Acquisition creates substantial commercial synergies with Above Food's Saskatoon-based Ingredient Center, providing for additional opportunities to improve utilization and expand margins
Expands asset base with two additional ingredient processing and storage facilities in Montana
Strengthens Above Food's position in high-growth markets such as the US$26 billion plant-based pet food market, which accounted for approximately 40% (US$65M) of the acquired assets’ fiscal 2023 revenue
Enhances leadership in the US$15 billion global chickpea market, capitalizing on growing demand for plant-based proteins, to include that of the pet food market
REGINA, Saskatchewan, Aug. 15, 2024 (GLOBE NEWSWIRE) -- Above Food Ingredients Inc. (Nasdaq: ABVE, ABVEW) (“Above Food” or the “Company”), an innovative food company leveraging its vertically integrated supply chain to deliver differentiated ingredients and consumer products, today announced its plans to expand its market share across high-growth sectors, strengthen its North American footprint, and optimize production capabilities in connection with its recent announcement to acquire The Redwood Group, LLC (“TRG”) a Montana-based specialty crop food ingredient division (the “Assets”). The acquisition, which was initially announced on August 9, 2024, was completed for consideration of US$34 million plus working capital, subject to final closing adjustments.
“This acquisition represents a transformative step for Above Food, perfectly aligning with our ‘Seed-to-Fork’ approach and significantly enhances our capabilities across multiple dimensions,” said Lionel Kambeitz, Founder, President, Chief Executive Officer, and Executive Chairman of Above Food. “Beyond the scope of what we shared previously, we expect this acquisition to enable an improvement in the utilization rate of our Saskatoon-based Ingredient Center and generate improved margins through transitioning the Assets’ operations to our advanced facilities. Further, this transaction strengthens our exposure to high-growth customer segments, particularly in the pet food market, which accounted for approximately 40% of the acquired Assets’ US$164 million revenue in fiscal year 2023, immediately positioning Above Food as a leader in this rapidly expanding sector. Together, we believe this transaction will generate long-term value for our shareholders and reinforce Above Food's position at the forefront of the plant-based food industry.”
Significant Expected Improvement in Facility Utilization with Existing Ingredient Center
The integration of the acquired business with Above Food's existing Ingredient Center in Saskatoon, Canada presents substantial opportunities for operational synergies and cost savings. The Company's specialty ingredient facilities in Saskatoon offer state-of-the-art cleaning, optical color sorting, polishing, milling and blending capabilities, increased capacity for value-added processing, enhanced quality control measures, and improved efficiency in logistics and distribution.
The acquisition is set to optimize Above Food's operational efficiency by increasing the utilization rate of its existing ingredient processing facility in Saskatoon. Notably, this improved utilization is expected to result in enhanced production capacity without significant capital expenditure, lower per-unit production costs leading to improved gross margins, greater flexibility in meeting varying customer demands, and optimized inventory management and reduced waste. The Company anticipates that these improvements will contribute to a more robust and agile supply chain, better positioning Above Food to respond to market fluctuations and evolving customer needs, while enhancing Above Food's ability to deliver high-quality, traceable products to its customers.
Bolsters Asset Base with High-Quality Montana-based Ingredient Processing Facilities
The Assets included in the previously announced transaction include two strategic processing facilities in Montana's "Golden Triangle," North America's premier pulse growing region. The addition of these facilities significantly increases the Company's processing capacity by a combined 56,000 metric tons. Beyond capacity, these modern assets offer advanced processing capabilities including air cleaning, color sorting, and dehulling. The facilities feature 72 additional silos for advanced ingredient separation and storage, and both have direct access to rail and offer railcar storage capacities, similar to the Company’s existing capabilities in Canada. The facilities’ strategic positioning in the heart of the U.S. pulse growing region enhances Above Food’s ability to serve high-margin human food end-markets while capitalizing on opportunities to grow the pulse crop acreage in surrounding areas.
Leadership in High-Growth Pet Food Market
The pet food segment represents a significant growth opportunity for Above Food. With the newly acquired division generating approximately US$65 million in pet food-related revenue in fiscal year 2023, the Company is well-positioned to capitalize on this expanding market. Key advantages contemplated in the acquisition include immediate market share in a rapidly growing sector, diversification of revenue streams, opportunity to leverage Above Food's expertise in plant-based ingredients for pet food applications, and potential for greater penetration with existing customers.
The US$26 billion global plant-based pet food market is projected to grow at a compound annual growth rate (“CAGR”) of 9% through 2032, according to Future Market Insights, driven by increasing pet ownership and a growing focus on pet health and nutrition. Above Food is now strategically positioned to capture a significant portion of this growth, leveraging its expanded capacity and expertise in plant-based ingredients such as chickpeas and flaxseed, which are increasingly being incorporated into premium, health-focused pet food formulas.
Chickpea Market Leadership
The Assets significantly bolster Above Food's position in the US$15 billion chickpea market, which Zion Market Research estimates will grow at a 7.4% CAGR through 2032. Chickpeas represented approximately 34% of the acquired Assets’ 2022 total sales volume. Chickpeas are a key ingredient in the plant-based protein sector and the Company’s U.S. footprint provides unparalleled access to the highest quality chickpeas, solidifying its position as North America’s largest chickpea manufacturer. Chickpeas are increasingly recognized for their nutritional value and versatility in food applications, and align with current consumer trends towards healthy eating and sustainability. The Company's enhanced leadership in this area is expected to yield several benefits, including increased market share in the global chickpea trade, enhanced ability to meet growing demand for chickpea-based products within the human and pet food markets, opportunity to drive innovation in chickpea processing and product development, and strengthened relationships with chickpea growers and suppliers.
About Above Food
Above Food Ingredients Inc. (Nasdaq: ABVE, ABVEW) is a differentiated, regenerative ingredient company that celebrates delicious products made with real, nutritious, flavorful ingredients and delivered with transparency. Above Food’s vision is to create a healthier world — one seed, one field, and one bite at a time. With a robust chain of custody of plant proteins, enabled by scaled operations and infrastructure in primary agriculture and processing, and proprietary seed development capabilities that leverage the power of artificial intelligence-driven genomics, Above Food delivers nutritious foods to businesses and consumers with traceability and sustainability. Above Food’s consumer products and brands are available online and in leading grocers across Canada and the United States.
This press release may contain “forward-looking information” within the meaning of the United States federal securities laws and applicable Canadian securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” future,” “opportunity,” “plan,” “may,” “should,” “will,” “could,” “will be,” will continue,” and similar expressions and include, without limitation, statements about the ability of or expectations regarding the future performance of our business and operations; expectations regarding revenues, expenses, gross profit, gross profit margin and anticipated cash needs; expectations regarding cash flow, liquidity and sources of funding, including the ability to raise additional capital; expectations regarding capital expenditures; expectations regarding Above Food's ability to execute its growth strategy; expectations regarding our ability to maintain and enhance our platform and synergistic portfolio of ingredients and consumer products; and expectations regarding our ability to differentiate ourselves from competitors.
Forward-looking statements are based on the current expectations of Above Food's management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. There may be risks that Above Food presently does not know or that Above Food currently believes are immaterial that could also cause actual results to differ from those contained in forward-looking statements. In addition, forward-looking statements provide Above Food’s expectations, plans or forecasts of future events and views as of the date of this communication. Above Food anticipates that subsequent events and developments will cause Above Food’s assessments to change. However, while Above Food may elect to update these forward-looking statements in the future, Above Food specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Above Food’s assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements. Nothing herein should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results in such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein.
