. FX this the year, was million million last with $X.X flowing

a $X.X XXX% the attributable common fourth shareholders million $XX.X to million year quarter prior Earnings million to the million was loss in $X.X of period. prior for or Adjusted the $XX.X EBITDA was year. than higher in compared

adjusted XX.X% from more of EBITDA than year. percentage revenue, a doubled year this last As to X.X%

to where flow. and we the from debt balance the are on we a perspective. with sheet cash pleased are start, maturity both Turning To leverage sheet, and balance

have context, For due over our million double business. the are XXXX. as of facilities capital last over years of we to X not the $XXX core our we credit end until invested plant-based seek growth

of XXXX, with the As end was $XXX of total leverage debt December the million X.Xx of fourth quarter. XX, at

target our Xx leverage As reminder, to a is Xx.

that within to over followed the ramping as quarters. higher the year-end couple year at we first continue of continue with the towards be last of of range gradual end the came half to the range, and by XXXX capacity improvement the We online production expect that

perspective, to flow million a contributed flow From The divestiture strong the quarter business flow of positive after cash with we the fourth capital cash fourth quarter. before and profile. a sunflower had investment. cash $X

quarter, was primarily Cash to Cash from $XX million XXXX compared partially sunflower last recent projects, in proceeds provided during $XX by the investments in divestiture activities $XX with quarter of expansion in of during $XX activities capacity offset reflecting operating investing was of year's used the fourth XXXX. million business. million million fourth by the quarter fourth compared the

fluid. Let with remains me outlook, comments environment close on our the recognizing

guidance business. revenue $X.XX to a we guidance our XXXX, with the on billion perspective other $X expect XX% a items of some the XX% financial to provide growth, representing From will I along sunflower statements. excluding divested in billion, standpoint, for range across

We would balance growth the to expect from the with actions majority taken of of come by wraparound the driven throughout that pricing volume, XXXX.

to not would reminder, XXXX sunflower for growth. a From also gains million that of $XX XX% expect a an As the QX range million XX% XXXX. to call EBITDA onetime $XX adjusted refer that million, will quarter. Please QX included standpoint, which in $XXX of we on $XX revenue commentary in recur represents year's revenue, million to in including last

of with from the As the the we XXXX, XX-XX expect first think Texas about of second half EBITDA a we and the the year pacing roughly split would back ramp-up in ongoing of half our benefiting in facility.

also cover would items in as them by with From financial statement few shared see expect standpoint, stock-based our a the me developing Day, other we driven SG&A be expense. outlook Let XXXX. percent, to up double-digit low part consistent compensation in a of at Investor P&L we

interest rates to million from credit begin the $XX expense used to as million expansion capacity will million on to due be rising on depreciated. half interest million Depreciation projects. be expansions finance up and roughly leases $X facilities up $X with half Interest $XX capital will to

$XX expect capital $X QX we projects million QX $X costs flow million related expansion our in million $XX Finally, of would $X with million being to QX. in million each the start-up in and and approximately to QX,

As are and margin gross are in cost added costs profit sold, reducing a EBITDA. gross to start-up of and recorded goods back reminder,

sheet is to capital expect standpoint, cash the million, From expected $XX million on range leverage growth the expenditures flow Free would a in cash $XX million we no and in between cash new flow a year-end million investments. balance of assuming flow and with $XX mid-Xs. material statement $XX

out with Day June what Each laid at these in estimates of are XXXX. Investor of our consistent we

the about as percentage would total digits for mid-single revenue adjusted we with revenue. double-digit margins EBITDA growth, and the of of high capital low a XXXX, think teens As expect low post algorithm business financial gross a expenditures margins we of company teens

plant-based need final a mention. in As XXXX One XX.X% have our that achieve our deliver targets business beyond. a said item reminder, a we to for time to long and we to CAGR

Lothian, We along with at in-person an This our plant live are facility, mid-April available. update newly both to an event Texas to Meeting event be We planning be our new in will business, will intend showcase and webcast opened Analyst host overall an our and also Investor including facility. the this a on tour.

