Rogers Sugar Inc.’s (“our,” “we”, “us” or “Rogers”) (TSX: RSI)
today reported second quarter fiscal 2021 results with consolidated
adjusted EBITDA of $21.4 million and $49.0 million for the current
quarter and the first six months of the year, respectively.
"Providing consistent, reliable supply is vital
for our customers and we have strategically added operational
flexibility to allow us to consistently meet their needs,” said
John Holliday, President and Chief Executive Officer of Rogers and
Lantic Inc. "This foresight has allowed us to successfully navigate
prior unexpected events, including COVID-19, and this quarter
allowed us to maintain our full-year sugar outlook, despite some
weather-related losses for our beet sugar production. We continue
to expect our full year fiscal 2021 results to be strong, with
sugar sales remaining higher than last year and the impact of our
production improvements in our Maple business driving stronger
profitability".
Second Quarter 2021 Consolidated
Highlights(unaudited) |
Q2 2021 |
Q2 2020 |
YTD 2021 |
YTD 2020 |
Financials
($000s) |
|
|
|
|
Revenues |
215,929 |
199,126 |
439,769 |
408,442 |
Adjusted gross margin(1) |
27,407 |
23,612 |
63,859 |
60,138 |
Adjusted EBITDA(1) |
21,375 |
16,522 |
49,022 |
46,749 |
Net earnings |
10,778 |
965 |
24,551 |
16,929 |
per share (basic) |
0.1 |
0.01 |
0.24 |
0.16 |
per share (diluted) |
0.1 |
0.01 |
0.23 |
0.16 |
Adjusted net earnings(1) |
7,751 |
4,036 |
19,999 |
18,134 |
Adjusted net earnings per
share (basic)(1) |
0.07 |
0.04 |
0.19 |
0.17 |
Trailing twelve months free
cash flow(1) |
46,670 |
35,588 |
46,670 |
35,588 |
Dividends per share |
0.09 |
0.09 |
0.18 |
0.18 |
|
|
|
|
|
Volumes |
|
|
|
|
Sugar (metric tonnes) |
183,749 |
175,226 |
374,189 |
363,605 |
Maple
Syrup (thousand pounds) |
14,214 |
12,893 |
29,106 |
25,686 |
(1) See “Cautionary statement on Non-GAAP Measures” section
of this press release for definition and reconciliation to GAAP
measures. |
- Consolidated
adjusted EBITDA for the second quarter of 2021 was $21.4 million,
up 29.4% from the same quarter last year, driven by higher adjusted
EBITDA in both the Sugar and Maple segments in the current quarter.
Adjusted EBITDA for the first six months of 2021 was $49.0 million,
up 4.9% from the same period in 2020, largely as a result of
improved adjusted EBITDA in the Maple segment;
- Adjusted EBITDA
in the Sugar segment was $17.0 million in the second quarter, an
increase of $3.2 million or 22.8% from the same quarter last year,
largely due to higher revenue partly offset by higher operating
costs and higher warehousing costs;
- Sales volumes in
the Sugar segment increased by 4.9% to 183,749 metric tonnes in the
second quarter, as stronger industrial, liquid and export volumes
were partly offset by a reduction in consumer volumes;
- As a result of
unfavourable weather conditions in October 2020, a portion of the
current year’s Taber beet crop was damaged, reducing the quantity
and quality of the beet processed in the second quarter of 2021.
The issue encountered in fiscal 2021 reduced the expected sugar
production from Taber by 9,000 metric tonnes. The current year
issue was not as severe as the similar issue encountered in 2020
whereby half of the overall sugar beet crop was lost due to
unfavourable weather;
- Adjusted EBITDA
in the Maple segment was $4.4 million in the second quarter, an
increase of $1.7 million or 63.2% from the same quarter last year
as a result of higher customer demand and improved margin;
- Maple segment
volumes increased by 10.2% to 14,214 pounds in the quarter, driven
by strong demand from retail customers;
- Free cash flow
for the trailing 12 months ended April 3, 2021 was $46.7 million,
an increase of $11.1 million from the same period last year;
- In the second
quarter of 2021, we distributed $0.09 per share to our shareholders
for a total amount of $9.3 million;
- On April 30,
2021, Lantic issued $100 million in senior guaranteed Notes under a
note purchase agreement as a private placement with certain
institutional investors. The proceeds of the issuance were used to
refinance existing debt. The Notes carry an interest rate of 3.49%
and are due on April 30, 2031 with interest payable semi-annually
in arrears; and
- On May 5, 2021,
the Board of Directors declared a quarterly dividend of $0.09 per
share, payable on July 13, 2021.
Sugar
Second Quarter 2021 Sugar
Highlights(unaudited) |
Q2 2021 |
Q2 2020 |
YTD 2021 |
YTD 2020 |
Financials
($000s) |
|
|
|
|
Revenues |
155,961 |
143,609 |
315,419 |
298,424 |
Adjusted gross margin(1) |
21,793 |
19,210 |
52,489 |
49,985 |
Per metric
tonne ($/ mt) (1) |
118.6 |
109.63 |
140.27 |
137.47 |
Administration and selling
expenses |
5,771 |
5,577 |
13,039 |
11,148 |
Distribution costs |
3,623 |
3,997 |
8,692 |
7,225 |
Adjusted EBITDA(1) |
17,010 |
13,847 |
39,741 |
39,967 |
|
|
|
|
|
Volumes (metric
tonnes) |
|
|
|
|
Total
volume |
183,749 |
175,226 |
374,189 |
363,605 |
(1) See “Cautionary statement on Non-GAAP Measures”
section of this press release for definition and reconciliation to
GAAP measures. |
In the second quarter of fiscal 2021, revenue
increased by 8.6%, compared to the same period last year driven by
higher volumes and increased pricing.
Sugar volume increased by 4.9% in the second
quarter 2021 compared to the same quarter last year as stronger
industrial, liquid and export volumes were partly offset by a
reduction in consumer volumes.
- Export volumes
contributed the largest increase in the quarter, largely due to
higher beet sugar sales to the United States in 2021 under the
Canadian United States Mexico Agreement quota (“CUSMA”).
- Total domestic
volume remained largely unchanged; however, we experienced a shift
between the industrial, consumer and liquid segments. Industrial
and liquid volumes increased compared to last year as customer
demand remained firm and delayed industrial orders from the first
quarter were filled in the second quarter. In the second quarter,
consumer volumes lowered, returning closer to pre-COVID levels as
consumer pantry loading reduced compared to last year, resulting in
retailers holding higher inventory levels than expected.
Adjusted gross margin increased by $2.6 million
in the current quarter compared to the same quarter last year
mainly as a result of higher sugar sales margin of $1.2 million and
increased by-product net contribution of $2.9 million. This
favourable variance was partially offset by higher processing costs
of $1.5 million. The higher costs were related to the Vancouver
plant and were mainly due to a variation in the mix of products
sold resulting from the transfer of production from Taber to
Vancouver. The transfer of production was necessary to mitigate
supply issues at the Taber facility. On a per unit basis, adjusted
gross margin for the second quarter was at $118.60 per metric
tonnes, higher that last year by $8.97 per metric tonnes. The
increase was mainly due to higher volume in the current year,
reflecting higher customer demand and increased pricing in 2021
compared to 2020.
As a result of unfavourable weather conditions
in October 2020, a portion of the current year’s Taber beet crop
was damaged, reducing the quantity and quality of the beet
processed in the second quarter of 2021. The issue encountered in
fiscal 2021 reduced the expected sugar production from Taber by
9,000 metric tonnes. The current year issue was not as severe as
the similar issue encountered in 2020 whereby half of the overall
sugar beet crop was lost due to unfavourable weather. In both
fiscal years, we continued to meet customer demand, despite the
uncontrollable crop shortfall as our Vancouver cane sugar facility
was used to backfill the shortfall from the Taber facility. The
direct impact on adjusted gross margin of the crop issues on the
Taber operations is expected to amount to $ 4.0 million in 2021. In
connection with this issue, $2.1 million was recognized in the
second quarter of 2021.
Adjusted EBITDA for the second quarter increased
by $3.2 million compared to the same period last year, largely as a
result of higher adjusted gross margin, and lower distribution
costs as costs associated with reconfiguring our supply chain to
compensate for the crop shortfall this quarter were lower compared
the same quarter last year.
Maple Products
Second Quarter 2021 Maple
Highlights(unaudited) |
Q2 2021 |
Q2 2020 |
YTD 2021 |
YTD 2020 |
Financials
($000s) |
|
|
|
|
Revenues |
59,968 |
55,517 |
124,350 |
110,018 |
Adjusted gross margin(1) |
5,614 |
4,402 |
11,370 |
10,153 |
As a
percentage of revenues (%) (1) |
9.40% |
7.90% |
9.10% |
9.20% |
Administration and selling
expenses |
2,185 |
2,883 |
4,515 |
5,582 |
Distribution costs |
721 |
875 |
1,334 |
1,672 |
Adjusted EBITDA(1) |
4,365 |
2,675 |
9,281 |
6,782 |
|
|
|
|
|
Volumes (thousand
pounds) |
|
|
|
|
Total
volume |
14,214 |
12,893 |
29,106 |
25,686 |
(1) See “Cautionary statement on Non-GAAP
Measures” section of this press release for definition and
reconciliation to GAAP measures. |
Revenues for the second quarter of the current
fiscal year were $4.5 million higher than the same period last year
due to ongoing strong demand, driven partially by the COVID-19
pandemic and an aggressive marketing strategy.
Adjusted gross margin for the current quarter
was $1.2 million higher than the comparable period last year,
driven by a combination of lower costs from improved operational
efficiency and higher sales margin from sustained marketing
efforts. Improved profitability was also reflected in our adjusted
gross margin percentage, increasing by 150 basis points to 9.4% in
the current quarter, up from 7.9% in the same quarter last
year.
Adjusted EBITDA for the second quarter of fiscal
2021 increased by $1.7 million than the comparable period last
year, due mainly to increased adjusted gross margin and lower
administration and selling expenses, largely driven by a reduction
of sales and marketing expenses related to trade shows and
promotions as well as lower employee compensation and benefits
costs. Adjusted EBITDA was also positively impacted by lower
distribution costs mainly as a result of a reduction in net freight
costs from favourably negotiated agreements.
OUTLOOK
The health and safety of our employees remains
our top priority. We are closely following all COVID-19 public
health authority recommendations and have enhanced safety protocols
in place. To date our plants have operated without any disruption
during the COVID-19 pandemic; however, the uncertainty and
increased demand volatility make it difficult to estimate the
impact on future sale volumes, operations and financial results. We
are closely monitoring the situation and will continue to adapt
quickly to the changing circumstances.
