SOY.TO - Earnings call 3 2023

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Operator

Greetings, and welcome to SunOpta's Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, and that is Reed Anderson with ICR. may you and you, begin. Thank

Reed Anderson

thank Good SunOpta's joining on for Quarter afternoon, fiscal and Third XXXX us call. you earnings conference

its On being to Investor on website. www.sunopta.com. this the afternoon Ennen, available Relations Joe press release Gaba, page By today is webcast, be issued Officer; call transcription earnings everyone on This call earlier was now, access Greg will Officer. Chief at available Chief have SunOpta's company's should and and website that and also is Financial the Executive are the on the

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

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

continuing Also, I'd changed fruit nearest the business over segment. Given the quarter business a referring note has are remarks company of turn dollars, that the call is the now in stated, XXXX, all figures to the in U.S. be structures unless operations follow, of in single prepared million. and the and now like portion Joe. operating to company as otherwise please the the our to will to reporting reporting the of third rounded occasionally divestiture frozen

Joseph D. Ennen

thank and for today. afternoon, joining Good us you

me the new to say let First, welcome SunOpta.

of divestiture fruit transformation we finally, heavy frozen of month. the With the divestiture with business, portfolio XXXX completed XXXX; in lifting the Sunflower Ingredients the Global frozen began last the have our our in that business around business, fruit and

of snacks been several last the and focused operating high-growth, attractive on results are advantaged is business now very more The a obvious. businesses, our aggressively the these competitively years, focused, in categories. plant-based very Over we've investments SunOpta and investing in new

SunOpta. the you grown months, give few has Over grown about range. a XX XX% the this XX%. time, our pro to approximately revenue QX forma in last the On factoring a SunOpta EBITDA basis, outlook, consistently in me been facts XX% in margins and have new the XX% Let new has our EBITDA

those XX impressive with in year in revenue has percentage of and last only revenue months, highly a We EBITDA growth efficient have up years. a manner this achieved the SG&A SG&A as X in declined X% for and every

mode will the going strategic pivots Texas flow. further from continued and was growth, not is capital priorities worth our fuelling delivering prospects yet this EBITDA needs has excited investments for now to investment half new the forward, been business about and have and SunOpta we made future capital over divestiture as Additionally, noting are cash Texas XXXX the investments growth we that made. and to optimize contributed I have supporting It forward. of million. $XXX working we growth XXXX the the EBITDA, by going startup quantum in has the The revenue thereby reduced EBITDA share the we as

operational First, excellence.

on We investments organically. several significant the there fuel we We have growth opportunity made is our to are to from next focused over assets the years. believe value maximum to gain sweating do this

allocation. capital Second,

large on for of shareholders. come demonstrating and cycle, a strong have growth. are returns creating focused investment and we And out We third,

We are gains on TAM new and adding our customers existing with a customers, company, is and growth focus expansion. share

let offer solid We on key Now growth. me takeaways results. some the volume had QX

volume looking is importantly, momentum growth We QX have X.X% builds. stronger in as And even QX.

TAM had fuelled expect field X% EBITDA. growth. to things: strong and by share quarter we all of million X another of came as production customers new with XXXX expansion. growth in will online with and at And are our was and snacks customers, gains positively growth. increased existing end expansion the volume continued Our that customers, volume in Fruit Adjusted growth EBITDA business At this point, through $XX QX impact to XXXX. QX, strong flowed new capacity

close. pipeline new a of aggressively Additionally, to strong second business opportunities 'XX of we are have working for that we the half

fruit reaffirming for projecting high to frozen sale revenue the and XXXX. adjusting and volume in We guidance growth are of XXXX double-digit single

and of resulting growth from X% growth revenue is course, with details expansion. to milks, terms TAM around broth, creamers, This product customers, million. of $XXX our increased beverages in and gains X% results, represents saw oat new in We X% of In The teas, teas and XX% the revenue. broth shakes. group plant-based milk, protein all in packaged came QX of share from and our revenue customers increase QX which a protein existing volume, drinks,

