SunOpta, Inc.

will follow the prepared remarks. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Reed Anderson with ICR. Thank you. You may begin.

Good afternoon, and thank you for joining us on Synopta's second quarter fiscal 2024 earnings conference call. On the call today are Brian Cooker, Chief Executive Officer, and Greg Gaba, Chief Financial Officer. By now, everyone should have access to the earnings press release that was issued earlier this afternoon and is available on the investor relations page of Synopta's website at www.synopta.com. This call is being webcast, and its transcription will also be available on the company's website. As a reminder, please note that the prepared remarks, which will follow, contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. We refer you to all risk factors contained in Synopta's press release issued this afternoon, the company's annual report filed on Form 10-K, and other filings with the Securities and Exchange Commission for a more detailed discussion of the factors that could cause actual results to differ materially from those projections and any forward-looking statements. The company undertakes no obligation to publicly correct or update the forward-looking statements made during the presentation to reflect future events or circumstances, except as may be required under applicable securities laws. Finally, we would like to remind listeners that the company may refer to certain non-GAAP financial measures during this teleconference. A reconciliation of these non-GAAP financial measures was included with the company's press release issued earlier today. Also, please note, In the prepared remarks to follow, unless otherwise stated, the company will be referring to the continued operations portion of the business, and all figures are in U.S. dollars, occasionally rounded to the nearest million. Now, I'll turn the call over to Brian to begin. Brian?

