Sunopta — Investor Day (April 2016)
54 slides from Sunopta's investor day presentation, Apr 12, 2016
Slide 1: Poised to Accelerate our Transformation as a Global Leader in Healthy and Organic Foods
Poised to Accelerate our Transformation as a Global Leader in Healthy and Organic Foods
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may include forward-looking statements and therefore is subject to important risks and uncertainties. Actual results could differ materially from the conclusions, forecasts and projections as certain material factors and assumptions were applied in drawin
Slide 3: 2016 Analyst Day Objectives
2016 Analyst Day Objectives I. Gain a better understanding of SunOpta and where we are today II. Clearly lay out where we are going for the next 24-36 months III. Learn how innovation is a key element of our strategies and future During today’s presentation, we will not be discussing or answering an
Slide 4: Agenda
Agenda I. Introductions II. Management presentations Rik Jacobs - SunOpta’s Transformation President and Chief Executive Officer John Ruelle - Global Ingredients Senior Vice President, RMSS, Healthy Snacks Joe Davidson - Healthy Beverages Senior Vice President, Healthy Beverages Mark Murai - Healthy
Slide 5: We Operate in Growing non-GMO and Organic Markets
We Operate in Growing non-GMO and Organic Markets Underpinned by Growing ORGANIC CONSUMER US Food & Beverage TRENDS SALES ($ Billions) 11.0% Y-O-Y Growth $36 $32 Awareness of Linkage Between Diet & Health 2013A 2014A GMO, Food Additive & Allergen Concerns NON-GMO 12.4% Y-O-Y Growth $200 Evolving $17
Slide 6: Well positioned to take advantage of a vibrant and growing marketplace
Well positioned to take advantage of a vibrant and growing marketplace Optimized portfolio, reorganized teams and integrated platforms Scalable operations in key product categories supported by an innovation pipeline Focused on execution, filling new capacity and achieving operational excellence Str
Slide 7: The Key to "Fix" our Business is Excelution
The Key to “Fix” our Business is Excelution With Customers and Employees, Keeping an Eye on Costs CUSTOMERS Commercial: Intimacy, diversification, pricing Innovation: From reactive to proactive COSTS Supply Chain: Expenses: Delight from order entry to delivery Maximize sustainable leverage EMPLOYEES
Slide 8: More Than 35 Acquisitions Since 1999
More Than 35 Acquisitions Since 1999 But Integration Only Started 18 Months Ago Baja California Congeladora del Congelados, S.A. de Rio, S.A. de C.V. C.V. 8
Slide 9: Transformative Year in 2015
Transformative Year in 2015 Three Acquisitions in Consumer Product Business Q4 2014 Revenues Q4 2015 Revenues 43% 57% 55% 45% Global Ingredients Consumer Products 9
Slide 10: Now Three Clear CPG Platforms
Now Three Clear CPG Platforms Supported By Sourcing and Selling Raw Materials and Ingredients Healthy Beverages Healthy Fruit Healthy Snacks Aseptic non-dairy, low acid IQF fruit for retail Fruit-based snacks beverages IQF fruit and purees for Chilled juice Roasted snacks foodservice Shelf stable ju
Slide 11: Private Label/Store Brands Innovation Key
Private Label/Store Brands Innovation Key To Grow our Categories in Natural and Organic Imitator Innovator 11
Slide 12: Our Playbook
Our Playbook PURPOSE § We responsibly bring healthy food from field to table VALUES / oe We source, create and package healthy food STRATEGY Sun@pta @)
Slide 13: For the Rest of the Presentation…
For the Rest of the Presentation… • Insight into SunOpta’s category leadership in Global Ingredients, Healthy Beverages, Healthy Fruit and Healthy Snacks o Category trends and how SunOpta expects to profit from these trends • Analysis of SunOpta’s mid-term (24 to 36 month) financial targets o P&L an
