Mr. Brian Kocher reports

SUNOPTA ANNOUNCES FOURTH QUARTER AND FISCAL 2023 FINANCIAL RESULTS

SunOpta Inc. has released its financial results for the fourth quarter and fiscal year ended Dec. 30, 2023.

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

Fourth Quarter 2023 highlights:

• Revenues of $181.6 million increased 13.7% compared to $159.8 million in the prior year period, driven by volume growth
• Gross profit margin was 14.1% on a reported basis. Adjusted gross margin1 was 17.3%, down 50-basis points from the prior year period, mainly due to the 80-basis point increase in depreciation related to new production equipment.
• Operating income of $5.1 million increased 47.8% compared to $3.4 million in the prior year period.
• Loss from continuing operations was $1.8 million compared to $0.4 million in the prior year period mainly due to an increase in interest expense partially offset by increased gross profit.
• Adjusted earnings1 from continuing operations of $5.7 million increased 120% compared to $2.6 million in the fourth quarter of 2022 mainly due to improved operating performance, partially offset by increases in interest expense and depreciation.
• Adjusted EBITDA1 from continuing operations increased by 17.5% to $22.3 million, or 12.3% of revenues, compared to $19.0 million and 11.9% of revenues in the prior year period.

"Our latest results provide validation of the powerful potential of our platform. We are a growth company in growing categories and are armed with an optimized product portfolio and high-quality base of leverageable assets that provide significant runway for continued growth," said Brian Kocher, Chief Executive Officer of SunOpta. "Fourth quarter revenues and Adjusted EBITDA exceeded expectations reflecting solid execution against our strategic priorities focused on operational excellence and growth. Volume was up double-digits and accelerated sharply from the third quarter, underscoring the strength of our competitive position and the broad-based demand we are seeing across our portfolio. Plant-based milks and fruit snacks continue to drive growth. We are gaining share with existing customers as well as adding new customers in both categories. In addition, our 330-milliliter protein shake business continues to ramp up aggressively, advancing our total addressable market expansion efforts. We are re-affirming our outlook for 2024 reflecting a high degree of confidence in the direction and trajectory of our business."

Fourth Quarter 2023 Results

• Revenues increased 13.7% to $181.6 million for the fourth quarter of 2023. The increase was driven by favorable volume/mix which was up 14.7% partially offset by a price reduction of 1.0% due to pass through of commodity prices. Volume/mix reflected broad based volume growth from oat milks and creamers, 330-milliliter protein shakes and teas, as well as increased sales volumes for fruit snacks, partially offset as expected, by lower external sales of plant-based ingredients, due to increased internal demand for oat base, as well as lower broth volumes.
• Gross profit was $25.6 million for the fourth quarter, compared to $23.8 million in the prior year period. As a percentage of revenues, gross profit margin was 14.1% compared to 14.9% in the fourth quarter of 2022, a decrease of 80 basis points, as reported. Adjusted gross margin1 was 17.3% for the fourth quarter of 2023 compared to 17.8% in the fourth quarter of 2022. The 50-basis point decrease in adjusted gross margin reflected the impact of incremental depreciation of new production equipment for capital expansion projects partially offset by a positive mix shift in plant-based ingredients with increased internal use.
• Operating income was $5.1 million, or 2.8% of revenues in the fourth quarter of 2023, compared to operating income of $3.4 million, or 2.1% of revenues in the fourth quarter of 2022. The increase in operating income was primarily driven by higher gross profit.
• Loss from continuing operations was $1.8 million for the fourth quarter of 2023 compared to $0.4 million in the prior year period. Diluted loss per share from continuing operations attributable to common shareholders (after dividends and accretion on preferred stock) was $0.02 for the fourth quarter compared with diluted loss per share of $0.01 in the prior year period.
• Loss from discontinued operations was $10.0 million or $0.09 per diluted share in the fourth quarter of 2023 versus earnings of $1.5 million or $0.01 per diluted share in the year earlier period.
• Adjusted earnings1 from continuing operations was $5.7 million or $0.05 per diluted share in the fourth quarter of 2023, compared to adjusted earnings from continuing operations of $2.6 million or $0.02 per diluted share in the fourth quarter of 2022 mainly due to improved operating performance, partially offset by increases in interest expense and depreciation.
• Adjusted EBITDA1 from continuing operations was $22.3 million or 12.3% of revenue in the fourth quarter of 2023 compared to $19.0 million or 11.9% of revenue in the fourth quarter of 2022.

Please refer to the discussion and table below under "Non-GAAP Measures".

Balance Sheet and Cash Flow

As of December 30, 2023, SunOpta had total assets of $669.4 million and total debt of $263.2 million compared to total assets of $855.9 million and total debt of $308.5 million at fiscal 2022 year end. During the fourth quarter of 2023, cash provided by operating activities of continuing operations was $12.0 million compared to $7.3 million during the fourth quarter of 2022. The increase in cash provided mainly reflected improved operating performance, partially offset by increased working capital and the impact of higher start-up costs and cash interest expense. Investing activities of continuing operations consumed $9.2 million of cash during the fourth quarter of 2023 down from $26.4 million in the prior year, reflecting the completion of certain major capital projects, including the construction of our new plant-based beverage facility in Midlothian, Texas.

2024 Outlook2

For fiscal 2024, the Company is re-affirming its outlook and continues to expect strong growth in revenue and Adjusted EBITDA:

Conference Call

SunOpta plans to host a conference call at 5:30 P.M. Eastern time on Wednesday, February 28, 2024, to discuss the fourth quarter financial results. After opening remarks, there will be a question and answer period. Investors interested in listening to the live webcast can access a link on SunOpta's website under the "Investor Relations" section or directly here. A replay of the webcast will be archived and can be accessed for approximately 90 days on the Company's website. This call may be accessed with the toll free dial-in number dial (888) 440-4182 or International dial-in number (646) 960-0653 using Conference ID: 8338433.

1 See discussion of non-GAAP measures

2 The Company has included certain forward-looking statements about the future financial performance that include non-GAAP financial measures, including Adjusted EBITDA. These non-GAAP financial measures are derived by excluding certain amounts, expenses or income, from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts that are excluded from these non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period. We are unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because management cannot reliably predict all of the necessary components of such GAAP measures. Historically, management has excluded the following items from certain of these non-GAAP measures, and such items may also be excluded in future periods and could be significant amounts.

• Expenses related to the acquisition or divestiture of businesses or assets, including business development costs, integration costs, severance, retention costs and transaction costs;
• Start-up costs of new facilities and equipment;
• Charges associated with restructuring and cost saving initiatives, including but not limited to asset impairments, accelerated depreciation, severance costs and lease abandonment charges;
• Asset impairment charges and facility closure costs;
• Legal settlements or awards; and
• The tax effect of the above items.

About SunOpta Inc.

SunOpta (Nasdaq:STKL) (TSX:SOY) is a U.S.-based, global pioneer fueling the future of sustainable, plant-based food and beverages. Founded 50 years ago, SunOpta manufactures organic and specialty products sold through retail and foodservice channels. SunOpta operates as a manufacturer for leading natural and private label brands, and also proudly produces its own brands, including SOWN (TM), Dream (TM), West Life TM.

We seek Safe Harbor.