QX XXth to our snacks for deliver very completely business. XX% increases marks by driven growth snacks led strong continued up business quarter fruit Our in the growth label fruit with consecutive double-digit and volume revenues by $XX of million, to private growth.

as ingredient an externally go-to-market ingredient. growth continues go-to-market it label, from gains prioritize private saw of only outlined with strategic internal positive gains standpoint, co-manufacturing, a the in that from outbase the company, in a versus The QX the total resulting in down approach we outside part to very we own was brands. fastest-growing our of shift For the was and be balanced sales selling to business use

a dynamic snacks milks, some few in being nontracked of performance health in service estimate coffee that channels and shop category internal be for and channel Xx performance about shelf-stable been XX%. performance track category is or milks see an may spot foodservice being there beverages, performing This category is combined. we One categories. nutrition broth, estimate that questions total up protein performance food major milk and comments single shakes. which channel much based From our plant-based low in performance, performance are category total is on estimate tracked track a down. category AKA across flat a as of lot have all plant-based of channels, as up to shelf-stable made note our tracked bright a milk quarter volume plant-based XX% down have aggregated Xx category the consumes that we channel units channel performance standpoint, It strongly. driven all up volume was we Here Since QX, channel the and last digits despite was club category Plant-Based stores on the to by of with untracked and retailers similar surprising

output new projects lines expansion capacity are Washington in we show on major the ramp and we Our fully feel The expectations, to largely continued increase Production Texas of quarter and with XX/X to and expected. the production XXXX. new came fully Omak, as efficiency customer the to tracking the continues commissioned our we third respectively, total utilizing create focus fruit to X are will planned. our capacity snacks output in for lines production realize in at running XX% steady capacity. the environment Once QX. ramped, this third to line online good of Texas The The year XX% expansion meet X approximately continues now and will facility potential as at improving online progress, volume and state. first capacity. our XX/X, XXXX in facility snacks this to on ideal come the Midlothian, in demand a the about to shifting these Texas way and lines, continues be

commissioning QX the now oat capability we half XXXX of a construction of call, first begin XXXX. Lastly, have Modesto, production the referenced in as will and completed we extraction we and on new in

frozen more influenced at frozen and time a capital of the inflection metrics of good lines by outline an which our did needs and the flexibility. approach that business, were divestiture is for point With allow detail That the changes are heavily our much fruit. of different in target capital our not business, our we divestiture with allocation to it fruit Historically, priorities. of

more anticipated Our section, This over in thereby his reduced. giving Greg for cover needs is that result returning inflection working fact, to truly and optionality we a and but medium is important SunOpta internal will growth shareholders. are more in point very capital will term increased flow, an us combined needs significantly today. underappreciated investment free cash the with lower in it this for detail feel value

of Given development very XXXX, across revenue forecast. growth to X% with XX% in new have our revenue grow be strong outlook the opportunities by communicated to this, QX single-digit a the adjusted to more specifically volume on year than growth focused end XX% XXXX, steady a to addition commenting strong business forecast. in update expected of is faster and XXXX. to in EBITDA we which the of let to will And growth. EBITDA second growth high volume new our able during share will This for for preliminary view will will I core call. me XX% we portfolio, business half double-digit with see the both the range. we and previously In be revenue, the pipeline range,

frozen million snacks $XX can plant-based The This midterm the presented full fruit, you $XXX previously of have is million the number included and network, target a million this and for year. EBITDA. bridges for communicated from still in plus $XXX earlier number both adjusted would utilization XXXX this have valid. of as infer of approximately represented We

and been CFO in X appointed in pivotal finance lead critical over organization. of business, have to and Greg? with background him a have Many thrilled and business see extensive as as to but strategic our knowledge we I'm Deputy to is previously financial call with the played growth achieving Gaba, consistently CFO. you priorities strong a goals. our Greg to that summary, mid-October. expanding turn SunOpta his prior Greg positioned and know utilized the capacity something likely moment, business, fully new and continue or execute improved against fuel by XXXX. food. profitability well a In network In informed I'll when model XXXX well Greg to As leverage the we our by again, over is are future capacity to insights and deliver He interacted has years was and flexible role of and significant in have of who we him provided for has being that our our

