[10-Q] SunOpta Inc. Quarterly Earnings Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| OR | |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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Securities registered pursuant to Section 12(b) of the Act:
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The number of the registrant's common shares outstanding as of October 31, 2025 was
SUNOPTA INC.
FORM 10-Q
For the Quarterly Period Ended September 27, 2025
TABLE OF CONTENTS
| PART I | FINANCIAL INFORMATION | |
| Item 1. | Financial Statements (unaudited) | |
| Consolidated Statements of Operations for the quarters and three quarters ended September 27, 2025 and September 28, 2024 | 5 | |
| Consolidated Balance Sheets as at September 27, 2025 and December 28, 2024 | 6 | |
| Consolidated Statements of Shareholders' Equity as at and for the quarters and three quarters ended September 27, 2025 and September 28, 2024 | 7 | |
| Consolidated Statements of Cash Flows for the three quarters ended September 27, 2025 and September 28, 2024 | 9 | |
| Notes to Consolidated Financial Statements | 10 | |
| Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 21 |
| Item 3 | Quantitative and Qualitative Disclosures about Market Risk | 36 |
| Item 4 | Controls and Procedures | 36 |
| PART II | OTHER INFORMATION | |
| Item 1 | Legal Proceedings | 37 |
| Item 1A | Risk Factors | 37 |
| Item 5 | Other Information | 37 |
| Item 6 | Exhibits | 38 |
Basis of Presentation
Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q ("Form 10-Q") to the "Company," "SunOpta," "we," "us," "our" or similar words and phrases are to SunOpta Inc. and its subsidiaries, taken together.
In this report, all currency amounts presented are expressed in thousands of United States ("U.S.") dollars ("$"), except per share amounts, unless otherwise stated.
Forward-Looking Statements
This Form 10-Q contains forward-looking statements that are based on management's current expectations and assumptions and involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and are typically accompanied by words such as "anticipate," "estimate," "target," "intend," "project," "potential," "predict," "continue," "believe," "expect," "can," "could," "would," "should," "may," "might," "plan," "will," "budget," "forecast," the negatives of such terms, and words and phrases of similar impact and include, but are not limited to, references to future financial and operating results, plans, objectives, expectations, and intentions; our expectations regarding the future profitability of our business, including anticipated results of operations, revenue trends, and gross margin profile; our expectations regarding customer demand, consumer preferences, competition, sales pricing, and availability and pricing of raw material inputs; the expected cost and timing to complete planned capital expenditures; the uncertainty of the tariff environment and the potential effects on macroeconomic conditions and our business; ability and timing to achieve the expected benefits from our margin improvement investments; the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing; the anticipated sufficiency of future cash flows to enable the payments of interest and repayment of debt, working capital needs, and planned capital expenditures; our ability to obtain additional financing or issue additional debt or equity securities; our estimate of duties and interest owed in connection with the revised tariff classification of certain fruit snack products; our estimate of insurance recoveries associated with the withdrawal of certain batches of aseptically-packaged products; the outcome of litigation to which we may, from time to time, be a party; and other statements that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on certain assumptions, expectations and analyses we make in light of our experience and our interpretation of current conditions, historical trends and expected future developments, as well as other factors that we believe are appropriate in the circumstances. Whether actual results and developments will be consistent with and meet our expectations and predictions is subject to many risks and uncertainties, including those set forth under Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024, under Part II, Item 1A of our Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission on May 7, 2025 and August 6, 2025, under Item 1A. "Risk Factors" of this report, and in our other filings with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators.
| SUNOPTA INC. | 3 | September 27, 2025 Form 10-Q |
All forward-looking statements made herein are qualified by these cautionary statements, and our actual results or the developments we anticipate may not be realized. Our forward-looking statements are based only on information currently available to us and speak only as of the date on which they are made. We do not undertake any obligation to publicly update our forward-looking statements, whether written or oral, after the date of this report for any reason, even if new information becomes available or other events occur in the future, except as may be required under applicable securities laws. The foregoing factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report.
| SUNOPTA INC. | 4 | September 27, 2025 Form 10-Q |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SunOpta Inc.
Consolidated Statements of Operations
For the quarters and three quarters ended September 27, 2025 and September 28, 2024
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
| Quarter ended | Three quarters ended | |||||||||||
| September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||
| $ | $ | $ | $ | |||||||||
| Revenues (note 15) | ||||||||||||
| Cost of goods sold | ||||||||||||
| Gross profit | ||||||||||||
| Selling, general and administrative expenses | ||||||||||||
| Intangible asset amortization | ||||||||||||
| Other expense (income), net | ( |
) | ||||||||||
| Foreign exchange loss (gain) | ( |
) | ( |
) | ||||||||
| Operating income | ||||||||||||
| Interest expense, net | ||||||||||||
| Other non-operating expense | ||||||||||||
| Earnings (loss) from continuing operations before income taxes | ( |
) | ( |
) | ||||||||
| Income tax expense (note 11) | ||||||||||||
| Earnings (loss) from continuing operations | ( |
) | ( |
) | ||||||||
| Net loss from discontinued operations (note 2) | ( |
) | ||||||||||
| Net earnings (loss) | ( |
) | ( |
) | ||||||||
| Accretion on preferred stock | ( |
) | ( |
) | ( |
) | ||||||
| Earnings (loss) attributable to common shareholders | ( |
) | ( |
) | ||||||||
| Basic and diluted earnings (loss) per share (note 12) | ||||||||||||
| Earnings (loss) from continuing operations attributable to common shareholders | ( |
) | ( |
) | ||||||||
| Loss from discontinued operations | ( |
) | ||||||||||
| Earnings (loss) attributable to common shareholders | ( |
) | ( |
) | ||||||||
| Weighted-average common shares outstanding (000s) (note 12) | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
(See accompanying notes to consolidated financial statements)
| SUNOPTA INC. | 5 | September 27, 2025 Form 10-Q |
SunOpta Inc.
Consolidated Balance Sheets
As at September 27, 2025 and December 28, 2024
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars)
| September 27, 2025 | December 28, 2024 | |||||
| $ | $ | |||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | ||||||
| Accounts receivable, net of allowance for credit losses of $ |
||||||
| Inventories (note 4) | ||||||
| Prepaid expenses and other current assets | ||||||
| Income taxes recoverable | ||||||
| Total current assets | ||||||
| Restricted cash (note 5) | ||||||
| Property, plant and equipment, net | ||||||
| Operating lease right-of-use assets | ||||||
| Intangible assets, net | ||||||
| Goodwill | ||||||
| Other long-term assets | ||||||
| Total assets | ||||||
| LIABILITIES | ||||||
| Current liabilities | ||||||
| Accounts payable | ||||||
| Accrued liabilities | ||||||
| Income taxes payable | ||||||
| Notes payable (note 6) | ||||||
| Short-term debt (note 7) | ||||||
| Current portion of long-term debt (note 7) | ||||||
| Current portion of operating lease liabilities | ||||||
| Total current liabilities | ||||||
| Long-term debt (note 7) | ||||||
| Operating lease liabilities | ||||||
| Deferred income taxes | ||||||
| Total liabilities | ||||||
| Series B-1 Preferred Stock (note 8) | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Common shares, |
||||||
| Additional paid-in capital | ||||||
| Accumulated deficit | ( |
) | ( |
) | ||
| Accumulated other comprehensive income | ||||||
| Total shareholders' equity | ||||||
| Total liabilities and shareholders' equity |
Commitments and contingencies (note 14)
(See accompanying notes to consolidated financial statements)
| SUNOPTA INC. | 6 | September 27, 2025 Form 10-Q |
SunOpta Inc.
Consolidated Statements of Shareholders' Equity
As at and for the quarters ended September 27, 2025 and September 28, 2024
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars)
| Common shares | Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive income |
Total | ||||||||||||||
| 000s | $ | $ | $ | $ | $ | |||||||||||||
| Balance at June 28, 2025 | ( |
) | ||||||||||||||||
| Repurchase of common shares(1) (note 9) | ( |
) | - | - | - | - | - | |||||||||||
| Employee stock purchase plan | - | - | - | |||||||||||||||
| Stock incentive plan | ( |
) | ( |
) | - | - | ||||||||||||
| Withholding taxes on stock-based awards | - | - | - | - | ||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||
| Net earnings | - | - | - | - | ||||||||||||||
| Balance at September 27, 2025 | ( |
) | ||||||||||||||||
| Common shares | Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive income |
Total | ||||||||||||||
| 000s | $ | $ | $ | $ | $ | |||||||||||||
| Balance at June 29, 2024 | ( |
) | ||||||||||||||||
| Employee stock purchase plan | - | - | - | |||||||||||||||
| Stock incentive plan | ( |
) | - | - | ||||||||||||||
| Withholding taxes on stock-based awards | - | - | ( |
) | - | - | ( |
) | ||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||
| Net loss | - | - | - | ( |
) | - | ( |
) | ||||||||||
| Accretion on preferred stock | - | - | - | ( |
) | - | ( |
) | ||||||||||
| Balance at September 28, 2024 | ( |
) | ||||||||||||||||
| SUNOPTA INC. | 7 | September 27, 2025 Form 10-Q |
SunOpta Inc.
