Sunopta — Investor Day (April 2016)
54 slides from Sunopta's investor day presentation, Apr 12, 2016
Slide 1: Poised for our Transformation as a Global Leader in Healthy and Organic Foods
Poised i our ransformation as a Global Leader in SunCpta Healthy and Organic Foods | = 2"nsing well-being to life
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may include forward-looking statements and therefore is subject to important risks and uncertainties. Actual results could differ materially from the conclusions, forecasts and projections as certain material factors and assumptions were applied in drawin
Slide 3: 2016 Analyst Day Objectives
2016 Analyst Day Objectives |. Gain a better understanding of SunOpta and where we are today Il. Clearly lay out where we are going for the next 24-36 months Ill. Learn how innovation is a key element of our strategies and future During today’s presentation, we will not be discussing or answering an
Slide 4: Agenda
Agenda |. Introductions Il. Management presentations Rik Jacobs - SunOpta’s Transformation President and Chief Executive Officer John Ruelle - Global Ingredients Senior Vice President, RMSS, Healthy Snacks Joe Davidson - Healthy Beverages Senior Vice President, Healthy Beverages Mark Murai - Healthy
Slide 5: We Operate in Growing non-GMO and Organic Markets
We Operate in Growing non-GMO and Organic Markets Underpinned ( by Growing ORGANIC _ CONSUMER US Food & Beverage, \ TRENDS 20134 20144 NON-GMO 20134 20144 Sun@pta 8
Slide 6: Well positioned to take advantage of a vibrant and growing marketplace
Well positioned to take advantage of a vibrant and growing marketplace Optimized portfolio, reorganized teams and integrated platforms Scalable operations in key pr supported by an innovation p Focused on execution, and achieving operati
Slide 7: The Key to Fix our Business is Execution
The Key to “Fix” our Business is Excelution With Customers and Employees, Keeping an Eye on Costs CUSTOMERS -: te Commercial: —~ Intimacy, diversification, pricing ~ Innovation: \ From reactive to proactive COSTS Supply Chain: ‘Expenses: Delight from order entry to delivery Maximize sustainable - —
Slide 8: More Than Acquisitions Since 1999
More Than 35 Acquisitions Since 1999 But Integration Only Started 18 Months Ago teughs AMID (ys, AM. ai pla [yr Vu Vary | PRO(_)}gamics Fe a Inc. |_Saieaer’ | % ay 5 Same _afisSnapdragon Natural Foods Inc. GENERAL MILLS a ‘ ai DIS E-VIE Les Importations ass Mpiie, SunRticn en CAS “NGREDIENT? cael ¥
Slide 9: Transformative Year in 2015
Transformative Year in 2015 Three Acquisitions in Consumer Product Business hago. cris ince Q4 2014 Revenues Q4 2015 Revenues © © 1 Global ingredients Mi Consumer Products SunCpta
Slide 10: Now Three Clear CPG Platforms
Now Three Clear CPG Platforms Supported By Sourcing and Selling Raw Materials and Ingredients 7 i Aseptic ee aed IQF fruit for retail Fruit-based snacks Chilled juice Isis iulene burece ik Roasted snacks Shelf stable juice Fruit-based ingredients Nutritional bars Functional waters Pouches L urcing a
Slide 11: Private Label/Store Brands Innovation Key
Private Label/Store Brands Innovation Key To Grow our Categories in Natural and Organic Imitator Innovator Sun@pta @)
Slide 12: Our Playbook
Our Playbook PURPOSE § We responsibly bring healthy food from field to table sale is We source, create and package healthy food STRATEGY SunCpta
Slide 13: For the Rest of the Presentation...
