Good morning and welcome to SunOpta’s First Quarter 2016 Earnings Conference Call. By now, everyone should have access to the earnings press release that was issued this morning. The release as well as the accompanying slides are available on the Investor Relations page of SunOpta’s website at www.sunopta.com. This call is being webcast and its transcription will be available on the company’s website. As a reminder, please note that the prepared remarks, which will follow contain forward-looking statements and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. We refer you to all risk factors contained in SunOpta’s press release issued this morning, the company’s annual report filed on Form 10-K and other filings with the Securities and Exchange Commission for a more detailed discussion of the factors that could cause actual results to differ materially from those projections in any forward-looking statements. Finally, we would like to remind listeners that the company may refer to certain non-GAAP financial measures such as adjusted earnings and adjusted EBITDA during the teleconference. A reconciliation of these non-GAAP financial measures was included with the company’s press release issued earlier today. Also please note that, unless otherwise stated, all figures discussed today are in U.S. dollars and are occasionally rounded to the nearest million. And now, I would like to turn the conference call over to SunOpta’s CEO, Rik Jacobs.

Good morning and thank you for joining us today. With me on the call today is Rob McKeracher, our CFO. Today, I would like to highlight our first quarter results, discuss our business progress and update you on our 2016 operational goals. After that, Rob will take you through our first quarter financials in greater detail and then we look forward to taking your questions. I would like to remind those on the call that there is an accompanying presentation on the Investor Relations page of our website, which we will reference today in our prepared remarks. Also note that, unless otherwise noted, all of our financial commentary on this call refers to continuing operations, which now includes just our food operations. Slide 2 is regarding forward-looking statements, which the operator covered. So if you kindly turn to Slide 3. Having completed the Opta Minerals divestiture, we are now truly a pure-play organic and non-GMO food company. We believe we have built a scalable business platform with many of our investments completed and acquisitions integrated. Our goal is now to fill up our expanded capacity with new and existing customers as well as new products while improving our operational execution to drive higher margins. Please turn to Slide 4. In Q1, our revenue grew by 3.5% year-over-year on a normalized basis. Revenue was $352 million compared to $274 million a year ago and $316 million in Q4. Given the transformation of our company in 2015 with the acquisition of three businesses, I think it’s more relevant to look at our sequential numbers than our year-over-year numbers. So, I will place more focus on that. After all, now for the first time in our history, our CPG segment represents close to 60% of our business, while last year this was only…

Thanks, Rik and good morning, everyone. Please be advised that unless otherwise noted, my comments are focused on our continuing food operations only as Opta Minerals is accounted for within discontinued operations. The sale of our interest in Opta Minerals concluded shortly after the end of our first quarter on April 6, 2016. So looking forward, that operation will no longer meaningfully impact our financial results. I will take you through revenue, margins and earnings as well as highlight our EBITDA and cash flow performance during the first quarter. Please turn to Slide 8. Slide 8 shows our revenue breakdown by segment. Revenues for the first quarter of 2016 were $352 million, a sequential increase of 11.4% compared to the fourth quarter of 2015 and a 28.6% increase over the first quarter of 2015. Most of the year-over-year growth was driven by acquired businesses as well as internal growth in frozen fruit, aseptic beverages and resealable pouch products. However, the sequential increase in revenues was driven primarily by growth in frozen fruit sales by Sunrise due in part to a full quarter of ownership as well as a favorable response at retail by consumers following price increases taken during the fourth quarter. After adjusting for changes in revenue, including the impact of acquired businesses, commodity prices and foreign exchange rates. On a normalized basis, consolidated revenues increased 3.5% compared to the first quarter of 2015. Global ingredients reported revenues of $146 million, growth of 2% over the fourth quarter of 2015 and a 6% decline in comparison to the first quarter of 2015. However, on a normalized basis, revenues in global ingredients grew 1% over the prior year. This growth was driven by increased sales of internationally sourced organic ingredients, which on a normalized basis, was up 13.1% year-over-year offset…

Thanks, Rob. If I can leave you all with five key takeaways as we look ahead, it would be the ones that I laid out on Slide 12. First, we operate mainly in growing markets that are on trend with consumers’ focus on healthier lifestyle. Second, we have a well-defined strategy to drive our business to higher margins. Third, the Sunrise Growers acquisition makes sense both strategically and financially and they are performing to plan. Fourth, we do have the committed financing on our second lien debt through 2022 at a cap rate of 9.5% and our new ABL has a 5-year term through 2021 giving us ample capital with flexibility. And finally, [indiscernible] remains paramount and we recognized that we still have work to do with this regard. With that, I would ask the operator to please open up the call to questions.

