SunOpta Inc. (STKL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to SunOpta's 2022 Investor Day. My name is Michael Mulgrew. I'm the Vice President of Strategy and Corporate Development. And on behalf of our team, I'd like to thank you all for this opportunity to share our excitement and enthusiasm for SunOpta with you today. Before we get started, just a reminder that today's presentation includes forward-looking statements that reflect current beliefs and are not a guarantee of future performance. For more information on the risk factors and uncertainties that could make results not reflect those indicated today, please refer to the Risk Factors section in our 10-K. Today's presentation also includes non-GAAP financial measures and figures that have been rounded. With that said, we have a great agenda for you today. We'll be covering our strategy, our operations, our values on our financials. And with that, let's get started. It's my pleasure to introduce our CEO, Joseph Ennen.

Good morning. Did you enjoy the tour? Learned a few things? Good, good. We're going to talk a lot today about strategy and numbers and competitive advantages, et cetera. But on some levels, I've already showed you what makes the company special and that was the people. And I have to think one of the hardest parts of your jobs when you assess companies and evaluate investment opportunities is strategy is a PowerPoint, numbers are numbers, but it's always about the people, isn't it? It's always about can the people make the numbers happen. And so we were very purposeful today in wanting to show you some of the people, some of the talent, some of the culture that we have here because at the end of the day, what you have to believe is that the people that we've got on this are going to make all these numbers happen. And I am extremely confident and extremely proud of the talent that we have built here. And if there's one thing that we've done well over the last 2 or 3 years, it's execute, it's execute. We're an operations-driven company, we're operators. We make stuff happen. We execute. And so I wanted you to have a chance to just see some of the people and some of the talent that support the business and drive the business and make it happen every day. Because if you don't feel that, then this is just PowerPoint. So what I hope you take away from today is 4 things. Number one, an appreciation for our competitive advantage capabilities. We've tried to show you a little bit of that. Mike is going to unpack for you in detail the core competitive advantages that we have in the plant-based space. Insights into where and how we will drive growth. This is unapologetically a growth plan. 75% of the business growth in EBITDA that you're going to see is going to come from revenue growth. I spent a formidable part of my career at PepsiCo. They had a phrase growth is oxygen, okay? I was imprinted by that idea, and that philosophy that growth is oxygen. And so you see a growth -- fueled growth in EBITDA. We're going to outline for you in detail by initiative, by business unit our build to $100 million of EBITDA next year. By the way, we recognize we're 7 months away from 2023, and we're still saying $100 million of EBITDA next year. I think some people were a little bit surprised by that number when we shared it on the Q4 call. We're still saying it and we're 7 months closer than when we said it the last time, $100 million of EBITDA next year and $150 million in EBITDA in 2025. Lastly and maybe most importantly, we hope you leave with an understanding that this is a compelling investment. So just some of the participants you're going to hear from today, myself; Mike Buick, who is our General Manager of our plant-based business. Some of you who are on the tour group, too, got a chance to meet Mike. You're going to hear from him, and he's going to unpack the plant-based business for you. Scott Huckins is doing double duty and continues to do double duty as both the General Manager of our fruit business as well as the CFO. We're getting good value for money here at SunOpta. And you're also going to hear from Jill Barnett. Jill is our Chief Administrative Officer over our HR functions as well as is our General Counsel. We have a number of our leaders on the back, who you would have had the chance to meet this morning; as well as 3 representatives from our Board, Eric from Oaktree, Ken Kempf from Engaged and -- there he is; and Dean Hollis, our Chairman, back here. So welcome to them as well. I'm not going to drain the history of SunOpta, but I think it's important to understand where we are and how it was influenced by the history of the company. So the company was founded in 1973 as a sustainability company. It was sustainable before it was cool to be sustainable. It was started in Canada, and it was a series of entrepreneurial ventures, some of which make for interesting reading. The company got into the food business in 1999 on the kind of very commodity-oriented side of the business. 1999, they bought an organic corn and soy milling business in, I believe, North Dakota or Minnesota, and that started their entree into the food business. But what you saw from 1995 to 2015 was 40-plus acquisitions. Basically, they saw something interesting to buy. They bought it. And they ran it like a holding company. So corporate, I think, was 6 people. And they really ran a holding company business model for almost the entirety of the history of the company. In 2015, SunOpta acquired Sunrise Growers, the fruit business, frozen fruit business that you're all very familiar with. That really put in motion the need to centralize because it was a really big acquisition and the company focused on trying to bring the pieces of the business together. That saw then a chapter of some significant quality challenges, business challenges, et cetera. In 2019, I joined the company as CEO. One single thing attracted me to this opportunity and that was I've spent my entire career building and managing nutrition businesses or pivoting businesses to be driven by nutrition as well. I'm a bit of a fix-it guy. And I looked at the portfolio, I looked at the opportunity, and I said, "Wow, this thing should be doing way better than it is." I didn't see the focus on the right pieces of the business, et cetera. And so in 2019, we did a couple of key things that have been instrumental and powerful to the turnaround of the business. We built a new management team, changed the structure of the organization, put great general managers in place like Mike Buick to run their businesses. We sold off portions of the business. We sold off the Tradin business, which at the time was 40% of the revenue commodity trading business, took the proceeds and invested in capital. Invested in the most profitable, powerful, advantaged parts of the business. We stopped trying to fix everything that was broken. And we said, "Let's spend our time and our energies on the parts of the business where we can win as opposed to trying to fix everything that was broken." The result of that was a pretty significant turnaround. In 2019, we made $20 million of EBITDA. In 2020, we made $60 million. And some of you will remember, and those were certainly fun scripts to read when we talked about tripling EBITDA, doubling EBITDA, et cetera. Where we are today, a little bit of a speed bump in Q3 and Q4, everybody felt it. Supply chain challenges, et cetera, but we feel like those are all materially behind us. We are doing great in our plants. We still have some labor turnover, et cetera. But the output of our plants is outstanding, absolutely outstanding. The innovation agenda that we have going is going to drive significant growth. And we absolutely believe that will deliver $100 million of EBITDA next year and $150 million by 2025. So where we are today, just a quick grounding in case you arrived not knowing anything about us. Two business units, plant-based. You see some of the products there. $76 million of gross profit, more than 80% of the gross profit comes from the plant-based side of the business. On the fruit side, really 2 very different businesses. The only thing they really share is the word fruit, okay? Customer profile is completely different. Nature of the customer contracts, very, very different. Profitability of the 2 businesses, very, very different. And so when you look at fruit, you need to think about it as kind of 2 different pieces: the frozen fruit side of the business and the fruits snacks side of the business. We have a lot of manufacturing plants for a company our size. Really, a function of just that kind of acquisition-oriented chapter in the company's history. I'll bring your eye to the green. Those are plant-based manufacturing plants. You see they make a beautiful diamond shape around the U.S. that was strategic in nature. Everybody knows diesel is, I think, $5.40 a gallon last week. So imagine shipping product from Allentown, Pennsylvania to San Diego if we didn't have a plant in Modesto. Imagine a -- by the way, most of our customers pick up the product at our warehouse, okay? So imagine if they're only working with SunOpta, and we only had a plant in Allentown, Pennsylvania. They're driving their product on their account all the way from Allentown, Pennsylvania to San Diego, Texas, et cetera. We're the only company in the U.S. that runs the network. We're the only one. We're the only one that has more than 1 plant. So everyone we compete with is trying to meet with customers and say, "Please come and pick up your product and ship it all across the U.S. on your dime." So huge competitive advantage for us in today's market as well as going forward because the redundancy that it represents, the capacity that it represents is a huge competitive advantage for us. One of the things that's different about SunOpta and we're incredibly proud of is we have a lot of ways to make money. We have 4 different ways that we make money. We go to market through our own brands. The purpose of those is really to be the tip of the spear for innovation. It gives us the confidence that we can develop a product platform and bring it to market and bring it to market through our own brand. And I'll talk more about that. We go to market ingredients. You would have saw oat base and all the different things that we can do with oatbase. You're going to -- Mike is going to share with you a video that explains all the different ways that we go to market. Co-manufacturing is a big part of our business. We manufacture for many, many, many of the brands that you see on the shelf, especially in the shelf stable space. As a matter of fact, I think if you close your eyes and just reach out and grab one, there'd be probably 8 in 10 chance that you grabbed a product that was manufactured by us. Private label, more predominant on the frozen fruit side of the business. On the plant-based side, we have a couple of strategic partnerships that we do private label for, and Mike again will explain a bit more about that. So net-net, we have a very strong foundation, a lot to build on, a lot to drive growth off of. But where are we going? We have a description of our company, which is fueling the future of food. We are a sustainability company. You're sitting in a building with 18,000 square foot of sustainably sourced bamboo. Just yesterday, they were starting the process of putting 36,000 square feet of solar panels on the roof. There's no paper products in this building. It's all dishes, et cetera. You heard some of the sustainability efforts that we have going within our plants. Our -- all of our plants have achieved zero waste. We are a sustainability company. The business that we're in, value-added food manufacturing focused on high-growth, supply-constrained categories. That's a hugely important part of why we're successful. We're focused on plant-based sustainable products, principally cow dairy alternatives. It's not the easiest thing to say but cow alternatives, no cow. Multipronged go-to-market approach, I mentioned that we are channel agnostic, full-service business model. And again, Mike will unpack for you just what that means. But we don't just run manufacturing plants. Many co-manufacturers just say, "Here's our plant. Show up with your formula. Pay us $15,000 for the day. You can run your product through our plant. Hope it goes well." That's the level of R&D support they get. You saw the level of R&D support we can supply. Lastly is we're focused on creating growth runway for customers outside their capabilities. I grew up in brand management, my whole career, okay? They're really good at doing what they do, and they're really bad at doing things they don't do. What we afford them is the opportunity for a brand to say, "Hey, you want to be in this category, great. We'll manufacture it for you. We'll do all the work. All you have to do is put your brand on it, and they can drive growth." And it's a huge part of the value that we give brands. So I mentioned these results. What I can tell you is they're impressive numbers. They're not aspirational numbers. These are not pie in the sky, airy-fairy, aspirational numbers. These are the numbers that we're going to deliver. They're impressive, but they're actually incredibly achievable. We try to make this really simple for you guys, which is in order to believe this, you only need to believe 4 things, okay? So to believe we're going to deliver $1.3 billion in revenue. And in order to believe we're going to deliver $150 million of EBITDA, you have to believe these 4 things. The first is that we can continue to grow our plant-based business at the rate that we've grown over the last 3 years, 15%. That will deliver the double in revenue that we have talked about for 2.5 years. You have to believe that we can deliver a 19% gross margin in plant-based, which we effectively delivered in 2020. You have to believe that we can double our fruit snacks business to $115 million, a significant portion of which we just inked in a major new contract with our biggest customer. And the last thing you need to believe is that we can manage our business with the SG&A growth in line with revenue growth. You believe these 4 things. That's 90-plus percent of the EBITDA I just showed you. There's no bend in the curve. Not asking you to believe a bend in the curve. I'm just asking you to believe we can continue to deliver results that we have already delivered. I mentioned growth. And again, this is unapologetically a plan that is built on driving revenue growth, and we have 3 ways to drive revenue growth. Organic growth from existing categories and customers. We're blessed with customers who are winning in the marketplace and categories that are growing. When you hear and understand the depth of our competitive advantages, you'll understand why we're so bullish about our ability to grow market share from competitors. And lastly, we're taking our capabilities and our competencies and extending the TAM of the business significantly. So 5 strategic imperatives for us to deliver outstanding financial results. First is transforming the portfolio through structural changes and prioritization of resources. This is not a new headline for us. You've been hearing about this since I joined the company. Fortifying our competitive advantages in margin-accretive categories, leveraging our core capabilities to expand the TAM. Being and being recognized as a sustainability company. And Jill is going to kind of unpack that for you because we feel somewhat disrespected that we are actually an incredibly strong sustainability company through the products we produce every single day, yet the scorecard doesn't necessarily reflect it. And so we are committed to remedying the scorecard and getting credit for the company that we actually are. It's a little bit like Tesla's defense at getting kicked out of the Sustainability 500 recently. And then the last is codifying our vibrant culture. And again, this is the core of what -- this is the engine room of the business. So portfolio transformation. The core of our business plant-based milks. We also run some tea and broth products and fruit snacks. 