SOY.TO - Earnings call 4 2023

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Operator

Greetings and welcome to SunOpta's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.I will now turn the conference over to your host, Reed Anderson with ICR. Thank you.

You may begin.

Reed Anderson

Good afternoon and thank you for joining us on SunOpta's fourth quarter fiscal 2023 earnings conference call.

end are end Former serving appointed of advisory through today retired Executive in Chief call quarter; role the first at XXXX the Executive the Officer Joe who Chief Ennen, Officer, an Brian effective On Kocher, the was Relations of and Financial on this the of the release earnings page at Chief that of the afternoon should www.sunopta.com. everyone was and XXXX; now, start earlier and press available is have Investor Gaba, issued at website Greg Officer.By access SunOpta's is to is in This statements prepared forward-looking also a to response remarks the webcast reminder, call available website.As statements contain follow and being your will questions. management and its company's the which be may transcription please make that note forward-looking on additional do and reliance guarantee therefore them. placed statements be not performance undue upon future not should These all the actual in afternoon, Form We factors differ factors with filings the refer cause Exchange discussion any that more of could materially annual the to detailed press this XX-K report forward-looking company's risk you projections filed on and Commission for those Securities release statements. other issued from a results to contained and and SunOpta's statements financial to certain except correct obligation remind to that during no this company we like required laws.Finally, the would refer may The reflect the during may non-GAAP presentation to under listeners undertakes or be teleconference. update the future forward-looking as events to company circumstances, publicly made measures or applicable securities was release earlier issued financial A reconciliation press of today. these included with company's measures the non-GAAP figures in continuing business will remarks the operations U.S. be the to to Also, follow, are please all unless company prepared the note portion and of stated, in referring the otherwise call CEO the the to will Joe's over tenure quarter, fully the Brian.Joe? results quarterly occasionally rounded Joe nearest before million.Given turning dollars, encompassed to speak to fourth as

Joseph D. Ennen

Good us thank afternoon for you today. and joining

years journey than from exciting business and over different be fourth The incredibly of several a was end for to XXXX. I've and It's solid is to quarter getting interactions. is a today, Today a SunOpta of my to all you rewarding, beginning this earnings reporting XXXX. most strong be our last the As in SunOpta when know call. I along know, with will much you past outlook great started been enjoyed it

then Our leverages going is his categories.For cover I'm your platform, the from Greg offer it's attractive strong. very the priorities its results it in the then power let the demonstrate of to company call, and with growth QX that fourth industry's Overall the of that some to clear model new to Brian and highly and and we'll our growth a highlights results. quarter turn differentiated the business, the was questions.Now focused discuss a views SunOpta of participate most today's volume-driven and the revenue outlook. some key me of to over will take follow financials review from takeaways

year-over-year, growth with For we broad sharp continued based. QX algorithm. increased increase revenues X% line Growth to from the acceleration and in the quarter in our sequential XX% delivered long-term be a

rates customers, growth, our growth oat-based by milks, reflecting meeting to inefficient million our frozen including agreement XX.X% X $XX in over levers, increased had that with the quarter plant-based chain primary significant the for rate gains facilities This our asset quarter leveraged highest in customers had terms the We an gains share demand foodservice. of become higher well expanded utilization the growth of strong operations, business strong profitability. adding performed offerings, sell the from fruit year the EBITDA similar customer to our and divestiture leveraged We another Of capacity.Adjusted product small growth Plant-based led highly XX%, existing groups, milks our each of all last expanding of see snacks continued quarter as market. addressable our volume-driven and smoothie capacity at of our had total investments supply new demand.Last to X as revenue best signed remaining further plant in our had $X after increase frozen bowl business of all strong we for to customer of was million. the week, fruit. frozen growth

group, TAM strong continue in Lastly, color results. we customers, the oat growth and remains a expansion. attributable and the QX on XXX% years. new offer This broth opportunities.Now XX% let X incredibly milk the additional addition $XXX was mix, over some over to million. to for to and our The have product of represented existing pipeline additional beverage revenues QX as of increased In growth reflecting me it a group of driver robust has was key gains product customers XX% been share with Growth revenue. and volume