Slide 14: Global Ingredients
Global Ingredients Sun@pta
Slide 15: Delivering Global Supply Chain Expertise and Operational Integrity
Delivering Global Supply Chain Expertise and Operational Integrity 15
Slide 16: Category Overview: Global Ingredients
Category Overview: Global Ingredients Source: Organic Trade Association • US organic category sales growth to >$39B • 14% increase from 2014 • Projected to continue at this pace through 2018 • Access to supply is critical 16
Slide 17: Six Product Desks > $600M External Sales
Six Product Desks > $600M External Sales Organic ~$420M Specialty ~$190M Sunflower Soybean Corn & Feed In-shell, Kernel Whole, Meal Whole, Meal 17
Slide 18: Serving 16 Industry Categories
Serving 16 Industry Categories Baby & Toddler Food Bakery Beverages Cereals & Granolas Cocoa & Chocolate Confectionary Conserves Dairy Dressings & Condiments Foodservice Frozen Food Pharmaceutics & Cosmetics Soups & Sauces Spreads & Jams Sweetening Solutions Wholesalers & Packages 18
Slide 19: Category Overview: GI Products & Customers
Category Overview: GI Products & Customers Representative • SunOpta has one of the largest organic raw material Customers ingredient sourcing and supply networks in the world1 • Very diverse customer base across numerous categories globally: largest customer represents < 3% of revenue Sales by Geogr
Slide 20: Global Sourcing Projects
Global Sourcing Projects Serbia China United States Fruit Goji berries Soy Berries Pumpkin seeds Corn Mexico Sunflower Agave Orange juice Vietnam Cashew nuts Bulgaria Pineapple Sunflower Pakistan Philippines Rice Cocoa Peru Ethiopia Coconut Quinoa Sesame Banana Chia Coffee Indonesia Coconut sugar Ch
Slide 21: Global Ingredients Recent Performance & Strategic Initiatives
Global Ingredients Recent Performance & Strategic Initiatives • First U.S. company non-GMO PVP certified • Launching new ingredient programs (e.g. ginger, oat) o Two-touch integrated supply chains are key o Capabilities should leverage multiple categories • Critical in helping launch new CPG product
Slide 22: Healthy Beverages
Healthy Beverages 22
Slide 23: Healthy Beverages Overview
Healthy Beverages Overview Product Offering Non-dairy Refrigerated Shelf-stable Functional Aseptic Aseptic Teas Aseptic Broths Premium Juices Beverages Waters Leading organic orange Competitive Leading position in National aseptic footprint with Vertically juice manufacturer in Positioning / non-dai
Slide 24: Category Overview: Aseptic
Category Overview: Aseptic • Key to success in the aseptic category space is taking share in non-dairy and continuing to expand Key Focus Categories ($ Millions) in fast growing categories Broth & • Focus categories represent $1.1Bn Stock +9.0% $730 addressable market • Key categories grew 6.3% over
Slide 25: Aseptic: Strategic Initiatives and Recent Highlights
Aseptic: Strategic Initiatives and Recent Highlights Strategic Initiatives • Increasing facility utilization o Use our national footprint to take share o Innovate using control brands o Expand presence in other growing categories • Lower conversion cost per case and maximize production mix Recent Hi
Slide 26: Category Overview: Premium Juice
Category Overview: Premium Juice • Refrigerated Juice is a $5.5 billion category and growing 1.4% • Premium Juice is 58.1% share of the Refrigerated Juice category and a $3.2B category (+0.1% vs YAG) • Consumers are looking for no-sugar added claims on juices, with 70% of consumers paying attention
Slide 27: Premium Juice: Strategic Initiatives and Recent Highlights