Consolidated Statements of Shareholders' Equity (continued)
As at and for the three quarters ended September 27, 2025 and September 28, 2024
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars)
| Common shares | Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive income |
Total | ||||||||||||||
| 000s | $ | $ | $ | $ | $ | |||||||||||||
| Balance at December 28, 2024 | ( |
) | ||||||||||||||||
| Repurchase of common shares(1) (note 9) | ( |
) | ( |
) | - | ( |
) | - | ( |
) | ||||||||
| Employee stock purchase plan | - | - | - | |||||||||||||||
| Stock incentive plan | ( |
) | - | - | ||||||||||||||
| Withholding taxes on stock-based awards | - | - | ( |
) | - | - | ( |
) | ||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||
| Net earnings | - | - | - | - | ||||||||||||||
| Accretion on preferred stock | - | - | - | ( |
) | - | ( |
) | ||||||||||
| Balance at September 27, 2025 | ( |
) | ||||||||||||||||
| Common shares | Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive income |
Total | ||||||||||||||
| 000s | $ | $ | $ | $ | $ | |||||||||||||
| Balance at December 30, 2023 | ( |
) | ||||||||||||||||
| Employee stock purchase plan | - | - | - | |||||||||||||||
| Stock incentive plan | ( |
) | - | - | ||||||||||||||
| Withholding taxes on stock-based awards | - | - | ( |
) | - | - | ( |
) | ||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||
| Net loss | - | - | - | ( |
) | - | ( |
) | ||||||||||
| Accretion on preferred stock | - | - | - | ( |
) | - | ( |
) | ||||||||||
| Balance at September 28, 2024 | ( |
) | ||||||||||||||||
(1)
(See accompanying notes to consolidated financial statements)
| SUNOPTA INC. | 8 | September 27, 2025 Form 10-Q |
SunOpta Inc.
Consolidated Statements of Cash Flows
For the three quarters ended September 27, 2025 and September 28, 2024
(Unaudited)
(All dollar amounts expressed in thousands of U.S. dollars)
| Three quarters ended | ||||||
| September 27, 2025 |
September 28, 2024 |
|||||
| $ | $ | |||||
| CASH PROVIDED BY (USED IN) | ||||||
| Operating activities | ||||||
| Net earnings (loss) | ( |
) | ||||
| Net loss from discontinued operations | ( |
) | ||||
| Earnings (loss) from continuing operations | ( |
) | ||||
| Items not affecting cash: | ||||||
| Depreciation and amortization | ||||||
| Amortization of debt issuance costs | ||||||
| Deferred income taxes | ( |
) | ||||
| Stock-based compensation | ||||||
| Impairment of property, plant and equipment | ||||||
| Gain on sale of property, plant and equipment | ( |
) | ||||
| Gain on sale of smoothie bowls product line | ( |
) | ||||
| Other | ( |
) | ( |
) | ||
| Changes in operating assets and liabilities, net of divestitures (note 13) | ( |
) | ( |
) | ||
| Net cash provided by operating activities of continuing operations | ||||||
| Net cash used in operating activities of discontinued operations | ( |
) | ||||
| Net cash provided by operating activities | ||||||
| Investing activities | ||||||
| Additions to property, plant and equipment | ( |
) | ( |
) | ||
| Proceeds from sale of property, plant and equipment | ||||||
| Addition to intangible assets | ( |
) | ||||
| Proceeds from sale of smoothie bowls product line | ||||||
| Net cash used in investing activities of continuing operations | ( |
) | ( |
) | ||
| Net cash provided by investing activities of discontinued operations | ||||||
| Net cash used in investing activities | ( |
) | ( |
) | ||
| Financing activities | ||||||
| Proceeds from notes payable | ||||||
| Repayment of notes payable | ( |
) | ( |
) | ||
| Net increase in borrowings under revolving credit facilities | ||||||
| Borrowings of short-term and long-term debt | ||||||
| Repayment of long-term debt | ( |
) | ( |
) | ||
| Proceeds from the exercise of stock options and employee share purchases | ||||||
| Payment of withholding taxes on stock-based awards | ( |
) | ( |
) | ||
| Repurchase of common shares (note 9) | ( |
) | ||||
| Payment of cash dividends on preferred stock | ( |
) | ||||
| Net cash used in financing activities of continuing operations | ( |
) | ( |
) | ||
| Increase in cash, cash equivalents and restricted cash in the period | ||||||
| Cash, cash equivalents and restricted cash, beginning of the period | ||||||
| Cash, cash equivalents and restricted cash, end of the period | ||||||
Non-cash investing and financing activities (note 13)
(See accompanying notes to consolidated financial statements)
| SUNOPTA INC. | 9 | September 27, 2025 Form 10-Q |
| SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
1. Significant Accounting Policies
Basis of Presentation
The unaudited Consolidated Financial Statements of SunOpta Inc. (the "Company" or "SunOpta") included herein have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended, and in accordance with United States ("U.S.") generally accepted accounting principles ("U.S. GAAP") for interim financial information. Accordingly, these statements do not include all of the disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments considered necessary for the fair presentation of the interim periods presented have been included, and all such adjustments are of a normal, recurring nature. Operating results for the quarter and three quarters ended September 27, 2025 are not necessarily indicative of the results that may be expected for the full fiscal year ending January 3, 2026 or for any other period. These statements include the accounts of the Company and its subsidiaries and have been prepared on a basis consistent with the annual consolidated financial statements for the year ended December 28, 2024. For further information, refer to the consolidated financial statements, and notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the "2024 Form 10-K").
Fiscal Year
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024. ASU 2023-09 will impact the Company's income tax disclosures beginning with the consolidated financial statements included in the annual report on Form 10-K for the current fiscal year ending January 3, 2026, but will have no impact on the Company's results of operations, cash flows, or financial condition.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The guidance will be effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential effect that ASU 2024-03 will have on its financial statement disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which is intended to modernize the accounting for the costs of internal-use software given the evolution of software development. ASU 2025-06 removes all references to project stages throughout Subtopic 350-40 and clarifies the threshold entities apply to begin capitalizing costs. The guidance will be effective for annual periods beginning after December 15, 2027, and for interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the potential effect that ASU 2025-06 will have on its consolidated financial statements.
| SUNOPTA INC. | 10 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
2. Discontinued Operations
Divestiture of Frozen Fruit
On October 12, 2023 (the "Closing Date"), the Company completed the sale of certain assets and liabilities of its frozen fruit business ("Frozen Fruit") to Natures Touch Mexico, S. de R.L. de C.V. and Nature's Touch Frozen Fruits, LLC (the "Purchasers") for an estimated aggregate purchase price that comprised (i) cash consideration of $
The table below presents the major components of the results of discontinued operations reported in the consolidated statement of operations for the three quarters ended September 28, 2024.
| $ | |||
| Cost of goods sold | |||
| Selling, general and administrative expenses | |||
| Other income, net | ( |
) | |
| Foreign exchange gain | ( |
) | |
| Interest expense | |||
| Loss from discontinued operations before income taxes | ( |
) | |
| Income tax expense | |||
| Net loss from discontinued operations | ( |
) |
3. Receivables Sales Program
On August 28, 2024, the Company entered into a Master Receivables Purchase Agreement, as amended on February 11, 2025 (the "Agreement"), with a third-party financial institution (the "Purchaser"), for the sale of designated trade receivables of certain eligible customers in exchange for cash proceeds (the "Receivables Sales Program"). Under the Receivables Sales Program, the maximum aggregate amount of outstanding receivables that can be sold to the Purchaser at any time is $
The receivables sold under the Receivables Sales Program are without recourse to the Company for any customer credit risk. The Company does not retain any ongoing financial interest in the receivables sold under the Receivables Sales Program other than cash collection and administrative services. The Company has not recognized any servicing asset or liability as at September 27, 2025, as the fair values of the servicing arrangement and the fees earned are not considered material to the consolidated financial statements.
| SUNOPTA INC. | 11 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
Receivables sold under the Receivables Sales Program are accounted for as sales of financial assets. The sold receivables are derecognized from accounts receivable on the Company's consolidated balance sheet at the time of sale to the Purchaser. For the quarter and three quarters ended September 27, 2025, the loss on sale of the sold receivables, representing the discount taken by the Purchaser, amounted to $
The following table summarizes activity related to the Receivables Sales Program:
| Three quarters ended | ||||||
| September 27, 2025 | September 28, 2024 | |||||
| $ | $ | |||||
| Receivables balance sold to the Purchaser, beginning of the period | ||||||
| Sale of receivables | ||||||
| Cash collected and remitted to the Purchaser | ( |
) | ||||
| Receivables balance sold to the Purchaser, end of the period(1) | ||||||
| Cash collected and not remitted to the Purchaser(2) | ( |
) | ( |
) | ||
| Outstanding receivables sold, end of the period | ||||||
(1) For the first three quarters of 2025 and 2024, the Company recorded increases of $
(2) Cash collected from customers on behalf of but not yet remitted to the Purchaser is included in accounts payable on the consolidated balance sheet as at September 27, 2025, with changes in such obligations reflected as operating activities in the consolidated statements of cash flows. There are no restrictions under the Agreement on the Company's use of the cash collected prior to the time it is due to be remitted to the Purchaser.
4. Inventories
| September 27, 2025 | December 28, 2024 | |||||
| $ | $ | |||||
| Raw materials and work-in-process | ||||||
| Finished goods | ||||||
| Inventory reserves | ( |
) | ( |
) | ||
5. Restricted Cash
Restricted cash relates to certain bank accounts in Mexico that were retained following the divestiture of Frozen Fruit, which are subject to a judicial hold in connection with a litigation matter. Restricted cash has been classified as non-current on the consolidated balance sheets as at September 27, 2025 and December 28, 2024, as the Company cannot predict the timing of when this matter may be resolved.