75% of that part of the business, and we'll refer to this as core from this point forward. Core, 75% branded, $470 million in sales, 90-plus percent of our gross profit, 15% year-over-year revenue growth. In the optimized category, we have a couple of businesses, frozen fruit and our sunflower business, margin-challenged businesses and really, really dominated by the private label side of the business, less than 10% of the gross profit, okay? So you will not be surprised that 90% of the content of this meeting is focused on where 90% of the gross profit is. We will unpack frozen fruit a little bit just so you understand and are grounded. But you'll notice in my 4 things you need to believe that we didn't ask you to believe anything on frozen fruit. I didn't ask you to believe revenue improvement in frozen fruit. I didn't even ask you to believe margin improvement in frozen fruit. I absolutely can tell you we are going to improve margin in frozen fruit. That's for us to prove and us to demonstrate to you. We're not going to ask you to believe that. The company has a long history of not delivering great numbers on frozen fruit. So we're not asking you to believe anything on frozen fruit, nothing. You don't have to believe anything. We hold ourselves to a much higher standard than that. But when we built the numbers, we're not going to ask you to believe anything there. Just a quick slide on how we view the optimized side of our portfolio. Obviously, we're trying to fix these businesses. And Scott is going to share with you our margin improvement plan on frozen fruit. But when you look at it, I mean -- and this is -- this would be true of any business, right? You focus on trying to drive improvement. If you're successful, great, reevaluate it as core. If not, you look at either redeploying those assets, risk managing that part of the business, considering alternate owners or ultimately ceasing operations. So I just want to give you a sense of how we're thinking about some of those optimized sides of the business. Our focus right now is on executing our profit improvement plan. Now we have been -- and again, back to part of what bent the curve on the EBITDA performance of the business back in 2019. From 2019 to 2020, $20 million of EBITDA to $60 million. What bent the curve? This, in its most simple terms. This is what bent the curve. We shifted our focus to focus on the things we were good at. 75% of management's time, 80% of our R&D resource, 90% of our CapEx investment against the core businesses driving profit improvement. So what's been the result of that? It's one of my favorite pages in the deck. If you look at 2019, 30% of the business was value-added, 70% of the business was commodity. I mean we were effectively a commodity business in 2019. Fast forward to today, in just 4 years, we've doubled the size of the value-added segment of the business, from 30% of the portfolio to 60% of the portfolio. And we'll continue on that journey. I mentioned we're very focused on plant-based milk. If you haven't gotten that point yet. This will be a good reminder. Why? Huge growth opportunity. You see on the right-hand side, the plant-based milk category growth. One of my favorite reminder is that this is a 20-year overnight success. Plant-based milk started in the mid-'90s with soy milk and has delivered a comfortable, 20-plus percent CAGR over the last several decades. It continues to do outstanding in the marketplace, and there are core consumer drivers behind it. You can see on the left-hand side some of the growth rates and size of the categories. Plant-based milks is obviously the dominant part of the plant-based universe. So milk is fully 40% of all of plant-based out of all the plant-based categories. All the beverages, dips, spreads, yogurt, plant-based meats, add it all up, milk is 40% of it. And you see the growth rates that have been delivered for decades on the left. Why? Why? I get asked that question a lot. Why? What's the buzz? Why are all these people drinking plant-based milks? One of the most important ones is taste. People actually prefer the taste of plant-based milks. And here's the thing to understand. And again, as a consumer marketer my whole career, people don't change behaviors. So if kids grew up drinking almond milk or kids grew up drinking soy milk, they don't suddenly go, "Oh, wait, I'm an adult. I need to reevaluate every single thing in my pantry and every food choice I've ever made in my whole life." No, they just keep drinking almond milk. When they go off to college, when they get their own apartment, when they have kids, guess what the kids get? Almond milk. It's called the cohort effect. It's demonstrated for 100 years, cohort effect. People prefer the taste of dairy. It's funny. We do a lot of product cuttings here. And recently, several months ago, we did a product cutting comparing our products to cow milk. It was so funny because people were like, "It just tastes funny. Like my mouth is coated. Like kind of -- it tastes sour, it tastes eggy." That is a core fundamental part of plant-based milks because unlike some of the meat analog spaces, where their goal was to make it taste exactly like the cow alternative. Therefore, if it tastes the same, there's no opportunity for there to be preference. If 2 things are identical, you can't prefer 1 over the other. They're identical. By definition, there's no preference. They're identical. Whereas if something is different, there's the opportunity for preference. And that's one of the reasons why plant-based milks continue to do very, very well. Health, allergies, this is probably a not well-understood driver. 1/3 of the people in the U.S. 1/3 of the people in the U.S. are lactose intolerant. 65% of people on planet Earth are lactose intolerant. 65%, so now think of the demographic changes going on in America. They've been going on for decades and decades and decades. And you'll understand some of the drivers applying base milk growth over time. Sustainability and animal welfare are 2 other drivers. So I'd be remiss if I didn't also acknowledge while our current focus is on internal expansion of capabilities, that M&A is, I would say, something within the planning horizon out through 2025 that we would certainly consider if the right opportunity came along. Next section is around competitive advantages. And I'm not going to drain this because Mike is going to go through it. But you're in Minnesota. They don't like to brag. They're kind of really understated, cautious people. I'm going to brag for a minute, okay? So my apologies to all the Minnesotans in the room. But I'm going to brag for a minute. We are outstanding at running manufacturing plants. Mike is going to show you some data from Tetra Pak comparing us to every single person in the country who runs aseptic manufacturing plants. And we are the best in North America at running these plants, factual data. Technical expertise. You would have saw in the R&D labs, how great we are. National manufacturing footprint, I talked about that. Thank you. All the lights are on, motion detectors because we're a sustainability company. Aggressive investment in a capacity-constrained environment, right? We are doing the hard work right now of building capacity. It's hard work. There is no labor. All the raw materials are in short supply. And we are standing up plants and adding capacity and building out capacity when it's really hard. And we're going to get paid for that because we're doing the hard work. Fourth is vertical integration. Why does that matter? Because if we were trying to go source oatbase right now from somebody else, there is none. So thank God, we are making our own oatbase because if we're trying to buy it from somebody else, it wouldn't exist and we wouldn't have $80 million approaching $120 million oat business. We wouldn't have it because there'd be no oatbase to buy. Lastly is the robust customer service model that, again, Mike is going to share some testimonials from our customers on how great of a job we do here and how important what we do is for their business. Third piece, leveraging our core capabilities to expand the TAM. We've done a great job in the last several years of expanding the capabilities of the business. We used to just be a co-man and private label business. We've added brands successfully, and we've added ingredients. You saw that on the tour. Vertical integration. We've gone from really focused on processing and packaging to adding the extraction step. And again, hugely important part of being able to deliver products to our customers. On the packaging format side, we used to do 1 liter in half gallon aseptic packaging in tetra. We're adding 330 ml. That's opening up a $6 billion TAM for us in the protein shake sector, which is consistently short of supply. Huge opportunity for us, again, focus on capacity-constrained environments. Categories. We used to be predominantly focused on almond, soy, rice and coconut. We've added oat, huge growth pillar for us; creamers, protein beverages, refrigerated beverages. Again, we're already in these markets succeeding. Lastly, it's not a coincidence that we have 4 manufacturing plants all within a couple of hundred miles of the border. East Coast, West Coast, North and South. And we've never had capacity to go pursue international expansion. So why go hire a broker to take our product into Mexico when you don't have capacity to serve your customer base in the U.S.? But as we're adding capacity, as we're expanding, that is certainly a growth avenue for us. We get calls all the time. China, Australia, can you ship us product? We'd love to buy your product. Can you send it? We're busy running our current customers, servicing this market. But as we get capacity, this will absolutely open doors for us. So here's the TAM of the business. In 2019, $3 billion TAM. So today, $12.5 billion -- excuse me, by the end of next year when Texas comes online, $12.5 billion. So we started with the core shelf-stable plant-based milk. That's the green slice of the upside-down layer cake. You can see on the left-hand side how we go to market. We go to market packaged, branded private label and co-man, $1 billion TAM growing at 5%. The total TAM of that environment is $3 billion, growing at 4%. Then we expanded into creamers and baristas. You would have tried several of those products again this morning. Another $1 billion of plant-based TAM, 33% growth, huge. That whole sector of the creamer barista category is blowing up. $4 billion total TAM. Then we get into refrigerated. How do we participate in refrigerated milks? We don't make the cardboard, gable-top cartons that you see. No, we supply the oatbase. That's an ingredient play for us. We go to market that way through co-man and private label. $3 billion plant-based TAM opens up, growing 10%. Then you say, again, I saw the ice cream category, et cetera, right? Big opportunity for us. Again, how do we participate? Oatbase as an ingredient play, co-man and owned brand, $1.5 billion TAM, growing 16%. And then the last piece of it, which will come online as part of our Texas project is the protein drink sector, $6 billion TAM. The plant-based side of it is incredibly underdeveloped. We will participate both on the whey-based side of it, which is the $6 billion market while we bring our plant-based credentials and capabilities to help build out the plant-based side of it, okay? Here's a fun fact for you. Protein powders , 40% of the powders are plant-based, 40%. Ready-to-drink protein, 3% plant-based. So I'm thinking if 40% of the people are buying plant-based powders and only 3% are buying plant-based ready to drink, there's some opportunity to unlock there. So we'll participate on the whey side of it. Obviously, these are big systems to put in and we're going to sign up volume and drive volume against the whey-base side of it. But we're incredibly excited equally about bringing our plant-based credentials and capabilities to the ready-to-drink protein sector. We prioritize 6 innovation territories, 3 on plant-based, 3 on fruit-based. You would have saw, again, some of these products this morning. Oat, and you see some of the products and go-to-market optionality that we're pursuing there. Protein, next-generation milks. And then on snacks, one of our core strategies on snacks is portfolio transformation to more value-add. So you won't be surprised then to see that we have an incredible focus on the fruit side of building out value-added products as opposed to just freezing a strawberry and putting it in a bag, we're now sourcing organic acai and organic dragon fruit, pureeing it, putting it in a ball with papitas and soy crisps, et cetera, et cetera. That's a much, much different value proposition. And you would have saw we've commercialized 12 products already against this [ bose ] platform and then value-added blends. So 3 and 3 on each side, you would have seen many of those products this morning. I get asked often about our go-to-market strategy and the role of brands. So it's important to understand everything, how you execute starts with where the idea comes from, okay? So when a customer comes to us with an idea or we bring an idea to a customer, then that's a pretty simple process, isn't it? We look at, is this a good idea? Can we commercialize it to make money? And then we go develop it, we launch it. And over time, we'll look to kind of extend that into the other parts of our business, pretty simple. Problem with that is that's not going to help us achieve the growth aspirations that we have for the business. So we have started initiating self-identifying growth opportunities. The problem and the challenge in that is you can't -- no one will buy a product from you if all you have to show them is PowerPoint. If you don't have any manufacturing equipment and you don't have a plant to run it and you don't have any product formulations, but you say we'd like to get into manufacturing bowls. And they say, have you developed any products? No. Do you have any expertise sourcing those ingredients? No. Do you actually have any equipment to run it? No. But if you say, yes, we'll go do all that. They're going to go, why don't you call us when you got something? So this process starts with us identifying is it a good idea? How can we commercialize it to make money? And then we get to just one little difference in the process, which is, are we prepared to launch this with our own brand? Because you're going to spend all the time and money and energy to develop the product, you better be willing to commercialize it. So we said, "Great. If we had brands, we can use them as proof of concept." Proof points for the innovation so that we can bring it to market, and that's exactly what's happened on bowls. If you look at this product, the Sunrise Growers, we showed this to customers. Some customers said we love it. We'll take it in as Sunrise Growers. Some customers looked at this and said, "Wow, we love that. Can we do that as private label?" And we say yes. Some customers look at that big CPGs and says, "Wow, you're already making this? Can I just put my name on it?" And we say, yes. We're trying to monetize the platform and we're agnostic as to how we bring the innovation to market. Fourth, be and be recognized as a sustainability company. It's my Rodney Dangerfield moment. So what are we focused on? Number one is driving growth in our core business, okay? The products we make and you're going to see from Jill. The products we make, the core products we make, plant-based is about being a sustainability company. We're putting solar on the roof of our building because we think it's the right thing to do. We're not doing it to prove to somebody that we're a sustainability company. We're doing it because we think it's the right thing to do. Number two, and I mentioned this, understanding and managing the external evaluators scoreboard and managing to that. It's -- they're scoring. There's a score being kept and we need to do a better job of making sure that we're putting points on the board in the right places. Setting aggressive ESG goals. Activating this through the network, that's our network. And lastly, marketing our efforts to stakeholders, and Jill is going to share with you what we're doing in this space. Lastly is codifying our vibrant culture. And again, I tried to explain that. This may be one of my favorite quotes of all time from Peter Drucker, strategy -- culture eats strategy for breakfast. I absolutely believe that. I absolutely believe that. I've been doing big CPG for 30 years. It's always about the people and the team and the culture of the team. And again, if you can understand and appreciate that and understand and appreciate how important it is for us, you'll appreciate why I'm so confident that we're going to deliver the numbers that we've outlined. These are -- we have a set of what we call MVBs, most valued behaviors. I think every company has something that looks like this. It's real here. It is absolutely real, and Jill is going to share with you some data on just how many people have taken the opportunity to recognize a peer, et cetera, around these. But I think if you stop anybody -- and I would wager a heck of a lot of money, you could stop anybody who works in this company. Third, shift Alexandria plant and say, what are our MVBs, I think they'll get 4 of the 6 right. So those are the 5 imperatives that will deliver our results. But what do those results look like? So unpack a little bit more for you. On the plant-based side, revenue $471 million last year, growing to $850 million and $86 million of gross profit growth on the plant-based side of things. On fruit, $100 million of growth, $21 million of gross profit, I think, split pretty evenly, Scott will unpack this, between the snack side and the frozen side. So again, you see the dominance and the preponderance of our effort against the plant-based side of the business. So with that, Mr. Mike Buick will come up and take you through more on our plant-based business, what our competitive advantages are and how we're going to deliver the numbers that, candidly, he's already been delivering. I mean -- so Mike?

