Our Mission
To deliver customized supply chain solutions that fuel and sustain our customers' success.
Our Vision
To be North America's leading solutions provider of innovative, sustainable, better-for-you beverages,
broths and snacks.
FINANCIAL HIGHLIGHTS
All dollar amounts in U.S. $ millions, except per share amounts
2024
2023
2022
Revenue
723.7
626.7
591.4
Gross profit
96.3
86.0
98.1
Gross margin
13.3%
13.7%
16.6%
Adjusted Gross margin (1)
16.4%
17.2%
17.6%
Operating income
15.6
5.0
16.3
Earnings (loss) from continuing operations attributable to common shareholders
(11.5)
(25.2)
2.3
Loss per share from continuing operations attributable to common shareholders
($0.10)
($0.24)
($0.01)
Loss from discontinued operations
(5.9)
(153.6)
(8.7)
Loss per share from discontinued operations
($0.05)
($1.34)
($0.08)
Adjusted earnings from continuing operations (2)
13.4
5.8
5.7
Adjusted earnings from continuing operations per diluted share (2)
$0.11
$0.05
$0.05
Adjusted EBITDA from continuing operations (3)
88.7
75.9
62.1
Total assets (4)
668.5
661.2
561.9
Total debt
265.2
263.5
308.5
Working capital (5)
17.9
43.0
42.6
Net cash flows from operating activities of continuing operations
52.3
3.6
30.7
Net cash flows from investing activities of continuing operations
(25.0)
(46.5)
(121.0)
(1)
Refer to page 33 of the 2024 Form 10-K for a tabular reconciliation of adjusted gross margin to the most directly
comparable U.S. GAAP measure.
(2) Refer to page 34 of the 2024 Form 10-K for a tabular reconciliation of adjusted earnings from continuing operations and
adjusted earnings from continuing operations per diluted share to the most directly comparable U.S. GAAP measure.
(3) Refer to page 35 of the 2024 Form 10-K for a tabular reconciliation of adjusted EBITDA from continuing operations to the
most directly comparable U.S. GAAP measure.
(4) Total assets excludes current and non-current assets held for sale.
(5) Working capital is defined as current assets less current liabilities, excluding cash and cash equivalents, current assets
held for sale, current portion of long-term debt and current liabilities held for sale.
FIVE KEY INVESTMENT HIGHLIGHTS:
STRONG, FOCUSED BUSINESS SERVING GROWING CATEGORIES:
*includes ingredients
TO OUR SHAREHOLDERS
When I joined the company in January 2024, I was incredibly excited about
our asset base and the potential to leverage our deployed equipment and
facilities. Today, I am even more excited and very proud of the progress our
employees have delivered over the past year.
To succinctly wrap up 2024, volume growth drove significant revenue
growth; we completed our capital expansion efforts that were started in
2022 and 2023; we invested in sustainable supply chain process
improvements and made enough progress in expanding the capacity of our
existing assets that we could satisfy a 21% expansion in volume, grow
Adjusted EBITDA, improve Operating Income and increase Free Cash Flow.
As we turn to 2025, based on what we seeوnot hopeوwe expect volume
driven revenue growth, expanding margins and increasing Adjusted
EBITDA. Our expected revenue growth stems from two powerful forces; the
steadily growing categories we support and the robust suite of solutions we
provide to our customers. Shelf stable plant-based milks, broths, ready-to-
drink protein shakes and better-for-you fruit snacks are all growing
categories. Our customer base is comprised of blue-chip brands that are
outperforming the categories in which they compete.
We have numerous competitive advantages including our national
manufacturing footprint, broad packaging format capabilities, production
redundancy across facilities and a world-class R&D team. We leverage these
strengths to solve customer challengesوwhen they win, we win. This
positions us to grow share with existing and new customers and participate
in total addressable market expansion opportunities. The investments
made in 2024 have positioned us for success in 2025, both operationally and
structurally without a need for significant capital investment until late 2026.
With this strategy, Free Cash Flow will continue to be strong, enabling us to
further de-lever and strengthen our balance sheet. Our management goals
are simple: grow the business, make money and spend capital wisely. To
reinforce that philosophy, we revised each of our executivesٚ incentive
metrics for short- and long-term performance. All incentive compensation
will be determined by achieving a combination of Adjusted EBITDA,
Revenue Growth and Return on Invested Capital.
At SunOpta, we are committed to being a solutions provider for our
customers, fueling their growth with exceptional quality products and
service. Our employees take pride in their work, support one another and
care for the communities where they live and work. We continuously seek
better, more efficient and sustainable ways to manufacture products
without compromising quality or integrity. Innovation and collaboration
drive us, as does our commitment to sustainability. By embedding this
commitment throughout our organization, we ensure our actions consider
environmental impact, evolving regulations and stakeholder needs.
2025 OUTLOOK:
As we look ahead to 2025, we foresee more volume-fueled growth, expanding margins, increasing Adjusted
EBITDA and continued strengthening of the balance sheet. We expect to drive our revenue growth with
the growing categories we support and with the suite of solutions we provide to our customers.
Our 2025 Priorities:
Relentless pursuit of supply chain efficiencies to improve profitability and generate fuel for growth
Deliver innovative solutions to gain share with existing customers, acquire new customers and
expand our total addressable market
Increase return on invested capital through disciplined capital allocation and management
We closed the books on 2024 with strong resultsوWe
grew revenue, increased Adjusted EBITDA, finalized our
Midlothian, Texas plantٚs ٗstart-up٘ phase, invested in our
supply chain to improve output and deleveraged the
balance sheet. We did what we said we were going to
do. Based on what we can seeوnot what we hopeو
we expect to continue our growth trajectory into 2025
and beyond, leveraging our existing asset base by
driving
improved
manufacturing
efficiencies
and
increasing
return
on
invested
capital
while
maintaining
the
highest
food safety and quality
standards.
Sincerely,
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 2024
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-34198
SUNOPTA INC.
(Exact Name of Registrant as Specified in Its Charter)
CANADA
Not Applicable
(Jurisdiction of Incorporation)
(I.R.S. Employer Identification No.)
7078 Shady Oak Road
Eden Prairie, Minnesota, 55344
(Address of Principal Executive Offices)
(952) 820-2518
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares
STKL
The Nasdaq Stock Market LLC
Common Shares
SOY
Toronto Stock Exchange
Securities registered pursuant Section to 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of ³large accelerated filer,´ ³accelerated filer,´ ³smaller reporting company,´
and ³emerging growth company´ in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management¶ s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. Yes
No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant¶s executive officer during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
No
Aggregate market value of the common equity held by non-affiliates of the registrant, computed using the closing price of $5.40 as
reported on the NASDAQ Global Select Market for the registrant¶s common shares on June 29, 2024, the last business day of the
registrant¶s most recently completed second fiscal quarter, was $508.7 million. Common shares beneficially owned by Oaktree Fund GP,
LLC and held by reporting directors and officers of the registrant have been excluded from this calculation because such persons may be
deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The number of shares of the registrant¶s common stock outstanding as of February 21, 2025 was 117,208,602.
Documents Incorporated by Reference: Portions of the SunOpta Inc. Definitive Proxy Statement for the 2025 Annual Meeting of
Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K.
SUNOPTA INC.
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December 28, 2024 Form 10-K
SUNOPTA INC.
FORM 10-K
For the year ended December 28, 2024
TABLE OF CONTENTS
Basis of Presentation
2
Forward-Looking Statements
2
PART I
Item 1
Business
4
Item 1A
Risk Factors
9
Item 1B
Unresolved Staff Comments
18
Item 1C
Cybersecurity
18
Item 2
Properties
19
Item 3
Legal Proceedings
19
Item 4
Mine Safety Disclosures
19
PART II
Item 5
Market for Registrant¶s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
19
Item 6
[Reserved]
20
Item 7
Management¶s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
36
Item 8
Financial Statements and Supplementary Data
37
Item 9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
37
Item 9A
Controls and Procedures
38
Item 9B
Other Information
40
Item 9C
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
40
PART III
Item 10
Directors, Executive Officers and Corporate Governance
40
Item 11
Executive Compensation
40
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
40
Item 13
Certain Relationships and Related Transactions, and Director Independence
41
Item 14
Principal Accounting Fees and Services
41
PART IV
Item 15
Exhibits, Financial Statement Schedules
41
Item 16
Form 10-K Summary
41
SUNOPTA INC.
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December 28, 2024 Form 10-K
Basis of Presentation
Except where the context otherwise requires, all references in this Annual Report on Form 10-K for the fiscal year ended
December 28, 2024 (³Form 10-K´) to ³SunOpta,´ the ³Company,´ ³we,´ ³us,´ ³our´ 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 (³U.S.´) dollars (³$´), except per
share amounts, unless otherwise stated.
Forward-Looking Statements
This Form 10-K 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 ³anticipate,´ ³estimate,´ ³target,´ ³intend,´ ³project,´ ³potential,´
³predict,´ ³continue,´ ³believe,´ ³expect,´ ³can,´ ³could,´ ³would,´ ³should,´ ³may,´ ³might,´ ³plan,´ ³will,´ ³budget,´
³forecast,´ 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; the expected
impact of the inflationary cost environment on our business, including raw material, packaging, labor, energy, fuel and
transportation costs; the expected impact of pricing actions on sales volumes and gross margins; the expected impact of cost
containment measures and productivity initiatives; our expectations regarding customer demand, consumer preferences,
competition, sales pricing, availability and pricing of raw material inputs, and timing and cost to complete capital expansion
projects; our ability to successfully execute on our capital investment plans, and the viability of those plans; disruptions or
inefficiencies in the supply chain; 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, planned capital expenditures; and 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 in the second quarter of 2024; 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. Accordingly, there are important factors that could cause our actual results to differ materially from
our expectations and predictions. We believe these factors include, but are not limited to, the impact of global economic
conditions, including inflation, interest rates, and energy availability; the potential for economic disruption due to geopolitical
events and health crises; our ability to increase pricing to offset, or partially offset, inflationary pressures on the cost of our
products; issues affecting our supply chain and procurement of raw materials, including fluctuations in the cost and availability
of raw and packaging materials; our ability to increase pricing or absorb additional expenses in response to the potential impact
of new or increased tariffs; labor shortages, employee turnover, and labor cost increases; business interruptions due to weather
events, natural disasters, other unexpected events or public health crises; the potential loss of one or more of our key customers;
our ability to identify, interpret and react to changes in consumer preferences and demand; our ability to effectively respond
to competitive factors, including product innovations of our competitors; a failure to realize some or all of the anticipated
benefits from our capital investment plans; a failure to successfully integrate or divest businesses, operations, or assets;
impairments of long-lived assets or goodwill; a failure of our internal control over financial reporting; occurrence of product
recall and withdrawal events; results of litigation and other legal proceedings; changes in government regulations and policies;
infringements of our intellectual property; risks associated with our information technology systems, including the threat of
data breaches and cyber-attacks; the impacts of severe weather events, natural disasters, and climate change on the supply and
cost of raw and packaging materials, as well as energy, fuel and water; the availability and pricing of non-GMO and organic
ingredients; global economic and financial conditions on availability of financing and interest rates; the effects of increased
debt levels and service obligations on our ability to borrow or the cost of any such additional borrowing on our ability to react
to certain economic and industry conditions; and other risks described herein under Part I, Item 1A ³Risk Factors.´
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
SUNOPTA INC.
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December 28, 2024 Form 10-K
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.
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December 28, 2024 Form 10-K
PART I
Item 1. Business
The Company
SunOpta Inc. was organized under the laws of Canada in 1973. We operate as an innovation partner, solutions provider, and
value-added manufacturer for leading brands, and produce our own propriety brands, including SOWN®, Dream® and West
Life. The core of our product portfolio is a range of plant-based beverages, including oat, almond, soy, coconut and rice milks
and creamers, which have a favorable climate profile relative to traditional dairy milks in terms of lower carbon emissions and
water usage. Our plant-based offerings include non-genetically modified (³non-GMO´), organic, and gluten-free products.
Additionally, our consumer products portfolio includes fruit snacks, nutritional beverages, broths, and teas. We also produce
liquid and dry ingredients for internal use and for sale to other food and beverage manufacturers.
Our employees and production facilities are principally located in the U.S., as well as Canada. Our corporate headquarters is
located in Eden Prairie, Minnesota, together with our innovation center and pilot plant.
Customers and Competition
We sell our products through various distribution channels, including foodservice operators, grocery retailers and club stores,
branded food companies, and food manufacturers, located principally in the U.S., as well as e-commerce channels. We
generally conduct our business with customers based on purchase orders or pursuant to contracts that are terminable by either
party following a designated notice period. However, some of our contracts may extend for several years and/or include volume
purchase commitments. A relatively limited number of customers account for a large percentage of our revenues. In 2024, our
ten largest customers accounted for approximately 80% of our revenues.
We compete with major branded and private-label food manufacturers that have significantly greater resources and brand
recognition than we do. However, we believe that the strategic locations of our manufacturing and distribution facilities, our
in-house processing and packaging capabilities, and our innovation center and pilot plant, allows us to compete effectively. For
sales of private label and co-manufactured products, the principal competitive factors are product quality, reliability of service,
innovation, and price. For sales of our own branded products, the principal competitive factors are consumer brand recognition
and loyalty, product quality, promotion, and price.
Raw Materials
Our raw materials primarily consist of ingredients and packaging materials. Principal ingredients used in our products include
oats, almonds, soybeans, coconut, apple, and sugar. For critical raw materials, we identify and qualify alternate sources of
supply, where possible. Ingredients are subject to fluctuations in market price caused by weather, growing and harvesting
conditions, inflation, commodity speculation, and other factors beyond our control. Where possible, we mitigate market price
volatility by entering into annual purchase arrangements with our suppliers and by incorporating pass-through pricing
adjustment clauses into our contracts with customers. The costs of raw materials used in our products also fluctuate due to
energy costs, fuel prices, labor availability, freight and storage demand, and changes in tariff rates. Additionally, certain
jurisdictions have either enacted or are considering enacting extended producer responsibility (³EPR´) laws and regulations
that require manufacturers to be responsible for the collection, recycling, and disposal of the packaging materials they introduce
into the market. Volatility in the cost of our raw materials can adversely affect our performance, as price changes may lag
behind changes in costs, and we are not always able to adjust our pricing to reflect changes in raw material costs due to
competitive pressures.
We rely on our packaging suppliers to ensure delivery of often unique, portable, and convenient consumer packaging formats.
In our plant-based beverage processing facilities, we specialize in the use of Tetra Pak processing and packaging equipment in
a variety of package sizes, and an array of opening types and extended shelf-life options. Over 95% of our packaging by weight
is recyclable, and we are committed to working with our suppliers to innovate and develop new packaging technologies to
further reduce the impact on the environment, while maintaining the quality and safety of our products.
Natural gas and electricity are the primary sources of energy used to power our plants and processing equipment, and water is
the principal ingredient in many of our products and is essential to our production processes.
Diesel fuel is used in connection with the distribution of our products, and we rely on third-party transportation providers to
deliver raw materials, as well as our products to our customers.
SUNOPTA INC.
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December 28, 2024 Form 10-K
Seasonality
Overall, the demand for most of our products does not typically fluctuate significantly in any particular season; however, broth
sales are generally higher in the first and fourth quarters of each year.
Product Development
Our 24,000 square foot innovation center and pilot plant located in Eden Prairie, Minnesota, supports our product development
team of 21 highly trained and experienced food scientists and technologists that are dedicated to the development of innovative
food and beverage offerings and addressing product development opportunities for our customers. These opportunities include
new and custom formulations, innovations in packaging formats, and new production processes and applications. Applications
and technical support provided to our customers include all aspects of product development from concept to commercial launch,
as well as ongoing manufacturing and processing support.
Trademarks
We market our own consumer brands under trademarks that we own, including SOWN, Dream and West Life. While we
consider these trademarks to be valuable to the marketing and sale of our proprietary brands, we do not consider any trademark
to be of such material importance that its absence would cause a material disruption of our business.
Human Capital
At SunOpta, we develop employee programs, benefits, and compensation to align with four pillars of well-being: physical,
financial, social, and emotional. SunOpta¶s goal is to offer applicable benefits and experience for employees based on their
stage in life and personal circumstances. Our Human Capital Management strategy is based on our goal of ³Putting the YOU
in SunOpta.´ Examples of these initiatives are:
Offering a competitive compensation and benefit package that includes ³choices´ for each employee to select which
works best for them. Our comprehensive benefits package includes health insurance, company-paid life, accident, and
disability insurance, 401(k), employee stock purchase plan, paid time off, paid parental and maternity leave programs,
flexible schedules, caregiving benefits, voluntary benefits (such as, pet insurance, identification theft, legal services,
hospital indemnity, and critical illness) and a tuition reimbursement program. Our regular, full-time employees receive
two additional personal holidays called ³You Days,´ which can be taken in recognition of an employee¶s birthday and
work anniversary date. The mental health benefit for our employees has been successful in providing faster access to
care at the individual level of need for employees and their families. In 2024, as part of our focus on financial wellness,
eligibility for our 401(k) plan allows employees to participate following one month of service, so employees can
realize the benefits of planning for retirement with employer match earlier in their tenure.
We believe it is key to give back to the communities in which we live and work as evidenced by our community
service and volunteerism program, which we refer to as ³SunOpta Cares.´ This program provides 24 hours of paid
time off for our employees to volunteer with community programs that align with their values. Throughout the year,
employees have several opportunities to donate talent and gifts to local charitable organizations.
Talent management and growth is instrumental in developing a sustainable workforce. We provide various
opportunities for our employees to learn and grow within SunOpta through individual development plans, on-the-job
training, special project assignments, monthly safety training and interpersonal skills learning events. In 2024, we had
two cohorts of employees (Director and Vice President level) as participants in the Leadership Impact Program. These
cohorts gathered quarterly throughout the year to focus on leadership skills, strategy, professional growth and
completed capstone projects to further the business. In addition, we expanded our Foundational Manager Program to
all of our plant locations. This offering was created for managers and supervisors with a focus on cross-functional
leadership, effective communication, leading through change, influencing with integrity, negotiating, and creative
problem solving. We are committed to identifying and developing the talents of our next generation leaders. On an
annual basis, we conduct talent assessments across the organization and succession planning for our most critical roles
within the organization to identify high potential employees, gaps in capabilities or skills, and bench strength.
We believe in the power of diversity in thought, perspectives, opinions, and experiences, as it is key to our success.
By providing learning events regarding inclusion and belonging for our employees they are better equipped to
understand how we can all work together, and be better, by embracing our differences. We foster an inclusive
workplace culture that emphasizes mutual respect, collaboration, and merit-based achievement, where employees feel
SUNOPTA INC.
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December 28, 2024 Form 10-K
valued and encouraged to contribute to the Company¶s success. We recognize and support activities and initiatives
representative of our workforce such as celebrations of Black History month, Hispanic Heritage month, PRIDE,
National Native American Heritage month, and our Women¶s Leadership Program. We continue to foster our Hispanic
and Women¶s Employee Resource Groups by offering programming for awareness, education and collaboration.
We encourage our employees to be guided by our MVBs (Most Valued Behaviors) of speed, dedication, problem solving,
passion, entrepreneurship, and customer centricity. We have a peer recognition program which allows employees to recognize
others who are demonstrating our MVBs. Our leaders also recognize employees through our quarterly awards program.
SunOpta conducts an organizational health survey annually to check the pulse of our workforce and look for areas of
improvement through the lens of all our employees. We engage in communication efforts such as quarterly town halls and
monthly all-company huddles that we believe help employees feel they are a part of SunOpta as a whole, not just their individual
department or location.
As of December 31, 2024, we employed 1,248 full-time employees in North America. Our average employee has nearly five
years of service. In 2024, our voluntary turnover was 16.3% (down from 20.2% in 2023) across the Company. We continue to
focus on increasing employee retention by implementing retention programs and initiatives to increase employee engagement.
Employee health and safety is paramount to our success. In addition to our safety training and initiatives at our manufacturing
facilities, we track our Total Recordable Incident Rate (TRIR) which ended the year at 2.25.
Environmental, Social and Governance
We are committed to incorporating environmental, social and governance (³ESG´) principles into our business strategies and
organizational culture. The Corporate Governance Committee of our Board of Directors provides oversight on ESG matters.
Details on our ESG commitments and progress are set out in our most recent ESG report (available at
sunopta.com/sustainability), which shall not be deemed to be a part of this Form 10-K or incorporated into any of our other
filings made with the U.S. Securities and Exchange Commission (the ³SEC´) or Canadian Securities Administrators (the
³CSA´).
Regulations
We are subject to a wide range of governmental regulations and policies in the U.S. and Canada. These laws, regulations and policies
are implemented, as applicable in each jurisdiction, on the national, federal, state, provincial, and local levels. For example, we are
affected by laws and regulations related to seed, fertilizer, and pesticides; the purchasing, harvesting, transportation, and
warehousing of agricultural products; the processing, packaging, and sale of food and beverages, including wholesale operations;
and product labeling and marketing, food safety and food defense. We are also affected by government-sponsored price supports,
acreage set aside programs, and a number of environmental regulations.
U.S. Regulations
Our activities in the U.S. are subject to regulation by various governmental agencies, including the Food and Drug Administration
(³FDA´), the Federal Trade Commission (³FTC´), the Environmental Protection Agency (³EPA´), the U.S. Department of
Agriculture (³USDA´), Occupational Safety and Health Administration (³OSHA´), and the Departments of Commerce and Labor,
as well as voluntary regulation by other bodies. Various state and local agencies also regulate our activities.
USDA National Organic Program and Similar Regulations
We manufacture and distribute a number of organic products that are subject to the standards set forth in the Organic Foods
Production Act and the regulations adopted thereunder by the National Organic Standards Board. In addition, our organic products
may be subject to various state regulations. We believe that we are in material compliance with the organic regulations applicable
to our business, and we maintain an organic testing and verification process. Generally, organic food products are produced using:
agricultural management practices intended to promote and enhance ecosystem health;
ingredients produced without genetically engineered seeds or crops, sewage sludge, long-lasting pesticides, herbicides,
or fungicides; and
food processing practices intended to protect the integrity of the organic product and disallow irradiation, genetically
modified organisms, or synthetic preservatives.
SUNOPTA INC.
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December 28, 2024 Form 10-K
After becoming certified, organic operations must retain records concerning the production, harvesting, and handling of
agricultural products that are to be sold as organic for a period of five years. Any organic operation found to be in violation of
the USDA organic regulations is subject to potential enforcement actions, which can include financial penalties or suspension
or revocation of their organic certificate.
Food Safety, Labeling and Packaging Regulations
As a manufacturer and distributor of food products, we are subject to the Federal Food, Drug and Cosmetic Act, the Fair
Packaging and Labeling Act and regulations promulgated thereunder by the FDA and the FTC. This regulatory framework
governs the manufacture (including composition and ingredients), labeling, packaging, and safety of food in the U.S. state and
local statutes and regulations may impose additional food safety, labeling, and packaging requirements. For instance, the
California Safe Drinking Water and Toxic Enforcement Act of 1986 (commonly referred to as ³Proposition 65´) requires, with
a few exceptions, that a specific warning appear on any consumer product sold in California that contains a substance, above
certain levels, listed by that state as having been found to cause cancer or birth defects. We believe we are in material
compliance with state and local statutes and regulations as they apply to our business.
Environmental Regulations
We are also subject to various U.S. federal, state, and local environmental regulations. Some of the key environmental regulations
in the U.S. include, but are not limited to, the following:
Air quality regulations ± air quality is regulated by the EPA and certain city/state air pollution control groups. Emission
reports are filed annually.
Waste treatment/disposal regulations ± solid waste is either disposed of by a third-party or, in some cases, we have a
permit to haul and apply the sludge to land. Agreements exist with local city sewer districts to treat waste at specified
levels of Biological Oxygen Demand (³BOD´), Total Suspended Solids (³TSS´) and other constituents. This can
require weekly/monthly reporting as well as annual inspection.
Sewer regulations ± we have agreements with the local city sewer districts to treat waste at specified limits of BOD
and TSS. This requires weekly/monthly reporting as well as annual inspection.
Hazardous chemicals regulations ± various reports are filed with local, city, and state emergency response agencies to
identify potential hazardous chemicals being used in our U.S. facilities.
Storm-water ± all of our U.S. facilities are inspected annually and must comply with an approved storm-water plan to
protect water supplies.
Employee Safety Regulations
We are subject to certain safety regulations, including OSHA regulations. These regulations require us to comply with certain
manufacturing safety standards to protect our employees from accidents. We believe that we are in material compliance with
all employee safety regulations applicable to our business.
Canadian Regulations
In Canada, the sale of food is regulated under various federal and provincial laws, principally (but not limited to) the Safe Food for
Canadians Act (³SFCA´), the Food and Drugs Act (³FADA´), the Canada Consumer Product Safety Act (³CCPSA´), the Canadian
Food Inspection Agency Act (³CFIAA´) and the Canadian Environmental Protection Act, 1999 (³CEPA´), along with their
supporting regulations. The following is a summary of each of these statutes to the extent that they apply or potentially apply to the
Company and its operations:
Safe Food for Canadians Regulations (³SFCR´) (under the SFCA) ± the SFCR and SFCA regulate imported, exported, or
inter-provincially traded food products. Some provisions of the SFCA and SFCR also apply intra-provincially. Principal
elements of the SCFR that may impact the Company include licensing requirements, preventative controls, traceability
requirements, commodity-specific requirements, reporting requirements and timelines, an export certificate request
process, packaging and labeling requirements to ensure food safety and prevent false or misleading labeling, regulation
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of the use of grades and grade names, standards of identity and expansion of the certification process for organic
products, and other requirements.
Food and Drug Regulations (under the FADA) ± food and drugs are subject to specific regulatory requirements, including
composition (such as food additives, fortification, and food standards), packaging, labeling, advertising, and marketing,
and licensing requirements. In 2022, the Government of Canada, with support from the Canadian Food Inspection Agency
(the ³CFIA´), amended the Food and Drug Regulations to update the requirements for labelling pre-packaged food
products. The amendments to the Food and Drug Regulations are part of the CFIA¶s initiative to modernize Canada¶s food
labelling system and manufacturers will have until December 31, 2025 to change labels on prepackaged foods to comply
with the new requirements.
Canadian Food Inspection Agency Act (³CFIAA´) ± the CFIAA grants power to the CFIA, which is tasked with the
administration and enforcement of certain Canadian food legislation. By virtue of the CFIAA and the SFCA, the CFIA
has the power to inspect and, if deemed necessary, recall certain products, including fresh fruit and vegetables,
processed foods, and organic foods, if the Minister of Health believes that such products pose a risk to the public,
animal or plant health.
Substance Regulations ± various regulations under CEPA regulate the importation and use of certain substances in
Canada. For example, prior to the importation and use in products, the importer must ensure that all ingredients are
found on the Domestic Substances List (³DSL´) maintained by Environment and Climate Change Canada. In the event
that an ingredient is not found on the DSL, then subject to the amount of the substance imported into Canada and used
in products sold in Canada, a filing may become necessary under the New Substances Notification Regulations.
Canada Consumer Product Safety Act (³CCPSA´) ± the CCPSA provides oversight and regulation of consumer
products with respect to manufacturers, importers, and retailers. It includes, without limitation, the ability to require
product recalls, mandatory incident reporting, document retention requirements, increased fines and penalties, and
packaging and labeling requirements. While the CCPSA does not apply to food, it does apply to its packaging with
respect to safety. It is possible that there will be amendments introduced to the FADA, to capture the essence of the
regulatory oversight found in the CCPSA. We have no way of anticipating if and when that may occur.
Environmental Compliance
As described above, we are subject to environmental regulations in the U.S. and Canada. Our business also requires that we have
certain permits from various state, provincial and local authorities related to air quality, water consumption and treatment,
stormwater discharge, solid waste, land spreading and hazardous waste. We are committed to meeting all applicable environmental
compliance requirements.
Intellectual Property
The nature of a number of our products and processes requires that we create and maintain patents, trade secrets and trademarks.