6. Notes Payable
The Company finances certain purchases of trade goods and services through third-party extended payables facilities. Under these facilities, third-party intermediaries advance the amount of the scheduled payment to the supplier based on the invoice due date and issue a short-term note payable to the Company for the face amount of the supplier invoice. Interest accrues on the note payable from the contractual payment date of the supplier invoice to the extended due date of the note payable, as specified by the negotiated terms of each facility. The Company does not maintain any form of security with the third-party intermediaries. Outstanding principal payment obligations to the third-party intermediaries are recorded as notes payable on the Company's consolidated balance sheets. Proceeds from, and repayments of the notes payable are reported as financing cash flows on the Company's consolidated statements of cash flows.
| SUNOPTA INC. | 12 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
7. Short-Term and Long-Term Debt
| September 27, 2025 | December 28, 2024 | |||||
| $ | $ | |||||
| Short-Term Debt | ||||||
| Line of credit facility | ||||||
| Long-Term Debt | ||||||
| Term loan facility | ||||||
| Revolving credit facility | ||||||
| Less: unamortized debt issuance costs | ( |
) | ( |
) | ||
| Total credit facilities | ||||||
| Finance lease liabilities | ||||||
| Total long-term debt, before current portion | ||||||
| Less: current portion | ||||||
| Total long-term debt |
Short-Term Debt
Line of Credit Facility
On June 13, 2025, the Company entered into an Uncommitted Trade Loan Facility Agreement (the "Trade Loan Agreement") with a third-party banking institution (the "Lender") providing for an uncommitted revolving line of credit facility (the "Line of Credit Facility") under which the Company may request, and the Lender may make, at its sole discretion, loans and advances of up to an aggregate amount of $
Long-Term Debt
Credit Facilities
On December 8, 2023, the Company entered into a five-year Credit Agreement (the "Credit Agreement") providing for
| SUNOPTA INC. | 13 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
As at September 27, 2025, the Company was in compliance with all financial and non-financial covenants under the Credit Agreement.
8. Series B-1 Preferred Stock
As at September 27, 2025, SunOpta Foods had
As at September 27, 2025, the Company had
9. Common Shares
Share Repurchase Program
On May 7, 2025, the Company announced that its Board of Directors authorized a share repurchase program for the repurchase of up to $
| SUNOPTA INC. | 14 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
10. Stock-Based Compensation
Short-Term Incentive Plan
On March 24, 2025, the Company granted
Long-Term Incentive Plan
On April 11, 2025, the Company granted
The grant-date fair values of each RSU and PSU were estimated to be $
| Grant-date stock price | $ | ||
| Exercise price | $ | ||
| Dividend yield | |||
| Expected volatility(a) | |||
| Risk-free interest rate(b) | |||
| Expected life (in years)(c) |
(a) Determined based on the historical volatility of the common shares over expected life of the stock options.
(b) Determined based on U.S. Treasury yields with a remaining term equal to the expected life of the stock options.
(c) Determined based on the mid-point of vesting (three years) and expiration (ten years) for the stock options.
| SUNOPTA INC. | 15 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
The aggregate grant-date fair value of the RSUs, PSUs and stock options granted under the 2025 LTIP was determined to be $
11. Income Taxes
Income taxes were recognized at an effective rate of
12. Earnings (Loss) Per Share
Basic and diluted earnings (loss) per share were calculated as follows (shares in thousands):
| Quarter ended | Three quarters ended | |||||||||||
|
September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||
| Basic Earnings (Loss) Per Share | ||||||||||||
| Numerator for basic earnings (loss) per share: | ||||||||||||
| Earnings (loss) from continuing operations | $ | $ | ( |
) | $ | $ | ( |
) | ||||
| Less: accretion on preferred stock | ( |
) | ( |
) | ( |
) | ||||||
| Earnings (loss) from continuing operations attributable to common shareholders | ( |
) | ( |
) | ||||||||
| Loss from discontinued operations | ( |
) | ||||||||||
| Earnings (loss) attributable to common shareholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||
| Denominator for basic earnings (loss) per share: | ||||||||||||
| Basic weighted-average number of shares outstanding | ||||||||||||
| Basic earnings (loss) per share: | ||||||||||||
| Earnings (loss) from continuing operations attributable to common shareholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||
| Loss from discontinued operations | ( |
) | ||||||||||
| Earnings (loss) attributable to common shareholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||
| SUNOPTA INC. | 16 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
| Quarter ended | Three quarters ended | |||||||||||
|
September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||
| Diluted Earnings (Loss) Per Share | ||||||||||||
| Numerator for diluted earnings (loss) per share: | ||||||||||||
| Earnings (loss) from continuing operations | $ | $ | ( |
) | $ | $ | ( |
) | ||||
| Less: accretion on preferred stock | ( |
) | ( |
) | ||||||||
| Earnings (loss) from continuing operations attributable to common shareholders | ( |
) | ( |
) | ||||||||
| Loss from discontinued operations | ( |
) | ||||||||||
| Earnings (loss) attributable to common shareholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||
| Denominator for diluted earnings (loss) per share: | ||||||||||||
| Basic weighted-average number of shares outstanding | ||||||||||||
| Dilutive effect of the following: | ||||||||||||
| Stock options and restricted stock units(1) | ||||||||||||
| Series B-1 Preferred Stock(2) | ||||||||||||
| Diluted weighted-average number of shares outstanding | ||||||||||||
| Diluted earnings (loss) per share: | ||||||||||||
| Earnings (loss) from continuing operations attributable to common shareholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||
| Loss from discontinued operations | ( |
) | ||||||||||
| Earnings (loss) attributable to common shareholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||
(1) For the quarter and three quarters ended September 28, 2024,
(2) For the quarter and three quarters ended September 28, 2024, it was more dilutive to assume the Series B-1 Preferred Stock was not converted into common shares and, therefore, the numerator of the diluted earnings per share calculation was not adjusted to add back the accretion on the Series B-1 Preferred Stock and the denominator was not adjusted to include the
| SUNOPTA INC. | 17 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
13. Supplemental Cash Flow Information
| Three quarters ended | ||||||
|
September 27, 2025 |
September 28, 2024 |
|||||
| $ | $ | |||||
| Changes in Operating Assets and Liabilities, Net of Divestitures | ||||||
| Accounts receivable | ( |
) | ||||
| Inventories | ( |
) | ( |
) | ||
| Accounts payable | ||||||
| Other operating assets and liabilities | ( |
) | ||||
| ( |
) | ( |
) | |||
| Non-Cash Investing and Financing Activities | ||||||
| Change in additions to property, plant and equipment included in accounts payable | ( |
) | ( |
) | ||
| Right of use assets obtained in exchange for lease liabilities: | ||||||
| Operating leases | ( |
) | ( |
) | ||
| Finance leases | ( |
) | ( |
) | ||
14. Commitments and Contingencies
Legal Proceedings
Various current and potential claims and litigation arising in the ordinary course of business are pending against the Company. The Company believes it has established adequate accruals for liabilities that are probable and reasonably estimable that may be incurred in connection with any such currently pending matter. In the Company's opinion, the eventual resolution of such matters, either individually or in the aggregate, is not expected to have a material impact on the Company's financial position, results of operations, or cash flows. However, litigation is inherently unpredictable and resolutions or dispositions of claims or lawsuits by settlement or otherwise could have an adverse impact on the Company's financial position, results of operations, and cash flows for the reporting period in which any such resolution or disposition occurs.
U.S. Customs and Border Protection Matter
On February 3, 2025, the Company delivered a voluntary disclosure letter to U.S. Customs and Border Protection ("CBP") regarding the tariff classification of certain fruit snack products produced at the Company's Niagara, Ontario, facility. The Company disclosed to CBP that a revised tariff classification should have been utilized for previously reported shipments, resulting in the underpayment of duties to CBP for the period from January 2022 to December 2024. The Company submitted its final report to CBP on April 3, 2025. As at September 27, 2025 and December 28, 2024, the Company recognized $
Product Withdrawal
In the second quarter of 2024, the Company conducted a voluntary withdrawal from customers of certain batches of aseptically-packaged products that may have had the potential for non-pathogenic microbial contamination. None of the withdrawn product made it into the consumer marketplace. The Company recognized direct costs related to the withdrawal of $
| SUNOPTA INC. | 18 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
15. Segment Information
Segment Profit or Loss
The Company manages its continuing operations on a company-wide basis, rather than at a product category or business unit level, thereby making determinations as to the allocation of resources as one operating and reportable segment. Earnings (loss) from continuing operations as reported on the Company's consolidated statements of operations is the measure of segment profit or loss utilized by Company's Chief Executive Officer, who has been identified as the Chief Operating Decision Maker ("CODM"), when assessing performance and allocating resources. The significant segment-level expense information provided to the CODM is consistent with the Company's consolidated statements of operations, as supplemented by the specified expense items disclosed in the table below. The measure of segment assets is the same as total assets reported on the Company's consolidated balance sheet. There are no differences from the 2024 Form 10-K in the Company's basis for segmentation or basis for measurement of segment profit or loss.
Disaggregation of Revenue
The majority of the Company's products are shelf-stable packaged food and beverage products and share similar customers and distribution. The principal products that comprise the Company's product categories are as follows:
|
Category |
Principal Products |
|
Beverages and broths |
Plant-based beverages utilizing oat, almond, soy, coconut, rice, hemp, and other bases, including Dream® and West Life™ brands; oat-based creamers, including SOWN® brand; ready-to-drink protein shakes; packaged teas and concentrates; meat and vegetable broths and stocks. |
|
Fruit snacks |
Ready-to-eat fruit snacks made from apple purée and juice concentrate in bar, bit, twist, strip and sandwich formats; cold pressed fruit bars. |
|
Ingredients |
Liquid bases utilizing oat and soy. |
Revenue disaggregated by product category is as follows:
| Quarter ended | Three quarters ended | |||||||||||
| September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||
| $ | $ | $ | $ | |||||||||
| Product Category | ||||||||||||
| Beverages and broths | ||||||||||||
| Fruit snacks | ||||||||||||
| Ingredients | ||||||||||||
| Smoothie bowls(1) | ||||||||||||
| Total revenues | ||||||||||||
(1) On March 4, 2024, the Company completed the sale of its smoothie bowl product line and exited the category.
| SUNOPTA INC. | 19 | September 27, 2025 Form 10-Q |
SunOpta Inc. Notes to Consolidated Financial Statements For the quarters and three quarters ended September 27, 2025 and September 28, 2024 (Unaudited) (All tabular amounts expressed in thousands of U.S. dollars, except per share amounts) |
The following table presents details of specified expenses provided to the CODM and included in earnings (loss) from continuing operations:
| Quarter ended | Three quarters ended | |||||||||||
| September 27, 2025 |
September 28, 2024 |
September 27, 2025 |
September 28, 2024 |
|||||||||
| $ | $ | $ | $ | |||||||||
| Depreciation and Amortization | ||||||||||||
| Depreciation expense included in cost of goods sold | ||||||||||||
| Depreciation expense included in selling, general and administrative expenses | ||||||||||||
| Intangible asset amortization expense | ||||||||||||
| Total depreciation and amortization | ||||||||||||
| Stock-Based Compensation | ||||||||||||
| Stock-based compensation expense included in selling, general and administrative expenses | ||||||||||||
| Interest Expense, Net | ||||||||||||
| Interest expense | ||||||||||||
| Amortization of debt issuance costs | ||||||||||||
| Interest income | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Interest expense, net | ||||||||||||
16. Subsequent Event
| SUNOPTA INC. |
20 |
September 27, 2025 Form 10-Q |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Financial Information
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the interim consolidated financial statements, and notes thereto, for the quarter ended September 27, 2025 contained under Item 1 of this Quarterly Report on Form 10-Q (the "Interim Consolidated Financial Statements") and in conjunction with the annual consolidated financial statements, and notes thereto, contained in the Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the "2024 Form 10-K"). Unless otherwise indicated herein, the discussion and analysis contained in this MD&A includes information available to November 5, 2025.
