STKL Q2 Deep Dive: Volume Growth and Capacity Expansion Drive Upbeat Outlook

Plant-based food and beverage company SunOpta (NASDAQ:STKL) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 12.9% year on year to $191.5 million. The company’s full-year revenue guidance of $810 million at the midpoint came in 1.5% above analysts’ estimates. Its non-GAAP profit of $0.04 per share was $0.02 above analysts’ consensus estimates.

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StockStory’s Take

SunOpta’s second quarter performance drew a strongly positive market reaction, reflecting management’s emphasis on operational execution, broad-based volume growth, and resilience in the face of external headwinds. CEO Brian Kocher credited the company’s 13% revenue increase to a surge in production capacity and robust demand across the product portfolio, particularly in better-for-you fruit snacks and plant-based beverages. Kocher highlighted that every go-to-market channel and top customer contributed to the growth, noting, “We are executing well and doing what we said we would do, growing revenue, growing adjusted EBITDA, improving gross margins and allocating capital with discipline.” Management also pointed out the successful implementation of tariff pass-through pricing, which helped offset cost pressures and maintain margin progress.

Looking ahead, SunOpta’s forward guidance is shaped by sustained demand in its core categories, plans for new production capacity, and ongoing efforts to improve operational efficiency. Management underscored the importance of expanding fruit snacks capacity to meet accelerating customer demand, with Kocher stating, “Our new business pipeline has never been stronger, and we are exceptionally well positioned to drive sustainable growth and profitability.” CFO Greg Gaba confirmed that upcoming investments will be focused on high-return projects while maintaining balance sheet discipline. The company’s growth outlook remains closely tied to consumer preferences for better-for-you products and its ability to navigate evolving tariff and cost environments.

Key Insights from Management’s Remarks

Management attributed the quarter’s strong results to operational improvements, successful tariff cost management, and the continued outperformance of key product categories.

• Fruit snacks demand surge: SunOpta’s better-for-you fruit snacks achieved double-digit growth for the twentieth consecutive quarter, with management announcing a new manufacturing line to address capacity constraints and rising customer orders.
• Tariff pass-through execution: The company fully implemented pass-through pricing for tariffs, with every customer accepting upcharges, effectively mitigating gross margin risks from recent trade policy changes.
• Production capacity unlocks: Beverage and broth unit production increased 16% and 22% respectively, enabling SunOpta to deliver high unit volume growth and support expanding channels such as club and foodservice.
• Channel and customer diversity: Management highlighted that every major channel—retail, club, and foodservice—grew year-over-year, and each of the top ten customers posted gains, reinforcing the company’s diversified revenue base.
• Broth category strategy: SunOpta leveraged the seasonality of its broth business to optimize utilization of its aseptic production lines, allowing flexibility and efficiency in meeting varying category demand throughout the year.

Drivers of Future Performance

SunOpta’s outlook is anchored in continued category momentum, capacity investments, and disciplined cost recovery strategies.

• Capacity expansion projects: Management is investing in additional fruit snacks production lines, with new capacity already oversubscribed by existing customers. These projects are expected to be accretive to returns on invested capital and support growth through 2027 and beyond.
• Operational efficiency focus: The company is targeting sequential gross margin improvements by unlocking further efficiencies in plant operations and labor, while managing the timing impacts of tariff-related cost pass-throughs.
• Category and customer growth: SunOpta expects growth to be driven by strong consumer demand for plant-based beverages and better-for-you snacks, with its largest customers consistently outperforming their respective markets and new business pipeline activity at record levels.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will watch for (1) the ramp-up and utilization of new fruit snacks manufacturing capacity, (2) ongoing gross margin improvements as tariff cost pass-throughs are fully realized, and (3) sustained growth across all major channels, especially club and foodservice. Progress in securing high-return capital projects and further broadening the customer base will also be key indicators of execution.

SunOpta currently trades at $6.26, up from $5.18 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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