for of job in the in and was to on sizable of By We state end revenue gains what by go-to-market online ramp tea along our end line. outstanding late perspective, growth quarter accomplishment.In QX, consecutive teams This enabled several Omak, business.From QX. our in operations was creamers Washington our remained our an was XX% million, to over XXth be by should past a fruit done run throughout impressive and quarters. snacks, scaling growth, plant also capacity up our we fruit driven to in new that volume $XX truly business. have delivered close snacks Texas, the double-digit we've with seen The trends which protein of our expansion shake rate an came this similar continued up R&D in

times by of continues stemmed the externally in followed on in as QX foreshadowed down decline to prioritize due selling call. brand The the broth category contract was base shift versus the ingredient to internal we it as strategic we use an revenue to our in several from oat QX have discussed label ingredient. the growth Private competitive rates, manufacturing highest business. dynamics own our deliver Our the

contributor beverage and like a performance category in businesses. major XX% overall I'd to growth.Now touch the shift of on broth continued to benefits that We see to it our the P&L and for was major

and category foodservice to channels, and that is tracked which much all our to to for on we from strategies. last plant-based all your in and reminder, the channels, estimate your QX for grew When continued least Looking channels. execution up as the XX plant-based a XX% robust thank weeks of Also, milk see prior tenacious derived in of than revenue investors very the milks to reflecting tracked year.In employees and past Recall years, In company. channel, support for in commodity-based like operating the portfolio the estimate passion untracked we We closing, the of by I'd larger versus extremely continued in strong I'm X proud of transformation very competitively we untracked our to the focus divesting our businesses of advantaged businesses in trends in be channels. digits. growth, growth high at protein attractive at category invest mid-single very our shakes Xx categories. tracked show the of optimized

sustainability a and with We built have every our great culture team values a we day. great live

going quadrupled. new to the Brian's future over of the doubled basis pro revenue results. X and to EBITDA I to as We I'm under of pass has call food.With over Brian. we look the new that, success years, a last On continued the has than forward the SunOpta to SunOpta the fuel leadership forma more Brian? have adjusted delivered continue

Brian Kocher

opportunity drove joining and and you, in today. the Thank next company to grateful of Joe's leadership. this change years. Joe start be I he like lead to the thanks saying The and its Joe us I'd X want chapter. to to by the is new culmination on SunOpta over for recognize last the everyone the transformational am SunOpta also I of for excited call part how a

and of you. Thank X impact SunOpta are have over are future last with should a of you our for for long-term your trajectory. continued excited and more about we for of focused several shareholders SunOpta I a company result a very the I'm with of definitely of many As months, thank those leadership be reasons. at discussed you support.As your efforts, growth Joe, you proud stronger, we your clearer the proud

categories in First I which we love and the foremost, play.

Our an and we categories base customer growth. further fuel excellent to have are growing

volume the was capital and Joe from fits and deployed is In operational profit growth. the short, role for significant of That migrating and capital to perspective. role the that are a a one largely one right SunOpta from for his the strategic portfolio is commodity growth. that leadership to from portfolio we strengths SunOpta unlock team leveraging transformed next based is perfectly. my with excellence Secondly, CEO where now transformation purely then timing value add.

years Thirdly, growth. the has demonstrated new several of SunOpta already

of you can complete, With core the portfolio see transformation business. the power the now

XX% and grown XX Over grown revenue XX%. EBITDA the has approximately last months, adjusted has

company's to growth which lead work and We our on doing is of every communities growing focused of good and the and categories excited our chapter by the next company environment this live. in built DNA we growth.Additionally, on customers, are a I'm strand

that right and and a doing to sustainability right and our with be its where our categories doing We XXX% company values. for are blessed environment is in with operate aligned lives our products food to customers associated beverage I'm for proud