Certain statements contained in this MD&A may constitute forward-looking statements as defined under securities laws. Forward-looking statements may relate to our future outlook and anticipated events or results and may include statements regarding our future financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans, and objectives. In some cases, forward-looking statements can be identified by terms such as "anticipate," "estimate," "target," "intend," "project," "potential," "predict," "continue," "believe," "expect," "can," "could," "would," "should," "may," "might," "plan," "will," "budget," "forecast," or other similar expressions concerning matters that are not historical facts, or the negative of such terms are intended to identify forward-looking statements; however, the absence of these words does not necessarily mean that a statement is not forward-looking. To the extent any forward-looking statements contain future-oriented financial information or financial outlooks, such information is being provided to enable a reader to assess our financial condition, material changes in our financial condition, our results of operations, and our liquidity and capital resources. Readers are cautioned that this information may not be appropriate for any other purpose, including investment decisions.
Forward-looking statements contained in this MD&A are based on certain factors and assumptions regarding expected growth, results of operations, performance, and business prospects and opportunities. While we consider these assumptions to be reasonable based on information currently available, they may prove to be incorrect. These factors are more fully described in the "Risk Factors" section at Part I, Item 1A of the 2024 Form 10-K, at Part II, Item 1A of our Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission on May 7, 2025 and August 6, 2025, and Part II, Item 1A of this report.
Forward-looking statements contained in this commentary are based on our current estimates, expectations, and projections, which we believe are reasonable as of the date of this report. Forward-looking statements are not guarantees of future performance or events. You should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. Other than as required under securities laws, we do not undertake to update any forward-looking information at any particular time. Neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements, and we hereby qualify all our forward-looking statements by these cautionary statements.
Unless otherwise noted herein, all currency amounts in this MD&A are expressed in U.S. dollars. All tabular dollar amounts are expressed in thousands of U.S. dollars, except per share amounts.
Overview
SunOpta delivers customized supply chain solutions and innovation for top brands, retailers, and foodservice providers across a broad portfolio of beverages, broths, and better-for-you snacks. Our products are distributed through retail, club, foodservice and e-commerce channels across North America.
Business Environment and Fiscal 2025 Outlook
For the fourth quarter and fiscal year 2025, we are projecting higher year-over-year revenues, driven by organic growth across our beverage, broth and fruit snack product categories. We anticipate an improved gross margin profile on a reported basis, reflecting higher output from our existing capital infrastructure. However, certain manufacturing inefficiencies and temporary volume constraints at our plant-based beverage facility in Midlothian, Texas, that we experienced in the third quarter (as discussed below under "Consolidated Results of Operations") may continue to negatively impact our reported gross margin, as we have not yet achieved all of the anticipated benefits from our margin improvement initiatives. An increase in gross profit, together with lower selling, general and administrative ("SG&A") expenses as a percentage of revenue, is expected to drive operating income growth and increased cash flows.
| SUNOPTA INC. | 21 | September 27, 2025 Form 10-Q |
As it relates to the current tariff environment, our employees, production facilities, and customers are predominately located in the U.S.; however, we source a portion of our raw material ingredients and packaging globally, including from Canada and Mexico. Additionally, a portion of our total revenues, less than 8%, are generated from the sale of fruit snack products imported into the U.S. from our Niagara, Ontario, facility. As a result, the imposition of new tariffs by the U.S. on goods from Canada and Mexico, respectively, that are not exempt under the U.S.-Mexico-Canada Agreement ("USMCA") has resulted in additional costs for us, as well as our suppliers, and increased the landed cost in the U.S. of our products produced in Canada that are not exempt under the USMCA. In response to these new tariffs, we have been implementing alternative sourcing strategies and pricing arrangements that have allowed us to mitigate our known tariff exposure at this time, although the long-term tariff environment remains uncertain.
Consolidated Results of Operations for the Quarters Ended September 27, 2025 and September 28, 2024
| September 27, 2025 |
September 28, 2024 |
Change | Change | |||||||||
| For the quarter ended | $ | $ | $ | % | ||||||||
| Revenues | 205,410 | 175,856 | 29,554 | 16.8% | ||||||||
| Cost of goods sold | 179,943 | 152,988 | 26,955 | 17.6% | ||||||||
| Gross profit | 25,467 | 22,868 | 2,599 | 11.4% | ||||||||
| Gross margin | 12.4% | 13.0% | -0.6% | |||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative expenses | 15,399 | 21,052 | (5,653 | ) | -26.9% | |||||||
| Intangible asset amortization | 526 | 446 | 80 | 17.9% | ||||||||
| Other expense, net | 2,800 | 450 | 2,350 | 522.2% | ||||||||
| Foreign exchange loss (gain) | (124 | ) | 113 | (237 | ) | * | ||||||
| Total operating expenses | 18,601 | 22,061 | (3,460 | ) | -15.7% | |||||||
| Operating income | 6,866 | 807 | 6,059 | 750.8% | ||||||||
| Interest expense, net | 5,424 | 6,762 | (1,338 | ) | -19.8% | |||||||
| Other non-operating expense | 603 | 236 | 367 | 155.5% | ||||||||
| Earnings (loss) from continuing operations before | ||||||||||||
| income taxes | 839 | (6,191 | ) | 7,030 | * | |||||||
| Income tax expense | 23 | 23 | - | 0.0% | ||||||||
| Earnings (loss) from continuing operations | 816 | (6,214 | ) | 7,030 | * | |||||||
| Net loss from discontinued operations | - | - | - | * | ||||||||
| Net earnings (loss) | 816 | (6,214 | ) | 7,030 | * | |||||||
| Accretion on preferred stock | - | (137 | ) | 137 | * | |||||||
| Earnings (loss) attributable to common shareholders | 816 | (6,351 | ) | 7,167 | * |
* Percentage not meaningful
Revenues for the quarter ended September 27, 2025 increased by 16.8% to $205.4 million from $175.9 million for the quarter ended September 28, 2024. The change in revenues from the third quarter of 2024 to the third quarter of 2025 was due to the following:
| $ | % | |||||
| 2024 revenues | 175,856 | |||||
| Volume/Mix | 29,557 | 16.8% | ||||
| Price | (3 | ) | 0.0% | |||
| 2025 revenues | 205,410 | 16.8% |
For the quarter ended September 27, 2025, the 16.8% increase in revenues reflected organic volume growth across our beverage, broth, and fruit snack product categories and new product launches. Additionally, for the third quarter of 2025, the unfavorable pricing impact of lower pass-through pricing for certain raw material cost savings was largely offset by incremental pass-through pricing adjustments for tariff costs.
| SUNOPTA INC. | 22 | September 27, 2025 Form 10-Q |
Gross profit increased $2.6 million, or 11.4%, to $25.5 million for the quarter ended September 27, 2025, compared with $22.9 million for the quarter ended September 28, 2024. Gross margin was 12.4% for the quarter ended September 27, 2025, compared with 13.0% for the quarter ended September 28, 2024, a decrease of 60 basis points.
For the third quarters of 2025 and 2024, we incurred temporary third-party haul-off charges of $1.1 million and $2.2 million, respectively, for excess wastewater produced at our Midlothian, Texas, facility, due to temporary volume constraints within our current treatment system. Additionally, for the third quarter of 2025, we incurred inventory write-offs and employee severance costs of $1.4 million in cost of goods sold related to our decision to exit from the packaging of aseptic totes within our Ingredients product portfolio. The exit from this packaging format frees up processing capacity to help service increased volume demand for our more profitable beverage and broth product lines. For the third quarter of 2024, we incurred start-up costs of $4.1 million, mainly related to the scale-up of production at our Midlothian, Texas, facility. Excluding the impact of these charges and costs, adjusted gross margin was 13.6% for the quarter ended September 27, 2025, compared with 16.6% for the quarter ended September 28, 2024, a decrease of 300 basis points. See below under "Non-GAAP Measures" for a reconciliation of adjusted gross margin from gross margin calculated in accordance with U.S. GAAP.
The decrease in adjusted gross margin reflected investments in labor and infrastructure to improve long-term margins, incremental depreciation related to assets recently placed in service but not fully utilized as production ramps up, and the dilutive effect of pass-through tariff pricing. Additionally, we faced certain manufacturing inefficiencies while servicing our increased volume growth, which resulted in higher waste, labor and maintenance costs, together with temporary volume limitations and increased downtime resulting from the excess wastewater issue at our Midlothian, Texas, facility. All of these factors were partially offset by higher sales and production volumes for beverages, broths and fruit snacks driving improved plant utilization.
Operating income increased $6.1 million to $6.9 million for the quarter ended September 27, 2025, compared with $0.8 million for the quarter ended September 28, 2024. The increase in operating income mainly reflected lower employee variable compensation costs based on performance, the $2.6 million increase in gross profit, as described above, and lower professional fees related to operational productivity initiatives. These factors were partially offset by non-cash asset impairment charges of $2.6 million in the third quarter of 2025, related to the decommissioning of the tote filling equipment and the early retirement of certain non-production assets.