Our policy is to protect our technology, brands, and trademarks by, among other things, filing patent applications for technology
relating to the development of our business in the U.S. and in selected foreign jurisdictions, registering trademarks in the U.S.,
Canada and selected foreign jurisdictions where we sell products, and maintaining confidentiality agreements with outside
parties and employees.
Our continued success depends, in part, on our ability to protect our products, trade names and technology under U.S. and
international patent laws and other intellectual property laws. We believe that we own or have sufficient rights to use all of the
proprietary technology, information and trademarks necessary to manufacture and market our products; however, there is
always a risk that patent applications relating to our products or technologies will not result in patents being issued, or, if issued,
will be later challenged by a third party, or that current or additional patents will not afford protection against competitors with
similar technology.
We also rely on trade secrets and proprietary know-how and confidentiality agreements to protect certain technologies and
processes. However, even with these steps taken, our outside partners and contract manufacturers could gain access to our
proprietary technology and confidential information. All employees are required to adhere to internal policies, which are
intended to further protect our technologies, processes, and trade secrets.
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Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the ³Exchange Act´), are
available free of charge on our website at www.sunopta.com as soon as reasonably practicable after we file such information
electronically with, or furnish it to, the SEC and the CSA.
Additionally, the SEC and CSA maintain internet sites that contain reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC and CSA, which can be found at http://www.sec.gov and
http://www.sedarplus.ca, respectively.
Item 1A. Risk Factors
Our business, financial condition and results of operations are subject to various risks and uncertainties, including those
described below and elsewhere in this report. We believe the most significant of these risks and uncertainties are described
below, any of which could adversely affect our business, financial condition and results of operations, as well as our cash flows,
liquidity, stock price and/or reputation, and could cause actual results to differ materially from the results contemplated by the
forward-looking statements contained in this report. There may be additional risks and uncertainties not presently known to us
or that we currently consider immaterial. Consequently, you should not consider the following to be a complete discussion of
all possible risks or uncertainties applicable to our business. These risk factors should be read in conjunction with the other
information in this report and in the other documents that we file from time to time with the SEC and the CSA.
Risks Related to Our Company, Business and Operations
Deterioration of global economic conditions, an economic recession, periods of inflation, or economic uncertainty in our
key markets may adversely affect customer and consumer spending, as well as demand for our products
Global economic conditions can be uncertain and volatile. Our business and results of operations have in the past been, and
may continue to be, adversely affected by changes in global economic conditions including inflation, interest rates, consumer
spending rates, energy availability and costs, the negative impacts caused by public health crises, as well as the potential impacts
of geopolitical events, and the effect of governmental initiatives to manage economic conditions. As global economic
conditions continue to be volatile or economic uncertainty remains, trends in consumer spending also remain unpredictable and
subject to reductions due to credit constraints and uncertainties about the future. Most of our products are purchased by our
customers based on end-user demand from consumers. Some of the factors that may influence consumer spending include
general economic conditions, high levels of unemployment, health crises, higher consumer debt levels, reductions in net worth
based on market declines and uncertainty, home foreclosures and reductions in home values, fluctuating interest rates and credit
availability, fluctuating fuel and other energy costs, fluctuating commodity prices, inflationary pressure, tax rates, tariffs, and
general uncertainty regarding the overall future economic environment. Unfavorable economic conditions may lead customers
and consumers to delay or reduce purchases of our products and could present challenges in collecting our account receivables
on a timely basis. Customer demand for our products may not reach our targets or may decline as distributors and retailers seek
to reduce inventory positions if there is an economic downturn or economic uncertainty in our key markets. Economic cycles
and related fluctuations in customer demand may have a material adverse effect on our business, financial condition, and results
of operations.
We may not be able to increase prices to fully offset inflationary pressures on costs, such as raw and packaging materials,
labor, energy, fuel and distribution costs, which may impact our business, financial condition, and results of operations
In recent years, we have experienced elevated commodity and supply chain costs, including the costs of raw materials,
packaging, labor, energy, fuel, freight and other inputs necessary for the production and distribution of our products. Many of
these materials and costs are subject to price fluctuations from a number of factors, including, but not limited to, market
conditions, geopolitical events, demand for raw materials, weather, growing and harvesting conditions, energy and fuel costs,
tariffs, environmental and other sustainability regulations (including potential impacts of EPR laws and regulations), changes
to immigration policies, currency fluctuations, and other factors beyond our control.
Our attempts to offset these cost pressures, such as through increases in the selling prices of some of our products, may not be
successful. Higher product prices may result in lower sales volumes. Consumers may shift to lower priced product offerings,
or may forego some purchases altogether, during an economic downturn or times of increased inflationary pressure. To the
extent that our efforts to offset cost inflation through price increases, and/or through cost containment measures and
productivity initiatives, are not sufficient to offset these increased costs adequately or in a timely manner, and/or if they result
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December 28, 2024 Form 10-K
in significant decreases in sales volume, our business, financial condition and results of operations may be materially and
adversely affected.
The imposition of new or increased tariffs could have a material adverse effect on our business, financial condition and
results of operations
The U.S. government has proposed significantly increased tariffs on foreign imports into the U.S. from certain countries,
including Canada and Mexico. Certain key inputs used in our business may be subject to these tariffs, including oats from
Canada and packaging from Mexico, which could increase the raw material cost of our products. If these tariffs are imposed,
or if retaliatory trade measures are taken by foreign countries in response to additional tariffs that relate to our products, we
may be required to raise our prices or incur additional expenses, which could have a material adverse effect on our business,
financial condition and results of operations.
If we do not manage our supply chain effectively, our operating results may be adversely affected
Our supply chain is complex and critical to our ability to manufacture, move, and sell products. We rely on third-party suppliers
for our raw materials and packaging, as well as the distribution of our products. The inability of any of these suppliers to deliver
or perform for us in a timely or cost-effective manner could cause our operating costs to rise and our margins to fall. Many of
our products are perishable and require timely processing and transportation to our customers. Additionally, many of our
products can only be stored for a limited amount of time before they spoil and cannot be sold. We must continually monitor
our inventory and product sales mix against forecasted demand to reduce the risk of not having adequate supplies to meet
consumer demand or the risk of having too much inventory that may reach its expiration date. In recent years, general
macroeconomic and conditions, geopolitical events and health crises have increased the challenges of managing our supply
chain, and these factors could continue to cause unpredictable supply chain interruptions or other adverse effects on our supply
chain. If we are unable to manage our supply chain effectively and ensure that our products are available to meet consumer
demand, our operating costs could increase and our margins could decline, which could have a material adverse effect on our
business, financial condition, and results of operations.
If we face labor shortages or increased labor costs, our business, financial condition, and results of operations could be
adversely affected
Labor is a primary component of operating our business. Our ability to achieve our operating goals depends on our ability to
identify, hire, train, and retain qualified employees. We compete with other companies both within and outside of our industry
for talented employees. If we are unable to hire and retain employees capable of performing at a high-level, our ability to
efficiently operate our manufacturing facilities and overall business could be adversely affected. Our ability to meet our labor
needs while controlling labor costs is subject to external factors, such as employment levels, prevailing wage rates, minimum
wage legislation, changing demographics, health and other insurance costs, and governmental labor and employment
requirements. In addition, a sustained labor shortage or increased turnover rates within our employee base could lead to
increased costs, such as increased overtime to meet demand, costs to hire and train new employees, and increased wage rates
and employee benefits to attract and retain employees. An overall labor shortage, lack of skilled labor, increased turnover, labor
inflation, and changes in applicable employment laws and regulations, could lead to increased labor costs and/or reduced
operating efficiencies, which could have a material adverse impact on our business, financial condition, and results of
operations.
An interruption at one or more of our manufacturing facilities could negatively affect our business, and our business
continuity plan may prove inadequate
We own or lease, manage and operate a number of manufacturing, processing, packaging, storage and office facilities. We may
be unable to accept and fulfill customer orders as a result of adverse weather conditions, natural disasters, health crises, business
interruptions, or other similar events. Some of our inventory and manufacturing facilities are located in areas that are susceptible
to harsh weather, and the production of certain of our products is concentrated in a few geographic areas. Although we have a
business continuity plan, our plan might not address all of the issues we may encounter in the event of a disaster or other
unanticipated issues. Our business interruption insurance may not adequately compensate us for losses that may occur from
any of the foregoing. In the event that a disaster, or other catastrophic event were to destroy any part of any of our facilities or
interrupt our operations for any extended period of time, or if harsh weather or health crises prevent us from producing and/or
delivering products in a timely manner, our business, financial condition and results of operations could be materially and
adversely affected.
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Our customers generally are not obligated to continue purchasing products from us
Many of our customers buy from us under short-term, binding purchase orders. As a result, these customers are not committed
to maintain or increase their sales volumes or orders for the products supplied by us. Decreases in our customers¶ sales volumes
or orders for products supplied by us may have a material adverse effect on our business, financial condition and results of
operations. In addition, some customer buying decisions are based on a periodic bidding process. Our sales volume may
decrease if our offer is too high and rejected. Alternatively, we risk reducing our margins if our offer is successful but less than
our desired price point. Either of these outcomes may adversely affect our results of operations.
Loss of a key customer could materially reduce revenues and earnings
Our relationships with our key customers are critical to the success of our business and our results of operations. For the year
ended December 28, 2024, our ten largest customers accounted for approximately 80% of revenues. The loss, decrease or
cancellation of business with any of our large customers could materially and adversely affect our business, financial condition,
and results of operations.
We operate in a highly competitive industry
We operate in the highly competitive food industry in North America. We compete with large U.S. and international food
ingredient and consumer-packaged food companies. These competitors may have financial resources larger than ours and may
be able to benefit from economies of scale, pricing advantages, long-standing customer relationships, and greater resources for
product innovation, and marketing and promotional activities. In addition, we may have to compete for limited supplies of
certain raw materials with competitors having greater resources and stronger supplier relationships than we have. If we are
unable to effectively respond to these competitive factors or if the competition in any of our product markets results in price
reductions or decreased demand for our products, our business, financial condition and results of operations may be materially
and adversely affected.
Product innovations by our competitors could make our food products less competitive
Our competitors include major food manufacturers and consumer-packaged food companies. Many of these companies are
engaged in the development of food ingredients and packaged food products and frequently introduce new products into the
market. If our competitors introduce products that are more appealing to the tastes and dietary habits of consumers or considered
to be of higher quality or value than our products, our sales and market share could decline, which may have a material adverse
effect on our profitability.
Consumer food preferences are difficult to predict and may change
Our success depends, in part, on our ability to predict, identify, and interpret the tastes and dietary habits of consumers and to
offer products to our customers that appeal to those preferences on a timely and affordable basis. Consumer preferences and
trends change based on a number of factors, including product taste and nutrition, food allergies, sustainability values, and
animal welfare concerns. Our failure to anticipate and respond to changing consumer preferences on a timely basis could result
in reduced demand and price decreases for our products, which could have a material adverse effect on our business, financial
condition, and results of operations.
We may not realize some or all of the anticipated benefits of our capital investment plans in the anticipated time frame or
at all
We have recently completed the largest capital expansion in our company¶s history, which included the construction of our
new plant-based beverage facility in Midlothian, Texas. Our capital investment plans often require a substantial amount of
management, operational, and financial resources, which may divert our attention and resources from our existing business,
potentially disrupting our operations and adversely affecting our relationships with customers and suppliers. In addition, we
may incur delays and unexpected costs in connection with the construction of capital expansion projects and/or the start-up of
commercial production, or be affected by changes in demand and pricing for our products, which could result in us not realizing
all or any of the anticipated benefits of our capital investment plans on our expected timetable or at all, and there can be no
assurance that any benefits we realize from our capital investments will be sufficient to offset the costs that we may incur.
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December 28, 2024 Form 10-K
Our operations are subject to the general risks associated with acquisitions and divestitures
We regularly review strategic opportunities to grow our business through acquisitions of complementary businesses or assets.
Additionally, we have made several significant divestitures in recent years, including the divestiture of our frozen fruit business
(³Frozen Fruit´) in 2023, that aligned with our strategic priority of optimizing our non-core, commodity-based businesses and
focusing on value-add opportunities. Potential risks associated with these transactions include the inability to consummate a
transaction on favorable terms, the diversion of management¶s attention from other business concerns, the potential loss of key
employees and customers of current or acquired companies, the inability to integrate or divest operations successfully, the
possible assumptions of unknown liabilities, potential disputes with buyers or sellers, potential impairment charges, and the
inherent risks in entering markets or lines of business in which the Company has limited or no prior experience. Any or all of
these risks could have a material and adverse impact on our business, financial condition, and results of operations. In addition,
acquisitions outside the U.S. or Canada may present unique challenges and increase our exposure to the risks associated with
foreign operations.
In connection with the sale of Frozen Fruit to Natures Touch Mexico, S. de R.L. de C.V. and Nature¶s Touch Frozen Fruits,
LLC (the ³Purchasers´), a portion of the aggregate purchase price is in the form of secured promissory notes that the Company
entered into with the Purchasers and Nature¶s Touch Frozen Foods, LLC (collectively the ³Loan Parties´). The promissory
notes have a stated principal amount of $20.0 million in the aggregate, with the principal and interest thereon due from the
Purchasers on October 12, 2026. The promissory notes are secured by a second-priority lien on certain assets of Frozen Fruit
acquired by the Purchasers. While we assessed the promissory notes to be collectible as at December 28, 2024, a deterioration
in the liquidity of the Loan Parties could impact the collectability of the promissory notes.
Impairment charges related to long-lived assets or goodwill could adversely impact our financial condition and results of
operations
As at December 28, 2024, we had $343.6 million of property, plant and equipment, $105.7 million of operating lease right-of-
use assets, and $20.0 million of intangible assets, as well as $4.0 million of goodwill. In addition, prior to fiscal 2019, we
recognized accumulated impairment losses of $213.8 million related to goodwill that arose from business acquisitions.
We perform impairment assessments for our long-lived assets whenever events occur that could affect the value of these assets.
If the results of such assessments were to show that the carrying value of our long-lived assets was not recoverable and the fair
value of these assets was less than the carrying value, we would be required to recognize a charge for impairment, and the
amount of the impairment charge could be material. Factors which could result in an impairment of a long-lived assets include,
but are not limited to, reduced demand or pricing for our products due to increased competition, the loss of a significant
customer or market share, or a current expectation that, more likely than not, a long-lived asset may be disposed of before the
end of its previously estimated useful life.
We perform an annual impairment test for goodwill, or at any time when events occur that could indicate that more likely than
not the carrying value of a reporting unit exceeds its fair value. Indicators of goodwill impairment include, but are not limited
to, a decline in general economic conditions, an increased competitive environment in which a reporting unit operates, a
negative trend in the financial performance and cash flows of the reporting unit, and a more-likely-than-not expectation of
selling or disposing of all, or a portion, of a reporting unit.
For the year ended December 28, 2024, we did not recognize any impairment charges related to our long-lived assets or
goodwill. However, future impairments of long-lived assets and/or goodwill could materially and adversely impact our
business, financial condition, and results of operations.
If we lose the services of our key executives, our business could suffer
Our prospects depend to a significant extent on the continued service of our key executives, and our continued growth depends
on our ability to identify, recruit, and retain key management personnel. We do not typically carry key person life insurance on
our executive officers. If we lose the services of our key executives or fail to identify, recruit, and retain key management
personnel, our business, financial condition and results of operations may be materially and adversely impacted.
Failure of our internal control over financial reporting could harm our business and financial results
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal
control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for
external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal
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December 28, 2024 Form 10-K
control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement
of our financial statements or fraud. Any failure to maintain an effective system of internal control over financial reporting
could limit our ability to report our financial results accurately and in a timely manner, or to detect and prevent fraud. A
significant financial reporting failure or material weakness in internal control over financial reporting could cause a loss of
investor confidence and/or a decline in the market price of our stock.
Risks Related to Litigation and Government Regulations
Product recalls and withdrawals and product liability claims could have a material adverse effect on our business
We sell products for human consumption, which involves risks such as product contamination or spoilage, misbranding,
product tampering, and other adulteration of food products. Consumption of a contaminated, spoiled, tampered, or adulterated
product may result in personal illness or injury. Under certain circumstances, we may be required to recall or withdraw products,
which may be costly and time consuming, and may require the diversion of management¶s time and resources from business
operations. The costs of a recall or withdrawal may include product destruction costs, temporary plant closings, and compliance
or remediation costs. In addition, a product recall or withdrawal may cause us to lose future revenues from, or relationships
with, one or more material customers, and the impact of the recall or withdrawal could affect our customers¶ willingness to
continue to purchase related or unrelated products from us or could otherwise hinder our ability to grow our business with those
customers. Further, we could be subject to claims or lawsuits relating to an actual or alleged illness or injury, and we could
incur liabilities that are not insured or that exceed our insurance coverage. Even if product liability claims against us are not
successful or fully pursued, these claims could be costly and time consuming to defend against, and the negative publicity
surrounding any such claims could adversely affect our reputation. Any of these events could have a material and adverse effect
on our business, results of operations, financial condition and cash flows.
In the second quarter of 2024, we 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. We are seeking to recover a portion of the withdrawal-related costs through our insurance
coverage and have recognized expected recoveries of $7.6 million as at December 28, 2024. Our recovery estimate may need
to be revised as we work with our insurance providers to substantiate our losses.
Potential liabilities and costs from litigation could adversely affect our business
We are, or may become, party to various lawsuits and claims arising in the normal course of business, which may include
lawsuits or claims relating to commercial contracts, product recalls, product liability, the marketing and labeling of products,
employment matters, environmental matters, data protection, intellectual property, and other aspects of our business. There is
no guarantee that we will be successful in defending ourselves in these actions and we could incur substantial costs and fees in
defending ourselves or in asserting our rights in these actions. The results of litigation and other legal proceedings are inherently
unpredictable and resolutions or dispositions of lawsuits and claims by settlement or otherwise could have a material adverse
effect on our business, results of operations, financial condition and cash flows.
New laws or regulations or changes in existing laws or regulations could adversely affect our business
The food industry is subject to a variety of federal, state, local, and foreign laws and regulations, including, but not limited to,
those related to food safety, food labeling, and environmental and sustainability matters. Governmental regulations also affect
taxes and tariffs, healthcare costs, energy usage, and labor and immigration issues, all of which may have a direct or indirect
effect on our business or those of our customers or suppliers. Changes in these laws or regulations, or the introduction of new
laws or regulations (such as new food safety or labeling requirements, or new EPR laws and regulations) could increase the
costs of doing business for the Company, our customers, or suppliers, or restrict our actions, causing our results of operations
to be adversely affected.
The Organization for Economic Co-operation and Development has introduced the Pillar Two framework, which establishes a
global minimum corporate tax rate of 15% for multinational enterprises with consolidated annual revenues of ¼750 million or
more. During 2024, Canada enacted legislation to adopt Pillar Two effective for fiscal years beginning on or after December
31, 2023. Although we do not currently expect that this global minimum tax will materially impact our consolidated financial
statements, we will continue to monitor legislative and regulatory developments with respect to this initiative.
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Risks Related to Intellectual Property and Information Technology
We rely on protection of our intellectual property and proprietary rights
Our success depends in part on our ability to protect our intellectual property rights. We rely primarily on patent, copyright,
trademark, and trade secret laws to protect our proprietary technologies. Our policy is to protect our technology by, among
other things, filing patent applications for technology relating to the development of our business in the U.S. and in selected
foreign jurisdictions. Our trademarks and brand names are registered in the U.S., Canada, and other jurisdictions. We intend to
keep these filings current and seek protection for new trademarks to the extent consistent with business needs. We also rely on
trade secrets and proprietary know-how and confidentiality agreements to protect certain of the technologies and processes that
we use. The failure of any patents, trademarks, trade secrets or other intellectual property rights to provide protection to our
technologies would make it easier for our competitors to offer similar products, which could result in lower revenues and/or
margins and could have a material adverse effect on our business, financial condition and results of operations.
Our business operations could be disrupted if our information technology systems fail to perform adequately or are breached
The efficient operation of our business depends on our information technology systems to process, transmit, and store electronic
information. We rely on our information technology systems, including the internet, to effectively manage our business data,
supply chain, order entry and fulfillment, and other business processes. Information technology systems are also integral to our
internal and external financial reporting. Furthermore, a significant portion of the communications between, and storage of
personal data of, our personnel, customers and suppliers depends on information technology. Our information technology
systems, some of which are dependent on services provided by third parties, may be susceptible to physical or electronic break-
in, damage, disruption, or shutdown due to computer viruses, hacker attacks, and other cybersecurity risks, hardware failures,
telecommunications failures, user errors or malfeasance, catastrophic events, natural disasters, fires, or other factors which may
be beyond our control. Furthermore, the rapid evolution and increased adoption of artificial intelligence technologies may
intensify our cybersecurity risks. If we are unable to anticipate, prevent, or adequately respond to and resolve these failures,
disruptions or breaches, our business may be materially disrupted, and we may suffer other adverse consequences such as
significant data loss, financial or reputational damage or penalties, legal claims or proceedings, remediation costs, or loss of
revenues or customers. Consequently, any failure or breach of our information technology systems could have a material
adverse effect on our business, financial condition and results of operations.
Risks Related to Weather, Climate Change, and Other External Factors
Adverse weather conditions and natural disasters could impose costs on our business
Ingredients for our products are vulnerable to adverse weather conditions and natural disasters, including windstorms,
hurricanes, earthquakes, floods, droughts, fires, and temperature and precipitation extremes, some of which are recurring but
difficult to predict, as well as crop disease and infestation. Severe weather conditions may occur with higher frequency or may
be less predictable in the future due to the effects of climate change. Unfavorable growing and harvesting conditions could
reduce both crop size and crop quality. In extreme cases, entire harvests may be lost in some geographic areas. Adverse weather
conditions or natural disasters may adversely affect our supply of raw materials or prevent or impair our ability to ship products
as planned. These factors may increase raw material acquisition and production costs, decrease our sales volumes and revenues,
and lead to additional charges to earnings, which could have a material adverse effect on our business, financial condition, and
results of operations.
Climate change, or legal, regulatory or market measures to address climate change, may negatively affect our business,
financial condition and results of operations
Long-term climate change impacts on global temperatures, weather patterns, and the frequency and severity of extreme weather
and natural disasters may negatively impact the price or availability of ingredients and packaging materials (such as corrugated
cardboard) that are necessary for our products. We may also be subjected to decreased availability of and/or less favorable
pricing for water, which could adversely impact our manufacturing operations.
In recent years, there has been increased focus from regulators and legislative bodies regarding environmental policies relating
to climate change, regulating greenhouse gas emissions, energy policies, and sustainability (including EPR laws and
regulations). Increased compliance costs and expenses due to the impacts of climate change and additional legal or regulatory
requirements regarding climate change may cause disruptions in, or an increase in the costs associated with, the running of our
manufacturing facilities and our business, as well as increase distribution and supply chain costs. In addition, compliance with
any such legal or regulatory requirements may require us to make significant changes in our business operations and strategy,
SUNOPTA INC.
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December 28, 2024 Form 10-K
which will likely require us to devote substantial time and attention to these matters and cause us to incur additional costs. Even
if we make changes to align ourselves with such legal or regulatory requirements, we may still be subject to significant penalties
or potential litigation if such laws and regulations are interpreted and applied in a manner inconsistent with our practices. The
effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact
on our business and results of operations.
Additionally, we might fail to effectively address increased attention from customers, consumers, investors, activists and other
stakeholders on climate change and related environmental sustainability matters. Such failure, or the perception that we have
failed to act responsibly regarding climate change, whether or not valid, could result in adverse publicity and negatively affect
our business and reputation.
Furthermore, we may from time to time establish and publicly announce goals and commitments to reduce our impact on the
environment. Our ability to achieve any stated goal or commitment is subject to numerous factors and conditions, many of
which are outside of our control. Examples of such factors include evolving regulatory requirements affecting sustainability
standards or disclosures, the development of new environmental technologies to address climate change, and the availability
of financing to support climate-related projects. In addition, we may determine that it is in the best interest of our company and
our shareholders to prioritize other business investments over the achievement of our current environmental goals and
commitments based on economic conditions, changes in our business strategy, or pressure from investors or other stakeholders.
If we fail to achieve or are perceived to have failed or been delayed in achieving, or improperly report our progress toward
achieving our goals and commitments, it could negatively affect customer and consumer preference for our products or investor
confidence in our business, as well as expose us to enforcement actions and litigation.
Our business may be adversely affected by the availability of non-GMO and organic commodities and ingredients
Our ability to ensure a continuing supply of non-GMO and organic ingredients at competitive prices depends on many factors
beyond our control, including the number and size of farms that grow non-GMO and organic crops. The non-GMO and organic
raw materials that we use in the production of our products, including, among others, grains, nuts, fruits, sweeteners, and
flavorings, are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, water scarcity,
temperature extremes, frosts, earthquakes, and pestilences. Natural disasters and adverse weather conditions can reduce crop
size and crop quality, which in turn could reduce our supplies of and/or increase the price of non-GMO and organic raw
materials. If our supplies of non-GMO and organic raw materials are reduced, we may not be able to find enough supplemental
supply sources on favorable terms, if at all, which could impact our ability to supply product to our customers and adversely
affect our business, financial condition, and results of operations.
Risks Related to Our Indebtedness and Liquidity
Our level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt obligations
As at December 28, 2024, we have a significant amount of indebtedness outstanding as a result of the capital investments we
have made in recent years. The level of our indebtedness and the degree to which we are leveraged could adversely affect our
business, financial condition, and results of operations, including, without limitation, increasing our exposure to rising or
sustained elevated interest rates, and impairing our ability to obtain additional financing for working capital, capital
expenditures, debt service requirements, acquisitions, or other general corporate purposes. In addition, we may have to use a
substantial portion of our cash flow to pay principal and interest on our indebtedness, which may reduce the funds available to
us for other purposes. If we do not generate sufficient cash flows to satisfy our debt service obligations, we may have to
undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital
expenditures, or seeking to raise additional capital. A high level of indebtedness and leverage could also make us more
vulnerable to economic downturns and adverse industry conditions and may compromise our ability to capitalize on business
opportunities, and to react to competitive pressures as compared to our competitors.
Our debt and equity agreements restrict how we may operate our business, and our business may be materially and adversely
affected if these restrictions prevent us from implementing our business plan
The agreements governing our debt and preferred equity instruments contain restrictive covenants that limit the discretion of
our management with respect to certain business matters. These covenants place restrictions on, among other things, our ability
to obtain additional debt financing or preferred equity, to create other liens, to complete a merger, amalgamation, or
consolidation, to make certain distributions or make certain payments, investments and guarantees and to sell or otherwise
dispose of certain assets. These restrictions may hinder our ability to execute on our growth strategy or prevent us from
implementing parts of our business plan.
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December 28, 2024 Form 10-K
Our business could be materially and adversely affected if we are unable to meet the financial covenants of our credit
agreement
Our credit agreement requires us to maintain a minimum fixed charge coverage ratio and a maximum consolidated total net
leverage ratio. Our ability to comply with the financial covenants under the credit agreement will depend on the success of our
business, our operating results, and our ability to achieve our financial forecasts. Various risks, uncertainties and events beyond
our control could affect our ability to comply with the financial covenants and terms of the credit agreement. Failure to comply
with the financial covenants and other terms could result in an event of default and the acceleration of amounts owing under
the credit agreement unless we are able to negotiate a waiver. The lenders could condition any such waiver on an amendment
to the credit agreement on terms, including, but not limited to, the payment of consent fees, which may be unfavorable to us.
If we fail to comply with the financial covenants and we are unable to negotiate a covenant waiver or replace or refinance the
credit agreement on favorable terms, our business, financial condition and results of operations could be materially and
adversely impacted.
We may require additional capital, which may not be available on favorable terms or at all
Our working capital requirements, capital investment plans, and our ability to acquire complementary businesses or assets often
require significant financial resources. Our ability to raise capital, through debt or equity financing, is directly related to our
ability to both continue to grow our revenues and improve the profitability of our operations. Debt or equity financing may not
be available to us on favorable terms or at all. In addition, any potential debt financing could adversely affect our financial
condition and increase our exposure to interest rate changes, while any potential equity financing would dilute our current
shareholders and may result in a decrease in our share price if we are unable to realize adequate returns.