all lot projects After Board underlying within increasingly great and there the and of clear about plans see had everyday and most it base me Modesto initial business. that our and were capacity the and for the company about excited third strong even trends line culture, on These the understand and and started their understand progressing, with our improving on the validate in Texas. and throughput the views and and the efficiency of in I'm plan possible working in over into SunOpta past update well Once everyone, for probably facilities. great trends the expansion into to I focus values enduring. several a oat is to I as operational have sales meeting of execute to I've drive employee I've that as shape early production of they outlook that my are our our greater return. the demand the exceeded to of under entire me the overall initiatives and an expectations. to this increasing business couple Lastly, pipeline. of it first me confidence a drivers aspects I've growth years with All what positioned the on provides growth.All we chance business a our a is company.Next, I've rates have is the sustainable helped to to team, spending joined momentum an the XXXX importantly, fit and leadership passion growth. of in and confidence believe ability a the operating as SunOpta's leadership sales from whole, contribute digging more model company.When visibility solidified these are model core personally. in in people quarter The the growth transform a grown you my been my continue give of was well I is fourth confidence year. as in look align priorities The able us excellence and Joe's our long-term let as for new culture growth provide base trajectory with an potential. the key my our seen differentiator clearly as as have taken my observations months. our time excited

divestiture of our did that horizon In confident not the Actually, the due the with contributed rate those also and chain. of seeing to or some reaffirming efficiency run million to in in I strategic I is After by early end priorities. the outlook on observations confident revenue Number reaffirming the am of pipeline our outlook our advantaged supply am for XXXX. time X, we adjusted the the plan the $XXX business, of confident increasing team, deliver and million take like we've reaffirm XXXX in competitively built. model in raising Board, the fact, our with to momentum effectively to am our XXXX.I'd so smoothie adjust I XXXX. bowl discussions my for effectiveness the EBITDA am and validating which business our guidance $XX that as of the I

have deployed in capacity We capital. invested and

on executing with momentum. the to the X, We Now plant we need need improvements efficiently demand-side our customers, its focused driving is relentlessness. through to I'll growth. look and and categories summary, expansion. remain quarter to driving margin and to our the turn company physical volume updating call priorities, #X Continue existing TAM installed currently highly of progress And focused more chain growth operate to over in priority.In XXXX.Now ensure growing on we leverage operational with new is growth our and daily you focused to customer I via in the drive forward cover Number fourth Greg excellence and base throughout allocation of SunOpta efficiencies, trajectory detail. is optimize on in deleveraging the finally, We're acquisition assets our to operational enhancement a supply disciplined growing assets. are share and capital which

Greg Gaba

in XX% production million. $XX.X to the XX.X%, prior-year increased Adjusted XX.X%.Turning million much, We was doubled depreciation. point by of continuing year, a to due increases $XXX.X million the strong Revenue up cash balance the down to of was Thank had Brian, quarter. operations earnings driven $X.X versus good up prior-year you an interest performance net and of operating and to Adjusted continuing new afternoon, increase Adjusted was from Operating percentage last improved by depreciation compared to EBITDA sheet related growth. absorbing and as basis margin million XX.X% $X.X very growth. XX million million, from a from points revenue, offsetting to expense to by gross period, volume in increased basis operations Gross increased flow. points, profitable $XX.X XX profit XX driven $X.X X.X% basis volume than everyone. more than and period XX.X% to income more fourth by equipment. in

$XXX debt business X.Xx. that operations provide the have with frozen our balance was term million, generated end investing in of activities the during strengthen was future structure was into planned in facilities X-year of sheet capital continuing new loan entered of our by the new $XX operating the debt activities working of of and in Cash continuing needs, and As million. The credit of operations completed credit and provide implying of is fourth a credit leverage flow a resulting December. new of QX, $X.X reduction million, provided million facility term a aligned a significant to $XXX refinancing revolving used million $X.X capital $XX with facility. million, We divestiture cash our continuing we needs.At operations cash fruit and greater quarter flexibility, a free from the

the XXXX, For free cash call. target that the first QX are we we flow you $XX million to $XX million of maintaining with on shared

be aligned Board of Xx use me rates, under priorities.Given debt reiterate Let to until allocations first down pay current current levered. we're interest our capital the cash will

we From flow. M&A.Let provided of accretive standpoint, me our use high the of expect to project the this will second ROI we continuously the previous Xx we level XXXX evaluate debt with We share under include close a due levered, reach in guidance Once half capital free the call. Brian half on first funding of best may we as cash projects outlook Modesto extraction and/or the in outlook. buybacks, are comments completion will XXXX reaffirming This the referenced. increase to the are slightly on

