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SunOpta Inc. (STKL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong top-line with revenues of $205.4M (+16.8% YoY) driven entirely by volume growth; adjusted EPS of $0.05 and adjusted EBITDA of $23.6M, while GAAP diluted EPS was $0.01 as margins compressed amid accelerated volumes and operational inefficiencies .
  • Versus S&P Global consensus, SunOpta beat revenue ($205.4M vs $195.7M*) and adjusted EPS ($0.05 vs $0.034*), while GAAP EPS was below; adjusted EBITDA was in line/slightly below consensus definitions (methodology differences likely) .
  • Guidance changed: FY25 revenue raised to $812–816M (from $805–815M), but adjusted EBITDA lowered to $90–92M (from $99–103M), with initial FY26 outlook of $865–880M revenue and $102–108M adjusted EBITDA; company expects leverage ~2.8x exiting FY25 vs prior 2.5x target .
  • Stock reaction catalysts: clear demand strength across plant-based beverages, broth, tea, and fruit snacks; offset by near-term margin pressure from wastewater constraints at Midlothian, downtime/maintenance, and delayed margin initiatives; new aseptic line announced (50% subscribed) and fruit snacks capacity add provide medium-term growth visibility .

What Went Well and What Went Wrong

What Went Well

  • Volume-driven growth across portfolio: revenues up 16.8% to $205.4M with plant-based beverages up high teens, broth high single digits, tea fastest-growing category, and fruit snacks marking a 21st consecutive quarter of double-digit revenue growth .
  • Profitability improved YoY despite margin pressure: operating income rose to $6.9M (from $0.8M), adjusted EPS to $0.05 (from $0.02), adjusted EBITDA to $23.6M (from $20.8M) .
  • Management quote signaling strategic wins: "We seized every single one of these opportunities... customers are voting with their business, and they are voting for us" .

What Went Wrong

  • Gross margin compressed: 12.4% (down 60 bps YoY) and adjusted gross margin 13.6% (down ~300 bps YoY), driven by accelerated volume stressing supply chain, increased maintenance/overtime, higher waste, and Midlothian wastewater limitations .
  • Non-cash impairment charges ($2.6M) related to decommissioned tote filling equipment and early retirement of non-production assets pressured operating profit .
  • FY25 adjusted EBITDA guidance cut to $90–92M due to Q4 operational headwinds (wastewater constraints ~$2M, maintenance/overtime ~$3M, delayed margin plan ~$3M, October downtime ~$2M) .

Financial Results

Quarterly Performance

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$201.6 $191.5 $205.4
Gross Margin %15.0% 14.8% 12.4%
Adjusted Gross Margin %15.3% 15.2% 13.6%
Adjusted EBITDA ($USD Millions)$22.4 $22.7 $23.6
Diluted EPS (GAAP, cont. ops)$0.04 $0.03 $0.01
Adjusted EPS (cont. ops)$0.04 $0.04 $0.05

Year-over-Year Context (Q3)

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$175.9 $205.4
Gross Margin %13.0% 12.4%
Adjusted Gross Margin %16.6% 13.6%
Adjusted EBITDA ($USD Millions)$20.8 $23.6
Diluted EPS (GAAP, cont. ops)$(0.05) $0.01
Adjusted EPS (cont. ops)$0.02 $0.05

Q3 2025 Actual vs S&P Global Consensus

MetricActualConsensusBeat/Miss
Revenue ($USD Millions)$205.4 $195.7*Beat
Primary EPS ($USD)GAAP: $0.01 ; Adjusted: $0.05 $0.034*Adjusted Beat; GAAP Miss
EBITDA ($USD Millions)Adjusted: $23.6 $23.7*In line/slightly below (definition differences)

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

KPIs and Balance Sheet Highlights (Q3)

MetricQ3 2025
Net Leverage (TTM Adjusted EBITDA)2.8x
Total Debt ($USD Millions)$265.8
Cash from Ops YTD ($USD Millions)$34.1
Cash & Equivalents ($USD Millions)$2.2
Net Debt ($USD Millions)$263.6
Weighted Avg Diluted Shares (000s)124,743

