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What changed in SunOpta Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SunOpta Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+229 added−300 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in SunOpta Inc.'s 2025 10-K

229 paragraphs added · 300 removed · 160 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur 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.
Biggest changeOur 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.
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, and freight and storage demand.
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.
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 "Exchange 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.
SUNOPTA INC. 8 December 28, 2024 Form 10-K 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 "Exchange 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.
We foster inclusion by recognizing and supporting 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 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.
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 regular leader led learning sessions.
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.
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, 2023, we employed 1,174 full-time employees in North America. Our average employee has over four years of service.
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 2023, our voluntary turnover was 20% (down from 22% in 2022) 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 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.
Generally, organic food products are produced using: agricultural management practices intended to promote and enhance ecosystem health; SUNOPTA INC. 5 December 30, 2023 Form 10-K 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.
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. 6 December 30, 2023 Form 10-K 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 ("SFCA"), the Food and Drugs Act ("FADA"), the Canada Consumer Product Safety Act ("CCPSA"), the Canadian Food Inspection Agency Act ("CFIAA") and the Canadian Environmental Protection Act, 1999 ("CEPA"), along with their supporting regulations.
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 ("SFCA"), the Food and Drugs Act ("FADA"), the Canada Consumer Product Safety Act ("CCPSA"), the Canadian Food Inspection Agency Act ("CFIAA") and the Canadian Environmental Protection Act, 1999 ("CEPA"), along with their supporting regulations.
SUNOPTA INC. 3 December 30, 2023 Form 10-K 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.
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.
SunOpta conducts an organizational health survey two times each year to check the pulse of our workforce and look for areas of improvement through the lens of all our employees.
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.
In 2023, we expanded the 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.
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.
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 INC. 5 December 28, 2024 Form 10-K 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.
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 1.02, compared to a goal of 1.3. Environmental, Social and Governance We are committed to incorporating environmental, social and governance ("ESG") principles into our business strategies and organizational culture.
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 ("ESG") principles into our business strategies and organizational culture.
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.
SUNOPTA INC. 4 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.
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.
SUNOPTA INC. 6 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.
In 2023, we implemented two additional paid personal holidays for our regular, full-time employees called "You Days," which can be taken in recognition of an employee's birthday and work anniversary date. In addition, we added a mental health benefit that provides faster access to care at the individual level of need for employees and their families.
Our regular, full-time employees receive two additional personal holidays called "You 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.
New requirements regarding nutrition and ingredient labeling and food color were introduced in 2016. In 2022, the Government of Canada, with support from the Canadian Food Inspection Agency (the "CFIA"), amended the Food and Drug Regulations to update the requirements for labelling pre-packaged food products.
In 2022, the Government of Canada, with support from the Canadian Food Inspection Agency (the "CFIA"), amended the Food and Drug Regulations to update the requirements for labelling pre-packaged food products.
Item 1. Business The Company SunOpta Inc. was organized under the laws of Canada in 1973. We operate as a manufacturer for leading natural and private label brands and also produce our own propriety brands, including SOWN®, Dream® and West Life™.
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 ™ .
SUNOPTA INC. 7 December 30, 2023 Form 10-K 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.
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.
As part of our focus on financial wellness, we announced expedited access to our 401(k) plan, beginning in 2024 so employees can realize the benefits of planning for retirement with employer match earlier in their tenure.
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.
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, market conditions, including inflationary cost increases, and other factors beyond our control.
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.
The amendments to the Food and Drug Regulations are part of the CFIA's initiative to modernize Canada's food labelling system. Canadian Food Inspection Agency Act ("CFIAA") - the CFIAA grants power to the CFIA, which is tasked with the administration and enforcement of certain Canadian food legislation.
Canadian Food Inspection Agency Act ("CFIAA") - the CFIAA grants power to the CFIA, which is tasked with the administration and enforcement of certain Canadian food legislation.
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. In 2023, we had the first cohort of the Leadership Impact Program.
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.
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.
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.
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 ("SFCR") (under the SFCA) - the SFCR came into effect on January 15, 2019, and consolidated 14 sets of existing food regulations into a single set of regulations which governs all imported, exported, or inter-provincially traded food products.
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 ("SFCR") (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.
Human Capital Our Human Capital Management strategy is based on our goal of "Putting the YOU in SunOpta." We develop employee programs, benefits, and compensation to align with four pillars of well-being: physical, financial, social, and emotional.
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.
Timelines for complying with the SFCR requirements vary by food, activity, and size of the food business. 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.
SUNOPTA INC. 7 December 28, 2024 Form 10-K 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.
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.
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.
Examples of these initiatives are: Offering a competitive compensation and benefit package that includes "choices" 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, and a tuition reimbursement program.
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.
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 2023, our ten largest customers accounted for approximately 80% of our revenues from continuing operations.
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.
Participants at the SVP and VP level gathered quarterly throughout the year to focus on leadership skills, strategy, professional growth and completed capstone projects to further the business. SUNOPTA INC. 4 December 30, 2023 Form 10-K We believe in the power of diversity.
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.
We provide training regarding diversity, equity and inclusion for employees to better understand how we can all work together, and be better, by embracing our differences.
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 valued and encouraged to contribute to the Company's success.
Removed
Our consumer products portfolio also includes protein shakes, teas, broths, and fruit snacks. In October 2023, we completed the divestiture of our commodity-based frozen fruit business ("Frozen Fruit"), in order to focus on value-add products in plant-based and healthy snack categories (see below - "Divestiture of Frozen Fruit").
Added
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.
Removed
We sell our products through various distribution channels including private label products to retail customers; branded products under co-manufacturing agreements to other branded food companies for their distribution; and our own branded products to retail and foodservice customers. In addition, we also produce liquid and dry ingredients for internal use and for sale to other food and beverage manufacturers.
