Mr. Joe Ennen reports

SUNOPTA ANNOUNCES SALE OF FROZEN FRUIT ASSETS FOR AN AGGREGATE PURCHASE PRICE OF $141 MILLION ALONG WITH PRELIMINARY RESULTS FOR THIRD QUARTER FISCAL 2023 AND CFO TRANSITION

SunOpta Inc. has sold certain frozen-fruit assets to Nature's Touch, a company based in Quebec, Canada. The transaction is valued at $141-million and represents the company's exit from the frozen-fruit business. Included in the sale are the primary assets of the frozen-fruit business, including facilities located in Edwardsville, Kansas and Jacona, Mexico, along with a significant quantity of frozen-fruit inventory. The transaction closed on Oct. 12, 2023.

"The divestiture of our frozen-fruit business is a major milestone in our portfolio optimization efforts and our multiyear transformation to becoming a leading manufacturer of value-add products in plant-based and healthy snack categories," said Joe Ennen, chief executive officer of SunOpta. "This transaction is significantly accretive to margins, results in a more-capital-efficient business model, strengthens our balance sheet and ensures we are singularly focused on the most-attractive growth opportunities.

"We are also pleased with our third-quarter revenue growth from our continuing plant-based and healthy snacks operations and the strong demand we experienced across key products and categories throughout the period. Importantly, volume was the primary factor driving our third-quarter growth reflecting market share gains and total addressable market expansion efforts. Our latest results continue to reflect the competitive advantages that underpin our value-add business model, including a scalable, geographically diverse platform with proven expertise in complex manufacturing coupled with leading innovation capabilities."

Transaction highlights

The transaction is valued at $141-million, inclusive of $20-million of seller promissory notes due in three years. The transaction includes a significant portion of the assets associated with the frozen-fruit business that had previously been reported in the fruit-based foods and beverages operating and reportable segment. The stand-alone frozen-fruit business generated approximately $263-million of revenue and approximately $15-million of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) over the 12-month period ended July 1, 2023. The net cash proceeds will be used to pay down debt and other liabilities, which will reduce SunOpta's net leverage from 3.7 times at the end of the second quarter of 2023 to 3.4 times on a pro forma basis at closing and to 3.2 times factoring in the collection of the seller notes. Additional details regarding the expected pro forma financial impact from the divestiture will be provided in SunOpta's third quarter 2023 financial results release in early November, 2023.

Advisers

Evercore served as financial adviser to SunOpta, and Sidley Austin LLP and Wilson Abogados SC served as legal advisers to SunOpta.

Ernst & Young Orenda Corporate Finance Inc. in Canada served as financial adviser, Lowndes, Drosdick, Doster, Kantor & Reed PA served as U.S. legal adviser, Cuesta Campos y Asociados SC served as Mexican legal adviser, and Miller Thomson LLP served as Canadian legal adviser to Nature's Touch.

Preliminary third quarter fiscal 2023 results

Total revenue from continuing operations is expected to be approximately $152-million in the third quarter of 2023, an increase of approximately 6 per cent versus a year ago. Adjusted EBITDA from continuing operations for the third quarter of 2023 is expected to be approximately $18.5-million to $19-million. These results are preliminary estimates and are subject to change pending the completion of the company's financial reporting process.

All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP (generally accepted accounting principles), except where specifically noted.

2023 outlook

For fiscal 2023, the company is maintaining its outlook as communicated on the second-quarter earnings call, adjusting for the sale of the frozen-fruit assets. The company will share an updated view of 2024 on its third-quarter earnings call in November.

Chief financial officer transition

The company has appointed Greg Gaba as chief financial officer of the company, effective Oct. 13, 2023. Mr. Gaba has been with the company for over six years and most recently served as deputy CFO. "I am thrilled to have Greg join the senior leadership team and lead our finance organization," said Mr. Ennen. "Greg has consistently provided critical financial insights and played a pivotal role in achieving our business goals. His extensive knowledge of our business operations, coupled with a deep understanding of cost control measures, will undoubtedly reinforce our financial leadership and support our continued growth and profitability." Prior to joining the company, Mr. Gaba worked in finance and external auditor roles at SMTC Corp. and Ernst & Young LLP. Mr. Gaba will lead all aspects of the company's finance function, including financial planning and analysis, accounting, U.S. Securities and Exchange Commission reporting, tax, and treasury.

The company has accepted the resignation of Scott Huckins as CFO and general manager of fruit-based foods and beverages, effective Oct. 13, 2023, to pursue another opportunity at a publicly traded company. "I want to thank Scott for his efforts at SunOpta these past four years. Scott's leadership has been critical in developing people and transforming the portfolio of the company to focus on higher-growth, higher-return opportunities that are differentiated and leverage the company's competitive strengths," said Mr. Ennen.

About SunOpta Inc.

SunOpta is a United States-based, global pioneer fuelling the future of sustainable, plant-based foods and beverages. Founded nearly 50 years ago, SunOpta manufactures natural, organic and specialty products sold through retail and food-service channels. SunOpta operates as a manufacturer for leading natural and private-label brands, and also proudly produces its own brands, including Sown, Dream and West Life.

Frozen fruit business -- selected financial information

An attached table presents a summary of the reported results of operations of the frozen-fruit business for the periods presented, together with a reconciliation of adjusted EBITDA for the frozen-fruit business from earnings/loss before income taxes, which the company considers in this case to be the most directly comparable U.S. GAAP financial measure.

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