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$805–815 $812–816 Raised
Adjusted EBITDA ($USD Millions)FY 2025$99–103 $90–92 Lowered
Interest Expense ($USD Millions)FY 2025n/a$24–26 New
Capital Expenditures ($USD Millions)FY 2025n/a$30–35 New
Free Cash Flow ($USD Millions)FY 2025n/a$20–22 (allocated to debt/notes payables) New
Net Leverage (x)FY 2025 Exit2.5x target ~2.8x maintained Higher than prior
Revenue ($USD Millions)FY 2026n/a$865–880 New
Adjusted EBITDA ($USD Millions)FY 2026n/a$102–108 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Demand strength across categoriesQ1: Broad-based volume growth; pipeline growing; raising FY25 outlook . Q2: 14.4% volume growth; fruit snacks tailwinds; pipeline “never been stronger” .High teens plant-based beverage growth; tea fastest; broth up HSD; fruit snacks 21st straight double-digit quarter .Strengthening; multi-channel demand sustained.
Margin expansion initiativesQ1: Expected sequential margin increases through 2025 . Q2: Progress unlocking capacity and yields .Delayed due to servicing accelerated demand; targeted resumption in 2H26 .Near-term setback; medium-term recovery plan.
Midlothian wastewater constraintQ1: Inefficiencies from wastewater limits . Q2: Ongoing wastewater haul-off charges; adjusted gross margin impact .Key Q4 headwind (~$2M); new wastewater equipment by end Q2 2026 .Resolution slated mid-2026.
TariffsQ2: Pricing pass-through; 90 bps margin hit in Q2; Continued into Q3 .Mitigated via sourcing/pricing; long-term environment uncertain .Manageable with lag; ongoing monitoring.
Capacity expansionQ2: New fruit snack line (Omak) for late 2026; oversubscribed .New aseptic line at Midlothian (50%+ subscribed), late 2026; +10% network capacity ($35M capex) .Building multi-year capacity to meet demand.
Capital allocation & leverageQ1: $25M share repurchase authorization; deleveraging priority . Q2: $1.0M repurchased; net leverage 2.9x .FY25 leverage ~2.8x exit vs prior 2.5x; FCF earmarked for debt .More conservative; prioritize debt service.
FY26 pacingn/a48%/52% H1/H2 revenue split; 45%/55% EBITDA split; stronger back half .Back-half weighted recovery in 2026.

Management Commentary

  • CEO: “We seized every single one of these opportunities… customers are voting with their business, and they are voting for us.” .
  • CEO: “Our categories are roaring… we are growing volume faster than we anticipated… I am confident… to get back to our planned adjusted EBITDA growth and margin expansion pace by mid-2026.” .
  • CFO: “We now expect revenue in the range of $812–$816M… and adjusted EBITDA of $90–$92M… interest expense of $24–$26M… capex of ~$30–$35M… free cash flow of $20–$22M.” .
  • CEO on Midlothian: “We are timing the launch of this new [aseptic] line with the [wastewater] completion… excited to finally utilize the full power of our Midlothian facility.” .

Q&A Highlights

  • Margin cadence and Q4 headwinds: Management quantified ~$10M Q4 headwind (wastewater ~$2M, maintenance/overtime ~$3M, delayed margin plan ~$3M, one-week downtime ~$2M) and reiterated recovery plan into mid-2026 .
  • Demand vs macro backdrop: SunOpta emphasized category strength (coffee shops expected to expand ~20% over five years; 8 of top 10 chains feature products) and affordability of offerings; diversified channels (foodservice/private label/club/retail) support resilience .
  • Pricing and mix optimization: Company has taken price selectively and exited lower-return aseptic tote filling to prioritize capacity for higher-margin, marquee customers .
  • Volume commitments: New business seen as long-term, often under multi-year agreements; management would “take this business 10x out of 10x” again .

Estimates Context

  • Q3 2025 revenue beat: $205.4M vs $195.68M consensus* .
  • EPS: Adjusted EPS $0.05 vs consensus Primary EPS $0.034* (beat on adjusted basis); GAAP diluted EPS $0.01 was below consensus .
  • EBITDA: Adjusted EBITDA $23.6M vs consensus $23.7M*—interpret cautiously due to differing EBITDA definitions between company’s adjusted measure and consensus frameworks .
  • FY 2025 consensus at the time: revenue ~$813.86M*, EPS ~$0.144*, EBITDA ~$90.74M*—aligned with revised company guidance ranges [GetEstimates].

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

Key Takeaways for Investors

  • Demand is robust and diversified; SunOpta is capturing accelerated customer allocations across beverages, broth, tea, and fruit snacks, underpinning multi-year growth visibility .
  • Near-term margin headwinds are operational (wastewater constraints, downtime and maintenance, delayed initiatives) with defined remediation timeline; expect back-half weighted FY26 recovery .
  • Guidance shift is the key stock narrative: raised FY25 revenue but lowered FY25 adjusted EBITDA—focus on execution of recovery plan and Midlothian upgrades to re-accelerate margins by mid-2026 .
  • Capacity adds (Midlothian aseptic line, Omak fruit snacks) are already substantially subscribed and should expand network capacity and fixed-cost leverage starting late 2026 into 2027 .
  • Balance sheet improving (net leverage 2.8x) with FY25 FCF prioritized for debt service—watch deleveraging trajectory and potential for future capital returns once leverage objectives are met .
  • Trading lens: near-term print risk around Q4 margin/EBITDA, but revenue momentum and medium-term capacity expansion can drive estimate revisions upward beyond mid-2026 if execution stays on track .
  • Monitor tariffs pass-through and wastewater equipment installation timing; both are important for margins and confidence in guidance cadence .
Notes: Values marked with asterisk (*) retrieved from S&P Global.