We remain optimistic for the outlook of both the
Sugar and Maple segments in fiscal 2021, despite of market
uncertainty and additional costs related to the COVID-19 pandemic.
Regardless of an additional week of operations in fiscal 2020, we
anticipate volumes to exceed prior year levels in both segments,
which is expected to result in improved financial performance for
2021 compared to 2020. Fiscal 2021 includes 52 weeks of operations
while 2020 had 53 weeks, providing additional volumes in fiscal
2020 of approximately 14,000 metric tonnes for the Sugar Segment
and 1,000,000 lbs for the Maple Segment.
Sugar
Our full year fiscal 2021 sales volumes guidance
remains unchanged at approximately 776,000 metric tonnes, an
increase of 15,000 metric tonnes over fiscal 2020, despite the
impact of the crop shortfall in Taber, and an extra week of
operations in 2020. We continue to expect our Sugar segment to
achieve improved financial performance in fiscal 2021over fiscal
2020.
-
Industrial and liquid volumes are expected to increase by
approximately 15,000 metric tonnes in 2021, due to the addition of
new liquid customers.
- Consumer volumes
are expected to decrease by 5,000 metric tonnes in 2021 as the
effect of COVID-19 on the retail market subsides in the later part
of the current year.
- Export volumes
are expected to increase by approximately 5,000 metric tonnes
driven by new export quotas including the CUSMA special quotas that
took effect on July 1, 2020.
The 2021 adjusted EBITDA for the Sugar segment
is expected to benefit from the increase in beet sugar production
at the Taber facility as compared to last year. Our 2020 beet
harvest campaign was completed, despite weather-related crop
losses, with an estimated production of 119,000 metric tonne of
beet sugar, approximately 9,000 metric tonnes lower than expected;
but 48,000 metric tonnes higher than last year.
Maintenance programs for the remaining quarters
of 2021 are expected to follow the trend of previous years for each
facility. For the remainder of 2021, we expect distribution costs
to be lower than last year as the impact of the current year crop
shortfall in Taber was not as severe as last year’s crop issue,
requiring less backfill of customer orders from our Vancouver
facility.
Our capital spending expectation for the year is
between $20 million and $25 million, with approximately a quarter
of these funds allocated to return-on-investment projects.
We are continuing to work with our strategic
partner, Doux-Matok, to advance a unique sugar reduction solution
based on cane sugar to food companies in North America. Although
this is a small portion of the sweetener market, we believe this
could provide a competitive offering in this niche market.
Maple Products
We expect to see ongoing strong performance in
our Maple segment in fiscal 2021. The improvements in sales margins
and increased operational efficiencies evident in the first six
months, are expected to continue throughout the year. Sales margins
are expected to improve as the impact of successful contract
negotiations with new and existing customers are coming into effect
gradually. In addition, we expect the ongoing optimization at our
manufacturing facilities and efficiency improvements at our new
Granby facility and existing Dégelis plant to continue to drive
lower operating costs in 2021.
While we expect the COVID-19 related demand we
have seen over the past few quarters to temper in the second half
of 2021, we expect that firm underlying demand for maple syrup,
combined with our improved margins and lower cost structure will
result in improved financial performance for fiscal 2021, compared
to 2020.
Capital investments are expected to be
significantly lower for the Maple segment in 2021, following the
completion of our capital projects in 2020 and the resulting
increase in our production capacity.
See Cautionary statement on forward-looking
information and NON-GAAP measure sections.
A full copy of Rogers second quarter 2021,
including management’s discussion and analysis and unaudited
condensed consolidated interim financial statements, can be found
at www.LanticRogers.com.
Conference Call and Webcast
Rogers will host a conference call to discuss its second quarter
fiscal 2021 results on May 6, 2021 starting at 8:00a.m. ET. To
participate, please dial 1-877-223-4471. A recording of the
conference call will be accessible shortly after the conference, by
dialing 1-800-585-8367, access code 3194049#. This recording will
be available until May 13, 2021. A live audio webcast of the
conference call will also be available via www.LanticRogers.com.
About Rogers Sugar
Rogers is a corporation established under the
laws of Canada. The Corporation holds all of the common shares of
Lantic and its administrative office is in Montréal, Québec.
Lantic operates cane sugar refineries in Montreal, Québec and
Vancouver, British Columbia, as well as the only Canadian sugar
beet processing facility in Taber, Alberta. Lantic also operate a
custom blending and packaging operation and distribution center in
Toronto, Ontario. Lantic’s sugar products are marketed under the
“Lantic” trademark in Eastern Canada, and the “Rogers” trademark in
Western Canada and include granulated, icing, cube, yellow and
brown sugars, liquid sugars and specialty syrups. Lantic owns all
of the common shares of TMTC and its head office is headquartered
in Montréal, Québec. TMTC operates bottling plants in Granby,
Dégelis and in St-Honoré-de-Shenley, Québec and in Websterville,
Vermont. TMTC’s products include maple syrup and derived maple
syrup products supplied under retail private label brands in over
fifty countries and are sold under various brand names, such as
L.B. Maple Treat, Great Northern, Decacer and Highland
Sugarworks.
For more information about Rogers please visit
our website at www.LanticRogers.com.
Cautionary Statement Regarding
forward-looking information
This report contains Statements or information
that are or may be “forward-looking statements” or “forward-looking
information” within the meaning of applicable Canadian securities
laws. Forward-looking statements may include, without limitation,
statements and information which reflect the current expectations
of the Company with respect to future events and performance.
Wherever used, the words “may,” “will,” “should,” “anticipate,”
“intend,” “assume,” “expect,” “plan,” “believe,” “estimate,” and
similar expressions and the negative of such expressions, identify
forward-looking statements.
Although this is not an exhaustive list, Rogers
cautions investors that statements concerning the following
subjects are, or are likely to be, forward-looking statements:
- future prices of
raw sugar
- natural gas
costs
- the opening of
special refined sugar quotas in the United States (“U.S.”)
- beet production
forecasts
- growth of the
maple syrup industry
- the status of
labour contracts and negotiations
- the level of
future dividends
- the status of
government regulations and investigations
- the impact of
the COVID-19 pandemic on the Corporation and its operations.
Forward-looking statements are based on
estimates and assumptions made by Rogers in light of its experience
and perception of historical trends, current conditions and
expected future developments, as well as other factors that we
believe are appropriate and reasonable in the circumstances,
including with respect to the continuity of its operations despite
the COVID-19 pandemic, but there can be no assurance that such
estimates and assumptions will prove to be correct. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. Actual performance or results could differ materially
from those reflected in the forward-looking statements, historical
results or current expectations. Readers should also refer to the
section “Risks and Uncertainties” of the second quarter MD&A
for additional information on risk factors and other events that
are not within our control. These risks are also referred to in
Rogers Annual Information Form in the “Risk Factors” section.
Although we believe that the expectations and
assumptions on which forward-looking information is based are
reasonable under the current circumstances, readers are cautioned
not to rely unduly on this forward-looking information as no
assurance can be given that it will prove to be correct.
Forward-looking information contained herein is made as at the date
of this press release and Rogers does not undertake any obligation
to update or revise any forward-looking information, whether as a
result of events or circumstances occurring after the date hereof,
unless so required by law.
Cautionary Statement Regarding non-GAAP
measures
In analyzing results, we supplement the use of
financial measures that are calculated and presented in accordance
with IFRS with a number of non-GAAP financial measures. A non-GAAP
financial measure is a numerical measure of a company’s
performance, financial position or cash flow that excludes
(includes) amounts, or is subject to adjustments that have the
effect of excluding (including) amounts, that are included
(excluded) in most directly comparable measures calculated and
presented in accordance with IFRS. Non-GAAP financial measures are
not standardized; therefore, it may not be possible to compare
these financial measures with the non-GAAP financial measures of
other companies having the same or similar businesses. We strongly
encourage investors to review the audited consolidated financial
statements and publicly filed reports in their entirety, and not to
rely on any single financial measure.
We use these non-GAAP financial measures in
addition to, and in conjunction with, results presented in
accordance with IFRS. These non-GAAP financial measures reflect an
additional way of viewing aspects of the operations that, when
viewed with the IFRS results and the accompanying reconciliations
to corresponding IFRS financial measures, may provide a more
complete understanding of factors and trends affecting our
business. See “Non-GAAP measures” section at the end of the second
quarter MD&A for the current quarter for additional
information.
Financial Report Q2 2021
This Management’s Discussion and Analysis
(“MD&A”) of Rogers Sugar Inc.’s (“Rogers”, “RSI” or “our,”
“we”, “us”) dated May 5, 2021 should be read in conjunction with
the unaudited condensed consolidated interim financial statements
and related notes for the three- and six-month periods ended April
3, 2021, as well as the audited consolidated financial statements
and MD&A for the year ended October 3, 2020. The
quarterly unaudited condensed consolidated interim financial
statements and any amounts shown in this MD&A were not reviewed
nor audited by our external independent auditors. This
MD&A refers to Rogers, Lantic Inc. (“Lantic”) (Rogers and
Lantic together referred as the “Sugar segment”), The Maple Treat
Corporation (“Maple Treat”) and Highland Sugarworks Inc.
(“Highland”) (the latter two companies together referred to as
“TMTC” or the “Maple segment”).
Management is responsible for preparing the
MD&A. This MD&A has been reviewed and approved by the Audit
Committee of Rogers and its Board of Directors.
OUR BUSINESS
Rogers has a long history of providing high
quality sugar products to the Canadian market and has been
operating since 1888.
Lantic, Rogers wholly owned subsidiary, operates
cane sugar refineries in Montreal, Québec and Vancouver, British
Columbia, as well as the only Canadian sugar beet processing
facility in Taber, Alberta. Lantic’s sugar products are marketed
under the “Lantic” trademark in Eastern Canada, and the “Rogers”
trademark in Western Canada and include granulated, icing, cube,
yellow and brown sugars, liquid sugars and specialty syrups. We
also operate a custom blending and packaging operation and
distribution center in Toronto, Ontario.
Maple Treat operates bottling plants in Granby,
Dégelis and in St-Honoré-de-Shenley, Québec and in Websterville,
Vermont. Maple Treat’s products include maple syrup and derived
maple syrup products supplied under retail private label brands in
over fifty countries and are sold under various brand names, such
as L.B. Maple Treat, Great Northern, Decacer and Highland
Sugarworks.
Our Business has two distinct segments - Sugar –
which includes refined sugar and by-products and Maple – which
includes maple syrup and maple derived products.
UPDATE ON COVID-19
The ongoing COVID-19 pandemic has negatively
impacted the global economy, disrupted financial markets and supply
chain, significantly restricted business travel and interrupted
business activity.