Good afternoon, and thank you for joining us today. For today's call, I'll start with the highlights of our latest quarter's performance, along with an update on business trends and key priorities. Greg will follow with a review of the financials and our outlook. Then we'll take your questions. Our second quarter headline is very simple. Both volume-driven revenue growth of 21% and adjusted EBITDA of 20.6 million exceeded our guidance. And I'd like to share context on that performance, specifically focusing on our revenue and operational initiatives. With respect to our revenue performance, on our last call, we guided to revenue growth that we could see, We worked on initiatives beyond our known wins, and then we over-delivered with 21% volume-driven revenue growth. For the fourth quarter in a row, our volume growth was spread broadly across customers, panels, and major product categories. We are executing well across our product portfolio and continue to see significant opportunities for further growth and improvements. Remember last quarter I mentioned we have visibility into our customers' initiatives and pipelines, which gave us confidence in our demand generation engine and confidence to increase our 2024 outlook. Let me provide a few data points to give you some perspective on the depth of our growth. We again drove double-digit revenue growth from each of our top three customers. Our top five customers posted 23% average year-over-year revenue growth. Our fruit snacks business grew by over 24% and continued a streak of 16 consecutive quarters with at least double-digit growth. Our food service segment revenue again increased at a double-digit rate, and every major go-to-market channel and product category grew during the quarter. We continue to see plant-based beverages increasingly featured across new menu items and on menu boards in food service. Volume continues to be the primary driver of growth. Unit volume growth is the most significant confirmation of our continued and differentiated value proposition in the commercial market. When customers want more of our support products and innovation and want them at a faster rate than the overall market is growing, we know we have a sustainable competitive advantage. Our volume growth is coming from several areas. We are winning with winning customers as a solution provider and an innovation partner. Specifically, the brands we support are winning and outperforming the categories where they play. Over the last 13-week measurement period, the majority of the brands we support have exceeded category volume performance by over 700 basis points. Secondly, we're gaining incremental business from new and existing customers as they seek to leverage our service capabilities, our capacity, and our innovation talent to launch new products as well as support growth in their established offerings. And thirdly, we are also benefiting from our TAM expansion into protein shakes and other plant-based beverage innovations in food service. The adjustable markets in which we participate are also large and growing. For 2024, we estimate the U.S. shelf-stable plant-based milks market continues to grow in the mid-single digits in the aggregate across all channels tracked and untracked. Remember that much of our volume is derived from untracked segments, and we continue to see growth in food service and club channels. Protein shakes continues to be one of the fastest-growing categories in CPGs. with tract channel volume up approximately 18% over the past 13 weeks. And over 60% of the performance nutrition category is comprised of the 330 ml format like we produce in Midlothian, Texas. In fruit snacks, consumer and customer demand remain very strong. The Better For You segment is the fastest growing subset within the fruit snacks category. up over 30% over the past 52 weeks, with our customers commanding well over 75% of the segment share. As you can see, we have significant tailwinds supporting our revenue line. Let me transition to our operational performance. In addition to the revenue growth we guided in 2Q, we also committed to improving the effectiveness of our supply chain. which as you know has been a major area of focus for me and the organization over the past two quarters. As you've heard me describe many times, this is a journey of a thousand steps. We are making progress every day and we always strive to be better. I am both pleased with our progress during the quarter and also energized by our prospects for substantial improvement in the future. From an output perspective, during the second quarter, we increased unit output in our aseptic facilities by over 24% versus the prior year, and output in our fruit snacks facilities increased by more than 33%. Importantly, these increases were driven by both greater efficiency from our established lines as well as new capacity. If you exclude new capacity, we increased unit output of those assets by greater than 10% versus the year-ago quarter, which is the equivalent of adding roughly an entire manufacturing line to the network. Our team is making significant progress on creating capacity via operating improvements. Our extraction expansion in Modesto came online during the quarter, as many of you know, and we are both aggressively ramping volume as well as selling future capacity. In Midlothian, we are progressing various efficiencies throughout the plan. Our third line started producing commercially sellable product at the end of Q1 24, is ramping as anticipated, and is expected to make a solid contribution to our second half 24 results. Output in Midlothian is increasing, and we see opportunities to drive further improvement with targeted investments now to accelerate sustainable growth and margin achievement later this year and into 2025. As I look at the progress we've made in our supply chain throughout the quarter, the increase in output was satisfying, but ultimately uncovered and highlighted further areas for improvement and investment. As we continue identifying opportunities for operational efficiency, we are taking advantage of exceptional revenue growth to accelerate short-term investments which in turn will accelerate sustainable process improvements. Our supply chain initiatives are detailed by plant, by product line, and by hour of the day. Each of these projects are making progress, and the pace of the progress varies by project and location. In some lines and or functions, we may need to take a step back to take two steps forward. In 2Q, we had the benefit of incremental growth. So, we purposely invested to either shore up project plans or accelerate sustainable results. The quantum and magnitude of improvement plans we have in place across our network help to fuel our 27% volume growth in Q2. Rarely are increases in output not simultaneously accompanied by some growing pain. In the quarter, we discovered areas for short-term investment, which will continue into the third quarter. we see significant opportunity for sustainable margin improvement commencing in Q4 and carrying us through 2025. Once again, I'm proud of our quarterly results, and I continue to be excited about our long-term revenue and profit growth outlook. Our expectations for the future continue to be based on what we see, not on what we hope, and we are confident in raising our 2024 revenue outlook for the second time this year. Our priorities, actions, and initiatives to deliver against these expectations remain the same. First, grow volume through expanding our current customer relationships, acquiring new customers, and expanding our TAM. Our co-development and innovation network on behalf of our customers provides great excitement about the demand side of our business. Most importantly, it fills our capacity with products and categories that significantly over index towards growth. Secondly, we want to drive operational improvements to both increase output and expand sustainable margins. We have multiple efficiency projects at each facility and are gaining momentum every day. We increased output by 27% in the second quarter, and our newest capacity is still ramping up in the second half. With the support of our short-term investments, We expect to see sustainable margin expansion starting in the fourth quarter through better fixed cost absorption as well as variable cost reduction. Lastly, we will maintain our disciplined financial approach and continue deleveraging to under three times EBITDA, our stated goal, by the end of this year. Every aspect of our business is closely linked, and through our disciplined, relentless focus on operational execution, We continue delivering strong results. We are a growth company operating in growing categories with growing customers. As a private label and co-manufacturing solutions provider, we solve problems and create wins for our customers. As we create wins and solve problems for our customers, we grow share in revenue. We also grow share in revenue by improving operational efficiency. As we increase output through efficiency gains, We extend the capacity of our deployed investments and deferred growth capex, which leads to higher returns on invested capital and drives incremental value for shareholders. In summary, we delivered strong results in the first half and believe we are well positioned for the balance of 2024 and beyond. We are delivering top line growth rates that are several times faster than peer averages and propelled by robust volume gains. We're demonstrating the necessary operational resilience a business needs to service growth while simultaneously overcoming challenges and improving our operational efficiency. As a result, we are poised for higher sustainable margins and improving profitability as our supply chain initiatives gain traction and accelerate, all of which helps to drive free cash flow. I'm confident in the direction of our business and increased revenue outlook for 2024, along with our significant potential for driving growth, cash flow, and shareholder value over the longer term. Now, I'll turn the call over to Greg to cover the second quarter and full year outlook in more detail.