• Revenue: $194 million, up 9% year-over-year.
• Volume Growth: 13% in Q4, 21% for the full year 2024.
• Adjusted EBITDA: Increased 20% to $26.1 million.
• Adjusted EBITDA Margin: Improved 130 basis points to 13.4%.
• Adjusted Gross Profit: Increased 2% to $31.5 million.
• Adjusted Gross Margin: 16.1%, down from 17.2% in the prior year.
• Loss from Continuing Operations: $4.6 million, compared to a loss of $3 million in the prior year.
• Adjusted Earnings from Continuing Operations: $7.6 million, up from $4.5 million in the prior year.
• Debt: $265 million, down $25 million from the previous quarter.
• Net Leverage: Achieved target of 3x, down from 3.4x last quarter.
• Cash Provided by Operating Activities: $52 million for the full year, up from $4 million in 2023.
• Cash Used in Investing Activities: $25 million, down from $47 million in 2023.
• 2025 Revenue Outlook: $775 million to $805 million, growth of 7% to 11%.
• 2025 Adjusted EBITDA Outlook: $97 million to $103 million, growth of 9% to 16%.
• Interest Expense for 2025: $24 million to $26 million.
• Capital Expenditures for 2025: $30 million to $35 million.
• Free Cash Flow for 2025: $25 million to $30 million.

• Warning! GuruFocus has detected 9 Warning Signs with STKL.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenue increased by 9% in Q4 2024, driven by a 13% volume growth across segments, products, and customers.
• Adjusted EBITDA grew by 20%, with a margin improvement of 130 basis points to 13.4%, reflecting strong revenue growth and operational efficiencies.
• SunOpta Inc (NASDAQ:STKL) completed the start-up phase in Midlothian, resolving previous equipment delays and inefficiencies.
• The company achieved a significant volume growth of 21% in 2024, indicating strong demand in the food and beverage consumer landscape.
• SunOpta Inc (NASDAQ:STKL) reduced its debt by $25 million in Q4, achieving a year-end net leverage target of 3x, down from 3.4x in the previous quarter.

Negative Points

• Gross profit decreased by $3.9 million compared to the prior year, mainly due to increased costs associated with the Midlothian start-up.
• Adjusted gross margin declined from 17.2% to 16.1% due to incremental depreciation and short-term investments in supply chain efficiencies.
• The company experienced 10-plus days of downtime at the Midlothian facility due to equipment upgrades, resulting in inefficiencies and waste.
• Loss from continuing operations was $4.6 million, compared to a loss of $3 million in the prior year period.
• The company faces supply constraints, particularly in the fruit snacks segment, which may limit its ability to meet demand without additional capacity.

Q & A Highlights

Q: Can you elaborate on the composition of revenue growth for 2025? Is it primarily from existing customers or new business wins? A: Brian Kocher, CEO: Our 2025 volume growth is driven by two main factors. First, our categories, such as shelf-stable plant-based beverages and ready-to-drink protein shakes, are growing. Second, our customers are outperforming their categories. About two-thirds of our guidance is based on category and customer growth, while one-third comes from known distribution wins and innovation with our customers.

Q: Could you provide more details on the margin opportunity for the year and the sequencing of gross margin? A: Greg Gaba, CFO: We expect gross profit dollars to be 44% in the first half and 56% in the second half. This is due to new roles focused on maintenance and continuous improvement, which will impact the first half more. We anticipate these roles will pay off in the second half, helping us reach an 18% to 19% gross margin by Q4.

Q: What are the factors that could lead to achieving the low or high end of your 7% to 11% revenue growth range? A: Brian Kocher, CEO: The range is influenced by timing. If we unlock capacity sooner, we could reach the higher end. The growth is also driven by category expansion and distribution opportunities. We have some innovation and distribution changes expected throughout the year.

Q: How do you view the potential for new business in the pipeline, and what areas could see growth? A: Brian Kocher, CEO: Our strategy focuses on expanding share and new product development with existing customers. We also aim to acquire new customers by providing solutions to their challenges. We are confident in our ability to grow beyond the 7% to 11% range.

Q: With the recent changes in pricing for plant-based milks at coffee shops, have you seen any changes in demand patterns? A: Brian Kocher, CEO: We support anything that increases penetration and trial. The growth we saw in Q4 and our 2025 outlook reflect increased trial and repeat purchases. The shelf-stable plant-based beverage category continues to grow, supported by these trends.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.