Added
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.
Removed
Divestiture of Frozen Fruit On October 12, 2023, we completed the sale of certain assets and liabilities of Frozen Fruit, which included owned facilities of Frozen Fruit located in Edwardsville, Kansas, and Jacona, Mexico. In December 2023, we completed the liquidation of a leased frozen fruit facility located in Oxnard, California.
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Additionally, certain jurisdictions have either enacted or are considering enacting extended producer responsibility ("EPR") laws and regulations that require manufacturers to be responsible for the collection, recycling, and disposal of the packaging materials they introduce into the market.
Removed
These transactions represent our exit from the processing, packaging and selling of individually quick frozen fruit for retail, foodservice and industrial applications and completes our strategic optimization plan for our non-core, commodity-based businesses, which included the divestiture of our sunflower business ("Sunflower") in October 2022. Frozen Fruit and Sunflower have been classified as discontinued operations.
Added
Our Human Capital Management strategy is based on our goal of "Putting the YOU in SunOpta." Examples of these initiatives are: Offering a competitive compensation and benefit package that includes "choices" for each employee to select which works best for them.
Removed
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. 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.
Added
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.
Removed
Some provisions of the SFCA and SFCR also apply intra-provincially. Notably, SFCR replaced the Organic Products Regulations, 2009 , the Processed Products Regulations and, to the extent that they related to food products, the Consumer Packaging and Labeling Act and its supporting regulations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+8 added−14 removed108 unchanged
Biggest changeWe may incur additional losses related to this recall that are unforeseen at this time and we may need to revise our insurance estimate as we work with our insurance providers to substantiate the losses incurred to date.
Biggest changeWe 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.
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, and general uncertainty regarding the overall future economic environment.
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.
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 our Company or fail to regularly publish reports about us, our industry, or 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.
Likewise, 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.
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.
We operate in a highly competitive industry We operate businesses in the highly competitive food industry in North America. We compete with large U.S. and international food ingredient and consumer-packaged food companies.
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.
Our capital investment plans often require a substantial amount of management, operational, and financial resources, which may divert our attention and resources from existing businesses, potentially disrupting our operations and adversely affecting our relationships with customers and suppliers.
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.
Our ability to comply with the financial covenants under the credit agreement will depend on the success of our businesses, 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.
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.
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, such as the COVID-19 pandemic, as well as the potential impacts of geopolitical events, and the effect of governmental initiatives to manage economic conditions.
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.
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.
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.
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 United States generally accepted accounting principles.
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.
Governmental regulations also affect taxes and levies, healthcare costs, energy usage, and labor issues, all of which may have a direct or indirect effect on our business or those of our customers or suppliers.
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.
SUNOPTA INC. 9 December 30, 2023 Form 10-K 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.
SUNOPTA INC. 10 December 28, 2024 Form 10-K 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.
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 interest rate fluctuations and impairing our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, or other general corporate purposes.
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.
SUNOPTA INC. 10 December 30, 2023 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.
SUNOPTA INC. 11 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.
We may be unable to accept and fulfill customer orders as a result of disasters, health crises (such as the COVID-19 pandemic), 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.
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.
SUNOPTA INC. 13 December 30, 2023 Form 10-K 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.
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.
For the year ended December 30, 2023, our ten largest customers accounted for approximately 80% of revenues from continuing operations. 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.
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.
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 annually, or at any time when events occur that could affect the value of these assets.
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.
In addition, delays and unexpected costs in connection with the completion of capital expansion projects, or changes in demand and pricing for our products may occur that 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.
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.
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.
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. SUNOPTA INC. 14 December 28, 2024 Form 10-K 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.
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.
SUNOPTA INC. 12 December 28, 2024 Form 10-K 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.
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.
SUNOPTA INC. 17 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.
Additionally, we have made several significant divestitures in recent years that aligned with our strategic priority of optimizing our non-core, commodity-based businesses and focusing on value-add opportunities.
Additionally, we have made several significant divestitures in recent years, including the divestiture of our frozen fruit business ("Frozen Fruit") in 2023, that aligned with our strategic priority of optimizing our non-core, commodity-based businesses and focusing on value-add opportunities.
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.
SUNOPTA INC. 15 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.
SUNOPTA INC. 16 December 30, 2023 Form 10-K 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.
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 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.
SUNOPTA INC. 16 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.
SUNOPTA INC. 8 December 30, 2023 Form 10-K 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, and we expect elevated levels of inflation to continue in 2024.
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.
Changes in these laws or regulations, or the introduction of new laws or 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.
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.
SUNOPTA INC. 12 December 30, 2023 Form 10-K 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 matters.
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.
Impairment charges related to long-lived assets or goodwill could adversely impact our financial condition and results of operations As at December 30, 2023, we had $319.9 million of property, plant and equipment, $105.9 million of operating lease right-of-use assets, and $21.9 million of intangible assets, as well as $4.0 million of goodwill.
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.
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.
SUNOPTA INC. 13 December 28, 2024 Form 10-K 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.
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, currency fluctuations, and other factors beyond our control.
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.
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.
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.
SUNOPTA INC. 15 December 30, 2023 Form 10-K 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 30, 2023, Oaktree Capital Management L.P., a private equity investor (together with its affiliates, "Oaktree") held an approximately 20% voting interest in the Company and has nominated two members of our Board of Directors.
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, "Oaktree") held an approximately 20% voting interest in the Company and has nominated two members of our Board of Directors.
To the extent that these various SCF programs were terminated, our financial condition, cash flows, and liquidity could be adversely affected by higher working capital levels due to delays in collecting accounts receivables.
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.
