Executive Summary

Q1 2025 revenue rose 9.3% to $201.6M on 12.2% volume growth; diluted EPS from continuing operations was $0.04 (vs. $0.03 YoY), and adjusted EBITDA was $22.4M (11.1% margin) .
SunOpta beat S&P Global consensus on revenue by ~$6.6M ($201.6M vs. $195.0M*) and on EPS by ~$0.03 ($0.04 vs. $0.013*); S&P’s EBITDA measure was roughly in line ($20.9M* actual vs. $21.3M* consensus), while company-reported adjusted EBITDA was $22.4M .
Management raised FY25 guidance: revenue to $788–805M (from $775–805M) and adjusted EBITDA to $99–103M (from $97–103M); announced a $25M share repurchase authorization, contingent on deleveraging progress to 2.5x by year-end 2025 .
Gross margin fell YoY to 15.0% (adj. 15.3%) due to temporary Midlothian wastewater constraints (~$0.5M/quarter haul-off fees), depreciation, and capability investments; management expects sequential margin improvement through 2025 and 18–19% gross margin in Q4 2025, on a path to ~20% in 2026 .
Likely stock catalysts: raised outlook, volume-led growth, deleveraging with optional buybacks, and a clear margin expansion bridge; near-term watch items include margin rate optics from tariff pass-through and Midlothian bottleneck costs .

What Went Well and What Went Wrong

What Went Well

Broad-based, volume-led growth: revenue +9.3% on 12.2% volume growth (plant-based beverages, broth, fruit snacks), with top 5 customers growing YoY and club channel up double digits .
Cash generation and leverage: operating cash flow rose to $22.3M (vs. $7.4M YoY); leverage improved to 2.9x (from 3.0x YE24), with a reiterated goal of 2.5x by YE25 .
Confidence and pipeline: sales pipeline ~25% of annual revenue (2x prior 15 months), supporting raised FY25 outlook; “We are ahead of our plan and marching along the path that we outlined for 2025” (CEO) .

What Went Wrong

Margin compression YoY: gross margin 15.0% (adj. 15.3%) vs. 16.8% (adj. 17.0%) in Q1 2024, driven by Midlothian wastewater limits, investments in talent/infrastructure, and higher depreciation .
Temporary Midlothian constraint: ~$0.5M/quarter for wastewater haul-off until a permanent solution in mid‑2026; output is capped until installation completes .
Price giveback and tariff optics: pricing decreased ~1.7% as raw material costs were passed back; tariff pass‑through likely neutral to EBITDA dollars but could reduce margin rates while raising revenue .

Financial Results

Consolidated results (oldest → newest)

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($M)	184.4	193.9	201.6
Diluted EPS – cont. ops ($)	0.03	(0.04)	0.04
Adjusted EPS ($)	0.02	0.06	0.04
Gross Margin %	16.8%	10.9%	15.0%
Adjusted Gross Margin %	17.0%	16.1%	15.3%
Adjusted EBITDA ($M)	21.9	26.1	22.4
Adjusted EBITDA Margin %	11.9%	13.5%	11.1%

Actual vs. S&P Global consensus (Q1 2025)

Metric	Consensus*	Actual
Revenue ($M)	195.0*	201.6
Diluted EPS – cont. ops ($)	0.013*	0.04
EBITDA ($M) (S&P definition)	21.3*	20.9*

Values with asterisks (*) retrieved from S&P Global.

Narrative on surprise: Revenue beat by ~$6.6M (201.6 vs. 195.0*), EPS beat by ~$0.027 (0.04 vs. 0.013*); S&P EBITDA essentially in line; company-reported adjusted EBITDA was $22.4M (11.1% margin) .

KPIs and balance sheet

KPI	Q1 2024	Q1 2025
Volume/Mix Growth %	—	12.2%
Price Impact %	—	(1.7%)
Smoothie Bowls Exit Impact %	—	(1.3%)
Cash from Ops ($M)	7.4	22.3
Leverage (Net debt/Adj. EBITDA, mgmt)	—	2.9x
Total Debt ($M)	265.2 (YE24)	260.6
Capex Additions ($M)	7.5	12.7

Segment/Product commentary (disclosure summary)

Category	Commentary
Plant-based beverages	Volume increased; category expected to grow high single digits in 2025; strong foodservice and club dynamics .
Broth & tea	Continued mid-single-digit category growth and pipeline opportunities .
Fruit snacks	19 consecutive quarters of double-digit growth; Q1’25 units +7% YoY; capacity-constrained; confident in 10%+ growth in 2025 .