For the Rest of the Presentation... + Insight into SunOpta’s category leadership in Global Ingredients, Healthy Beverages, Healthy Fruit and Healthy Snacks o Category trends and how SunOpta expects to profit from these trends + Analysis of SunOpta’s mid-term (24 to 36 month) financial targets o P&L
Slide 14: Global Ingredients
Global Ingredients
Slide 15: Delivering Global Supply Chain Expertise and Operational Integrity
Delivering Global Supply Chain Expertise and Operational Integrity A global supply chain Trace nutrition straight Top certification, peak source nutrition, bright future SunCpta @)
Slide 16: Category Overview: Global Ingredients
Category Overview: Global Ingredients US organic category sales growth to >$39B 14% increase from 2014 Projected to continue at this pace through 2018 Access to supply is critical '$40,000.000.000 '$30,000.000.000 520.000.000.000 $10,000,000,000 ‘Source: Organic Tiade Associaton Total U.S. Organic S
Slide 17: Six Product Desks > $600M External Sales
Six Product Desks > $600M External Sales Organic ~$420M Specialty ~$190M cso ‘SNP JSF ‘Sunflower ‘Soybean Corn & Feed Cocoa, Sugor & 08 Seeds, Nuts & Puses dices, Sweeteners & Ful feta Wider eal == whe, Mea SunQ@pta
Slide 18: Serving Industry Categories
Serving 16 Industry Categories Baby & Toddler Food Cereals & Granolas Cocoa & Chocolate Confectionary Conserves Dairy Dressings & Condiments Foodservice al & { Frozen Food es, Pharmaceutics & Cosmetics a4 Soups & Sauces Spreads & Jams Sweetening Solutions == Wholesalers & Packages SunQ@pta
Slide 19: Category Overview: GI Products & Customers
Category Overview: GI Products & Customers Representative Customers Logos Redacted + SunOpta has one of the largest organic raw material ingredient sourcing and supply networks in the world! + Very diverse customer base across numerous categories globally: largest customer represents < 3% of revenue
Slide 20: Global Sourcing Projects
Global Sourcing Projects China Goji berries Pumpkin seeds Sun@pta
Slide 21: Global Ingredients Recent Performance & Strategic Initiatives
Global Ingredients Recent Performance & Strategic Initiatives First U.S. company non-GMO PVP certified Launching new ingredient programs (e.g. ginger, oat) © Two-touch integrated supply chains are key o Capabilities should leverage multiple categories Critical in helping launch new CPG products o Or
Slide 22: Healthy Beverages
Healthy Beverages SunCpta
Slide 23: Healthy Beverages Overview
Healthy Beverages Overview Product Offering Competitive Positioning/ Strengths Representative Customers Facilities SunCpta 5 Non-dairy Refrigerated Shetf-stable Functional Aseptic Aseptic Teas AsepticBroths | Premium Juices Beverages Waters Leading positionin National aseptic footprintwith Verticall
Slide 24: Category Overview: Aseptic
Category Overview: Aseptic + Key to success in the aseptic category space is taking share in non-dairy and continuing to expand in fast growing categories Key Focus Categories ($ Millions) aroha fox + Focus categories represent $1.1Bn Stock | sd $720 addressable market . i 4 ver coconut Ill Key cate
Slide 25: Aseptic: Strategic Initiatives and Recent Highlights
Aseptic: Strategic Initiatives and Recent Highlights Strategic Initiatives + Increasing facility utilization o Use our national footprint to take share o Innovate using control brands o Expand presence in other growing categories * Lower conversion cost per case and maximize production mix Recent Hi
Slide 26: Category Overview: Premium Juice
Category Overview: Premium Juice * Refrigerated Juice is a $5.5 billion category and growing 1.4% + Premium Juice is 58.1% share of the Refrigerated Juice category and a $3.2B category (+0.1% vs YAG) + Consumers are looking for no-sugar added claims on juices, with 70% of consumers paying attention
Slide 27: Premium Juice: Strategic Initiatives and Recent Highlights