Our business is considered an essential service
by the government and as such, our plants have continued to operate
at usual capacity. We have established extensive protection
measures and protocols to ensure the health and safety of our
employees. COVID-19 could have a material effect on our business as
it relates to customer demand, supply and delivery chain,
operations, financial market volatility, pension and benefits
liabilities and other economic fundamentals. For the second quarter
and the first six month of 2021, we incurred direct costs amounting
to $0.8 million and $1.8 million respectively in relation to
COVID-19. These costs were largely due to increased health and
safety measures implemented across all production facilities.
The effect of COVID-19 on our business may
continue for an extended period and the ultimate impact will depend
on future developments that are uncertain and cannot be predicted,
including and without limitations, the duration and severity of the
pandemic, the duration of the government support measures, the
effectiveness of the actions taken to contain and treat the disease
and the length of time it takes for normal economic and operating
conditions to resume.
BUSINESS HIGHLIGHTS
- Consolidated adjusted EBITDA for
the second quarter of 2021was $21.4 million, up 29.4% from the same
quarter last year, driven by higher adjusted EBITDA in both the
Sugar and Maple segments in the current quarter. Adjusted EBITDA
for the first six months of 2021 was $49.0 million, up 4.9% from
the same period in 2020, largely as a result of improved adjusted
EBITDA in the Maple segment;
- Adjusted EBITDA in the Sugar
segment was $17.0 million in the second quarter, an increase of
$3.2 million or 22.8% from the same quarter last year, largely due
to higher revenue partly offset by higher operating costs and
higher warehousing costs;
- Sales volumes in the Sugar segment
increased by 4.9% to 183,749 metric tonnes in the second quarter,
as stronger industrial, liquid and export volumes were partly
offset by a reduction in consumer volumes;
- As a result of unfavourable weather
conditions in October 2020, a portion of the current year’s Taber
beet crop was damaged, reducing the quantity and quality of the
beet processed in the second quarter of 2021. The issue encountered
in fiscal 2021 reduced the expected sugar production from Taber by
9,000 metric tonnes. The current year issue was not as severe as
the similar issue encountered in 2020 whereby half of the overall
sugar beet crop was lost due to unfavourable weather;
- Adjusted EBITDA in the Maple
segment was $4.4 million in the second quarter, an increase of $1.7
million or 63.2% from the same quarter last year as a result of
higher customer demand and improved margin;
- Maple segment volumes increased by
10.2% to 14,214 pounds in the quarter, driven by strong demand from
retail customers;
- Free cash flow for the trailing 12
months ended April 3, 2021 was $46.7 million, an increase of $11.1
million from the same period last year;
- In the second quarter of 2021, we
distributed $0.09 per share to our shareholders for a total amount
of $9.3 million;
- On April 30, 2021, Lantic issued
$100 million in senior guaranteed Notes under a note purchase
agreement as a private placement with certain institutional
investors. The proceeds of the issuance were used to repay existing
debt. The Notes carry an interest rate of 3.49% and are due on
April 30, 2031 with interest payable semi-annually in arrears;
and
- On May 5, 2021, the Board of
Directors declared a quarterly dividend of $0.09 per share, payable
on July 13, 2021.
SELECTED FINANCIAL DATA AND HIGHLIGHTS
(unaudited) (In thousands of dollars, except volume and per share
information) |
Q2 2021 |
Q2 2020 |
YTD 2021 |
YTD 2020 |
Sugar (metric tonnes) |
183,749 |
175,226 |
374,189 |
363,605 |
Maple syrup (000 pounds) |
14,214 |
12,893 |
29,106 |
25,686 |
Total revenues |
215,929 |
199,126 |
439,769 |
408,442 |
Gross Margin |
31,451 |
19,390 |
70,064 |
58,436 |
Adjusted gross margin(1) |
27,407 |
23,612 |
63,859 |
60,138 |
Results from operating
activities |
19,151 |
6,058 |
42,483 |
32,809 |
Adjusted results from
operating activities(1) |
15,107 |
10,280 |
36,278 |
34,511 |
Adjusted EBITDA(1) |
21,375 |
16,522 |
49,022 |
46,749 |
Net earnings |
10,778 |
965 |
24,551 |
16,929 |
per share
(basic) |
0.10 |
0.01 |
0.24 |
0.16 |
per share
(diluted) |
0.10 |
0.01 |
0.23 |
0.16 |
Adjusted net earnings(1) |
7,751 |
4,036 |
19,999 |
18,134 |
Adjusted net earnings per
share (basic)(1) |
0.07 |
0.04 |
0.19 |
0.17 |
Trailing twelve months free
cash flow(1) |
46,670 |
35,588 |
46,670 |
35,588 |
Dividends per share |
0.09 |
0.09 |
0.18 |
0.18 |
(1) See “Non-GAAP Measures” section for
definition and reconciliation to GAAP measures. |
Revenue and Adjusted
EBITDA: https://www.globenewswire.com/NewsRoom/AttachmentNg/80311927-e0b5-46e1-b136-7c34890e0a2f
Adjusted Net Earnings and Free Cash
Flow
TTM: https://www.globenewswire.com/NewsRoom/AttachmentNg/c3c97675-3081-4ecf-99e0-65f7173b87d9
Adjusted results
In the normal course of business, we use
derivative financial instruments consisting of sugar futures,
foreign exchange forward contracts, natural gas futures and
interest rate swaps. We have designated our natural gas
futures and our interest rate swap agreements entered into in order
to protect us against natural gas prices and interest rate
fluctuations as cash flow hedges. Derivative financial
instruments pertaining to sugar futures and foreign exchange
forward contracts are marked-to-market at each reporting date and
are charged to the consolidated statement of earnings. The
unrealized gains/losses related to natural gas futures and interest
rate swaps are accounted for in other comprehensive income. The
amount recognized in other comprehensive income is removed and
included in net earnings under the same line item in the
consolidated statement of earnings and comprehensive income as the
hedged item, in the same period that the hedged cash flows affect
net earnings, reducing earnings volatility related to the movements
of the valuation of these derivatives hedging instruments.
We believe that our financial results are more
meaningful to management, investors, analysts, and any other
interested parties when financial results are adjusted by the
gains/losses from financial derivative instruments. These
adjusted financial results provide a more complete understanding of
factors and trends affecting our business. This measurement
is a non-GAAP measurement. See “Non-GAAP measures” section.
We use the non-GAAP adjusted results of the
operating company to measure and to evaluate the performance of the
business through our adjusted gross margin, adjusted results from
operating activities, adjusted EBITDA, adjusted net earnings,
adjusted net earnings per share and trailing twelve months free
cash flow. In addition, we believe that these measures are
important to our investors and parties evaluating our performance
and comparing such performance to past results. We also use
adjusted gross margin, adjusted EBITDA, adjusted results from
operating activities and adjusted net earnings when discussing
results with the Board of Directors, analysts, investors, banks and
other interested parties. See “Non-GAAP measures” section.
OUR RESULTS ARE ADJUSTED AS FOLLOWS:
Income
(loss)(In thousands of dollars) |
|
Q2 2021 |
|
|
Q2 2020 |
|
|
Sugar |
Maple Products |
Total |
Sugar |
Maple Products |
Total |
Mark-to-market on: |
|
|
|
|
|
|
Sugar futures contracts |
1,462 |
- |
|
1,462 |
(2,825 |
) |
- |
|
(2,825 |
) |
Foreign exchange forward contracts |
526 |
794 |
|
1,320 |
(991 |
) |
(1,258 |
) |
(2,249 |
) |
Total mark-to-market
adjustment on derivatives |
1,988 |
794 |
|
2,782 |
(3,816 |
) |
(1,258 |
) |
(5,074 |
) |
Cumulative timing differences |
2,642 |
(1,380 |
) |
1,262 |
1,255 |
|
(418 |
) |
837 |
|
Adjustment to cost of
sales |
4,630 |
(586 |
) |
4,044 |
(2,561 |
) |
(1,676 |
) |
(4,237 |
) |
Amortization of transitional balance to cost of sales and changes
in fair value of expired contracts for cash flow hedges |
- |
- |
|
- |
15 |
|
- |
|
15 |
|
Total
adjustment to costs of sales |
4,630 |
(586 |
) |
4,044 |
(2,546 |
) |
(1,676 |
) |
(4,222 |
) |
Income
(loss)(In thousands of dollars) |
|
YTD 2021 |
|
|
YTD 2020 |
|
|
Sugar |
Maple Products |
Total |
Sugar |
Maple Products |
Total |
Mark-to-market on: |
|
|
|
|
|
|
Sugar futures contracts |
1,041 |
- |
|
1,041 |
|
(337 |
) |
- |
|
(337 |
) |
Foreign exchange forward contracts |
3,823 |
1,892 |
|
5,715 |
|
(1,522 |
) |
(1,003 |
) |
(2,525 |
) |
Total mark-to-market
adjustment on derivatives |
4,864 |
1,892 |
|
6,756 |
|
(1,859 |
) |
(1,003 |
) |
(2,862 |
) |
Cumulative timing differences |
1,411 |
(1,962 |
) |
(551 |
) |
1,745 |
|
(607 |
) |
1,138 |
|
Adjustment to cost of
sales |
6,275 |
(70 |
) |
6,205 |
|
(114 |
) |
(1,610 |
) |
(1,724 |
) |
Amortization of transitional balance to cost of sales and changes
in fair value of expired contracts for cash flow hedges |
- |
- |
|
- |
|
22 |
|
- |
|
22 |
|
Total
adjustment to costs of sales |
6,275 |
(70 |
) |
6,205 |
|
(92 |
) |
(1,610 |
) |
(1,702 |
) |
Fluctuations in the mark-to-market adjustment on
derivatives are due to the price movements in #11 world raw sugar
and foreign exchange variations.
We recognize cumulative timing differences, as a
result of mark-to-market gains or losses, only when sugar is sold
to a customer. The gains or losses on sugar and related
foreign exchange paper transactions are largely offset by
corresponding gains or losses from the physical transactions,
namely sale and purchase contracts with customers and
suppliers.
The above described adjustments are added to or
deducted from the mark-to-market results to arrive at the total
adjustment to cost of sales. For the three- and six-months
periods ended on April 3, 2021, the total cost of sales adjustment
is a gain of $4.0 million and $6.2 million, respectively, to be
deducted from the consolidated results versus a loss of $4.2
million and $1.7 million to be added to the consolidated results
for the comparable periods last year, respectively.
See the “Non-GAAP measures” section for more
information on these adjustments.
