[Management View]
SunOpta reported $191 million in revenue for fiscal Q2 2025, a 13% increase driven by 14% volume growth. Gross profit was $28.4 million, up 34% YoY, with a gross margin of 14.8%. Adjusted EBITDA rose 14% to $22.7 million. The company announced a $25 million investment in a new fruit snacks manufacturing line to increase output by 25% in late 2026.

[Outlook]
Revenue guidance for fiscal 2025 was raised to $805 million–$815 million, with adjusted EBITDA reaffirmed at $99 million–$103 million. SunOpta targets a gross margin of 18%-19% for fiscal 2026 and approximately 20% for fiscal 2027. The company aims to achieve a 16%-18% ROIC by 2026.

[Financial Performance]
Revenue increased 13% YoY to $191 million. Gross profit rose 34% YoY to $28.4 million. Adjusted EBITDA grew 14% YoY to $22.7 million. Net earnings from continuing operations were $4.4 million, reversing a $4.4 million loss in the prior year. Adjusted EPS was $0.04, up from $0.02 in the prior year.

[Q&A Highlights]
Question 1: Did the new fruit snacks plan involve new customers or existing ones, and how does it impact plant-based capacity needs?
Answer: The new manufacturing line is primarily for existing customers, with some new opportunities. The investment is $25 million, expected to be accretive on a ROIC basis. SunOpta believes it has enough capacity to fuel 2026 growth, with potential future investments for 2027.

Question 2: Can you confirm the adjusted gross margin progression in the back half of the year and the impact of tariffs?
Answer: The 90 basis point tariff impact in Q2 has been fully passed through. A $2 million impact is expected in Q3 from new tariffs, with full recovery by Q4. Operational efficiencies are expected to offset these costs.

Question 3: What is driving growth in the shelf-stable plant-based milk category?
Answer: Growth is driven by menu expansion, promotional volume, and overall foodservice growth. Club channel and private label are also growing significantly, with track channel data not correlating to SunOpta's revenue growth.

Question 4: How do you balance aseptic capacity among plant-based milk, protein shakes, and broth?
Answer: Broth production is seasonal and can be pre-built, allowing flexibility in production. SunOpta optimizes capacity to expand gross margin and fuel unit volume growth, with disciplined growth capital investment.

Question 5: What is the investment amount for the new fruit snacks line and leverage ratio targets for 2026?
Answer: The investment is approximately $25 million, mainly in 2026. SunOpta aims to achieve a leverage target of 2.5 times by the end of 2025, with future investments supporting growth.

Question 6: How are customers approaching the macro environment and launch timing?
Answer: SunOpta's frequent meetings with top customers inform their outlook. Despite macroeconomic uncertainties, the pipeline is growing, and structural tailwinds in dietary and health trends support long-term growth.

Question 7: How does SunOpta view packaging format changes in the aseptic category?
Answer: While evaluating packaging formats, the current pipeline is built on Tetra Pak capacity, with significant runway in the Tetra product.

[Sentiment Analysis]
Analysts and management expressed confidence in SunOpta's growth trajectory and operational efficiency. The tone was optimistic, with a focus on strategic investments and customer demand.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|-------------------------|---------------|---------------|--------------|
| Revenue | $191 million | $169 million | +13% |
| Gross Profit | $28.4 million | $21.2 million | +34% |
| Gross Margin | 14.8% | 12.5% | +230 bps |
| Adjusted EBITDA | $22.7 million | $20 million | +14% |
| Net Earnings | $4.4 million | -$4.4 million | +198% |
| Adjusted EPS | $0.04 | $0.02 | +100% |

[Risks and Concerns]
Tariff impacts and timing lags in pass-through pricing remain a concern. The company is focused on operational efficiencies to mitigate these risks. Macroeconomic uncertainties and consumer spending volatility are also potential challenges.

[Final Takeaway]
SunOpta delivered strong financial performance in Q2 2025, driven by broad-based volume growth and operational execution. Strategic investments in fruit snacks capacity and effective tariff management are expected to support future growth. The company remains confident in its ability to achieve long-term growth targets and improve margins, with structural tailwinds in dietary and health trends providing additional support.