All right. Thank you, Joe, and good morning to everyone. I've had the good pleasure of leading the plant-based food and beverage team and the incredibly talented people on this business for the last few years. And we're incredibly proud of the results we've delivered. But I'm down right thrilled about what we're about to do over the next 3 years. It's an incredibly interesting space. SunOpta has some advantage capabilities. We've got great customers, and we're going to put all of this together to continue to drive growth. We're going to start with just unpacking what is in the Plant-Based Foods and Beverages business unit. It is a reportable segment for SunOpta. But I'm not sure everyone really understands what's in the business. And so first, we have our plant-based beverages business. It's 72% of our revenue. It's more than 80% of our profit. And it's the strategic focus for our resources, our investment and our growth. The second is our broth business. It's 15% of our revenue. It's less than 10% of our profits. And while it's not a strategic focus for our business, it is -- we do have strategic customers with which this is part of SunOpta's total value proposition. And then finally is the Sunflower business. Joe talked about that. It's a stand-alone business. There's a general manager reporting to me who runs that business, does a really nice job. You can see the contribution to the overall business. But we're going to spend a lot of time over the next 30 to 40 minutes talking about plant-based beverages. Our plant-based beverage business competes in a $4.5 billion total addressable market. And that's really underpinned by our strategic foothold in shelf-stable plant-based milk, which is a $750 million total addressable market. And SunOpta has more than a 50% share in that market. And that gives us an incredible foothold to add new capabilities, expand on current capabilities and continue to grow in plant-based milk and other beverages. And we'll talk a lot about that. Within the plant-based beverage, on the left-hand side, you can see our revenue mix. And what's amazing about this chart, you could see oat in 2022 will be the largest type of anything that we do. If this chart was -- if this was 2018 and you were looking at this chart, oat would be 1/3 of 1% of our total business, 1/3 of 1%. In 2022, it will be 1/3 of our total business. And that is a result of a great team seeing an opportunity, leveraging a core capability working with customers and really taking advantage of our competitive advantages and executing. And so in 2022, oat will be 32%. Almond continues to be a really important business for us and for our customers. And soy, coconut, rice and any other plant-based milk that you can imagine rounds out the portfolio. In terms of go-to-market mix, we have a very diversified go-to-market strategy. This enables us to bring great ideas to market faster and execute them through a number of different channels. So you can see hybrid 34%. This is a customer that isn't quite contract manufacturing, isn't quite food service, but it's a big important part of SunOpta's business. You can see 27% is contract manufacturing. This is where we make products for other national brands, and we are the strategic partner behind their success. 22% in private label. It's a small set of private label customers but the leaders in the area. And then we have a brand business and ingredient business. And then in terms of channel mix, actually, more than 50% of our business actually ends up in foodservice ultimately. Now whether that's SunOpta going direct to food service customers or SunOpta through our national brand partners and ultimately the foodservice, you could call it 50-50, but a lot of our business ends up in the foodservice channel. So where are we going? The headline, we will double our plant-based business by fiscal '25. This isn't new news. We've been saying this for 2 years. We've been building a strategic plan. We've been executing on that, and that's where we're going. In terms of strategies, the first one is we are fortifying SunOpta's competitive advantages. We have some great competitive advantages in a great market, but we're continuing to build on those. The second building capacity and capabilities to support the growth. We've got some great customer partners. We're working in great categories. We see great opportunity. We need to build capacity to support the growth, and we need to build new capabilities to drive the growth. And finally, innovation from our core capabilities. In terms of the growth levers over the next 3 years, 4 years, from fiscal '21 to fiscal '25, it really falls into 3 buckets. The first one is core growth. $210 million. More than 50% of our growth will come from the things that we do today. The second one is oat, $120 million of growth from fiscal '21 to fiscal '25. And the third is our entry into the nutrition space. 330 ml is the size of package from Tetra Pak. That will be a $50 million business by fiscal '25. The collection of those 3 growth levers will double our business. I want to talk a little bit more about what is the reason to believe, where are we making investments and what does that growth look like? So in our core business, you're going to see our competitive advantage. We are the market leader in plant-based milks. We have a diverse, fast-growing and hungry customer base. And demand continues to outstrip supply. We will invest in innovation. You can see that here at Epic, you can see that with our R&D team. We are building more capacity in our existing network. And we're building a fourth aseptic plant in Texas. In fiscal '25, $210 million of growth. 80% of that will come from current customers. That's either organic growth or that is us being a bigger part of their business going forward as we have the capacity to support it. 20% will come from customer development over the next 4 years, and we're very confident in that number. The second area is oat. Oat is the fastest-growing segment in plant-based milk. Shelf-stable, refrigerated, retail or food service. The leading national brands have less than a 40% ACV at retail. There's not enough extended shelf-life processing. There's not enough aseptic processing. And there's, most certainly, not enough oat extraction in the market to fuel and to service the demand of oat milk. How are we going to invest? We're going to continue to innovate. You saw that in the tour earlier today, right? Our oatbase in the shelf-stable milk, our oatbase in a refrigerated milk into yogurt, into ice cream into other categories. And we are going to extend our oat extraction. Today, it is in Minnesota. In the future, we will have a network with Minnesota and California. And that West Coast presence is critical for our customers. They couldn't be more excited. So $120 million of growth, 2/3 of it will come from existing customers, right? You can imagine, again, when the leading brands have a 40% ACV, they're busy building refrigerated extended shelf-life capacity. And they're counting on us to build more oat extraction. 1/3 will come from customer development. We sold out our Minnesota out extraction fully 1 year ahead of our plan. And so we are working on a business development pipeline with lots of customers who are excited about SunOpta bringing oat capabilities to market. And we had to say sorry, we're out, right? We really have to focus on some of our big strategic customers. Some of them are waiting to come into the market in a lot of different categories. And so 1/3 of that will come from business development. And finally, our entry into the nutrition space. We have a core capability in aseptic manufacturing in 330 ml. Again, there's not enough supply for the growing demand. And so we're going to leverage our core capabilities to get into nutrition. And we will -- we have a great line of sight to a $50 million business. That's how we're going to double this business. So now I'll talk a lot more about our core growth and driven by our competitive advantages. This is really critical. These competitive advantages certainly drive our core, but it's the reason to believe across all of our growth. Let's start with shelf-stable plant-based milk. If you look at retail, right, tracked channels, it's a $220 million category. Refrigerated is 10x the size, right? So it's only $220 million. But that's dramatically understated. That's less than 1/3 of total shelf-stable plant-based milk. Given it's extended shelf life, there's $120 million. It's a perfect format. It's a perfect product for club, for e-commerce, which, of course, is growing rapidly in a COVID -- post-COVID environment. There's $120 million. So through untracked channels of retail and e-commerce, it's almost more than 50% the size of retail. And then in untracked channels like foodservice, and that's primarily coffee shops, this is a $400 million business and growing rapidly. So the total is actually a $750 million market, and SunOpta has a 70% supply share of that $700 million market. And we have a greater than 60% share in retail and a greater than 60% share in foodservice, which again gives us a very big important strategic foothold in plant-based milk. So who's the competition? Who has the other 30%? It's really broken into 2 buckets. The first are subsidiaries of large CPG companies. And while they are focused businesses for them, one, a lot of them are actually using contract manufacturers such as SunOpta. But two is within the broader context of the large CPG, they're not building fourth plants. They're not building oat extraction capacity and capabilities like we are. The second area is regional co-manufacturers. We'll talk a little bit more about who some of these are, but they're really focused on being full, not on doubling their business. They don't have the means. They don't have the aspirations, but SunOpta does. That leadership position has translated to strong revenue growth and margin improvement. 15% CAGR is what we've delivered over the last 3 years, right? And we've improved our gross profit. Again, Joe talked about what you need to believe is a 19% gross margin and plant-based. We delivered that in fiscal '20. We would have delivered that again in fiscal '21 were it not for a global supply chain crisis, of which SunOpta and every other manufacturer in the country struggled. And we'll talk a little bit more about our recovery and how we're doing. But there's nothing fundamentally different about our business today than in 2020. And we absolutely have line of sight to getting back to these margins. Our success is underpinned by 5 distinct competitive advantages. And again, I think it's important to keep in mind the broader context of which we operate, which is plant-based milk is growing rapidly. There's not enough supply, a global supply chain crisis. And so retailers and brand partners, they are looking for partners who can -- who can help them be successful. And we do that in 5 ways: one, world-class operational and technical expertise. That results in high case fill, lower cost, speed of innovation and quality; two, a national manufacturing footprint, lower supply chain costs, supply redundancy. Three, aggressive investments in a capacity-constrained environment. We have been investing in capacity. We're accelerating that investment. Four is vertical integration, right? We can control the quality. We can lower cost. We can get into new markets faster. And five is robust customer service model, which provides supply chain integrity and the ability to serve our customers. So let's talk a little bit about the first of our competitive advantages, which is our technical expertise. SunOpta is a world-class aseptic operator. Tetra Pak a global leader in processing, packaging and service of aseptic technology runs a benchmarking study of all of the manufacturers in the Americas who run aseptic technology. SunOpta's 3 plants are in the top 7, all of them in the top quartile of every manufacturer who puts anything into an aseptic package, plant-based milk, dairy milk, juice, tea, water. It doesn't matter what it is. SunOpta runs 3 of the top plants in all of the Americas. And we do that with a more diverse customer portfolio. We do that with a more diverse product portfolio. This matters to our customers. We have recovered from the global supply chain crisis that absolutely impacted us in 2021. In our first quarter earnings, we talked about our first quarter aseptic production, 8% higher than it ever was, 19% higher than [ Q4 '10. ] What we haven't shared yet until this moment is that in Q2 of '22 quarter-to-date, we actually made more cases. We're continuing to see the benefits of adding more people, investing more in our plants, building a more robust supply chain. We're seeing the results of that in our business. And this, again, is an environment where we run a very challenging product in terms of intellectual property, agricultural understanding, enzyme science. And we have a very challenging manufacturing process. We -- the scale at which we produce is unmatched by almost any of these other aseptic manufacturers. We're running 500 million cases -- sorry, 500 million units through our network every year. And we do that in a surgically sterile environment through miles of piping, 72 valves. If anything goes wrong in any one of those, you lose sterility, and you put days of production on hold. That's the environment we work in. And we're investing to deliver even greater productivity. We're investing across our aseptic network. One of the areas we're investing is in the digitizing of our shop floor. So bringing real-time technology to the folks who run our products and getting real-time information about the performance and the quality of our products. We rolled the pilot plant out in Alexandria, Minnesota just a couple of months ago. And we immediately saw a significant step change in our operational effectiveness. All of our other plants, as you might imagine, when are we next. And so we have accelerated our timeline. We'll be rolling all of our plants, including Texas in the next 12 months. This is a real game changer for our performance. And then finally, in terms of technical expertise is our R&D, research and development. This building is a testament to that. We've more than doubled the head count. We have an incredibly talented group of people. We have given them awesome capabilities, a 25,000 square-foot lab, lots of tools, a pilot plant. It's a game changer. And then finally, we have brands that can help us bring innovation to market faster. We've launched over 100 new items in the last 24 months. And this is in an environment when a lot of retailers are focused on keeping their shelves full and not actually bringing in new items. We think this will accelerate certainly with the investments we've made in Epic. In terms of national footprint, Again, Joe mentioned this. We are the only aseptic manufacturer with coast-to-coast capabilities, and we're completing that diamond in Midlothian, right? And these plants have redundant packaging and product capabilities so that we can run large national customers through 2, 3 and eventually maybe even 4 of our plants, providing them a lower cost, supply chain stability, redundancy and supply our competition can't do that. In fact, our scale and breadth of offering is unmatched. We'll have 4 plants, 4 aseptic plants when we bring Midlothian online. Our competition generally has one, right? One in a region -- and so our large national customers, if they were looking for an alternative solution would need to bring on 2, 3, maybe even 4 other co-manufacturers to replicate what we do. And we're investing -- sorry, the third competitive advantage is our ability and our interest in capacity investment. Again, these are fast-growing customers in fast-growing categories. It's a lot of work to stand up a contract manufacturer. If you're standing up a contract manufacturer who's not willing or able to invest in the near future, well, then as you grow, you need to bring on a second co-packer or a third or a fourth. And we're building and we're investing. So we have 8 big investment buckets. You can see largely where we're complete. So within our own -- our current aseptic manufacturing by the end of fiscal '22, we'll bring on the very last piece of new capacity and our West Coast facility will be complete. Midlothian, we're going to talk a little bit more about that shortly. That will be complete in '23. Our oatbase extraction will be completed in '23. And the pilot plant, as you can see today, is complete. We're investing more than $220 million to support the growth of the market and our customers. So let's talk about Midlothian, Texas. We're incredibly excited. This will be our largest investment that SunOpta has made to date. And it will be the largest plant in our aseptic network, 285,000 square foot building, and we've already designed 150,000 additional square feet for potential expansion. I'd like to show a video. But before I do, keep in mind that on September 18, 2021, this was a field and not a single shovel had been put into the ground. So it's a quick 1-minute video. [Presentation]