SEGMENTED INFORMATION
Segmented
Results (In thousands of dollars) |
|
Q2 2021 |
|
|
Q2 2020 |
|
|
Sugar |
Maple Products |
Total |
Sugar |
Maple Products |
Total |
Revenues |
155,961 |
|
59,968 |
215,929 |
|
143,609 |
55,517 |
|
199,126 |
Gross margin |
26,423 |
|
5,028 |
31,451 |
|
16,664 |
2,726 |
|
19,390 |
Administration and selling
expenses |
5,771 |
|
2,185 |
7,956 |
|
5,577 |
2,883 |
|
8,460 |
Distribution costs |
3,623 |
|
721 |
4,344 |
|
3,997 |
875 |
|
4,872 |
Results from operating
activities |
17,029 |
|
2,122 |
19,151 |
|
7,090 |
(1,032 |
) |
6,058 |
|
|
|
|
|
|
|
Adjustment to cost of
sales(2) |
(4,630 |
) |
586 |
(4,044 |
) |
2,546 |
1,676 |
|
4,222 |
Adjusted Gross margin(1) |
21,793 |
|
5,614 |
27,407 |
|
19,210 |
4,402 |
|
23,612 |
Adjusted results from
operating activities(1) |
12,399 |
|
2,708 |
15,107 |
|
9,636 |
644 |
|
10,280 |
Adjusted EBITDA(1) |
17,010 |
|
4,365 |
21,375 |
|
13,847 |
2,675 |
|
16,522 |
Additional information: |
|
|
|
|
|
|
Addition to property, plant and equipment, intangible assets, and
right-of-use assets |
6,905 |
|
367 |
7,272 |
|
4,267 |
2,250 |
|
6,517 |
(1) See “Non-GAAP Measures” section for definition and
reconciliation to GAAP measures |
(2) See “Adjusted results” section |
Segmented Results (In thousands of dollars) |
|
YTD 2021 |
|
|
YTD 2020 |
|
|
Sugar |
Maple Products |
Total |
Sugar |
Maple Products |
Total |
Revenues |
315,419 |
|
124,350 |
439,769 |
|
298,424 |
110,018 |
408,442 |
Gross margin |
58,764 |
|
11,300 |
70,064 |
|
49,893 |
8,543 |
58,436 |
Administration and selling
expenses |
13,039 |
|
4,515 |
17,554 |
|
11,148 |
5,582 |
16,730 |
Distribution costs |
8,692 |
|
1,334 |
10,027 |
|
7,225 |
1,672 |
8,897 |
Results from operating
activities |
37,033 |
|
5,450 |
42,483 |
|
31,520 |
1,289 |
32,809 |
|
|
|
|
|
|
|
Adjustment to cost of
sales(2) |
(6,275 |
) |
70 |
(6,205 |
) |
92 |
1,610 |
1,702 |
Adjusted Gross margin(1) |
52,489 |
|
11,370 |
63,859 |
|
49,985 |
10,153 |
60,138 |
Adjusted results from
operating activities(1) |
30,758 |
|
5,520 |
36,278 |
|
31,612 |
2,899 |
34,511 |
Adjusted EBITDA(1) |
39,741 |
|
9,281 |
49,022 |
|
39,967 |
6,782 |
46,749 |
Additional information: |
|
|
|
|
|
|
Addition to property, plant and equipment, intangible assets, and
right-of-use assets |
13,348 |
|
478 |
13,826 |
|
8,569 |
12,922 |
21,491 |
(1) See
“Non-GAAP Measures” section for definition and reconciliation to
GAAP measures |
(2) See
“Adjusted results” section |
Sugar
REVENUES
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In thousands of dollars) |
155,961 |
143,609 |
12,352 |
315,419 |
298,424 |
16,995 |
Sugar Volume Variance and Sugar
Volumes: https://www.globenewswire.com/NewsRoom/AttachmentNg/f88f87f0-c632-4491-8f5a-566bb72c9fc2
In the second quarter and first six months of
fiscal 2021, revenue increased by 8.6% and 5.7% respectively,
compared to the same periods last year driven by higher volumes and
increased pricing.
Sugar volume increased by 4.9% in the second
quarter 2021 compared to the same quarter last year as stronger
industrial, liquid and export volumes were partly offset by a
reduction in consumer volumes.
- Export volumes contributed the
largest increase in the quarter, largely due to higher beet sugar
sales to the United States in 2021 under the Canadian United States
Mexico Agreement quota (“CUSMA”).
- Total domestic volume remained
largely unchanged; however, we experienced a shift between the
industrial, consumer and liquid segments. Industrial and liquid
volumes increased compared to last year as customer demand remained
firm and delayed industrial orders from the first quarter were
filled in the second quarter. In the second quarter, consumer
volumes lowered, returning closer to pre-COVID levels as consumer
pantry loading reduced compared to last year resulting in retailers
holding higher inventory levels than expected.
In the first six months of 2021, sugar volume
totaled 374,189 metric tonnes, an increase of 2.9% compared to the
same period last year, as stronger liquid and export volumes were
partly offset by a reduction in industrial and consumer
volumes.
- Export volumes also contributed the
largest increase in the first six months of 2021, largely due to
higher beet sugar sales to the United States under the CUSMA
quota.
- Domestic volumes remained overall
consistent as compared to last year. However, we experienced a
shift between the industrial, consumer and liquid segments. The
reduction in the industrial volume was due to the volatility in
demand related to COVID-19, while the increase in the liquid volume
was due to higher volume from new and existing customers. Finally,
we noted that the retail consumer volumes returned closer to
pre-COVID levels in the second quarter of 2021, as explained
above.
GROSS MARGIN
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars, except per metric tonne information) |
Gross margin |
26,423 |
|
16,664 |
9,759 |
|
58,764 |
|
49,893 |
8,871 |
|
Total
adjustment to cost of sales(2) |
(4,630 |
) |
2,546 |
(7,176 |
) |
(6,275 |
) |
92 |
(6,367 |
) |
Adjusted gross margin(1) |
21,793 |
|
19,210 |
2,583 |
|
52,489 |
|
49,985 |
2,504 |
|
Adjusted gross margin per
metric tonne(1) |
118.60 |
|
109.63 |
8.97 |
|
140.27 |
|
137.47 |
2.80 |
|
Included in Gross margin:Depreciation of property, plant and
equipment and right-of-use assets |
3,799 |
|
3,744 |
55 |
|
7,575 |
|
7,422 |
15 |
|
(1) See
“Non-GAAP Measures” section for definition and reconciliation to
GAAP measures |
(2) See
“Adjusted results” section |
Gross margins were $26.4 million and $58.8
million for the three and six months ended April 3, 2021 and
include a gain of $4.6 and $6.3 million, respectively, for the
mark-to-market of derivative financial instruments. For the same
periods last year, gross margins were $16.7 million and $49.9
million, respectively, with a mark-to-market loss of $2.5 million
and $0.1 million.
Adjusted gross margin was $21.8 million and
$52.5 million for the second quarter and for the first six months
of 2021, respectively, as compared to $19.2 million and $50.0
million in the same periods of 2020.
Adjusted gross margin increased by $2.6 million
in the current quarter compared to the same quarter last year
mainly as a result of higher sugar sales margin of $1.2 million and
increased by-product net contribution of $2.9 million. This
favourable variance was partially offset by higher processing costs
of $1.5 million. The higher costs were related to the Vancouver
plant and were mainly due to a variation in the mix of products
sold resulting from the transfer of production from Taber to
Vancouver. The transfer of production was necessary to mitigate
supply issues at the Taber facility. On a per unit basis,
adjusted gross margin for the second quarter was at $118.60 per
metric tonnes, higher that last year by $8.97 per metric tonnes.
The increase was mainly due to higher volume in the current year,
reflecting higher customer demand and increased pricing in 2021
compared to 2020.
As a result of unfavourable weather conditions
in October 2020, a portion of the current year’s Taber beet crop
was damaged, reducing the quantity and quality of the beet
processed in the second quarter of 2021. The issue encountered in
fiscal 2021 reduced the expected sugar production from Taber by
9,000 metric tonnes. The current year issue was not as severe as
the similar issue encountered in 2020 whereby half of the overall
sugar beet crop was lost due to unfavourable weather. In both
fiscal years, we continued to meet customer demand, despite the
uncontrollable crop issues as our Vancouver cane sugar facility was
used to backfill the shortfall from the Taber facility. The direct
impact on adjusted gross margin of the crop shortfall on the Taber
operations is expected to amount to $ 4.0 million in 2021. In
connection with this issue, $2.1 million was recognized in the
second quarter of 2021.
Adjusted gross margin for the first six months
of 2021 was $2.5 million higher than the comparable period last
year, mainly due to higher adjusted gross margin in the second
quarter of 2021, as explained above. On a per unit basis, for the
first six months of 2021, adjusted gross margin amounted to $140.27
per metric tonnes compared to $137.47 per metric tonnes. The
variance of $2.80 per metric tonnes was due to the issue mentioned
above’ partially offset by higher contribution in the first quarter
of 2020 compared to 2021.
Adjusted Gross
Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/25eb7f26-8b74-4bf6-b653-ade5013ccfb2
OTHER EXPENSES
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars) |
Administration and selling expenses |
5,771 |
5,577 |
194 |
|
13,039 |
11,148 |
1,891 |
Distribution costs |
3,623 |
3,997 |
(374 |
) |
8,692 |
7,225 |
1,467 |
Included in Administration and
selling expenses:Depreciation of property, plant and equipment and
right-of-use assets |
405 |
210 |
195 |
|
627 |
419 |
208 |
Included in Distribution costs:Depreciation of right-of-use
assets |
407 |
257 |
150 |
|
781 |
514 |
267 |
In the second quarter, administration and
selling expenses remained largely unchanged compared to the same
quarter last year, with both periods including direct expenditures
related to COVID-19 health and safety costs. Due to the timing of
the COVID-19 pandemic, the impact was lower in the second quarter
of 2020; however, the current quarter also includes the recognition
of prior-period government support in relation to various programs,
including tax credits. Distribution costs decreased by
9.4% as costs associated with reconfiguring our supply chain to
compensate for the crop shortfall this quarter were lower compared
the same quarter last year.
For the first six months of 2021, administration
and selling expenses were $1.9 million higher than the comparable
period last year, mainly due to incremental COVID-19 related cost
of $1.8 million incurred in the first two quarters of 2021.
