MINNEAPOLIS – SunOpta, Inc. has been adding capacity, particularly in plant-based beverage processing, and, after experiencing supply chain disruptions during the fourth quarter of 2021, the pieces fell into place during the first quarter of fiscal 2022.

“We delivered strong first-quarter results compared to Q4, reflecting significant progress on recent initiatives to enhance capacity and productivity coupled with robust demand across our portfolio,” said Joseph D. Ennen, chief executive officer, during a May 11 conference call. “Plant-based revenue increased 13.4% on a year-over-year basis, driven by oat-based offerings up 59% and proprietary brands, with price and volume/mix both positive factors.

“The sharp recovery in our fruit-based business, where revenue increased 18.7%, was largely influenced by recent pricing actions as well as continued growth in fruit snacks and smoothie bowls. While margins were below our year-earlier levels, we made significant progress from the fourth quarter of 2021, and believe that we have remedied production challenges in our plants and have passed on over 90% of inflationary pressures with price increases.”

Net income for the quarter ended April 2 was $3.5 million, equal to 3¢ per share on the common stock, and an improvement over the same period the year prior when the company recorded a loss of $281,000.

Total sales reached $240 million during the quarter, up 16%.

“Topline was strong across the portfolio, fueled by pricing, but also supported by volume growth,” Mr. Ennen said. “We had record production in our plant-based manufacturing facilities, which drove gross margin improvement versus Q4.  Production was plus 19% versus Q4 and plus 8% versus Q1 2021, which was the previous best quarter ever.  This record outlook allowed us to improve service levels and importantly, rebuild depleted safety stock.”

SunOpta has two business units — Plant-Based Foods and Beverages and Fruit-Based Foods and Beverages. Plant-Based sales rose 13% to $135.5 million during the quarter when compared to the year prior.

“Oat milk sales continued to be very robust, with sales plus 59% versus Q1 2021,” Mr. Ennen said. “The brands we support in part or in full, are now roughly one-third of the US oat milk market and are gaining share every week.

“We are firing on all cylinders in oats from the supply of oats to extraction to customer development. We are selling every drop we can make, and we are producing volumes above the projections from our original capital project underwriting.”

Fruit-Based sales rose 19% during the quarter $104.7 million. The growth was driven by pricing and favorable volume/mix due to strong customer demand and a one-time surge in volume from a frozen-fruit customer.

“They had a shortfall from another supplier, and they asked us (if) we could step in and fill in while they were scrambling and we happened to have the inventory available to help them out,” Mr. Ennen said.

Since 2020, SunOpta has undertaken six capital expansion projects to add capacity. Four are complete.

“By the end of 2022, we will have effectively doubled the manufacturing capacity of the business versus 2020,” Mr. Ennen said. “The fifth project comes online in Q3 of this year in Modesto (Calif.) and is on track. The big one, our Texas greenfield plant is impressively still tracking toward the Q4 startup despite all the macro supply chain challenges. While we have a lot of work left to do in Texas, we are within four weeks of our original schedule and have already hired the majority of the management team.”

For the rest of fiscal 2022, SunOpta reaffirmed its guidance of sales coming in between $890 million and $930 million, and consolidated adjusted EBITDA being in a range of $67 million to $75 million.