Greg Gaba

Thank with you everyone. Joe, to and forward in look my future. to new all speak privilege about the you with you very today. and regular much, of dialogue excited afternoon, good It's a role I'm

Before that the discussing fruit start quarterly the our let as quarter October on reported held-for-sale frozen qualifies with operations criteria fruit business third me of Frozen Sunflower beginning XXXX. the for the results, divestiture discontinued together in XX. with of and

outstanding and $XX.X disposal As fruit promissory have from purchasers aggregate repay stated for revolving performance on frozen to consideration the consideration the principal million, estimated million accounts a due required aggregate balance not sheet. the used At frozen cash purchasers. Note the in under continuing otherwise, our result, liabilities will of of by million was of of payable credit the accrued in bank and receivable note be the of as date, facilities. million regarding certain sale liabilities third regard $XX stated of held $XX make loans reported $XX borrowings comprised reclassified repayments our to We operations. million short-term of cash and cash with that X $XX a fruit. of closing assets price secured the $XX and frozen purchase by remaining a assumption seller unless my fruit $XXX amount the results other utilized been to of and years of million liabilities the The the of quarter of of assumed consideration the notes commentary a group in portion million,

percentage up was production Adjusted of incremental volume Third of as Adjusted consolidated $XX $XXX,XXX from revenue, XX year, equipment. $XX new operations in which million points or million XXX continuing year of profit were period. by points from a X% last operations XX.X% was gross basis earnings of up mostly $XXX increased start-up quarter and removing XX.X%. the was compared X.X%. of versus $X.X to basis from million Adjusted prior revenue impact includes costs X% driven growth revenues million to depreciation continuing EBITDA to

third wind-down impact cash flow. related million during the $XX of paydown our expense, Cash of At operations Turning operations million and cash working was the fruit, activities end related is of $XXX used interest in million. balance higher million, QX, to together sheet was was the Midlothian. quarter of $XXX of facility, of associated with million, X.Xx. the $XX for divestiture $X to Texas costs immediate debt CapEx debt used is the start-up to the for with leverage operating and in in frozen investing activities reflecting reflecting the continuing continuing Midlothian, capital. Adjusting debt Cash corresponding of increases

with sheet business our levels going XX%. paydown of and significant annual balance with had to XX% half revenue from As significant at divestiture around approximately reduction capital impact Joe our commented earlier, the fruit our frozen debt on a amount a of to that working positive the of

working the arrangement, ABL suboptimal operating significant our reduction, extended third-party and our company. new for Given which capital leases supplemented is current finance payable facilities was with

loan term leases. a revolver with finance to structure and moving are We limited

partners we and been of have by completing the anticipate supportive, We maturity very year. banking X-year refinancing with who great the have the a end

capital expect cost around and to Over capital has greater and our opportunities the refinancing recent new lower flexibility of allocation. we this our internal years, on add investment years, been next several capacity. to capabilities focus In provide

monetizing along capacity $XXX with profits cash significant we new deliver over our as will and existing growth the and invested plant been we've Texas. greenfield have simply revenues, to in building expand These XXXX. reminder, improve by investments since a facilities, this several to XXXX As next doing continue in incremental million since flow years,

flow. result the generate investment range XXXX, decrease to million. million CapEx we significantly cycle, $XX meaningful In needs will in in of As the cash generate term, free of this our $XX which will medium flow expect a free to cash