Our ability to maintain current levels of working capital may be adversely affected if we are unable to utilize receivables
financing programs to accelerate payment terms for certain customers
In order to accelerate cash flows and to improve working capital efficiency, we entered into a receivables sales program with
a third-party financial institution, whereby we may sell certain eligible trade receivables to the financial institution in exchange
for cash proceeds. The arrangement may be terminated by the financial institution at any time with 30 days¶ notice.
Additionally, we utilize supply chain financing programs offered by some of our major customers that allow us to monetize
our trade receivables from those customers earlier than our payment terms would provide. To the extent any of these programs
were terminated, our financial condition, cash flows, and liquidity could be adversely affected by higher working capital levels
due to longer payment terms or delays in collecting trade receivables. If working capital is negatively impacted by the
termination of these programs, and we are unable to secure alternative financing sources, we may have to increase our debt
borrowings, along with the associated interest expense.
Risks Related to Significant Investors and Shareholder Activism
Our significant investor may have interests that conflict with those of our debtholders and other stakeholders
As at December 28, 2024, Oaktree Fund GP, LLC, a private equity investor (together with its affiliates, ³Oaktree´) held an
approximately 20% voting interest in the Company and has nominated two members of our Board of Directors. The interests
of Oaktree may differ from the interests of our other stakeholders in material respects. For example, Oaktree may have an
interest in directly or indirectly pursuing acquisitions, divestitures, financings, or other transactions that, in their judgment,
could enhance their other equity investments, even though such transactions might involve risks to us, including risks to our
liquidity and financial condition. Oaktree is in the business of making or advising on investments in companies, including
businesses that may directly or indirectly compete with certain portions of our business. Oaktree may also pursue acquisition
opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available
to us.
Our other large investors do not have specific rights beyond those of smaller holders of our common shares. However, a
concentration of ownership within our large investors could potentially be disadvantageous to, or conflict with, interests of our
debtholders or smaller shareholders. In addition, if any significant shareholder were to sell or otherwise transfer all or a large
percentage of its holdings, we could find it difficult to raise capital, if needed, through the sale of additional equity securities.
SUNOPTA INC.
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December 28, 2024 Form 10-K
Our business could be negatively impacted as a result of shareholder activism or an unsolicited takeover proposal or a proxy
contest
In recent years, proxy contests and other forms of shareholder activism have been directed against numerous public companies.
If a proxy contest or an unsolicited takeover proposal is made with respect to us, we could incur significant costs in defending
the Company, which would have an adverse effect on our financial results. Shareholder activists may also seek to involve
themselves in the governance, strategic direction, and operations of the Company. Such proposals may disrupt our business
and divert the attention of our management and employees, and any perceived uncertainties as to our future direction resulting
from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern
to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners,
all of which could adversely affect our business. In addition, actions of activist shareholders may cause significant fluctuations
in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the
underlying fundamentals and prospects of our business.
Risks Related to Ownership of our Common Shares
Our share price is subject to significant volatility
Our share price may be highly volatile compared to larger public companies, which increases the chance of larger than normal
price swings that could reduce predictability in the price of our common shares and impair investment decisions. In addition,
price and volume trading volatility in the stock markets can have a substantial effect on our share price, frequently for reasons
other than our operating performance. These broad market fluctuations could adversely affect the market price of our common
shares.
Periods of volatility in the overall market and the market price of a company¶s securities is often followed by securities class
action litigation alleging material misstatements or omissions in disclosures provided to shareholders. Such litigation, if
instituted against us, could result in substantial costs and a diversion of our management¶s attention and resources.
Our debt instruments restrict, and our future debt instruments may restrict, our ability to pay dividends to our shareholders,
and we do not currently intend to pay any cash dividends on our common shares in the foreseeable future; therefore, our
shareholders may not be able to receive a return on their common shares until their shares are sold
We have never paid or declared any cash dividends on our common shares, and we do not currently anticipate paying any cash
dividends on our common shares in the foreseeable future. Any future payment of dividends will be dependent on factors such
as covenant restrictions, cash on hand, or achieving and maintaining profitability, the financial requirements to fund growth,
our general financial condition, and other factors we may consider appropriate in the circumstances. Until we pay dividends,
which we may never do, our shareholders will not receive a return on their common shares until their shares are sold, and any
return will depend on the ability to sell their shares at a price higher than they paid to acquire them.
The future issuance of additional common shares in connection with the exchange of convertible preferred stock, vesting
of equity-based awards, participation in our employee stock purchase plan and issuance of additional securities could dilute
the value of our common shares
We have unlimited common shares authorized but unissued. Our articles of amalgamation authorize us to issue these common
shares, and we may also issue options, rights, warrants and appreciation rights relating to common shares for consideration and
on terms and conditions established by our Board of Directors in its sole discretion.
The exchange of outstanding convertible preferred stock, vesting of equity-based awards, participation in our employee stock
purchase plan, and issuance of additional securities in connection with acquisitions or otherwise could result in dilution in the
value of our common shares and the voting power represented thereby. Furthermore, to the extent common shares are issued
pursuant to the exchange of outstanding convertible preferred stock, vesting of equity-based awards, participation in our
employee stock purchase plan, and issuance of additional securities, our share price may decrease due to the additional amount
of common shares available in the market. The subsequent sales of these shares could encourage short sales by our shareholders
and others, which could place further downward pressure on our share price.
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December 28, 2024 Form 10-K
If securities or industry research analysts do not publish or cease publishing research or reports about our business or if
they issue unfavorable commentary or downgrade our common shares, our share price and trading volume could decline
The trading market for our common shares relies in part on the research and reports that securities and industry research analysts
publish about us, our industry, our competitors and our business. We do not have any control over these analysts. Our share
price and trading volumes could decline if one or more securities or industry analysts downgrade our common shares, issue
unfavorable commentary about us, our industry or our business, cease to cover the Company or fail to regularly publish reports
about us, our industry, or our business.
A portion of our assets and certain of our directors are located outside of the U.S.; it may be difficult to effect service of
process and enforce legal judgments upon us and certain of our directors
A portion of our assets and certain of our directors are located outside of the U.S. As a result, it may be difficult to effect service
of process within the U.S. and enforce judgment of a U.S. court obtained against us and certain of our directors. Particularly,
our stakeholders may not be able to:
effect service of process within the U.S. on us or certain of our directors;
enforce judgments obtained in U.S. courts against us or certain of directors based upon the civil liability provisions of
the U.S. federal securities laws;
enforce, in a court outside of the U.S., judgments of U.S. courts based on the civil liability provisions of the U.S.
federal securities laws; or
bring an original action in a court outside of the U.S. to enforce liabilities against us or any of our executive officers
and directors based upon the U.S. federal securities laws.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Our cybersecurity program is strategically crafted to achieve the paramount goals of identifying, protecting, detecting, and
responding to all potential risks and threats. Employing a defense-in-depth strategy, we proactively identify, investigate, and
resolve vulnerabilities and security incidents in a timely manner.
Continuous improvement is integral to our cybersecurity approach. Regular assessments, conducted with the expertise of
external security firms against international standards, allow us to quantify our program¶s effectiveness. The insights gained
from these assessments serve as a foundation for continuous improvement efforts. Outcomes are reported to our Audit
Committee for transparency and accountability. We rely on services from a variety of third-party providers to supply things
such as cloud storage and networks. On an annual basis, we review these providers to assess their risk profiles. We rely on
these third parties to have their own cybersecurity programs commensurate with their risk, and we cannot ensure in all
circumstances that their efforts will be successful.
Despite facing directed attacks, our systems have withstood such challenges without material interruptions to our business
operations. Recognizing the potential impact of significant disruptions, we remain steadfast in our commitment to fortify our
systems against evolving threats. Any significant disruption to our ability to transact business could adversely affect our
business performance as well as our reputation. Refer to Item 1A ³Risk Factors ± Our business operations could be disrupted
if our information technology systems fail to perform adequately or are breached.´
Heading our cybersecurity program is our Chief Information Officer (³CIO´). Our CIO has over 30 years of experience in
Software Engineering and Information Technology/Cybersecurity and is supported by skilled professionals from our
Information Technology team. This seasoned team provides regular updates to our Enterprise Risk Management Steering
Committee (the ³ERM´), composed of our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, and
other members of our senior leadership. Our Audit Committee and Board of Directors receive regular reports from the ERM,
as well as directly from our CIO on a quarterly basis. These reports cover various cybersecurity matters, including risk
assessments, mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance.
SUNOPTA INC.
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December 28, 2024 Form 10-K
Furthermore, our Board of Directors takes a proactive stance in overseeing our annual enterprise risk assessment. This
comprehensive evaluation encompasses key risks, including those associated with security, technology, and cybersecurity
threats, demonstrating our commitment to robust governance and risk management.
Item 2. Properties
Our leased executive offices, innovation center and pilot plant are located in Eden Prairie, Minnesota. The table below lists the
location, description and ownership of our production facilities. We believe our owned and leased facilities are suitable for our
operations and provide sufficient capacity to meet our requirements for the foreseeable future.
Location
Facility Description
Owned/Leased
Noncancellable
Lease Term End
Date
Alexandria, Minnesota
Aseptic beverage processing
Owned
Alexandria, Minnesota
Ingredient processing
Owned
Allentown, Pennsylvania
Aseptic beverage processing
Leased
April 2027(1)
Midlothian, Texas
Aseptic beverage processing
Leased
September 2037(2)
Modesto, California
Aseptic beverage and ingredient processing
Leased
May 2029(3)
Omak, Washington
Fruit snack processing
Leased
May 2027
St. David¶s, Ontario
Fruit snack processing
Leased
December 2026(4)
(1) Lease includes two five-year renewal options.
(2) Lease includes three five-year renewal options.
(3) Lease includes one remaining five-year renewal option.
(4) Lease includes a three-year renewal option.
Item 3. Legal Proceedings
For a discussion of legal proceedings, see note 19 of the consolidated financial statements included in Item 15 of this Form 10-
K.
Item 4. Mine Safety Disclosures
Not Applicable.
PART II
Item 5. Market for Registrant¶s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common shares are listed in U.S. dollars on The Nasdaq Stock Market LLC under the symbol ³STKL,´ and in Canadian
dollars on the Toronto Stock Exchange (³TSX´) under the symbol ³SOY.´
As at December 28, 2024, we had approximately 321 shareholders of record. We have never paid cash dividends on our
common stock and do not anticipate paying dividends in the foreseeable future. Our future dividend policy will depend on our
results of operations, financial condition and capital requirements, restrictions of debt and equity agreements to which we are
a party, and other factors considered relevant by our Board of Directors. The receipt of cash dividends by U.S. shareholders
from a Canadian corporation, such as we are, may be subject to Canadian withholding tax.
Shareholder Return Performance Graph
This performance graph shall not be deemed ³filed´ for purposes of Section 18 of the Exchange Act or incorporated by
reference into any filing of SunOpta under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.
SUNOPTA INC.
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December 28, 2024 Form 10-K
The following graph compares the five-year cumulative shareholder return on our common shares to the cumulative total return
of the S&P/TSX Composite and the NASDAQ Industrial Indices for the period from December 27, 2019 through December
27, 2024.
2019
2020
2021
2022
2023
2024
SunOpta Inc.
100.00
468.67
279.12
338.96
219.68
313.65
Nasdaq Industrial Index
100.00
151.87
165.25
107.33
138.39
177.94
S&P/TSX Composite Index
100.00
101.54
123.62
112.91
122.08
144.43
Assumes that $100.00 was invested in our common shares and in each index on December 27, 2019.
Item 6. [Reserved]
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December 28, 2024 Form 10-K
Item 7. Management¶s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Financial Information
This Management¶s Discussion and Analysis of Financial Condition and Results of Operations (³MD&A´) section provides
analysis of our operations and financial position for the fiscal year ended December 28, 2024 and includes information available
to February 26, 2025, unless otherwise indicated herein. It is supplementary information and should be read in conjunction
with the consolidated financial statements, and notes thereto, included in Item 15 of this Form 10-K (the ³Consolidated
Financial Statements´).
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 ³anticipate,´
³estimate,´ ³target,´ ³intend,´ ³project,´ ³potential,´ ³predict,´ ³continue,´ ³believe,´ ³expect,´ ³can,´ ³could,´ ³would,´
³should,´ ³may,´ ³might,´ ³plan,´ ³will,´ ³budget,´ ³forecast,´ 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 ³Risk Factors´ section at Item 1A of this Form 10-K.
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
We operate as an innovation partner, solutions provider, and value-added manufacturer for leading brands, and produce our
own brands, including SOWN®, Dream®, and West Life. Our product portfolio comprises plant-based beverages, fruit snacks,
nutritional beverages, broths, and teas, which are sold through retail, club, foodservice and e-commerce channels. We also
produce liquid and dry ingredients for internal use and for sale to other food and beverage manufacturers.
On March 4, 2024, we completed the sale of the net assets related to our smoothie bowls product line and exited the category.
Fiscal Year
We operate on a fiscal calendar that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday
closest to December 31. Fiscal years 2024, 2023 and 2022 were each 52-week periods ending on December 28, 2024, December
30, 2023 and December 31, 2022, respectively.
Revision of Prior Period Financial Statements
In connection with the preparation of our consolidated financial statements for fiscal 2024, we identified errors arising from
the underpayment of duties on certain of our products imported to the U.S. from Canada in fiscal years 2023 and 2022. We
determined that the impacts of these errors were not material to our previously issued consolidated financial statements for any
SUNOPTA INC.
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December 28, 2024 Form 10-K
of the prior quarters or annual periods in which they occurred. As a result, we have corrected these errors, together with other
unrelated immaterial errors, by revising our financial statements for the prior fiscal periods. Additionally, the comparative
financial information presented in this MD&A has been revised to reflect the correction of these errors. In the aggregate, the
correction of these errors had the effect of increasing the net losses previously reported for 2023 and 2022 by $3.8 million
($0.03 per share) and $1.6 million ($0.01 per share), respectively, and reducing our previous determination of adjusted earnings
before interest, taxes, depreciation and amortization (³EBITDA´) from continuing operations (as described below under ³Non-
GAAP Measures´) by $2.6 million and $1.6 million for 2023 and 2022, respectively.
Refer to note 1 to the Consolidated Financial Statements for additional information regarding the revisions to our prior period
financial statements.
Business Trends and Fiscal 2025 Outlook
During 2024, we experienced moderation in input cost inflation, relative to the elevated levels of recent years. We expect input
cost inflation in 2025 to remain at similar levels as 2024 and we anticipate our supply chain productivity initiatives, together
with modest pricing actions in 2025 will mitigate these inflationary pressures. While consumers are still experiencing higher
prices across food and beverage products, we have seen unit volumes returning in 2024 as inflation slows, and we expect this
trend to continue into 2025. However, the imposition of new or increased tariffs by the U.S. and/or other countries could
significantly impact the cost of some of our key inputs. In response to these additional tariffs, we may need to further raise
prices or incur additional expenses, which may reduce the competitiveness and level of consumption for certain of our products
and negatively impact our profit margins and earnings. We will continue to evaluate the evolving political and macroeconomic
environment to take action to mitigate the impact on our business.
For fiscal 2025, we are projecting higher revenues driven by organic volume growth from our beverages and snacks categories.
We anticipate an improved gross margin profile on a reported basis, reflecting investments in our supply chain process to
improve efficiency and output from our existing capital infrastructure in order to reduce per unit costs. The resulting increase
in gross profit, together with lower SG&A spending as a percentage of revenue, is expected to drive operating income growth
and improved cash flows. Additionally, by unlocking capacity from our existing assets through improved operating
performance, we plan to significantly reduce the level of investment in growth capital projects in 2025.
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December 28, 2024 Form 10-K
Consolidated Results of Operations for Fiscal Years 2024 and 2023
December 28,
2024
December 30,
2023
Change
Change
For the year ended
$
$
$
%
Revenues
723,728
626,730
96,998
15.5%
Cost of goods sold
627,424
540,730
86,694
16.0%
Gross profit
96,304
86,000
10,304
12.0%
Gross margin
13.3%
13.7%
-0.4%
Operating expenses
Selling, general and administrative expenses
79,406
78,654
752
1.0%
Intangible asset amortization
1,784
1,784
-
0.0%
Other expense (income), net
(1,833)
455
(2,288)
*
Foreign exchange loss
1,357
110
1,247
*
Total operating expenses
80,714
81,003
(289)
-0.4%
Operating income
15,590
4,997
10,593
212.0%
Interest expense, net
24,908
26,909
(2,001)
-7.4%
Other non-operating expense
686
-
686
*
Loss from continuing operations before income taxes
(10,004)
(21,912)
11,908
54.3%
Income tax expense
1,470
3,269
(1,799)
-55.0%
Loss from continuing operations
(11,474)
(25,181)
13,707
54.4%
Net loss from discontinued operations
(5,919)
(153,608)
147,689
96.1%
Net loss
(17,393)
(178,789)
161,396
90.3%
Dividends and accretion on preferred stock
(539)
(1,981)
1,442
72.8%
Loss attributable to common shareholders
(17,932)
(180,770)
162,838
90.1%
* Percentage not meaningful
Revenues for the year ended December 28, 2024 increased by 15.5% to $723.7 million from $626.7 million for the year ended
December 30, 2023. The change in revenues from 2023 to 2024 was due to the following:
$
%
2023 revenues
626,730
Volume/Mix
128,962
20.6%
Price
(21,984)
-3.5%
Exit from smoothie bowls
(9,980)
-1.6%
2024 revenues
723,728
15.5%
For the year ended December 28, 2024, the 15.5% increase in revenues reflected a favorable volume/mix impact of 20.6%,
partially offset by a 3.5% overall price reduction due to the pass-through of lower commodity costs for certain raw materials,
together with a 1.6% revenue loss related to our exit from the smoothie bowls category in March 2024. The favorable
volume/mix reflected incremental output from both our existing capital infrastructure and capital expansion projects.
Additionally, new product innovation launches produced sales volume growth with existing and new customers across our
beverage, broth and fruit snacks categories.
Gross profit increased $10.3 million, or 12.0%, to $96.3 million for the year ended December 28, 2024, compared with $86.0
million for the year ended December 30, 2023. Gross margin was 13.3% for the year ended December 28, 2024, compared
with 13.7% for the year ended December 30, 2023, a decrease of 40 basis points.
For the year ended December 28, 2024, we incurred start-up costs of $16.3 million, compared with $18.7 million for the year
ended December 30, 2023. Start-up costs for the year ended December 28, 2024, were mainly related to the scale-up of
production at our plant-based beverage facility in Midlothian, Texas, including the start-up of a new high-speed Edge line,
together with the impact of production downtime during the fourth quarter of 2024, to allow for the installation of new electrical
SUNOPTA INC.
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December 28, 2024 Form 10-K
switchgear to replace temporary equipment that had been put in use due to supply chain disruptions during the facility¶s
construction. In addition, for the year ended December 28, 2024, we incurred temporary third-party haul-off charges of $4.4
million for excess wastewater produced at our Midlothian facility, due to volume constraints within our current treatment
system, and we recognized direct costs, net of expected insurance recoveries, of $2.1 million related to our voluntary withdrawal
in the second quarter of 2024, of certain batches of aseptically-packaged products that may have had the potential for non-
pathogenic microbial contamination. Excluding the impact of start-up costs, wastewater charges and product withdrawal costs,
adjusted gross margin was 16.4% for the year ended December 28, 2024, compared with 17.2% for the year ended December
30, 2023, a decrease of 80 basis points. See below under ³Non-GAAP Measures´ for a reconciliation of adjusted gross margin
from gross margin calculated in accordance with U.S. GAAP.
The 80-basis point decrease in adjusted gross margin reflected the impact of incremental depreciation of new production
equipment related to capital expansion projects ($5.5 million or 0.8% gross margin impact), together with manufacturing
inefficiencies resulting from the excess wastewater and product withdrawal issues, and higher inventory reserves, partially
offset by higher sales and production volumes for beverages, broths and fruit snacks driving improved plant utilization.
Operating income increased $10.6 million to $15.6 million for the year ended December 28, 2024, compared with $5.0 million
for the year ended December 30, 2023. The increase in operating income reflected higher gross profit, as described above,
together with a gain on sale of the smoothie bowls product line of $1.8 million, and lower business development costs and
employee severance costs following the divestiture of our frozen fruit business (³Frozen Fruit´) and related consolidation of
our continuing operation in 2023. These factors were partially offset by increased operational productivity consultancy costs
and higher variable employee compensation accruals based on performance. In addition, for the year ended December 28, 2024,
we recognized an unrealized foreign exchange loss of $1.6 million on peso-denominated restricted cash held in Mexico.
(Further details on the changes in revenue, gross profit and operating income are provided in the rollforward tables below.)
Net interest expense decreased by $2.0 million to $24.9 million for the year ended December 28, 2024, compared with $26.9
million for the year ended December 30, 2023. The net decrease was due to a $1.9 million increase in paid-in-kind interest
income from promissory notes related to the divestiture of Frozen Fruit and a non-recurring $1.6 million loss on extinguishment
of debt related to the refinancing of our credit agreement in 2023, partially offset by higher interest expense on borrowings.
Other non-operating expense of $0.7 million for the year ended December 28, 2024, reflected the loss on sale of certain trade
receivables to a third-party financial institution under the Receivables Sales Program that we entered into in 2024 (as described
below under ³Liquidity and Capital Resources´).
Income taxes were recognized at an effective rate of (14.7)% for the year ended December 28, 2024, compared with (14.9)%
recognized for the year ended December 30, 2023. Our effective tax rate reflects the jurisdictional mix of earnings and
recognition of a full valuation allowance against certain deferred tax assets.
Loss from continuing operations was $11.5 million for the year ended December 28, 2024, compared with a loss of $25.2
million for the year ended December 30, 2023. Diluted loss per share from continuing operations attributable to common
shareholders (after accretion on preferred stock) was $0.10 for the year ended December 28, 2024, compared with a diluted
loss per share (after dividends and accretion on preferred stock) of $0.24 for the year ended December 30, 2023.
We recognized a loss from discontinued operations related to Frozen Fruit of $5.9 million (diluted loss per share of $0.05) for
the year ended December 28, 2024, compared with a loss of $153.6 million (diluted loss per share of $1.34) for the year ended
December 30, 2023, which included pre-tax losses on the divestiture of Frozen Fruit of $5.4 million and $119.8 million
recognized in 2024 and 2023, respectively. Refer to note 2 to the Consolidated Financial Statements for additional details.
We realized a loss attributable to common shareholders of $17.9 million (diluted loss per share of $0.15) for the year ended
December 28, 2024, compared with a loss attributable to common shareholders of $180.8 million (diluted loss per share of
$1.58) for the year ended December 30, 2023.
Adjusted earnings from continuing operations were $13.4 million, or $0.11 earnings per diluted share, for the year ended
December 28, 2024, compared with adjusted earnings from continuing operations of $5.8 million, or $0.05 earnings per diluted
share, for the year ended December 30, 2023.
Adjusted EBITDA from continuing operations increased $12.8 million, or 16.8%, to $88.7 million for the year ended December
28, 2024, compared with $75.9 million for the year ended December 30, 2023.
SUNOPTA INC.
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December 28, 2024 Form 10-K
Adjusted earnings from continuing operations and adjusted EBITDA from continuing operations are non-GAAP financial
measures. See below under ³Non-GAAP Measures´ for a reconciliation of adjusted earnings from continuing operations and
adjusted EBITDA from continuing operations from 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 year ended
December 28,
2024
December 30,
2023
Change
% Change
Revenues
$
723,728
$
626,730
$
96,998
15.5%
Gross profit
96,304
86,000
10,304
12.0%
Gross margin
13.3%
13.7%
-0.4%
Operating income
$
15,590
$
4,997
$
10,593
212.0%
Operating margin
2.2%
0.8%
1.4%
Revenues
The table below explains the $97.0 million increase in revenues from $626.7 million for the year ended December 30, 2023 to
$723.7 million for the year ended December 28, 2024:
Revenues for the year ended December 30, 2023
$626,730
Sales volume growth for broths, protein shakes, teas, and plant-based beverages,
partially offset by the impact of lower pass-through pricing to customers due to lower
costs for certain raw materials
77,836
Sales volume growth of 30% for fruit snacks, reflecting the addition of new production
and packaging capacity in 2023 to meet unfilled demand
29,142
Impact of the exit from the smoothie bowls category in March 2024
(9,980)
Revenues for the year ended December 28, 2024
$723,728
Gross Profit
The table below explains the $10.3 million increase in gross profit from $86.0 million for the year ended December 30, 2023
to $96.3 million for the year ended December 28, 2024:
Gross profit for the year ended December 30, 2023
$86,000
Higher sales and production volumes for beverages, broths, and fruit snacks, together
with lower commodity costs for certain raw materials, partially offset by higher
inventory reserves
19,914
Decrease in start-up costs related to capital expansion projects
2,390
Incremental depreciation related to capital expansion projects
(5,494)
Temporary excess wastewater haul-off charges, due to volume constraints within the
current treatment system at our Midlothian, Texas, facility
(4,361)
Direct costs, net of expected insurance recoveries, related to the voluntary withdrawal
in the second quarter of 2024, of specific batches of aseptically-packaged product that
may have had the potential for non-pathogenic microbial contamination
(2,145)
Gross profit for the year ended December 28, 2024
$96,304
SUNOPTA INC.
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December 28, 2024 Form 10-K
Operating Income
The table below explains the $10.6 million increase in operating income from $5.0 million for the year ended December 30,
2023 to $15.6 million for the year ended December 28, 2024:
Operating income for the year ended December 30, 2023
$4,997
Increase in gross profit, as explained above
$10,304
Gain on sale of smoothie bowls product line
1,800
Increased consultancy costs related to operational productivity initiatives and
higher employee variable compensation based on performance, together with an
unrealized foreign exchange loss of $1.6 million on peso-denominated restricted
cash held in Mexico, partially offset by lower business development costs and
employee severance costs following the divestiture of Frozen Fruit and related
consolidation of our continuing operations in 2023
(1,511)
Operating income for the year ended December 28, 2024
$15,590
Consolidated Results of Operations for Fiscal Years 2023 and 2022
December 30,
2023
December 31,
2022
Change
Change
For the year ended
$
$
$
%
Revenues
626,730
591,395
35,335
6.0%
Cost of goods sold
540,730
493,257
47,473
9.6%
Gross profit
86,000
98,138
(12,138)
-12.4%
Gross margin
13.7%
16.6%
-2.9%
Operating expenses
Selling, general and administrative expenses
78,654
78,469
185
0.2%
Intangible asset amortization
1,784
1,784
-
0.0%
Other expense, net
455
1,651
(1,196)
-72.4%
Foreign exchange loss (gain)
110
(107)
217
*
Total operating expenses
81,003
81,797
(794)
-1.0%
Operating income
4,997
16,341
(11,344)
-69.4%
Interest expense, net
26,909
13,156
13,753
104.5%
Earnings (loss) from continuing operations before income
taxes
(21,912)
3,185
(25,097)
*
Income tax expense
3,269
896
2,373
264.8%
Earnings (loss) from continuing operations
(25,181)
2,289
(27,470)
*
Net loss from discontinued operations
(153,608)
(8,722)
(144,886)
*
Net loss
(178,789)
(6,433)
(172,356)
*
Dividends and accretion on preferred stock
(1,981)
(3,109)
1,128
36.3%
Loss attributable to common shareholders
(180,770)
(9,542)
(171,228)
*
* Percentage not meaningful
SUNOPTA INC.
27
December 28, 2024 Form 10-K
Revenues for the year ended December 30, 2023 increased by 6.0% to $626.7 million from $591.4 million for the year ended
December 31, 2022. The change in revenues from 2022 to 2023 was due to the following:
$
%
2022 revenues
591,395
Volume/Mix
19,222
3.3%
Price
16,113
2.7%
2023 revenues
626,730
6.0%
For the year ended December 30, 2023, the 6.0% increase in revenues reflected a 2.7% increase in pricing mainly reflecting
the wrap-around benefit of pricing actions taken with customers in 2022 to offset inflationary cost increases, together with a
favorable volume/mix impact of 3.3%. The favorable volume/mix impact reflected sales volume growth for plant-based
beverages, protein shakes, and teas, together with higher sales volumes for fruit snacks and smoothie bowls. These factors were
partially offset by lower external ingredient sales due to a customer transferring part of its business to a second-source supplier
and increased internal demand for oat base, together with lower broth volumes.