SUNOPTA INC. 14 December 30, 2023 Form 10-K Our level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt obligations As at December 30, 2023, we have a significant amount of indebtedness outstanding as a result of the capital investments we have made in recent years.
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.
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.
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.
We may also be subjected to decreased availability of and/or less favorable pricing for water, which could adversely impact our manufacturing operations. There is an increased focus by U.S. federal, state and local regulatory and legislative bodies, as well as foreign bodies, regarding environmental policies relating to climate change, regulating greenhouse gas emissions, energy policies, and sustainability.
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).
SUNOPTA INC. 11 December 30, 2023 Form 10-K 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.
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.
The Seller Promissory Notes are secured by a second-priority lien on certain assets of Frozen Fruit acquired by the Purchasers. While we assessed the Seller Promissory Notes to be collectible as at December 30, 2023, a deterioration in the liquidity of the Loan Parties could impact the collectability of the Seller Promissory Notes.
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.
In addition, a portion of the aggregate purchase price was in the form of secured seller promissory notes due in three years and with a stated principal amount of $20.0 million in the aggregate (the "Seller Promissory Notes") that the Company entered into with the Purchasers and Nature's Touch Frozen Foods, LLC (collectively the "Loan Parties").
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 "Purchasers"), 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 "Loan Parties").
For the year ended December 30, 2023, on a continuing operations basis, we did not recognize any impairment charges related to our long-lived assets or goodwill.
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.
Our ability to maintain current levels of working capital may be adversely affected if we are unable to utilize supply chain financing ("SCF") programs to accelerate payment terms for certain customers To improve working capital efficiency, we utilize SCF programs offered by some of our major customers that allow us to monetize our receivables from those customers earlier than our payment terms would provide.
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.
Removed
In October 2023, we completed the sale of certain assets and liabilities of Frozen Fruit to Natures Touch Mexico, S. de R.L. de C.V. and Nature's Touch Frozen Fruits, LLC (the "Purchasers") for an estimated aggregate purchase price of approximately $141 million.
Added
SUNOPTA INC. 9 December 28, 2024 Form 10-K 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.
Removed
The estimated aggregate purchase price is subject to post-closing adjustments based on a determination of the final net working capital as of the closing date of the transaction on October 12, 2023.
Added
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.
Removed
Our estimate of the final net working capital allocation, which is recognized as part of the loss from discontinued operations in the consolidated statement of operations for the year ended December 30, 2023, may be subject to change, which could be material, as the parties are currently in the process of reconciling the final aggregate purchase price, including the resolution of certain disputed items, in accordance with the procedures set forth in the Asset Purchase Agreement.
Added
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.
Removed
A change in the aggregate purchase price could have a material impact on our consolidated results of operations, financial condition and cash flows.
Added
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.
Removed
Within discontinued operations, we incurred a pre-tax loss on the sale of Frozen Fruit of $119.8 million, of which a significant portion was comprised of the carrying value of the long-lived assets of the business. Future impairments of long-lived assets and/or goodwill could materially and adversely impact our business, financial condition, and results of operations.
Added
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.
Removed
In connection with the preparation of our consolidated financial statements as of and for the fiscal year ended December 31, 2022, we identified a material weakness in our internal control over financial reporting. This material weakness was remediated during the fiscal year ended December 30, 2023.
Added
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 €750 million or more. During 2024, Canada enacted legislation to adopt Pillar Two effective for fiscal years beginning on or after December 31, 2023.
Removed
The identified material weakness and associated remediation efforts are further described in Part II, Item 9A of this Form 10-K. Even after any identified material weaknesses have been remediated, investors may lose confidence in our reported financial information and the market price of our common shares may decline.
Added
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.
Removed
In the second quarter of 2023, we announced our subsidiary, Sunrise Growers Inc., 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. To date, we have recognized losses of $7.3 million related to this recall, net of estimated insurance recoveries of $4.8 million.
Added
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.
Removed
In addition, in the third quarter of 2023, we withdrew specific batches of aseptically-packaged product from a customer due to the discovery of a faulty seal that was traced to an equipment misconfiguration by a third-party service provider.
Removed
The equipment issue was identified and resolved in the third quarter of 2023, and none of the withdrawn product made it into the consumer marketplace. We have recognized losses of $3.4 million related to the withdrawal, net of expected recoveries from the service provider.
Removed
Our recovery estimate may need to be revised as we work with the service provider to substantiate our losses.
Removed
In addition, customers and consumers may choose to stop purchasing our products or purchase products from another company or a competitor, and our business, financial condition and results of operations may be materially and adversely affected. Furthermore, we may from time to time establish and publicly announce goals and commitments to reduce our impact on the environment.
Removed
Risks Related to Our Indebtedness and Liquidity Increases in interest rates may negatively impact our cost of borrowing and access to capital financing To address inflation, the U.S. Federal Reserve implemented tighter monetary policies beginning in 2022, causing interest rates to rise significantly, which negatively impacted the cost of borrowing on our variable rate debt beginning in 2022.
Removed
As at December 30, 2023, we had approximately $212 million of variable rate debt outstanding under our credit agreement. We expect interest rates to remain at elevated levels in 2024, and we continue to be exposed to further changes in interest rates, which could have a material negative impact on our business, financial condition, results of operations and cash flows.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe 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. SUNOPTA INC. 17 December 30, 2023 Form 10-K Despite facing directed attacks, our systems have withstood such challenges without material interruptions to our business operations.
Biggest changeWe 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.
These reports cover various cybersecurity matters, including risk assessments, mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance. Furthermore, our Board of Directors takes a proactive stance in overseeing our annual enterprise risk assessment.
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. 18 December 28, 2024 Form 10-K Furthermore, our Board of Directors takes a proactive stance in overseeing our annual enterprise risk assessment.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 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 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.