[Operator Instructions]

We recognized that we are issuing our press release and our conference call at the same time as multiple other companies in our space, which I think is leading to lack of questions at this stage. And I think as a result – there is one.

We have a question from the line of Keith Howlett with Desjardin. Your line is now open.

Yes. I just wanted to ask on the sunflower recall, what is the expected time to get a sense of where your product might have gone through the supply chain channels?

Yes. Hi, Keith. Obviously, we are not clear yet how many products are going to be returned from customers and therefore we can’t really accurately state that. So, the timing is going to be – is going to take some time into the second quarter before we have clarity on that one. However, I would like to remind everybody that we have insurance in place that we believe is appropriate for the company and that will address events such as this.

And with the orange juice voluntary withdrawal, is that covered by insurance or?

Since the orange juice was not a food safety issue, it was rather related to early spoilers after consumers opened the products. That is not covered, but we believe we have captured the total cost inside of the quarter.

Great, thank you.

[Operator Instructions] Our next question comes from the line of Jon Andersen with William Blair. Your line is now open.

Hi, good morning guys.

Hey, good morning Jon.

First question is on the healthy fruit business, which sounded like that was quite strong in the first quarter. Can you talk about the 37%, I guess sequential growth in the quarter? How much of that we should think – we should consider seasonality and maybe how much is being driven by kind of category and/or kind of share growth? And then as you think about the healthy fruit business during the course of the year, what kind of expectations for kind of year-on-year growth should we be assuming in our models? Thanks.

Yes. So look, the healthy fruit category at the retail continues to grow at around 10% and we definitely think that we will get our fair share out of that. But you need to remember that two-thirds of Sunrise’s business and also our own business, quite frankly is in retail. One-third is in food service, and that is not growing at the same rate. So I would say the total growth is in and at about 8% or something like that. Now what we saw in Q1, we saw a bounce back from Q4. If you will recall, there were significant raw material input costs changes that we passed through to the customers. As a result, they increased their shelf price significantly. So I would say that Q4 of 2015 was, from a revenue perspective, a bit lower than we had expected. We saw a very good bounce back. Q1 is always a strong quarter, at least from a revenue perspective, not necessarily the best quarter from a mix perspective though, right. So while I don’t think the future quarters are going to see as strong of a growth sequentially, I think from a mix perspective, the margins we expect to improve further.

Okay. And the comment on fresh – the frozen fruit, I think in the second quarter being somewhat – the growth being a bit more modest, could you clarify is that you indicated, it was due to a late start to the cooler season in California, I didn’t catch that, I am sorry?

Yes, that’s okay. So look, the fields in California, of course all the farmers would like to get paid premium dollar for the strawberries that they sell into the fresh market. When the weather is slightly cooler than previous years, it means that they can actually sell through the fresh climate longer. That means they can get a late start into the second quarter. Typically, they say it’s perhaps one week after Mother’s Day, so that should be around now, but we are a little bit delayed, what does that mean. And that is obviously not specific to Sunrise that impacts the entire industry. What that means is that you don’t have to work more with food that you would buy in from the outside rather than you take and freeze yourself. That will have some impact on your margins.

Excellent, that’s helpful. Thanks. Could you give us an update – a little bit more of an update in your progress in the aseptic beverage business, I know you called out a couple of customer wins in the recent past, are those shipping now, are there – you have better visibility on some additional wins at this point. And then on the cost side, it sounds like you are still seeing some pressure from startup costs in Allentown, how long do you anticipate that, that will persist and how quickly I guess can you get some more kind of productivity level that you are aspiring to there? Thanks.

Yes. So look, as we pointed out during the Analyst Day that we recently had, the non-dairy segment in aseptic is not growing. So we are aggressively entering into new segments, most namely the broth segments. We had a number of meter – meetings with retailers and are quite confident that, that’s going to lead to multiple listings. So that’s quite positive. I think the Allentown facility is starting to contribute at least from us being able to land new business, so to speak. But we have been careful in starting that facility. Up until quite recently, we have only done about five SKUs with one customer. We are now ramping up with the second customer. And as I pointed out in my remarks, I foresee startup costs being gone by the end of the second quarter. That’s when it should be in full production.