Premium Juice: Strategic Initiatives and Recent Highlights Strategic Initiatives • Sell raw juice as ingredient into fast-growing super premium segment [HPP] • Expand presence in private label organic and NFC orange juice market • Expand beyond orange juice with innovative two-touch adult juice beve
Slide 28: Healthy Fruit
Healthy Fruit Sun@pta
Slide 29: Healthy Fruit Overview
Healthy Fruit Overview Product Offering Formulated fruit solutions for Custom fruit preparations IQF fruit for retail for industrial use foodservice Competitive Extensive Aligned with industry Category management Positioning / Low-cost supply chain access to supply leading customers approach Strengt
Slide 30: Category Overview: Healthy Fruit
Category Overview: Healthy Fruit Best-In-Class-Profile Category Profile Market leading position in 22% private label frozen fruit Rapidly growing, on-trend food category Relationships with each top 10 10+ Year customer Strategically located 6 manufacturing facilities Household penetration only 30% f
Slide 31: Highly Favorable Private Label Trends
Highly Favorable Private Label Trends Consumers pay less while retailers realize better margins • Consumers prefer private label to branded frozen fruit given pricing advantages in addition to no differences in quality, packaging, and assortment • 66% of the frozen fruit category is private label (1
Slide 32: Supply Chain Snapshot
Supply Chain Snapshot 2016 Expected Production by Geography Mexico • Optimized network of six facilities • Significant distribution efficiencies California • Recently expanded processing Kansas City capabilities 2016 Expected Mix of Fruits Other Mango Blueberry • Diversified global sourcing platform
Slide 33: Strategic Initiatives and Recent Highlights
Strategic Initiatives and Recent Highlights Strategic Initiatives • Capturing $5M - $7M in synergies in 2016 • Expansion in Central Mexico and Kansas City • Tapping into SunOpta’s existing international sourcing network • Process innovation o Optical sorting, automated handling • Adding mango and bl
Slide 34: Healthy Snacks
ZB Healthy Snacks Sun@pta
Slide 35: Healthy Snacks Overview
Healthy Snacks Overview Product Offering Fruit Snacks Nutritional Bars Roasted Snacks Pouches Competitive Leading position in At forefront of National footprint Competitive non-GMO and Positioning / premium healthy innovation within the in fruit snacks organic production capabilities Strengths fruit
Slide 36: Category Overview: Healthy Snacks
Category Overview: Healthy Snacks Momentum in Healthy Categories – Industry Sales ($ Billions) Top Ten Trends Healthy Snacks 1. Organic growth for clear label $5.8B $5.5B +4.9% 2. Free from for all +10.0% +1.0% 3. The “flexitarian” effect +22.2% $1.8B $2.0B 4. Processing the natural way $1.0B $1.0B
Slide 37: Competitive Positioning: Healthy Snacks
Competitive Positioning: Healthy Snacks Uniquely positioned assets combined with a strategic supply chain and innovation resources sets SunOpta apart from other category participants Barriers to entry • Multi-year agreements with category leaders • Global supply chain for specialty ingredients • Sig
Slide 38: Strategic Initiatives and Recent Highlights
Strategic Initiatives and Recent Highlights • Two major new product launches in Q2 o Private label chickpeas o Disruptive bar - superfood/ancient grain • OptaCore – helping retailers stay on trend and ahead of the curve o Category management with control brands o Value-based pricing o Leverage innov
Slide 39: Financial Review
Financial Review Sun@pta
Slide 40: Financial Review
Financial Review Focus Areas Q4 2014 Revenues 1. Mid-term (24 to 36 month) growth profile and 43% margin expansion targets 57% 2. Detail on debt capital structure o Global ABL Q4 2015 Revenues o 2nd Lien Loan o Leverage reduction targets 45% 55% Consumer Products Global Ingredients 40
Slide 41: Global Ingredients