Gross profit decreased $12.1 million, or 12.4%, to $86.0 million for the year ended December 30, 2023, compared with $98.1
million for the year ended December 31, 2022. Gross margin for the year ended December 30, 2023 was 13.7% compared to
16.6% for the year ended December 31, 2022, a decrease of 290 basis points.
For the year ended December 30, 2023, we incurred start-up costs of $18.7 million related to our new plant in Midlothian,
Texas, and new extrusion and high-speed packaging lines at our fruit snacks facility in Omak, Washington, compared with $5.8
million of start-up costs incurred in 2022. Additionally, in 2023, we incurred incremental costs, net of expected recoveries, of
$3.4 million related to the withdrawal of specific batches of aseptically-packaged product due to a faulty seal caused by an
equipment misconfiguration by a third-party service provider. Excluding the impact of these costs, adjusted gross margin for
the year ended December 30, 2023 was 17.2% compared to 17.6% for the year ended December 31, 2022, a decrease of 40
basis points. See below under ³Non-GAAP Measures´ for a reconciliation of adjusted gross margin from gross margin
calculated in accordance with U.S. GAAP.
The 40-basis point decrease in adjusted gross margin reflected the impact of incremental depreciation of new production
equipment for capital expansion projects ($8.5 million or 1.4% gross margin impact) and higher manufacturing costs, partially
offset by the wrap-around benefit of pricing actions taken in 2022 to recover input cost inflation, together with a favorable mix
shift in our ingredient operations, with increased internal use of oat base to support our beverage business and lower external
sales.
Operating income decreased $11.3 million to $5.0 million for the year ended December 30, 2023, compared with $16.3 million
for the year ended December 31, 2022. The decrease in operating income reflected lower gross profit, as described above,
together with higher business development and employee severance costs in connection with the divestiture of Frozen Fruit
and related consolidation of our continuing operations, partially offset by lower employee incentive compensation accruals and
variable stock-based compensation expense based on performance.
(Further details on the changes in revenue, gross profit and operating income are provided in the rollforward tables below.)
Net interest expense increased by $13.7 million to $26.9 million for the year ended December 30, 2023, compared with $13.2
million for the year ended December 31, 2022, resulting from an increase in average outstanding debt to finance capital
expansion projects, together with the impact of higher interest rates. Additionally, interest expense, net, includes a loss on the
extinguishment of debt of $1.6 million recognized in connection with the refinancing of our credit agreement in December
2023. Interest expense capitalized as part of the construction cost of property, plant and equipment was $0.3 million and $1.2
million in 2023 and 2022, respectively.
Income taxes were recognized at an effective rate of (14.9)% for the year ended December 30, 2023, compared with 28.1%
recognized for the year ended December 31, 2022, which reflected the recognition of a full valuation allowance against U.S.
deferred tax assets in 2023.
Loss from continuing operations for the year ended December 30, 2023 was $25.2 million, compared with earnings of $2.3
million for the year ended December 31, 2022. Diluted loss per share from continuing operations attributable to common
shareholders (after dividends and accretion on preferred stock) was $0.24 for the year ended December 30, 2023, compared
with diluted loss per share of $0.01 for the year ended December 31, 2022.
SUNOPTA INC.
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December 28, 2024 Form 10-K
We recognized a loss from discontinued operations of $153.6 million (diluted loss per share of $1.34) for the year ended
December 30, 2023, compared with a loss of $8.7 million (diluted loss per share of $0.08) for the year ended December 31,
2022. The loss from discontinued operations included a pre-tax loss on the divestiture of Frozen Fruit of $119.8 million in
2023, compared with a pre-tax loss on the divestiture of our sunflower business (³Sunflower´) of $23.2 million in 2022, together
with an $8.2 million loss recognized in 2022 on the settlement of the purchase price allocation related to the 2020 divestiture
of our global ingredients business, Tradin Organic.
We realized a loss attributable to common shareholders of $180.8 million (diluted loss per share of $1.58) for the year ended
December 30, 2023, compared with a loss attributable to common shareholders of $9.5 million (diluted loss per share of $0.09)
for the year ended December 31, 2022.
For the year ended December 30, 2023, adjusted earnings from continuing operations were $5.8 million, or $0.05 earnings per
diluted share, compared with $5.7 million, or $0.05 earnings per diluted share, for the year ended December 31, 2022.
Adjusted EBITDA from continuing operations increased $13.8 million, or 22.3%, to $75.9 million for the year ended December
30, 2023, compared with $62.1 million for the year ended December 31, 2022.
Adjusted earnings and adjusted EBITDA are non-GAAP financial measures. See below under ³Non-GAAP Measures´ for a
reconciliation of adjusted earnings and adjusted EBITDA 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 year ended
December 30,
2023
December 31,
2022
Change
% Change
Revenues
$
626,730
$
591,395
$
35,335
6.0%
Gross profit
86,000
98,138
(12,138)
-12.4%
Gross margin
13.7%
16.6%
-2.9%
Operating income
$
4,997
$
16,341
$
(11,344)
-69.4%
Operating margin
0.8%
2.8%
-2.0%
Revenues
The table below explains the $35.3 million increase in revenues from $591.4 million for the year ended December 31, 2022 to
$626.7 million for the year ended December 30, 2023:
Revenues for the year ended December 31, 2022
$591,395
Sales volume growth for plant-based beverages, protein shakes, and teas, together with
the wrap-around benefit of pricing actions taken in 2022 to offset input cost inflation,
partially offset by lower broth volumes
44,780
Sales volume growth for fruit snacks
15,317
Higher sales volumes for smoothie bowls
3,572
Lower external ingredient sales due to a customer transferring part of its business to a
second-source supplier and increased internal demand for oat base
(28,334)
Revenues for the year ended December 30, 2023
$626,730
SUNOPTA INC.
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December 28, 2024 Form 10-K
Gross Profit
The table below explains the $12.1 million decrease in gross profit from $98.1 million for the year ended December 31, 2022
to $86.0 million for the year ended December 30, 2023:
Gross profit for the year ended December 31, 2022
$98,138
Increase in start-up costs related to capital expansion projects
(12,968)
Incremental depreciation related to capital expansion projects
(8,494)
Incremental costs, net of expected recoveries, related to the withdrawal of specific
batches of aseptically-packaged product due to a faulty seal caused by an equipment
misconfiguration by a third-party service provider
(3,430)
Higher sales pricing and volume growth, together with increased internal use of oat
base to support our beverage business, partially offset by higher manufacturing costs
12,754
Gross profit for the year ended December 30, 2023
$86,000
Operating Income
The table below explains the $11.3 million decrease in operating income from $16.3 million for the year ended December 31,
2022 to $5.0 million for the year ended December 30, 2023:
Operating income for the year ended December 31, 2022
$16,341
Decrease in gross profit, as explained above
($12,138)
Higher business development and employee severance costs in connection with the
divestiture of Frozen Fruit and related consolidation of our continuing operations,
together with a $0.4 million loss on a foreign exchange hedge in connection with
the divestiture of Frozen Fruit, partially offset by lower employee incentive
compensation accruals based on performance, together with lower reserves for legal
settlements and losses on asset disposals
(603)
Lower variable stock-based compensation expense based on performance, together
with increased forfeitures due to employee turnover
1,397
Operating income for the year ended December 30, 2023
$4,997
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 ³Term Loan Credit Facility´) and an $85.0 million revolving credit facility (the ³Revolving Credit Facility´) (collectively,
the ³Credit Facilities´). As at December 28, 2024, $173.3 million remained outstanding under the Term Loan Credit Facility
and we had utilized $39.8 million of the Revolving Credit Facility, including $5.9 million in letters of credit. For more
information on our Credit Facilities, including maturity dates, see note 12 to the Consolidated Financial Statements.
On August 28, 2024, we entered into an agreement to sell, from time to time, on a revolving basis, up to $30.0 million aggregate
amount of trade receivables of eligible customers to a third-party financial institution in exchange for cash proceeds (the
³Receivables Sales Program´ ± see note 4 to the Consolidated Financial Statements). Additionally, we utilize, from time to
time, supply chain finance (³SCF´) 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
SUNOPTA INC.
30
December 28, 2024 Form 10-K
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 December 28, 2024 and December 30, 2023, we had $11.1 million and $17.6 million
principal amount outstanding under these facilities, respectively. 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.
On April 17, 2024, we eliminated the dividend rights attached to the shares of Series B-1 Preferred Stock of our subsidiary,
SunOpta Foods Inc., effective from and after December 31, 2023 (see note 13 to the Consolidated Financial Statements). The
elimination of the cumulative dividend of 8.0% per year results in annual savings of $1.2 million.
As at December 28, 2024, we had approximately $130 million of purchase commitments related to inventories to be used in
our production processes over the next 12 months, which we intend to fund through operating cash flows, supplemented from
time to time with short-term borrowings under our Revolving Credit Facility.
For information on our lease obligations, see note 8 to the Consolidated Financial Statements.
We estimate capital expenditures in 2025 of approximately $30 million to $35 million, mainly consisting of productivity and
maintenance projects (including upgrades to our wastewater treatment system at our Midlothian, Texas, facility). For 2025, our
estimated capital expenditures directly related to environmental projects are not expected to be material. 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.
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 and extended
payable facilities, as well as anticipated 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 business, 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.
Cash Flows
Summarized cash flow information for the years ended December 28, 2024, December 30, 2023 and December 31, 2022 is as
follows:
Change
December 28,
2024
December 30,
2023
December 31,
2022
2023 to
2024
2022 to
2023
$
$
$
$
$
Net cash flows provided by (used in):
Continuing operations:
Operating activities
52,339
3,575
30,746
48,764
(27,171)
Investing activities
(24,980)
(46,519)
(120,957)
21,539
74,438
Financing activities
(31,091)
(48,337)
96,534
17,246
(144,871)
Discontinued operations
3,990
99,356
(5,871)
(95,366)
105,227
Operating Activities of Continuing Operations
Cash provided by operating activities of continuing operations increased $48.8 million from 2023 to 2024. The increase in cash
provided mainly reflected improved working capital efficiency attributable to our Receivables Sales Program, together with
increased operating income, driven by revenue volume growth.
Cash provided by operating activities of continuing operations decreased $27.2 million from 2022 to 2023, which reflected the
impact of start-up costs related to our Midlothian, Texas, facility, and higher cash interest expense on borrowings to finance
capital expenditures, and unrecovered product withdrawal and recall costs.
SUNOPTA INC.
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December 28, 2024 Form 10-K
Investing Activities of Continuing Operations
Cash used in investing activities of continuing operations decreased $21.5 million from 2023 to 2024, which mainly reflected
lower capital expenditures, together with the receipt of cash proceeds of $6.3 million from the sale of the smoothie bowls
product line.
Cash used in investing activities of continuing operations decreased $74.4 million from 2022 to 2023, which reflected the
completion of certain capital projects, including the construction of our new plant-based beverage facility in Midlothian, Texas.
Financing Activities of Continuing Operations
Cash used in financing activities of continuing operations was $31.1 million for 2024, which reflected repayments of long-term
debt related to completed capital projects, together with net repayments of notes payable in connection with our extended
payables facilities.
Cash used in financing activities of continuing operations was $48.3 million for 2023, which reflected the repayment of
approximately $78 million of debt following the divestiture of Frozen Fruit, together with reduced levels of new borrowings
as capital projects, including the Midlothian, Texas, facility, were completed, partially offset by net proceeds from issuance of
notes payable.
Cash provided by financing activities of continuing operations was $96.5 million for 2022, which mainly reflected debt
borrowings and lease financing to fund construction activities related to capital projects.
Discontinued Operations
Net cash provided by discontinued operations was $4.0 million for 2024, which reflected remaining proceeds of $6.3 million
from a short-term note receivable related to the Frozen Fruit divestiture, partially offset by the settlement of pre-divestiture
obligations.
Net cash provided by discontinued operations was $99.4 million for 2023, which mainly reflected net cash consideration of
approximately $92 million received from the divestiture of Frozen Fruit.
Net cash used by discontinued operations was $5.9 million for 2022, which mainly reflected the final settlement of the purchase
price allocation and other post-closing matters in connection with the divestiture of Tradin Organic in 2020.
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. The use of estimates is pervasive throughout our financial statements. The
following are the accounting estimates which we believe to be most significant to our business.
Income Taxes
Deferred tax assets and liabilities are recognized for future tax effects of temporary differences between financial and income
tax reporting using tax rates in effect for the years in which the differences are expected to reverse. We record valuation
allowances when it is likely that all or a portion of a deferred tax asset will not be realized. Our valuation allowances mainly
relate to deferred tax assets for U.S. federal and state operating losses and Canadian federal capital losses. Changes in valuation
allowances from period to period are included in our income tax provision in the period of change. In determining whether a
valuation allowance is required, we consider many factors, including the specific tax jurisdiction, both historical and projected
future earnings of our business, loss carryback and carryforward periods, and tax planning strategies. Many of the judgments
made in recording valuation allowances involve assumptions and estimates that are highly subjective and, due to changes in
facts and circumstances, differences between actual future events and prior assumptions and estimates could result in
adjustments to these valuation allowances.
SUNOPTA INC.
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December 28, 2024 Form 10-K
Contingencies
We are subject to loss contingencies, including various legal and regulatory proceedings, and asserted and potential claims that
arise in the ordinary course of business. Provisions for loss contingencies are recorded when we determine that it is both
probable that a liability has been incurred and the amount of loss can be reasonably estimated. Potential insurance recoveries
in connection with recognized loss contingencies are recognized in the period in which such recoveries are determined to be
probable of realization. In establishing our estimates for loss contingencies and related recoveries, we consider past experience
and input from external advisors and legal counsel. We re-evaluate our estimates for loss contingencies and related recoveries
as additional information becomes available. Given the inherent uncertainties, the ultimate settlement of a contingent liability
and/or related insurance receivable could differ from our estimates, which would impact our reported financial results. See note
19 of the Consolidated Financial Statements for disclosures related to recognized loss contingencies and related insurance
recoveries.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements is provided in note 1 of the Consolidated Financial Statements.
Non-GAAP Measures
We have included in this MD&A measures of financial performance that are not defined by U.S. GAAP. These non-GAAP
financial measures exclude specific 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. For each of these non-GAAP
measures, we provide a reconciliation to the most directly comparable U.S. GAAP measure, an explanation of why management
believes the non-GAAP measure provides useful information to financial statement users, and any additional purposes for
which management uses the non-GAAP measure. These non-GAAP measures are presented solely to allow users to more fully
assess the Company¶s results of operations and should not be considered in isolation of, or as substitutes for, an analysis of the
Company¶s results as reported under U.S. GAAP. Additionally, these non-GAAP measures may be different from similar
measures used by other companies.
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 non-capitalizable start-up costs that are incurred in connection with capital
expansion projects. In recent years, we have undergone the largest capital expansion in our company¶s history, including the
construction of our new plant-based beverage facility in Midlothian, Texas. As a result, start-up costs have had a significant
impact on the comparability of reported gross margins in 2024, 2023 and 2022, which may obscure trends in our margin
performance. Additionally, our measure of adjusted gross margin may exclude 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 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 table presents a reconciliation of adjusted gross margin from reported gross margin
calculated in accordance with U.S. GAAP.
SUNOPTA INC.
33
December 28, 2024 Form 10-K
Revenues
Cost of Goods Sold
Gross Profit
For the year ended
$
$
$
December 28, 2024
As reported
723,728
627,424
96,304
Adjustments:
Start-up costs(a)
1,727
(14,608)
16,335
Wastewater haul-off charges(b)
-
(4,361)
4,361
Product withdrawal costs(c)
-
(2,145)
2,145
As adjusted
725,455
606,310
119,145
Reported gross margin
13.3%
Adjusted gross margin
16.4%
Revenues
Cost of Goods Sold
Gross Profit
For the year ended
$
$
$
December 30, 2023
As reported
626,730
540,730
86,000
Adjustments:
Start-up costs(a)
1,728
(16,997)
18,725
Product withdrawal costs(c)
-
(3,440)
3,440
As adjusted
628,458
520,293
108,165
Reported gross margin
13.7%
Adjusted gross margin
17.2%
Revenues
Cost of Goods Sold
Gross Profit
For the year ended
$
$
$
December 31, 2022
As reported
591,395
493,257
98,138
Adjustment:
Start-up costs(a)
-
(5,757)
5,757
As adjusted
591,395
487,500
103,895
Reported gross margin
16.6%
Adjusted gross margin
17.6%
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 table presents 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.
SUNOPTA INC.
34
December 28, 2024 Form 10-K
Year Ended
December 28, 2024
December 30, 2023
December 31, 2022
Per
Share
Per
Share
Per
Share
$
$
$
$
$
$
Earnings (loss) from continuing operations
(11,474)
(25,181)
2,289
Dividends and accretion on preferred stock
(539)
(1,981)
(3,109)
Loss attributable to common shareholders
(12,013)
(0.10)
(27,162)
(0.24)
(820)
(0.01)
Adjusted for:
Start-up costs(a)
19,149
20,249
6,028
Wastewater haul-off charges(b)
4,361
-
-
Product withdrawal costs(c)
2,145
3,440
-
Unrealized foreign exchange loss on restricted
cash(d)
1,607
-
-
Business development costs(e)
-
2,390
1,170
Loss on extinguishment of debt(f)
-
1,584
-
Severance costs(g)
-
897
-
Gain on sale of smoothie bowls product line(h)
(1,800)
-
-
Other(i)
(33)
471
1,651
Change in valuation allowance for deferred tax
assets(j)
-
3,978
-
Net income tax on adjusting items(k)
-
-
(2,326)
Adjusted earnings from continuing operations
13,416
0.11
5,847
0.05
5,703
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.
SUNOPTA INC.
35
December 28, 2024 Form 10-K
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 table presents 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.
Year Ended
December 28, 2024
December 30, 2023
December 31, 2022
$
$
$
Earnings (loss) from continuing operations
(11,474)
(25,181)
2,289
Interest expense, net
24,908
26,909
13,156
Loss on sale of receivables*
686
-
-
Income tax expense
1,470
3,269
896
Depreciation and amortization
36,497
31,039
23,047
Stock-based compensation
11,190
12,432
13,830
Adjusted for:
Start-up costs(a)
19,149
20,249
6,028
Wastewater haul-off charges(b)
4,361
-
-
Product withdrawal costs(c)
2,145
3,440
-
Unrealized foreign exchange loss on restricted
cash(d)
1,607
-
-
Business development costs(e)
-
2,390
1,170
Severance costs(g)
-
897
-
Gain on sale of smoothie bowls product line(h)
(1,800)
-
-
Other(i)
(33)
471
1,651
Adjusted EBITDA from continuing operations
88,706
75,915
62,067
* Included in other non-operating expense.
Footnotes
(a) For 2024, start-up costs of $16.3 million were recorded as a reduction of revenues ($1.7 million) and an increase to cost
of goods sold ($14.6 million). Start-up costs in 2024 were mainly related to the scale-up of production at our plant-based
beverage facility in Midlothian, Texas, including the start-up of a new high-speed Edge line, as well as the impact of
production downtime during the fourth quarter of 2024, to allow for the installation of new electrical switchgear to replace
temporary equipment that had been put in use due to supply chain disruptions during the facility¶s construction. For 2023,
start-up costs of $18.7 million were recorded as a reduction to revenues ($1.7 million) and an increase to cost of goods
sold ($17.0 million). Start-up costs in 2023 were mainly related to the initial ramp-up of production at our Midlothian,
Texas, facility, and the addition of new extrusion and high-speed packaging lines at our fruit snacks facility in Omak,
Washington. Additionally, for 2024 and 2023, start-up costs included $2.8 million and $1.5 million, respectively, of
consultancy fees related to operational productivity initiatives, which were recorded in SG&A expenses. For 2022, start-
up costs were mainly related to the hiring and training of new employees for the Midlothian facility, and the integration of
the acquired Dream and West Life brands, which are recorded in cost of goods sold ($5.7 million) and SG&A expenses
($0.3 million).
(b) For 2024, reflects temporary third-party haul-off charges for excess wastewater produced at our Midlothian, Texas, facility,
due to volume constraints within our current treatment system. These charges are recorded in cost of goods sold.
(c) For 2024, reflects certain direct costs, net of expected insurance recoveries, related to the voluntary withdrawal from
customers of certain batches of aseptically packaged products that may have had the potential for non-pathogenic microbial
contamination. For 2023, reflects direct costs, net of expected recoveries, related to the withdrawal from customers of
specific batches of aseptically-packaged product due to a faulty seal caused by an equipment misconfiguration by a third-
party service provider. Product withdrawal costs are recorded in cost of goods sold.
(d) For 2024, reflects an unrealized foreign exchange loss associated with peso-denominated bank accounts in Mexico that
were retained following the divestiture of Frozen Fruit. These accounts are currently subject to a judicial hold in connection
with a litigation matter.
SUNOPTA INC.
36
December 28, 2024 Form 10-K
(e) For 2023, business development costs were related to the divestiture of Frozen Fruit. For 2022, these costs related to the
divestitures of Frozen Fruit and Sunflower. These costs are recorded in SG&A expenses.
(f) For 2023, reflects a loss on the extinguishment of debt in connection with the refinancing of our credit agreement in
December 2023, which is recorded in interest expense, net.
(g) For 2023, reflects employee severance costs recognized in connection with the consolidation of our continuing operations
following the divestiture of Frozen Fruit, which are recorded in SG&A expenses.
(h) For 2024, reflects the pre-tax gain on sale of the smoothie bowls product line, which is recorded in other income.
(i) For 2024, other reflects a gain on sale of a former warehouse facility, together with gains on the settlement of certain legal
matters, partially offset by accrued demolition costs related to our former roasted snack facility, which was abandoned in
2018. For 2023, other includes a $0.4 million loss on a foreign exchange hedge in connection with the divestiture of Frozen
Fruit and reserves for legal settlements. For 2022, other includes exit costs related to a former fruit ingredient processing
facility and reserves for legal settlements. These other amounts are recorded in other expense/income.
(j) For 2023, reflects an increase to the valuation allowance for U.S. deferred tax assets based on an assessment of the future
realizability of the related tax benefits.
(k) Reflects the tax effect of the adjustments to earnings calculated based on the statutory tax rates applicable in the tax
jurisdiction of the underlying adjustment, net of deferred tax valuation allowances.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk
Variable and fixed rate borrowings carry different types of interest rate risk. Variable rate debt gives less predictability to
earnings and cash flows as interest rates change, while the fair value of fixed rate debt is affected by changes in interest rates.
As at December 28, 2024, we had approximately $207 million of variable rate debt, mainly comprised of our Credit Facilities,
and approximately $59 million principal amount of fixed rate debt, comprised of finance lease obligations. A one percent, or
100 basis-point, change in interest rates would have a pre-tax effect of approximately $2.1 million on our results of operations
and cash flows, based on current outstanding borrowings of variable rate debt, and the fair value of the fixed-rate finance lease
liabilities would increase or decrease by approximately $0.9 million.
Foreign currency risk
Our operations, assets and customers are principally located in the U.S. All of our U.S. subsidiaries use the U.S. dollar as their
functional currency, and the U.S. dollar is also our reporting currency. In addition, the functional and reporting currencies of
our Canadian operations are the U.S. dollar. Our U.S. and Canadian operations also have limited exposure to foreign currency
transactions since sales and purchases are predominately made in U.S. dollars. We are currently exposed to fluctuations in the
exchange rate between the U.S. dollar (USD) and Mexican peso (MXN) on peso-denominated bank accounts in Mexico. A
10% change in the USD to MXN rate of exchange would have a foreign exchange gain or loss impact on our consolidated
results of operations of approximately $0.7 million. With the exception of this exposure, as at December 28, 2024, a 10%
change in foreign exchange rates would not have a material impact on our consolidated financial position, results of operations,
or cash flows.
Price risk
Certain agricultural commodities and ingredients we use in the production of our products are exposed to market price risk,
including grains, nuts, sweeteners, and flavorings. In addition, other inputs, such as packaging materials, energy, fuel, storage,
and freight, are exposed to price fluctuations due to weather conditions, energy costs, fuel prices, transportation and storage
demands, tariffs, environmental and other sustainability regulations, currency fluctuations, and other factors that are beyond
our control. In addition, the impacts of global macroeconomic conditions have contributed to higher commodity inflation and
input costs over the past few years. We currently do not utilize derivative contracts to hedge our exposure to fluctuations in
input prices.
SUNOPTA INC.
37
December 28, 2024 Form 10-K
Changes in the prices of our products may lag changes in the costs to produce and ship our products due to contractual
restrictions in our revenue contracts with customers, or competitive pressures. If we are unable to increase our prices to offset
increasing costs, our gross margins, operating results, and cash flows could be materially affected.
Our ability to pass through higher input costs to our customers on a timely basis depends on how we go-to-market, that is
private label, co-manufacturing, or branded products. In our private label contracts, the timing of pass-through pricing
adjustments tends to lag impacts from cost inflation. As a result, with private label we have greater exposure to price risk,
including the impact of changing freight rates as these products are typically delivered to the customers. On the other hand, the
cost-plus pricing mechanisms built into most of our co-manufacturing arrangements generally result in our customers bearing
the majority of the raw material and packaging price risk. In addition, co-manufactured products are typically picked up by our
customers, so they bear the impact of changing freight rates. With our branded portfolio, we are exposed to price risks for input
costs, including raw materials, packaging, plant operating costs and freight, that we may not be able to fully recover through
price increases due to competitive factors, or be able to fully offset with compensating productivity gains.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements required by this item are set forth immediately following the signature page to this Form
10-K beginning on page F1 and are incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
SUNOPTA INC.
38
December 28, 2024 Form 10-K
Item 9A - 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
³Exchange 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 its management to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, 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 annual report. Based on this evaluation, our
Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective
as of December 28, 2024.
Management¶s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of the
Company¶s financial reporting for external purposes in accordance with United States generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly,
even effective internal control over financial reporting can only provide reasonable assurance of achieving their control
objectives.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the Company¶s annual or interim financial statements will not
be prevented or detected on a timely basis.
Management conducted an evaluation of the effectiveness of the internal control over financial reporting as of December 28,
2024, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (³COSO´) in
Internal Control - Integrated Framework (2013). Based on the evaluation performed, management concluded that our internal
control over financial reporting was effective as of December 28, 2024 based on those criteria.
Our internal control over financial reporting as of December 28, 2024 has been audited by Ernst & Young LLP, Independent
Registered Public Accounting Firm, as stated in its report which contains an unqualified opinion on the effectiveness of our
internal control over financial reporting. This report appears herein.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 28, 2024 that
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
SUNOPTA INC.
39
December 28, 2024 Form 10-K
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of SunOpta Inc.
Opinion on Internal Control Over Financial Reporting
We have audited SunOpta Inc.¶s internal control over financial reporting as of December 28, 2024, based on criteria established
in Internal Control²Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway (2013
framework) (the COSO criteria). In our opinion, SunOpta Inc. (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 28, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 28, 2024 and December 30, 2023, the related
consolidated statements of operations, comprehensive loss, shareholders¶ equity and cash flows for each of the three years in
the period ended December 28, 2024 and the related notes and our report dated February 26, 2025 expressed an unqualified
opinion thereon.
Basis for Opinion
The Company¶s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management¶s Annual
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company¶s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company¶s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company¶s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company¶s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
February 26, 2025
SUNOPTA INC.
40
December 28, 2024 Form 10-K
Item 9B. Other Information
Insider Trading Arrangements
During the quarter ended December 28, 2024, none of our directors or officers adopted or terminated any Rule 10b5-1 trading
arrangement or non-Rule 10b5-1 trading arrangement.
Departure of Principal Officer
On February 24, 2025, the Compensation Committee of the Board of Directors of the Company accepted the resignation of Jill
Barnett as Chief Administrative Officer, General Counsel and Corporate Secretary of the Company effective March 28, 2025.