So the progress we've made in building out this facility in this current environment is nothing short of extraordinary. But it's not extraordinary for SunOpta. We have a proven track record of execution, right? Whether it was our oat extraction in Minnesota 2 years ago where there was new processing and filling capacity. Certainly, the test is harder. We're not complete, but we're really proud of our proven track record of execution, and our team has stood up to this latest test. Having said that, we still have a lot of work to do before we're making saleable cases and seeing revenue profit out of Midlothian. Aseptic manufacturing is incredibly difficult with stringent requirements. And so there is a lot more to do, installation of equipment, validation, qualification. And so you can see we have a staggered timeline of line 1, line 2 and line 3. This is on time. This is the plan that we laid out 18 months ago. We are on time, and we'll see in 2023, the rollout of each one of these lines as we continue to get this work accomplished. In terms of business development, we're adding a lot of capacity here. So how are we doing selling out this capacity? Again, as we sit here today, we have line of sight to more than 50% utilization for this capacity. We're very close on the 330 ml line. We're very close to finalizing agreement with an anchor customer who will be taking almost 90% of the capacity on that line, one customer. We have commitments from 2 existing customers that would like to move more incremental volume into our network. They see our competitive advantages. They like the capacity that we're building. They want to bring more business to SunOpta. And third and finally, we have a robust sales pipeline. We're actively engaged with conversation with new customers about bringing new opportunities on board. The Texas facility will amplify the impact of our competitive advantages, scale, capacity, operational expertise, lower cost. We're really excited about what Texas is going to offer. The fourth competitive advantage is vertical integration. You saw for us, getting into the oat business has expanded our total addressable market. We play in the refrigerated milk business. We play in creamers, plant-based creamers. And the opportunities are limitless almost. We've done a lot of really good work in oat extraction in a very short period of time, which really demonstrates our entrepreneurial spirit of the team and the people that work on this business. So we have a 4-minute video that will bring to life what oat means. This will be -- this will go from $1 million in 2018 to a $200 million business in 2025. And we'd like to share a little bit more about how we bring oats to market. [Presentation]

So pretty exciting stuff. Two things I wanted to mention. One is to bring this to life, we showed some images of retail and some shelf sets that, by no way, is intended to be indicative of who our customers are, it's the type of customers that are in the market. Secondly, on the tour, the question was asked I thought you sold the ingredients business. Now it sounds like you're getting back to an ingredient business. And so I think you can see from this, this is a value-added ingredients business, right? This is not trading a commodity. Look at the size of the facility needed to convert raw oats into an oatbase. We call it an ingredients business because it's an essential ingredient in the plant-based foods and beverages, but by no way is this an ingredient business like a commoditized ingredient business. So we're really excited about the future of oat. The fifth and final competitive advantage that we'll talk about today is customer service. And customer service certainly means high case fill rate and the customer service, customer service function within the organization. But at SunOpta, it means so much more than that. We have local embedded resources at key customers. We have wired our organization supply planning, demand planning, R&D, quality and so on and so forth to really understand our customers' needs. And we work incredibly close on a day in and day out basis with our customers to bring their products and their -- and drive their growth. A couple of our customers were kind enough to share some testimonials, specifically for this audience. And today, and I'd like to quickly read them. The first is from HP Hood. They said, we've leaned heavily on SunOpta to respond to the seemingly endless array of supply chain challenges we've all experienced this past year. The competence and professionalism of SunOpta's customer service team stands out among its peers. A second customer ekaterra which is a spinoff from Unilever for their tea business, said the following. From partnering on innovation for the TAZO brand, enabling growth of the brand and day-to-day operations getting TAZO into market, we appreciate the support. As a strategic partner, we share with you our growth ambitions. We are confident that in SunOpta, we have the right partner to match our ambitions. These are 2 of our customers. Final point. On a quarterly basis, we survey all of our customers to understand how are we performing as a company in terms of customer service. And we consistently get very high marks on our Net Promoter Score. It's incredibly important. All of these competitive advantages get wrapped up at the end of the day and our ability to service our customer. So I wanted to talk a little bit briefly about how all of these competitive advantages come together for our biggest customer. And at the end of the day, we are uniquely wired for large national scale customers. And we bring all of these competitive advantages to life. Operational expertise looks like high fill rate. It looks like having an R&D team that can customize and formulate products that uniquely match their needs. The national footprint, again, I mentioned this earlier, but it's being able to make the same product with the same consistency across each one of our plants in our network, allowing them to save on freight costs and have supply chain redundancy. It looks like investment in capacity. We've invested -- and in this particular customer, we are the only half-gallon network. It's a unique package that works for their needs. It drives higher store-level execution. It lowers their costs. And it's a really important part of their sustainability strategy and brings that sustainability story together for both of us. Vertical integration, being vertically integrated in oats allowed us to quickly enter this market with an oat milk. And finally, customer service. Again, every function in this organization is uniquely positioned and focused on this customer. Starbucks was kind enough to share the following testimony. Starbucks and SunOpta have had a great relationship together over the years. And we appreciate the innovation and collaboration that SunOpta brings to the table, which has led to success for both our brands. We look forward to continuing our relationship and are excited to see what the future holds for our 2 companies. And this is what that success looks like, a nearly 20-year relationship that spans multiple products and unbelievable growth. And as you heard from the testimony, we expect that growth to continue. But it's not just for our largest customer, it's for all of our customers. These are our top 10 customers. And because of the various ways we go to market, in 20 years, this is our -- this is the most diversified customer set I've ever had the benefit of managing. This includes global coffee chains. It includes large vertically integrated dairies, global mass retailers, global CPG brands. It is a blue-chip list of customers. 4 of these customers have been long-time partners of SunOpta. They represent 53% of our total revenue. And the average tenure of those 4 customers is 18 years. To say that our company feels like it's part of our company would be an understatement. We've been in business together for a long time. But it also represents the impact in our ability on the business development side. The other 6 customers were not customers 5 years ago. And so we went out with our capabilities and our competitive advantages and told our story and brought new customers into the fold. They represent 25% of our total revenue and they're leaders in their respective channels. Oat growth is our second growth lever. Again, I talked about this earlier in fiscal '18. It was a $1 million business, $1 million. We bought oat ingredients from the outside. We turned it into a finished good for a small and emerging brand. It was a $1 million business. 3 years later, it's an $80 million business. Last year, certainly line of sight to $120 million this year. We believe this will be a $200 million business by fiscal '25. This is a great example of SunOpta leveraging a core capability, investing, executing and really taking advantage of some great market opportunities. Again, the $200 million, and I think you saw it in the video, this is going to go to market under -- in a number of different ways. So certainly, plant-based milk in our plant-based creamers. Then you look at it and say the oat milk base can go into refrigerated oat milk. It can go into ice cream. It can go into yogurt. We can continue to innovate milk latte, oat milk with protein. You tried that on the tour this morning. We've got a lot of opportunity, and we have a diverse go-to-market strategy that will bring this to life. Third growth lever, expanding into the ready-to-drink nutrition category. Again, leveraging our aseptic expertise, right? We are an aseptic manufacturer. This requires aseptic manufacturing. It's a big growth or it's a big market. Today, it's a $6 billion total addressable market, and it's continuing to grow, and it's underserviced. There's not enough capacity, not enough supply to match the demand. And so we're really excited to take our core capabilities and get into this market. And then you heard Joe talk about the opportunity in plant-based. So initially, this will be a whey protein product that we will bring on some big strategic customers to help us get into this market. But over time, similar to what you see in protein powder, tubs of protein, there is a consumer demand and need for plant-based that's not -- that doesn't currently exist in ready-to-drink format. And so that will be a big part of our innovation efforts going forward. So last 2 pages for me. And it's a page you already saw, bring all this back together and we are going to double this business by fiscal '25. We're going to do it by focusing on 3 things, and the growth levers are core, $210 million. So in 4 years, $210 million, you saw we -- in the last 3 years, we've grown $160 million. And we're going to do that with a stronger team, with a stronger set of customers, with a higher level of investment and proven execution. Our oat business went from 0 to $80 million in 3 years. It will go from $80 million to $200 million by 2025. We will get into the nutrition business. And so what must you believe to believe that we'll double the plant-based business? As Joe said earlier, it's pretty simple. You need to believe that we will grow over the next 4 years at the same rate that we grew in the last 3, again, with a stronger team, more investment, stronger category dynamics and a stronger customer list. You need to believe that we'll grow our core business by $210 million driven by our competitive advantages. You need to believe that we will take our $80 million business in oat and grow it to $200 million in fiscal '25. And finally, you need to believe that we'll build a $50 million nutrition business. And I said earlier, we are very close to finalizing agreement with one of the leading brands in that category that wants 90% of our capacity. So it really becomes an execution. And you saw that we are the best aseptic manufacturers in the Americas. So we have a lot of confidence in our business. Again, I'm excited about our opportunity. I'm fortunate to lead the best team in the industry with the best customers and with the investment and support from our senior leadership team. I'm excited about our future, and I hope you are as well. Thank you very much. At this point in the agenda, I think we're going to take a 10-minute break. So we will -- we'll come back in 10 minutes. And thank you very much. [Break]

Okay. We're going to get started again. Please take a seat. I'm Scott Huckins. Many of you know me as the Chief Financial Officer of the company. I came to SunOpta in 2019. More recently, I took over the leadership of the fruit business. So I'm going to take you through a few pages to try to dive into fruit, give you a good understanding of where we've been and where we're going. I want to start with a level set. I think Joe teed this up properly. There's really 2 pretty different businesses that sit within fruit. Arguably, the only thing they share is the word fruit. So the first business is the frozen fruit business. This is individually quick-frozen fruit, primarily sold through, call it, top 5, top 10 U.S. retail. If you look at some of the statistics, it's about a $280 million business in 2021. Revenue actually contracted 14%. That was on purpose. You may remember, we have done a lot of work on SKU and customer rationalization, hence, the decline in revenue. We'll talk about the outlook in a moment. Moving over to the fruit snacks business called the alter ego. It's really a co-manufacturing business. Some of you had a chance to test or sample the organic, better-for-you, pure fruit snacks. That's what this business really is. If you look at 2021, did about $63 million of revenue, up a mere 28% growth. When you think about the size of these segments at retail, frozen fruit business, call it about $1.7 billion, again at retail, grew about 4% last year. When you move over to fruit snacks, that overall category is about $1.4 billion. It actually grew 12% last year. Again, just to kind of ground you on the basics of the business. We have for, call it, 3 years talked about 3 strategies for the fruit business. The first 2 are applied to the frozen fruit business. The third is specific to the portfolio. First strategy is to derisk the frozen fruit business end to end. Second strategy, we'll cover this in detail, is to take a significant amount of cost out of the business to make it a low-cost producer. Third, looking at the portfolio, the aspiration, and you're going to see the details, is to increase the sales mix of the value-added content of the portfolio away from commodity toward value add. From a growth standpoint, basically $100 million of growth from 2021 to 2025. It's roughly evenly split between the frozen fruit growth and the fruit snacks growth. How we're getting there is quite different. The overwhelming majority of the growth in frozen fruit is pricing. You may remember we talked about taking significant price in this business to set up 2022. When you move over and look at the food snacks business, the opposite is true. It's predominantly volume growth. Okay. I'm going to try to unpack give you some insight into the 2 topics that we laid out for frozen fruit, right? Number one, derisk the business. Number two, migrate this to a low-cost producer. So when we showed up here in 2019, there was basically zero pass-through pricing in frozen fruit, zero. Fast forward a couple of years, I'd say about 1/3 of the frozen fruit portfolio has pass-through pricing. But arguably, the more important fact is the $40 million I talked about. We took $40 million of pricing in that business. So I think I believe we've answered the question satisfactory, we can take price in this business. You look at geographic diversification, again, kind of going back to our entry point here in 2019, very, very much a California-centric business, very California-centric. We've really done 3 things from call it a footprint geography perspective. The first is we've taken about 88% of the manufacturing capacity out of California. Where did that volume go? How did we manage the business? We've had about a 50% increase in our sourcing and processing in Mexico. As you would guess, that's cost advantage relative to the rest of the ecosystem. 50 is a larger number. Importantly, the Central Mexico facility is our largest facility in the fruit network. Last piece is improving the supply chain by sourcing fruit in South America. South America is very relevant to the global fruit economy. We've had roughly a threefold increase in our ability to source. So the point is, think of it as much more of a global supply chain management footprint than a California business. Lastly, let me cover low-cost producer. We have done a lot in this business in the last couple of years. I think the takeaway is important, though, it's the first bullet point, which is we've really been streamlining the business. It used to be a long customer tail, long SKU tail business, really consolidate that, build the business around core household name U.S. retail. They understand the value proposition, frankly, better than the rest of the freight economy. So that's the strategic imperative that then allowed us to unlock the costs. So from a cost standpoint, we closed 2 fruit plants last year. It's about $10 million of fixed cost avoidance. Going back to my first point that more simplified streamlined business allowed us to delayer the organization pretty significantly, call it, about $5 million on a run rate basis. And then we sort of put everything together, again, just trying to drill the facts here. If you think about the overall low-cost producer objective, if you looked at the plant expense, this is just in COGS, right, plant expense, 2019 to this year, it's down nearly 40%. So for those of you who followed the company a while and maybe heard some of the messages we thought it would be helpful to give you a kind of a double click, take you through some of the metrics that we've been managing against. And you obviously would have seen in Q1 versus Q4, a nice step up in production. Okay. So transitioning to the third priority, third objective, third strategy, again, increase the sales mix of value-added fruit. Again, IQF fruit. Think of that as the commodity piece. What we're going to talk about now is the value-added piece. So if you look at the bar chart on the right, we're just trying to share kind of like Joe laid out for the company. Let's look at the journey of going from more commodity driven to value added. So the point is, over the last, call it, 2 years, 3 years, we've added about 800 basis points of value add. By the time we're done with 2025, call it 25% of the portfolio value add. Again, that's fruit snacks, and we'll talk about in a moment on some of our innovation. The big driver really in terms of flow-through or profit flow-through, we're going to talk about is highlighted in blue, which is taking that core fruit snacks business from about $50 million in 2020 to $115 million in 2025, and I'll show you how in just a moment. Okay. So focusing on food snacks. I want to start dimensionalizing this, unpack the numbers a little bit. So again, this is a $1.4 billion category at retail. Two things are important. If you look at the growth in the category in 2021, the $1.4 billion grew about 12%. Our focus in that business, as you know, is clean label. So if you look at the subset of that $1.4 billion that was better for you organic, roughly double that growth profile, plus 24%. So when we look back at the business, quite a small business back in 2017. $35 million of revenue. So over a 4-year period of time, we've delivered a 15% CAGR in the business, almost identical to what we have in the outlook, 16% between 2021 and in 2025. Probably the single most important proof point of how real, how credible is that is in the middle of the page. So if you looked at public reporting, where we show it in the 10-Q, we delivered a little more than $21 million in this business in Q1 2022, right? Multiply it by 4, it's an $85 million run rate. So the point is run rate today in the business we're 75% of the way to our target. We've mentioned, I think, throughout the morning that there's a number of expansion projects. The one expansion project in fruit is in this business. We're going to add a little more than 50% capacity to the core offering that we've got here. Okay. In closing on fruit, I want to talk to you about 2 of the core innovation platforms that we have in the fruit business. So I think what's important to understand to introduce these. As you've heard a couple of times, the company agenda is to be go-to-market agnostic, right? So that means bringing these products to life in private label, number two, through our own brands or, three, through co-manufacturing. Fruit bowls or smoothie bowls as we call them as a perfect example. We actually have 2 day, each of those categories being deployed. We have one of the largest CPG companies in the world, one of the largest food companies that you would have certainly heard of. We do this with our own brand. We do it at private label. It's a small segment in the absolute, call it $50 million, but importantly, it doubled last year. So the point being, we have customer traction, scaling the business. We think this could be a significant growth lever. And probably more recent would be the last topic, which is value-added blends. Think of this as trying to bring that smoothy shop experience directly to the consumer, right? So again, back to the theme of better-for-you quality, better-for-you product and accessibility right down the middle of the fairway. The idea again is have that readily available in the consumer's home. This is being commercialized is in the market as we speak, and this business also continues to grow. So again, the idea is how do we go from 85%, 90% commodity-driven business to a business with at least 1/4 of the portfolio being value added. This is the answer how. Okay. I'd like to bring up Jill Barnett, our Chief Administrative Officer, to talk to you about ESG and culture.