as in adjusted From $XXX perspective, represents pacing expect, and half. a From see back to the XX% stronger we split approximately XX%. first the would the half which expect XX%. a to million, $XX profit $XX EBITDA range the to We somewhat million million, standpoint, half we of growth X% second which half with represents million first of expect year to revenue of growth of of XX% a of to XX% $XXX than be you

seasonality, call continue balance provide cash expect and QX customer in statement half From in the call XXXX.Before expect capital million addition, for we SKU million please due flow to for competitive an of that, first expected split be QX. for just of operator, with XX% that stronger standpoint, XX% approximately activity.And sheet to flow expenditures year, to the questions, to regarding do $XX to reminder with commentary the cash approximately the we reasons, and the detailed a than of not questions. for $XX opening on level open a we In QX QX or

Operator

Instructions] Markets. BMO with from of Capital [Operator the question comes first Strelzik line Andrew Your

Andrew Strelzik

you. And in been It's future. great best of luck working Joe the with

Joseph D. Ennen

Thanks, Andrew.

Andrew Strelzik

pipeline. question the guess the of without wanted guess, underlying there's that question, My I the guess, back in I that be comment first to you I now revenue you'll that assumptions just an kind to business -- I smoothie My new made given And the about business. is absolutely. tie increase,

there that So have Or of you pipeline -- opportunities that seen that any some those Is over? that? to converting building? movement new business business how is contributing new

Brian Kocher

things A and call. that of would Yes, a for Andrew, for question about lot I say couple business the thanks our the pipeline. new joining

acquiring fourth fourth some We're expanding that don't chip with of to We're in fact we line. themselves We're with made that forget, First also growth we've revenue customers. area. -- ways carries our with of and lot the we foremost, area And multiple and the customers. customer got new is share our really blue have a investments don't a growing recently.And it. existing that our is grow of base growing that the and TAM along

say we now So see guidance, looked the few meet think chance to X at. in they're the to specifically, that the quarter to that outlined a that role coming at are we order and that facilities, call. I coming had line salespeople, the in meet XXXX customers when understand to in third all with the a volumes in forecast they're And I would in I've pace months with

new a along we're close is discovery So development of business I business our on respect specifically, business customers.So That new points always various with to guess development. from to with at runs our anywhere implementation, development new stage, the each of and process, horizon new part business horizon. from that it's

at with the us and new product current that's portfolio XXXX. our business we're current and customers of development. But that we what gave affirm the the in confidence for looking invest them, to our growth strength guidance our see to We continue with now, right

Andrew Strelzik

Got it.

Okay. the by and -- you the end That's noted just that question of then of would facility, And helpful. first at is second state. ramp the the end Texas the on quarter, second you be the kind of

utilization from X out an that online the Is in of on quarter. the just right coming first give guess those I Can the I a you ramping? update rate terms in know where first now? So was line us are that's And lines, how third perspective?

Brian Kocher

Yes.

best expected. could I think it's as it I way is the say ramping

production our and demonstrating quarter, to trajectory and is be first the And of the so process right on run rate, end The the in X at speak, expected we in line are lines productivity third that are to the year. both the middle absolutely second now. then

So it excited we're end comes on, believe line to would contributing qualification third be the some well. in it's the things. that then and -- about the other yes, quarter, and by second the do But, we and profits the path we in as of

Andrew Strelzik

seeing new types you're terms recently? underpinning the kind or in on the the Okay. seeing what helpful. of it's one growth to of line you're me it's what customers foodservice there share last where there, side or the And about things foodservice the Can in that softness you just note those a gains talk the bit then gives that maybe as some of of trends side, seeing. especially on some and bulk where be the of quick strength whether confidence you one the just of players of they're that's impressive for would top little maybe more hear larger And outlook

Brian Kocher

Yes.

described foodservice what quarter our to in the similar fourth of the is growth Joe results. in with story still many do customers. the see area We think I

preference, quick shops in restaurants oat There oat driving and is particular, a think I for that. coffee service the products. in is

across with areas. and particular, a we is from driving think comes it in share expansion have that's bands comes of where So acquisition from factor comes And it been across it. even But customers, really all those customers, TAM comes of I of those existing we It X growth. it from think really of it new expansion.