Biggest changeItem 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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 which commenced December 31, 2018. 12/31/2018 12/31/2019 12/30/2020 12/31/2021 12/31/2022 12/31/2023 SunOpta Inc. 100.00 64.84 303.91 180.99 219.79 142.45 Nasdaq Industrial Index 100.00 127.77 194.05 211.15 137.14 176.82 S&P/TSX Composite Index 100.00 120.72 122.58 149.23 136.30 147.37 Assumes that $100.00 was invested in our common shares and in each index on December 31, 2018.
Biggest changeSUNOPTA INC. 19 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 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 "STKL," and in Canadian dollars on the Toronto Stock Exchange ("TSX") under the symbol "SOY." As at December 30, 2023, we had approximately 332 shareholders of record.
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 "STKL," and in Canadian dollars on the Toronto Stock Exchange ("TSX") under the symbol "SOY." As at December 28, 2024, we had approximately 321 shareholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+53 added−119 removed18 unchanged
Biggest changeSUNOPTA INC. 28 December 30, 2023 Form 10-K Rollforward of Revenue, Gross Profit and Operating Income For the year ended December 30, 2023 December 31, 2022 Change % Change Revenues $ 630,297 $ 591,395 $ 38,902 6.6% Gross profit 88,617 99,730 (11,113 ) -11.1% Gross margin 14.1% 16.9% -2.8% Operating income $ 8,268 $ 17,933 $ (9,665 ) -53.9% Operating margin 1.3% 3.0% -1.7% Revenues The table below explains the $38.9 million increase in revenues from $591.4 million for the year ended December 31, 2022 to $630.3 million for the year ended December 30, 2023: Revenues for the year ended December 31, 2022 $591,395 Sales volume growth for plant-based milks and creamers (oat, coconut and soy flavors), 330-milliliter protein shakes, and teas, together with the wrap-around benefit of pricing actions taken in 2022 to offset input cost inflation, partially offset by softer demand for almond and rice milks, together with lower broth volumes 48,347 Higher sales volumes for fruit snacks and smoothie bowls 18,889 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 $630,297 Gross Profit The table below explains the $11.1 million decrease in gross profit from $99.7 million for the year ended December 31, 2022 to $88.6 million for the year ended December 30, 2023: Gross profit for the year ended December 31, 2022 $99,730 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 13,779 Gross profit for the year ended December 30, 2023 $88,617 SUNOPTA INC. 29 December 30, 2023 Form 10-K Operating Income The table below explains the $9.6 million decrease in operating income from $17.9 million for the year ended December 31, 2022 to $8.3 million for the year ended December 30, 2023: Operating income for the year ended December 31, 2022 $17,933 Decrease in gross profit, as explained above ($11,113) 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 2,051 Operating income for the year ended December 30, 2023 $8,268 Consolidated Results of Operations for Fiscal Years 2022 and 2021 December 31, 2022 January 1, 2022 Change Change For the year ended $ $ $ % Revenues 591,395 496,455 94,940 19.1% Cost of goods sold 491,665 415,311 76,354 18.4% Gross profit 99,730 81,144 18,586 22.9% Gross margin (1) 16.9% 16.3% 0.6% Operating expenses Selling, general and administrative expenses 78,469 64,778 13,691 21.1% Intangible asset amortization 1,784 1,286 498 38.7% Other expense, net 1,651 6,745 (5,094 ) -75.5% Foreign exchange loss (gain) (107 ) 94 (201 ) * Total operating expenses 81,797 72,903 8,894 12.2% Operating income 17,933 8,241 9,692 117.6% Interest expense, net 13,156 7,552 5,604 74.2% Earnings from continuing operations before income taxes 4,777 689 4,088 593.3% Income tax expense (benefit) 896 (4,854 ) 5,750 * Earnings from continuing operations 3,881 5,543 (1,662 ) -30.0% Loss from discontinued operations (8,722 ) (6,715 ) (2,007 ) -29.9% Net loss (2),(3) (4,841 ) (1,172 ) (3,669 ) -313.1% Dividends and accretion on preferred stock (3,109 ) (4,197 ) 1,088 25.9% Loss attributable to common shareholders (4) (7,950 ) (5,369 ) (2,581 ) -48.1% * Percentage not meaningful due to figures being positive and negative.
Biggest changeRollforward 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. 28 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 "Term Loan Credit Facility") and an $85.0 million revolving credit facility (the "Revolving Credit Facility") (collectively, the "Credit Facilities").
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 2023 and 2022, which may obscure trends in our margin performance.
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.
However, in order to finance significant investments in our existing businesses, or significant business acquisitions, if any, that may arise in the future, we may need additional sources of cash that we could attempt to obtain through a combination of additional bank or subordinated financing, a private or public offering of debt or equity securities, or the issuance of common stock.
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.
Investing Activities of Continuing Operations Cash used in investing activities of continuing operations decreased $74.4 million from 2022 to 2023, which reflected the completion of certain major capital projects, including the construction of our new plant-based beverage facility in Midlothian, Texas.
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.
The loss from discontinued operations reflected 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 Sunflower 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.
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 ("Sunflower") 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.
For 2022, start-up costs mainly related to the hiring and training of new employees for the Midlothian facility, and the integration of the Dream and West Life brands, which are recorded in cost of goods sold ($5.7 million) and SG&A expenses ($0.3 million).
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).
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 investors with a meaningful, consistent comparison of our profitability measure for the periods presented.
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.
(1) 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 included in cost of goods sold that are incurred in connection with capital expansion projects.
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.
The 20-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 1.3% gross margin impact) and higher manufacturing costs, largely 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.
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.