be will to come. There more details

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

Operator

afternoon Brian [Operator Instructions] from Take our first question this Cowen. Holland of

Brian Holland

just beverage some category. data could high-level really kind strong your the plant-based I been that's point among know If to the with Yes. how performance of obviously, I and look a just that start sensitivity in conveys of at wondering investors business. who

obviously, strong continued share here and incursion. execution So implies

out data appreciate we level XXXX, the around deceleration. go catch high you and at though, -- color obviously, scanner your we I the we that some doesn't As how business? a and it see -- And Joe, data provided what impacts in to

category range as category there forecast of outcomes you're have could frame we us underlying to XXXX the tether helpful beverage a maybe guidance a that there's in be you little if plant-based that if point to for would of using help you starting It the your extent that sense that? a

Joseph D. Ennen

Brian.

forecast our relates about asking scan scanner to you're it -- category data? So as

Brian Holland

share. then -- It and it 'XX and an to be at the we're -- X a take doesn't Y have do grows of category have to category doesn't beverage you mean, amount just to between plant-based level, in assumption this yes, I for have going

and how just going making category you're I to which the think reasonable the assumptions people would curious category you is underlying that pace is the are guess for share I'm maybe incursion point understand to some for grow. the of extent help starting I that because what your anticipating

Joseph D. Ennen

I'll talk -- so seen certainly track channels. about We've Yes.

tracked for CAGR. the X several things years, even a have of is years, plant-based in Brian, growth XX I with back for back go kind channel We seen fully low double-digit going you of consistent mid-teens mean you've just seen that if the milks very XX or

really growth would milks decade. suggest that see standpoint. has revenue a growth is around the that for foodservice. don't deceleration been also CAGR in a we mean fully seeing a And strong anything We're I from over there plant-based

see to continue migrate plant-based milks. channel in We consumers that to

it oat a is brought momentum. nontracked Think see retail category in, milk and in again, overall other non-track the rate. incremental, growth for the And We largely mean, the is Club channels and when strong gets I channels, benefit which then great double-digit

So I growth, would category significantly exceeded for overall, mean, X I the quarters, performance to continue. our we to and don't that expect that's we Obviously, see. X has last what really, the know,

Brian Holland

Got the it. of you're West just and could been any and more And curious and fruit tree there's if the us upstream impact obviously Mexico. up color crops your any and you events the Coast. a business, update, it's in you Obviously, maybe I -- to for lot seeing give could heavily evolution fruit weighted I provide switching it's there, appreciate or if down whether just of any a minute. the weather color 'XX. nuts I'm Joe. But towards business what there on understand

Scott Huckins

Scott. the Brian, Thanks for it's question.

fine So we're quality Mexico We until seeing far so be won't the California production, reports now. we season suggests call heart have least At the ramping perfectly May. good in season. a We're the of availability. it

There's same time, acres the been more At some from weather. certainly severe been there's planted. the erosion

of better or we're at think expect. we would we see I as So that not than to were a sit we're going worse least in here view March, anything

Brian Holland

Appreciate stuck with for And X $XXX then for it. you guidance XXXX. that. EBITDA Obviously, last the Got million me.

'XX your XX% it delivered that XX% the think 'XX. implied you've upside would you first on provided XX growth in have with I when months guide, ago, initial

to want about I'm don't curious anything that to little sticking there's certainly in We're light Having we're now said mindful ramp. nothing in guidance worse there's has growth, say headwind if we're suggesting of to conservative or from outperformance delivery interpret XXXX, whether EBITDA that a or growth. factoring we or the with XX% mindful the over closer being that though, there's to in XXXX Midlothian that XX% whether bit you're that here the to that a and is something maybe be that, need I certainly, gotten of okay, it's in it's of bad here

to interpreted want $XXX with be to But just context of the XXXX, outperformance the the sticking understand million, is what that? in from in

Scott Huckins

No problem, Yes. Brian.

really outlined XXXX we with center I start what year's going with think the time. X back I'll cut we answer, consistent almost really

you on for the to lot it, 'XX you as question, is I visits and of: two, commercializing remember, a of in asked head and I think think, customers. existing function it's you hit your important that the when a additional one, new onboarding customers growth

And between and some the SunOpta to cooperation works customer inherently that's of me, in base. so requires volatility level that how and

So could. But or we estimate. the better, things I to course, of think they I as could think, go set usual, want cut

Operator

Ryan of Capital to We Street Lake Meyers go now next Markets.