Operator

of Canaccord with question Burleson Your comes from line Bobby the Genuity. next

Bobby Burleson

Hopefully you can hear me.

how just I curious the volumes versus one is guess So first industry. the your look

tracked the most gains. substantial? You But retail? share mentioned color it's just gains overall, there outside do the versus volume of channels. share delta any to is where of you are And tough think wondering, by look kind And I'm foodservice then

Joseph D. Ennen

Bobby, it's Joe.

total in base, were we for say the faster Xx quarter we mid-singles. we As was category plant reported, given it category. total fourth volume we I growth And outlined, the mean, would than

Bobby Burleson

Okay.

the oat do terms gained you have assuming the be in supporting terms of I'm you the internal what are And rather so seeing production guys some of like consumption than some external. guys wondering, I'm oat And supply for, some industry competitive in tightness you prioritizing And the is of base, advantage gotten might more needs versus there? -- broadly? think base what

Brian Kocher

as co-man definitely think I couple think category, a saw our growth We business. and private Bobby, of to as about. in driving things label Well, business the oat foodservice well

in we impacting extraction driver. So coming quarter, online our oat that to be expect quarter. in anticipated second also we and a as It's positively and it line we Remember, oat place. first is profits saw in Modesto the the in

able the to blue say we we've think been would customer So really we oat with a foresaw have our base. Again, customers. I partner chip expansion.I

partner and 'XX we've out product the what's we've been fourth able we're And been when exactly lines that our able customers across of to those existing our we the with different well. our of of were quarter. some expecting. executing our trends knowing so outlets with certainly we customers existing advantage they're make line taking growth in in And them see to executing sure and that's spectrum a and well And be to what growth, charted

Operator

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

Ryan Meyers

where potentially could you here? guided one the have high see that guys are you're you than the not if think gave better guidance If that what things we in you at looking come about First ranges you end, some could for for, initially XXXX, for me. what

Brian Kocher

Yes.

opportunities be think as of impact 'XX I I One additive. think positively got new line, across outlook. the of some would business that goal development of would would a couple things there's those our if these

that is who visibility we've in say operate and I for I forecasting would entire category, for to the our the not in thing enough 'XX, they're what have were tracked customers well that channels certainly channels we entire explained forecasting tracked other again, is increases, think category The to think promotional if mid-single be I would if start we growing, would that softness the additive 'XX well. some digits, turn that tracked that volume If drive outlook would turn around, and growing would see but channels, there. some as around

Ryan Meyers

as you That's helpful. much then think I is the new the the levers could new if expansion that about customers and there channel. was how it. foodservice Got add growth about to talk wondering how And we customers, and of penetrated you in are in ability

Brian Kocher

it's I question. ideas. we're expansion think we or customers on product I mean, Well, have great working a and development TAM in, new we're certainly penetrated that

you market, I stable, shelf stable channels. including XX% think of about overall believe XX%, untracked tracked we're if at we shelf the and look

Operator

line Your Stephens. of Salera next Jim from question the comes with

James Salera

First retirement. of congrats Joe, on all,

wasn't your think of I said I And little you forward. a escaped. I'd a if really leave lying in I envious be spot future moving the business great

forward for So you like kind have close question on at look the XXXX, sales fun gone. with of If it that. moving one composition we to everything. are sounds the smoothies Maybe into last loop

using it the beverages snacks? now, really of just ingredients You fruit guys Is now. are broths X the categories internally and majority the and the

Joseph D. Ennen

decades. certainly it see protein for if I us a half mean, how think as I shakes. about not incredibly for untapped you think, decade, depends market We that the an Jim, upon next

rolls outstanding territory as just think growth really standpoint, there, from in would though potential revenue up a even I for about us. reporting that -- So it

James Salera

this, Okay. broth you the fruit was beverage the for and And but if rate? broth? but and I beverages I'm XQ missed give missed sorry snacks know number growth XX%, I I did maybe

Joseph D. Ennen

of XX%. and XX%. and plus I plus XX% think was broths, said beverages revenue We it Yes, total

James Salera

XXXX, snacks think is there? split through you the the and more midpoint the X.X%. In guys snacks being a beverages unlock little capacity between broths that given Great. on working for Should there we bit or fruit guide like just are and is leverage that fruit Okay. as sales about evenly