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 ("MD&A") section provides analysis of our operations and financial position for the fiscal year ended December 30, 2023 and includes information available to February 28, 2024, unless otherwise indicated herein.
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 ("MD&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.
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 softer demand for almond and rice milks, and lower broth volumes.
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.
Diluted loss per share from continuing operations attributable to common shareholders (after dividends and accretion on preferred stock) was $0.21 for the year ended December 30, 2023, compared with a diluted earnings per share of $0.01 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.
Additionally, in 2023, we incurred incremental costs, net of expected recoveries, of $3.4 million (0.5% gross margin impact) 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.
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.
As at December 30, 2023, we had approximately $86.3 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 New Revolving Credit Facility.
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 the year ended December 30, 2023, we incurred start-up costs included in cost of goods sold of $18.7 million (3.0% gross margin impact) 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 (1.0% gross margin impact) of start-up costs incurred in 2022.
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.
We realized a loss attributable to common shareholders of $177.0 million (diluted loss per share of $1.55) for the year ended December 30, 2023, compared with a loss attributable to common shareholders of $8.0 million (diluted loss per share of $0.07) for the year ended December 31, 2022.
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.
We recognized a loss from discontinued operations of $153.1 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.
SUNOPTA INC. 27 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 change in revenues from 2022 to 2023 was due to the following: $ % 2022 revenues 591,395 Price 17,841 3.0% Volume/Mix 21,061 3.6% 2023 revenues 630,297 6.6% For the year ended December 30, 2023, the 6.6% increase in revenues reflected a 3.6% 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 3.0%.
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%.
It is supplementary information and should be read in conjunction with the consolidated financial statements included elsewhere in this report. Certain statements contained in this MD&A may constitute forward-looking statements as defined under securities laws.
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 "Consolidated Financial Statements"). Certain statements contained in this MD&A may constitute forward-looking statements as defined under securities laws.
We believe that our operating cash flows, including the selective use of customer SCF programs to improve collection terms, together with our New Credit Facilities and access to committed 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.
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.
For the year ended December 30, 2023, adjusted earnings from continuing operations were $9.1 million, or $0.08 earnings per diluted share, compared with adjusted earnings of $7.3 million, or $0.07 earnings per diluted share, 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.
The favorable volume/mix impact reflected sales volume growth for plant-based milks and creamers (oat, coconut and soy flavors), 330-milliliter protein shakes, and teas, together with higher sales volumes for fruit snacks and smoothie bowls.
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 non-GAAP measures are presented solely to allow investors to more fully assess our results of operations and should not be considered in isolation of, or as substitutes for an analysis of our results as reported under U.S. GAAP.
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.
For 2023, start-up costs included in cost of goods sold related to the ramp-up of production at our new plant-based beverage facility in Midlothian, Texas, and the start-up of new extrusion and high-speed packaging lines at our fruit snacks facility in Omak, Washington.
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.
Some of these limitations are: adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; adjusted EBITDA does not include the payment or recovery of income taxes, which is a necessary element of our operations; SUNOPTA INC. 26 December 30, 2023 Form 10-K 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 does not reflect any cash requirements for such replacements; and adjusted EBITDA does not include non-cash stock-based compensation, which is an important component of our total compensation program for employees and directors.
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.
Gross profit decreased $11.1 million, or 11.1%, to $88.6 million for the year ended December 30, 2023, compared with $99.7 million for the year ended December 31, 2022. Gross margin for the year ended December 30, 2023 was 14.1% compared to 16.9% for the year ended December 31, 2022, a decrease of 280 basis points.
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.
Adjusted earnings (loss) and adjusted EBITDA are non-GAAP financial measures. See footnotes (2) and (3) to the "Consolidated Results of Operations for Fiscal Years 2023 and 2022" table for a reconciliation of adjusted earnings (loss) and adjusted EBITDA from net earnings (loss), which we consider to be the most directly comparable U.S. GAAP financial measure.
See below under "Non-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.
See footnotes (2) and (3) to the "Consolidated Results of Operations for Fiscal Years 2022 and 2021" table for a reconciliation of adjusted earnings (loss) and adjusted EBITDA from net earnings (loss), which we consider to be the most directly comparable U.S. GAAP financial measure.
See below under "Non-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.
(g) For 2023, we recognized 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.
(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.
Adjusted EBITDA from continuing operations increased $14.1 million, or 28.5%, to $63.7 million for the year ended December 31, 2022, compared with $49.5 million for the year ended January 1, 2022. Adjusted earnings (loss) and adjusted EBITDA are non-GAAP financial measures.
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.
(k) For 2023, reflects an increase to the valuation allowance for U.S. deferred tax assets recognized in the second quarter of 2023, based on an assessment of the future realizability of the related tax benefits.
(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.
(2) When assessing our financial performance, we use an internal measure of adjusted earnings/loss 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.
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.
Excluding the impact of these costs, adjusted gross margin for the year ended December 30, 2023 was 17.6% compared to 17.8% for the year ended December 31, 2022, a decrease of 20 basis points.
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 "Non-GAAP Measures" for a reconciliation of adjusted gross margin from gross margin calculated in accordance with U.S. GAAP.
For the year ended December 31, 2022, we recognized income tax expense of $0.9 million on pre-tax earnings of $4.8 million. Loss from continuing operations for the year ended December 30, 2023 was $21.9 million, compared with earnings of $3.9 million for the year ended December 31, 2022.
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.
(i) For 2023, other includes a $0.4 million loss on a foreign exchange hedge in connection with the divestiture of Frozen Fruit, which is recorded in other expense. For 2023 and 2022, other also reflects reserves for legal settlements and gains and losses on the disposal of assets, which are recorded in other expense/income and loss from discontinued operations.
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.