Ryan Meyers

for of the of new First me. of you've X the call, growth and the I existing it you in and kind about talked alluded beginning kind this from of customers. past, know to kind at

on provide of commentary if of sort that you -- could curious from you this from and growth kind existing some much customers. then it Just during was of guys quarter customers new saw how

Joseph D. Ennen

and of clean the the sweep a quarter, business. beauty Ryan, The Yes. virtual of dimension every across was cut

product especially double-digit So the times said was every we exceptionally new type side, single as remarks, single channel, story go-to-market growth, customers, highlight single plant-based in existing almost of quarter and also every on broad-based every I the prepared the growth. the have mechanism the several customers,

But top amplifier core when base saw and big from double giant of. expectations, we That just plans add business to contribution existing digit. your importantly, you an new on consistent get with new can our is incredible customer growing customers. incredibly So

Ryan Meyers

at has know Got to past sporadic. inventory returning kind feel sense. over hit customers a it. normalized now kind they're the normal And few Makes of been kind we've buying of and of Do level patterns? you I quarters, like

Joseph D. Ennen

expected. go really We felt unerratic. so quarter as And in pattern to far Yes. as about came steady the as really, the order We exactly -- it. describe saw might good consistent, quarter incredibly X

Operator

now We'll Strelzik Andrew go BMO next Capital at to Markets.

Andrew Strelzik

you of competitors, you're future, and and dynamics much about Through how respect so kind at that. I high to a first say My X customers only level some at the in do on about with et or that But is just competitive and thinking that, key cetera. with the can know into the impacts customers traded 'XX peers should as anything capabilities, other any you their we of we be space, of of? think you think that publicly aware all your evolving production there's

Joseph D. Ennen

what pudding, the are I in say that every Yes, competitors, our And do in well. we the provide proof the our model competitive business advantages very every confident and customers. in as Andrew, and is industry is we would have And service we right?

look And indicator certainly our and And EBITDA, by them. growth our in real closely we as just that have sustainable is We them cetera, et you rates, as channel, revenue we strongest at have competitive the that possible. rates possible respect growth our advantages. broad monitor We growth competitors.

But have we're equation that we confident in demonstrating business value that in we're we marketplace And to model customer service proving the customers the offer is incredibly and that the valuable. itself and be playbook the assembled we're running.

Andrew Strelzik

Great. piece have about in commissioning shape online. of just the on the material Okay. on sense. as talked curious, progression year, you of the any kind comments that broader that the that impact through broadly coming year. through the on margin of XXX-milliliter Does particular, business please? the And makes question I'm just a Also progression and That margin

Scott Huckins

Scott. it's Andrew, Yes,

you'd to out tried expect we're that. that, being because I prepared trying modeling in to positive to what a outline think my for for equal, purposes, exactly feel see lay would each margin estimated for other remarks sequential all have was example, start-up I so quarter's costs, factors that you development

think second the depreciation. laid amount I out the is then incremental X of I And

bringing sequentially you'd Texas, the So is up positive selling that as basics example, to through, development margin just an conceptually, go we're the expect through back year.

Andrew Strelzik

X for a Okay. me. quick Great. then And just last

agenda on the producer we is that for new XXXX? as of that we strategy it in the Just the fruit, agenda what's play there And be as productivity see mindful year being on around relates out. the the should anything low-cost to

Scott Huckins

Good question.