Distribution cost increased by $1.5 million compared to the first
six months of 2020 largely driven by additional logistical costs
incurred to support our supply chain in the first quarter of 2021
as strong demand in the fourth quarter of fiscal 2020 resulted in
lower than typical inventory levels at the beginning of fiscal year
2021.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED
EBITDA
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars) |
Results from operating activities |
17,029 |
|
7,090 |
9,939 |
|
37,033 |
|
31,520 |
5,513 |
|
Total
adjustment to cost of sales (2) |
(4,630 |
) |
2,546 |
(7,176 |
) |
(6,275 |
) |
92 |
(6,367 |
) |
Adjusted results from
operating activities(1) |
12,399 |
|
9,636 |
2,763 |
|
30,758 |
|
31,612 |
(854 |
) |
Depreciation of property, plant and equipment, right-of-use assets,
and amortization of intangible assets |
4,611 |
|
4,211 |
400 |
|
8,983 |
|
8,355 |
628 |
|
Adjusted EBITDA(1) |
17,010 |
|
13,847 |
3,163 |
|
39,741 |
|
39,967 |
(226 |
) |
(1) See
“Non-GAAP Measures” section for definition and reconciliation to
GAAP measures |
(2) See
“Adjusted results” section |
Results from operating activities for the second
quarter and the first six months of 2021 were $17.0 million and
$37.0 million respectively, an increase from $7.1 million and $31.5
million in the same periods last year. These results include
gains and losses from the mark-to-market of derivative financial
instruments, as well as timing differences in the recognition of
any gains and losses on the liquidation of derivative
instruments. In addition, non-cash depreciation and
amortization expense also had a negative impact on the results from
operating activities.
Adjusted results from operating activities in
the second quarter of 2021 were $2.8 million higher than the same
period last year, mainly due to higher adjusted gross margin as
explained above. Adjusted results from operating activities
for the first six months of 2021 were $0.9 million lower than the
same period last year as higher adjusted gross margin was offset by
higher distribution costs and administration and selling
expenses.
Adjusted EBITDA for the second quarter increased
by $3.2 million compared to the same period last year, largely as a
result of higher adjusted gross margin. Adjusted EBITDA for the
first six months was largely unchanged compared to the same period
last year as higher EBITDA in the second quarter of 2021
compensated for the lower EBITDA in the first quarter of 2021,
mainly explained by higher distribution costs and administration
and selling expenses.
Maple Products
REVENUES
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars, except volume) |
Volume (000 pounds) |
14,214 |
12,893 |
1,321 |
29,106 |
25,686 |
3,420 |
Revenues |
59,968 |
55,517 |
4,451 |
124,350 |
110,018 |
14,332 |
Maple Volumes and
Adjusted Gross
Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/f6198030-7610-43f9-afd9-bf0582044d95
Revenues for the second quarter and the first
six month of the current fiscal year were $4.5 million and $14.3
million higher than the same periods last year due to ongoing
strong demand driven partially by the COVID-19 pandemic and an
aggressive sales and marketing strategy.
GROSS MARGIN
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars, except adjusted gross margin rate
information) |
Gross margin |
5,028 |
|
2,726 |
|
2,302 |
|
11,300 |
|
8,543 |
|
2,757 |
|
Total
adjustment to cost of sales(2) |
586 |
|
1,676 |
|
(1,090 |
) |
70 |
|
1,610 |
|
(1,540 |
) |
Adjusted gross margin(1) |
5,614 |
|
4,402 |
|
1,212 |
|
11,370 |
|
10,153 |
|
1,217 |
|
Adjusted gross margin
percentage(1) |
9.4 |
% |
7.9 |
% |
1.5 |
% |
9.1 |
% |
9.2 |
% |
(0.1 |
)% |
Included in Gross margin:Depreciation of property, plant and
equipment and right-of-use assets |
785 |
|
786 |
|
(11 |
) |
1,767 |
|
1,489 |
|
278 |
|
(1) See “Non-GAAP Measures” section for definition and
reconciliation to GAAP measures |
(2) See “Adjusted results” section |
Gross margin was $5.0 million and $11.3 million
for the three and six months ended in the current fiscal year and
include a loss of $0.6 and $0.1 million, respectively, for the
mark-to-market of derivative financial instruments. For the same
periods last year, gross margin was $2.7 million and $8.5 million,
respectively, with a mark-to-market loss of $1.7 million and $1.6
million.
Adjusted gross margin for the current quarter
was $1.2 million higher than the comparable period last year,
driven by a combination of lower costs from improved operational
efficiency and higher sales margin from sustained marketing
efforts. Improved profitability was also reflected in our adjusted
gross margin percentage, increasing by 150 basis points to 9.4% in
the current quarter, up from 7.9% in the same quarter last
year.
Adjusted gross margin was $1.2 million higher
for the first six months of 2021 compared to last year, driven by
the increase in adjusted gross margin in Q2 2021 as explained
above.
Other expenses
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars) |
Administration and selling expenses |
2,185 |
2,883 |
(698 |
) |
4,515 |
5,582 |
(1,067 |
) |
Distribution costs |
721 |
875 |
(154 |
) |
1,334 |
1,672 |
(338 |
) |
Included in Administration and selling expenses:Amortization of
intangible assets |
872 |
875 |
7 |
|
1,747 |
1,750 |
(3 |
) |
Administration and selling expenses were $0.7
million and $1.1 million lower than the second quarter and the
first six months of last year, respectively, due to a reduction of
sales and marketing expenses related to trade shows and promotions
as well as lower employee compensation and benefits costs.
Distribution costs decreased by $0.2 million and $0.3 million
compared to the second quarter and the first six months of last
year, respectively, largely driven by a reduction in net freight
costs from favourable negotiated agreements.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED
EBITDA
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars) |
Results from operating activities |
2,122 |
(1,032 |
) |
3,154 |
|
5,450 |
1,289 |
4,162 |
|
Total
adjustment to cost of sales(2) |
586 |
1,676 |
|
(1,090 |
) |
70 |
1,610 |
(1,540 |
) |
Adjusted results from operating activities(1) |
2,708 |
644 |
|
2,064 |
|
5,520 |
2,899 |
2,621 |
|
Non-recurring expenses: |
|
|
|
|
|
|
Other one-time
non-recurring items |
- |
370 |
|
(370 |
) |
247 |
644 |
(397 |
) |
Depreciation and amortization |
1,657 |
1,661 |
|
(4 |
) |
3,514 |
3,239 |
275 |
|
Adjusted EBITDA(1) |
4,365 |
2,675 |
|
1,690 |
|
9,281 |
6,782 |
2,499 |
|
(1) See
“Non-GAAP Measures” section for definition and reconciliation to
GAAP measures |
(2) See
“Adjusted results” section |
Results from operating activities for the second
quarter and the first six months of 2021 were $2.1 million and $5.5
million respectively, compared to $(1.0) million and $1.3 million
in the same periods last year. These results include gains
and losses from the mark-to-market of derivative financial
instruments, as well as timing differences in the recognition of
any gains and losses on the liquidation of derivative
instruments.
Certain non-cash items and non-recurring
expenses had an impact on the results from operating activities. As
such, Management believes that the Maple segment’s financial
results are more meaningful to management, investors, analysts, and
any other interested parties when financial results are adjusted
for the above-mentioned items. Other non recurrent items in the
second quarter and the first six months of 2020 were mainly costs
associated with having two locations in Granby.
Adjusted results from operating activities for
the current quarter and the first six months of 2021 were $2.1
million and $2.6 million higher than the comparable periods last
year, due to increased adjusted gross margin and lower
administration and selling expenses as well as lower distribution
costs, as explained above.
Adjusted EBITDA for the second quarter and the
first six months of fiscal 2021 increased by $1.7 million and $2.5
million, respectively due to higher adjusted gross margins and
lower administration and selling expenses as well as lower
distribution cost, as explained above.
OUTLOOK
The health and safety of our employees remains
our top priority. We are closely following all COVID-19 public
health authority recommendations and have enhanced safety protocols
in place. To date our plants have operated without any disruption
during the COVID-19 pandemic; however, the uncertainty and
increased demand volatility make it difficult to estimate the
impact on future sale volumes, operations and financial results. We
are closely monitoring the situation and will continue to adapt
quickly to the changing circumstances.
We remain optimistic for the outlook of both the
Sugar and Maple segments in fiscal 2021, despite of market
uncertainty and additional costs related to the COVID-19 pandemic.
Regardless of an additional week of operations in fiscal 2020, we
anticipate volumes to exceed prior year levels in both segments,
which is expected to result in improved financial performance for
2021 compared to 2020. Fiscal 2021 has 52 weeks of operations while
2020 had 53 weeks, providing additional volumes in fiscal 2020 of
approximately 14,000 metric tonnes for the Sugar Segment and
1,000,000 lbs for the Maple Segment.
Sugar
Our full year fiscal 2021 sales volumes guidance
remains unchanged at approximately 776,000 metric tonnes, an
increase of 15,000 metric tonnes over fiscal 2020, despite the
impact of the crop shortfall in Taber, and an extra week of
operations in 2020. We continue to expect our Sugar segment to
achieve improved financial performance in fiscal 2021over fiscal
2020.
- Industrial and liquid volumes are
expected to increase by approximately 15,000 metric tonnes in 2021,
due to the addition of new liquid customers.
- Consumer volumes are expected to
decrease by 5,000 metric tonnes in 2021 as the effect of COVID-19
on the retail market subsides in the later part of the current
year.
- Export volumes are expected to
increase by approximately 5,000 metric tonnes driven by new export
quotas including the CUSMA special quotas that took effect on
July 1, 2020.
The 2021 adjusted EBITDA for the Sugar segment
is expected to benefit from the increase in beet sugar production
at the Taber facility as compared to last year. Our 2020 beet
harvest campaign was completed, despite weather-related crop
losses, with an estimated production of 119,000 metric tonne of
beet sugar, approximately 9,000 metric tonnes lower than expected;
still 48,000 metric tonnes higher that last year.
Maintenance programs for the remaining quarters
of 2021 are expected to follow the trend of previous years for each
facility. For the remainder of 2021, we expect distribution costs
to be lower than last year as the impact of the current year crop
shortfall in Taber was not as severe as last year’s crop issue,
requiring less backfill of customer orders from our Vancouver
facility.
Our capital spending expectation for the year is
between $20 million and $25 million, with approximately a quarter
of these funds allocated to return-on-investment projects.
We are continuing to work with our strategic
partner, Doux-Matok, to advance a unique sugar reduction solution
based on cane sugar to food companies in North America. Although
this is a small portion of the sweetener market, we believe this
could provide a competitive offering in this niche market.
Maple Products
We expect to see ongoing strong performance in
our Maple segment in fiscal 2021. The improvements in sales margins
and increased operational efficiencies evident in the first six
months, are expected to continue throughout the year. Sales margins
are expected to improve as the impact of successful contract
negotiations with new and existing customers are coming into effect
gradually. In addition, we expect the ongoing optimization at our
manufacturing facilities and efficiency improvements at our new
Granby facility and existing Dégelis plant to continue to drive
lower operating costs in 2021.
While we expect the COVID-19 related demand we
have seen over the past few quarters to temper in the second half
of 2021, we expect that firm underlying demand for maple syrup,
combined with our improved margins and lower cost structure will
result in improved financial performance for fiscal 2021, compared
to 2020.
Capital investments are expected to be
significantly lower for the Maple segment in 2021, following the
completion of our capital projects in 2020 and the resulting
increase in our production capacity.