SUNOPTA INC. 38 December 30, 2023 Form 10-K Financing Activities of Continuing Operations Cash used in financing activities of continuing operations increased $144.9 million from 2022 to 2023, which reflected the repayment of approximately $78 million of debt following the divestiture of Frozen Fruit in 2023, together with reduced levels of new borrowings in 2023 as major capital projects, including the Midlothian facility, were completed.
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.
The following table presents a reconciliation of adjusted earnings (loss) from net earnings (loss), which we consider to be the most directly comparable U.S. GAAP financial measure. In addition, we have prepared this table in columnar format to present the effects of discontinued operations on our consolidated results for the periods presented.
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.
(b) Reflects 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. The equipment issue was identified and resolved in the third quarter of 2023, and none of the withdrawn product made it into the consumer marketplace.
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.
The resulting increase in gross profit, together with stable SG&A spending as a percentage of revenue, is expected to drive operating income growth and improved cash flows.
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.
SUNOPTA INC. 27 December 30, 2023 Form 10-K Operating income decreased $9.6 million to $8.3 million for the year ended December 30, 2023, compared with $17.9 million for the year ended December 31, 2022.
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.
For 2023, business development costs related to the divestiture of Frozen Fruit, and, for 2022, these costs related to the divestitures of Frozen Fruit and Sunflower, together with our inaugural Investor Day held in June 2022. These costs are recorded in SG&A expenses.
SUNOPTA INC. 35 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.
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. Management compensates for these limitations by not viewing adjusted EBITDA in isolation, and specifically by using other U.S.
SUNOPTA INC. 34 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.
Cash provided by financing activities of continuing operations increased $43.8 million from 2021 to 2022, which mainly reflected higher borrowings in 2022 to fund the ramp-up in construction activities related to major capital projects.
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.
Diluted earnings per share from continuing operations attributable to common shareholders (after dividends and accretion on preferred stock) were $0.01 for each of the years ended December 31, 2022 and January 1, 2022.
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.
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. In addition, we may explore the sale of selected operations or assets from time to time to improve our profitability, reduce our indebtedness, and/or improve our position to obtain additional financing.
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.
The following table presents a reconciliation of adjusted EBITDA from net earnings (loss), which we consider to be the most directly comparable U.S. GAAP financial measure. In addition, as described above in footnote (2), we have prepared this table in columnar format to present the effects of discontinued operations on our consolidated results for the periods presented.
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.
For the year ended December 31, 2022, adjusted earnings from continuing operations were $7.3 million, or $0.07 earnings per diluted share, compared with adjusted earnings of $9.9 million, or $0.09 earnings per diluted share, for the year ended January 1, 2022.
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.
Cash Flows Summarized cash flow information for the years ended December 30, 2023, December 31, 2022 and January 1, 2022 is as follows: Change December 30, 2023 December 31, 2022 January 1, 2022 2022 to 2023 2021 to 2022 $ $ $ $ $ Net cash flows provided by (used in): Continuing operations: Operating activities 3,575 30,746 38,207 (27,171 ) (7,461 ) Investing activities (46,519 ) (120,957 ) (77,390 ) 74,438 (43,567 ) Financing activities (48,337 ) 96,534 52,762 (144,871 ) 43,772 Discontinued operations 99,356 (5,871 ) (13,603 ) 105,227 7,732 Operating Activities of Continuing Operations 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, higher cash interest expense on borrowings to finance capital expenditures, and unrecovered product withdrawal and recall costs.
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.
We also use this measure to assess operating performance in connection with our employee incentive programs. We define adjusted EBITDA as net earnings (loss) before interest, income taxes, depreciation, amortization, and stock-based compensation, and excluding other unusual items as identified in the determination of adjusted earnings (loss) (refer above to footnote (2)).
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.
Net cash used in discontinued operations decreased $7.7 million from 2021 to 2022, which reflected the $6.3 million settlement of the Tradin Organic closing matters in 2022, compared with the payment of $13.4 million of transaction costs in 2021 related to the Tradin Organic divestiture. Critical Accounting Estimates The preparation of financial statements in conformity with U.S.
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.
We realized a loss attributable to common shareholders of $8.0 million (diluted loss per share of $0.07) for the year ended December 31, 2022, compared with a loss attributable to common shareholders of $5.4 million (diluted loss per share of $0.05) for the year ended January 1, 2022.
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.
From time to time, as part of our ongoing efforts to improve working capital efficiency, we utilize, at our sole discretion, supply chain finance ("SCF") programs offered by some of our major customers that allows us to sell our receivables from the customers to such customers' financial institutions, on a non-recourse basis, in order to be paid earlier than our payment terms with the customer provide at a discount rate that leverages those customers' favorable credit ratings.
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.
On February 23, 2024, we entered into an agreement to sell the assets related to our smoothie bowl product line, which is expected to close on March 4, 2024. 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 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.
(Further details on the changes in revenue, gross profit and operating income are provided in the rollforward tables below.) Net interest expense increased by $5.6 million to $13.2 million for the year ended December 31, 2022, compared with $7.6 million for the year ended January 1, 2022, reflecting an increase in outstanding debt to finance capital expansion projects and fund working capital requirements, together with the impact of higher interest rates.
(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.
Utilizing our customers' SCF programs reduces our accounts receivable balances, improves our cash flows, and reduces the cost of servicing these receivables with our revolving credit facility. All operating cash flows from accounts receivable are reported consistently in our consolidated statements of cash flows regardless of whether they are associated with a SCF program.
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.
We recognized a loss from discontinued operations of $8.7 million (diluted loss per share of $0.08) for the year ended December 31, 2022, compared with a loss of $6.7 million (diluted loss per share of $0.06) for the year ended January 1, 2022.
