SunOpta Inc ((STKL)) has held its Q2 earnings call. Read on for the main highlights of the call.
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SunOpta Inc’s recent earnings call conveyed a positive sentiment, highlighting robust growth in revenue and EBITDA. The company demonstrated resilience despite facing challenges such as tariff headwinds and gross margin pressures. Strategic investments and a strong pipeline were emphasized as key factors positioning SunOpta for future growth.
Strong Revenue and EBITDA Growth
SunOpta reported a commendable year-over-year revenue growth of 13% and an adjusted EBITDA increase of 14%. This growth was achieved despite facing challenges from tariff headwinds, showcasing the company’s ability to navigate through external pressures effectively.
Impressive Fruit Snacks Performance
The better-for-you fruit snacks category stood out with its 20th consecutive quarter of double-digit growth. This category now accounts for 20% of SunOpta’s total revenue, underscoring its importance in the company’s portfolio.
Operational Efficiency Gains
Significant strides were made in operational efficiency, with beverage and broth unit production increasing by 16% and fruit snack production up by 22% year-over-year. These gains reflect SunOpta’s focus on optimizing its operations to support growth.
Expansion in Club Channel and Broth
SunOpta’s club channel business experienced a surge of over 25%, while broth sales saw substantial growth in both retail and club channels. This expansion highlights the company’s successful strategy in diversifying its sales channels.
New Manufacturing Investment
The company announced a $25 million investment in a new fruit snacks manufacturing line, aimed at increasing output by approximately 25%. This investment is a testament to SunOpta’s commitment to scaling its operations to meet growing demand.
Tariff Headwinds
SunOpta faced $1.6 million in tariff headwinds, impacting gross profit. The company acknowledged ongoing uncertainty in tariff adjustments, which remains a challenge for future financial performance.
Gross Margin Pressure
The adjusted gross margin decreased by 80 basis points due to a timing lag on tariff pass-through and investments in labor and infrastructure. This pressure on margins indicates areas where SunOpta is working to improve profitability.
Forward-Looking Guidance
Looking ahead, SunOpta revised its 2025 revenue outlook to a range of $805 million to $815 million, reflecting an upward adjustment from previous guidance. The company expects adjusted EBITDA growth of 12% to 16% and aims to achieve a net leverage target of 2.5x by the end of 2025. SunOpta is also focused on sustaining growth into 2026 and beyond.
In summary, SunOpta Inc’s earnings call highlighted a strong performance with significant growth in key areas such as fruit snacks and operational efficiency. Despite challenges like tariff headwinds and margin pressures, the company’s strategic investments and revised guidance indicate a positive outlook for future growth.