'XX really capable of. what I we're think demonstrated

we if happened I talked time, absorbed is business. you've to I And got operating -- out that frozen in we've the a send flow-through plants -- seen to X think you think about of what's go X better profit in from back business.

the I think think minimis piece I recall, second amount is, resigned de then you'll we that lower of fair And margin. SKUs a were

productivity up exactly a we're to, the we I from in had shows frozen P&L. and So standpoint, think the it running in expected business as

I of really turning say would to the fruit snacks second we're about very excited half XXXX.

I that recap few come a of the important expect business growth. large about the we've third think it in project I got we've a deliver times, that I will that that's mentioned online we've past. expansion but talked another we sooner, that's heard to the material in think we quarter. wish leg that because in And

Operator

go to Furman Hallum. Craig of next We'll now Alex .

Alex Fuhrman

is to Congratulations ramping to have so you of sounds for getting you're the for sense how producing ask volume the to you're Midlothian as a Can quickly. be steadily that year eventually into facility. of much going us production product your It like in up Midlothian give facility opened much about that relative year? wanted progresses. there I guidance going this baked how to

Scott Huckins

Or did it question we're the -- guidance? Alex, really of all, miss affect thinking question Texas? first the about it? Is around Is I and is how

Alex Fuhrman

second of QX have year QX guess you you will and I sounds less the like than it specifically, end by the lot when But line be coming you're more be going I the producing in mean, on? Yes. to a

year? potential I the of to above the 'XX in producing rate what terms guess is how run to the on going you'll you're I'm end and more come be wondering year in beyond a based produce at much there of what

Scott Huckins

Okay. No, I understand.

is would because expect a of contribution would humming. full quarter you So start than it you'd material as QX to to we have I I more that what guess think of see as first-line say in inferred QX,

see number up ml contribution in expect And about that talked coming two, in QX. we've to more line would QX because and you XXX

the I a and is, of growth. biggest a XXXX question bit front it's but year, the center and think driver So XXXX it's of transitional

Alex Fuhrman

And numbers ask know just the Okay. Can growth where were last then business year that's you I smaller branded impressive. the you, from? on for That's helpful. could really I a coming if that's business. but share X very

West brand Is to and small more mature growing from Life as very see brands more significant that growth base? like a mostly Or of your acquired homegrown you off well? are starting the Dream

Joseph D. Ennen

growth natural the focused saw on sure, in was we channel. oat principally percentages, to saw give a milk say we the drive distribution, I also and The growth just Foodservice. biggest we to as bases, strong in contributor For the Dream that that smaller natural I'll to velocities exceptionally brand But channel. really continue so hesitate the are strong

Reminder, product not in an a organic product organic much that's the of in that does offering. way category have

known as Life. the known as West So a now artist mentioned West point us. key what West, for of difference And I Soy, then our the relaunch of formerly

trade certainly Early, encouraged, productivity mentioned, in the focused shelf-stable in weeks a driving spending. behind we're XX fastest-growing category team innovation, the plant-based as brand but expansion distribution days, milk and and our I early last around

in load started, end by stuff, the oat being just big there So a lot I is of Milk Dream to carried of the foodservice. but kind really, great where

Operator

now I'm Blair. of William going to Jon Anderson

Jon Andersen

to out ask. Trying what to figure

see. Let's

So the last you've seen plant-based. growth -- broad-based in

to you of channels, directions in As tilt go-to-market product you growth X look a couple that there XXXX, be the to should a Or is considering? based across be in direction do particular strategies? broad expect we or similarly plant-based types,

Joseph D. Ennen

Jon. No,

-- the certainly, half of of think it of first kind oat seen last I think the the all we've the year, quarters, was of couple story. I

an single up types see, I bit milk coconut a in us, of which a the up, to mean soy I having actually right, mentioned, of sectors competency milk the a playing think product back saw category, almond I which just entire up, is of half core return as is of milk we portfolio for a the different would great I say is lot product doing in that satisfy well. we because year, not saw a or to but to consumer.

