Focus on the Future NASDAQ: STKL TSX: SOY Investor Presentation September 2005 1
Forward Looking Statements This presentation contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995 ( the Act ), that can be identified by words such as believes, expects, projects, and similar expressions and involve numerous risks and uncertainties. The Company s actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in the Company s filings with the Securities and Exchange Commission. 2
SunOpta Overview SunOpta is a rapidly growing, vertically integrated company with extensive expertise in sourcing, processing, packaging and distributing of natural and organic foods SunOpta Food Group - 90% YTD 2005 Revenues SunOpta Grains and Soy Products Group SunOpta Ingredients Group SunOpta Packaged Products Group SunOpta Fruit Group SunOpta Canadian Food Distribution Group Opta Minerals Inc. (TSX: OPM) 9% YTD 2005 Revenues 70% ownership StakeTech Steam Explosion Group - 1% YTD 2005 Revenues 3
Investment Highlights 66% 6-Year Revenue CAGR (1998 2004) $415M Revenue Guidance for 2005 Increase of 36% over 2004 14.5% Internal Revenue Growth for 2004 Y/Y 31 Consecutive Quarters of Record Revenues Y/Y 67% 6-Year Net Income CAGR (1998-2004) 23% Growth in Net Income for FY 2004 26% Growth in Net Income YTD 2005 $14.5 Billion Organic Market Approx. 50% of current revenues Rapidly Expanding Healthy Eating Categories LT-Debt to Equity of 0.26 to 1.00 4
SunOpta Revenue Growth $450 $400 $350 6-Year CAGR (1998-2004): 66% Steam Explosion: $5-$6M USD Opta Minerals: $38-$40M USD $ Millions USD $300 $250 $200 $150 $100 $50 Food: $367-$369M USD $0 1998 1999 2000 2001 2002 2003 2004 2005 EST 31 Consecutive Quarters of Record Revenues Y/Y 5
SunOpta Net Income Growth $ Millions USD $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 ($2.0) 6-Year CAGR (1998-2004): 67% $11.0 $9.0 $3.7 $1.9 $0.5 $1.0 ($0.2) 1998 1999 2000 2001 2002 2003 2004 6
Our Value System Our values include conducting our business in a manner which demonstrates: 1. Mutual respect for those with whom we work and serve; 2. Compassion, honesty and support in all our interactions, while maintaining and developing a culture which builds on the passion of our people and the industry; 3. Respect for the environment where we pledge to minimize our impact and to support sustainable agricultural and environmental practices; 4. Providing our customers with the highest quality of products and services, which are generally free of genetic modification and chemical treatment; 5. Management of our Company with the highest ethical standards, in a transparent manner, dedicated to achieving an above average return for our shareholders; and 6. Being active in the communities where we work by supporting consumer education as to the benefits of natural, organic and healthy food products. 7
U.S. Organic Food Market Growth 17-20% Annual Growth Since 1997 $15 $14 $14.5 $ Billion USD $13 $12 $11 $10 $10.4 $12.2 $9 $8.6 $8 $7 $6 2002 2003 2004 2005 EST Source: Organic Trade Association s (OTA s) 2004 Manufacturer Survey 8
Market Growth Rationale People are understanding the connection between health and diet and taking control of their health Availability of organic foods in major grocery stores Obesity amongst children and adults in the U.S. Higher income and education amongst consumers The rise in people with diabetes, cancer and heart disease Increasing concern over food additives and genetic modification Clear standards on dietary guidelines 9
SunOpta Food Group SunOpta Grains and Soy Products Group (28% YTD Food Revenues) Soy, sunflower, corn and premium whole grains SunOpta Ingredients Group (18% YTD Food Revenues) Oat fibers, soluble fibers, soy concentrates and powders, brans, germs, natural preservatives, drying and specialty blending, starches, integrated ingredient systems SunOpta Fruit Group (8% YTD Food Revenues) Sourcing and processing of organic and natural fruits with emphasis on private label packaged products and ingredient solutions SunOpta Packaged Products Group (15% YTD Food Revenues) Aseptic and ESL soy and rice beverages, healthy fruit and grain snacks SunOpta Canadian Distribution Food Group (31% YTD Food Revenues) Organic, natural, specialty and kosher food products distributed nationally within Canada 10
