SunOpta is trending positive despite another year of double-digit revenue declines, beating analysts’ expectations by posting $11.7 million in losses for Q4 2023 and $181.6 million for the year in its latest earnings report.
The Minneapolis-based company has backed itself with large investments in plant-based milk production as it seeks to partner with large-scale “blue chip customers,” particularly in foodservice. However, it has incurred significant debts to get there.
In Q4 2023, revenue increased +14% (to $181 million) year-over-year, a healthy jump over +6% in the previous quarter. Operating income rose $47.8% to $5.1 million.
Revenue increased 19% (to $147 million) in SunOpta’s beverage and broth product group, representing 81% of the company’s Q4 revenue. Growth was “over 100% attributable to volume and mix,” thanks in large part to continued “robust” gains from oat milk, along with creamers and tea.
Plant-based milks grew “mid-single digits” in the past quarter, the company reported, with much of its category revenue coming from untracked channels. Within that space, oat is still driving scale across SunOpta’s food service and private label businesses, though its strategy is shifting somewhat. The company reaffirmed previous statements that it will stop selling its oat base as an ingredient to other manufacturers, prioritizing its use internally. A new oat extraction facility in Modesto, Calif., is expected to help meet increased demand when it goes online later this year.
Protein shakes are also starting to ramp up after recent strong performances in tracked channels; the category is up 40% year-over-year in the last 13 weeks. The company expects to be close to its full run rate on protein shakes at the Midlothian plant by the end of Q2.
In addition to the Midlothian and Modesto facilities, SunOpta recently added a new extrusion line at its fruit snacks facility in Omak, Washington.
The earnings report also provided a glimpse into the company’s evolving portfolio; while plant-based milk generates much of the attention, fruit snacks had the highest quarterly growth (+31%) across its portfolio. Meanwhile, last week’s $6 million sale of SunOpta’s frozen smoothie bowl business completes its divestiture from frozen items.
Deleveraging the business by paying down debt is a top priority for the company this year, management explained during a conference call with investors.
The company ended FY 2023 with less debt than the previous year – $263.2 million, compared to $308.5 million – and cash from operating activities in Q4 jumped from $7.3 million to $12 million year-over-year, thanks mainly to improved operating performance. Around $9.2 million of that was consumed by investing activities in the quarter, a big drop from last year’s total of $26.4 million.
The company expects the full year’s revenue to be between $670 and $700 million, growing at between 6% to 11%.