Thank you, and good morning. I'm going to be covering off on our environmental, social and governance, otherwise known as our ESG strategy as well as talking a bit about our culture. But first, I'm going to start off with a video. [Presentation]

So amazing, right? We are incredibly proud of the products that we produce and manufacture here at SunOpta and the actual contribution that we make to better our planet. So SunOpta has always been an environmentally friendly company. Joe mentioned it at the beginning of his comments, from our early beginnings as stake technology, we use proprietary technology through the steam explosion in order to create a more sustainable animal feed system. Then later on, when we moved into organic food products, we ended up changing our name. And the whole purpose of changing that name was really to reinforce our commitment to environmental and organic products as well as to recognize these products are nourished with the sun for optimal nutritional value as well as our environmental responsibility in growing these products. Our ESG strategy has 5 key components and Joe went through this, but I'll remind you just briefly. First off is drive growth in our core business. Second is to understand and manage our external evaluator scorecard. Third is to set aggressive ESG goals. Fourth is to activate throughout our network. And five is to market our efforts to our shareholders. Our core business is really driving our sustainability agenda. Our plant-based beverages are inherently sustainable compared to dairy milk. The crops that are grown for plant-based require less land, less water usage and use fewer greenhouse gas emissions than animal-based products. As we know, the plant-based milk consumes less water when producing compared to dairy. And as we saw from the video last year alone, we were able to save about 32 billion gallons of water based on 2021 production volume versus dairy milk. We are working hard to improve our external score carding as our current evaluations, we don't believe, accurately reflect who we are as a company and give us the credit we believe we deserve. We took steps in order to make sure that we could understand what our ESG profile was externally, understand what our rating agencies were giving us for scores and then started to work through how do we best improve and set goals for the future. So we engaged an ESG consultant, started setting our goals and then looked at prioritizing what actions we could take to improve those scores. Given the nature of our business, we ended up landing on 5 key environmental focus areas that we think at SunOpta, we can have the greatest effect on. Number one is product environmental impact; two, greenhouse gas emissions; three, biodiversity and ingredient sourcing; four, water management; and the last one, supply management. So specifically, what are we going to do around these areas? Well, we have bold targets in place between now and 2027. By the end of the year, we are working on making all of our plants zero waste to landfill. We also are implementing actions in order to help us with reducing water, natural gas and electricity usage throughout our organization. We are also collecting our Scope 1 and Scope 2 greenhouse gas emissions data in order to set future targets that we can improve upon those as well as taking a number of other actions, including creating some policies around carbon, biodiversity, palm oil and deforestation as well as from a packaging standpoint, we're working to figure out more sustainable alternatives in collaboration with our customers and suppliers where we can have recyclable materials we're looking to implement. And even within our fruit-based platform, we're looking at rolling out and commercializing a new compostable bowl, hopefully, by the end of this year. And then lastly, we have some aggressive packaging goals. Our packaging engineers are looking to move all of our -- recycle all of our packaging sourced by SunOpta to recyclable or compostable or reusable by 2025. And finally, we continue to create strategies and programs that elevate the importance of diversity, equity inclusion in the communities where we operate and do business. In 2021, we've made significant progress against our ESG commitments. 44 of our products, our branded products are in the non-GMO project. We manufactured over 300 organic products, 29 of which were actually our own brands. Additionally, 3 of our facilities were able to achieve zero waste to landfill. Those were facilities in Allentown, Pennsylvania as well as our 2 Alexandria, Minnesota facilities. 97.7% of our packaging, our own branded packaging was recyclable. And then we amended 261 tons of carbon emissions. On the people side, we're also making really good progress, too. We're on track for achieving our diversity goals and have increased the percentage of female leaders in our companies at the director level and above to 37% and are also increasing our racially diverse employees at the salary level throughout our organization to now 24%. All of this progress is fueling the sustainability of our organization to achieve more at both the individual level as well as at the company level and activating a sustainability mindset. So next, I want to show you a video of one of our plants, our Third Avenue Alexandria facility, and how plant personnel there are activating on sustainability. [Presentation]

Sustainability mindset is not only used in how we operate every day. It's also in how we design and build the capabilities that will support our growth. Our new Midlothian facility has had sustainability at top of mind from day 1. The strategic location allows us to save $5 million freight miles on an annual basis, which results in about 59 million less carbon emissions. We also are investing in a water treatment facility, which will save about 20 million gallons of water when we're fully operational at that facility. Our centralized HVAC will reduce energy usage by 45% as well as energy-efficient water heaters and LED lights for our plants. And then we've used both recycled and recyclable materials in leaking out the construction efforts as well as the materials that we have in our plant offices as well as our labs there. We also had sustainability at the forefront of building our new innovation center here. Our new headquarters boast 13,000 of renewables bamboo square footage. It also has over 920 LED lights, 4 electric car charging stations. And as Joe mentioned earlier, once we get that solar panel installed on our roof, we will be offsetting about 30% of our energy consumption on an annual basis. So really, it's all about how do we incorporate sustainability in everywhere, operations, building capabilities and what are we doing to tell people about it. So we've really amped up our PR efforts to talk about our ESG story. So you will see things being announced via PR initiatives regarding our new facilities, both Midlothian, Epic. In the video, the oat video, we referenced our up-cycled oat gold ingredient. And then we also are working to become a go-to media source, especially on the oat side of our business, oftentimes getting references to get headlines and stories from what we're doing on the oat side of our business. In trade shows like Expo West, we have the opportunity to meet with new and existing customers to tell them more about our products and our innovation and sustainability efforts throughout our organization. And online, you've probably seen we've got not only the water counter, but we've got our ESG report as well as our social media efforts through LinkedIn to tell our stories, get pictures, videos, et cetera, out there that show more of our sustainability, including our people and our culture. While I was only able to provide a high-level summary of what we're doing on the ESG front, if you want to get more specific details, please take a look at our 2021 ESG annual report. At SunOpta, we are passionate about sustainability, and it's part of everyone's job. We've even gone as far as deputizing all of our employees to be sustainability ambassadors. Sustainability is not something we are looking to achieve here at SunOpta. It's who we already are. So now turning to culture. As Joe mentioned earlier, culture is an essential element of our organization. From our passion to sustainability, to meeting and exceeding customer expectations, what makes SunOpta different is the people who work here. Employees have lots of choices where they can work nowadays. And being able to provide them with an opportunity to work for a company that's mission-driven, that empowers them to make decisions and that allows them to grow and develop is what we're striving for within our culture at SunOpta. Empowering employees at SunOpta means GSD, get stuff done, each day and every day. And it's this GSD mindset that has become the unofficial model for all of our employees. You'll find GSD on T-shirts and communications -- in company communications throughout meetings. You'll see references to it everywhere. It's all about building a culture around getting things done and delivering what we need for our customers. As Joe mentioned, we've got 6 most valued behaviors: speed, entrepreneurship, customer-centricity, passion, dedication and problem solving. These are the behaviors that our employees are living and teaching each day. And they're driving our results with our focus being on speed and entrepreneurship. Here are just a few examples of our culture and action. Our team was able to successfully commercialize an oat milk product within a 6-week period. We were able with less than $100,000 invest in a production and scale our new fruit bowls line. And we were able to launch a new zone brand in less than 6 months to support our organic oat creamer line. These are just examples of where our employees are GSD each and every day. One of the ways we reinforce these behaviors is through our MVB recognition program. And this gives our employees the opportunity to submit information about their colleagues who are showing and demonstrating these behaviors on a daily basis. In 2021 alone, we had over 640 submissions out of 1,300 employees. That's pretty amazing. These are opportunities where employees are getting to highlight and showcase their fellow colleagues who are working to speed up projects in order to cut through process. They are also activating as entrepreneurs and saving costs for the company and generally just doing things in order to deliver what we need to from a result standpoint. How do we show you how our culture is here at SunOpta and what it means to work at SunOpta? This is a bit of an impossible task, I think, to try to convey via PowerPoint or spoken words what it means to work at SunOpta. And I know this morning, you've had the opportunity to talk with some of our vibrant and passionate R&D people to see what projects they're working on. You were able to look at the video for some of our plant personnel and see how sustainability and MVBs are impacting their day-to-day life and what they're delivering. But it's just really hard to convey that culture. But I wanted to just take one moment to read an example of one of the MVBs that we received recently as an opportunity to try to give you a feel for what it's like. So these are part of the 640 submissions that we've gotten in the last year. So Jared never batted an eye when we explained that the Redstone timeline was tighter than the Suez Canal and worked diligently to complete the controls work to ensure that we were able to hit our practice and go live deadlines. Our red zone coach said Alexandria was one of the most prepared customer sites he's ever worked with. Jared has established best practices for SunOpta that will prove invaluable as we replicate the other plant-based -- to the other plant-based beverage facilities. We are beyond lucky to have a team member that takes ownership to that level and always is willing to help troubleshoot any issues, no matter the hour of the day. This is Jared Jergenson, who is one of our PLC controls technicians in our Alexandria, Minnesota Street plant. This right here is exactly what is driving the results that we are seeing at our company. And I firmly believe that this culture, this empowered mission-driven GSD culture is the reason why we delivered our Q1 numbers and will be the reason why we deliver our long-term plans. And finally, our incentive structure is aligned with our culture, and our shareholder interest manager level and above employees at SunOpta on an equity-based annual incentive plan. This absolutely drives the results that we will be able to deliver this year by aligning our performance-driven culture with shareholder interest. And when you look at the management team who sits here today, collectively, we represent about 6 of the largest number of shares of the company just here. And what I can say to you with complete confidence, we are ready to get stuff done this year. Thank you. I'm going to now turn it over to Scott Huckins, who's going to take us through The financial algorithm.