mean, I we at So the business. the broad a piece add And when other I we see the consumer we're is customer-driven continuing. growth look within category, would trends

by we broad-based customer we when channel, the customer channel descriptor so hearing and good sight line by of And therefore, a of continuation to pretty growth. look have

Jon Andersen

Okay. helpful. That's

as many For Can reflect of wraparound things, pricing? or price up from moving environment the if benefit through current you be up whether at 'XX it commodity in further and in commodity further X implemented the point? supports tracking, price you've think XXXX to us Or stability kind move moving guess, of you us, for we've you pricing the I kind this down been that think help see of pressure. it they'll

Scott Huckins

Jon. Yes,

the tried think of I so-called the to outline, the to would of expect that to be I just be growth give of first. the minority you volume-based, the to growth actions, pricing the I X majority wraparound

as expect, you would puts think and takes. there's I

examples or like I whole, still I fortunate price But have in see costs think labor packaging from think You don't escalating, the we're a position. expect escalating. we I broad-based at here. is when don't look increases any

at about So thinking that's least XXXX. how we're

Jon Andersen

Is about business XX% Excited about the kind And it and development of weeks. few another you've comments. currently percent is risen? volume How maybe more prepared earlier -- to think of Good, efforts, efforts than come the see on in a down but good. you X talked talked the in BD Midlothian. presold, much I that

they that And line? bit I line line of the then new with is Is because expander TAM X, you're there expect into guess, there second is more line time being I for second -- as, able that frame and asked kind it product a you? particular quickly to built kind or of risk ramp a the line, a little say, it's, as you think on which would of that this ramp XXX-milliliter

Joseph D. Ennen

Yes, Jon.

So more than summarize we business existing customers yes, make are certainly as to continue could utilized well front, continue on bring we that the we progression, development customers. we and to XX% new as as on expand

continues, continue So of more out development and the we to business more facility. sell and

we terms for on. opportunity. conservative shake in built the We a expansion You're lines much TAM would -- XXX% a the of spot protein approach more take have ramping time

we and is of it, want not timing be a we're to confident and deliver recognizing but and terms in for customer commitments capability on around new because expectations trying Not us in to our humble volume. this we're

a line an plant. vertical was incredible company first the every function team or from start-up the effort heard about have across as every in just seen ever literally I of as single So of single

our every had across country, network. we in and of the from X benefit think Texas, that's manufacturing single I helping the plants people of a

we're new beat it, yes, to but approach us. But of a what taking is in bit hope a think a we a approach. prudent conservative that's customer big absolutely We managing for more

Jon Andersen

one, quick follow-up. a One Great.

in flow if you right? cash On are heard situation, XXXX. your use flow free cash that kind think, priorities the cash, the of positive What I of I Scott, for mentioned that

Scott Huckins

Yes.

back So June was very Jon, what outline, Investor at I stands. Day. what is consistent shared trying I in outlook had with to That still

is as capital think X ourselves very we that -- much having attractive with investments? about think that organic think will do deployment see alternatives. I find that. we One we I growth

example. You were would asking a business, about that the be good shake protein

those think profile how add-on we which the or or we flow. relative repurchase, example. be is but capital mutually bolt-on return think exclusive, share to do like, is, what not them. be be a cash those with of for think, of X, if the And apertures I the got. you opportunities return could M&A a X clear, then I they're what potential for And would in about be against environment, a would that And dislocated would X we've Number

Jon Andersen

quarter. saying, Okay. And great Congratulations I'll unerratic was call. just very by Joe, close a a this on it

Operator

appears no this it as any afternoon. for closing gentlemen, like further you questions to to hand have I'd Ennen, comments. And back we Mr.

Joseph D. Ennen

interest appreciate your following of for Great. you further with in and up talking evening you to look forward this the depth. and in We all time company. Thank your

Alex Fuhrman

call. that you Ladies Quarter thank day. remainder great to SunOpta's all Fourth Goodbye. so Again, earnings conclude XXXX I conference will and gentlemen, much your and wish would of joining us for like you a

SunOpta (STKL) 1 Mar 232022 Q4 Earnings call transcript