Given flow, our priorities. soon-to-be to allocation I appropriate outline feel significant time expected capital cash is it our an

use of be debt first levered. pay until under will The are Xx we cash down to further

half increase rates we second of current there from year, the is in resulting the being to the leverage Given of levered be first will expect in as the sub-Xx our goal, slightly half XXXX interest is that the Once we the under stock our still flow referenced payment of back current other assuming extraction to cash coming buy Xx project and price Joe levered, online to are liabilities. undervalued. is priority use free shares, Modesto

are propose at We discussions formally have It had preliminary with to our Board, intention meeting. is share buyback our board they aligned. a and year-end management's

undervalued While we trading discount material our value positioned to none organic is represents, SunOpta significantly companies. believe options, there we the are believe other compared many investment and a to stock as similarly at attractive

ROI flow. be or organic projects are quantum specific we and year's of yet attractive X a priorities, While to agreed, to through buyback either cash expect the would to boundaries be fund After growth will equivalent roughly we these acquisition.

on XXXX outlook. for provided the that standpoint, our our in previous for estimates From a with high and The business. sale Let the of fourth comments fruit call, the were the we of operations in revenue are result me guidance maintaining frozen growth adjusting single-digit single-digit growth EBITDA quarter. continuing adjusted close on would midpoint guidance our

growth XXXX XX% $XX the to than of standpoint, represents expect somewhat would of the the year standpoint, see expenditures and million million expect balance stronger to of to expect, a XXXX back XXXX. the From pacing to From midpoint perspective, the we range XXXX $XX $XXX the outlook. of adjusted which statement $XX we XX% the to cash of half. first flow we million which XX% continue as half from revenue million, and range approximately represents cash sheet in profit you we be $XX in from to XXXX, flow the a X% growth From on For of approximately of $XX capital million of midpoint $XXX expect million million, in to range. a the EBITDA our of

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

Operator

question Instructions] the of Jim Our first comes Stephens. today from line [Operator with Salera

James Salera

ask If in time the you guys that said question, XQ, maybe the at a me my opportunities of guide. XXXX was there guys. notes correctly, I Hi if business could XX kind serve you had that into baked new

numbers were update X? give think kind just were gone us maybe that's then delayed. and have Can X we X wayside, any factored are the with I on those an contribution your into pace how on of far And for from along you them to XXXX? by

Joseph D. Ennen

all X first contributed the then have them would to And overlapping quarter. the growth so before Jim, QX growth key in be XXXX in to contributors and Hi we expect and them. of production third half we now to are in certainly, start

James Salera

Okay. data into Great. we kind kind those a because trends tracked retail plant-based total have any give you of the offered channel? see consumption and the of consumption club obviously, in found divergence interesting the I thoughts us channels. foodservice Can there's only visibility the versus as That's what helpful. you And know, guys why that we such on very between then at around can you

Joseph D. Ennen

have and you order environment, they counter or have coffee drink. the a in up their go think routinized a to favorite shop very who's usual. and I the consumer pattern, a in foodservice their They to especially drive-thru they behavior

to basket on certain themselves for food conscious for put a for And to try I family. because they're budget I week. they're think the for shopping have the week retail much they orientation the is in think table groceries when much a and their dollars amount a in or the the environment, more consumer trade-off fill more of

X shopping they're think what elasticity I consumer frameworks different upon you depending so for. with the just And very see

James Salera

helpful. maybe of one with customers? That's those can How sneak outlook. existing I Or as more of into new to core kind your that it that some well? And outlook if as relates business in just of there much is opportunities XXXX baked is

Joseph D. Ennen

was 'XX tried we the as we was And the Jim, and business. X that call, talked what very we challenging. just of our a the quantum is one guidance QX of timing we things, those thought certain learn new on So of XXXX calling for out quantum in to the in months baked

is SKUs, relative numbers can is share have today. So as point. from us It we manufacture today. we just 'XX It's as the what certain you serve would customers It's core heard vantage business. our get to certain

Operator

Our next Lake question Meyers Markets. Street comes with Ryan from the line of Capital

Ryan Meyers

guys. Hi

gave? Just continued. improvement. And as of that category potential kind there a that kind of of curious obviously, overall could sort last the a as overall I'm an question. of softness, you some follow-up the do just sort to guys kind if into into like sounds that improvement see have The some you year, what be guidance next if of upside we visibility

Joseph D. Ennen

Yes.