Okay, great. I guess the last one for me is just around the domestic raw materials sourcing business, which has been impacted by obviously the currency trends in U.S. dollar, is this – are you looking at this broadly as just kind of temporary type of phenomenon, which will be kind of anniversaried or lapped at some point in time or are you looking more kind of strategically at that business and thinking about planned rationalization, just some color there on expectations for that part of your business. Thanks.

Yes. I mean, on that business, I mean we have been scaling back the number of acres that we plant. We have been scaling back the number of facilities that we operate, especially inside of the sunflower business. We already took that action in 2014. Right now, it is at an all-time low commodity price. And even though we don’t obviously sell the conventional, the organic and non-GMO do track the conventional prices. We do see a little bit of a bounce back coming over there as a result of South American harvest not being as strong, but it’s not just the U.S. dollar, it is also very much the low commodity prices. So, from – while it has an impact on what we are reporting as our overall revenue, what I think we have been very clear about was a team there manage for margin and don’t manage for revenue over there. So what you will have seen and continue to see is an uptick in our margins that produced in the global ingredients segment. So, we are more focused on margins there than we are on revenue.

Great. One more from me and I just kind of quarter into the year now, Rik, would you say that you are kind of on track in aggregate and comfortable with the kind of the full year operational objectives, which you have kind of noted in your prepared comments? But again, just kind of where you sit today based on Q1 performance, what you have seen so far in Q2, should we be thinking about your tracking well against each of those measures? Thank you.

Yes, I think we are off to a – overall, I would to say we are off to a pretty good start. I mean, if I look at healthy fruit and I am happy with that. If I look at healthy snacks and I look at what we have got in the pipeline that we should be converting into sales happy with that. Aseptic, we still need to get land the big customer that we are working hard on or a big innovation into a new category, both of which we are working hard on. And while I don’t have a contract signed on that yet, I expect some progress on that. The one I would say that we need to work the hardest on still is really on the operations, because these surprises, we must be able to contain those within the four walls of our facilities so that we can limit the costs. And so I would say overall on track, overall comfortable with what’s out there on an annualized basis from all of you guys and continued to perform, especially focused on operations and continue to attract more salespeople, so we can fill up our factories faster.

Really helpful. Thank you and good luck going forward.

Alright. Thanks, Jon.

We have a follow-up question from Keith Howlett. Your line is now open.

Yes. I just wanted to clarify. On the overall aseptic plant based beverage business, is that sort of flat at the moment, I know there are some ups and downs but...

Is that sort of what? Sorry, Keith, I didn’t...

It’s sort of flat, flattish for you?

No, it grew – the aseptic business grew 7% year-over-year and 4% sequentially. So, we are seeing good growth. And obviously that is making up for some of the declines with some of the customers that we are seeing and that’s as a result of entering into new categories and taking share in our traditional stronghold, which is a nondairy segment.

And is that growth from the broth or is it from coconut milk or where is the growth side of it?

I would say it basically is from new customers that we have been able to attract as a result of us having a national network right now. It is from – so that means taking share on dairy. It is also coming from entering into new categories, so – and broth and coconut milk and dairy and nutritional beverages.

And then just in terms of the soy category, you have got a big sourcing business there, commodity business. How do you view that given the consumer seems to be for whatever reason taking some temporary pause from growing soy category from the category growing?

Yes. Keith, what we have laid out is that we believe that non-dairy as an overall category is going to continue to take share from the dairy category. And we just need to make sure that we are in the growing parts of that segment. So whether it’s almonds or whether it’s oats, which we believe is going to be a big one, whether it is coconut or whether it is soy. And when it comes to our sourcing business, we are now already working, of course on an old supply chain. We have got a coconut supply chain. We have an almond supply chain. So it’s not just the soy supply chain that we have secured. We want to secure it for all of these raw materials.

And in the soy, you go right back to selling the seeds to the farmer?

Correct.

Generally speaking, do you think that’s a one-off or would you see that occurring in some of the other segments?

No. Look, I mean in coconut, we pretty much have our supply chain secured out of the Philippines and out of Indonesia. And when it comes to oat, that is a very, very good rotational crop for the farmers that we already worked with on corn and on soy, because as you know, you can’t plant soy every year. Farmers have to rotate their crop, so that’s a very good fit for us. So I don’t see soy as a one-off.

Thank you.

That concludes today’s question-and-answer session. I would like to turn the call back to Rik Jacobs for closing remarks.

Alright. Thank you all for joining us on the call. I would like to reiterate, I think we are off to a pretty okay start for the year and feel confident that we will meet our internal and external expectations. Thanks for joining us and enjoy the rest of your day.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program and you may now disconnect. Everyone, have a great day.