(Further details on the changes in revenue, gross profit and operating income are provided in the rollforward tables below.)
Net interest expense decreased by $1.4 million to $5.4 million for the quarter ended September 27, 2025, compared with $6.8 million for the quarter ended September 28, 2024, which reflected reduced borrowings, favorable interest rate movements, and increased interest income.
Other non-operating expense of $0.6 million and $0.2 million for the quarters ended September 27, 2025 and September 28, 2024, respectively, reflected the loss on sale of certain trade receivables to a third-party financial institution under the Receivables Sales Program (as described below under "Liquidity and Capital Resources").
Income taxes were recognized at effective tax rates of 2.7% and (0.4)% for the quarters ended September 27, 2025 and September 28, 2024, respectively. Income tax expense mainly related to federal and state cash taxes. Due to a full valuation allowance against deferred tax assets, we have not recognized any income tax expense or benefit on pre-tax earnings or loss for the quarters ended September 27, 2025 and September 28, 2024. The enactment of the One Big Beautiful Bill Act (the "OBBBA") on July 4, 2025, did not have a material impact on our effective tax rate for the third quarter of 2025.
Earnings from continuing operations were $0.8 million (diluted earnings per share of $0.01) for the quarter ended September 27, 2025, compared with a loss from continuing operations of $6.2 million (diluted loss per share of $0.05) for the quarter ended September 28, 2024.
We realized earnings attributable to common shareholders of $0.8 million (diluted earnings per share of $0.01) for the quarter ended September 27, 2025, compared with a loss attributable to common shareholders of $6.4 million (diluted loss per share of $0.05) for the quarter ended September 28, 2024.
| SUNOPTA INC. | 23 | September 27, 2025 Form 10-Q |
Adjusted earnings from continuing operations were $6.0 million, or $0.05 earnings per diluted share, for the quarter ended September 27, 2025, compared with adjusted earnings from continuing operations of $1.8 million, or $0.02 earnings per diluted share, for the quarter ended September 28, 2024.
Adjusted EBITDA from continuing operations increased $2.8 million, or 13.4%, to $23.6 million for the quarter ended September 27, 2025, compared with $20.8 million for the quarter ended September 28, 2024.
Adjusted earnings from continuing operations and adjusted EBITDA from continuing operations are non-GAAP financial measures. See below under "Non-GAAP Measures" for a reconciliation of adjusted earnings from continuing operations and adjusted EBITDA from continuing operations from earnings (loss) from continuing operations, which we consider to be the most directly comparable U.S. GAAP financial measure.
Rollforward of Revenue, Gross Profit and Operating Income
| For the quarter ended | September 27, 2025 |
September 28, 2024 |
Change | % Change | ||||||||
| Revenues | $ | 205,410 | $ | 175,856 | $ | 29,554 | 16.8% | |||||
| Gross profit | 25,467 | 22,868 | 2,599 | 11.4% | ||||||||
| Gross margin | 12.4% | 13.0% | -0.6% | |||||||||
| Operating income | $ | 6,866 | $ | 807 | $ | 6,059 | 750.8% | |||||
| Operating margin | 3.3% | 0.5% | 2.8% |
Revenues
The table below explains the $29.5 million increase in revenues from $175.9 million for the third quarter of 2024 to $205.4 million for the third quarter of 2025:
| Revenues for the quarter ended September 28, 2024 | $175,856 |
| Sales volume increases for beverages and broths, partially offset by lower pass-through pricing for certain raw material cost savings | 23,098 |
| Higher sales of fruit snacks driven by volume growth, together with incremental pass-through pricing adjustments for tariff costs | 6,456 |
| Revenues for the quarter ended September 27, 2025 | $205,410 |
| SUNOPTA INC. | 24 | September 27, 2025 Form 10-Q |
Gross Profit
The table below explains the $2.6 million increase in gross profit from $22.9 million for the third quarter of 2024 to $25.5 million for the third quarter of 2025:
| Gross profit for the quarter ended September 28, 2024 | $22,868 |
| Decrease in start-up costs related to capital expansion projects | 4,980 |
| Decrease in excess wastewater haul-off charges, related to temporary volume constraints within the current treatment system at our Midlothian, Texas, facility | 1,035 |
| Higher sales and production volumes for beverages, broths, and fruit snacks | 771 |
| Incremental investments in labor and infrastructure to improve long-term margins | (2,301) |
| Inventory write-offs and employee severance costs related to the exit from aseptic totes | (1,368) |
| Incremental depreciation related to capital expansion projects | (518) |
| Gross profit for the quarter ended September 27, 2025 | $25,467 |
Operating Income
The table below explains the $6.1 million increase in operating income from $0.8 million for the third quarter of 2024 to $6.9 million for the third quarter of 2025:
| Operating income for the quarter ended September 28, 2024 | $807 |
| Lower employee bonus accruals based on performance, together with non-recurring consultancy costs related to operational productivity initiatives in the third quarter of 2024 | 5,080 |
| Increase in gross profit, as explained above | 2,599 |
| Lower variable stock-based compensation expense based on performance | 945 |
| Non-cash asset impairment charges in the third quarter of 2025, related to the decommissioned tote filling equipment and the early retirement of certain non-production assets | (2,565) |
| Operating income for the quarter ended September 27, 2025 | $6,866 |
| SUNOPTA INC. | 25 | September 27, 2025 Form 10-Q |
Consolidated Results of Operations for the Three Quarters Ended September 27, 2025 and September 28, 2024
| September 27, 2025 |
September 28, 2024 |
Change | Change | |||||||||
| For the three quarters ended | $ | $ | $ | % | ||||||||
| Revenues | 598,527 | 529,819 | 68,708 | 13.0% | ||||||||
| Cost of goods sold | 514,334 | 454,707 | 59,627 | 13.1% | ||||||||
| Gross profit | 84,193 | 75,112 | 9,081 | 12.1% | ||||||||
| Gross margin | 14.1% | 14.2% | -0.1% | |||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative expenses | 52,322 | 61,170 | (8,848 | ) | -14.5% | |||||||
| Intangible asset amortization | 1,498 | 1,338 | 160 | 12.0% | ||||||||
| Other expense (income), net | 2,744 | (1,654 | ) | 4,398 | * | |||||||
| Foreign exchange loss (gain) | (257 | ) | 1,372 | (1,629 | ) | * | ||||||
| Total operating expenses | 56,307 | 62,226 | (5,919 | ) | -9.5% | |||||||
| Operating income | 27,886 | 12,886 | 15,000 | 116.4% | ||||||||
| Interest expense, net | 15,832 | 19,222 | (3,390 | ) | -17.6% | |||||||
| Other non-operating expense | 1,562 | 236 | 1,326 | 561.9% | ||||||||
| Earnings (loss) from continuing operations before income taxes | 10,492 | (6,572 | ) | 17,064 | * | |||||||
| Income tax expense | 514 | 283 | 231 | 81.6% | ||||||||
| Earnings (loss) from continuing operations | 9,978 | (6,855 | ) | 16,833 | * | |||||||
| Net loss from discontinued operations | - | (1,814 | ) | 1,814 | 100.0% | |||||||
| Net earnings (loss) | 9,978 | (8,669 | ) | 18,647 | * | |||||||
| Accretion on preferred stock | (175 | ) | (401 | ) | 226 | 56.4% | ||||||
| Earnings (loss) attributable to common shareholders | 9,803 | (9,070 | ) | 18,873 | * |
* Percentage not meaningful
Revenues for the three quarters ended September 27, 2025 increased by 13.0% to $598.5 million from $529.8 million for the three quarters ended September 28, 2024. The change in revenues from the first three quarters of 2024 to the first three quarters of 2025 was due to the following:
| $ | % | |||||
| 2024 revenues | 529,819 | |||||
| Volume/Mix | 76,477 | 14.4% | ||||
| Price | (5,463 | ) | -1.0% | |||
| Exit from smoothie bowls | (2,306 | ) | -0.4% | |||
| 2025 revenues | 598,527 | 13.0% |
For the three quarters ended September 27, 2025, the 13.0% increase in revenues reflected a favorable volume/mix impact of 14.4%, partially offset by a 1.0% overall price reduction, together with a 0.4% revenue loss related to our exit from the smoothie bowls category in March 2024. The favorable volume/mix impact reflected organic growth across our beverage, broth and fruit snack product categories and new product launches. The unfavorable pricing impact reflected lower pass-through pricing for certain raw material cost savings, partially offset by incremental pass-through pricing adjustments for tariff costs.
Gross profit increased $9.1 million, or 12.1%, to $84.2 million for the three quarters ended September 27, 2025, compared with $75.1 million for the three quarters ended September 28, 2024. Gross margin was 14.1% for the three quarters ended September 27, 2025, compared with 14.2% for the three quarters ended September 28, 2024, a decrease of 10 basis points.
For the first three quarters of 2025 and 2024, we incurred temporary third-party haul-off charges of $2.4 million and $3.6 million, respectively, for excess wastewater produced at our Midlothian, Texas, facility, due to temporary volume constraints within our current treatment system. Additionally, for the first three quarters of 2025, we incurred inventory write-offs and employee severance costs of $1.4 million in cost of goods sold related to our decision to exit from the packaging of aseptic totes within our Ingredients product portfolio. For the first three quarters of 2024, we incurred start-up costs of $6.8 million, mainly related to the scale-up of production at our Midlothian, Texas, facility, and we incurred product withdrawal costs of $2.1 million. Excluding the impact of these charges and costs, adjusted gross margin was 14.7% for the three quarters ended September 27, 2025, compared with 16.5% for the three quarters ended September 28, 2024, a decrease of 180 basis points. See below under "Non-GAAP Measures" for a reconciliation of adjusted gross margin from gross margin calculated in accordance with U.S. GAAP.
| SUNOPTA INC. | 26 | September 27, 2025 Form 10-Q |
The decrease in adjusted gross margin reflected investments in labor and infrastructure to improve long-term margins, incremental depreciation related to assets recently placed in service but not fully utilized as production ramps up, and the dilutive effect of pass-through tariff pricing. Additionally, we faced certain manufacturing inefficiencies while servicing our increased volume growth, which resulted in higher waste, labor and maintenance costs, together with temporary volume limitations and increased downtime resulting from the excess wastewater issue at our Midlothian, Texas, facility. All of these factors were partially offset by higher sales and production volumes for beverages, broths and fruit snacks driving improved plant utilization.