Ms. Barnett will be eligible to receive payments under the Company¶s Short-Term Incentive Plan for 2024, which is expected
to be paid out on or before April 4, 2025, and the vesting of the performance share units portion of the Company¶s 2022 Long-
Term Incentive Plan for 2022, which are scheduled to vest on May 5, 2025.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required under this item is incorporated herein by reference to our Definitive Proxy Statement for the 2025
Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission not later than 120 days after
December 28, 2024 (the ³2025 Proxy Statement´).
Item 11. Executive Compensation
The information required under this item is incorporated herein by reference from the 2025 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information
The following table provides information as at December 28, 2024, with respect to our common shares that may be issued
under the Company¶s equity compensation plans:
Plan Category
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants,
and Rights
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a))
(a)
(b)
(c)
Equity compensation plans approved by
securities holders:
2013 Stock Incentive Plan
3,991,475 (1)
$6.55 (3)
2,575,812
Employee Stock Purchase Plan
-
341,372
Equity compensation plans not approved by
securities holders
1,698,077 (2)
$3.78 (3)
-
Total
5,689,552
$5.63 (3)
2,917,184
(1) Represents common shares of the Company issuable in respect of 2,130,913 stock options, 604,490 restricted stock units
(³RSUs´) and 1,256,072 performance share units (³PSUs´) granted under the Company¶s 2013 Stock Incentive Plan.
SUNOPTA INC.
41
December 28, 2024 Form 10-K
(2) Represents common shares of the Company issuable in respect of a special grants of 1,190,865 stock options, 218,404
RSUs and 288,808 PSUs.
(3) Vested RSUs and PSUs entitle the holder to receive one common share per unit without payment of additional
consideration. Accordingly, these units are disregarded for purposes of computing the weighted-average exercise price.
The information related to the security ownership of certain beneficial owners and management required under this item is
incorporated herein by reference from the 2025 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required under this item is incorporated herein by reference from the 2025 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required under this item is incorporated herein by reference from the 2025 Proxy Statement.
PART IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are being filed as part of this annual report.
1. Financial Statements. See ³Index to Consolidated Financial Statements´ set forth on page F1.
2.
Financial Statement Schedules. All schedules for which provision is made in the applicable accounting requirements of
the Securities and Exchange Commission are not required or the required information has been included within the
financial statements or the notes thereto.
3. Exhibits. The list of exhibits in the Exhibit Index included in this annual report is incorporated herein by reference.
Item 16. Form 10-K Summary
The Company has chosen not to include an optional summary of the information required by this Form 10-K. For a reference
to information in the Form 10-K, investors should refer to the Table of Contents to this Form 10-K.
EXHIBIT INDEX
Exhibits
Description
2.1
Asset Purchase Agreement, dated as of October 12, 2023, among SunOpta Inc., Sunrise Growers
Mexico, S. de R.L. de C.V., SunOpta Mx, S.A. de C.V., Sunrise Growers, Inc., Nature's Touch Frozen
Fruits, LLC and Natures Touch Mexico, S. de R.L. de C.V. (incorporated by reference to Exhibit 2.1
the Company¶s Current Report on Form 8-K filed on October 17, 2023).
3.1
Amalgamation of Stake Technology Ltd. and 3754481 Canada Ltd. (formerly George F. Pettinos
(Canada) Limited) (incorporated by reference to Exhibit 3.1 to the Company¶s Annual Report on Form
10-KSB for the year ended December 31, 2000).
3.2
Certificate of Amendment, dated October 31, 2003, to change the Company¶s name from Stake
Technology Ltd. to SunOpta Inc. (incorporated by reference to Exhibit 3i(b) to the Company¶s Annual
Report on Form 10-K for the year ended December 31, 2003).
SUNOPTA INC.
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December 28, 2024 Form 10-K
Exhibits
Description
3.3
Articles of Amalgamation of SunOpta Inc. and Sunrich Valley Inc., Integrated Drying Systems Inc.,
Kettle Valley Dried Fruits Ltd., Pro Organics Marketing Inc., Pro Organics Marketing (East) Inc.,
4157648 Canada Inc. and 4198000 Canada Ltd., dated January 1, 2004 (incorporated by reference to
Exhibit 3i(c) to the Company¶s Annual Report on Form 10-K for the year ended December 31, 2003).
3.4
Articles of Amalgamation of SunOpta Inc. and 6319734 Canada Inc., 4157656 Canada Inc. and
Kofman-Barenholtz Foods Limited, dated January 1, 2005 (incorporated by reference to Exhibit 3i(d)
to the Company¶s Annual Report on Form 10-K for the year ended December 31, 2004).
3.5
Articles of Amalgamation of SunOpta Inc. and 4307623 Canada Inc., dated January 1, 2006
(incorporated by reference to Exhibit 3i(e) to the Company¶s Annual Report on Form 10-K for the year
ended December 31, 2005).
3.6
Articles of Amalgamation of SunOpta Inc., 4208862 SunOpta Food Ingredients Canada Ltd., 4406150
Canada Inc. and 4406168 Canada Inc., dated January 1, 2007 (incorporated by reference to Exhibit 3i(f)
to the Company¶s Annual Report on Form 10-K for the year ended December 31, 2007).
3.7
Articles of Amalgamation of SunOpta Inc. and 4460596 Canada Inc., dated January 1, 2008
(incorporated by reference to Exhibit 3i(g) to the Company¶s Annual Report on Form 10-K for the year
ended December 31, 2007).
3.9
Certificate of Amendment, dated July 10, 2013, to authorize the directors to fix the number of directors
to be elected by the shareholders and to appoint one or more directors (incorporated by reference to
Exhibit 4.3 to the Company¶s Registration Statement on Form S-3 filed on July 3, 2014).
3.10
By-Law Number 15 of SunOpta Inc. (incorporated by reference to Exhibit 3.1 to the Company¶s Current
Report on Form 8-K filed on November 13, 2015).
4.1
Form of Certificate representing Common Shares, no par value (incorporated by reference to Exhibit
4.9 to the Company¶s Registration Statement on Form S-8 filed on September 2, 2011).
4.2
Shareholder Rights Plan Agreement, dated November 10, 2015, between SunOpta Inc. and American
Stock Transfer & Trust Company, LLC, as rights agent (incorporated by reference to Exhibit 4.1 to the
Company¶s Current Report on Form 8-K filed on November 13, 2015).
4.3
Amended and Restated Shareholder Rights Plan Agreement, dated November 10, 2015, amended and
restated as of April 18, 2016, between SunOpta Inc. and American Stock Transfer & Trust Company,
LLC, as rights agent (incorporated by reference to Exhibit 4.1 to the Company¶s Current Report on Form
8-K filed on April 20, 2016).
4.4
Second Amended and Restated Certificate of Incorporation of SunOpta Foods Inc., setting forth the
terms of its Series B Preferred Stock, which is exchangeable for Common Shares of SunOpta Inc.
(incorporated by reference to Exhibit 4.1 to the Company¶s Current Report on Form 8-K filed on April
28, 2020).
4.5
Articles of Amendment of SunOpta Inc., setting forth the terms of its Special Shares, Series 2
(incorporated by reference to Exhibit 4.2 to the Company¶s Current Report on Form 8-K filed on April
28, 2020).
4.6
Amended and Restated By-Law No. 14 of SunOpta Inc. dated May 24, 2023 (incorporated by reference
to Exhibit 4.1 to the Company¶s Quarterly Report on Form 10-Q filed on August 10, 2023).
4.7
Description of Registrant¶s Securities Registered Under Section 12 of the Securities Exchange Act of
1934 (incorporated by reference to Exhibit 4.7 to the Company¶s Annual Report on Form 10-K for the
year ended December 30, 2023).
SUNOPTA INC.
43
December 28, 2024 Form 10-K
Exhibits
Description
4.8
Third Amended and Restated Certificate of Incorporation of SunOpta Foods, Inc. (incorporated by
reference to Exhibit 4.1 to the Company¶s Current Report on Form 8-K filed on April 18, 2024).
10.1
SunOpta Inc. 2002 Stock Option Plan, Amended and Restated May 2011 (incorporated by reference to
Exhibit 10.1 to the Company¶s Current Report on Form 8-K filed on May 24, 2011).
10.2
Stock Deferral Plan for Non-Employee Directors dated August 12, 2014 (incorporated by reference to
Exhibit 10.1 to the Company¶s Quarterly Report on Form 10-Q filed on August 13, 2014).
10.3
Subscription Agreement, dated April 15, 2020, between SunOpta Inc., SunOpta Foods Inc., Oaktree
Organics, L.P., Oaktree Huntington Investment Fund II, L.P., Engaged Capital, LLC, Engaged Capital
Flagship Master Fund, LP and Engaged Capital Co-Invest IV-A, LP. (incorporated by reference to
Exhibit 10.1 to the Company¶s Current Report on Form 8-K filed on April 20, 2020).
10.4
Exchange and Support Agreement, dated April 24, 2020, between SunOpta Inc., SunOpta Foods Inc.,
Engaged Capital Flagship Master Fund, LP, Engaged Capital, LLC and Engaged Capital Co-Invest IV-
A, LP, Oaktree Organics, L.P. and Oaktree Huntington Investment Fund II, L.P. and any person that
becomes a Holder of Preferred Stock, from time to time (incorporated by reference to Exhibit 10.2 to
the Company¶s Current Report on Form 8-K filed on April 28, 2020).
10.5
Voting Trust Agreement, dated April 24, 2020, between SunOpta Inc., SunOpta Foods Inc., the trustee
named therein, Oaktree Organics, L.P. and Oaktree Huntington Investment Fund II, L.P. and any other
Holder of Preferred Stock, from time to time (incorporated by reference to Exhibit 10.3 to the
Company¶s Current Report on Form 8-K filed on April 28, 2020).
10.6
Amended and Restated Investor Rights Agreement, dated April 24, 2020, between SunOpta Inc.,
SunOpta Foods Inc. and Oaktree Organics, L.P. and Oaktree Huntington Investment Fund II, L.P.
(incorporated by reference to Exhibit 10.5 to the Company¶s Current Report on Form 8-K filed on April
28, 2020).
10.7
Amended 2013 Stock Incentive Plan (incorporated by reference to Exhibit A to the Company's
Definitive Proxy Statement on Schedule 14A filed on April 14, 2023).
10.8
Executive Employment Agreement made as of December 1, 2023 between Brian W. Kocher and
SunOpta Inc. (incorporated by reference to Exhibit 10.2 the Company¶s Current Report on Form 8-K
filed on December 7, 2023).
10.9
Credit Agreement, dated as of December 8, 2023, among SunOpta Inc., the other guarantors party
thereto, the lenders party thereto, Bank of America, N.A., as Administrative Agent, as an Issuing Bank,
as the Swingline Lender and as Collateral Agent (incorporated by reference to the Company¶s Current
Report on Form 8-K filed on December 14, 2023).
10.10
Amending Agreement between Oaktree Organics, L.P., Oaktree Huntington Investment Fund II, L.P.,
OCM SunOpta Trustee LLC, SunOpta Inc. and SunOpta Foods Inc., dated as of April 17, 2024
(incorporated by reference to Exhibit 10.1 to the Company¶s Current Report on Form 8-K filed on April
18, 2024).
10.11
Performance Unit Award Agreement, entered into as of January 2, 2024, between SunOpta Inc. and
Brian W. Kocher (incorporated by reference to Exhibit 10.1 to the Company¶s Quarterly Report on Form
10-Q filed on May 8, 2024).
10.12
Stock Option Award Agreement, entered into as of January 2, 2024, between SunOpta Inc. and Brian
W. Kocher (incorporated by reference to Exhibit 10.2 to the Company¶s Quarterly Report on Form 10-
Q filed on May 8, 2024).
SUNOPTA INC.
44
December 28, 2024 Form 10-K
Exhibits
Description
10.13
Restricted Stock Unit Award Agreement, entered into as of January 2, 2024, between SunOpta Inc. and
Brian W. Kocher (incorporated by reference to Exhibit 10.3 to the Company¶s Quarterly Report on Form
10-Q filed on May 8, 2024).
10.14
Employment Agreement, effective February 26, 2024, between SunOpta Inc. and Justin Kobler
(incorporated by reference to Exhibit 10.4 to the Company¶s Quarterly Report on Form 10-Q filed on
May 8, 2024).
10.15
Restricted Stock Unit Award Agreement, entered into as of March 13, 2024, between SunOpta Inc. and
Brian W. Kocher (incorporated by reference to Exhibit 10.5 to the Company¶s Quarterly Report on Form
10-Q filed on May 8, 2024).
10.16
Employment Agreement, effective March 25, 2024, between SunOpta Inc. and Lauren McNamara
(incorporated by reference to Exhibit 10.6 to the Company¶s Quarterly Report on Form 10-Q filed on
May 8, 2024).
10.17
Separation Agreement and Full and Final Release, by and between SunOpta Inc. and Chad Hagen, dated
as of December 18, 2024 (incorporated by reference to Exhibit 10.1 to the Company¶s Current Report
on Form 8-K filed on December 18, 2024).
10.18*
SunOpta Inc. 2024 Short Term Incentive Plan.
10.19*
SunOpta Inc. 2024 Long Term Incentive Plan.
10.20*
2024 Performance Share Unit Award Agreement.
10.21*
2024 Restricted Stock Unit Award Agreement.
10.22*
2024 Incentive Stock Option Award Agreement.
19*
Insider Trading Policy.
21*
List of subsidiaries.
23.1*
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
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.
97
SunOpta Inc. Clawback Policy (incorporated by reference to Exhibit 97 to the Company¶s Annual
Report on Form 10-K for the year ended December 30, 2023).
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
SUNOPTA INC.
45
December 28, 2024 Form 10-K
Exhibits
Description
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)
Indicates management contract or compensatory plan or arrangement.
*
Filed herewith.
SUNOPTA INC.
46
December 28, 2024 Form 10-K
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ Greg Gaba
Greg Gaba
Chief Financial Officer
Date: February 26, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Brian Kocher
Brian Kocher
Chief Executive Officer and Director
(Principal Executive Officer)
February 26, 2025
/s/ Greg Gaba
Greg Gaba
Chief Financial Officer
(Principal Financial and Accounting Officer)
February 26, 2025
/s/ Leslie Starr
Leslie Starr
Chair of the Board and Director
February 26, 2025
/s/ Albert Bolles
Albert Bolles
Director
February 26, 2025
/s/ Rebecca Fisher
Rebecca Fisher
Director
February 26, 2025
/s/ Dean Hollis
Dean Hollis
Director
February 26, 2025
/s/ David Lemmon
David Lemmon
Director
February 26, 2025
/s/ Diego Reynoso
Diego Reynoso
Director
February 26, 2025
/s/ Mahes Wickramasinghe
Mahes Wickramasinghe
Director
February 26, 2025
SUNOPTA INC.
-F1-
December 28, 2024 Form 10-K
SunOpta Inc.
Index to Consolidated Financial Statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
F2
Consolidated Statements of Operations for the years ended December 28, 2024, December 30, 2023 and
December 31, 2022
F4
Consolidated Statements of Comprehensive Loss for the years ended December 28, 2024, December 30,
2023 and December 31, 2022
F5
Consolidated Balance Sheets as at December 28, 2024 and December 30, 2023
F6
Consolidated Statements of Shareholders¶ Equity as at and for the years ended December 28, 2024,
December 30, 2023 and December 31, 2022
F7
Consolidated Statements of Cash Flows for the years ended December 28, 2024, December 30, 2023 and
December 31, 2022
F8
Notes to Consolidated Financial Statements
F9
SUNOPTA INC.
-F2-
December 28, 2024 Form 10-K
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of SunOpta Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of SunOpta Inc. (the Company) as of December 28, 2024 and
December 30, 2023, the related consolidated statements of operations, comprehensive loss, shareholders¶ equity and cash flows
for each of the three years in the period ended December 28, 2024, and the related notes (collectively referred to as the
³consolidated financial statements´). In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of the Company at December 28, 2024 and December 30, 2023, and the results of its operations and its
cash flows for each of the three years in the period ended December 28, 2024 in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company¶s internal control over financial reporting as of December 28, 2024, based on criteria established in
Internal Control²Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 26, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company¶s management. Our responsibility is to express an opinion on
the Company¶s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
SUNOPTA INC.
-F3-
December 28, 2024 Form 10-K
Revenue recognition under bill-and-hold arrangements
Description of the
Matter
As discussed in Note 1 to the consolidated financial statements, the Company enters into bill-and-hold
arrangements. Under bill-and-hold arrangements, the Company bills a customer for products to be
delivered at a later date, control typically transfers when the product is ready for physical transfer to
the customer, and the Company has a present right to payment. Total revenues was $723.7 million for
the year ended December 28, 2024, a portion of which was for bill-and-hold arrangements.
We identified the evaluation of revenue recognized under bill-and-hold arrangements as a critical audit
matter because of the extent of additional audit effort required to test the incremental bill-and-hold
revenue recognition criteria. The incremental bill-and-hold revenue recognition criteria include the
evaluation of: 1) the reason for the bill and hold arrangement; 2) the identification of the product as
separately belonging to the customer; 3) the product being currently ready for physical transfer to the
customer; and 4) the Company¶s inability to use the product or direct it to another customer.
How We Addressed
the Matter in Our
Audit
We evaluated the design and tested the operating effectiveness of certain internal controls over the
Company¶s revenue recognition process, including controls related to the identification of bill-and-
hold revenue transactions and whether the criteria for revenue recognition have been met based on the
underlying agreements and transactions.
We examined the contracts with customers and evaluated the terms and conditions to determine
whether the reason for the bill-and-hold arrangement is substantive and whether certain revenue should
be recognized as bill-and-hold revenue. We further examined a sample of bill-and-hold revenue
transactions to assess the incremental bill-and-hold revenue recognition criteria. Specifically, we
inspected the certificate of analysis that evidences that product is ready for physical transfer and the
contract terms which evidence the Company has the present right to payment. To evaluate that the
Company does not have the ability to use the product or direct to another customer, we inspected
underlying documentation for the same sample of bill and hold transactions to determine legal title to
the product had transferred to the customer.
/s/ Ernst & Young LLP
We have served as the Company¶s auditor since 2021.
Minneapolis, Minnesota
February 26, 2025
SUNOPTA INC.
-F4-
December 28, 2024 Form 10-K
SunOpta Inc.
Consolidated Statements of Operations
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
December 28,
2024
December 30,
2023
December 31,
2022
$
$
$
Revenues (note 20)
723,728
626,730
591,395
Cost of goods sold
627,424
540,730
493,257
Gross profit
96,304
86,000
98,138
Selling, general and administrative expenses
79,406
78,654
78,469
Intangible asset amortization (note 9)
1,784
1,784
1,784
Other expense (income), net
(1,833)
455
1,651
Foreign exchange loss (gain)
1,357
110
(107)
Operating income
15,590
4,997
16,341
Interest expense, net (note 20)
24,908
26,909
13,156
Other non-operating expense (note 4)
686
-
-
Earnings (loss) from continuing operations before income taxes
(10,004)
(21,912)
3,185
Income tax expense (note 16)
1,470
3,269
896
Earnings (loss) from continuing operations
(11,474)
(25,181)
2,289
Net loss from discontinued operations (note 2)
(5,919)
(153,608)
(8,722)
Net loss
(17,393)
(178,789)
(6,433)
Dividends and accretion on preferred stock (note 13)
(539)
(1,981)
(3,109)
Loss attributable to common shareholders
(17,932)
(180,770)
(9,542)
Basic and diluted loss per share (note 17)
Loss from continuing operations attributable to common shareholders
(0.10)
(0.24)
(0.01)
Loss from discontinued operations
(0.05)
(1.34)
(0.08)
Loss attributable to common shareholders
(0.15)
(1.58)
(0.09)
Weighted-average common shares outstanding (000s) (note 17)
Basic
116,617
114,226
107,659
Diluted
116,617
114,226
107,659
(See accompanying notes to consolidated financial statements)
SUNOPTA INC.
-F5-
December 28, 2024 Form 10-K
SunOpta Inc.
Consolidated Statements of Comprehensive Loss
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All dollar amounts expressed in thousands of U.S. dollars)
December 28,
2024
December 30,
2023
December 31,
2022
$
$
$
Earnings (loss) from continuing operations
(11,474)
(25,181)
2,289
Net loss from discontinued operations
(5,919)
(153,608)
(8,722)
Net loss
(17,393)
(178,789)
(6,433)
Other comprehensive loss
Reclassification of accumulated currency translation adjustment
of discontinued operations
-
(646)
-
Other comprehensive loss
-
(646)
-
Comprehensive loss
(17,393)
(179,435)
(6,433)
(See accompanying notes to consolidated financial statements)
SUNOPTA INC.
-F6-
December 28, 2024 Form 10-K
SunOpta Inc.
Consolidated Balance Sheets
As at December 28, 2024 and December 30, 2023
(All dollar amounts expressed in thousands of U.S. dollars)
December 28, 2024
December 30, 2023
$
$
ASSETS
Current assets
Cash and cash equivalents
1,552
306
Accounts receivable, net of allowances for credit losses of $134 and $303, respectively (note 4)
46,314
63,023
Inventories (note 5)
92,798
85,070
Prepaid expenses and other current assets
14,680
23,776
Income taxes recoverable
4,114
4,717
Current assets held for sale (note 2)
-
5,910
Total current assets
159,458
182,802
Restricted cash (note 6)
7,460
8,448
Property, plant and equipment, net (note 7)
343,618
320,199
Operating lease right-of-use assets (note 8)
105,692
104,788
Intangible assets, net (note 9)
20,077
21,861
Goodwill
3,998
3,998
Other long-term assets
28,224
25,055
Total assets
668,527
667,151
LIABILITIES
Current liabilities
Accounts payable
93,362
77,467
Accrued liabilities (note 10)
17,876
22,724
Notes payable (note 11)
11,110
17,596
Income taxes payable
638
-
Current portion of long-term debt (note 12)
29,393
24,647
Current portion of operating lease liabilities (note 8)
17,055
15,808
Total current liabilities
169,434
158,242
Long-term debt (note 12)
235,798
238,883
Operating lease liabilities (note 8)
99,328
98,696
Deferred income taxes (note 16)
325
505
Total liabilities
504,885
496,326
Series B-1 preferred stock (note 13)
15,048
14,509
SHAREHOLDERS' EQUITY
Common shares, no par value, unlimited shares authorized,
117,102,745 shares issued (December 30, 2023 - 115,953,287)
471,792
464,169
Additional paid-in capital
30,775
28,188
Accumulated deficit
(355,982)
(338,050)
Accumulated other comprehensive income
2,009
2,009
Total shareholders' equity
148,594
156,316
Total liabilities and shareholders' equity
668,527
667,151
(See accompanying notes to consolidated financial statements)
SUNOPTA INC.
-F7-
December 28, 2024 Form 10-K
SunOpta Inc.
Consolidated Statements of Shareholders¶ Equity
As at and for the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All dollar amounts expressed in thousands of U.S. dollars)
Common shares
Additional
paid-in
capital
Accumulated
deficit
Accumulated
other com-
prehensive
income
Total
000s
$
$
$
$
$
Balance at January 1, 2022
107,360
436,463
23,240
(147,738)
1,363
313,328
Employee share purchase plan
88
575
-
-
-
575
Stock incentive plan
462
3,310
(2,257)
-
-
1,053
Withholding taxes on stock-based awards
-
-
(1,629)
-
-
(1,629)
Stock-based compensation
-
-
13,830
-
-
13,830
Net loss
-
-
-
(6,433)
-
(6,433)
Dividends on preferred stock
-
-
-
(2,436)
-
(2,436)
Accretion on preferred stock
-
-
-
(673)
-
(673)
Balance at December 31, 2022
107,910
440,348
33,184
(157,280)
1,363
317,615
Exchange of Series B preferred stock, net of
share issuance costs of $191
6,089
13,915
-
-
-
13,915
Employee share purchase plan
121
583
-
-
-
583
Stock incentive plan
1,833
9,323
(8,024)
-
-
1,299
Withholding taxes on stock-based awards
-
-
(9,404)
-
-
(9,404)
Stock-based compensation
-
-
12,432
-
-
12,432
Net loss
-
-
-
(178,789)
-
(178,789)
Dividends on preferred stock
-
-
-
(1,428)
-
(1,428)
Accretion on preferred stock
-
-
-
(553)
-
(553)
Disposition of discontinued operations
-
-
-
-
646
646
Balance at December 30, 2023
115,953
464,169
28,188
(338,050)
2,009
156,316
Employee share purchase plan
84
449
-
-
-
449
Stock incentive plan
1,066
7,174
(5,688)
-
-
1,486
Withholding taxes on stock-based awards
-
-
(2,915)
-
-
(2,915)
Stock-based compensation (note 15)
-
-
11,190
-
-
11,190
Net loss
-
-
-
(17,393)
-
(17,393)
Accretion on preferred stock
-
-
-
(539)
-
(539)
Balance at December 28, 2024
117,103
471,792
30,775
(355,982)
2,009
148,594
(See accompanying notes to consolidated financial statements)
SUNOPTA INC.
-F8-
December 28, 2024 Form 10-K
SunOpta Inc.
Consolidated Statements of Cash Flows
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All dollar amounts expressed in thousands of U.S. dollars)
December 28,
2024
December 30,
2023
December 31,
2022
$
$
$
CASH PROVIDED BY (USED IN)
Operating activities
Net loss
(17,393)
(178,789)
(6,433)
Net loss from discontinued operations
(5,919)
(153,608)
(8,722)
Net earnings (loss) from continuing operations
(11,474)
(25,181)
2,289
Items not affecting cash:
Depreciation and amortization (note 20)
36,497
31,039
23,047
Amortization of debt issuance costs (note 20)
914
1,398
1,601
Deferred income taxes (note 16)
(180)
3,978
(296)
Stock-based compensation (note 15)
11,190
12,432
13,830
Gain on sale of smoothie bowls product line (note 3)
(1,800)
-
-
Gain on sale of property, plant and equipment
(244)
-
-
Loss on extinguishment of debt
-
1,584
-
Other
(275)
707
3,825
Changes in operating assets and liabilities, net of divestitures (note 18)
17,711
(22,382)
(13,550)
Net cash provided by operating activities of continuing operations
52,339
3,575
30,746
Net cash provided by (used in) operating activities of discontinued operations
(2,310)
11,269
29,829
Net cash provided by operating activities
50,029
14,844
60,575
Investing activities
Additions to property, plant and equipment
(31,928)
(46,125)
(125,139)
Proceeds from sale of smoothie bowls product line (note 3)
6,336
-
-
Proceeds from sale of property, plant and equipment
612
-
4,182
Cash settlement of foreign currency forward contract
-
(394)
-
Net cash used in investing activities of continuing operations
(24,980)
(46,519)
(120,957)
Net cash provided by investing activities of discontinued operations
6,300
90,551
14,133
Net cash provided by (used in) investing activities
(18,680)
44,032
(106,824)
Financing activities
Increase (decrease) in borrowings under revolving credit facilities (note 12)
2,187
(15,863)
29,640
Borrowings of long-term debt (notes 8 and 12)
1,446
199,855
90,907
Repayment of long-term debt (notes 8 and 12)
(26,953)
(95,303)
(20,085)
Repayment of asset-based credit facilities
-
(141,880)
-
Payment of debt issuance costs
-
(3,297)
(735)
Proceeds from notes payable (note 11)
129,662
102,043
-
Repayment of notes payable (note 11)
(136,148)
(84,447)
-
Proceeds from the exercise of stock options and employee share purchases
1,935
1,882
1,628
Payment of withholding taxes on stock-based awards
(2,915)
(9,404)
(1,629)
Payment of cash dividends on preferred stock (note 13)
(305)
(1,732)
(2,436)
Payment of common share issuance costs
-
(191)
-
Payment of preferred stock issuance costs
-
-
(756)
Net cash provided by (used in) financing activities of continuing operations
(31,091)
(48,337)
96,534
Net cash used in financing activities of discontinued operations
-
(2,464)
(49,833)
Net cash provided by (used in) financing activities
(31,091)
(50,801)
46,701
Increase in cash, cash equivalents and restricted cash in the period
258
8,075
452
Cash, cash equivalents and restricted cash, beginning of the year
8,754
679
227
Cash, cash equivalents and restricted cash, end of the year
9,012
8,754
679
Non-cash investing and financing activities (notes 8 and 18)
(See accompanying notes to consolidated financial statements)
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F9-
December 28, 2024 Form 10-K
1. Significant Accounting Policies
Basis of Presentation
These consolidated financial statements include the accounts of SunOpta Inc. and those of its wholly-owned subsidiaries
(collectively, the ³Company´ or ³SunOpta´) and have been prepared by the Company in United States (³U.S.´) dollars and in
accordance with U.S. generally accepted accounting principles (³U.S. GAAP´). All intercompany accounts and transactions
have been eliminated on consolidation.