So total we Ryan, we call digits, to mid-single low mid-single as not milks, digits, the down. said, category would shelf-stable up plant-based

That's the again, the Xx it channel. would That's were we just sell many foodservice that they So Because declines as again, our as into see that to certainly, we than forecasted underline club as retail appear that XXXX relates foodservice. not the it channel. the to of SKUs saw larger category to have recover, channel to XXXX -- just upside channel, is meaning not if total would even it stores. point, decline. in counting that customers relates track growth, category the the subset, track further But as for an

Ryan Meyers

this of it, you of should be And feel where guys of where the sort you we And the can business call just the gross sort as current about is? margin new margin, we like about Okay. as ultimately, how you too? SunOpta gross take thinking think then

Joseph D. Ennen

Yes. Thanks, Ryan.

that gross margin that years gross said frozen consistent hasn't pretty of current our and our has the was publish Our I at last We've fruit we couple for the say XX%. excluding look divested, pretty view would that that long-term around strong margin business will be we our XX%, still changed. goal we as been when you historicals the well. goal

Operator

comes question the of Andrew Strelzik with Capital BMO line next Our from Markets.

Andrew Strelzik

My the just the Hi of your level there I'm that mean you continue? Just XXXX customers. that think Have questions. guess, for up guys, underlying about any one you what you talked that great. curious, did -- texture taking thanks guys? you this foodservice just you current the assuming roll similar first around kind into the assumed, some the when are that year I think did guidance. I would be to cetera, I category baked guess et operating is about environment for from club, outlook trends, both you of those all How in some And

Joseph D. Ennen

Sure.

plan XXXX, that category with start So opposed And to that us point our the forecast, and build from category. customers are a they track of our appear our our starting foodservice in our customers' and growth in as forecast. forecast our or see customers working to we will the assumptions point continued forecasts channel which is are give meaning it planning their for would declines to and channel, continuing expect club the

for in break And important you they would based can numbers. tracked see overall, being products would are seeing our kind we as but coffee as and SunOpta. can infer the in we have But don't in it clearly, we growth forecast upside. recovery channel by what positive happens by seen SKUs say on But going what driver again, what is as in of -- channels are shop I of the asked, planned volume direction. the foodservice the So would SKU Ryan most we far up,

Andrew Strelzik

Got it.

spending a your like expect out, to again to leverage based you pushed that, perspective, things in share capacity capital to it be And some expansion. terms situation has potential you're that of from I buybacks, a needs. obviously, to and we're allocation how Okay. relation capacity and to targets you're eventually, sounds of like where the I I'm guess That's helpful. about but been know when get then curious on going thinking hit cadence that in going

Greg ability kind you to X commentary your on guess, I those of balance things? just -- how So

Greg Gaba

prioritization best this the cash a mean, of I from we feel is and absolutely say, time use would like I a in buyback. value best point standpoint, the share flow at

it more a future And operational volume discussion priorities for is own. our out and infrastructure priority are core I for us. with several and we certainly we needs, currently assets strong you of relates what massive in As believe around to the existing can excellence growth base as drive heard to capital our our squeezing that the continue next years manufacturing

Andrew Strelzik

could in factor squeeze there? from like respect elaborate obviously onboarding I talking And 'XX if was of 'XX comments think you what that. being 'XX the things one a leap Okay. were in with then I just maybe about guide more in that swing to There'll the million. in you be here made big 'XX. timing $XXX about you and EBITDA the on or million Can the to

would So 'XX be I color 'XX? seem in great. there is guess, Just Do it little like does a more you that's possible more realistic? think

Joseph D. Ennen

Yes.