Operating income increased $15.0 million to $27.9 million for the three quarters ended September 27, 2025, compared with $12.9 million for the three quarters ended September 28, 2024, which mainly reflected the $9.1 million increase in gross profit, as described above, together with lower employee variable compensation costs based on performance and lower employee salary and benefit compensation costs. Additionally, the increase in operating income reflected a favorable foreign exchange impact on peso-denominated restricted cash held in Mexico, and lower professional fees related to operational productivity initiatives. All of these factors were partially offset by non-cash asset impairment charges of $2.6 million in the first three quarters of 2025, related to the decommissioning of the tote filling equipment and the early retirement of certain non-production assets, and the inclusion of a non-recurring gain of $1.8 million on the sale of smoothie bowl product line in the first three quarters of 2024.
(Further details on the changes in revenue, gross profit and operating income are provided in the rollforward tables below.)
Net interest expense decreased by $3.4 million to $15.8 million for the three quarters ended September 27, 2025, compared with $19.2 million for the three quarters ended September 28, 2024, which reflected reduced borrowings, favorable interest rate movements, and increased interest income.
Other non-operating expense of $1.6 million and $0.2 million for the three quarters ended September 27, 2025 and September 28, 2024, respectively, reflected the loss on sale of certain trade receivables to a third-party financial institution under the Receivables Sales Program (as described below under "Liquidity and Capital Resources").
Income taxes were recognized at effective tax rates of 4.9% and (4.3)% for the three quarters ended September 27, 2025 and September 28, 2024, respectively. Income tax expense mainly related to federal and state cash taxes. Due to a full valuation allowance against deferred tax assets, we have not recognized any income tax expense or benefit on pre-tax earnings or loss for the three quarters ended September 27, 2025 and September 28, 2024. The enactment of the OBBBA on July 4, 2025, did not have a material impact on our effective tax rate for the first three quarters of 2025.
Earnings from continuing operations were $10.0 million (diluted earnings per share of $0.08) for the three quarters ended September 27, 2025, compared with a loss from continuing operations of $6.9 million (diluted loss per share of $0.06) for the three quarters ended September 28, 2024.
We recognized a loss from discontinued operations related to our divested frozen fruit business ("Frozen Fruit") of $1.8 million (diluted loss per share of $0.02) for the three quarters ended September 28, 2024.
We realized earnings attributable to common shareholders of $9.8 million (diluted earnings per share of $0.08) for the three quarters ended September 27, 2025, compared with a loss attributable to common shareholders of $9.1 million (diluted loss per share of $0.08) for the three quarters ended September 28, 2024.
Adjusted earnings from continuing operations were $15.7 million, or $0.13 earnings per diluted share, for the three quarters ended September 27, 2025, compared with adjusted earnings from continuing operations of $5.9 million, or $0.05 earnings per diluted share, for the three quarters ended September 28, 2024.
| SUNOPTA INC. | 27 | September 27, 2025 Form 10-Q |
Adjusted EBITDA from continuing operations increased $6.1 million, or 9.7%, to $68.7 million for the three quarters ended September 27, 2025, compared with $62.6 million for the three quarters ended September 28, 2024.
Adjusted earnings from continuing operations and adjusted EBITDA from continuing operations are non-GAAP financial measures. See below under "Non-GAAP Measures" for a reconciliation of adjusted earnings from continuing operations and adjusted EBITDA from continuing operations from earnings (loss) from continuing operations, which we consider to be the most directly comparable U.S. GAAP financial measure.
Rollforward of Revenue, Gross Profit and Operating Income
| For the three quarters ended | September 27, 2025 |
September 28, 2024 |
Change | % Change | ||||||||
| Revenues | $ | 598,527 | $ | 529,819 | $ | 68,708 | 13.0% | |||||
| Gross profit | 84,193 | 75,112 | 9,081 | 12.1% | ||||||||
| Gross margin | 14.1% | 14.2% | -0.1% | |||||||||
| Operating income | $ | 27,886 | $ | 12,886 | $ | 15,000 | 116.4% | |||||
| Operating margin | 4.7% | 2.4% | 2.3% |
Revenues
The table below explains the $68.7 million increase in revenues from $529.8 million for the first three quarters of 2024 to $598.5 million for the first three quarters of 2025:
| Revenues for the three quarters ended September 28, 2024 | $529,819 |
| Sales volume increases for beverages and broths, partially offset by lower pass-through pricing for certain raw material cost savings | 52,647 |
| Higher sales of fruit snacks driven by volume growth, together with incremental pass-through pricing adjustments for tariff costs | 18,367 |
| Impact of the exit from the smoothie bowls category in March 2024 | (2,306) |
| Revenues for the three quarters ended September 27, 2025 | $598,527 |
| SUNOPTA INC. | 28 | September 27, 2025 Form 10-Q |
Gross Profit
The table below explains the $9.1 million increase in gross profit from $75.1 million for the first three quarters of 2024 to $84.2 million for the first three quarters of 2025:
| Gross profit for the three quarters ended September 28, 2024 | $75,112 |
| Higher sales and production volumes for beverages, broths, and fruit snacks | 8,333 |
| Decrease in start-up costs related to capital expansion projects | 7,655 |
| Non-recurring direct costs, net of expected insurance recoveries, related to a voluntary product withdrawal in the second quarter of 2024 | 2,145 |
| Decrease in excess wastewater haul-off charges, related to temporary volume constraints within the current treatment system at our Midlothian, Texas, facility | 1,166 |
| Incremental investments in labor and infrastructure to improve long-term margins | (6,631) |
| Incremental depreciation related to capital expansion projects | (2,219) |
| Inventory write-offs and employee severance costs related to the exit from aseptic totes | (1,368) |
| Gross profit for the three quarters ended September 27, 2025 | $84,193 |
Operating Income
The table below explains the $15.0 million increase in operating income from $12.9 million for the first three quarters of 2024 to $27.9 million for the first three quarters of 2025:
| Operating income for the three quarters ended September 28, 2024 | $12,886 |
| Increase in gross profit, as explained above | 9,081 |
| Favorable foreign exchange impact on peso-denominated restricted cash held in Mexico, together with lower employee bonus accruals based on performance, lower employee salary and benefit compensation costs, and non-recurring consultancy costs related to operational productivity initiatives in the third quarter of 2024 | 5,986 |
| Lower variable stock-based compensation expense based on performance and a reduced equity component within our short-term incentive plan, together with increased forfeitures related to employee turnover in the first quarter of 2025, and the non-recurring impact of the accelerated vesting of certain awards in connection with the retirement of our former Chief Executive Officer in the first quarter of 2024 | 4,298 |
| Non-cash asset impairment charges in the third quarter of 2025, related to the decommissioned tote filling equipment and the early retirement of certain non-production assets | (2,565) |
| Non-recurring gain on sale of smoothie bowl product line in the first quarter of 2024 | (1,800) |
| Operating income for the three quarters ended September 27, 2025 | $27,886 |
Liquidity and Capital Resources
On December 8, 2023, we entered into a five-year Credit Agreement providing for a $180.0 million term loan credit facility (the "Term Loan Credit Facility") and an $85.0 million revolving credit facility (the "Revolving Credit Facility") (collectively, the "Credit Facilities"). As at September 27, 2025, $166.5 million remained outstanding under the Term Loan Credit Facility and we had utilized $39.3 million of the Revolving Credit Facility, including $4.9 million in letters of credit. For more information on the Credit Facilities, see note 7 to the unaudited consolidated financial statements included in this report.
| SUNOPTA INC. | 29 | September 27, 2025 Form 10-Q |
On June 13, 2025, we entered into an uncommitted revolving line of credit facility (the "Line of Credit Facility") under which we may request loans and advances of up to an aggregate amount of $15.0 million to be used solely to finance the purchase, production or sale of broth inventory. The Line of Credit Facility bears interest at a rate that is favorable to the Revolving Credit Facility. As at September 27, 2025, we had drawn the full amount of the Line of Credit Facility. For more information on the Line of Credit Facility, see note 7 to the unaudited consolidated financial statements included in this report.
We are able to strategically manage customer payment terms by selling, from time to time, on a revolving basis, up to $42.0 million aggregate amount of trade receivables of eligible customers to a third-party financial institution in exchange for cash proceeds (the "Receivables Sales Program" - see note 3 to the unaudited consolidated financial statements included in this report). Additionally, we utilize, from time to time, supply chain finance ("SCF") programs offered by some of our major customers that allow us to sell our receivables from those customers to such customers' financial institutions. We utilize our Receivables Sales Program and our customers' SCF programs in order to be paid earlier than our payment terms with the customers provide, and at a discount rate that leverages those customers' favorable credit ratings. Utilizing these programs accelerates our cash flows and improves working capital efficiency, while providing a lower cost access to liquidity when compared to the Revolving Credit Facility. All cash flows associated with these programs are reported as operating activities on our consolidated statements of cash flows.
In connection with our efforts to extend payment terms with our major suppliers to enhance cash flows, we are financing certain purchases of goods and services through extended payables facilities, by which third-party intermediaries settle the supplier invoice on the contractual due date and issue us a short-term note payable for the face amount of the invoice, which we repay, together with interest, at a later date. As at September 27, 2025, we had $4.1 million (December 28, 2024 - $11.1 million) principal amount outstanding under these facilities. Proceeds from, and repayments of, the notes payable associated with these facilities are reported as financing cash flows on our consolidated statements of cash flows.