Brian Kocher

broth. might be so the may to broth say growth and amount it's the there beverage the big of that similar. think side dollar accelerated the little I size fair Jim, on be Yes. remember, versus is beverage and fruit probably the rate snacks absolute a But

James Salera

then And operations Great. gears the Okay. side. maybe to switching

and think So, Can really inherit you of the excited chain the where Brian, see to do with of that that's out the Pak see Tetra you you a and you to to and walk to business manufacturing what maybe base opportunity area leverage on expertise operations see here. very through cross there's EBITDA the know piece. I can hopefully through operating the well-functioning business already But side, your extract especially line? just you flow that can supply

Brian Kocher

Yes, Jim, thanks for the question.

customer I A, competitive think, a fulfill ability advantage you what our is demand. we supply We and believe are to have do our right. in chain

that we've we defects be shop better chain supply that's it say, the implementing productivity right, fixes down its network, in everywhere total never agree spent certainly, do for that answer we one is you to enhance Jim, break can most I inventory that, into there. track ever, your points we we allow some are you of that, So and those, with component track ever then parts, that's planning more to chain, for conversion procurement with efficiency that sort to cost easy. the And Even to I supply to of lack will chain -- excellence. in supply working essentially drive to from either word, trying find opportunities philosophically, there math, think we're to would importantly, supply that.I pareto large along to straight can push units if if just maybe look long-term to at done X to and each part not what but start the an a last distribution, opportunity at metrics us metrics year floor chain of to reasons. there's or done and improve component parts there's One, question of margin. fixed leakage and And of against line a that some you opportunity. And a operating the

we I is to demand. think to of our cost fixed non-CapEx get through the us It units that create capacity. I'd customer the we part allows like fill our more that to network, us allows call, second manage what can And schedules.

So most the of year. we're -- producing month and at the the quarter, the time effective time

a advantages capacity on and lot our shop supply that excellence And so free in chain of of we pushing up to amount continue any network. can there's

James Salera

Okay. That's maybe question. X in And could if great. sneak I then more

that should CapEx coming with Just that amount a guys in dollar getting lift think whatever to XXXX? for obviously, you XXXX, big just think thoughts for we a sales, and of up of spend about or percentage around Midlothian and easier off either like is running

Greg Gaba

Jim, gave in million XXXX, the range. and remarks, $XX about that $XX in million an feel estimate good and Yes, CapEx pretty prepared we between we for

Operator

Your next with of Securities. from Mizuho Baumgartner John the comes line question

John Baumgartner

to to come improvement drives to line. I in the add evolves mean at any there as months you from here. reason material to expect go SG&A off, incremental last I'm resources uptick to in wanted there -- first you're SG&A you SG&A the come is I there. forward? as to specifically Just The X XXXX showed SG&A solid a line. leverage how trying Are understand volume I spending? back some as about wanted thinking back operating pretty and how to top need curious

Greg Gaba

at a to QX. change, little it John, stock-based QX, our fruit revenue Thanks -- due in leadership, it in as look a of That asking the in SG&A the was of to similar with for 'XX. change compensation divestiture percentage business of change percentage. a in of lower, frozen great the bit the and of reversal question. was there bit was I as was all the a How pretty that. In is 'XX

see roughly of percentage SG&A a be pretty You'll on the flow 'XX. revenue view XX.X% and in as But going would as cash -- forward, statement. that we're that revenue, I similar to

John Baumgartner

home. better And understanding I'm TAM in the the back of the all growth time, away or away channel of is beverages, the Is just universities home. coming outlet then TAM, terms Are is the from there coffeehouse driven away-from-home adopting comments for the figure in trying to commonalities this first certain that mid-single-digit you plant-based for from plant-based gaining out, largely on how like verticals to sectors still Are acceleration? driven? the evolving across any sort seeing where by obviously hospitality?

