SunOpta reported double-digit gains in both revenue growth and gross profit in its Q1 2024 earnings report released yesterday, with the plant-based milk supplier feeling “encouraged by the progress of our capacity investments,” per CEO Brian Kocher.
Gross profit was up to $31.7 million in the quarter versus $24.1 million in the prior year period. As a percentage of revenue, gross profit margin was 17.4% compared to 15.5% in Q1 2023.
According to Kocher, every product category in which SunOpta operates grew in the quarter and the company’s top three customers all grew double-digits.
“SunOpta’s first quarter performance was defined by excellent revenue growth across our portfolio of products, customers, and channels, which continue to see healthy, broad-based demand,” said Kocher in a prepared statement. “We are encouraged by the progress of our capacity investments and our operational improvement initiatives, which are supporting significant volume growth, driving our revenue trajectory and enabling us to improve gross margin.”
Based on the results, SunOpta raised its FY 2024 revenue outlook up $685 million to $715 million (previously $670 million to $700 million) and adjusted EBITDA slightly to $88 million to $92 million (previously $87 million to $92 million).
The strong Q1 earnings are a testament to the company’s broad and diverse portfolio across channels, customers, and products, said Kocher, highlighting 11% y/y growth in the foodservice channel. Protein shakes are also seeing “robust” growth and traction, up roughly 20% in volume over the last 13 weeks versus the prior year.
Fruit snacks proved to be the company’s strongest segment, with revenue growing 31% y/y and marking a 15th straight quarter of double-digit growth. Fruit snacks continue to deliver the highest growth rate among SunOpta’s product categories as the company leverages expanded capacity while underlying demand remains healthy.
Investing activities used $4.2 million of cash during Q1, down from $25.4 million in 2023, reflecting the completion of major capital projects including the construction of SunOpta’s new plant-based beverage facility in Midlothian, Texas.
Production continues to ramp up on the company’s first two lines at the Midlothian plant. The third line commercially launched at the end of Q1 and, according to Kocher, SunOpta expects to see a “meaningful contribution” from the line in the back half of the year.
Additionally, the extraction expansion in Modesto is now up and running and SunOpta will continue ramping up production volumes throughout the remainder of the year. As a result of the company’s disciplined approach to capital projects, SunOpta is on track for its FY 2024 CapEx guidance of $25 million to $30 million.
“Our areas of focus will not change, and we remain steadfast in executing across top-line growth. We are a growth company in growing categories with a competitively advantaged model that provides multiple ways to win,” Kocher told investors.