Vertically Integrated Business Model From Field to Table SunOpta Sells Organic, Non-GMO Seed to Farmers SunOpta Contracts and Purchases Crop from Farmers and Initially Processes It SunOpta Converts Crop into Food Ingredients SunOpta Packages Product Ready for Resale SunOpta Distributes Product to Retailers in Canada and Sells to Manufacturers, Distributors and Retailers in U.S. 11
SunOpta Food Group Operations SunOpta Grains and Soy Products Group: Breckenridge, MN Cresco, IA Edson, KS Goodland, KS Hope, MN Minnetonka, MN Moorhead, MN Wahpeton, ND Hungarian Operation SunOpta Ingredients Group: Alexandria, MN Afton, WY Bedford, MA Bertha, MN Cambridge, MN Cedar Rapids, IA Fosston, MN Galesburg, IL Louisville, KY SunOpta Fruit Group: Aptos, CA Buena Park, CA Salinas, CA South Gate, CA Approximately 1500 Employees SunOpta Packaged Products Group: Alexandria, MN Norval, ON Omak, WA Summerland, BC (2) Wahpeton, ND SunOpta Canadian Food Distribution Group: Burnaby, BC Montreal, QC Richmond, BC Toronto, ON (2) 12
SunOpta Grains and Soy Products Group (28% of YTD 2005 Food Group Revenues) Organic and Specialty Soybeans Largest U.S. purchaser of organic soybeans Sunflower (Confection) Whole Seed and Kernel Approx. 30% share of the U.S. production Organic and Specialty Corn, Oats, and Wheat Processed Grain-based Ingredients Revenues $ Millions USD $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 1999 2000 2001 2002 2003 2004 21.4% Revenue Growth* 11.9% Income Growth* 7% Op. Margins YTD 2005 6-8% Target Op. Margins * 4-Year CAGR 13
SunOpta Ingredients Group (18% of YTD 2005 Food Group Revenues) Oat Fiber Largest supplier of oat fiber to the food industry worldwide Soy Concentrate and Powders Largest supplier of organic whole soy concentrate in the U.S. Extensive product portfolio leveraging internally resourced inputs utilized to provide ingredient solutions to healthy foods manufacturers Technical Processing Extensive network of operating capabilities for end product Revenues $ Millions USD $70 $60 $50 $40 $30 $20 $10 $0 2000 2001 2002 2003 2004 34.3% Revenue Growth* 78.6% Income Growth* 6.5% Op. Margins YTD 2005 12-15% Target Op. Margins * 3-Year CAGR 14
SunOpta Fruit Group (8% of YTD 2005 Food Group Revenues) Sources organic fruit products from approx. 30 countries Sources, processes and packages private label fruit products Extensive product development and formulation expertise for fruit ingredient applications Completed vertically integrated business model in 2005 with annualized revenues in excess of $100M US Revenues $ Millions USD $16 $14 $12 $10 $8 $6 $4 $2 $0 6-Months June 2005 5.6% Op. Margins YTD 2005 8-10% Target Op. Margins 15
SunOpta Packaged Products Group (15% of YTD 2005 Food Group Revenues) Packaged Aseptic Soy and Rice Beverages The largest packager of organic shelf stable soy milk in the U.S., utilizing input from Grains and Ingredients groups Natural and Organic Fruit and Grain Snacks Branded, private label and U.S. school systems Edamame Largest producer in the U.S. Revenues $ Millions USD $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 2001 2002 2003 2004 28.5% Revenue Growth* 6.2% Income Growth* 3.7% Op. Margins YTD 2005 7-8% Target Op. Margins * 2-Year CAGR 16
SunOpta Canadian Food Distribution Group (31% of YTD 2005 Food Group Revenues) Largest integrated distributor of natural, organic and specialty foods in Canada National distribution capabilities and facilities 10,000 SKUs 5,000 customers Distributor of key U.S. customers products throughout Canada Recently built largest natural and organic distribution center in Canada Revenues $ Millions USD $80 $70 $60 $50 $40 $30 $20 $10 $0 2002 2003 2004 202.9% Revenue Growth* 305.8% Income Growth* 2.5% Op. Margins YTD 2005 6-8% Target Op. Margins * 1-Year CAGR 17
Market Share Data Soybean #1 organic soybean processor in U.S. Approx. 35% share of market Sunflower #1 producer of high oelic confection sunflower in the U.S. Approx. 30% market share of confection market Oat Fiber #1 producer of oat fiber to the food industry worldwide Approx. 85% share of market U.S. market Organic Whole Soy Concentrate Largest vertically integrated 3 rd party organic whole soy concentrate supplier in the U.S. Approx. 60% share of market in 2005 Organic Aseptic Soy Packaging #1 processor and packager of organic aseptic soymilk in the U.S. Edamame #1 producer in the U.S. Natural, Organic and Specialty Distributor in Canada #1 in Canada 18