is that it's indicated, answer be for question comment back to the the a And position of on much informed I of by business to in and the new XXXX. into the business. half we highly see 'XX we'll as So new quantum better

represented what But that But until pursuing. network out So target, absolutely several $XXX $XXX or we've And we of the the certain, said full we're date. when with rolled pursuing that. that kind consistent it and we to be first would million utilization. premature enthusiastic about are of kind big are we're peg have those opportunities million

QX probably a reference that say, call. point better you can I give would on So on the

Operator

Our with Fuhrman comes next the of from question line Group. Craig-Hallum Capital Alex

Alex Fuhrman

future? you frozen like a foodservice most pretty sounds important much guys, and that for have the you what if good tracked pretty been of milks grocery has on your refrigerated attribute underperform continue stores, Obviously, question, plant-based milk, foreseeable what's of insight channels you noticed business. if taking in been by that think I'd huge any course, restaurants? be just given expect a really broader shelf-stable to divergence Hi all the also channels to very share driving between of in club divergence to? across what thanks the dominant any for between plant-based you fruit congratulations trends really And the for and curious shelf-stable restaurants, then channel for Curious category Do the into and a sale margin. guys, in you milk. sort you've And plant-based

Joseph D. Ennen

Yes, working backwards.

and terms shelf haven't closely in refrigerated. performance. together of big tracked We a seen They've incredibly divergence stable between

think divergence, terms again, why coffee shop such of In the of prior. One a we foodservice that think things happening a I you're in behavior been mentioned seeing there's I is and that rutinized number channel.

Starbucks and work, Second coffee think I as more then get be more people you drive-thru popular to destination. is, returning a whatever the or shop, to continues

store You the same-store chains week, traffic coffee comps seen large would well both last one which from have shop recently revenue being as a saw reported of growth on gains. per-drink basis as

the they innovation great customers coffee a keeping aggregate, channel, doing engaged. job around shop in channel product the meaning is and think are, I their So

Operator

next Instructions] question from with [Operator Jon William Our of Andersen the Blair. line

Jon Andersen

Let's see.

if opportunity buckets those that in for if used sense TAM the those you I'd the customers gains of each driving love -- customers, share to the So where you better growth dimension describe and outlook? and that to X the 'XX, 'XX sales could be being with in to ask low single-digit don't may a high existing begin the this across but size not relative at rate get possible we to possible. growth growth some Why if on to start? that add I'll I'm wondering -- point, it of double-digit expansion. new share

Joseph D. Ennen

certainly, course, protein well as customers us from doors with existing lot as I gaining of around kind share of new throughout Jon, think gains, activity of for it's see in expansion new between on-boarding TAM that then, And split, Texas -- talked XXXX, pretty regard. And customers as a share and opened we lot TAM real expansion. We customers. of a shakes. the

So of all contribute them X that and growth to deliver will algorithm.

Jon Andersen

Good.

Okay.

that this So that you kind from kind maybe to like of steps the at then are sight? at where X to, at more that balance of hoped to what XX% necessary now feel in mines time And to this you are good where get line do running there. you Good. of Do producing had about are that? are XXX% point? I be them Is that be importantly, you Midlothian that have guess, And And of mentioned point ultimately. you'd in the to here?

Joseph D. Ennen

say continued would good have I sight the very the of line curve. of we to start-up Yes, progression

about to progress So to we're good our push very up. yes, feeling ability and continue that

Jon Andersen

on Joe, which third is focused area the to be going line, And the of business?

Joseph D. Ennen

heavy plant-based to a milks, -- be probably Core would own. skew core it

Jon Andersen

And do capability, -- -- is contributing ingredient you this of the can goods external plant-based to will Okay. mentioned you finished to business? be support will the think you start extraction but Or to may internally And that a you that portion dedicated the product that sales? when will sales? Modesto earnest, in that use have already,

Joseph D. Ennen

There significant will a consumed but the that internally. is produced be base sales, will portion out be some external of Modesto of ingredient