For the three quarters ended September 27, 2025, we incurred capital expenditures of $21.7 million, including the payment of $4.0 million of capital expenditures related to fiscal 2024 that were included in accounts payable as at December 28, 2024. For fiscal 2025, we estimate total capital expenditures of approximately $30 million to $35 million, mainly consisting of productivity and maintenance projects. We intend to fund the majority of our capital expenditures through operating cash flows and the Revolving Credit Facility, with the balance through long-term finance leases. Additionally, we announced plans to add a new processing and packaging line at our fruit snacks facility in Omak, Washington, to meet existing demand, and we have entered into a finance lease agreement to provide for up to $22 million of financing related to this project. This new line is anticipated to come online in late 2026.
On May 5, 2025, our Board of Directors approved a share repurchase program, authorizing the purchase of up to an aggregate $25 million of our common shares for cancellation through open market transactions. The size and timing of repurchases, if any, will be determined by management and will depend upon a multitude of factors, including our progress towards our leverage target, financial position, capital allocation priorities, market conditions, regulatory requirements, and other considerations. For the three quarters ended September 27, 2025, we utilized $1.0 million of the authorized amount to repurchase 0.2 million common shares.
We believe that our operating cash flows, including the selective use of our Receivables Sales Program and customer SCF programs to improve collection terms, together with available borrowings under the Revolving Credit Facility, the Line of Credit Facility, and extended payable facilities, as well as access to lease financing, will be adequate to meet our operating, investing, and financing needs for the foreseeable future, including the 12-month period following the issuance of our financial statements. However, in order to finance significant investments in our existing businesses, or significant business acquisitions, if any, that may arise in the future, we may need additional sources of cash that we could attempt to obtain through a combination of additional bank or subordinated financing, a private or public offering of debt or equity securities, or the issuance of common stock. There can be no assurance that these types of financing would be available at all or, if so, on terms that are acceptable to us.
| SUNOPTA INC. | 30 | September 27, 2025 Form 10-Q |
Cash Flows
Summarized cash flow information for the three quarters ended September 27, 2025 and September 28, 2024, is as follows:
| For the three quarters ended | |||||||||
| September 27, 2025 |
September 28, 2024 |
Change | |||||||
| $ | $ | $ | |||||||
| Net cash flows provided by (used in): | |||||||||
| Continuing operations: | |||||||||
| Operating activities | 34,124 | 19,221 | 14,903 | ||||||
| Investing activities | (22,864 | ) | (16,464 | ) | (6,400 | ) | |||
| Financing activities | (9,822 | ) | (4,865 | ) | (4,957 | ) | |||
| Discontinued operations | - | 3,990 | (3,990 | ) | |||||
Operating Activities of Continuing Operations
Cash provided by operating activities of continuing operations increased $14.9 million from the first three quarters of 2024 to the first three quarters of 2025. The increase in cash provided mainly reflected higher operating profitability, driven by revenue growth and reduced SG&A spending, together with the receipt of tax refund and insurance proceeds in the first three quarters of 2025, partially offset by a decrease in cash flows from the Receivables Sales Program.
Investing Activities of Continuing Operations
Cash used in investing activities of continuing operations increased $6.4 million from the first three quarters of 2024 to the first three quarters of 2025. The increase in cash used mainly reflected the non-recurring receipt of $6.3 million from the sale of the smoothie bowls product line in the first three quarters of 2024.
Financing Activities of Continuing Operations
Cash used in financing activities of continuing operations increased $5.0 million from the first three quarters of 2024 to the first three quarters of 2025, which mainly reflected reduced borrowings due to higher operating cash flows.
Discontinued Operations
Net cash provided by discontinued operations of $4.0 million for the first three quarters of 2024, reflected proceeds of $6.3 million from the remaining short-term note receivable related to the Frozen Fruit divestiture, partially offset by the settlement of pre-divestiture obligations.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, related revenues and expenses, and disclosure of gain and loss contingencies at the date of the financial statements. The estimates and assumptions made require us to exercise our judgment and are based on historical experience and various other factors that we believe to be reasonable under the circumstances. We continually evaluate the information that forms the basis of our estimates and assumptions as our business and the business environment generally changes.
There have been no material changes to the critical accounting estimates disclosed under the heading "Critical Accounting Estimates" in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the 2024 Form 10-K.
| SUNOPTA INC. | 31 | September 27, 2025 Form 10-Q |
Non-GAAP Measures
Adjusted Gross Margin
Gross margin is a measure of gross profit (equal to revenues less cost of goods sold) as a percentage of revenues. We use a measure of adjusted gross margin that excludes unusual items that are identified and evaluated on an individual basis, which due to their nature or size, we would not expect to occur as part of our normal business on a regular basis. We use the measure of adjusted gross margin to evaluate the underlying profitability of our revenue-generating activities within each reporting period. We believe that disclosing this non-GAAP measure provides users with a meaningful, consistent comparison of our profitability measure for the periods presented. However, the non-GAAP measure of adjusted gross margin should not be considered in isolation or as a substitute for gross margin calculated based on gross profit determined in accordance with U.S. GAAP. The following tables present a reconciliation of adjusted gross margin from reported gross margin calculated in accordance with U.S. GAAP.
| Third Quarter Ended | Revenues | Cost of Goods Sold | Gross Profit | ||||||
| September 27, 2025 | $ | $ | $ | ||||||
| As reported | 205,410 | 179,943 | 25,467 | ||||||
| Adjusted for: | |||||||||
| Wastewater haul-off charges(a) | - | (1,145 | ) | 1,145 | |||||
| Exit from aseptic totes(b) | - | (1,368 | ) | 1,368 | |||||
| As adjusted | 205,410 | 177,430 | 27,980 | ||||||
| Reported gross margin | 12.4% | ||||||||
| Adjusted gross margin | 13.6% | ||||||||
| Third Quarter Ended | Revenues | Cost of Goods Sold | Gross Profit | ||||||
| September 28, 2024 | $ | $ | $ | ||||||
| As reported | 175,856 | 152,988 | 22,868 | ||||||
| Adjusted for: | |||||||||
| Wastewater haul-off charges(a) | - | (2,180 | ) | 2,180 | |||||
| Start-up costs(c) | 360 | (3,787 | ) | 4,147 | |||||
| As adjusted | 176,216 | 147,021 | 29,195 | ||||||
| Reported gross margin | 13.0% | ||||||||
| Adjusted gross margin | 16.6% |
| SUNOPTA INC. | 32 | September 27, 2025 Form 10-Q |
| First Three Quarters Ended | Revenues | Cost of Goods Sold | Gross Profit | ||||||
| September 27, 2025 | $ | $ | $ | ||||||
| As reported | 598,527 | 514,334 | 84,193 | ||||||
| Adjusted for: | |||||||||
| Wastewater haul-off charges(a) | - | (2,440 | ) | 2,440 | |||||
| Exit from aseptic totes(b) | - | (1,368 | ) | 1,368 | |||||
| As adjusted | 598,527 | 510,526 | 88,001 | ||||||
| Reported gross margin | 14.1% | ||||||||
| Adjusted gross margin | 14.7% | ||||||||
| First Three Quarters Ended | Revenues | Cost of Goods Sold | Gross Profit | ||||||
| September 28, 2024 | $ | $ | $ | ||||||
| As reported | 529,819 | 454,707 | 75,112 | ||||||
| Adjusted for: | |||||||||
| Wastewater haul-off charges(a) | - | (3,606 | ) | 3,606 | |||||
| Start-up costs(c) | 421 | (6,401 | ) | 6,822 | |||||
| Product withdrawal costs(d) | - | (2,145 | ) | 2,145 | |||||
| As adjusted | 530,240 | 442,555 | 87,685 | ||||||
| Reported gross margin | 14.2% | ||||||||
| Adjusted gross margin | 16.5% |
Adjusted Earnings
When assessing our financial performance, we use an internal measure of adjusted earnings that excludes specific items recognized in other income or expense, and other unusual items that are identified and evaluated on an individual basis, which due to their nature or size, we would not expect to occur as part of our normal business on a regular basis. We believe that the identification of these excluded items enhances the analysis of the financial performance of our business when comparing those operating results between periods, as we do not consider these items to be reflective of normal business operations. The following tables present a reconciliation of adjusted earnings from earnings (loss) from continuing operations, which we consider to be the most directly comparable U.S. GAAP financial measure.
| Third Quarter Ended | ||||||||||||
| September 27, 2025 | September 28, 2024 | |||||||||||
| Per Share |
Per Share |
|||||||||||
| $ | $ | $ | $ | |||||||||
| Earnings (loss) from continuing operations | 816 | (6,214 | ) | |||||||||
| Accretion on preferred stock | - | (137 | ) | |||||||||
| Earnings (loss) from continuing operations attributable to common shareholders | 816 | 0.01 | (6,351 | ) | (0.05 | ) | ||||||
| Adjusted for: | ||||||||||||
| Wastewater haul-off charges(a) | 1,145 | 2,180 | ||||||||||
| Exit from aseptic totes(b) | 1,423 | - | ||||||||||
| Start-up costs(c) | - | 4,980 | ||||||||||
| Unrealized foreign exchange loss (gain) on restricted cash(e) | (222 | ) | 525 | |||||||||
| Asset impairment charges(f) | 2,565 | - | ||||||||||
| Other(h) | 235 | 450 | ||||||||||
| Adjusted earnings from continuing operations | 5,962 | 0.05 | 1,784 | 0.02 | ||||||||
| SUNOPTA INC. | 33 | September 27, 2025 Form 10-Q |
| First Three Quarters Ended | ||||||||||||
| September 27, 2025 | September 28, 2024 | |||||||||||
| Per Share |
Per Share |
|||||||||||
| $ | $ | $ | $ | |||||||||
| Earnings (loss) from continuing operations | 9,978 | (6,855 | ) | |||||||||
| Accretion on preferred stock | (175 | ) | (401 | ) | ||||||||
| Earnings (loss) from continuing operations attributable to common shareholders | 9,803 | 0.08 | (7,256 | ) | (0.06 | ) | ||||||
| Adjusted for: | ||||||||||||
| Wastewater haul-off charges(a) | 2,440 | 3,606 | ||||||||||
| Exit from aseptic totes(b) | 1,423 | - | ||||||||||
| Start-up costs(c) | - | 7,655 | ||||||||||
| Product withdrawal costs(d) | - | 2,145 | ||||||||||
| Unrealized foreign exchange loss (gain) on restricted cash(e) | (765 | ) | 1,363 | |||||||||
| Asset impairment charges(f) | 2,565 | - | ||||||||||
| Gain on sale of smoothie bowls product line(g) | - | (1,800 | ) | |||||||||
| Other(h) | 179 | 146 | ||||||||||
| Adjusted earnings from continuing operations | 15,645 | 0.13 | 5,859 | 0.05 | ||||||||
Adjusted EBITDA
We use a measure of adjusted EBITDA from continuing operations when assessing the performance of our operations, which we believe is useful to users' understanding of our operating profitability because it excludes non-operating expenses, such as interest, loss on sale of receivables, and income taxes, as well as non-cash expenses, such as depreciation, amortization, and stock-based compensation. In addition, our measure of adjusted EBITDA excludes other unusual items that affect the comparability of our operating performance, as identified in the preceding determination of adjusted earnings from continuing operations. We also use this measure of adjusted EBITDA to assess operating performance in connection with our employee incentive programs.