See “Forward Looking Statements” section and
“Risks and Uncertainties” section.
CONSOLIDATED RESULTS AND SELECTED
FINANCIAL INFORMATION
|
Q2 2021 |
Q2 2020 |
YTD 2021 |
YTD 2020 |
(unaudited)(In thousands of dollars, except volume and per share
information) |
Sugar (metric tonnes) |
183,749 |
175,226 |
374,189 |
363,605 |
Maple syrup (000 pounds) |
14,214 |
12,893 |
29,106 |
25,686 |
Total revenues |
215,929 |
199,126 |
439,769 |
408,442 |
Gross margin |
31,451 |
19,390 |
70,064 |
58,436 |
Adjusted Gross Margin(1) |
27,407 |
23,612 |
63,859 |
60,138 |
Results from operating
activities |
19,151 |
6,058 |
42,483 |
32,809 |
Adjusted results from
operating activities(1) |
15,107 |
10,280 |
36,278 |
34,511 |
Adjusted EBITDA(1) |
21,375 |
16,522 |
49,022 |
46,749 |
Net finance costs |
4,383 |
4,504 |
9,079 |
9,385 |
Income tax expense |
3,990 |
589 |
8,853 |
6,495 |
Net earnings |
10,778 |
965 |
24,551 |
16,929 |
per share
(basic) |
0.10 |
0.01 |
0.24 |
0.16 |
per share
(diluted) |
0.10 |
0.01 |
0.23 |
0.16 |
Adjusted net earnings(1) |
7,751 |
4,036 |
19,999 |
18,134 |
per share
(basic)(1) |
0.07 |
0.04 |
0.19 |
0.17 |
Dividends per share |
0.09 |
0.09 |
0.18 |
0.18 |
(1) See
“Non-GAAP Measures” section for definition and reconciliation to
GAAP measures |
Total revenues
Revenues increased by $16.8 million and $31.3
million for the second quarter and for the first six months of
2021, respectively versus comparable periods last year. Revenue
increased due to increased sales volumes and higher prices in both
the Sugar and Maple products segments.
Gross margin
Excluding the mark-to-market of derivative
financial instruments, adjusted gross margin for the second quarter
of the current year increased by $3.8 million, which is mainly
explained by an increase in adjusted gross margin rate for both
segments. For the Sugar segment, the adjusted gross margin per
metric tonnes was higher by $8.97 per metric tonnes, due to higher
sales volume and improved sales margins. For the Maple segment, the
adjusted gross margin percentage was higher by 1.5% mainly due to
improved sales margins and lower costs.
For the first six months of 2021, adjusted gross
margin was $3.7 million higher than the first half of fiscal 2020
mainly driven by the increase in the second quarter of 2021, as
explained above.
Results from operating activities
Excluding the mark-to-market of derivative
financial instruments, adjusted results from operating activities
for the current quarter amounted to $15.1 million compared to $10.3
million in the same quarter last year, an increase of $4.8 million.
For the first six months of 2021, adjusted results from operating
activities were $36.3 million compared to $34.5 million,
representing an increase of $1.8 million. The improvement in both
periods was mainly driven by higher contribution from both segments
in the current quarter and by higher results from the Maple segment
in the first half of 2021; partially offset by lower results from
the Sugar segment.
Net finance costs
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars) |
Interest expense on convertible unsecured subordinated
debentures |
2,102 |
2,073 |
29 |
|
4,140 |
4,171 |
(31 |
) |
Interest on revolving credit
facility |
1,644 |
1,829 |
(185 |
) |
3,356 |
3,529 |
(173 |
) |
Amortization of deferred
financing fees |
297 |
297 |
- |
|
593 |
593 |
- |
|
Other interest expense |
340 |
305 |
35 |
|
990 |
1,092 |
(102 |
) |
Net finance costs |
4,383 |
4,504 |
(121 |
) |
9,079 |
9,385 |
(306 |
) |
Net finance costs consisted of interest paid
under the revolving credit facility, as well as interest expense on
the convertible unsecured subordinated debentures and other
interest.
For the second quarter and first six months of
the current year, net finance costs were $0.1 million and $0.3
million lower than the comparable periods last year, respectively,
which is mainly due to lower interest rate on the revolving credit
facility partially offset by higher average balance of the
outstanding amount under this facility.
Other interest expense pertains mainly to
interest payable to the Producteurs et Productrices Acericoles du
Quebec (“PPAQ”) on syrup purchases, in accordance with the PPAQ
payment terms and interest accretion on discounted lease
obligations.
Taxation
|
Q2 2021 |
Q2 2020 |
∆ |
YTD 2021 |
YTD 2020 |
∆ |
(In
thousands of dollars) |
Current |
3,479 |
2,874 |
|
605 |
8,255 |
8,304 |
|
(49 |
) |
Deferred |
511 |
(2,285 |
) |
2,796 |
598 |
(1,809 |
) |
2,407 |
|
Income
tax expense |
3,990 |
589 |
|
3,401 |
8,853 |
6,495 |
|
2,358 |
|
The variation in current and deferred tax
expense period-over-period is consistent with the variation in
earnings before income taxes in fiscal 2021.
Deferred income taxes reflect temporary
differences, which result primarily from the difference between
depreciation claimed for tax purposes and depreciation amounts
recognized for financial reporting purposes, employee future
benefits and derivative financial instruments. Deferred
income tax assets and liabilities are measured using the enacted or
substantively enacted tax rates anticipated to apply to income in
the years in which temporary differences are expected to be
realized or reversed. The effect of a change in income tax
rates on future income taxes is recognized in income in the period
in which the change occurs.
Net earnings
Net earnings in the second quarter and for the
first six months fiscal 2021 were $9.8 million and $7.6 million
higher than the comparative periods of fiscal 2020, respectively.
Net earnings increased largely as a result of the after-tax impact
of the period-over-period variation of the gains and losses on the
mark-to-market of derivative financial instruments and an increase
in results from operating activities for both segments in the
second quarter and the first six months of 2021.
Summary of Quarterly Results
The following is a summary of selected financial
information of the unaudited condensed consolidated interim
financial statements and non-GAAP measures of the Company for the
last eight quarters:
(In
thousands of dollars, except for volume and per share
information) |
QUARTERS(2) (3) |
|
2021 |
2020 |
2019 |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Sugar Volume (MT) |
183,749 |
|
190,440 |
|
225,396 |
|
172,054 |
|
175,226 |
|
188,379 |
|
196,903 |
|
180,824 |
|
Maple products volume (000
pounds) |
14,214 |
|
14,892 |
|
13,181 |
|
14,313 |
|
12,893 |
|
12,792 |
|
10,163 |
|
9,325 |
|
Total revenues |
215,929 |
|
223,840 |
|
246,212 |
|
206,147 |
|
199,126 |
|
209,316 |
|
207,572 |
|
191,448 |
|
Gross margin |
31,451 |
|
38,613 |
|
37,890 |
|
29,873 |
|
19,390 |
|
39,046 |
|
29,073 |
|
30,741 |
|
Adjusted gross margin(1) |
27,407 |
|
36,452 |
|
40,065 |
|
25,915 |
|
23,612 |
|
36,526 |
|
29,026 |
|
26,231 |
|
Results from operations |
19,151 |
|
23,332 |
|
22,829 |
|
12,372 |
|
6,058 |
|
26,751 |
|
(32,800 |
) |
18,570 |
|
Adjusted results from
operations(1) |
15,107 |
|
21,171 |
|
25,004 |
|
8,414 |
|
10,280 |
|
24,231 |
|
17,153 |
|
14,060 |
|
Adjusted EBITDA |
21,375 |
|
27,647 |
|
31,231 |
|
14,279 |
|
16,522 |
|
30,227 |
|
22,215 |
|
18,792 |
|
Net earnings (loss) |
10,778 |
|
13,773 |
|
12,952 |
|
5,538 |
|
965 |
|
15,964 |
|
(40,021 |
) |
10,432 |
|
Per share -
basic |
0.10 |
|
0.13 |
|
0.13 |
|
0.05 |
|
0.01 |
|
0.15 |
|
(0.38 |
) |
0.10 |
|
Per share -
diluted |
0.10 |
|
0.13 |
|
0.12 |
|
0.05 |
|
0.01 |
|
0.14 |
|
(0.38 |
) |
0.10 |
|
Adjusted net earnings(1) |
7,751 |
|
12,248 |
|
14,551 |
|
2,560 |
|
4,036 |
|
14,098 |
|
9,910 |
|
7,033 |
|
Per share -
basic |
0.07 |
|
0.12 |
|
0.14 |
|
0.02 |
|
0.04 |
|
0.13 |
|
0.09 |
|
0.07 |
|
Per share -
diluted |
0.07 |
|
0.11 |
|
0.14 |
|
0.02 |
|
0.04 |
|
0.13 |
|
0.09 |
|
0.07 |
|
Sugar - Adjusted gross margin
rate per MT(1) |
118,60 |
|
161.18 |
|
157.51 |
|
120.45 |
|
109.63 |
|
163.37 |
|
123.71 |
|
116.97 |
|
Maple -
Adjusted gross margin percentage(1) |
9.4 |
% |
8.9 |
% |
7.90 |
% |
8.40 |
% |
7.90 |
% |
10.6 |
% |
9.70 |
% |
11.20 |
% |
(1) See
“Non-GAAP Measures” section for definition and reconciliation to
GAAP measures |
(2) All
quarters are 13 weeks with the exception of the fourth quarter of
2020 which is 14 weeks |
(3) The
first and second quarters of 2021 and the 2020 quarters results
include the impacts from the adoption of IFRS 16 Leases as
discussed in note 3 (h) of the 2020 audited consolidated financial
statements. As is permitted with this new standard, comparative
information has not been restated and, therefore, may not be
comparable |
Historically the first quarter (October to
December) of the fiscal year is the best quarter of the sugar
segment for adjusted gross margins and adjusted net earnings due to
the favourable sales mix associated with an increased proportion of
consumer sales during that period of the year. At the same
time, the second quarter (January to March) historically has the
lowest volume as well as an unfavourable customer mix, resulting in
lower revenues, adjusted gross margins and adjusted net
earnings. The historical trend for adjusted gross margin and
adjusted net earnings was different for the last three quarters of
2020 and for the two quarters of 2021 due to the volatility in
customer volumes related to COVID-19.
Usually, there is minimal seasonality in the
Maple products segment. However, for the last two quarters of 2020
and the two quarters of 2021, we experienced higher sales volume
partially attributable to increased demand from COVID-19.
