Above Foods’ latest asset acquisition in Montana expands

• The acquisition creates significant commercial synergies with Above Food’s Ingredient Centre in Saskatoon and provides 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 $26 billion plant-based pet food market, which accounted for approximately 40% ($65 million) of the acquired assets’ revenue in fiscal year 2023.
• Expanding leadership in the $15 billion global chickpea market, capitalizing on growing demand for plant-based proteins, including in the pet food market

REGINA, Saskatchewan, Aug. 15, 2024 (GLOBE NEWSWIRE) — About 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 in high-growth sectors, strengthen its presence in North America, and optimize its manufacturing capabilities in connection with its recently announced acquisition of The Redwood Group, LLC (“TRG”), a Montana-based specialty crop food ingredients division (the “Assets”). The Acquisition, originally announced on August 9, 2024, was completed for consideration of $34 million plus working capital, subject to final closing adjustments.

“This acquisition represents a transformative move for Above Food that fits perfectly with our seed-to-fork approach and significantly expands our capabilities across multiple dimensions,” said Lionel Kambeitz, Founder, President, CEO and Executive Chairman of Above Food. “Beyond what we previously communicated, we expect this acquisition to enable improved utilization of our Saskatoon-based Ingredient Center and deliver improved margins by moving the assets’ activities to our state-of-the-art facilities. In addition, this transaction strengthens our presence in high-growth customer segments, particularly the pet food market, which represented approximately 40% of the acquired assets’ $164 million in revenue in fiscal year 2023, and immediately positions Above Food as a leader in this fast-growing sector. Together, we believe this transaction will create long-term value for our shareholders and reinforce Above Food’s position at the forefront of the plant-based food industry.”

Significant improvement in plant utilization expected with existing ingredient center

The integration of the acquired business into Above Food’s existing ingredient center in Saskatoon, Canada, provides significant opportunities for operational synergies and cost savings. The Company’s specialty ingredients facilities in Saskatoon offer state-of-the-art cleaning, optical color sorting, polishing, milling and blending capabilities, increased value-added processing capacity, enhanced quality control measures and improved efficiency in logistics and distribution.

The acquisition is expected to optimize Above Food’s operational efficiency by increasing utilization of the existing ingredient processing facility in Saskatoon. Specifically, this improved utilization is expected to result in increased production capacity without significant capital expenditures, lower unit production costs and therefore improved gross margins, greater flexibility in meeting diverse customer requirements, and optimized inventory management and reduced waste. The Company expects these improvements to contribute to a more robust and flexible supply chain, allowing Above Food to be more responsive to market fluctuations and evolving customer needs, while improving Above Food’s ability to deliver high quality, traceable products to its customers.

Strengthens asset base with high-quality ingredient processing facilities in Montana

The assets of the previously announced transaction include two strategic processing facilities located in the “Golden Triangle” of Montana, the premier pulse growing region in North America. The addition of these facilities significantly increases the Company’s processing capacity by a total of 56,000 tonnes. Beyond capacity, these modern facilities provide advanced processing capabilities including air purification, color sorting and dehulling. The facilities feature 72 additional silos for advanced ingredient separation and storage. Both have direct access to the rail network and provide rail car storage capacity similar to the Company’s existing capacity in Canada. The strategic location of the facilities in the heart of the U.S. pulse growing region enhances Above Food’s ability to serve high-margin end markets for food for human consumption while capitalizing on opportunities to expand pulse acreage in surrounding areas.

Leader in the fast-growing pet food market

The pet food segment represents a significant growth opportunity for Above Food. With the newly acquired division expected to generate approximately $65 million in pet food revenue in fiscal 2023, the company is well positioned to capitalize on this growing market. Key benefits of the acquisition include immediate market share in a fast-growing sector, diversification of revenue streams, the ability to leverage Above Food’s expertise in plant-based ingredients for pet food applications, and the potential for greater penetration of existing customers.

The $26 billion global plant-based pet food market is expected 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 by leveraging its expanded capacity and expertise in plant-based ingredients such as chickpeas and flaxseed, which are increasingly being incorporated into high-quality, health-focused pet food formulas.

Market leadership in chickpeas

The assets significantly strengthen Above Food’s position in the $15 billion chickpea market, which Zion Market Research estimates will grow at a compound annual growth rate of 7.4% through 2032. Chickpeas accounted for approximately 34% of the acquired assets’ total revenue in 2022. Chickpeas are a key ingredient in the plant-based protein space, and the Company’s presence in the U.S. provides unprecedented access to the highest quality chickpeas, cementing its position as North America’s largest chickpea producer. Chickpeas are increasingly recognized for their nutritional value and versatility in food applications, and are in line with current consumer trends toward healthy eating and sustainability. The Company’s increased leadership in this space is expected to bring several benefits, including greater market share in the global chickpea trade, improved ability to meet growing demand for chickpea-based products in the human and pet food markets, the opportunity to drive innovation in chickpea processing and product development, and strengthened relationships with chickpea growers and suppliers.

About Above Food

About Food Ingredients Inc. (Nasdaq: ABVE, ABVEW) is a differentiated, regenerative ingredients company that offers delicious products made from real, nutritious, flavorful ingredients and delivers them transparently. Above Food’s vision is to create a healthier world – one seed, one field and one bite at a time. With a robust plant protein supply chain enabled by scaled primary farming and processing operations and infrastructure, and proprietary seed development capabilities leveraging the power of artificial intelligence-based genomics, Above Food delivers nutritious food with traceability and sustainability to businesses and consumers. Above Food’s consumer products and brands are available online and in leading grocery stores across Canada and the United States.

Cautionary note regarding forward-looking statements

This news 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 can be 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 regarding the ability or expectations regarding the future performance of our business and operations; expectations regarding revenue, expenses, gross profit, gross profit margin and expected cash requirements; expectations regarding cash flow, liquidity and sources of financing, including the ability to raise additional capital; expectations regarding capital expenditures; expectations regarding Above Food’s ability to execute on 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 the competition.

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 for illustrative purposes only and are not intended to be, and should not be relied upon by any investor as, a guarantee, representation, prediction or definitive statement of fact or probability. There may be risks that Above Food does not currently know or that Above Food currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Above Food’s expectations, plans or projections regarding future events and beliefs as of the date of this communication. Above Food expects that subsequent events and developments will cause Above Food’s estimates to change. Although Above Food may elect to update these forward-looking statements in the future, it expressly disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Above Food’s estimates as of any time after the date of this communication. Accordingly, undue reliance should not be placed on the forward-looking statements. Nothing contained herein should be regarded as a representation to any person that the forward-looking statements set forth herein will be achieved or that any of the results anticipated in such forward-looking statements will be achieved. You should not place undue reliance on the forward-looking statements in this release, which speak only as of the date hereof and are qualified in their entirety by reference to the cautionary statements contained herein.

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