Global Ingredients $619M Rev Sales $611M Rev GM% 10.3% GM Growth 11.5% GM[a] Specialty Specialty nominal 12%-14% 8%-10% Organic Organic 2014 2015 Mid-term target Priorities to achieve targets: 1. Continue to develop new sources of supply to support growth (internal and external) 2. Increase “two-tou
Slide 42: Consumer Products: Healthy Beverages
Consumer Products Healthy Beverages $269M Rev[a] Sales $261M Rev GM% 12.5% GM[b] Growth 15.4% GM Non-Aseptic Non-Aseptic 8%-10% 16%-18% Aseptic Aseptic >15% 2014 2015 Mid-term target Priorities to achieve targets: 1. Innovation and winning market share in aseptic 2. Increasing utilization to ~85% dr
Slide 43: Consumer Products: Healthy Fruit
Consumer Products Healthy Fruit $411M Rev[a] Sales GM% 11.0% GM[a,b] Growth Custom Formulation 3-5% Food Service 5-8% $174M Rev $128M Rev 9.3% GM[b] 16%-18% 10.8% GM Custom Food Custom Food Formulation Service Retail 8%-10% Service Formulation Retail Retail 2014 2015 2015PF Mid-term target Prioritie
Slide 44: Consumer Products: Healthy Snacks
Consumer Products Healthy Snacks $95M Rev $92M Rev[a] Sales GM% 4.7% GM 5.3% GM[b] Level Bars Bars $30M-$35M Pouches $60M-$65M Pouches 11%-13% Fruit Snacks $55M-$60M Fruit Snacks 2014 2015 Mid-term target Priorities to achieve targets: 1. New platform leadership and go-to-market strategy 2. Accelera
Slide 45: Consolidated Business
Consolidated Business Sales $1.38B Rev[a] GM% Growth $1.15B Rev 11.2% GM[a,b] $1.10B Rev 11.1% GM 10.9% GM[b] Consumer Products +12% Consumer Consumer Products Products 14%-16% Global Global Global Ingredients Ingredients Ingredients 5%-7% 2014 2015 2015 PF Mid-term target • SG&A target at or below
Slide 46: Capital Structure is Secured
Capital Structure is Secured 1. Global Asset-Based Credit Facility 2. Second Lien Loan 3. Focus on Leverage Reduction 46
Slide 47: Global Asset-Based Credit Facility
Global Asset-Based Credit Facility • Committed financing matures on February 11, 2021 5 YEAR $350M COVENANTS • Ability to increase total commitment to $450.0 COMMITTED AND million to accommodate FACILITY CAPABILITIES growth • New entrants to lending group that cover the INCREASED company’s global fo
Slide 48: Second Lien Loan
Second Lien Loan • Commitment agreed to with Underwriters ahead of Sunrise acquisition COMMITTED EXPECTED • Interest rate is capped for FINANCING WITH FEATURES OF any takeout financing at CAPPED INTEREST EVENTUAL BONDS 9.50% RATE • Presently in $320 million 2nd Lien Bridge Loan, 1-year term, with ra
Slide 49: Focus on Leverage Reduction
Focus on Leverage Reduction • Execution against mid-term targets designed to deliver topline growth and expansion of EBITDA to EBITDA LEVERAGE 8.5-10.5% of sales GROWTH REDUCTION FREE CASH FLOW • Currently approx. 5.0x GENERATION levered based on PF Adjusted EBITDA. • Targeting approx. one turn per
Slide 50: Strategy Recap
Strategy Recap SunCpta Bringing well-being to life
Slide 51: Our Playbook
Our Playbook PURPOSE § We responsibly bring healthy food from field to table VALUES / oe We source, create and package healthy food STRATEGY Sun@pta @)
Slide 52: Excelution a Must in 3 Key Areas
Excelution a Must in 3 Key Areas CUSTOMERS Commercial: Intimacy, diversification, pricing Innovation: From reactive to proactive COSTS Supply Chain: Expenses: Delight from order entry to delivery Maximize sustainable leverage EMPLOYEES Investments: Build for competitive Heads: Engagement in advantag
Slide 53: Our Key Priorities
Our Key Priorities CPG Margin Improvement %+$ Battle Plan KPI’s 53
Slide 54: Thank You for Attending
Thank You for Attending • That concludes our webcast for today • Lunch and Innovation Center tour for those in Edina • For any additional questions, contact [email protected] 54