In terms really, of QX in when we mode. see startup that, be will

is expect So would really, be to when that contributing materially. QX we

Jon Andersen

want $XX in flow flow cash The the free prepared interest perhaps of million. A cash flow have Just range. question and sure for Greg Is of to expenditures? to to expense great. that comments, unlevered -- I the capital free cash make you expect XXXX, or that during free $XX here. million definition after that Okay, in mentioned I generate

Greg Gaba

flow, interest. No Jon. at It problem, cash is including Yes. free

in best. So we not flow the unlevered cash free the referenced

Jon Andersen

last well. this the talked I then as you excellent. one, think Excellent, And about

just rate early a annual impact You're any to revolver I is guess, how the facility. of and Do And term have kind your restructuring, to thoughts it kind you Or of of interest a that? ABL on could call and too that? timing of expense? that the working towards

Greg Gaba

Jon. great No, question,

So the of year. the that we're end get to done expecting by

supportive. and bank a any won't of started new We extremely rate been that interest we say for partners don't of relatively the will year. I reason completed now. would structure. from Our end lot have similar see an perspective, It creates the where with are be the us to process, the flexibility why it we by be just

Operator

Our John from comes final line Securities. question today with Mizuho the Baumgartner of

John Baumgartner

you light But seeing, the for of the there Joe, I mentioned some the I'm growth the quarter, category for to to idea for the through the any in brands. retailer curious cooling think expectations outlook for was in tail category plant-based of curious TDPs October. how maybe shelf given velocity discussion there, and on underperformers in there's in volume Maybe the in the you're softness. channels. we're first category, pare-back this do some about with just And continued declines retailers retailers desire I'm seeing lower declines new off, declines side, sense still thinking you the changes we're declutter adding a XXXX brands bit? track of volume the around for last and the the merchandising address modest in the

Joseph D. Ennen

see say of is and on focus more expect from assortment would to a What I I changes promotional activity would less in XXXX probably brands. the

consistent message that as of certainly, a out is would categories QX, the intensify, in have in thematic trim out not the would our think will call resets would the typically play as the I expect XXXX kind -- a XXXX. category end from middle that, it, the QX, we be any as hearing we bottom have in movement that seen But this year, brand of juncture. at as material watching But retailers I middle that to I think for grocery will well. owners channels, the some certainly that. all tracked the pretty of category activity in for occur, we're of kind And I collective store experienced expect softness across volume promotional in

John Baumgartner

for snacks, see Okay. in in do that in beverage the risks the fruit takeaway of on the back soft? in Is year the growth to retailer mix bullish last outlook as for buck better allows visibility the the trend in volume the staying track How about soft very orders snacks remains a half, think scanner difference impact for you overall think And you fruit year few the then about on pertaining we And has how is into of maybe of well. to but if you months data, orders do that the customer XXXX? you also for and or XXXX? there the in been in next saw half the category sort hitting there the softness plant-based to sound from fruit this back

Joseph D. Ennen

good Yes, question.

bullish XX and double-digit we capacity growth. stores very our driven about with both It of and our by is tracked coming growth very very, specifically online, So consecutive expansion quarters are a club business -- significant is club. untracked and

for And mean, customers multiple might you several on very we see growth. at the approaching be allocation those look so when strong we've also It's years. had trends I retailers, noting, those in what very, -- worth with

also to allocation this And off able anxious are those to so and incredibly customers business. be drive come

month, in perform. of of certainly, things that we're here one as early added and snacks business or in strength perform to where capacity continues very certainly QX the even and first just perform I fourth trends quarter product we're of areas the is just strong the seeing, seeing the the one referenced So in fruit and the this

Operator

that, closing the to over With floor Joe, for call the remarks. Joe turn back would like I to Ennen yours. is

Joseph D. Ennen

us I everybody joining and call you Thanks to of future. Great. many again. look the speaking today in forward want Thank thank to on you. the just to for

Operator

that and day, today's Have great call. gentlemen, a and you concludes for Thank now may you all disconnect. Ladies everyone. joining,

SunOpta (STKL) 8 Nov 232023 Q3 Earnings call transcript