Fiscal Year
The fiscal year of the Company consists of a 52- or 53-week period ending on the Saturday closest to December 31. Fiscal
years 2024, 2023 and 2022 were each 52-week periods ending on December 28, 2024, December 30, 2023 and December 31,
2022, respectively. Fiscal year 2025 will be a 53-week period ending on January 3, 2026, with quarterly periods ending on
March 29, 2025, June 28, 2025, and September 27, 2025.
Revision of Prior Period Financial Statements
In connection with the preparation of the Company¶s consolidated financial statements for fiscal 2024, management determined
that certain fruit snack products produced at the Company¶s Niagara, Ontario, facility, had been improperly classified and
reported at the time of entry into the U.S., resulting in the underpayment of duties to U.S. Customs and Border Protection
(³CBP´) for the period from January 2022 to December 2024. As at December 28, 2024, the Company accrued $7.4 million
for duties and interest thereon estimated to be owed for the impacted periods, of which $2.9 million, $2.9 million and $1.6
million related to the years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively. As described
in note 19, on February 3, 2025, the Company voluntarily reported the tariff classification change to CBP.
In accordance with ASC 250 ± Accounting Changes and Error Corrections and Staff Accounting Bulletins No. 99 ± Materiality
and No. 108 ± Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements, management assessed the materiality of the errors arising due to the underpayment of duties in fiscal years 2023
and 2022, and determined that the impacts were not material to the Company¶s previously issued consolidated financial
statements for any of the prior quarters or annual periods in which they occurred, but that correcting the errors in the current
period would be material to the Company¶s consolidated results of operations for fiscal 2024. As a result, the Company has
corrected the 2023 and 2022 errors by revising the consolidated financial statements and related disclosures included herein
for those prior fiscal periods. Additionally, the Company has corrected the prior fiscal period for unrelated immaterial errors
originating in fiscal 2023 that were previously corrected in fiscal 2024. The Company also reclassified certain consideration
payable to a customer in 2023 from cost of goods sold to a reduction in revenues and remeasured certain lease assets and
liabilities recognized as at December 30, 2023.
The tables that follow present the effect of these revisions on the consolidated statements of operations and cash flows for the
years ended December 30, 2023 and December 31, 2022, and on the consolidated balance sheet as at December 30, 2023.
Additionally, revisions to our previously reported disclosures are reflected in notes 2 ± Discontinued Operations, 7 ± Property,
Plant and Equipment, 8 ± Leases, 12 ± Long-Term Debt, 15 ± Stock-Based Compensation, 16 ± Income Taxes, 17 ± Loss Per
Share, 18 ± Supplemental Cash Flow Information, and 20 ± Segment Information. The effect of these revisions on the
Company¶s previously reported unaudited quarterly consolidated results of operations is provided in note 21.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F10-
December 28, 2024 Form 10-K
Year Ended December 30, 2023
Year Ended December 31, 2022
As
Previously
Reported
Adjust-
ments As Revised
As
Previously
Reported
Adjust-
ments As Revised
$
$
$
$
$
$
Consolidated Statements of Operations
Revenues
630,297
(3,567)
626,730
591,395
-
591,395
Cost of goods sold
541,680
(950)
540,730
491,665
1,592
493,257
Gross profit
88,617
(2,617)
86,000
99,730
(1,592)
98,138
Selling, general and administrative expenses
78,000
654
78,654
78,469
-
78,469
Intangible amortization
1,784
-
1,784
1,784
-
1,784
Other expense, net
455
-
455
1,651
-
1,651
Foreign exchange loss (gain)
110
-
110
(107)
-
(107)
Operating income
8,268
(3,271)
4,997
17,933
(1,592)
16,341
Interest expense, net
26,909
-
26,909
13,156
-
13,156
Earnings (loss) from continuing operations
before income taxes
(18,641)
(3,271)
(21,912)
4,777
(1,592)
3,185
Income tax expense
3,269
-
3,269
896
-
896
Earnings (loss) from continuing operations
(21,910)
(3,271)
(25,181)
3,881
(1,592)
2,289
Net loss from discontinued operations
(153,108)
(500)
(153,608)
(8,722)
-
(8,722)
Net loss
(175,018)
(3,771)
(178,789)
(4,841)
(1,592)
(6,433)
Dividends and accretion on preferred stock
(1,981)
-
(1,981)
(3,109)
-
(3,109)
Loss attributable to common shareholders
(176,999)
(3,771)
(180,770)
(7,950)
(1,592)
(9,542)
Basic and diluted earnings (loss) per share:(1)
Earnings (loss) from continuing operations
operations attributable to common
shareholders
(0.21)
(0.03)
(0.24)
0.01
(0.01)
(0.01)
Loss from discontinued operations
(1.34)
(0.00)
(1.34)
(0.08)
-
(0.08)
Loss attributable to common shareholders
(1.55)
(0.03)
(1.58)
(0.07)
(0.01)
(0.09)
(1) The sum across of individual per share amounts may not add due to rounding.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F11-
December 28, 2024 Form 10-K
As at December 30, 2023
As Previously
Reported
Adjustments
As Revised
$
$
$
Consolidated Balance Sheet
Accounts receivable
64,862
(1,839)
63,023
Inventories
83,215
1,855
85,070
Prepaid expenses and other assets
25,235
(1,459)
23,776
Total current assets
184,245
(1,443)
182,802
Property, plant and equipment, net
319,898
301
320,199
Operating lease right-of-use assets
105,919
(1,131)
104,788
Total assets
669,424
(2,273)
667,151
Accounts payable
75,761
1,706
77,467
Accrued liabilities
20,889
1,835
22,724
Current portion of long-term debt
24,346
301
24,647
Total current liabilities
154,400
3,842
158,242
Operating lease liabilities
100,102
(1,406)
98,696
Total liabilities
493,890
2,436
496,326
Additional paid-in capital
27,534
654
28,188
Accumulated deficit
(332,687)
(5,363)
(338,050)
Total shareholders' equity
161,025
(4,709)
156,316
Total liabilities and shareholders' equity
669,424
(2,273)
667,151
Year Ended December 30, 2023
Year Ended December 31, 2022
As
Previously
Reported
Adjust-
ments As Revised
As
Previously
Reported
Adjust-
ments As Revised
$
$
$
$
$
$
Consolidated Statements of Cash Flows
Net loss
(175,018)
(3,771)
(178,789)
(4,841)
(1,592)
(6,433)
Net loss from discontinued operations
(153,108)
(500)
(153,608)
(8,722)
-
(8,722)
Earnings (loss) from continuing operations
(21,910)
(3,271)
(25,181)
3,881
(1,592)
2,289
Items not affecting cash:
Stock-based compensation
11,778
654
12,432
13,830
-
13,830
Changes in operating assets and liabilities,
net of divestitures
(24,999)
2,617
(22,382)
(15,142)
1,592
(13,550)
Net cash provided by operating activities
of continuing operations
3,575
-
3,575
30,746
-
30,746
Net cash provided by operating activities
of discontinued operations
11,269
-
11,269
29,829
-
29,829
Net cash provided by operating activities
14,844
-
14,844
60,575
-
60,575
Reclassification
Commencing in 2024, the Company is reporting accrued liabilities as a separate line item on the consolidated balance sheet,
rather than combined with accounts payable. Accrued liabilities as at December 30, 2023, have been reclassified from the
previously reported accounts payable and accrued liabilities line item to conform to the current year presentation.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F12-
December 28, 2024 Form 10-K
Use of 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 in the consolidated financial statements and accompanying notes. These estimates
and assumptions require judgment on the part of management and are based on the Company¶s historical experience and various
other factors that are believed to be reasonable in the circumstances. Actual results could differ from these estimates.
Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (that is, an exit price). Fair value measurements are estimated based on
inputs categorized as follows:
Level 1 inputs include quoted prices (unadjusted) for identical assets or liabilities in active markets that are observable.
Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or
similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the
asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation
or other means.
Level 3 includes unobservable inputs that reflect the Company¶s own assumptions about what factors market
participants would use in pricing the asset or liability.
When measuring fair value, the Company maximizes the use of observable inputs and minimizes the use of unobservable
inputs.
Foreign Currency Transactions
Gains or losses resulting from transactions denominated in foreign currencies are included in foreign exchange gain/loss on the
consolidated statements of operations.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term deposits with an original maturity of 90 days or less. The Company
places its cash and cash equivalents with institutions of high creditworthiness.
Restricted Cash
Restricted cash consists of cash that is legally restricted as to withdrawal or usage.
Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for credit losses is an
estimate of the amount of probable losses in existing accounts receivable. The Company routinely assesses the financial strength
of its customers and believes that its accounts receivable credit risk exposure is limited. The Company closely monitors
receivable balances and estimates an allowance for credit losses based on historical collection experience, and account aging
analysis and trends, and evaluates the adequacy of the allowance each reporting period, considering individual customer
account reviews, write-offs recorded in the period, sales forecasts and trends, and current and expected economic and customer-
specific conditions. Account balances are charged off against the allowance when the Company determines the receivable will
not be recovered. As at December 28, 2024, three long-term customers represented approximately 14%, 13% and 11%,
respectively, of the Company¶s consolidated accounts receivable balance. The Company does not believe it is exposed to any
significant credit risks with respect to these customers.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F13-
December 28, 2024 Form 10-K
Inventories
Inventories are valued at the lower of cost and net realizable value on a first-in, first-out basis. Shipping and handling costs are
included in cost of goods sold on the consolidated statements of operations.
Property, Plant and Equipment
Property, plant and equipment assets are stated at cost, less accumulated depreciation. Cost includes capitalized interest on
borrowings during the construction of major capital projects. Depreciation begins when an asset is ready for its intended use.
Property, plant and equipment assets, other than land, are depreciated on a straight-line basis over the estimated useful lives of
the assets, as follows:
Buildings
20 - 40 years
Machinery and equipment
5 - 20 years
Enterprise software
3 - 5 years
Office furniture and equipment
3 - 7 years
Vehicles
3 - 7 years
Leases
At the lease commencement date, the Company recognizes a right-of-use lease asset for an amount equal to the lease liability,
less any lease incentives. The lease liability is determined based on the present value of future lease payments over the lease
term. The lease term includes the noncancellable term of the lease, together with periods covered by options to extend the lease
that the Company is reasonably certain to exercise. The discount rate used to determine the present value of the future lease
payments is the implicit rate in the lease if readily determinable. When that rate is not readily determinable, the Company
applies its incremental borrowing rate, which its estimated using relevant interest rate yield curves and credit spreads derived
from available market data. The Company excludes material non-lease components in determining the future lease payments.
Material leases with an initial term of 12 months or less are recorded on the balance sheet.
Intangible Assets
The Company¶s finite-lived intangible assets consist of brand names and customer relationships. Intangible assets are amortized
on a straight-line basis over their estimated useful lives, which are 15 years for brand names and 20 years for customer
relationships.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds
the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying
amount of an asset is not recoverable, the fair value of the asset is determined typically using an income approach (discounted
cash flow analysis). An impairment loss is recognized in earnings for any excess of the carrying amount of the asset over its
fair value.
Goodwill
Goodwill represents the excess in a business combination of the purchase price over the estimated fair value of the identifiable
net assets acquired. Goodwill is not amortized but is instead tested for impairment at the reporting unit level at least annually,
or whenever events or circumstances change between the annual impairment tests that would indicate the carrying amount of
goodwill may be impaired. The Company performs its annual test for goodwill impairment in the fourth quarter of each fiscal
year. The Company can elect to qualitatively assess goodwill for impairment if it is more likely than not that the fair value of
a reporting unit exceeds its carrying value. If the Company elects to quantitatively assess goodwill, or it is not more likely than
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F14-
December 28, 2024 Form 10-K
not that the fair value of a reporting unit exceeds its carrying value, the Company estimates the fair value of each of its reporting
units using an income approach (discounted cash flow method). Goodwill impairment charges are recognized based on the
excess of a reporting unit¶s carrying amount over its fair value. Based on the Company¶s qualitative assessment, it was
determined that goodwill was not impaired as at December 28, 2024. Prior to fiscal 2019, the Company recognized accumulated
goodwill impairment losses of $213.8 million.
Debt Issuance Costs
Costs incurred in connection with obtaining debt financing are deferred and amortized over the term of the financing
arrangement. Costs incurred to secure revolving credit facilities are recorded in other long-term assets. All other debt issuance
costs are recorded as a direct deduction from the related debt liability.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes whereby deferred income tax assets are
recognized for deductible temporary differences and operating loss carryforwards, and deferred income tax liabilities are
recognized for taxable temporary differences. Temporary differences are the differences between the amounts of assets and
liabilities recorded for income tax and financial reporting purposes.
Deferred income tax assets are recognized only to the extent that management determines that it is more likely than not that the
deferred income tax assets will be realized. Deferred income tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment. The income tax expense or benefit is the income tax payable or recoverable for the
year plus or minus the change in deferred income tax assets and liabilities during the year.
The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the
Company may incur additional income tax expense based upon the outcomes of such matters. In addition, when applicable, the
Company adjusts income tax expense to reflect the Company¶s ongoing assessments of such matters, which requires judgment
and can materially increase or decrease its effective rate as well as impact operating results. The evaluation of tax positions
taken or expected to be taken in a tax return is a two-step process, whereby (i) the Company determines whether it is more
likely than not that the tax positions will be sustained based on the technical merits of the position, and (ii) for those tax positions
that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that has a
greater than 50% likelihood of being realized upon ultimate settlement with the related tax authority.
Stock Incentive Plan
The Company maintains a stock incentive plan under which stock options and other stock-based awards may be granted to
selected employees and directors. The Company measures stock-based awards at fair value as of the date of grant.
Compensation expense is recognized on a straight-line basis over vesting period of the entire stock-based award. Upon exercise,
stock-based awards are settled through the issuance of common shares and are therefore treated as equity awards.
Revenue Recognition
The Company manufactures and sells food and beverage products to retailers, foodservice operators, branded food companies,
and other food manufacturers. The Company recognizes revenue when performance obligations under the terms of a contract
with a customer are satisfied, which is upon the transfer of control of the contracted goods. Except for goods sold under bill-and-
hold arrangements, control is transferred when title and physical possession of the product transfers to the customer, which is at
the point in time that product is shipped from the Company¶s facilities or delivered to a specified destination, depending on the
terms of the contract, and the Company has a present right to payment. Under bill-and-hold arrangements, whereby the Company
bills a customer for product to be delivered at a later date, control typically transfers when the product is ready for physical
transfer to the customer, and the Company has a present right to payment.
A performance obligation is a promise within a contract to transfer distinct goods to the customer. A contract with a customer
may involve multiple products and/or multiple delivery dates, with the transfer of each product at each delivery date being
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F15-
December 28, 2024 Form 10-K
considered a distinct performance obligation, as each of the Company¶s products has standalone utility to the customer. In these
cases, the contract¶s transaction price is allocated to each performance obligation based on relative standalone selling prices and
recognized as revenue when each individual product is transferred to the customer.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods.
Consideration is typically determined based on a fixed unit price for the quantity of product transferred. Certain contracts include
rebates and other forms of variable consideration. For contracts involving variable consideration, the Company estimates the
transaction price based on the amount of consideration to which it expects to be entitled. These estimates are determined based
on historical experience and the expected outcome of the variable consideration, and are updated as new information becomes
available, including actual claims paid, which indicate an estimate is not indicative of the expected results. Changes to these
estimates are recorded in the period the adjustment is identified. The Company does not typically grant customers a general right
of return for goods transferred but will generally accept returns of product for quality-related issues. The cost of satisfying this
promise of quality is accounted for as an assurance-type warranty obligation rather than variable consideration. The Company¶s
contracts do not typically include any significant payment terms, as payment is normally due shortly after the time of transfer.
Revenue contracts are typically represented by short-term, binding purchase orders from customers, identifying the quantity and
pricing for products to be transferred. Customer purchase orders may be issued under long-term master supply arrangements. On
their own, these master supply arrangements are typically not considered contracts for purposes of revenue recognition, as they
do not create enforceable rights and obligations regarding the quantity, pricing, or timing of goods to be transferred; however,
certain master supply agreements impose minimum purchase obligations on the part of the customers, which is considered a form
of variable consideration. Other master supply arrangements provide for the transfer of product on a bill-and-hold basis at the
specific request of the customer. As goods are produced under these bill-and-hold arrangements to meet individual customer
specifications, they are identifiable as belonging to the customer and cannot be directed to another customer.
The timing of the Company¶s revenue recognition, customer billings and cash collections, does not result in significant unbilled
receivables (contract assets) or customer advances (contract liabilities) on the consolidated balance sheet. Contract costs, such
as sales commissions, are generally expensed as incurred given the short-term nature of the associated contracts.
Advertising Costs
Advertising costs are expensed as incurred and are included in selling, general and administrative expenses.
Research and Development Costs
Research and development costs are expensed as incurred and are included in selling, general and administrative expenses. The
Company¶s research and development activities are directed towards custom product formulations, packaging innovations, and
production process improvements. The Company¶s research and development expenditures primarily consist of employee-
related compensation and supplies, as well as rental costs and depreciation expense related to the Company¶s innovation center
and pilot plant.
Earnings Per Share
Basic earnings per share is computed by dividing earnings available to common shareholders by the weighted-average number
of common shares outstanding during the year. Earnings attributable to common shareholders is computed by deducting
dividends and accretion on convertible preferred stock from net earnings. The potential diluted effect of stock options and other
stock-based awards is computed using the treasury stock method whereby the weighted-average number of common shares
used in the basic earnings per share calculation is increased to include the number of additional common shares that would
have been outstanding if the potential dilutive common shares had been issued at the beginning of the year. The potential
dilutive effect of convertible preferred stock is computed using the if-converted method whereby dividends and accretion on
the convertible preferred stock are added back to the numerator, and the common shares resulting from the assumed conversion
of the convertible preferred stock are included in the denominator of the diluted earnings per share calculation.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F16-
December 28, 2024 Form 10-K
Contingencies
The Company is subject to loss contingencies, including various legal and regulatory proceedings, and asserted and potential
claims that arise in the ordinary course of business. Accruals for loss contingencies are recorded when the Company determines
that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. If the estimate of
the amount of the loss is a range and some amount within the range appears to be a better estimate than any other amount within
the range, that amount is accrued as a liability. If no amount within the range is a better estimate than any other amount, the
minimum amount of the range is accrued as a liability.
Recent Accounting Pronouncements
Adopted
In November 2023, the Financial Accounting Standards Board (³FASB´) issued Accounting Standards Update (³ASU´) 2023-
07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to
disclose information about their reportable segments¶ significant expenses and other segment items on an interim and annual
basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as
well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. The
Company adopted the annual disclosure requirements of ASU 2023-07 in the fourth quarter of 2024 (see note 20) and will
adopt the interim disclosure requirements beginning with the first quarter of 2025. The adoption of ASU 2023-07 did not have
any impact of the Company¶s consolidated financial statements.
Not Yet Adopted
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. ASU 2024-03 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 December 2023, the FASB issued 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. ASU 2023-09 is effective for fiscal years beginning after
December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09.
2. Discontinued Operations
Divestiture of Frozen Fruit
On October 12, 2023 (the ³Closing Date´), the Company, together with its subsidiaries Sunrise Growers, Inc. (³Sunrise
Growers´), Sunrise Growers Mexico, S. de R.L. de C.V. and SunOpta Mx, S.A. de C.V (³SunOpta Mexico´), completed the
sale of certain assets and liabilities of its frozen fruit business (³Frozen Fruit´) pursuant to the terms of an Asset Purchase
Agreement with Natures Touch Mexico, S. de R.L. de C.V. and Nature¶s Touch Frozen Fruits, LLC (the ³Purchasers´).
Included in the assets sold were frozen fruit processing facilities located in Edwardsville, Kansas, and Jacona, Mexico. At the
Closing Date, the estimated aggregate purchase price comprised (i) cash consideration of $95.3 million; (ii) a short-term note
receivable of $10.5 million, which was paid in five consecutive monthly installments of $2.1 million beginning 30 days
following the Closing Date; (iii) secured seller promissory notes due in three years and with a stated principal amount of $20.0
million in the aggregate (the ³Seller Promissory Notes´); and (iv) the assumption by the Purchasers of $15.7 million of accounts
payable and accrued liabilities of Frozen Fruit.
The estimated aggregate purchase price was subject to post-closing adjustments based on a determination of the final net
working capital as of the Closing Date. As at the Closing Date and December 30, 2023, the Company had recognized a $0.5
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F17-
December 28, 2024 Form 10-K
million net receivable from the Purchasers based on the Company¶s estimate of the final net working capital and post-closing
adjustments. In the fourth quarter of 2024, the parties resolved certain disputed items in connection with the determination of
the final net working capital, resulting in a net reduction in the aggregate purchase price in favor of the Purchasers of $5.1
million. The Company incurred professional fees of $0.3 million in connection with the dispute arbitration process, which
together with the reduction in the aggregate purchase price is recognized as an additional pre-tax loss on divestiture in
discontinued operations on the consolidated statement of operations for the year ended December 28, 2024.
The Seller Promissory Notes bear interest at a rate per annum equal to the Secured Overnight Financing Rate (³SOFR´),
determined quarterly in advance, plus a margin of 4.00% for the first year and 7.00% for the second and third years. Interest is
payable quarterly in-kind. The Seller Promissory Notes mature on October 12, 2026, and outstanding principal and accrued
and unpaid interest is payable on the maturity date. Upon initial recognition, the Company determined that the fair value of the
Seller Promissory Notes approximated their stated principal amount and no premium or discount was recognized. As at
December 28, 2024 and December 30, 2023, the principal amount of the Seller Promissory Notes, together with accumulated
accrued and unpaid in-kind interest of $2.5 million and $0.3 million, respectively, is recorded in other long-term assets on the
consolidated balance sheets. The Seller Promissory Notes are secured by a second-priority lien on certain assets of Frozen Fruit
acquired by the Purchasers. As at December 28, 2024 and December 30, 2023, the Company had not recorded any allowance
for credit losses related to the Seller Promissory Notes.
The table below presents the major components of the results of discontinued operations reported in the consolidated statement
of operations for each of the three years in the period ended December 28, 2024. The results of operations for the year ended
December 31, 2022 include the divestiture of the Company¶s sunflower business in October 2022.
December 28, 2024 December 30, 2023 December 31, 2022
$
$
$
Revenues
-
200,029
343,267
Cost of goods sold(1)
553
211,467
320,143
Selling, general and administrative expenses(2)
621
8,683
10,843
Intangible asset amortization
-
6,000
8,498
Other expense (income), net(3)
(378)
10,612
(2,746)
Foreign exchange loss
(101)
(3,333)
(1,641)
Interest expense, net
23
554
1,578
Earnings (loss) before loss on divestiture
(718)
(33,954)
6,592
Pre-tax loss on divestiture
(5,435)
(119,821)
(31,468)
Loss from discontinued operations before income taxes
(6,153)
(153,775)
(24,876)
Income tax benefit
(234)
(167)
(16,154)
Net loss from discontinued operations
(5,919)
(153,608)
(8,722)
(1) For the year ended December 28, 2024, cost of goods sold reflects the write down in the carrying value of frozen fruit
inventory that was not acquired by the Purchasers to its estimated net realizable value. During 2024, the Company
completed the disposal of the $5.9 million of frozen fruit inventory reported as held-for-sale as at December 30, 2023.
(2) For the year ended December 28, 2024, selling, general and administrative expenses include additional severance costs for
former employees of Frozen Fruit not ultimately retained by the Purchasers, as well as the true-up of pre-divestiture profit-
sharing bonuses payable to certain Mexican employees of Frozen Fruit.
(3) For the year ended December 28, 2024, other income includes insurance recoveries related to the recall of specific frozen
fruit products initiated in the second quarter of 2023 (see note 19), together with gains on the settlement of certain pre-
existing legal matters related to Frozen Fruit.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F18-
December 28, 2024 Form 10-K
3. Sale of Assets
On March 4, 2024, the Company completed the sale of the net assets related to its smoothie bowls product line, including
inventories and equipment, for a cash purchase price of $6.3 million. The Company recognized a pre-tax gain on sale of $1.8
million, which is recorded in other income of continuing operations on the consolidated statement of operations for the year
ended December 28, 2024.
4. Receivables Sales Program
On August 28, 2024, the Company entered into a Master Receivables Purchase Agreement (the ³Agreement´) with a third-
party financial institution (the ³Purchaser´), for the sale of designated trade receivables of certain eligible customers in
exchange for cash proceeds (the ³Receivables 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 $30.0 million. The Agreement may be
terminated by the Purchaser at any time with 30 days¶ notice.
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
December 28, 2024, as the fair values of the servicing arrangement and the fees earned are not considered material to the
consolidated financial statements.
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. The
loss on sale of the sold receivables, representing the discount taken by the Purchaser, together with upfront transaction costs
incurred by the Company in connection with the Agreement, amounted to $0.7 million for the period from August 28, 2024 to
December 28, 2024, which is included in other non-operating expense on the consolidated statement of operations for the year
ended December 28, 2024. Cash proceeds received from the Purchaser are classified as an operating activity in the consolidated
statements of cash flows.
The following table summarizes activity related to the Receivables Sales Program:
Year Ended
December 28, 2024
$
Opening receivables balance sold to the Purchaser
-
Sale of receivables
62,021
Cash collected and remitted to the Purchaser
(37,035)
Closing receivables balance sold to the Purchaser(1)
24,986
Cash collected and not remitted to the Purchaser(2)
(13,575)
Outstanding receivables sold
11,411
(1) For the year ended December 28, 2024, the Company recorded an increase of $25.0 million to cash flows from operating
activities of continuing operations from receivables sold under the Receivables Sales Program, which is reflected in the
consolidated statement of cash flows.
(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 December 28, 2024, 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.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F19-
December 28, 2024 Form 10-K
5. Inventories
December 28, 2024
December 30, 2023
$
$
Raw materials and work-in-process
51,422
52,419
Finished goods
46,843
39,461
Inventory reserve
(5,467)
(6,810)
92,798
85,070
The change in the inventory reserve for the years ended December 28, 2024 and December 30, 2023 is comprised as follows:
December 28, 2024
December 30, 2023
$
$
Balance, beginning of year
6,810
3,298
Additions to reserve during the year
11,966
9,255
Reserves applied and inventories written off during the year
(13,309)
(5,743)
Balance, end of year
5,467
6,810
6. 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 December 28, 2024 and December 30, 2023, as the Company cannot predict the timing of
when this matter may be resolved.