Financial condition
(In thousands of dollars) |
April 3, 2021 |
March 28, 2020 |
October 3, 2020 |
Total assets |
$ |
860,305 |
$ |
817,385 |
$ |
887,144 |
Total
non-current liabilities |
|
443,871 |
|
431,575 |
|
448,128 |
The increase in total assets in the current
fiscal quarter compared to the same quarter prior year is mainly
due to higher inventory of $38.4 million, higher property, plant
and equipment of $11.9 million and higher deferred tax assets of
$6.2 million, partially offset by a reduction of trade receivable
of $11.1 million.
Non-current liabilities for the current fiscal
quarter also increased compared to the same quarter 2020 due mainly
to an increase in employee benefits liabilities of $7.3 million,
mostly as a result of a change in pension actuarial assumptions and
an increase in deferred taxes liabilities of $11.6 million. This
was partially offset by a reduction in derivative financial
instruments liabilities.
Liquidity
Cash flow generated by Lantic is paid to Rogers
by way of dividends and return of capital on the common shares and
by the payment of interest on the subordinated notes of Lantic held
by Rogers, after taking a reasonable reserve for capital
expenditures, debt reimbursement and working capital. The
cash received by Rogers is used to pay administrative expenses,
interest on the convertible debentures, income taxes and dividends
to its shareholders. Lantic had no restrictions on
distributions of cash arising from the compliance of financial
covenants for the year.
|
Q2 2021 |
Q2 2020 |
YTD 2021 |
YTD 2020 |
(In
thousands of dollars) |
Net cash flow from operating activities |
9,687 |
|
6,599 |
|
4,981 |
|
20,709 |
|
Cash flow used in
financing activities |
(10,328 |
) |
(2,294 |
) |
6,637 |
|
(9,613 |
) |
Cash flow used in
investing activities |
(7,715 |
) |
(6,062 |
) |
(12,096 |
) |
(10,411 |
) |
Effect
of changes in exchange rate on cash |
25 |
|
552 |
|
(19 |
) |
433 |
|
Net
increase (decrease) in cash |
(8,331 |
) |
(1,205 |
) |
(497 |
) |
1,118 |
|
Cash flow from operating activities for the
current quarter increased by $3.1 million compared to the same
quarter last year, which is mainly due to an increase in earnings
before interests and taxes of $13.0 million and a reduction in
interest paid of $4.0 million, partially offset by a negative
non-cash working capital variation of $14.6 million. For the first
six months of 2021, cash flow from operating activities decreased
by $15.7 million, which is mainly explained by a negative non-cash
working capital variation of $24.2 million, partially offset by an
increase in earnings before interests and taxes of $9.7
million.
The negative variation in cash flow used in
financing activities of $8.0 million for the current quarter
compared to the same quarter last year is mainly attributable to a
reduction of $13.6 million in borrowings from the revolving credit
facility and the bank overdraft, partially offset by a reduction in
share repurchases under the Normal Course Issuer Bid (“NCIB”) of
$5.4 million. For the first six months of 2021, cash flow used in
financing activities had a positive variance of $16.3 million,
explained mainly by an increase of $10.4 million in borrowings from
the revolving credit facility and the bank overdraft and a
reduction in share repurchases under the NCIB of $6.5 million.
The cash outflow used in investing activities
for the current quarter and the first six months of 2021 were $1.7
million higher, compared to the same periods last year. The
variances were mainly related to timing of capital
expenditures.
In order to provide additional information, the
Company believes it is appropriate to measure free cash flow that
is generated by the operations of the Company. Free cash flow is a
non-GAAP measure and is defined as cash flow from operations
excluding changes in non-cash working capital, mark-to-market and
derivative timing adjustments and financial instruments’ non-cash
amounts, and including capital expenditures, net of operational
excellence capital expenditures, and the payment of capital
leases.
FREE CASH FLOW
|
Trailing twelve months |
(In thousands of dollars) |
2021 |
|
2020 |
|
Cash flow from operations |
48,855 |
|
73,288 |
|
Adjustments: |
|
|
Changes in non-cash working capital |
23,122 |
|
(13,367 |
) |
Mark-to-market and derivative timing adjustments |
(7,916 |
) |
(1,979 |
) |
Amortization of transitional balances |
(138 |
) |
(1,192 |
) |
Financial instruments non-cash amount |
5,932 |
|
(1,699 |
) |
Capital expenditures and intangible assets |
(27,838 |
) |
(27,532 |
) |
Value added capital expenditures |
9,707 |
|
10,288 |
|
Payment of leases obligation |
(5,054 |
) |
(2,063 |
) |
Deferred financing charges |
|
(156 |
) |
Free cash flow(1) |
46,670 |
|
35,588 |
|
Declared dividends |
37,275 |
|
37,634 |
|
Share
repurchased |
80 |
|
7,096 |
|
(1) See
“Non-GAAP Measures” section for definition and reconciliation to
GAAP measures. |
Free Cash
Flow: https://www.globenewswire.com/NewsRoom/AttachmentNg/ea8c37ed-f5c7-481e-afdb-63f2f92f54fc
Free cash flow for the trailing twelve months
ending on April 3, 2021 amounted to $46.7 million, representing an
increase of $11.1 million compared to the same period last year.
This increase in free cash flow is mainly due to an increase in
EBITDA of $7.1 million and lower taxes and interest paid of $5.4
million and $1.4 million, respectively. This variance was partially
offset by an increase in capital lease payment during the period
and higher capital expenditures.
Capital and intangible assets expenditures, net
of value added capital expenditures, increased by $0.9 million
compared to last year’s rolling twelve months due mainly to timing
in spending. Free cash flow is not reduced by value added capital
expenditures, as these projects are not necessary for the operation
of the plants but are undertaken because of the operational savings
that are realized once the projects are completed.
Financing charges are paid when a new debt
financing agreement is completed, and such charges are deferred and
amortized over the term of that debt. The cash used in the year to
pay for such fees is therefore not available and as a result is
deducted from free cash flow.
Payments made for capital leases are deducted
from free cash flow as such cash flow is no longer reflected as a
reduction in cash flow from operation and is therefore not
available.
The Board of Directors declared a quarterly
dividend of 9.0 cents per common share every quarter, totalling
36.0 cents for both trailing twelve months periods. The
slight decrease in declared dividends for 2021 is due to a
reduction in the number of shares outstanding as a result of the
purchase and cancellation of shares under the NCIB.
Changes in non-cash operating working capital
represent year-over-year movements in current assets, such as
accounts receivable and inventories, and current liabilities, such
as accounts payables. Movements in these accounts are due
mainly to timing in the collection of receivables, receipts of raw
sugar and payment of liabilities. Increases or decreases in
such accounts are due to timing issues and therefore do not
constitute free cash flow. Such increases or decreases are
financed from available cash or from our available credit facility
of $265.0 million. Increases or decreases in bank
indebtedness are also due to timing issues from the above and
therefore do not constitute available free cash flow.
The combined impact of the mark-to-market and
derivative timing adjustments, amortization of transitional
balances and financial instruments non-cash positive amount of $2.1
million for the current rolling twelve months does not represent
cash items as these contracts will be settled when the physical
transactions occur, which is the reason for the adjustment to free
cash flow.
Contractual obligations
There are no material changes in the contractual
obligations table disclosed in the Management’s Discussion and
Analysis of the October 3, 2020 Annual Report.
As at April 3, 2021, Lantic had commitments to
purchase a total of 1,302,000 metric tonnes of raw sugar, of which
292,879 metric tonnes had been priced for a total dollar commitment
of $121.4 million.
On April 7, 2021, we signed a two-year extension
to the existing agreement with Alberta Sugar Beets Growers, which
commits us to purchase the 2021 and 2022 crops.
Capital resources
Lantic has a total of $265.0 million of
available working capital from which it can borrow at prime rate,
LIBOR rate or under bankers’ acceptances, plus 20 to 250 basis
points, based on achieving certain financial ratios. As at April 3,
2021, a total of $470.3 million of assets have been pledged as
security for the revolving credit facility, compared to $426.6
million as at March 28, 2020; including trade receivables,
inventories and property, plant and equipment.
As at April 3, 2021, $225.0 million had been
drawn from the working capital facility and $1.5 million in cash
was also available.
Cash requirements for working capital and other
capital expenditures are expected to be paid from available cash
resources and funds generated from operations. Management
believes that the unused credit under the revolving facility is
adequate to meet its expected cash requirements.
As at April 3, 2021, Lantic was in compliance
with all the covenants under its revolving credit facility.
On April 30, 2021, Lantic issued a private
placement of $100 million in the form of senior guaranteed Notes
under a note purchase agreement entered into with certain
institutional investors. The Notes are guaranteed and rank pari
pasu with our existing revolving credit facility. The Notes are due
on April 30, 2031. The interest of the Notes was set at 3.49% and
the interest will be payable semi-annually in arrears in equal
installments on April 30th and October 30th of each year,
commencing on October 30, 2021. The proceeds received from the
private placement on April 30th were used to refinance existing
credit facility indebtedness.
OUTSTANDING SECURITIES
A total of 103,536,923 shares were outstanding
as at April 3, 2021 and May 5, 2021, respectively (103,554,993 as
at March 28, 2020).
On June 1, 2020, Rogers received approval from
the Toronto Stock Exchange to proceed with a Normal Course Issuer
Bid (“2020 NCIB”), under which it may purchase up to 1,500,000
common shares. In addition, Rogers entered into an automatic share
purchase agreement with Scotia Capital Inc. in connection with the
2020 NCIB. Under the agreement, Scotia may acquire, at its
discretion, common shares on the Rogers’ behalf during certain
“black-out” periods, subject to certain parameters as to price and
number of shares. The 2020 NCIB commenced on June 3, 2020 and
may continue to June 2, 2021. No shares have been purchased under
the 2020 NCIB as of April 3, 2021.
On May 22, 2019, Rogers received approval from
the Toronto Stock Exchange to proceed with a Normal Course Issuer
Bid (“2019 NCIB”), under which it may purchase up to 1,500,000
common shares. The 2019 NCIB commenced on May 24, 2019 and
terminated on March 30, 2020, whereby all common shares had been
purchased. Under the 2019 NCIB, the Company purchased 1,500,000
common shares having a book value of $1.4 million for a total cash
consideration of $7.1 million. All shares purchased were
cancelled.
RISK AND UNCERTAINTIES
Rogers’ business and operations are
substantially affected by many factors, including prevailing
margins on refined sugar and its ability to market sugar and maple
products competitively, sourcing of raw material supplies, weather
conditions, operating costs and government programs and
regulations.
Risk factors in our business and operations are
discussed in the Management’s Discussion and Analysis of our Annual
Report for the year ended October 3, 2020. This document is
available on SEDAR at www.sedar.com or on our website at
www.LanticRogers.com.