All right. Thank you, Jill. So we're going to try to take you through, I think, kind of 4 takeaways in this section. I'm going to try to organize it upfront, so you have an idea where I'm going. I'm going to unpack and bridge for you 2021 to 2023, revenue, gross profit, EBITDA, the exact same thing from 2023 to '25, so call it the model. We're going to talk about current events, the company's experience in managing and probably more importantly, our results in addressing inflation topic on everybody's mind. Three, I'm going to walk you through cash flow, leverage, returns on capital what is the result? How would you think about the result of what we've been investing in. And then four, close with here's our capital allocation framework as we look forward, okay? So before we dive in, I want to kind of set the stage just to make sure that how the projections were prepared is completely transparent. So the first is we did not reforecast the global economy, right? This is a roll forward of the environment we've all been living in, okay? Second is maybe more subtle and important to understand is this all hangs together, right? So the capital that's been invested, the revenue, the profits for all of the currently known projects we're going to go through, okay? Number 3 is we've assumed that the business portfolio is continuous, right? So no acquisitions, no divestitures. So again, roll forward of the company from today through 2025. Okay. Just to reset, put on a piece of paper, one page for simplicity, here are the targets just to recap. So for 2023, $1.1 billion of top line revenue. $100 million of adjusted EBITDA. I'm going to unpack cash flow in detail in a moment, call it $0.09 of adjusted earnings per common share. 2025, again, reset the targets. $1.3 billion of top line, $150 million of adjusted EBITDA, about $100 million of free cash flow and $0.45 of adjusted earnings per share. Joe made a comment that I think it's important to say again and then I'll see if I can prove it to as we go through this, which is, when you look in detail at the projections, materially, every single financial metric we've done, there won't be a never before unprecedented delivery mechanism. So again, substantially every single line I'm going to show you we've done, okay? Okay. Let's start with the top line, okay? So again, the purpose of this is let's bridge 2021 revenue to '23 and from '23 to '25. You've seen pieces of this, but I think it shouldn't surprise you when you look at this at the highest level, about 80% of the growth, so round numbers, this is $500 million of growth, 80%, as we've been saying for 2-plus years has been doubling the plant-based business. I walked you through a few minutes ago the 2 pillars that are driving fruit, primarily pricing in the frozen fruit business and volume growth that we're well on our way, or I think I mentioned, 75% of our way there in terms of our growth targets for fruit snacks, okay? Pretty straightforward. Okay. I'm going to spend a few minutes. I think this is a very, very important page. So again, this is -- I'm going to do 2 things. We're going to bridge gross profit. When I say the phrase gross profit, I'm talking about GAAP as required. I'm going to unpack some subtleties again, just in the interest of trying to provide clarity around this. So if you looked at the fiscal 2021 financial statements, you'd see $98 million of gross profit. I'll start with the answer, the first answer, which is that's $137 million of gross profit dollars as reported in GAAP or by GAAP, GAAP standards in 2023. So before I unpack this in a moment, big picture, as reported, about 2/3 of the dollar profit improvement would be plant-based, 1/3 fruit. It's a little misleading because of the red box, I'll explain that. So you just heard that we have invested to double the entire manufacturing ecosystem of the plant-based business. Not surprisingly, that gives rise to depreciation for the $20 million. The key is incremental depreciation, okay? So the point is, if you say, what is the contribution margins, if you use that phrase or the increase in gross profit without the incremental depreciation, probably a more sensible way to think about it, 75% of the improvement from 2021 to 2023 is plant-based, right on schedule with the revenue development we've talked about. Moving then forward from 2023 to 2025. Probably not surprising, about 90% of that increment in gross profit is coming from plant-based. Again, just a reminder, we're now selling through this step change in capacity we've had. So it shouldn't surprise you that the incremental performance will get stronger and stronger and stronger over time. We're selling through just the capacity. Okay. On the bottom, again, a lot of people, we get lots of questions about gross margin rate. So I want to be really clear about what this is designed to show you. So if you look at 2021, as reported right off the face of the financial statements, gross profit margin as calculated per GAAP 12%. Keep in mind the depreciation comment I'm showing you. So as we fast forward to 2023 is 12.5%. But again, a little bit apple and orange. You saw Mike go through a very detailed schedule, line by line, all the way through 2023. Well, the GAAP authorities are agnostic to time. You turn the plant on, you incur all the depreciation regardless of where you are in production, okay? So the point is, if you compare apples-to-apples, essentially what's really happening our contribution margin math is you're going from 12% to 14.3% in 2021, okay? Again, all we're doing there is just saying strip out that incremental depreciation. Fast forward, again, you can see the details on the chart. By the time you get to 2025, 16% flat. So I think about this in my mind economically is 12% to 14%, 14% to 16%, okay? Okay. Same concept, a little different technology, but I'll walk you through this. So this is adjusted EBITDA bridge 2021 and 2023, 2023 to 2025. What we're trying to show for transparency is 4 drivers. I'm going to spend a few minutes on this. So the first bucket is what is the proportion of EBITDA growth coming from revenue. Number two, which I'll unpack in a moment is what's the proportion of EBITDA growth coming from the normalization of profitability and productivity. Third is what is the amount of incremental SG&A that we've assumed in this forecast. The fourth is essentially the net change in all other adjustments immaterial, so I'm not going to spend a bunch of time on. So as you look at the first couple of boxes, so there's 2 contributors to profit. 2/3 of that growth between now and '23 come from revenue growth. I'm going to spend a moment on this $23 million item, which I've called normalization of profit and productivity. When you go back to the second half of last year, Q3, Q4, we were struggling to produce the quantum of cases we're capable. Mike showed you a very, very important chart. You saw the journey of how case production dipped and then sharply recovered in Q1, right? So it's kind of common-sense math. You think about Q1 of this year, sequentially, $5 million, plus or minus, of incremental EBITDA, really have the same manufacturing base. That's what I'm driving at, right? I don't want to ascribe or attribute some of the improvement in performance just to revenue growth because intellectually, we know that there was leakage in the second half of last year, okay? As you look from 2023 to 2025, not surprisingly kind of from the prior page on gross profit, it shouldn't surprise you that revenue growth is the answer. I mean revenue growth is story in terms of that acceleration of adjusted EBITDA. Okay. A really important comment on SG&A. So what we did in developing this is we assumed no operating leverage. I'm going to say it again, no operating leverage, perhaps a pretty conservative assumption. Said in a different way, we've taken the content of SG&A that affects EBITDA, kept it flat as a percentage of revenue with that growth. Again, we may well do better. But I want to be really, really clear that's what's assumed in these numbers, okay? Okay. A little transition. Again, current events, lots and lots and lots, rightly so, discussion about inflation. i want to be clear. What we're going to do is I'm going to unpack this is our actual Q1 experience. We -- Joe and I spent a lot of time on the call about this. But I want to give you kind of a double click a little more detail. So the pie chart is to say, if you took our COGS, cost of goods sold in Q1, broadly speaking, you just decompose them into 2 buckets. The larger of the 2, of course, the green bucket, 65% of the COGS was raw materials and packaging, okay? The 35% remainder is all other COGS, all the plant operating expenses, et cetera, okay? So that's the framework we're going to use to talk about inflation. What happened in Q1 is on the 65%, so raw materials and packaging, low double-digit inflation. So as a percentage, low double-digit inflation. If you dollarize it, it was about 80% of the inflation we incurred in the quarter, 80%. Going to the 35% think planned operating expenses, high single-digit inflation expense incurred. And that represented by dollars, about 20% of the inflation in the quarter. Most important thing I'm going to say on this page is that what was the result? So the result was we passed on $21 million of customer-facing pricing, which is just over 90% coverage of that incurred inflation. Again, we passed on '21 in pricing, a little more than 90% of the incurred inflation. So the point I'm trying to drive at is, I think this is a good illustration of the capability of the company to address in price for inflationary pressures. Okay. next transition I mentioned I talked to you about investments, free cash flow, leverage, and I'm going to unpack this in a little detail. So if you look on the left, you can see this is the cash flow statement, capital expenditures, nothing fancy. The blue bar is our estimation of the maintenance capital investment. The green is growth. Pretty straightforward. What I want to make sure you understand is as you look at the forecast, so this is for 2023, it shows $36 million in total, $18 million in 2025. The point is not to take away that we don't think we'll have incremental growth opportunities to invest. That's not the intent. It's as I said upfront. What we're trying to show you is we've modeled all of the known and in-process investments, the associated revenue and profit. So it all hangs together, okay? If you look at the center of the page, again, a reminder, double the manufacturing footprint of the plant-based business. So not surprisingly, we have back-to-back years of negative free cash flow, not a surprise. What's new information would be expectations around, again, using the assumptions we're talking about for capital, we'll return to a pretty nice free cash flow profile in 2023 and a very significant free cash flow profile in 2025, okay? So that very same set of numbers, that's what's driving the table on the right. What is leverage. Again, this is debt is -- all forms of debt as a numerator. Adjusted EBITDA is the denominator. We expect to peak this year, call it, 4.5x. 4.5x debt to EBITDA. You'll probably remember, Joe or I have said on many occasions, we'd like to run the business 4x or lower. That would be our general intent. As you look at deleveraging, again, you have 2 things going down. You have debt pay down. You also have the escalation of profit expected. We show deleveraging to about 1.3x in 2025. pretty comfortable. The point in the callout box, I think is really important. We're going to talk in a minute about capital allocation. So what we're doing is saying if we artificially impose a cap 4x leverage relative to that 1.3 turns in 2025, how much financing capacity is that mean? What would be the financial capacity of the company, bumping it back up to 4x. Coincidentally, it's about $400 million, okay? So again, that's just the delta in target leverage relative to where we think we'll be, what is that as a capacity to do things with capital, okay? Okay. A common question we get all the time, I want to be really direct about this, is what was the ROI of all this growth capital? What's the ROI of the growth capital? So I'm going to spend a little bit of time on the top. So if you remember, when I was doing the EBITDA bridge, we tried to be really clear and transparent that we're not ascribing all the EBITDA growth to these projects because intellectually, we know second half of last year, we would have leaked profit relative to our expectations. So for round numbers, we've got about $90 million of EBITDA growth. Our analysis says about 2/3 of that, let's call it, $60 million is directly attributable to the growth projects. So from our return standpoint, revenue-driven capacity expansion-based EBITDA $60 million. We've invested in total all forms of capital. CapEx leases the whole program, $230 million, okay? So $60 million of return on $230 million of investment, I think you'll remember, we've talked about this conceptually a few times, 25% return, 4-year payback. We've said that at least on 2 or 3 occasions on public calls, okay? So again, I think the point is we talk about sustainable earnings and the ability to invest at nice returns. This would be the proof statement. Okay. I mentioned capital allocation. So I think, again, this is a framework of how we think about capital deployment over time. Reminder, we're peaking at leverage this year for all the obvious reasons. And we expect to see that decline. So this is the tee-up what might we do and how do we think about it? So priority #1, let's get leverage to that 4 turns or lower target, very specific, very simple. And we have 3 things with which we would evaluate, right? We would hope to have and expect to have incremental organic growth opportunities. Keep that number in your head, 25%-ish return if you look at EBITDA to capital. Number two, we certainly could choose to return capital to shareholders dividends, share repurchases, et cetera, return of capital. Number three, we could choose to add to the portfolio. Joe showed you a slide of a 4-pronged acquisition scenario, how do we think about how we might expand the business through M&A. So the point then is in assessing those 3 different alternatives, it's an analysis of return. What's the return on capital, whether it was for organic growth, to repurchase shares in the context of that liquidity, that availability, where the shares are trading as of that period of time and then lastly, M&A. And probably we're saying they're not mutually exclusive. There could be combinations of each of those actions. That is the capital allocation framework. A couple of pages kind of wrapping up. One of the things that we get asked a lot is who is the comp of SunOpta, what's the comp? Is there a Coke and Pepsi? It doesn't work that way. So 2 concepts I want to take you through is when we try to think about the rows of value drivers, right, what would be attributes of shareholder value-creating businesses. the columns or categories of publicly available investment alternatives, okay? So as you look at SunOpta on the left, point is we share some similarities and differences from each of these comparative sets. So the first, in our view, probably the closest proxy would be the specialty ingredient houses. I won't drain the slide, but I think you get the point. We certainly share some attributes with other pure-play plant-based milks companies, particularly the growth aperture. If you look at the next last category, branded CPG, for example, we both share sticky customers. If you look at the last category, private label companies, we certainly share EBITDA positive characteristics. What's really interesting, at least to me, I hope you'll find this useful is when you think about how does SunOpta trade relative to the dimensions of these comparators will offer a couple of observations, round numbers, you think about SunOpta trade at roughly 11x next year's EBITDA, roughly, call it 1 turn of revenue, 1x revenue, okay? So just keep that 1 and 11 in your mind as I go through this. If you look at the specialty ingredient houses, 3.5x revenue, plus or minus, mid- to high-teens EBITDA. Again, these are tend to be reference points. If you look at pure-play plant-based milks companies, maybe 1.5 to 2 turns revenue, something like that. CPG is a big bucket. So I'd be pretty general here, but I'd say probably 13, 14x EBITDA, 2.5 turns of revenue, round numbers. Lastly, private label trades a lot like us. The point I'm really trying to drive at is, a, let's think about similarities and importantly differences of these investable alternatives. And in our judgment, when we go through each 1 of the, let's call them, value creation pillars, we truly believe that we're a very, very solid investment alternative relative to the options, okay? Okay. I want to close with a recap. You've seen the numbers before, it's just worth repeating this. So we're really clear about the targets. So for 2023, 1.1% of top line, 12.5% as reported by GAAP gross profit margin, $100 million of adjusted EBITDA, $0.09 of adjusted earnings per share. 2025, $1.3 billion of revenue, 16% as reported by GAAP gross profit margins, $150 million of EBITDA, $0.45 of earnings per adjusted share, okay? Some people hopefully appreciate we have shared the model. Okay. With that, I'd like to bring Joe back up for some closing comments.