Although we use adjusted EBITDA as a measure to assess the performance of our business and for the other purposes set forth above, this measure has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for an analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:
- adjusted EBITDA from continuing operations does not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness;
- adjusted EBITDA from continuing operations excludes the discount taken on trade receivables sold to a third-party factor, which is a strategic means for us to improve working capital efficiency, while reducing our indebtedness and interest expense;
- adjusted EBITDA from continuing operations does not include the payment or recovery of income taxes, which is a necessary element of our operations;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA from continuing operations does not reflect any cash requirements for such replacements; and
- adjusted EBITDA from continuing operations does not include non-cash stock-based compensation, which is an important component of our total compensation program for employees and directors.
Because of these limitations, adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business.
The following tables present a reconciliation of adjusted EBITDA from continuing operations from earnings (loss) from continuing operations, which we consider to be the most directly comparable U.S. GAAP financial measure.
| SUNOPTA INC. | 34 | September 27, 2025 Form 10-Q |
| Third Quarter Ended | ||||||
| September 27, 2025 | September 28, 2024 | |||||
| $ | $ | |||||
| Earnings (loss) from continuing operations | 816 | (6,214 | ) | |||
| Interest expense, net | 5,424 | 6,762 | ||||
| Loss on sale of receivables* | 603 | 236 | ||||
| Income tax expense | 23 | 23 | ||||
| Depreciation and amortization | 9,987 | 9,319 | ||||
| Stock-based compensation | 1,581 | 2,527 | ||||
| Adjusted for: | ||||||
| Wastewater haul-off charges(a) | 1,145 | 2,180 | ||||
| Exit from aseptic totes(b) | 1,423 | - | ||||
| Start-up costs(c) | - | 4,980 | ||||
| Unrealized foreign exchange loss (gain) on restricted cash(e) | (222 | ) | 525 | |||
| Asset impairment charges(f) | 2,565 | - | ||||
| Other(h) | 235 | 450 | ||||
| Adjusted EBITDA from continuing operations | 23,580 | 20,788 | ||||
| First Three Quarters Ended | ||||||
| September 27, 2025 | September 28, 2024 | |||||
| $ | $ | |||||
| Earnings (loss) from continuing operations | 9,978 | (6,855 | ) | |||
| Interest expense, net | 15,832 | 19,222 | ||||
| Loss on sale of receivables* | 1,562 | 236 | ||||
| Income tax expense | 514 | 283 | ||||
| Depreciation and amortization | 29,673 | 27,005 | ||||
| Stock-based compensation | 5,316 | 9,615 | ||||
| Adjusted for: | ||||||
| Wastewater haul-off charges(a) | 2,440 | 3,606 | ||||
| Exit from aseptic totes(b) | 1,423 | - | ||||
| Start-up costs(c) | - | 7,655 | ||||
| Product withdrawal costs(d) | - | 2,145 | ||||
| Unrealized foreign exchange loss (gain) on restricted cash(e) | (765 | ) | 1,363 | |||
| Asset impairment charges(f) | 2,565 | - | ||||
| Gain on sale of smoothie bowls product line(g) | - | (1,800 | ) | |||
| Other(h) | 179 | 146 | ||||
| Adjusted EBITDA from continuing operations | 68,717 | 62,621 | ||||
* Included in other non-operating expense.
Footnotes
(a) Reflects third-party haul-off charges for excess wastewater produced at our Midlothian, Texas, facility, due to temporary volume constraints within our current treatment system.
(b) Reflects costs related to the exit from the packaging of aseptic totes within our Ingredients product portfolio. Costs incurred reflect inventory write-offs of $1.3 million recorded in cost of goods sold, and employee severance costs of $0.1 million recorded in cost of goods sold and SG&A expenses.
(c) For the third quarter and first three quarters of 2024, start-up costs recorded as a reduction to revenues and an increase to cost of goods sold were related to the scale-up of production over the course of fiscal 2024 at our Midlothian, Texas, facility. Additionally, for the third quarter and first three quarters of 2024, start-up costs included $0.8 million of professional fees related to operational productivity initiatives, which are recorded in SG&A expenses.
| SUNOPTA INC. | 35 | September 27, 2025 Form 10-Q |
(d) Reflects certain direct costs, net of expected insurance recoveries, related to the voluntary withdrawal from customers in the second quarter of 2024 of certain batches of aseptically-packaged products.
(e) Reflects unrealized foreign exchange (gains) or losses associated with peso-denominated restricted cash held in Mexico.
(f) Reflects non-cash impairment charges related to the decommissioned tote filling equipment and the early retirement of certain non-production assets, which are recorded in other expense.
(g) Reflects the pre-tax gain on sale of the smoothie bowls product line in the first quarter of 2024, which is recorded in other income.
(h) For the third quarter and first three quarters of 2025, other mainly reflects net losses on legal settlements, partially offset by a gain on sale of property, plant and equipment. For the third quarter and first three quarters of 2024, other mainly reflects demolition costs related to our former roasted snack facility, which was abandoned in 2018, partially offset by legal settlement gains. These other amounts are recorded in other expense or income.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of the 2024 Form 10-K. There have been no material changes to our exposures to market risks since December 28, 2024.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management has established disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within time periods specified in the Securities and Exchange Commission's rules and forms. Such disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), we conducted an evaluation of our disclosure controls and procedures (as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act) as of the end of the period covered by this quarterly report. Based on this evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective as of September 27, 2025.
Changes in Internal Control Over Financial Reporting
Our management, with the participation of our CEO and CFO, has evaluated whether any change in our internal control over financial reporting (as such term is defined under Rule 13a-15(f) promulgated under the Exchange Act) occurred during the quarter ended September 27, 2025. Based on that evaluation, management concluded that there were no changes in our internal control over financial reporting during the quarter ended September 27, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| SUNOPTA INC. | 36 | September 27, 2025 Form 10-Q |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of legal proceedings, see note 14 to the unaudited consolidated financial statements included under Part I, Item 1 of this report.
Item 1A. Risk Factors
Certain risks associated with our operations are discussed in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 28, 2024, and in Part II, Item 1A "Risk Factors" of our Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission on May 7, 2025 and August 6, 2025. Except as set forth below, there have been no material changes to the previously reported risk factors as of the date of this quarterly report. Our previously reported risk factors should be carefully reviewed in connection with an evaluation of our Company.
Risks Related to Our Company, Business and Operations
The imposition of new or increased tariffs could have a material adverse effect on our business, financial condition and results of operations
In March 2025, the U.S. imposed 25% additional tariffs on goods from Canada and Mexico that are not exempt under the U.S.-Mexico-Canada Agreement ("USMCA"). Effective August 1, 2025, the tariff rate on those goods from Canada was increased to 35%. We source a portion of our raw material ingredients and packaging globally, including from Canada and Mexico. Additionally, a portion of our total revenues are generated from the sale of fruit snack products imported into the U.S. from our Niagara, Ontario, facility. As a result, the imposition of tariffs by the U.S. will result in additional costs for us, as well as our suppliers, and increase the landed cost in the U.S. of our products produced in Canada that are not exempt under the USMCA, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, the imposition of tariffs, the uncertainty about tariff implementation and tariff rates, and the actual or potential imposition of retaliatory tariffs could weaken the U.S. economy, which may result in lower demand for our products. Further, the potential inflationary impact of tariffs may also slow economic growth and reduce household savings, which may impact the level of consumption of certain of our products in the event consumers reduce overall spending and/or shift to lower-cost product alternatives. Any of these outcomes could have a material adverse effect on our business, financial condition and results of operations
Item 5. Other Information
(c) Insider Trading Arrangements
| SUNOPTA INC. | 37 | September 27, 2025 Form 10-Q |
Item 6. Exhibits
The following exhibits are included as part of this report.
| Exhibit | Description |
| 31.1* | Certification by Brian Kocher, Chief Executive Officer, pursuant to Rule 13a - 14(a) under the Securities Exchange Act of 1934, as amended. |
| 31.2* | Certification by Greg Gaba, Chief Financial Officer, pursuant to Rule 13a - 14(a) under the Securities Exchange Act of 1934, as amended. |
| 32* | Certifications by Brian Kocher, Chief Executive Officer, and Greg Gaba, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350. |
| 101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
| SUNOPTA INC. | 38 | September 27, 2025 Form 10-Q |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SUNOPTA INC. | |
| Date: November 5, 2025 | /s/ Greg Gaba |
| Greg Gaba | |
| Chief Financial Officer (Authorized Signatory and Principal Financial Officer) |
| SUNOPTA INC. | 39 | September 27, 2025 Form 10-Q |