7. Property, Plant and Equipment
The major components of property, plant and equipment as at December 28, 2024 and December 30, 2023 were as follows:
December 28, 2024
December 30, 2023
Cost
Accumulated
depreciation
Net book
value
Cost
Accumulated
depreciation
Net book
value
$
$
$
$
$
$
Land
203
-
203
238
-
238
Buildings
105,080
25,744
79,336
102,211
21,641
80,570
Machinery and equipment
374,808
121,508
253,300
323,954
95,254
228,700
Enterprise software
14,983
5,916
9,067
16,847
8,156
8,691
Office furniture and equipment
3,913
2,299
1,614
3,568
1,715
1,853
Vehicles
405
307
98
405
258
147
499,392
155,774
343,618
447,223
127,024
320,199
As at December 28, 2024, property, plant and equipment included construction in process assets of $18.6 million (December
30, 2023 ± $33.3 million) and $12.6 million (December 30, 2023 ± $11.1 million) of spare parts inventory. The Company did
not capitalize any interest expense as part of the construction cost of property, plant and equipment for the year ended December
28, 2024, compared with $0.3 million and $1.2 million for the years ended December 30, 2023 and December 31, 2022,
respectively.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F20-
December 28, 2024 Form 10-K
8. Leases
The Company leases certain manufacturing plants, warehouses, offices, and machinery and equipment. At the lease
commencement date, the Company classifies a lease as a finance lease if it has the right to obtain substantially all of the
economic benefits from the right-of-use assets, otherwise the lease is classified as an operating lease. The Company¶s leases
have noncancelable lease terms of less than one year to approximately 15 years and typically require fixed monthly rental
payments that may be adjusted annually to give effect to inflation. Real estate leases typically provide the Company options to
extend the leases for up to 15 years. Finance leases for machinery and equipment typically include nominal purchase options
at the end of the lease term that are reasonably certain of being exercised at the lease commencement date. Machinery and
equipment operating leases typically include purchase options for the fair market value of the underlying asset at the end of the
lease term, which are uncertain of being exercised at the lease commencement date.
The following tables present supplemental information related to leases:
December 28, 2024 December 30, 2023 December 31, 2022
$
$
$
Lease Costs
Operating lease cost
18,243
14,856
13,044
Finance lease cost:
Depreciation of right-of-use assets
8,541
13,441
9,816
Interest on lease liabilities
5,455
9,310
5,136
Total finance lease cost
13,996
22,751
14,952
December 28, 2024 December 30, 2023
$
$
Balance Sheet Classification
Operating leases:
Operating lease right-of-use assets
105,692
104,788
Current portion of operating lease liabilities
17,055
15,808
Operating lease liabilities
99,328
98,696
Total operating lease liabilities
116,383
114,504
Finance leases:
Property, plant and equipment, gross
100,481
81,724
Accumulated depreciation
(23,514)
(18,319)
Property, plant and equipment, net
76,967
63,405
Current portion of long-term debt
20,393
15,647
Long-term debt
38,528
37,284
Total finance lease liabilities
58,921
52,931
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F21-
December 28, 2024 Form 10-K
December 28, 2024 December 30, 2023 December 31, 2022
$
$
$
Cash Flow Information
Cash paid (received) for amounts included in measurement
of lease liabilities:
Operating cash flows from operating leases
17,268
13,852
12,320
Operating cash flows from finance leases
5,455
9,310
5,136
Financing cash flows from finance leases
Cash paid under finance leases(1)
20,203
89,087
19,903
Cash received under finance leases(2)
(1,446)
(6,568)
(58,764)
Right-of-use assets obtained in exchange for lease
liabilities:
Operating leases
10,227
35,601
47,544
Finance leases
24,746
9,952
31,466
Right-of-use assets and liabilities reduced through lease
terminations or modifications:
Operating leases
-
(914)
(4,060)
(1) Represents repayments under finance leases recorded as a reduction of the lease liability and reported in repayment of
long-term debt on the consolidated statements of cash flows.
(2) Represents cash advances received by the Company under finance leases for the construction of right-of-use assets
controlled by the Company, which is reported in borrowings of long-term debt on the consolidated statements of cash
flows.
December 28, 2024 December 30, 2023 December 31, 2022
Other Information
Weighted-average remaining lease term (years):
Operating leases
11.2
12.0
12.8
Finance leases
3.1
3.2
3.5
Weighted-average discount rate:
Operating leases
8.5%
8.6%
8.7%
Finance leases
9.6%
7.9%
8.2%
Operating leases
Finance leases
$
$
Maturities of Lease Liabilities
2025
17,608
24,547
2026
16,755
23,280
2027
15,770
11,224
2028
15,293
8,095
2029
13,750
1,674
Thereafter
154,473
-
Total lease payments
233,649
68,820
Less: imputed interest
(117,266)
(9,899)
Total lease liabilities
116,383
58,921
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F22-
December 28, 2024 Form 10-K
9. Intangible Assets
The gross carrying amounts and accumulated amortization of intangible assets as at December 28, 2024 and December 30,
2023 were as follows:
December 28, 2024
December 30, 2023
Cost
Accumulated
amortization
Net book
value
Cost
Accumulated
amortization
Net book
value
$
$
$
$
$
$
Brand names
25,073
6,189
18,884
25,073
4,517
20,556
Customer relationships
2,251
1,058
1,193
2,251
946
1,305
27,324
7,247
20,077
27,324
5,463
21,861
Amortization expense associated with intangible assets in each of the next five fiscal years and thereafter is as follows:
2025
2026
2027
2028
2029
Thereafter
Total
$
$
$
$
$
$
$
Amortization expense
1,784
1,784
1,784
1,784
1,784
11,157
20,077
10. Accrued Liabilities
December 28, 2024
December 30, 2023
$
$
Payroll and benefits
12,935
11,841
Accrued interest
1,435
1,379
Accrued severance costs
-
1,273
Accrued product recall-related costs
-
1,250
Dividends payable on preferred stock
-
304
Other accruals
3,506
6,677
17,876
22,724
11. 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. As at December 28, 2024 and December 30, 2023, the Company had outstanding principal payment obligations
to the third-party intermediaries of $11.1 million and $17.6 million in the aggregate, respectively, which is recorded as notes
payable on the Company¶s consolidated balance sheets. Proceeds from, and repayments of the notes payable associated with,
these facilities are reported as financing cash flows on the Company¶s consolidated statements of cash flows.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F23-
December 28, 2024 Form 10-K
12. Long-Term Debt
December 28, 2024
December 30, 2023
$
$
Term loan facility
173,250
180,000
Revolving credit facility
33,937
31,751
Less: Unamortized debt issuance costs
(917)
(1,152)
Total credit facilities
206,270
210,599
Finance lease liabilities (see note 8)
58,921
52,931
Total debt
265,191
263,530
Less: current portion
29,393
24,647
Total long-term debt
235,798
238,883
Scheduled maturities of long-term debt, including finance lease liabilities, are as follows:
$
2025
35,797
2026
36,780
2027
24,724
2028
177,032
2029
1,674
Total gross maturities
276,007
Less: imputed interest on finance lease liabilities
(9,899)
Less: debt issuance costs
(917)
Total debt
265,191
Credit Facilities
On December 8, 2023, the Company entered into a five-year Credit Agreement (the ³Credit Agreement´) providing for (i) a
$180.0 million term loan credit facility (the ³Term Loan Credit Facility´) and (ii) an $85.0 million revolving credit facility (the
³Revolving Credit Facility´ and together with the Term Loan Credit Facility, the ³Credit Facilities´). The Revolving Credit
Facility includes $30.0 million of borrowing capacity available for letters of credit and provides for borrowings of up to $10.0
million on same-day notice including in the form of swingline loans. As at December 28, 2024, $5.9 million in letters of credit
were issued but undrawn under the Revolving Credit Facility.
The Credit Facilities mature on December 8, 2028. Borrowings under the Term Loan Credit Facility are repayable in quarterly
principal installments of $2.3 million from the fiscal quarter ending March 31, 2024 to the fiscal quarter ending December 31,
2025, $3.4 million from the fiscal quarter ending March 31, 2026 to the fiscal quarter ending December 31, 2027, and $4.5
million from the fiscal quarter ending March 31, 2028 to the fiscal quarter ending September 30, 2028, with the remaining
principal balance of $121.5 million due on the maturity date.
Borrowings under the Credit Facilities bear interest at a margin over various reference rates, including a base rate (as defined
in the Credit Agreement) and SOFR, selected at the option of the Company. The margin for the Credit Facilities is set quarterly
based on the consolidated total net leverage ratio for the preceding fiscal quarter and will range from 1.00% to 2.25% with
respect to base rate loans and from 2.00% to 3.25% for SOFR loans. For the year ended December 28, 2024, the weighted-
average interest rate on outstanding borrowings under the Credit Facilities was 7.98%. In addition, the Company is required to
pay an undrawn fee under the Revolving Credit Facility quarterly based on the consolidated total net leverage ratio for the
preceding fiscal quarter ranging from 0.20% to 0.40% on the undrawn revolving commitments thereunder. The Company is
also required to pay customary letter of credit fees, to the extent letters of credit are issued and outstanding under the Revolving
Credit Facility.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F24-
December 28, 2024 Form 10-K
All obligations under the Credit Facilities are unconditionally guaranteed by the Company and substantially all of the
Company¶s existing and future direct and indirect wholly-owned material restricted subsidiaries organized in the U.S. and
Canada (the ³Subsidiary Guarantors´) and, subject to certain exceptions and qualifications, such obligations are secured by
first priority security interest in substantially all of the tangible and intangible assets of the Company and Subsidiary Guarantors.
The Credit Facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, the
Company¶s ability to: create liens on assets; sell assets and enter into sale and leaseback transactions; pay dividends, prepay
contractually subordinated indebtedness and make other restricted payments; incur additional indebtedness and make
guarantees; make investments, loans or advances, including acquisitions; engage in certain transactions with affiliates;
fundamentally change the character of the Company¶s business; enter into contractual obligations that restrict the ability of the
Company or any Subsidiary Guarantor to grant a lien on its assets in favor of the lenders and other secured creditors under the
Credit Facilities; and engage in mergers or consolidations. In addition, the Company is required to (i) maintain a minimum
fixed charge coverage ratio of 1.20 to 1.00 as of the end of each quarterly test period and (ii) maintain a maximum consolidated
total net leverage ratio of 4.00 to 1.00 for each quarterly test period prior to the fiscal quarter ending December 31, 2024, 3.75
to 1.00 for each quarterly test period from the fiscal quarter ending December 31, 2024 through the fiscal quarter ending
September 30, 2025, and 3.50 to 1.00 for each quarterly test period for the fiscal quarter ending December 31, 2025 and
thereafter; provided that, if the Company consummates an acquisition for consideration in excess of $50 million in any quarterly
test period, then the maximum consolidated total net leverage ratio may, at the election of the Company (on no more than two
occasions), be increased to the lesser of (x) 4.25 to 1.00 and (y) the then applicable maximum consolidated leverage ratio plus
0.50 to 1.00, for the end of the four succeeding quarterly test periods.
The Credit Facilities also contain certain customary affirmative covenants and events of default. As at December 28, 2024, the
Company was in compliance with all covenants of the Credit Agreement.
13. Series B-1 Preferred Stock
As at December 28, 2024, the Company¶s subsidiary, SunOpta Foods Inc. (³SunOpta Foods´), had 15,000 shares of Series B-
1 Preferred Stock (³Series B-1 Preferred Stock´) issued and outstanding with Oaktree Organics, L.P. and Oaktree Huntington
Investment Fund II, L.P. (collectively, ³Oaktree´). As at December 28, 2024, the aggregate liquidation preference of the Series
B-1 preferred stock was $15.2 million, or approximately $1,015 per share. The carrying value of the Series B-1 Preferred Stock,
net of unamortized issuance costs, is being accreted to the liquidation preference through charges to accumulated deficit, which
amounted to $0.5 million for the year ended December 28, 2024 (December 30, 2023 ± $0.6 million).
In the first quarter of 2024, the Company paid cash dividends on the Series B-1 Preferred Stock of $0.3 million related to the
fourth quarter of 2023. On April 17, 2024, the Company, SunOpta Foods and Oaktree entered into an Amending Agreement
related to the elimination of the dividend rights attached to the Series B-1 Preferred Stock effective from and after December
31, 2023. The Series B-1 Preferred Stock previously paid a cumulative dividend of 8.0% per year that could be paid in-kind or
in cash at the Company¶s option, which dividend would have increased from 8.0% to 10.0% per year and become payable only
in cash at the end of the Company¶s third quarter in 2029. All other rights and obligations of the Company, SunOpta Foods,
and Oaktree in connection with the Series B-1 Preferred Stock remain unchanged. The Company is accounting for the
elimination of the dividend rights on a prospective basis.
At any time, Oaktree may exchange the Series B-1 Preferred Stock, in whole or in part, into the number of shares of the
Company¶s common stock (³Common Shares´) equal to, per share of Series B-1 Preferred Stock, the quotient of the liquidation
preference divided by the exchange price of $2.50, while, at any time, SunOpta Foods may cause Oaktree to exchange all of
their shares of Series B-1 Preferred Stock if the volume-weighted average price of the Common Shares during the then
preceding 20 trading day period is greater than 200% of the exchange price then in effect. In addition, at any time on or after
April 24, 2025, SunOpta Foods may redeem all of the Series B-1 Preferred Stock for an amount per share equal to the value of
the liquidation preference at such time.
As at December 28, 2024, the Company had 2,932,453 Special Shares, Series 2 issued and outstanding, all of which are held
by Oaktree. The Special Shares, Series 2 serve as a mechanism for attaching exchanged voting rights to the Series B-1 Preferred
Stock and entitle the holder thereof to one vote per Special Share, Series 2 on all matters submitted to a vote of the holder of
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F25-
December 28, 2024 Form 10-K
the Common Shares, voting together as a single class, subject to certain exemptions. As a result of a permanent voting cap, the
number of Special Shares, Series 2 issued to Oaktree at any time, when taken together with any other voting securities Oaktree
then controls, cannot exceed 19.99% of the votes eligible to be cast by all security holders of the Company.
14. Common Shares
The Company is authorized to issue an unlimited number of Common Shares without par value and an unlimited number of
special shares without par value.
15. Stock-Based Compensation
On May 28, 2013, the Company¶s shareholders approved the 2013 Stock Incentive Plan, as amended (the ³2013 Plan´), which
permits the grant of a variety of stock-based awards, including stock options, restricted stock units (³RSUs´) and performance
share units (³PSUs´) to selected employees and directors of the Company. As at December 28, 2024, 2,575,812 securities
remained available for issuance under the 2013 Plan.
Additionally, on January 2, 2024, the Company granted special one-time awards of 144,404 RSUs, 288,808 PSUs and 230,804
stock options to Brian Kocher in connection with his appointment as the Company¶s Chief Executive Officer effective January
2, 2024. On March 13, 2024, the Company granted Mr. Kocher an additional 74,000 RSUs, equal to the number of Common
Shares purchased by Mr. Kocher on the open market within the 75-day period after his employment began.
Stock options, RSUs and PSUs granted under the 2013 Plan, together with the corresponding special one-time awards granted
to Mr. Kocher, are reflected in the tables below.
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022, stock-based compensation of $11.2
million, $12.4 million and $13.8 million was recorded in selling, general and administrative expenses on the consolidated
statements of operations.
Stock Options
Stock options granted to employees during the three-year period ended December 28, 2024, vest ratably on each of the first
through third anniversaries of the grant date and expire on the tenth anniversary of the grant date. Stock options granted by the
Company contain an exercise price that is equal to the closing market price of the shares on the day prior to the grant date. Any
consideration paid on the exercise of stock options is credited to capital stock.
The following table summarizes stock option activity for the year ended December 28, 2024:
Weighted-
average
Weighted-
remaining
average
contractual
Aggregate
Stock options
exercise price
term (years)
intrinsic value
Outstanding, beginning of year
3,348,103 $
5.63
Granted
485,914
6.10
Exercised
(238,759)
4.80
Forfeited
(137,862)
6.53
Expired
(135,618)
9.25
Outstanding, end of year
3,321,778 $
5.56
2.8
$
8,252
Exercisable, end of year
2,678,564 $
5.43
1.3
$
7,146
The total intrinsic value of stock options exercised during the year ended December 28, 2024 was $0.5 million.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F26-
December 28, 2024 Form 10-K
The following table summarizes non-vested stock option activity during the year ended December 28, 2024:
Weighted-
average grant-
Stock options
date fair value
Non-vested, beginning of year
1,222,991 $
3.67
Granted
485,914
3.85
Vested
(966,211)
3.66
Forfeited
(99,480)
3.90
Non-vested, end of year
643,214 $
3.77
The weighted-average grant-date fair values of all stock options granted in the years ended December 28, 2024, December 30,
2023 and December 31, 2022, were $3.85, $3.87 and $3.49, respectively, using a Black-Scholes option pricing model with the
following assumptions:
December 28, 2024
December 30, 2023
December 31, 2022
Grant-date stock price
$
6.10
$
6.29
$
5.91
Dividend yield(a)
0%
0%
0%
Expected volatility(b)
65.7%
63.5%
61.6%
Risk-free interest rate(c)
4.3%
4.1%
3.0%
Expected life of options (years)(d)
6.0
6.0
6.0
(a) Determined based on expected annual dividend yield at the time of grant.
(b) Determined based on historical volatility of the Company¶s Common Shares over the expected life of the option.
(c) Determined based on the yield on U.S. Treasury zero-coupon issues with maturity dates equal to the expected life of
the option.
(d) Determined based on the mid-point of vesting (one through three years) and expiration (10 years). The Company has
used the simplified method to determine the expected life of options due to insufficient historical exercise data to
provide a reasonable basis to estimate the expected life.
Total compensation costs related to non-vested stock option awards not yet recognized as an expense was $1.6 million as at
December 28, 2024, which will be amortized over a weighted-average remaining vesting period of 1.9 years.
The following table summarizes stock options outstanding and exercisable as at December 28, 2024:
Weighted-
average
remaining
Weighted-
Weighted-
Exercise price range
Outstanding
contractual life
average exercise
Exercisable
average exercise
Low
High
options
(years)
price
options
price
$
3.25
$
4.05
973,221
0.3 $
3.36
973,221 $
3.36
4.06
5.73
340,984
7.5
5.32
110,180
4.85
5.74
6.13
1,267,054
1.7
5.91
1,182,804
5.91
6.14
6.60
461,170
7.2
6.44
144,460
6.35
6.61
14.77
279,349
3.0
10.50
267,899
10.62
3,321,778
2.8 $
5.56
2,678,564 $
5.43
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F27-
December 28, 2024 Form 10-K
Restricted Stock Units
RSUs granted to employees vest ratably on each of the first through third anniversaries of the grant date and RSUs granted to
directors vest 100% on the first anniversary of the grant date. Each vested RSU entitles the employee or director to receive one
Common Share without payment of additional consideration. Non-employee directors may elect to defer receipt of Common
Shares until their departure from the Board of Directors. The weighted-average grant-date fair values of all RSUs granted in
the years ended December 28, 2024, December 30, 2023 and December 31, 2022, were $6.17, $5.88 and $6.40, respectively,
based on the closing price of the Common Shares on the grant dates.
The following table summarizes non-vested RSU activity during the year ended December 28, 2024:
Weighted-
average grant-
RSUs
date fair value
Non-vested, beginning of year
580,177 $
6.64
Granted
690,495
6.17
Vested
(367,178)
7.14
Forfeited
(115,430)
6.02
Non-vested, end of year
788,064
6.08
Vested and deferred
34,830
5.74
Outstanding, end of year
822,894 $
6.07
The total intrinsic value of RSUs that vested during the year ended December 28, 2024 was $2.1 million. Total compensation
costs related to non-vested RSU awards not yet recognized as an expense was $3.1 million as at December 28, 2024, which
will be amortized over a weighted-average remaining vesting period of 1.9 years.
Performance Share Units
Performance Conditions
The vesting of PSUs granted to selected employees under the Company¶s annual Short-Term Incentive Plan (³STIP´) is
dependent on the Company achieving a predetermined measure of adjusted earnings before interest, taxes, depreciation and
amortization. For PSUs granted to selected employees under the Company 2024 Long-Term Incentive Plan (³LTIP´), the
vesting of one-half of the PSUs is contingent on the achievement of compound annual growth rate (³CAGR´) benchmarks for
revenue during the three-year performance period commencing January 1, 2024 and continuing through December 31, 2026,
and the vesting of the other one-half of the PSUs is contingent on the achievement of return on invested capital (³ROIC´)
benchmarks within the same performance period. The percentage of vested LTIP PSUs may range from 0% to 200% based on
the Company¶s achievement of the predetermined CAGR and ROIC benchmarks. Each vested performance condition PSU
entitles the employee to receive one Common Share without payment of additional consideration, subject to the employee¶s
continued employment through the vesting date.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F28-
December 28, 2024 Form 10-K
The weighted-average grant-date fair values of performance condition PSUs granted during the years ended December 28,
2024, December 30, 2023 and December 31, 2022, were $6.49, $6.96 and $5.45, respectively, based on the closing price of the
Common Shares on the grant dates. The following table summarizes non-vested performance condition PSU activity during
the year ended December 28, 2024:
Performance
Weighted-
Condition
average grant-
PSUs
date fair value
Non-vested, beginning of year
1,000,896 $
6.95
Granted
918,207
6.49
Vested
(818,504)
6.94
Cancelled or forfeited
(309,558)
6.73
Non-vested, end of year
791,041 $
6.51
The total intrinsic value of performance condition PSUs that vested during the year ended December 28, 2024 was $5.6 million.
Each reporting period, the number of unvested performance condition PSUs that are expected to vest is redetermined and the
aggregate grant-date fair value of the redetermined number of PSUs is amortized on a straight-line basis over the remaining
requisite service period less amounts previously recognized. As at December 28, 2024, the compensation cost not yet
recognized as an expense for these PSUs that are expected to vest was $2.1 million, which will be amortized over a weighted-
average remaining vesting period of 1.4 years.
Market Conditions
The vesting of PSUs granted to employees under the Company¶s 2023 and 2022 LTIP, and the special one-time PSUs granted
to Mr. Kocher, are dependent on the Company¶s total shareholder return (³TSR´) performance relative to food and beverage
companies in a designated index during a three-year performance period commencing on January 1 of the year of grant, and
the employee¶s continued employment with the Company through the vesting dates. The TSR for the Company and each of
the companies in the designated index are calculated at the end of the applicable three-year performance period using a 20-
trading day average closing price as of December 31. The percentage of vested PSUs may range from 0% to 200% based on
the Company¶s achievement of predetermined TSR thresholds. Each vested market condition PSU entitles the employee to
receive one Common Share without payment of additional consideration.
The grant-date fair values of market condition PSUs granted in the years ended December 28, 2024, December 30, 2023 and
December 31, 2022, were $7.73, $7.00 and $8.48, respectively, using a Monte Carlo valuation model with the following
assumptions:
December 28, 2024
December 30, 2023
December 31, 2022
Grant-date stock price
$
5.54 $
6.35 $
5.91
Dividend yield
0%
0%
0%
Expected volatility(a)
58.4%
55.5%
67.8%
Risk-free interest rate(b)
4.1%
4.7%
2.8%
Expected life (in years)(c)
3.0
2.5
2.7
(a) Determined based on the historical volatility of the Common Shares over the performance period of the PSUs.
(b) Determined based on U.S. Treasury yields with a remaining term equal to the performance period of the PSUs.
(c) Determined based on the performance period of the PSUs.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F29-
December 28, 2024 Form 10-K
The following table summarized non-vested market condition PSU activity during the year ended December 28, 2024:
Market
Weighted-
Condition
average grant-
PSUs
date fair value
Non-vested, beginning of year
556,680 $
9.00
Granted
288,808
7.73
Vested
-
-
Forfeited
(91,649)
14.67
Non-vested, end of year
753,839 $
7.82
Total compensation costs related to non-vested market condition PSUs not yet recognized as an expense was $2.1 million as at
December 28, 2024, which will be amortized over a weighted-average remaining vesting period of 2.0 years.
Employee Stock Purchase Plan
The Company maintains an Employee Stock Purchase Plan whereby employees can purchase common shares through payroll
deductions. For the year ended December 28, 2024, the Company¶s employees purchased 84,194 Common Shares (December
30, 2023 ± 120,666; December 31, 2022 ± 87,850) for total proceeds of $0.4 million (December 30, 2023 ± $0.6 million;
December 31, 2022 ± $0.6 million). As at December 28, 2024, 341,372 Common Shares remained available to be granted under
this plan.
16. Income Taxes
The income tax expense differs from the amount that would have resulted from applying the combined Canadian federal and
provincial statutory income tax rate to earnings (loss) from continuing operations before income taxes due to the following:
December 28,
2024
December 30,
2023
December 31,
2022
$
$
$
Earnings (loss) from continuing operations before income taxes
(10,004)
(21,912)
3,185
Canadian statutory rate
26.5%
26.5%
26.5%
Income tax expense (benefit) at statutory rate
(2,651)
(5,807)
844
Stock-based compensation
1,392
(607)
1,054
Change in valuation allowance
2,534
6,607
(49)
Disallowed executive compensation
140
2,372
367
Foreign tax rate differential
(29)
107
(156)
Change in enacted tax rates
6
90
(9)
Other
78
507
(1,155)
Income tax expense
1,470
3,269
896
The components of earnings (loss) from continuing operations before income taxes are shown below:
December 28,
2024
December 30,
2023
December 31,
2022
$
$
$
Canada
(10,470)
(12,709)
(13,102)
U.S.
1,011
(9,203)
16,287
Mexico
(545)
-
-
Earnings (loss) from continuing operations before income taxes
(10,004)
(21,912)
3,185
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F30-
December 28, 2024 Form 10-K
The components of income tax expense are shown below:
December 28,
2024
December 30,
2023
December 31,
2022
$
$
$
Current income tax expense (benefit):
Canada
113
(32)
84
U.S.
213
(677)
1,108
Mexico
1,324
-
-
1,650
(709)
1,192
Deferred income tax expense (benefit):
Canada
-
-
-
U.S.
-
3,978
(296)
Mexico
(180)
-
-
(180)
3,978
(296)
Income tax expense
1,470
3,269
896
Deferred income taxes of the Company are comprised of the following:
December 28, 2024 December 30, 2023
$
$
Loss and credit carryovers
52,021
44,671
Lease liabilities
29,771
30,801
Interest expense limitation (163j)
19,970
15,906
Stock-based compensation
1,431
1,625
Inventory basis differences
1,351
3,723
Right-of-use lease assets
(28,374)
(29,691)
Property, plant and equipment and intangible assets
(24,892)
(18,537)
Other
5,945
3,068
57,223
51,566
Less: valuation allowance
57,548
52,071
Deferred income tax liability
(325)
(505)
The components of the deferred income tax liability are shown below:
December 28, 2024 December 30, 2023
$
$
Canada
(325)
(325)
U.S.
-
-
Mexico
-
(180)
Deferred income tax liability
(325)
(505)
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F31-
December 28, 2024 Form 10-K
The components of the deferred income tax valuation allowance are as follows:
December 28, 2024 December 30, 2023
$
$
Balance, beginning of year
52,071
5,262
Increase in valuation allowance
5,477
46,809
Balance, end of year
57,548
52,071
The following table details the Company¶s tax attributes as at December 28, 2024, primarily related to net operating losses, tax
credits and capital losses for which it has recorded deferred tax assets:
Gross attribute amount
Net attribute amount
Expiration years
Tax Attributes
Net operating losses - Canada
$
5,952 $
1,577
2040-2041
Net operating losses - U.S. Federal
171,565
36,029
2037 and indefinite
Net operating losses - U.S. State
145,853
6,680
2027-2044 and indefinite
Net operating losses - Other
2,194
658
2028
Federal credits - Canada
-
255
N/A
Federal credits - U.S.
-
3,042
2031-2044
State credits - U.S.
-
92
2025-2026
Federal capital loss - Canada
27,838
3,689
N/A
Total
$
52,021
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. In making
such determinations, the Company considers all available positive and negative evidence, including future reversals of existing
temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Based on this
evaluation, as at December 28, 2024, a valuation allowance of $57.5 million (December 30, 2023 ± $52.1 million) had been
recorded against certain assets to reduce the net benefit recorded in the consolidated financial statements.
As the undistributed earnings of the Company¶s non-Canadian affiliates and associated companies are considered to be indefinitely
reinvested, no provision for deferred taxes has been provided thereon.
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022, the Company did not identify any material
uncertain tax positions or recognize any related tax benefits. The Company believes it has adequately examined its tax positions
taken or expected to be taken in a tax return; however, amounts asserted by taxing authorities could differ from the Company¶s
positions. Accordingly, additional provisions on federal, provincial, state and foreign tax-related matters could be recorded in the
future as revised estimates are made or the underlying matters are settled or otherwise resolved.