Thank you. Thanks, Scott. Just to kind of recap on the day and kind of put all of this together into a bit of an investment highlight. Leading share, high-growth categories will fuel revenue growth. I mean, hopefully, if we've unpacked nothing, we've unpacked the idea that we have a tremendous amount of revenue runway in front of us. Really long-term customer relationships that will drive share. We have competitive advantages. I mean just look at the share position we have now, 60%, 70%. That is the product of sustainable competitive advantages. And we are doing nothing but insulate and further fortify those competitive advantages. We have an incredibly dedicated, focused set of resources against the biggest opportunities. I would say that would be one of the criticisms of SunOpta of old. This team is incredibly focused on winning where the game is most profitable to win. Aggressive capacity expansions in undersupplied markets. It's sometimes tough to communicate just the undersupply status of the categories that we compete in. We measure it by, on some levels, the desperateness with which the phone calls we get about can you guys help us? Can you guys do this for us? We have a company in Europe who's trying to launch in the U.S. And they're like, please, please, like we don't have anybody to make our product. Can you do it for us? We're like, "Hey, wait for Texas. It's coming, et cetera." So it's hard again to kind of express some of that. But I would tell you, the public companies on the protein shake space, all you have to do is read their transcripts to understand just how tight capacity is on the protein shake side of things. And again, the growth in plant-based milks and all of these co-manufacturing markets, if you just think about plant-based milks plus protein shakes, right? You're talking about $6 billion, and they're growing at 10%, okay? So that's $600 million. So every year, the co-pack community needs to put in the ground $600 million worth of incremental capacity just to keep up with the growth. So some of these companies are family owned, privately held, owned by private equity. Hey, we're a year out from our exit. We don't want to sink a whole bunch of capital in. We're going to sit tight and kick out cash and run our plants full. Or hey, family-owned business, we're going to buy a boat this year instead of putting capacity in the ground, whatever it is, right? So we are one of the few publicly traded companies in this space, who is pouring capital in, I mean, $230 million into fueling and feeding the capacity demands in this category. And we will be rewarded for that. And we're doing it in an incredibly challenged environment. And I can't underline that part enough. All you have to do is read the transcripts of many, many, many of the big CPG companies that are talking about delaying projects, putting projects on hold, et cetera, et cetera. Why? Because there's no trades to build anything. Price of steel has gone up 50%. The price of equipment has gone up 50%, et cetera, et cetera. And so what used to look like a decent ROI now flips to a negative project. And so we're hearing that across the network. We were fortunate to start most of our projects before any of that hit. And the big one, we bought all the structural steel [ Chris ] back in April of last year. If we had to go buy that same structural steel, so the plant we're building in Texas. We had to buy that steel today, 50% and a year later. So it would take 1 year longer to get that steel and cost us 50% more. So again, represents a huge advantage for us that we're going to have available capacity in capacity-constrained environments, and we're going to be ready to go. Proven ability to match cost inflation with customer pricing, again, I can't underscore number enough. All we're doing is presenting numbers that are the run rate of the business we've already demonstrated, 16% top line growth in plant-based, 19% gross margins, delivered that for the last 3 years. And arguably, you would say the capacity that we have coming is better than the capacity situation that we had in 2018, 2019 and 2020, 2021, right? We have more capacity coming. So in theory, the growth should be easier. Current share price disconnected from the long-term earnings power of the business. And the last piece is -- and again, it's -- we've tried to bring some of it to life. It's always going to feel a bit inadequate. But this whole idea of a passionate team, a unique culture, aligned incentives and a commitment to GSD. Jill was affectionate, she said stuff. She also swear. What she really meant to say is get s*** done because that's the motto here. Maybe as kind of evidence of that I'll share. So when we were doing the tour, we asked an innocuous question of a couple of people in our group. We said, "Hey, if you could have a new product, new oat milk-type product, what would you want?" And so somebody suggested man, cinnamon roll oat milk. That would be amazing. And then John said, I'd love a high-protein oat milk. So while we've all been talking here in the pilot plant, we just ran and produced and you'll be able to taste it on your way out a cinnamon roll, high-protein oat milk. Now what does that represent? Imagine if you were a customer and you came here and you said, "Hey, let's have a brainstorming session with the SunOpta team." Boom, you'll walk out here with the sample. You can take back to your leadership and say, look what we created on our visit to SunOpta. We can launch this thing. Okay. That's the power of speed. That's the power of GSD. That's the power of the team that we've built. We have -- whenever a new employee starts, we give them a backpack because part of the culture here is, hey, listen, everybody's got problems and challenges in their business. And one of the great things about the culture here is in invariably, when there is a problem sitting on the table, somebody picks it up, puts it in a backpack and hikes it up the hill. It just -- that's the way this place works. And it's magical. And sometimes the people that step up and pick the problem up off the table and put in the backpack and hike it up the hill are not the person you thought who is going to reach into the table, grab it and hike it up the hill. But we've tried to bring that part, that unique culture to life because, again, at the end of the day, it's about the team executing. And this is a team that executes. And if we laid out all of these magical numbers for you, but you didn't believe that the people can execute it, it's just PowerPoint. It's just PowerPoint. And so hopefully, you got a feel for that today. With that, we've got ample time for Q&A. So I'm going to invite my friends and colleagues up here, and we will be happy to field questions.

[indiscernible] the bridge from '21 to '25. One thing I was wondering if you not see in the bridge for [indiscernible]. But curious how the contribution of branded products -- to that 2025 goal? It crosses mind as we first started chatting a couple, I think you guys are treading lightly in terms of want your customers certainly sounds to be like the balance of power and maybe a little bit more in your favor which is not a lot of players product. And just curious, especially now that you have 2 very well-established ramps in the category that you acquired, do you feel like the timing is right to really grow those are there concerns that you be competing against some customers. Just kind of curious how you get to those '25 numbers and what full your own brands like that.

Yes. So the question was -- I'll just -- I'm going to repeat the questions for folks watching. So the question was, what's the role of our brands in the plant-based milk category? And how does that contribute to the overall build. The reason we talked about it in the buckets that we did is to represent our agnostic orientation. So we talked about here is oat and oat is going to deliver $120 million of growth. And our view of that is, hey, we have line of sight to this capacity utilization, the role of our brands as kind of the, call it, the tip of the spear or the proof of concept. The thing that is probably not well understood is, okay, in 2024, when we launched this product innovation under our own brand, will that continue to grow, et cetera? Or are we going to flip those products to a national brand, et cetera? So the way that we're using our brands is really to work the perimeters or the edges of the category. So you think about the Dream brand, West Life being -- WestSoy being repositioned to West Life to give us a much cleaner canvas to drive innovation. So for those who weren't familiar, so we bought a brand called WestSoy. We've repositioned it as West Life that will launch in Q3. The reason for that repositioning is to give us a blanker canvas, if you will, to be able to drive innovation against it because remember, the role of the brands in our portfolio is to drive and lead out innovation. So I would say as we look at the '25, it's easier to see the '23 number than the '25 number. I would just tell you, we absolutely see the role of brands as being important to work the edges of the category and to bring the innovation forward. But ultimately, how that sits out between co-manufacturing, private label and our own brands, we're agnostic to. And we're certain of the opportunity, and we're certain that we have the go-to-market levers to get it. What exactly it looks like in 2025. I honestly don't know. Jon?

I love to get 2 of the GSD shares. My question is as you move into nutrition, what are the margin implications for nutrition. And you also mentioned that we have 1 large customer that might sign up to take 90% of the capacity on that line. Would you want to dedicate 90% of the capacity on that line to 1 customer? If so, why? How do you think about the risk around that?

Yes, Scott, do you want to take that?

Yes. So I think the question starts with the entree into the nutritional beverage segment. How do we think about margin profile and maybe dedicated line time. I think that's the spirit of it. I would say we're not going to share like line item level margin performance, Jon. But I would say certainly would be complementary to the portfolio. It wouldn't be something that would be dilutive, to be clear. But I don't want to give a specific number on one line as you might appreciate for competitive reasons. In terms of line time and Mike can chime in, I'd say, I think the comment is starting with that particular customer set of customers to really fill that activity but at the same time, observe that data point, I think Joe shared of 40% of protein powder is plant-based, 3% of RTD. So you can kind of -- you can see where we're going, which is to have that opportunity to incubate and bring to market plant-based material.

Yes, I would agree with that. I really think of -- what we showed in our 2025 plan is really the beginning of -- it's the entry into nutrition. And just like aseptic and like oat extraction, where we're now building a second capability, what the future holds in nutrition, it's certainly going to be a focus of our innovation. And I think there's a lot of room to run. We're very excited to be able to partner with a leading brand to really kind of create a foothold in that category.

And Jon, if it was partly a risk question. What is typical in that category as it relates to co-manufacturers is the volumes guarantee, the duration of the contract. So it's -- if a customer comes to -- this will be a general statement. If a customer comes to you and says, "I want 100% of your line," then you're going to buy 100% of the output. Whether you use 60% of it or 50% of it or 100% of it, if you're tying it up, you're paying for it.

What's the typical duration of a contract?

I would say 3 to 5 years. And depending on the uniqueness of the asset and the complexity, it could be longer than that. And so we certainly -- we build the contracts appropriately for our investment and what the capability of that asset is.

It sounds like the oat extraction capacity you put in Alexandria is kind of sold out. I think someone mentioned it sold out a year earlier than anticipated. And the additional capacity I think Modesto -- scheduled to come online until 2023. It looks like midyear -- 2024 as kind of the ramp here for that. Do you have an issue in terms of bridging the gap between -- in terms of demand for oatbase with Alexandria market sold out in that, when capacity will come online?

Yes. So when we think about this year, we have capacity that will produce revenue growth versus last year, okay? So if we said $80 million last year, call it, $20 million a quarter. And we're saying, hey, we're run rating to kind of plus 50%, so call that $120 million, right, or $30 million a quarter. So I mean we're going to have solid growth on oat for the balance of this year. When we hit Q1 and Q2 of next year, it will be a little tight for us. We're exploring short-term options to potentially buy oatbase externally to help us bridge as well as just squeezing more productivity out of our existing operations, which to date, we have been -- it's an amazing team up there, and we are delivering volumes out of that facility that are well in excess of what we originally assumed. And so it's almost like each and every quarter, we set new high watermarks for our ability to produce volume. And I have a lot of faith that we'll find some ways to squeeze some incremental volume out in Q1 and Q2 before Modesto comes online.

And I guess the last one for me, you sound extremely confident -- really help kind of connect the dots on the plan for '21 to '23, '23 to '25. If you had to say what you consider main risk to the 2025 plan, how would you characterize that? What could set you back for hitting under [indiscernible] in 2025?

I think we've been pretty conservative in our assumptions, again, back to -- we didn't put any bends in the curve, right? So it's not like we got to go from 19% gross margin to 25% or we got to go from a 15% growth rate to 25%, right? I mean like we have intentionally outlined, and again, I said they look impressive, but they're not aspirational numbers for us. They're what we plan to deliver. I think it would probably just be the macros, Jon, what's happening with consumer demand and do we kind of hit some giant road block here. But I mean as it relates to our plan and our ability to execute our plan, we feel great about it. Andrew?

I have 2 questions. First one the $15 million nutritional that you guys pointed to because that -- what's the just selling -- out to 90%? Is it 100% or so kind of just if you could back that a little bit. And then just a broader question on the margins. You said 19% of land-based gross margins, which you achieved incremental lie-back was like 2.5%. It sounds like branded, sounds like nutritional or contribute.

Hopefully, this works. I'll start -- I think the second question was about longer-term margin and maybe incremental margin or flow through, Andrew, I believe it's the spirit what you're asking. So I'd say 2 things. Remember, we're showing multiyear bridges. So as we walk up in absorption, generally speaking, I would expect flow to get better and better and better. The reference point in my mind would be the closest period of 2025 is actually 2020, right? So in 2020, we were largely sold out. And if you'll recall, if you look year-over-year, flow-through would be certainly higher than low 20s just to be direct. But, a, when we show you a multiyear look, you can't see that level of granularity inside of a '24 to '25 recap. So I don't think anything structurally changed in the business, maybe it's where you're going with that. But again, we're just trying to show a direct bridge of '21 to '23 and '23 to '25.

[indiscernible]

Yes, I apologize. So I think your question was what was assumed is that we sell through that line in Texas. Yes, 1 line.

So I just want to ask question on sort of the agnostic nature between branded and private label. It implies to me that if you're agnostic between the 2 products, the margin is the same between the two. And so branded products should get a premium. Why would you spend the resource developing a branded product and you can't get a better margin?

Yes. So there's -- so the question was the margin structure between private label and branded. So I'll start with a couple of things. When we say we're agnostic, we're looking to maximize the revenue potential of that product platform, okay? Maximize the margin and the revenue potential of that product platform. If we can maximize that and through our branded play, and we do have stronger margins on our branded business. Yes, of course, we would lean into that. But you look at -- we have $200 million -- we have -- we will have a $200 million capability and oh, we're not going to use all that with our own business. So as we approach the pricing structure of these, we approach them as their margins similar on the innovation side of it. And that's a project by project answer. But yes, I mean, of course, if it comes down to, we think we can lean in on the brand and the brand has a stronger margin, we'll, of course, do that.

Just to unpack ESG for a second focusing on to get proposals from time to time that reduced profitability and how you take on, but how do you determine that, the policy perspective in general.

Yes. So the question was, when we think about ESG and specifically the E, do we do anything that undermines the profitability of the business? Yes. The short answer is no, we don't. Our focus on E is about reducing our footprint, reducing electricity use, reducing natural gas use, reducing water use. You would have saw on the tour the conversion from a plastic bowl to a compostable paper-based bowl, it's awesome, 0 cost impact. 0, not a $0.01 change in the product cost of that. So that's the orientation that we're leaning into is cost neutral or better.

