Reports Financial Results for First Quarter of Fiscal 2025
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq: STKL) (TSX: SOY), a leading provider of innovative and customized supply chain solutions for top-tier brands, retailers, and foodservice operators, today announced its financial results for the first quarter ended March 29, 2025. The Company, recognized for its broad portfolio of plant-based beverages, broths, and health-conscious snacks, reported strong revenue growth and significant improvement in adjusted earnings, reflecting momentum across its core operations.
All financial results are reported in U.S. dollars and prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), unless stated otherwise.
Key Financial Highlights for Q1 2025
- Total revenues grew to $201.6 million, marking a 9.3% increase from $184.4 million in the first quarter of 2024. The gain was primarily driven by a 12.2% rise in volume across core product categories. This was partially offset by a 1.7% price reduction, attributed to the pass-through of raw material cost savings to customers, and a 1.3% revenue impact related to the discontinuation of the smoothie bowl product line in March 2024.
- Earnings from continuing operations increased to $4.8 million, up from $3.8 million in the same period a year ago.
- Adjusted earnings from continuing operations rose significantly to $5.3 million, compared to $1.9 million in the prior year quarter. Adjusted diluted earnings per share from continuing operations doubled to $0.04, up from $0.02 in Q1 2024.
- Adjusted EBITDA from continuing operations reached $22.4 million, reflecting a 2.4% increase compared to $21.9 million a year ago. Adjusted EBITDA represented 11.1% of revenues, a slight decline from 11.9% in the previous year, reflecting temporary inefficiencies and strategic investments in capacity.
- Cash contribution from continuing operations rose sharply to $22.3 million, nearly tripling from $7.4 million in the first quarter of 2024, a result of enhanced working capital management and stronger operational efficiency.
CEO Commentary
Commenting on the quarterly performance, SunOpta CEO Brian Kocher expressed confidence in the Company’s trajectory for 2025:
“First quarter results exceeded our expectations, and we again delivered double-digit volume growth driven by broad-based gains across segments, products, and customers. Efforts to unlock latent capacity are ahead of schedule and our margin improvement initiatives are expected to deliver sequential quarterly margin increases throughout the year. We are also seeing growth in our sales pipeline, reflecting incremental opportunities from both existing and new customers.”
Kocher further emphasized that the Company remains committed to optimizing cash flow and deleveraging, providing SunOpta with strategic flexibility and positioning the business for enhanced long-term shareholder value.
Segment Performance and Operational Details
SunOpta’s revenue growth was driven by strong demand in its plant-based beverage and snack categories, with volume increases across the board. The strategic exit from the lower-margin smoothie bowl category in 2024 also allowed for better resource allocation toward higher-growth segments.
Despite the revenue growth, gross profit declined slightly by $0.8 million to $30.3 million compared to $31.1 million a year earlier. As a percentage of revenues, gross profit margin decreased to 15.0% from 16.8%. On an adjusted basis, gross margin was 15.3%, down from 17.0% in Q1 2024.
This margin compression reflects several headwinds, including:
- Strategic investments in workforce and operational infrastructure to support long-term margin expansion.
- Temporary inefficiencies at the Midlothian, Texas facility, caused by excess wastewater handling limitations.
- Incremental depreciation related to new capital assets that have come online but are not yet operating at full capacity.
However, these pressures were partially mitigated by increased sales volumes in beverages, broths, and snacks, which enhanced production efficiency and plant utilization.
Operating income for the quarter increased slightly to $10.5 million, up from $10.1 million in Q1 2024. The improvement was supported by reduced stock-based compensation expenses. However, this was partially offset by the absence of a one-time gain realized in the prior year from the sale of the smoothie bowl product line.
Earnings and Adjusted Financial Measures
Earnings per diluted share from continuing operations rose to $0.04, compared to $0.03 in the prior year, inclusive of preferred stock impacts. On an adjusted basis, diluted EPS doubled to $0.04 from $0.02 in the same quarter last year.
Adjusted EBITDA increased to $22.4 million, representing a solid year-over-year gain despite margin pressures. This measure reflects the Company’s strong control over operating expenses and successful execution of volume-driving strategies.
Balance Sheet and Liquidity Position
As of March 29, 2025, SunOpta reported total assets of $690.7 million, with total debt standing at $260.6 million. This compares to $668.5 million in assets and $265.2 million in debt at the end of fiscal 2024, indicating ongoing deleveraging progress.
Cash provided by operating activities from continuing operations surged to $22.3 million in Q1 2025 from $7.4 million a year earlier. This performance was driven by improved working capital efficiency and increased profitability.
Investing activities used $15.2 million in cash, significantly higher than the $4.2 million spent in the prior year quarter. The rise was due to higher capital expenditures and the purchase of additional wastewater allowances to expand production capabilities. Last year’s figure also included proceeds from the smoothie bowl divestiture, which did not recur in 2025.
The Company’s leverage ratio declined to 2.9x in Q1 2025 from 3.0x at the end of 2024. Management reiterated its commitment to reaching a leverage target of 2.5x by the end of the year.
Capital Allocation and Share Repurchase Program
SunOpta outlined a disciplined capital allocation strategy prioritizing three objectives:
- Achieving its leverage target of 2.5x.
- Investing in strategic capital expenditures to fuel growth.
- Returning capital to shareholders.
Since significant growth capital expenditures are not anticipated in 2025, the Company is positioning itself for potential share repurchases, assuming it continues trending ahead of plan and generates surplus cash.
Reflecting this approach, on May 5, 2025, the board of directors authorized a $25 million share repurchase program. The program will allow management to repurchase common shares opportunistically, taking into account available cash, market conditions, regulatory factors, and overall progress toward the leverage goal.
Impact of Tariffs
SunOpta continues to monitor the global trade environment and its potential impact on the business. Although 98% of the Company’s revenue in 2024 came from U.S.-based customers, a portion of raw materials and packaging is sourced internationally. Additionally, some fruit snack products are imported from SunOpta’s facility in Niagara, Ontario.
In response to tariff-related challenges, the Company began proactively communicating with customers earlier in the year. SunOpta plans to pass along the vast majority of any tariff-related cost increases to customers, consistent with its past practice regarding raw material pricing.