Guidance Changes

Metric	Period	Previous Guidance (Feb 26, 2025)	Current Guidance (May 7, 2025)	Change
Revenue ($M)	FY 2025	775–805	788–805	Raised low end
Adjusted EBITDA ($M)	FY 2025	97–103	99–103	Raised low end
Revenue Growth %	FY 2025	7%–11%	9%–11%	Raised low end
Adj. EBITDA Growth %	FY 2025	9%–16%	12%–16%	Raised low end
Interest Expense ($M)	FY 2025	24–26	24–26	Maintained
Capex ($M)	FY 2025	30–35	30–35	Maintained
Free Cash Flow ($M)	FY 2025	25–30	25–30	Maintained
Leverage target	YE 2025	2.5x	2.5x	Maintained
Gross Margin Exit	Q4 2025	18%–19% (narrative)	18%–19% (reiterated)	Maintained

Note: Guidance uses non-GAAP Adjusted EBITDA; tariff pass-through could lift revenue but lower reported margin rates without impacting EBITDA dollars .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
Volume-led growth & category health	Q3: Volume +20.6%; reaffirmed revenue/EBITDA outlook; plant-based, broth, RTD protein, fruit snacks strong . Q4: 2024 volume +21%; confidence in categories and share gains .	Volume +12.2% drives +9.3% revenue; top 5 customers grew; club up double digits; pipeline ~25% of annual sales .	Improving
Gross margin trajectory	Q4: Exit 2025 gross margin 18–19%; 20% in 2026 targeted .	Bridge from 15.3% adj GM in Q1 to 18–19% in Q4 via fixed cost leverage (~150 bps), yield (+100 bps), labor (+50 bps); 20% in 2H26 .	Improving
Midlothian constraints	Q3: Wastewater haul-off present . Q4: Start-up completed; some downtime; 50 bps impact in Q4 .	Temporary bottleneck; ~$0.5M/quarter haul-off fees until mid-2026; solution designed/ordered .	Headwind persists
Tariffs	—	Expect pass-through of incremental costs; EBITDA dollars neutral, margin rates could compress; initiated customer talks early 2025 .	Manageable
Capital allocation	Q4: Delever to 2.5x by YE25; Capex mainly maintenance/productivity; ROIC-focus .	Delevering to 2.5x on track; $25M buyback authorization if ahead of plan and leverage allows .	Stable to improving

Management Commentary

“Q1 performance exceeded our expectations… Adjusted EBITDA of $22.4 million exceeded our expectations. We are raising the bottom end of our fiscal year ’25 guidance.” – CEO Brian Kocher .
“We increased Q1 volume production by over 6% from Q4’24… Fruit snacks produced 7% more units YoY… We’re ahead of schedule on creating capacity within our network.” – CEO Brian Kocher .
“Between now and Q4 2025, product yield improvements are expected to result in approximately 100 bps of margin expansion… labor productivity [~50 bps].” – CEO Brian Kocher .
“Debt was $261 million… leverage 2.9x versus 3x at the end of the fourth quarter… We continue to expect to achieve our leverage target of 2.5x by the end of 2025.” – CFO Greg Gaba .
“Our Board has approved a share repurchase program, authorizing the purchase of up to $25 million in common shares.” – CFO Greg Gaba ; also disclosed in press release/8-K .

Q&A Highlights

Tariffs: Company expects to pass through “essentially all” incremental costs; potential short lag of 1–2 months; EBITDA dollars not materially impacted though margin rates could compress .
Midlothian: Permanent wastewater solution targeted for mid‑2026; expect ~$0.5M/quarter in haul‑off fees until then; leveraging other plants to meet demand .
Pipeline conversion: Pipeline equals ~25% of guided annual revenue; typical conversion cycle 6–18 months; provides confidence in long‑term growth algorithm .
SG&A timing: YoY SG&A decrease in Q1 largely stock comp timing/forfeitures; not a new base level .
Pricing/raw materials: Q1 had <2% price giveback (mainly oats pass‑through); similar +/- in coming quarters ex‑tariffs .

Estimates Context

Q1 2025 vs S&P Global consensus: revenue $201.6M vs $195.0M* (beat), EPS $0.04 vs $0.013* (beat). S&P EBITDA definition: $20.9M* actual vs $21.3M* consensus, essentially in line; company-reported adjusted EBITDA was $22.4M (11.1% margin) .
Values with asterisks (*) retrieved from S&P Global.

Where estimates may adjust: upward revisions to FY25 revenue/EBITDA low-end given raised guidance and strong pipeline; potential small downward tweaks to reported margin rates (not dollars) if tariff pass-through lifts revenue denominator .

Key Takeaways for Investors

Volume is the engine: 12.2% volume growth drove the beat; demand remains broad-based across categories and channels .
Margin expansion path is quantified and front-half loaded to operational initiatives; expect sequential improvement toward 18–19% in Q4 2025, 20% in 2026, subject to yield and labor execution .
Temporary Midlothian headwind is defined (~$0.5M/quarter) with a dated fix (mid‑2026); capacity rebalancing across plants helps mitigate risk .
Tariff pass-through should be EBITDA‑neutral but may dilute margin rates; watch reported margins vs. EBITDA dollars for optical effects .
Balance sheet improving: strong cash generation, leverage to 2.9x with a clear target of 2.5x by YE25; $25M buyback authorization provides optionality if deleveraging runs ahead .
Outlook raised: revenue low end +$13M and adjusted EBITDA low end +$2M for FY25; narrative confidence supported by a pipeline ~25% of annual sales .
Near-term trading: positive bias from guide raise and beats; monitor quarterly margin cadence, tariff optics, and any Midlothian update as incremental catalysts .

SunOpta Inc. (STKL)·Q1 2025 Earnings Summary