You're a customer for the semi-unique you own that or do we own that.

Very good question. So you'll have a chance to taste the John and Andrew mix in a minute. It's still warm. That's what Heidi hinted to me actually at one point. So it would depend really. If we -- a lot of times with customers, the way to think about it is the magic is in running the plant. Formulas are fairly germane. It's not the formula that's the power. It's the ability to run the plant and know how to make the product. That's the magic. So if a customer said, "Hey, I want to own the formula," we would say okay. And again, you look at private label as a concept, 25% of everything sold in the grocery store, like there's no magic in formulas. I mean somebody has a formula, it's imminently replicable in food manufacturing because food is simple, right? I mean you want food to be as simple as possible. You don't want 50 ingredients and a chemistry set in any part of your food. And so because food products are pretty simple, they're actually pretty easy to replicate. So in that instance, if a customer said, "Hey, we want to own this formulation," we would say okay because, again, somebody else could come in and kind of match it pretty quickly.

Let me ask you about the fruit business. I thought it was interesting kind of highlighting the core versus the noncore businesses. It seems to be having [indiscernible] unbelievably sophisticated [indiscernible] being produced. Is there anything you're doing on the snack side of the business that is that differentiator or have such strong barriers to entry [indiscernible] going after that [ growth in volume ]?

Yes. So the question is what are the barriers to entry around the fruit snacks business. Part of it is the ability to develop and run these products. I mean that's a pretty bespoke manufacturing process. The kind of bulk of like the Scooby-Doo fruit snacks, if you will, are incredibly high volume, massive scale operations. What we do is pretty bespoke in terms of really simple ingredient list. And it's as much of a sourcing business as it is a manufacturing business, finding the organic sources of all of the raw materials and ingredients, keeping them in steady supply. I mean that was a really, really significant challenge to that business in 2021 was just organic apple purée. So to some extent, there's value in the formulation side of it and kind of what is a pretty bespoke operation, but then the sourcing side of it can't be underestimated.

[ $50 million ] opportunity in nutritional beverages, that is largely [ whey based ], right?

Correct.

So I know you mentioned the plant-based opportunity there. Is that a beyond 2025 event? Or would you scale that up sooner?

I would think that's a beyond '25. So just in the planning architecture that you saw, that is principally the whey based side of it. We would need to add incremental capacity to really drive hard against the kind of plant-based side of it, and we would look to do that with a partner. Again, these are massive -- I mean, these are expensive manufacturing lines. They are massive. You need to run them. You need volume flowing through them. So think of it as an evolution or a transition. I mean you couldn't put a single line in and say we're only going to run plant-based protein drinks. You wouldn't like the look of that for the first couple of years, right? So that's how we view it is like we're getting into it with the whey-based drinks, but we are fully looking to bring our plant-based milk manufacturing knowledge and expertise to bear there and help drive and build the plant-based side of it.

One for Scott. You mentioned the price cost dynamic in Q1 of [ 90% inflation ]. Can we expect a similar progression for the rest of '22? [ What, if any, will change the dynamic? ]

So I think the question is how do we feel about inflation recovery Q1 relative to the rest of the year. I'd say, let's start with the answer, feel good about it. We don't know what we don't know. So could there be something that's unknown to anybody in this room? Of course. But thematically, structurally, feel good about it.

Okay. Just one last one for Joe. I know you said you're regulating [ full ] permits for competitive facilities and whatnot. I just want to -- anything changed there? [ It's still kind of quiet on that front ].

Yes. So the question was just on the competitive front. What are we seeing and hearing about additional capacity going in? Not seeing a lot of progress. We know there's people looking and putting stuff in, putting additional capacity in. But as I mentioned, I mean, the economics of some people's projects, we've heard, just kind of in parallel categories, have kind of flipped upside down. And the execution side of it is, I can't underscore it enough, just I would not be wanting to start a major -- that Texas video you saw, I would not be wanting to start that today in under any scope or imagination. It's just the time lines are longer, the costs are higher and so the ROIs look worse. And if somebody's got a marginal project, it's probably flipped to red.

Scott, you mentioned M&A to be a tool in your toolbox for growth down the road. And Joe, I think I just heard you mentioned you're maybe exploring oat-based acquisition. So I guess, can you just talk a bit about what M&A could look like going forward?

Sure. Maybe I'll start. I think the question is what might the M&A journey look like over a time series, if I've captured it right. I think we've outlined -- Joe spoke about 4 different pillars, if you like, of M&A opportunity. The one I usually think about is we're both used to and the company is very used to running an international business. I mean back to December of 2020, 40% of our business was based in Europe. And so I think -- there's no reason I can think of that there couldn't be an opportunity to expand beyond the U.S. borders. It's a very U.S.-centric revenue stream. I think the key is, is it value creating? I was mentioning in my section about this concept about capital deployment. So the question is what's the return profile of 3 topics, right, just to reset. Organic growth, number two would be returns of capital to shareholders and three would be M&A. So it's impossible [ knowing you ] have a specific example, how those are going to force rank. But I think the spirit of the point is it's something we look at.

[indiscernible] Can I ask, when you look at the revenue growth opportunities, how much of that is like nutrition [indiscernible] capacity versus you guys [ built ] for the customer [indiscernible]? So nutrition is pretty much [indiscernible] how much of that is [indiscernible]?

Mike, do you want to take that one?

Sure. So within the plant-based beverage business, I would say we're looking at our capacity is really existing demand and the expected growth on the existing demand. And so that's how we're looking at that today. Certainly, when I talked about our list of blue chip customers, top 10, as well as other customers who are aware of SunOpta and would love to do projects with us, we're always entertaining and looking at and evaluating opportunities to invest in new capabilities and things where we can partner. If you go back to our competitive advantages and the operational and technical expertise, our network, those are attractive to people for projects. So that's something that we do periodically is work with some big retailers, CPG customers and brands and so on and so forth for opportunities that -- where we can add some value and we -- and they really value what we -- what SunOpta can bring to the table.

Is that $1.3 billion number in FY '25 assuming [ brick-and-mortar ] capacity [indiscernible]?

I guess the short answer would be it's the sell-through of a lot of the capacity. One of the pages I presented, which is probably worth bringing up now, is there is a second phase, I think Mike spoke to it, available to us in Texas that would be considerable. That's not modeled in the $1.3 billion, just to be direct about it.

You guys talked a lot about people and culture. As we look down at kind of plant level, can you talk about labor cost, retention and maybe automation? Is the Texas plant, from a labor perspective, [ a lot ] different from existing facilities?

Yes. So the question was around labor cost, if we have labor cost, labor availability and are we looking at automation. First of all, our plants are very highly automated. I mean we might have, on a shift, 50 people in the plant. So these aren't 1,000 employees. I mean I've been in those manufacturing environments. You're talking, I don't know, 30, 40, 50 people on a shift. So they're already incredibly highly automated. I mean the people start in the mixing and there's not another person until you get to kind of packaging, if you will. So they're already very highly automated. What comes with that is they're pretty well-paid jobs to start with. And therefore, we're doing pretty well in terms of the market pay that we have available and finding talent. I mean it's definitely a harder environment than it's been, I don't know, in years and years and years. But Mike showed the production output in the plants, and what you can take away from that is we've stabilized the talent level in the plant. We are probably experiencing more turnover than we would like, but we figured out -- in true SunOpta fashion, we figured out how to manage the business with the variables that the environment is throwing at us. So we feel pretty -- we feel good about the availability. And Texas has been great. I mean we've hired the entire management team to run the Texas plant. We've already hired -- we hired the plant manager, I think, 9 months ago. And at this point, the entire management team has been hired. Just where we are geographically, there's a lot of people that drive through that area to work in kind of South Dallas, South Fort Worth. So we're sort of shortstopping them. And we're hearing from employees, "Hey, with gas prices, what they are, I'm very anxious to work for you because I don't have to drive another 20 miles to work in South Dallas." So we were fortunate in the locational choice of Midlothian. It's a good labor market, a lot easier than some of our others. That's for sure. Go ahead, Andrew. We've got time.

So 2 quick ones. I just want to confirm that when you talk about the [indiscernible] was [ $23 million ] or so [indiscernible] So there's no [indiscernible] pretty much on track. Just want to confirm that, number one. Number two, on the international opportunity, I mean, obviously, so much capacity constraint of demand domestically. How do you think about -- like what sort of timing [indiscernible].

It would be an economic -- I mean, it would be pure economics. It would be if we have available capacity, what options do we have internationally to sell product versus domestically and what's it look like. So that's how we would look at that.

How much of your market share -- or your oat milk growth is going to come from continued market share taking from other operating mills versus penetration into the dairy category? If you can give a sense to that.

Yes. Mike, do you want to answer that one?

Yes. So certainly, oat's growing 30%. And the answer probably on the foodservice side looks a little bit different than it does on the retail side. I think foodservice, I think what you're seeing is plant-based milks continuing to take from dairy. Oat is functionally superior. It tastes great. It's great in application of coffee. And so I think in foodservice, you're seeing a big share steal from dairy. I think in retail, you're seeing, certainly, oat is driving some of the plant-based growth. But I think there is a little bit of churn within the plant-based milk category. And again, that's why we're so excited about the way that we go to market is foodservice and retail. We think the runway for oat is tremendous. So that's how we think about it today. What I would say is oat milk, from almost the very get-go, there's not been enough capacity. So I don't think the oat milk story is even close to being written. As large as it is, 20% of the retail business right now in plant-based milk, it's out of stock. There's not enough distribution. Some of the big coffee chains aren't promoting it. They can't communicate it because they can't keep it in stock. So I think at the end of the day -- and the end of the day, I don't know if that's 3 years from now or 10 years from now, where the capacity of oats, oat extraction and ultimately, the finished good processing catches up -- I think we'll be a lot smarter about it then. But I think we're all chasing the tail at this point.

Mike mentioned the ACV distribution of some of the big brands. So like if you take a particular brand, almond milk is probably in 70% of the ACV. So ACV would include like the dollar channel and drug and so on and so forth, so it's the biggest measure. So you're going to see almond milk in like 70% to the ACV. Oat's in 40%. So there's a long -- you would say there's almost a double to come on just distribution gains. Now that distribution gain is going to be less productive than the first 40 points. But still, you would say there's, what, 30%, 40% category growth in oat just coming from distribution gains. Jon?

So the [ planning ] assumptions, [ if I understand ] [indiscernible] portfolio [ and making ] portfolio changes. However, you kind of positioned a couple of businesses as noncore, meaning, frozen fruit business and sunflower business. So what would your -- what are your intentions with those 2 businesses at this point? And again, understanding they're in the [ planning ] algorithm, but putting that aside, are those businesses you would consider [ chopping ] at some point? Could frozen fruit be separated from the fruit snack business? Is this a scenario where you're considering divesting it?

Yes, I mean, at this juncture, Jon, our focus on both of those businesses is running the plant. We look at the frozen fruit business especially and say we've structurally -- we've executed the structural change in the business. Like there's not another chapter to our transformation plan yet to come. I mean Scott referenced that we've taken 40% of the cost structure out of that business. I mean we've really set it up to be successful. And so our focus this year is, hey, let's run the business. Let's see what we can deliver. Last year wasn't a great year, but we were in the midst of a huge structural reset on that business. And I think we're optimistic. We're anxious to see the results of the plan that we've been running for the last 2 years.

Okay. And one more on the planning through 2025. It almost looks to me like to get to $150 million, you're assuming kind of a static environment where you make your capacity investments and you're assuming no capacity beyond 2025 or no growth beyond 2025. There's kind of [ a G&A hit ] between '21 and '23 because of new capacity. But assuming the business continues to grow beyond 2025, would you also be turning on additional production that would play on that $150 million?

So I think you have 2 questions, Jon, is what I'm hearing is -- I'll just repeat it to make sure everybody is following. So I think the first one is will there be more investment for that 2025 period and beyond? And maybe the subplot is how do you think about kind of the depreciation and amortization impact? So again, just to reset, the point of walking through the numbers the way we did them was that the audience could see the roll forward of revenue, profits and capital on a like-for-like or a similar basis as opposed to we're forecasting there won't be investment. Just again, I'll say it again, that was not the intent. So I would expect there'll be another round of investment opportunity for growth. So the company is not trying to just get to 2025. It's being transparent about the revenue and profit curve to get there. In terms of the impact of depreciation, to me, it's like a step function. So day 1, as I probably mentioned, you incur depreciation and amortization on a GAAP basis. That hits gross profit, not so much for EBITDA. No reason to think that, that has any differential impact in the future. So I look at it like, I think, on Andrew's question, in 2020, similar maybe in some ways to 2025. You could see what the performance of "really, really, really highly utilized assets" is and you reset as you add capacity. But that's inherent in what we do is in food manufacturing business, we need to invest for the future.

Well, we're at 11:59. So I want to, again, thank all of you for making the trip to Minneapolis. We certainly recognize it was a big allocation of time for all of you. We appreciate your interest and attentiveness and hearing for the last 3 hours plus the story of SunOpta. Hopefully, you took away a much better understanding of the power of the business that we're building and also the potential for this business to deliver really amazing returns. So with that, I think we have -- for the folks who aren't rushing to catch a plane, I think there -- we do have a lunch. And if you are running to get a plane, we have some box lunches that you can grab and eat on the way if you're dashing to make a plane. So again, thank you, and appreciate it.