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.
Gross profit increased $18.6 million, or 22.9%, to $99.7 million for the year ended December 31, 2022, compared with $81.1 million for the year ended January 1, 2022. Gross margin for the year ended December 31, 2022 was 16.9% compared to 16.3% for the year ended January 1, 2022, an increase of 60 basis points.
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.
SUNOPTA INC. 34 December 30, 2023 Form 10-K Earnings from continuing operations for the year ended December 31, 2022 were $3.9 million, compared with $5.5 million for the year ended January 1, 2022.
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. 24 December 28, 2024 Form 10-K Adjusted earnings from continuing operations and adjusted EBITDA from continuing operations are non-GAAP financial measures.
SUNOPTA INC. 23 December 30, 2023 Form 10-K Continuing Discontinued Operations Operations Consolidated Per Share Per Share Per Share For the year ended $ $ $ $ $ $ December 30, 2023 Net loss (21,910 ) (153,108 ) (175,018 ) Dividends and accretion on preferred stock (1,981 ) - (1,981 ) Loss attributable to common shareholders (23,891 ) (0.21 ) (153,108 ) (1.34 ) (176,999 ) (1.55 ) Adjusted for: Loss on divestiture of discontinued operations (a) - 119,821 119,821 Start-up costs (b) 20,249 - 20,249 Frozen fruit inventory reserves (c) - 12,900 12,900 Exit from frozen fruit processing facility (d) - 10,014 10,014 Product withdrawal and recall costs (e) 3,440 2,500 5,940 Business development costs (f) 2,390 - 2,390 Loss on extinguishment of debt (g) 1,584 - 1,584 Severance costs (h) 897 1,016 1,913 Other (i) 471 1,136 1,607 Net income tax on adjusting items (j) - - - Change in valuation allowance for deferred tax assets (k) 3,978 - 3,978 Adjusted earnings (loss) 9,118 0.08 (5,721 ) (0.05 ) 3,397 0.03 Continuing Discontinued Operations Operations Consolidated Per Share Per Share Per Share For the year ended $ $ $ $ $ $ December 31, 2022 Net earnings (loss) 3,881 (8,722 ) (4,841 ) Dividends and accretion on preferred stock (3,109 ) - (3,109 ) Earnings (loss) attributable to common shareholders 772 0.01 (8,722 ) (0.08 ) (7,950 ) (0.07 ) Adjusted for: Loss on divestiture of discontinued operations (a) - 31,468 31,468 Start-up costs (b) 6,028 - 6,028 Sale of frozen fruit processing facility (l) - (2,544 ) (2,544 ) Business development costs (f) 1,170 - 1,170 Exit from fruit ingredient processing facility (m) 577 - 577 Other (i) 1,074 (202 ) 872 Net income tax on adjusting items (j) (2,326 ) (18,303 ) (20,629 ) Adjusted earnings 7,295 0.07 1,697 0.02 8,992 0.08 (a) For 2023, reflects the pre-tax loss on the divestiture of Frozen Fruit, which is recorded in loss from discontinued operations.
SUNOPTA INC. 33 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.
Cash Flows from Discontinued Operations Net cash provided by discontinued operations increased $105.2 million from 2022 to 2023, which mainly reflected net cash consideration of approximately $92 million received from the divestiture of Frozen Fruit in the fourth quarter of 2023, compared with cash paid of $6.3 million in 2022 to settle the purchase price allocation and other post-closing matters in connection with the 2020 divestiture of Tradin Organic.
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.
For the year ended December 30, 2023, we had principal borrowings of $102.0 million under these facilities, of which $17.6 million principal amount remained outstanding as at December 30, 2023. With the flexibility provided by our New Credit Facilities, our intention is to reduce our reliance on these facilities in 2024 and to settle all remaining outstanding notes payable.
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.
We intend to fund our cash capital expenditures using operating cash flows and the New Revolving Credit 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.
Operating income increased $9.7 million to $17.9 million for the year ended December 31, 2022, compared with $8.2 million for the year ended January 1, 2022. The increase in operating income reflected higher gross profit, as described above, together with lower facility closure and employee severance costs related to the exit from our former fruit ingredient processing facility in 2021.
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 ("Frozen Fruit") and related consolidation of our continuing operation in 2023.
Consolidated Results of Operations for Fiscal Years 2023 and 2022 December 30, 2023 December 31, 2022 Change Change For the year ended $ $ $ % Revenues 630,297 591,395 38,902 6.6% Cost of goods sold 541,680 491,665 50,015 10.2% Gross profit 88,617 99,730 (11,113 ) -11.1% Gross margin (1) 14.1% 16.9% -2.8% Operating expenses Selling, general and administrative expenses 78,000 78,469 (469 ) -0.6% 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 80,349 81,797 (1,448 ) -1.8% Operating income 8,268 17,933 (9,665 ) -53.9% Interest expense, net 26,909 13,156 13,753 104.5% Earnings (loss) from continuing operations before income taxes (18,641 ) 4,777 (23,418 ) * Income tax expense 3,269 896 2,373 264.8% Earnings (loss) from continuing operations (21,910 ) 3,881 (25,791 ) * Loss from discontinued operations (153,108 ) (8,722 ) (144,386 ) -1,655.4% Net loss (2),(3) (175,018 ) (4,841 ) (170,177 ) -3515.3% Dividends and accretion on preferred stock (1,981 ) (3,109 ) 1,128 36.3% Loss attributable to common shareholders (4) (176,999 ) (7,950 ) (169,049 ) -2126.4% * Percentage not meaningful due to figures being positive and negative.
SUNOPTA INC. 22 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.