Consistent with its historical financial reporting, the Company has classified interest and penalties related to income tax
liabilities, when applicable, as part of interest expense in its consolidated statements of operations, and with the related liability
on the consolidated balance sheets.
The number of years with open tax audits varies depending on the tax jurisdiction. The Company¶s major taxing jurisdictions
are the U.S. (including multiple states) and Canada (Ontario). The Company¶s 2020 through 2023 tax years (and any tax year
for which available non-capital loss carryforwards were generated up to the amount of non-capital loss carryforward) remain
subject to examination by the Internal Revenue Service for U.S. federal tax purposes, and tax years 2017 through 2023 remain
subject to examination by the appropriate governmental agencies for Canadian federal tax purposes. There are other ongoing
audits in various other jurisdictions that are not considered material to the Company¶s consolidated financial statements.
The Organization for Economic Co-operation and Development has introduced the Pillar Two framework, which establishes a
global minimum corporate tax rate of 15% for multinational enterprises with consolidated annual revenues of ¼750 million or
more. During 2024, Canada enacted legislation to adopt Pillar Two effective for fiscal years beginning on or after December
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F32-
December 28, 2024 Form 10-K
31, 2023. The Company does not expect Pillar Two will have a material impact on its corporate income tax rate. The Company
will continue to monitor legislative and regulatory developments with respect to this initiative.
17. Loss Per Share
Basic and diluted loss per share were calculated as follows (shares in thousands):
December 28, 2024 December 30, 2023 December 31, 2022
Numerator
Earnings (loss) from continuing operations
$
(11,474) $
(25,181) $
2,289
Less: dividends and accretion on preferred stock
(539)
(1,981)
(3,109)
Loss from continuing operations attributable to
common shareholders
(12,013)
(27,162)
(820)
Net loss from discontinued operations
(5,919)
(153,608)
(8,722)
Loss attributable to common shareholders
$
(17,932) $
(180,770) $
(9,542)
Denominator
Basic weighted-average number of shares outstanding
116,617
114,226
107,659
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
116,617
114,226
107,659
Basic and Diluted Loss Per Share
Loss from continuing operations attributable to
$
(0.10) $
(0.24) $
(0.01)
common shareholders
Net loss from discontinued operations
(0.05)
(1.34)
(0.08)
Loss attributable to common shareholders
$
(0.15) $
(1.58) $
(0.09)
(1) For the years ended December 28, 2024, December 30, 2023 and December 31, 2022, 1,026,759, 1,273,093 and 2,587,501
potential common shares were excluded from the calculation of diluted loss per share due to their effect of reducing the
loss per share from continuing operations attributable to common shareholders. Dilutive potential common shares consist
of stock options, RSUs, and certain contingently issuable PSUs. In addition, for the years ended December 28, 2024,
December 30, 2023 and December 31, 2022, stock options and RSUs to purchase or receive 1,238,722, 2,192,677 and
2,427,146 potential common shares, respectively, were anti-dilutive because the assumed proceeds exceeded the average
market price of the Common Shares for the respective periods.
(2) For the years ended December 28, 2024, December 30, 2023 and December 31, 2022, it was more dilutive to the loss per
share from continuing operations to assume the Series B-1 Preferred Stock was not converted into Common Shares and,
therefore, the numerator of the diluted loss per share calculation was not adjusted to add back the dividends and accretion
on the Series B-1 Preferred Stock and the denominator was not adjusted to include the approximately 6,089,333, 6,089,333
and 12,178,667 Common Shares issuable on an if-converted basis as at December 28, 2024, December 30, 2023 and
December 31, 2022, respectively.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F33-
December 28, 2024 Form 10-K
18. Supplemental Cash Flow Information
December 28, 2024 December 30, 2023 December 31, 2022
$
$
$
Changes in Operating Assets and Liabilities, Net of
Divestitures
Accounts receivable
19,482
(2,195)
(4,948)
Inventories
(8,421)
(10,631)
(10,300)
Accounts payable
10,901
1,054
(6,046)
Other operating assets and liabilities
(4,251)
(10,610)
7,744
17,711
(22,382)
(13,550)
Non-Cash Investing and Financing Activities
Change in additions to property, plant and equipment
included in accounts payable
2,885
(436)
(4,234)
Change in accrued dividends on preferred stock
(304)
(305)
-
Change in net working capital adjustment related to the
divestiture of Frozen Fruit (see note 2)
5,101
(457)
-
Change in short-term note receivable from divestiture
of Frozen Fruit (see note 2)
6,300
(6,300)
-
Seller Promissory Notes issued on the divestiture
of Frozen Fruit (see note 2)
-
(20,000)
-
Cash Paid
Interest
23,927
24,032
11,093
Income taxes
437
569
847
19. 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 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. As at December 28, 2024, the Company accrued $7.4 million for the duties
and interest thereon believed to be owed. The Company intends to submit a final report to CBP by April 3, 2025. As the matter
is subject to review by CBP, it is possible that the actual amount of duties and interest owed may differ from the amount
presently accrued by the Company, and CBP may assess additional fines, penalties or enact other measures.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F34-
December 28, 2024 Form 10-K
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 $2.1 million, net of
expected insurance recoveries, in cost of goods sold in the consolidated statement of operations. The Company is seeking to
recover a portion of the withdrawal-related costs through its insurance coverage, and such recoveries are recorded in the period
in which the recoveries are determined to be probable of realization. As at December 28, 2024, the Company has recognized
expected insurance recoveries related to the withdrawal of $7.6 million, which is included in prepaid expenses and other current
assets on the consolidated balance sheet. The Company does not expect to incur any additional significant costs related to this
withdrawal.
Product Recall
On June 21, 2023, the Company announced its subsidiary, Sunrise Growers, had issued a voluntary recall of specific frozen
fruit products linked to pineapple provided by a third-party supplier due to possible contamination by Listeria monocytogenes.
In connection with the divestiture of Frozen Fruit, the recall-related costs and estimated insurance recoveries are included in
net loss from discontinued operations in the consolidated statements of operations. As at December 30, 2023, recall-related
costs of $1.3 million were recorded in accounts payable on the consolidated balance sheet, which were settled during 2024.
There were no significant additional direct costs associated with the recall recognized in 2024. Additionally, as at December
30, 2023, estimated insurance recoveries of $4.8 million were included in prepaid expenses and other current assets on the
consolidated balance sheet. During 2024, the Company received insurance proceeds of $5.1 million, resulting in a recovery of
previously recognized recall-related costs of $0.3 million, which is recognized as a gain in other income of discontinued
operations. As of December 28, 2024, the Company considers all activities related to this recall to be complete.
Environmental Laws
The Company believes that, with respect to both its operations and real property, it is in material compliance with current
environmental laws. Based on known existing conditions and the Company¶s experience in complying with emerging
environmental issues, the Company is of the view that future costs relating to environmental compliance will not have a material
adverse effect on its consolidated financial position, but there can be no assurance that unforeseen changes in the laws or
enforcement policies of relevant governmental bodies, the discovery of changed conditions on the Company¶s real property or
in its operations, or changes in the use of such properties and any related site restoration requirements, will not result in the
incurrence of significant costs.
20. Segment Information
Description of Operating and Reportable Segment, Identification of Chief Operating Decision Maker, and Measures of
Segment Profit or Loss and Segment Assets
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. The Company¶s
Chief Executive Officer, who has been identified as the Chief Operating Decision Maker (³CODM´), is supported by a
centralized management team based on functional area, including sales, marketing, supply chain, research and development,
and quality assurance, as well as finance, legal, information technology, and administration. Only the CODM has overall
responsibility and accountability for the profitability and cash flows of the Company. Using financial information at the
consolidated level, including corporate and non-operating costs and expenses, the CODM makes key operating decisions,
including approving annual operating plans, expanding into new markets or product categories, pursuing business acquisitions
or divestitures, and initiating major capital expenditure programs. In addition, the CODM determines the allocation of resources
(including personnel, productive assets, and financial resources) and capital investments to optimize operations and maximize
opportunities for the Company as a whole without regard to specific product categories or business units. The CODM also uses
consolidated information to establish company-wide incentive compensation targets.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F35-
December 28, 2024 Form 10-K
The measure of segment profit or loss utilized by the CODM is earnings (loss) from continuing operations as reported on the
Company¶s consolidated statements of operations. The CODM uses this measure of segment profit or loss to assess actual
performance relative to budget and considers budget-to-actual variances when making decisions about reallocations of
personnel or capital resources from those considered by the annual operating plan. 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 sheets. The accounting policies of the Company¶s operating and reportable segment
are the same as those described in the Company¶s summary of significant accounting policies (see note 1).
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 and powder ingredients utilizing oat, soy and hemp bases.
Smoothie bowls
Ready-to-eat fruit smoothie and chia bowls topped with frozen fruit.
Revenue disaggregated by product category is as follows:
December 28, 2024
December 30, 2023
December 31, 2022
$
$
$
Product Category
Beverages and broths
577,069
499,226
454,446
Fruit Snacks
127,328
98,186
82,869
Ingredients
17,025
17,032
45,366
Smoothie bowls(1)
2,306
12,286
8,714
Total revenues
723,728
626,730
591,395
(1) Revenues reported for the year ended December 28, 2024, reflect sales of smoothie bowls prior to March 4, 2024 (see note
3).
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F36-
December 28, 2024 Form 10-K
Specified Expense Items
The following table presents details of specified expenses provided to the CODM and included in earnings (loss) from
continuing operations:
December 28, 2024
December 30, 2023
December 31, 2022
$
$
$
Depreciation and Amortization
Depreciation expense included in cost of goods sold
29,719
24,225
15,731
Depreciation expense included in selling, general and
administrative expenses
4,994
5,030
5,532
Intangible asset amortization expense
1,784
1,784
1,784
Total depreciation and amortization
36,497
31,039
23,047
Stock-Based Compensation
Stock-based compensation expense included in
selling, general and administrative expenses
11,190
12,432
13,830
Interest Expense, Net
Interest expense, net of capitalized interest
26,307
24,422
11,889
Amortization of debt issuance costs
914
1,398
1,601
Loss on extinguishment of debt
-
1,584
-
Interest income
(2,313)
(495)
(334)
Interest expense, net
24,908
26,909
13,156
Geographic Information
Revenues from external customers are attributed to countries based on the location of the customer. Revenues from external
customers by geographic area for the years ended December 28, 2024, December 30, 2023 and December 31, 2022 were as
follows:
December 28, 2024
December 30, 2023
December 31, 2022
$
$
$
Revenues from External Customers
U.S.
710,191
611,566
577,515
Canada
11,359
11,740
8,973
Other
2,178
3,424
4,907
Total revenues from external customers
723,728
626,730
591,395
Long-lived assets consist of property, plant and equipment, net of accumulated depreciation, and operating lease right-of-use
assets, which are attributed to countries based on the physical location of the assets. Long-lived assets by geographic area as at
December 28, 2024 and December 30, 2023 were as follows:
December 28, 2024
December 30, 2023
$
$
Long-Lived Assets
U.S.
446,525
421,883
Canada
2,785
3,104
Total long-lived assets
449,310
424,987
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F37-
December 28, 2024 Form 10-K
Major Customers
Customers accounting for more than 10% of the Company¶s consolidated revenues from continuing operations in any of the
past three fiscal years were as follows:
December 28, 2024
December 30, 2023
December 31, 2022
Customer A
32%
35%
31%
Customer B
7%
8%
14%
21. Quarterly Consolidated Financial Information (Unaudited)
As described in Note 1 ± Significant Accounting Policies ± Revision of Prior Period Financial Statements, the Company has
corrected errors that effected the previously reported unaudited consolidated financial statements for the first three interim
periods of fiscal 2024 and each of the interim periods of fiscal 2023. The tables on the pages below present the effects of the
revisions on the previously reported unaudited consolidated statements of operations for each interim period preceding the
fourth quarter of 2024. The Company intends to reflect the revisions to the consolidated results of operations for each of the
first three interim periods of fiscal 2024 in its Quarterly Reports to filed on Form 10-Q in fiscal 2025.
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F38-
December 28, 2024 Form 10-K
Quarter-to-Date
Fiscal 2024
Third Quarter Ended
September 28, 2024
As
Previously
Reported
Adjust-
ments
As
Revised
$
$
$
Revenues
176,216
(360)
175,856
Cost of goods sold
152,632
356
152,988
Gross profit
23,584
(716)
22,868
Selling, general and administrative expenses
21,052
-
21,052
Intangible asset amortization
446
-
446
Other expense, net
450
-
450
Foreign exchange loss
113
-
113
Operating income
1,523
(716)
807
Interest expense, net
6,762
-
6,762
Other non-operating expense
236
-
236
Loss from continuing operations before income taxes
(5,475)
(716)
(6,191)
Income tax expense
23
-
23
Loss from continuing operations
(5,498)
(716)
(6,214)
Net loss from discontinued operations
-
-
-
Net loss
(5,498)
(716)
(6,214)
Accretion on preferred stock
(137)
-
(137)
Loss attributable to common shareholders
(5,635)
(716)
(6,351)
Basic and diluted loss per share:(1)
Loss from continuing operations attributable to common shareholders
(0.05)
(0.01)
(0.05)
Net loss from discontinued operations
-
-
-
Loss attributable to common shareholders
(0.05)
(0.01)
(0.05)
Fiscal 2024
First Quarter Ended
March 30, 2024
Second Quarter Ended
June 29, 2024
As
Previously
Reported
Adjust-
ments
As
Revised
As
Previously
Reported
Adjust-
ments
As
Revised
$
$
$
$
$
$
Revenues
182,848
1,574
184,422
170,995
(1,454)
169,541
Cost of goods sold
151,101
2,269
153,370
149,147
(798)
148,349
Gross profit
31,747
(695)
31,052
21,848
(656)
21,192
Selling, general and administrative expenses
22,988
(654)
22,334
17,784
-
17,784
Intangible asset amortization
446
-
446
446
-
446
Other income, net
(1,800)
-
(1,800)
(304)
-
(304)
Foreign exchange loss (gain)
(51)
-
(51)
1,310
-
1,310
Operating income
10,164
(41)
10,123
2,612
(656)
1,956
Interest expense, net
6,050
-
6,050
6,410
-
6,410
Earnings (loss) from continuing operations before income taxes
4,114
(41)
4,073
(3,798)
(656)
(4,454)
Income tax expense (benefit)
277
-
277
(17)
-
(17)
Earnings (loss) from continuing operations
3,837
(41)
3,796
(3,781)
(656)
(4,437)
Net loss from discontinued operations
(1,417)
500
(917)
(897)
-
(897)
Net earnings (loss)
2,420
459
2,879
(4,678)
(656)
(5,334)
Dividends and accretion on preferred stock
(433)
-
(433)
169
-
169
Earnings (loss) attributable to common shareholders
1,987
459
2,446
(4,509)
(656)
(5,165)
Basic and diluted earnings (loss) per share:(1)
Earnings (loss) from continuing operations attributable to common
shareholders
0.03
(0.00)
0.03
(0.03)
(0.01)
(0.04)
Net loss from discontinued operations
(0.01)
0.00
(0.01)
(0.01)
-
(0.01)
Earnings (loss) attributable to common shareholders
0.02
0.00
0.02
(0.04)
(0.01)
(0.04)
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F39-
December 28, 2024 Form 10-K
Fiscal 2023
Third Quarter Ended
September 30, 2023
Fourth Quarter Ended
December 30, 2023
As
Previously
Reported
Adjust-
ments
As
Revised
As
Previously
Reported
Adjust-
ments
As
Revised
$
$
$
$
$
$
Revenues
152,541
-
152,541
181,624
(3,567)
178,057
Cost of goods sold
132,273
815
133,088
155,983
(2,970)
153,013
Gross profit
20,268
(815)
19,453
25,641
(597)
25,044
Selling, general and administrative expenses
18,377
-
18,377
19,597
654
20,251
Intangible asset amortization
446
-
446
446
-
446
Other expense, net
-
-
-
475
-
475
Foreign exchange loss (gain)
(37)
-
(37)
66
-
66
Operating income
1,482
(815)
667
5,057
(1,251)
3,806
Interest expense, net
7,162
-
7,162
7,518
-
7,518
Loss from continuing operations before income taxes
(5,680)
(815)
(6,495)
(2,461)
(1,251)
(3,712)
Income tax benefit
-
-
-
(709)
-
(709)
Loss from continuing operations
(5,680)
(815)
(6,495)
(1,752)
(1,251)
(3,003)
Net loss from discontinued operations
(140,143)
-
(140,143)
(9,982)
(500)
(10,482)
Net loss
(145,823)
(815)
(146,638)
(11,734)
(1,751)
(13,485)
Dividends and accretion on preferred stock
(426)
-
(426)
(429)
-
(429)
Loss attributable to common shareholders
(146,249)
(815)
(147,064)
(12,163)
(1,751)
(13,914)
Basic and diluted loss per share:(1)
Loss from continuing operations attributable to common shareholders
(0.05)
(0.01)
(0.06)
(0.02)
(0.01)
(0.03)
Net loss from discontinued operations
(1.21)
-
(1.21)
(0.09)
(0.00)
(0.09)
Loss attributable to common shareholders
(1.26)
(0.01)
(1.27)
(0.11)
(0.02)
(0.12)
Fiscal 2023
First Quarter Ended
April 1, 2023
Second Quarter Ended
July 1, 2023
As
Previously
Reported
Adjust-
ments
As
Revised
As
Previously
Reported
Adjust-
ments
As
Revised
$
$
$
$
$
$
Revenues
154,969
-
154,969
141,163
-
141,163
Cost of goods sold
130,890
538
131,428
122,534
667
123,201
Gross profit
24,079
(538)
23,541
18,629
(667)
17,962
Selling, general and administrative expenses
23,069
-
23,069
16,957
-
16,957
Intangible asset amortization
446
-
446
446
-
446
Other expense (income), net
42
-
42
(62)
-
(62)
Foreign exchange loss (gain)
(11)
-
(11)
92
-
92
Operating income (loss)
533
(538)
(5)
1,196
(667)
529
Interest expense, net
5,664
-
5,664
6,565
-
6,565
Loss from continuing operations before income taxes
(5,131)
(538)
(5,669)
(5,369)
(667)
(6,036)
Income tax expense (benefit)
(2,304)
-
(2,304)
6,282
-
6,282
Loss from continuing operations
(2,827)
(538)
(3,365)
(11,651)
(667)
(12,318)
Net earnings (loss) from discontinued operations
4,204
-
4,204
(7,187)
-
(7,187)
Net earnings (loss)
1,377
(538)
839
(18,838)
(667)
(19,505)
Dividends and accretion on preferred stock
(704)
-
(704)
(422)
-
(422)
Earnings (loss) attributable to common shareholders
673
(538)
135
(19,260)
(667)
(19,927)
Basic and diluted earnings (loss) per share:(1)
Loss from continuing operations attributable to common shareholders
(0.03)
(0.00)
(0.04)
(0.10)
(0.01)
(0.11)
Net earnings (loss) from discontinued operations
0.04
-
0.04
(0.06)
-
(0.06)
Earnings (loss) attributable to common shareholders
0.01
(0.00)
0.00
(0.17)
(0.01)
(0.17)
SunOpta Inc.
Notes to Consolidated Financial Statements
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022
(All tabular dollar amounts expressed in thousands of U.S. dollars, except per share amounts)
____________________________________________________________________________________________________
SUNOPTA INC.
-F40-
December 28, 2024 Form 10-K
Year-to-Date
Fiscal 2024
First Two Quarters Ended
June 29, 2024
First Three Quarters Ended
September 28, 2024
As
Previously
Reported
Adjust-
ments
As
Revised
As
Previously
Reported
Adjust-
ments
As
Revised
$
$
$
$
$
$
Revenues
353,843
120
353,963
530,059
(240)
529,819
Cost of goods sold
300,248
1,471
301,719
452,880
1,827
454,707
Gross profit
53,595
(1,351)
52,244
77,179
(2,067)
75,112
Selling, general and administrative expenses
40,772
(654)
40,118
61,824
(654)
61,170
Intangible asset amortization
892
-
892
1,338
-
1,338
Other income, net
(2,104)
-
(2,104)
(1,654)
-
(1,654)
Foreign exchange loss
1,259
-
1,259
1,372
-
1,372
Operating income
12,776
(697)
12,079
14,299
(1,413)
12,886
Interest expense, net
12,460
-
12,460
19,222
-
19,222
Other non-operating expense
-
-
-
236
-
236
Earnings (loss) from continuing operations before income taxes
316
(697)
(381)
(5,159)
(1,413)
(6,572)
Income tax expense
260
-
260
283
-
283
Earnings (loss) from continuing operations
56
(697)
(641)
(5,442)
(1,413)
(6,855)
Net loss from discontinued operations
(2,314)
500
(1,814)
(2,314)
500
(1,814)
Net loss
(2,258)
(197)
(2,455)
(7,756)
(913)
(8,669)
Accretion on preferred stock
(264)
-
(264)
(401)
-
(401)
Loss attributable to common shareholders
(2,522)
(197)
(2,719)
(8,157)
(913)
(9,070)
Basic and diluted loss per share:(1)
Loss from continuing operations attributable to common shareholders
(0.00)
(0.01)
(0.01)
(0.05)
(0.01)
(0.06)
Net loss from discontinued operations
(0.02)
0.00
(0.02)
(0.02)
0.00
(0.02)
Loss attributable to common shareholders
(0.02)
(0.00)
(0.02)
(0.07)
(0.01)
(0.08)
Fiscal 2023
First Two Quarters Ended
July 1, 2023
First Three Quarters Ended
September 30, 2023
As
Previously
Reported
Adjust-
ments
As
Revised
As
Previously
Reported
Adjust-
ments
As
Revised
$
$
$
$
$
$
Revenues
296,132
-
296,132
448,673
-
448,673
Cost of goods sold
253,424
1,205
254,629
385,697
2,020
387,717
Gross profit
42,708
(1,205)
41,503
62,976
(2,020)
60,956
Selling, general and administrative expenses
40,026
-
40,026
58,403
-
58,403
Intangible asset amortization
892
-
892
1,338
-
1,338
Other income, net
(20)
-
(20)
(20)
-
(20)
Foreign exchange loss
81
-
81
44
-
44
Operating income
1,729
(1,205)
524
3,211
(2,020)
1,191
Interest expense, net
12,229
-
12,229
19,391
-
19,391
Loss from continuing operations before income taxes
(10,500)
(1,205)
(11,705)
(16,180)
(2,020)
(18,200)
Income tax expense
3,978
-
3,978
3,978
-
3,978
Loss from continuing operations
(14,478)
(1,205)
(15,683)
(20,158)
(2,020)
(22,178)
Net loss from discontinued operations
(2,983)
-
(2,983)
(143,126)
-
(143,126)
Net loss
(17,461)
(1,205)
(18,666)
(163,284)
(2,020)
(165,304)
Dividends and accretion on preferred stock
(1,126)
-
(1,126)
(1,552)
-
(1,552)
Loss attributable to common shareholders
(18,587)
(1,205)
(19,792)
(164,836)
(2,020)
(166,856)
Basic and diluted loss per share:(1)
Loss from continuing operations attributable to common shareholders
(0.14)
(0.01)
(0.15)
(0.19)
(0.02)
(0.21)
Net loss from discontinued operations
(0.03)
-
(0.03)
(1.26)
-
(1.26)
Loss attributable to common shareholders
(0.16)
(0.01)
(0.18)
(1.45)
(0.02)
(1.47)
(1) The sum across or down of individual per share amounts may not add due to rounding.
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brian Kocher, certify that:
(1)
I have reviewed this Annual Report on Form 10-K of SunOpta Inc.
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
(4)
The registrant¶s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a -15(f) and 15d -15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant¶s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant¶s internal control over financial reporting that occurred
during the registrant¶s most recent fiscal quarter (the registrant¶s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant¶s
internal control over financial reporting; and
(5)
The registrant¶s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant¶s auditors and the audit committee of the registrant¶s board of
directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant¶s ability to record, process,
summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant¶s internal control over financial reporting.
/s/ Brian Kocher
Brian Kocher
Chief Executive Officer
SunOpta Inc.
Date: February 26, 2025
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Greg Gaba, certify that:
(1)
I have reviewed this Annual Report on Form 10-K of SunOpta Inc.
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
(4)
The registrant¶s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a -15(f) and 15d -15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant¶s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant¶s internal control over financial reporting that occurred
during the registrant¶s most recent fiscal quarter (the registrant¶s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant¶s
internal control over financial reporting; and
(5)
The registrant¶s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant¶s auditors and the audit committee of the registrant¶s board of
directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant¶s ability to record, process,
summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant¶s internal control over financial reporting.
/s/ Greg Gaba
Greg Gaba
Chief Financial Officer
SunOpta Inc.
Date: February 26, 2025
Exhibit 32
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of SunOpta Inc. (the ³Company´) on Form 10-K for the year ended December 28, 2024,
as filed with the Securities and Exchange Commission (the ³Report´), I, Brian Kocher, Chief Executive Officer of the
Company, and I, Greg Gaba, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, that to our
knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this written statement, has been provided to the Company
and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: February 26, 2025
/s/ Brian Kocher
Brian Kocher
Chief Executive Officer
SunOpta Inc.
/s/ Greg Gaba
Greg Gaba
Chief Financial Officer
SunOpta Inc.
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and should not
be deemed to be filed under the Exchange Act by the Company or the certifying officers.
SunOpta's newest manufacturing facility in Midlothian, Texas
Publicly Held:
NASDAQ - STKL
TSX - SOY
Employees: pproximately 1,248
Headquarters: Eden Prairie, Minnesota, USA
Production Facilities: 7
Geography:
United States: 6
Canada: 1
DIRECTORS AND LEADERSHIP TEAM
Directors
Dr. Albert Bolles (3)(6)
Independent Director
Brian Kocher
Chief Executive Officer &
Director
Rebecca Fisher (4)(5)
Independent Director
Dean Hollis (2)(6)
Independent Director
David Lemmon (4)(6)
Independent Director
Diego Reynoso (2)(4)
Independent Director
Leslie Starr (2)(4)
Chair
Mahes Wickramasinghe (1)(6)
Independent Director
(1) Chair of Audit Committee
(2) Member of Audit Committee
(3) Chair of Corporate Governance Committee
(4) Member of Corporate Governance Committee
(5) Chair of Compensation Committee
(6) Member of Compensation Committee
Corporate Headquarters
7078 Shady Oak Road
Eden Prairie, Minnesota
55344
T: (952) 820-2518
www.sunopta.com
Leadership Team
Brian Kocher
Chief Executive Officer
Greg Gaba
Chief Financial Officer
Bryan Clark
Senior Vice President, R&D and
Food Safety & Quality
Rob Duchscher
Chief Information Officer
Justin Kobler
Senior Vice President, Supply Chain
Shareholder Information
TRANSFER AGENTS
TSX Trust Company
100 Adelaide Street West, Suite 301
Toronto, ON, Canada M5H 4H1
T: (416) 361-0930
Equiniti Trust Company, LLC
48 Wall Street
New York, NY, USA 10005
T: (800) 937-5449
CORPORATE LEGAL COUNSEL
Stoel Rives, LLP Minneapolis, MN
Wildeboer Dellelce LLP
Toronto, ON, Canada
AUDITORS
Ernst & Young LLP
Minneapolis, MN
ANNUAL MEETING
May 22, 2025 at 3 pm Eastern
www.virtualshareholdermeeting.
com/STKL2025
Listed on NASDAQ: STKL and TSX: SOY
SHAREHOLDER COMMUNICATIONS
Copies of SunOptaٚs Annual Report,
Form 10K (Annual Information Form)
and other regulatory filings are
available on the Company website
www.sunopta.com. Additional
financial information has been
filed electronically with various
securities commissions in Canada
through SEDAR+ (www.sedar.com
and in the United States through
EDGAR (www.sec.gov). Paper copies
are available without charge.
Please Contact:
Reed Anderson ى
reed.anderson@icrinc.com
Lauren McNamara
Senior Vice President, Business
Management
Chris McCullough
General Counsel & Corporate
Secretary