Joseph D. Ennen

years that to Yes, isn't migration new coffee trend, John, is, seen from seeing this for driven you're definitely shops. We're years we've What consumers and by a it's cow of based. dairy the and Joe. seeing plant

coffee a based. specialty you All plant one see plant-based the Additionally, will and houses menu you promotional featuring an increasing do on has look at drinks. drinks the is plethora see to putting board of emphasis

and promoting and the those the shops drinks, would and pushing it for between enthusiasm for years has so the And now, drivers to several consumer specialty then been we shift same coffee continue. expect

Operator

Your next Davidson. comes of the D.A. Holland from Brian question with line

Brian Holland

Yes.

addressed this think all together. has been tie spots, a different maybe in few it to So I but just

whole digits plant-based like trend little sounds the around foodservice, in has see beverage little it what a on So mid-single a stronger softer tracked in growth here channels. for we while been in the now, can

little that it extent this this I we sort sure what whole be sure than just understand, make for your digits? centered there. a Are category that of on it mid-single way, little to needs underpins that, to than I the like is to at to of bit Is look softer want assumed bit growth stronger want outlook? make possible I'm a to Just sort still that?

Brian Kocher

Brian, Yes, really good question.

this don't from forecast category We is, growth and outlook our to start think in about start the necessarily we underlies way of the terms remember, forecast with what number. our off outlook customers. think our a growth off I with

gives mid-single that have would we that to us, growing.Now growing translate category our ultimately, process the customers where we with that growth obviously, the say is have. of the to But sort a that's a into the category I in would then digits. so insight as that's And insight whole

So they example. happen to this be very aligned in

Brian Holland

plans seen, months to few maybe changed. Okay. question And category were XX channels as sense months? another your those Any XX an way if you I where customers more up conservative issue assumptions the where relative category we the the the some of just ask maybe prior have assumptions some that of next gotten slowdown in over maybe on that they've this category, talk follow softened the tracked made was I ago the because that, it, a quarters and to think about the kind we've so seen a in whole and like, some on about little that that

Brian Kocher

Yes.

more XXXX. we true growing, may of sort we think outlook we in a And questions, upside returns this absolutely think for be one been bit that they've would -- our to answered that's that's I tracked channels I that little conservative. as earlier we -- the of also to believe why if

So of conservative being tracked 'XX forecasts channel the we some overall the bit arena. they from that feedback customers were little a our than for directly on base more

Brian Holland

Where specific very from one you But last business sort customers? a can the you haven't products. been been that to in fruition I more which of lever about components underappreciated about helpful. can't actually don't for Last that we product And growth has of talk pipeline, has the innovation forms. years be what lot more number But using unveiled is here help the does That's existing that customers business the a of understanding managing I today?I of We to or stand you about. innovation that to are the I extent me. penetrate it. Appreciate how few either proving talk to that to story the gain things talk new appreciate extent over pipeline. know actively are just maybe some think a come new think one development.

Brian Kocher

simply and Yes, talk to me Brian, about try kind little bit. it's of that a great just question let a

that that look to new customers 'XX, of almost in and share at existing QX growth from really growth of the of acquisition $XX expansion, was we you 'XX between with growth TAM QX, almost equally customers. If split million worth the QX had revenue basically

Now products some and were the new coinciding new acquisition customers with the also launches. of of product new

every So the the sort as business at development at new and new it's I I earlier call, in in real development stages to our of various growth a platform.As we're we various the mentioned day, product so -- -- customers. are contributor key pipeline with

multiple or customer. with stage at we're sometimes, the in multiple different stages same projects And

see on product to financials, it and make that's it's best that you'll But updates So we'll the the is the our that way had we you'll regular I continue work what you see impact the and on into to organization. roll update the way think to that see the try to see on best progress. sure

Operator

question comes next of the Blair. from Your line Jon Andersen William with

Jon Andersen

go Joe, get you you it's been know to wishes and to forward. best fun as

achieve reference Let's goal And see. longer-term the of you're confidence comfortable by talked my million. can pull a Am the Most I was kind from? from of forward previously? $XXX how that you right that think to prepared of that's 'XX. I was think kind you portrayed EBITDA 'XX asked. of that it to incremental that where been is And there bit questions coming guess of early comments a I or a about in have that

Greg Gaba

just of sure run we're that of $XXX me clarify. rate of let make I the annual million Jon, say 'XX, affirming a sort can we be we at at would 'XX. beginning end

Jon Andersen

That's helpful. Great.

