SunOpta Inc. (Nasdaq: STKL; TSX: SOY) has released its financial results for the third quarter of fiscal 2024, reporting a 16% revenue growth compared to the previous year. The increase was primarily due to higher sales volumes across key product categories and new business wins. Despite a minor reduction in pricing from lower commodity costs, SunOpta’s revenue reached $176.2 million, up from $152.5 million in Q3 2023.
The company’s gross profit rose 16.4%, supported by gains in production efficiency, though recent investments in manufacturing equipment created some added depreciation costs. Adjusted gross margin improved to 17%, reflecting effective cost management and expanding production capabilities.
Pipeline of new opportunities
SunOpta’s CEO, Brian Kocher, attributed the results to “broad-based growth across our customers, channels, and product portfolio,” adding that a “substantial pipeline of new business opportunities” and ongoing productivity measures are paving the way for sustained growth.
The company’s recent cost-cutting moves, including its exit from the smoothie bowls market and the 2023 sale of its frozen fruit operations, are also beginning to yield operational efficiencies.
SunOpta’s top-performing categories this quarter included fruit snacks, broths, plant-based beverages, and protein shakes, all of which saw revenue growth. This product diversification helped offset a 2.3% revenue decline from the company’s exit from smoothie bowls earlier this year.
The company’s cash flow from operations strengthened considerably this year, generating $19.2 million in the first three quarters compared to a $8.4 million outflow last year, driven by improved working capital efficiency and profitability.
Investments in supply chain growth
Capital investments were reduced to $16.5 million from $37.3 million, as key projects, including its Texas plant-based beverage facility, were completed, following a $26M investment to expand its California facility, increasing oat milk production capacity by 60%, earlier this year.
“We continue to make short-term investments in our supply chain to support our growth and implement processes and controls. Those productivity initiatives are gaining traction and creating a long runway for significant future incremental capacity within our existing asset base which will drive sustainable gross margin expansion,” continues Kocher.
Looking toward future growth, SunOpta recently experienced a stock surge after announcing plans to expand distribution for its Dream Oatmilk Barista product, with 6,700 additional locations across North America by early 2025, likely through a partnership with Starbucks.
For fiscal 2024, SunOpta reaffirmed its positive outlook, expecting annual revenue between $710 million and $730 million, reflecting 13-16% growth. Adjusted earnings from ongoing operations climbed significantly to $2.5 million, up from $0.5 million in Q3 2023, signaling both increased efficiency and product success.
Kocher concludes, “We remain confident in the direction of our business and steadfast in our focus on driving increasing returns on our invested capital and generating long-term value for shareholders.”