Premium Juice: Strategic Initiatives and Recent Highlights Strategic Initiatives * Sell raw juice as ingredient into fast-growing super premium segment [HPP] + Expand presence in private label organic and NFC orange juice market + Expand beyond orange juice with innovative two-touch adult juice beve
Slide 28: Healthy Fruit
Healthy Fruit SunCpta
Slide 29: Healthy Fruit Overview
Healthy Fruit Overview Product Offering Competitive Positioning/ Strengths Representative Customers Facilities ) | »? 4 \ = Formulated fruit solutions for Custom fruit preparations 1OF fruit forretail foodservice forindustrial use Extensive Lowenst supply chain Aligned with industry Category managem
Slide 30: Category Overview: Healthy Fruit
Category Overview: Healthy Fruit Best-In-Class-Profile Category Profile Market leading position in )O, 22% private label frozen fruit Relationships with each top 10 Rapidly growing, on-trend food category 10+ Year customer 6 Strategically located manufacturing facilities Household penetration only 3
Slide 31: Highly Favorable Private Label Trends
Highly Favorable Private Label Trends Consumers pay less while retailers realize better margins + Consumers prefer private label to branded frozen fruit given pricing advantages in addition tono differences in quality, packaging, and assortment + 66% of the frozen fruit categoryis private label (? +
Slide 32: Supply Chain Snapshot
Supply Chain Snapshot 2016 Expected Production by Geography * Optimized network of six facilities + Significant distribution efficiencies Califomia + Recently expanded processing capabilities Kansas City 2016 Expected Mix of Fruits Other * Diversified global sourcing platform + Handle over 250M Ibs
Slide 33: Strategic Initiatives and Recent Highlights
Strategic Initiatives and Recent Highlights Strategic Initiatives * Capturing $5M - $7M in synergies in 2016 * Expansion in Central Mexico and Kansas City * Tapping into SunOpta’s existing international sourcing network + Process innovation o Optical sorting, automated handling + Adding mango and bl
Slide 34: Healthy Snacks
wu, Healthy Snacks SunCpta
Slide 35: Healthy Snacks Overview
Healthy Snacks Overview it@ ou Product Offering bm FT aq Frat Sacks Nir Bars Roasad Sacks Pouches Competitive aig on taster of Nateral eit Positioning / fran hey canes str ae imovalon wie Bo inratsrone Strengths fruit snacks ee healthy snack sector and pouches Representative Customers Logos Redacted
Slide 36: Category Overview: Healthy Snacks
Category Overview: Healthy Snacks Top Ten Trends 1. Organic growth for clear label 2. Free from for all 3. The “flexitarian” effect 4. Processing the natural way 5. Green light for vegetables Fruit Nutrition Roasted Flexible, i Sree” [i Snacks Bars! Snacks? —_Re-Sealable 6. Creating a “real” link Po
Slide 37: Competitive Positioning: Healthy Snacks
Competitive Positioning: Healthy Snacks Uniquely positioned assets combined with a strategic supply chain and innovation resources sets SunOpta apart from other category participants Barriers to entry - Multi-year agreements with category leaders + Global supply chain for specialty ingredients + Sig
Slide 38: Strategic Initiatives and Recent Highlights
Strategic Initiatives and Recent Highlights SunCpta * Two major new product launches in Q2 o Private label chickpeas o Disruptive bar - superfood/ancient grain * OptaCore — helping retailers stay on trend and ahead of the curve o Category management with control brands o Value-based pricing o Levera
Slide 39: Financial Review
Financial Review SunCpta
Slide 40: Financial Review
Financial Review Focus Areas Q4 2014 Revenues 1. Mid-term (24 to 36 month) growth profile and margin expansion targets 2. Detail on debt capital structure o Global ABL o 24 Lien Loan o Leverage reduction targets Q4 2015 Revenues [Consumer Products [J Global Ingredients SunQ@pta @)
Slide 41: Global Ingredients