Representative Brands Utilizing SunOpta Products 19
SunOpta Retail Customer Base 20
Soy Products Featuring SunOpta Soy Ingredients 21
Opta Minerals (9% of YTD 2005 Revenues) (TSX: OPM) - 70% Ownership Vertically integrated manufacturer, distributor and recycler Silica-free abrasives and roofing shingle granules Industrial Minerals and Specialty Sands Recycles spent products Opportunities to consolidate fragmented industry Revenues $ Millions USD $35 $30 $25 $20 $15 $10 $5 $0 1999 2000 2001 2002 2003 2004 11.2% Revenue Growth* 15.5% Income Growth* 14% Op. Margins YTD 2005 12-16% Target Op. Margins * 4-Year CAGR 22
StakeTech Steam Explosion Group (1% of YTD 2005 Revenues) Commercially proven, proprietary technology with multiple patents on equipment and processes Currently focused on processing of biomass for the production of ethanol and other bio-products Signed contract to engineer and construct biomass to ethanol plant Developing the technology to produce food fibers and related products $ Millions USD $1.4 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 Revenues 1999 2000 2001 2002 2003 2004 23
Acquisition Criteria Must operate in the natural, organic or specialty food sectors, but not in retail or in farming and share our values Focus on companies with revenues between $10M - $50M to mitigate risk Acquisition must be profitable, growing and immediately accretive with key management committed to remain Purchase price: 2-4 times EBITDA 3-5 times EBT Synergies are identified, but are not included in the EBITDA Earn out provisions 24
Organic Revenue Growth 16.5% Organic Growth since 1998 1998 1999 2000 2001 2002 2003 2004 Total Revenues $14.9M $31.8M $68.4M $92.4M $120.9M $199.1M $306.3M 1998 1999 2000 2001 2002 2003 2004 Acquisition Growth 0% 97.3% 95.7% 32.2% 10.5% 46.0% 39.3% Organic Growth 22.3% 16.7% 19.2% 3.7% 20.4% 18.7% 14.5% Total Growth 22.3% 114.0% 114.9% 34.9% 30.9% 64.7% 53.8% 25
Sarbanes-Oxley We achieved a clean audit opinion of our internal controls for 2004 as required under the Sarbanes- Oxley Act with no material weaknesses identified - a major achievement. 26
$ Millions USD $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 $15 $32 66% 6-Year Revenue CAGR Revenue Growth $69 1998 1999 2000 2001 2002 2003 2004 2005 ES T 14.5% Internal Revenue Growth for 2004 $415M Revenue Guidance for 2005 Increase of 36% over 2004 $93 $121 31 Consecutive Quarters of Record Revenues Y/Y $199 $306 $415 $189 YTD June 2005 27
$ Millions USD $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 ($2.0) $0.5 Net Income Growth $1.0 $1.9 ($0.2) 1998 1999 2000 2001 2002 2003 2004 2005 67% 6-Year Net Income CAGR 23% Growth in Net Income for FY 2004 26% Growth in Net Income YTD 2005 $3.7 $9.0 $11.0 $9.9 6-Months June 2005 28
$0.25 Diluted EPS Growth $0.20 $0.18 $0.20 $0.17 $0.15 $ USD $0.10 $0.05 $0.06 $0.04 $0.08 $0.09 $0.00 ($0.05) ($0.01) 1998 1999 2000 2001 2002 2003 2004 2005 22% 6-Year Diluted EPS CAGR 11% Growth in Diluted EPS for FY 2004 6-Months June 2005 29
Balance Sheet Highlights (as at June 30, 2005) Cash $7.7 Net Working Capital $66.0 Long-term Debt $39.8 Shareholders' Equ i ty $153.5 $0 $50 $100 $150 $200 Debt to Equity Ratio: 0.26 to 1.00 $ Millions USD 30
Growth Strategies Position SunOpta as a Preferred natural, organic and specialty foods and ingredient solutions provider Expand global soy and sunflower businesses Grow fiber and ingredient business by broadening current product offerings and developing new applications and geographic markets Develop fruit based sourcing, processing and packaging expertise with emphasis on private label food products Expand on dominant position in distribution of natural, organic, kosher and specialty food products in Canada Accelerate growth of Opta Minerals via new product introductions and consolidation of fragmented industry Accelerate utilization of Steam Explosion Technology in ethanol and food applications 31
Focus on the Future NASDAQ: STKL TSX: SOY Investor Presentation September 2005 32