On a consolidated basis, adjusted EBITDA was $82.1 million for the year ended December 30, 2023, compared with $83.7 million for the year ended December 31, 2022. Adjusted EBITDA from continuing operations increased $14.8 million, or 23.4%, to $78.5 million for the year ended December 30, 2023, compared with $63.7 million for the year ended December 31, 2022.
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.
As at December 30, 2023, the $180 million New Term Loan Credit Facility was fully drawn and we had utilized $37.7 million of the $85 million New Revolving Credit Facility, including $5.9 million in letters of credit.
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.
Revenues for the year ended December 30, 2023 increased by 6.6% to $630.3 million from $591.4 million for the year ended December 31, 2022.
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.
SUNOPTA INC. 25 December 30, 2023 Form 10-K Continuing Discontinued Operations Operations Consolidated For the year ended $ $ $ December 30, 2023 Net loss (21,910 ) (153,108 ) (175,018 ) Income tax expense (benefit) 3,269 (167 ) 3,102 Interest expense, net 26,909 554 27,463 Depreciation and amortization 31,039 8,886 39,925 Stock-based compensation 11,778 - 11,778 Adjusted for: Loss on divestiture of discontinued operations (a) - 119,821 119,821 Start-up costs (b) 20,249 - 20,249 Frozen fruit inventory reserves (c) - 12,900 12,900 Exit from frozen fruit processing facility (d) - 10,014 10,014 Product withdrawal and recall costs (e) 3,440 2,500 5,940 Business development costs (f) 2,390 - 2,390 Severance costs (h) 897 1,016 1,913 Other (i) 471 1,136 1,607 Adjusted EBITDA 78,532 3,552 82,084 Continuing Discontinued Operations Operations Consolidated For the year ended $ $ $ December 31, 2022 Net earnings (loss) 3,881 (8,722 ) (4,841 ) Income tax expense (benefit) 896 (16,154 ) (15,258 ) Interest expense, net 13,156 1,578 14,734 Depreciation and amortization 23,047 14,626 37,673 Stock-based compensation 13,830 - 13,830 Adjusted for: Loss on divestiture of discontinued operations (a) - 31,468 31,468 Start-up costs (b) 6,028 - 6,028 Sale of frozen fruit processing facility (l) - (2,544 ) (2,544 ) Business development costs (f) 1,170 - 1,170 Exit from fruit ingredient processing facility (m) 577 - 577 Other (i) 1,074 (202 ) 872 Adjusted EBITDA 63,659 20,050 83,709 (a)-(m) Refer to footnote (2) above.
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.
These factors were partially offset by higher employee compensation costs, including incremental 2022 incentive plan accruals based on performance, and a one-time bonus of $1.6 million recognized in the first quarter of 2022 to reward employees for improved performance, partially offset by lower business development costs.
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.
(b) For 2023, start-up costs included the ramp-up of production at our new plant-based beverage facility in Midlothian, Texas, the start-up of new extrusion and high-speed packaging lines at our fruit snacks facility in Omak, Washington, and professional fees related to productivity initiatives within our manufacturing operations, which are recorded in cost of goods sold ($18.7 million) and SG&A expenses ($1.5 million).
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.
Removed
Overview We operate as a manufacturer for leading natural and private label brands and also produce our own brands, including SOWN ® , Dream ® and West Life TM .
Added
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.
Removed
Our consumer product portfolio includes plant-based beverages and creamers, protein shakes, teas, and broths packaged in shelf-stable formats, together with fruit snacks and smoothie bowls, which are sold through retail and foodservice channels. We also produce liquid and dry ingredients for internal use and for sale to other food and beverage manufacturers.
Added
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.
Removed
Fiscal years 2023, 2022 and 2021 were each 52-week periods ending on December 30, 2023, December 31, 2022 and January 1, 2022, respectively.
Added
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.
Removed
SUNOPTA INC. 20 December 30, 2023 Form 10-K Recent Developments Divestiture of Frozen Fruit On October 12, 2023, we completed the sale of certain assets and liabilities of our frozen fruit business ("Frozen Fruit") for an aggregate purchase price of approximately $141 million, subject to closing working capital adjustments.
Added
We determined that the impacts of these errors were not material to our previously issued consolidated financial statements for any 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.
Removed
This transaction represents our exit from the processing, packaging and selling of individually quick frozen fruit for retail, foodservice and industrial applications.
Added
Additionally, the comparative financial information presented in this MD&A has been revised to reflect the correction of these errors.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+3 added−1 removed3 unchanged
Biggest changeAs 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.
Biggest changeOn 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.
In addition, as described above under "Recent Events," 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.
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.
In addition, other inputs, such as packaging materials, energy, fuel, storage, and freight, are exposed to price fluctuations due to weather conditions, regulations, industry conditions, energy costs, fuel prices, transportation and storage demands, or other factors that are beyond our control.
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.
As at December 30, 2023, we had approximately $212 million of variable rate debt, mainly comprised of our New Credit Facilities, and approximately $53 million principal amount of fixed rate debt, comprised of finance lease obligations.
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.
Foreign currency risk Following the divestiture of Frozen Fruit with its Mexican operations, our remaining 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.
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.
In addition, the functional and reporting currencies of our smaller Canadian operations are the U.S. dollar. As at December 30, 2023, a 10% change in foreign exchange rates would not have a material impact on our consolidated financial position, results of operations, or cash flows.
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.
In addition, U.S. and Canadian operations have limited exposure to foreign currency transactions since sales and purchases are predominately made in U.S. dollars. 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.
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.
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.
SUNOPTA INC. 36 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.
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.
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.
Removed
In addition, co-manufactured products are typically picked up by our customers, so they bear the impact of changing freight rates.
Added
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.
Added
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.
Added
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.

Other STKL 10-K year-over-year comparisons