Greg Gaba

that that to we been date. we've conferences the QX in the investor what is said And conference and

consistent. think it's I So very

Jon Andersen

there additional comments as to of just levels expansion, what been, protein the you producing? then by to if line can are that category is you add the well? end remind run X plans at given the production going be And me, strong TAM as quarter, rate in has second in if to that then prepared line Okay. shake I in And of guess, the how terms capacity going be referenced -- Line Midlothian is

Brian Kocher

on further X is that -- think ] opportunity I at some top our right productivity just rate next now. best be unleash on And middle I X and we're drive to plant-based do opportunity, Sure. again, Line run year. to we [ of milks. in the be rate -- capacity Line of we will run Midlothian at focused to the track specifically, Yes. expect sort the in the think be there's

would efficiency I do next those think capacity and in in to So continue is we manner. the productivity step lines that create drive and

Jon Andersen

X That makes Greg. Maybe Okay. sense. for

cash, million think cadence that generated Is $XX What's a target XXXX, just you paydown? level? how debt debt free debt now? been of in it's your the to generate -- your could for you cash as while about of refi long-term $XX earmarked about the you fixed the your did, million is leverage variable in versus kind free that So of you've with talking of paydown that much plans I since kind for you're right And XXXX? can't talk I

Greg Gaba

the All right. Thanks, Jon. I'll address first. last one

XX% XX% is fixed. debt So roughly, our variable,

our want goal, We deleverage, leverage. priority right, capital So get to right? first our under to Xx allocation for is

that. there, end be We either So will of primary the acquisitions. buyback, priorities, the we'll to be goal to debt down right, of half accomplish be by our is pay purchase high or investments of will ROI second Other Jon, think ROI, M&A year. stock

changed. hasn't So that

continue down on paying We debt. to focus

our on goal. to continue deleveraging. focus getting which is We focus on long-term under Continue to Xx,

Operator

question next of Biolsi Your comes Daniel Hedgeye. from line the with

Daniel Biolsi

and almond for the my growth be between I and would industry. that bucket in Joe. oat based, just the plant mid-single-digit best to looks wishes, how you extend And soy? of sort question that just able wanted to my curious is I'm

Brian Kocher

segment We and that. that really bucket don't of kind

includes it's plant-based the almond, the to projecting it's all fair the plant-based of that we're I think that oat, it's say rate of whether soy, all coconut, growth milks, milks.

Daniel Biolsi

comes be and start? look to Modesto then half shipping still we then of And Okay. expect in should And when does in would the in online online second the growth that ingredients QX once year?

Brian Kocher

first. positive Yes, the of Yes. I will it be we is a internal Again, might ingredient some But track. oat in the the you will our for the prioritize still would in believe Modesto of sales. end the see XXXX, year, on the first will by second products. the financials that quarter. internal we make part our impact use of use But own say maybe priority

Operator

to closing remarks. are no for at I Kocher further call Brian over the There questions this now turn time. will

Brian Kocher

to few minutes Thank key messages. you, summarize operator. to a our I'd take just like

If are X items you company and categories. be, X in foremost, call, the first away we should take a only this items growing growing then from

via we're TAM naturally coming grow and acquisition, In via share existing customer we blue the our expansion. addition our via that's way to in growth customer continue via to growing we're growth our customers, chip the base, new growing of gains

that's everyone. to one I'd thing.Secondly, like So remind just

allowing Our as to of then the And capacity non-CapEx efforts prioritize that's trends enhance talked affirm of margin guidance excellence and and really into my business that guidance our operational XXXX to allowed important our have as results that's then visibility well network. to so unlock the and in is that side capacity our midterm to the to a us create as way that confidence in we pursuit other think operational existing important remember. I and the excellence demand us early the in about is both 'XX leadership from thing pursuing

really as to the finally, then Joe, I'd for you like So And again, your leadership. X those items. thank summary remember

for the impact who years Thank so we forward thank positively will you. many Thank to business XXXX. we you to adjoin adjourn, and throughout operator, your can SunOpta of culture -- all legacy the for and and excuse joined Your come look to efforts.With that, us you updating me. you

Operator

This concludes call. today's

You may now disconnect.

SunOpta (STKL) 28 Feb 242023 Q4 Earnings call transcript