Global Ingredients Toswcou bepeeliete Es 10.3% GM 11.5% GMFl Specialty Specialty | nominal | 12%-14% 04-109 Organic | 8%-10% 2014 2015 Mid-term target Priorities to achieve targets: 1. Continue to develop new sources of supply to support growth (internal and external) 2. Increase “two-touch” interna
Slide 42: Consumer Products: Healthy Beverages
Consumer Products Healthy Beverages coconut w LOVERS ORGANIC cocohutmilk A delicious blend of cecanutmik & >" ler | $269M Revel $261M Rev 12.5% GMI 15.4% GM Non-Aseptic Non-Aseptic Aseptic Aseptic 2014 2015 Priorities to achieve targets: 8%-10% Sales ; 16%-18% >15% Mid-term target 1. Innovation and
Slide 43: Consumer Products: Healthy Fruit
Consumer Products Healthy Fruit 7 $411M Reval Sales oust 11.0%6MIes | ENT f Formulation } 3-5% conice $174M Rev = $128MRev =: 9.3% GMI) 16%-18% 10.8% GM . Retail 8%-10% 2014 2015 2015PF Mid-term target Priorities to achieve targets: 1. Ensure availability and integrity of supply 2. Innovation in pro
Slide 44: Consumer Products: Healthy Snacks
Consumer Products Healthy Snacks =] $95M Rev $92M Rev Sales are 4.7% GM 5.3% GMP Level : + s30M-s35M Pouches Pouches SEOMSESM 440.430, Fruit Snacks L $55M-$60M 2015 Mid-term target Priorities to achieve targets: 1. New platform leadership and go-to-market strategy 2. Accelerate growth through innova
Slide 45: Consolidated Business
Consolidated Business SunQ@pta $1.38B Revi) $140BRev $1.15BRev 11:2% GM 11.1% GM 10.9% GME! Soneimer +12% Consumer Consumer ee G% 5%-7% 2014 2015 2015 PF Mid-term target + SG&A target at or below 8.0% of sales + D&A and stock comp est. $34 - $38m (~2.5% PF sales) lo] Pro Forma fr Surrise Growers acq
Slide 46: Capital Structure is Secured
Capital Structure is Secured 1. Global Asset-Based Credit Facility 2. Second Lien Loan 3. Focus on Leverage Reduction SunCpta
Slide 47: Global Asset-Based Credit Facility
Global Asset-Based Credit Facility + Committed financing matures on February 11, 2021 5 YEAR $350M COVENANTS + Ability to increase total COMMITTED AND it 50.0 Sailr B coeaenndas FACILITY CAPABILITIES growth + Newentrants to lending group that cover the INCREASED company's global footprint CAPACITY,
Slide 48: Second Lien Loan
Second Lien Loan + Commitmentagreed to with Underwriters ahead of Sunrise acquisition COMMITTED FINANCING WITH CAPPED INTEREST RATE Interest rate is capped for any takeoutfinancing at 9.50% Presently in $320 million 2" Lien Bridge Loan, 1-year term, with rates starting at L+ 600 bps (Libor Floor of
Slide 49: Focus on Leverage Reduction
Focus on Leverage Reduction + Execution against mid-term targets designed to deliver topline growth and expansion of EBITDA to 8.5-10.5% of sales EBITDA GROWTH LEVERAGE REDUCTION FREE CASH FLOW GENERATION + Currently approx. 5.0x levered based on PF Adjusted EBITDA. Targeting approx. one tum per yea
Slide 50: Strategy Recap
SunC@pta Bringing well-being to life Strategy Recap
Slide 51: Our Playbook
Our Playbook PURPOSE § We responsibly bring healthy food from field to table sale is We source, create and package healthy food STRATEGY SunCpta
Slide 52: Execution a Must in Key Areas
Excelution a Must in 3 Key Areas CUSTOMERS -: te Commercial: —~ Intimacy, diversification, pricing ~ Innovation: \ From reactive to proactive COSTS Supply Chain: ‘Expenses: Delight from order entry to delivery = = f Maximize sustainable leverage EMPLOYEES Investments: Build for competitive Heads: En
Slide 53: Our Key Priorities
Our Key Priorities SunQ@pta PG Improvement %+$ Battle Plan KPI’s Strategic COGS (Cost of Pricing/Mix Goods Sold) by Management Plant 1. Productivity Goal is to Improve Q-ove! CONP (Cost of Non-Performance}} a Ege 1. Inventory Adjustments 2, Inventory Risk 3.Top Issue Actions
Slide 54: Thank You for Attending
Thank You for Attending SunCpta * That concludes our webcast for today + Lunch and Innovation Center tour for those in Edina * For any additional questions, contact rob.litt@sunopta.com SunC@ota Bringing well-being to life @) 4)