NON-GAAP MEASURES
In analyzing results, we supplement the use of
financial measures that are calculated and presented in accordance
with IFRS with a number of non-GAAP financial measures. A
non-GAAP financial measure is a numerical measure of a company’s
performance, financial position or cash flow that excludes
(includes) amounts or is subject to adjustments that have the
effect of excluding (including) amounts, that are included
(excluded) in most directly comparable measures calculated and
presented in accordance with IFRS. Non-GAAP financial
measures are not standardized; therefore, it may not be possible to
compare these financial measures with the non-GAAP financial
measures of other companies having the same or similar
businesses. We strongly encourage investors to review the
audited consolidated financial statements and publicly filed
reports in their entirety, and not to rely on any single financial
measure.
We use these non-GAAP financial measures in
addition to, and in conjunction with, results presented in
accordance with IFRS. These non-GAAP financial measures
reflect an additional way of viewing aspects of the operations
that, when viewed with the IFRS results and the accompanying
reconciliations to corresponding IFRS financial measures, may
provide a more complete understanding of factors and trends
affecting our business.
The following is a description of the non-GAAP measures used by
the Company in the MD&A:
- Adjusted gross margin is defined as
gross margin adjusted for:
- “the adjustment to cost of sales”, which comprises the
mark-to-market gains or losses on sugar futures, foreign exchange
forward contracts and embedded derivatives as shown in the notes to
the consolidated financial statements and the cumulative timing
differences as a result of mark-to-market gains or losses on sugar
futures, foreign exchange forward contracts and embedded
derivatives as described below; and
- “the amortization of transitional balance to cost of sales for
cash flow hedges”, which is the transitional marked-to-market
balance of the natural gas futures outstanding as of October 1,
2016 amortized over time based on their respective settlement date
until all existing natural gas futures have expired, as shown in
the notes to the consolidated financial statements.
- Adjusted results from operating
activities is defined as results from operating activities adjusted
for the adjustment to cost of sales, the amortization of
transitional balances to cost of sales for cash flow hedges.
- Adjusted EBITDA is defined as
adjusted results from operating activities adjusted to add back
depreciation and amortization expenses, goodwill impairment, the
Sugar segment acquisition costs and the Maple segment non-recurring
expenses.
- Adjusted net earnings is defined as
net earnings adjusted for the adjustment to cost of sales, the
amortization of transitional balances to cost of sales for cash
flow hedges, the amortization of transitional balance to net
finance costs and the income tax impact on these
adjustments. Amortization of transitional balance to
net finance costs is defined as the transitional marked-to-market
balance of the interest rate swaps outstanding as of October 1,
2016, amortized over time based on their respective settlement date
until all existing interest rate swaps agreements have expired, as
shown in the notes to the consolidated financial statements.
- Adjusted gross margin rate per MT
is defined as adjusted gross margin of the Sugar segment divided by
the sales volume of the Sugar segment.
- Adjusted gross margin percentage is
defined as the adjusted gross margin of the Maple segment divided
by the revenues generated by the Maple segment.
- Adjusted net earnings per share is
defined as adjusted net earnings divided by the weighted average
number of shares outstanding.
- Free cash flow is defined as cash
flow from operations excluding changes in non-cash working capital,
mark-to-market and derivative timing adjustments, amortization of
transitional balances, financial instruments non-cash amount, and
includes deferred financing charges, funds received from stock
options exercised, capital and intangible assets expenditures, net
of operational excellence capital expenditures, and payments of
capital leases.
In the MD&A, we discuss the non-GAAP
financial measures, including the reasons why we believe these
measures provide useful information regarding the financial
condition, results of operations, cash flows and financial
position, as applicable. We also discuss, to the extent
material, the additional purposes, if any, for which these measures
are used. These non-GAAP measures should not be considered in
isolation, or as a substitute for, analysis of the Company’s
results as reported under GAAP. Reconciliations of non-GAAP
financial measures to the most directly comparable IFRS financial
measures are as follows:
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES TO IFRS FINANCIAL MEASURES
|
|
Q2 2021 |
|
|
Q2 2020 |
|
Consolidated results (In thousands of
dollars) |
Sugar |
Maple Products |
Total |
Sugar |
Maple Products |
Total |
Gross margin |
26,423 |
|
5,028 |
31,451 |
|
16,664 |
2,726 |
|
19,930 |
|
Total
adjustment to the cost of sales(1) |
(4,630 |
) |
586 |
(4,044 |
) |
2,546 |
1,676 |
|
4,222 |
|
Adjusted Gross Margin |
21,793 |
|
5,614 |
27,407 |
|
19,210 |
4,420 |
|
23,612 |
|
Results from operating
activities |
17,029 |
|
2,122 |
19,151 |
|
7,090 |
(1,032 |
) |
6,058 |
|
Total
adjustment to the cost of sales(1) |
(4,630 |
) |
586 |
(4,044 |
) |
2,546 |
1,676 |
|
4,222 |
|
Adjusted results from
operating activities |
12,399 |
|
2,708 |
15,107 |
|
9,636 |
644 |
|
10,280 |
|
Results from operating
activities |
17,029 |
|
2,122 |
19,151 |
|
7,090 |
(1,032 |
) |
6,058 |
|
Total adjustment to the cost
of sales(1) |
(4,630 |
) |
586 |
(4,044 |
) |
2,546 |
1,676 |
|
4,222 |
|
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
4,611 |
|
1,657 |
6,268 |
|
4,211 |
1,661 |
|
5,872 |
|
Maple
Segment non-recurring costs |
- |
|
- |
- |
|
- |
370 |
|
370 |
|
Adjusted EBITDA |
17,010 |
|
4,365 |
21,375 |
|
13,847 |
2,675 |
|
16,522 |
|
Net earnings |
|
|
10,778 |
|
|
|
965 |
|
Total adjustment to the cost
of sales(1) |
|
|
(4,044 |
) |
|
|
4,222 |
|
Amortization of transitional
balance to net finance costs(1) |
|
|
- |
|
|
|
(65 |
) |
Income
taxes on above adjustments |
|
|
1,017 |
|
|
|
(1,086 |
) |
Adjusted net earnings |
|
|
7,751 |
|
|
|
4,036 |
|
Net earnings per share
(basic) |
|
|
0.10 |
|
|
|
0.01 |
|
Adjustment for the above |
|
|
(0.03 |
) |
|
|
0.03 |
|
Adjusted net earnings per share (basic) |
|
|
0.07 |
|
|
|
0.04 |
|
(1) See
“Adjusted results” section |
|
YTD 2021 |
YTD 2020 |
Consolidated results (In thousands of
dollars) |
Sugar |
Maple Products |
Total |
Sugar |
Maple Products |
Total |
Gross margin |
58,764 |
|
11,300 |
70,064 |
|
49.893 |
8,543 |
58,436 |
|
Total
adjustment to the cost of sales(1) |
(6,275 |
) |
70 |
(6,205 |
) |
92 |
1,610 |
1,702 |
|
Adjusted Gross Margin |
52,489 |
|
11,370 |
63,859 |
|
49,985 |
10,153 |
60,138 |
|
Results from operating
activities |
37,033 |
|
5,450 |
42,483 |
|
31,520 |
1,289 |
32,809 |
|
Total
adjustment to the cost of sales(1) |
(6,275 |
) |
70 |
(6,205 |
) |
92 |
1,610 |
1,702 |
|
Adjusted results from
operating activities |
30,758 |
|
5,520 |
36,278 |
|
31,612 |
2,899 |
34,511 |
|
Results from operating
activities |
37,033 |
|
5,450 |
42,483 |
|
31,520 |
1,289 |
32,809 |
|
Total adjustment to the cost
of sales(1) |
(6,275 |
) |
70 |
(6,205 |
) |
92 |
1,610 |
1,702 |
|
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
8,983 |
|
3,514 |
12,497 |
|
8,355 |
3,239 |
11,594 |
|
Maple
Segment non-recurring costs |
- |
|
247 |
247 |
|
- |
644 |
644 |
|
Adjusted EBITDA |
39,741 |
|
9,281 |
49,022 |
|
39,967 |
6,782 |
46,749 |
|
Net earnings |
|
|
24,551 |
|
|
|
16,929 |
|
Total adjustment to the cost
of sales(1) |
|
|
(6,205 |
) |
|
|
1,702 |
|
Amortization of transitional
balance to net finance costs(1) |
|
|
- |
|
|
|
(131 |
) |
Income
taxes on above adjustments |
|
|
1,653 |
|
|
|
(366 |
) |
Adjusted net earnings |
|
|
19,999 |
|
|
|
18,134 |
|
Net earnings per share
(basic) |
|
|
0.24 |
|
|
|
0.16 |
|
Adjustment for the above |
|
|
(0.05 |
) |
|
|
0.01 |
|
Adjusted net earnings per share (basic) |
|
|
0.19 |
|
|
|
0.17 |
|
(1) See
“Adjusted results” section |
CRITICAL ACCOUNTING ESTIMATES
For the second quarter and the first six month of fiscal 2021,
there were no significant changes in the critical accounting
estimate as disclosed in our Management’s Discussion and Analysis
of the October 3, 2020 Annual Report.
CHANGES IN ACCOUNTING PRINCIPLES AND PRACTICES NOT YET
ADOPTED
A number of new standards, and amendments to
standards and interpretations, are not yet effective and have not
been applied in preparing the unaudited consolidated interim
financial statements for the second quarter of 2021.
Management has reviewed such new standards, proposed amendments and
does not anticipate that they will have a material impact on
Rogers’ financial statements. Refer to note 3 (b) of the unaudited
condensed interim financial statements and to note 3 (q) of the
2020 audited consolidated financial statements for details.
CONTROLS AND PROCEDURES
In accordance with Regulation 52-109 respecting
certification of disclosure in issuers’ interim filings, the Chief
Executive Officer and Chief Financial Officer have designed or
caused it to be designed under their supervision, disclosure
controls and procedures (“DC&P”).
In addition, the Chief Executive Officer and
Chief Financial Officer have designed or caused it to be designed
under their supervision internal controls over financial reporting
(“ICFR”) to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements
for external purposes.
The Chief Executive Officer and Chief Financial
Officer have evaluated whether or not there were any changes to
Rogers’ ICFR during the six-month period ended April 3,2021 that
have materially affected, or are reasonably likely to materially
affect, Rogers’ ICFR. No such changes were identified through their
evaluation.
FORWARD-LOOKING STATEMENTS
This report contains Statements or information
that are or may be “forward-looking statements” or “forward-looking
information” within the meaning of applicable Canadian securities
laws. Forward-looking statements may include, without
limitation, statements and information which reflect the current
expectations of the Company with respect to future events and
performance. Wherever used, the words “may,” “will,” “should,”
“anticipate,” “intend,” “assume,” “expect,” “plan,” “believe,”
“estimate,” and similar expressions and the negative of such
expressions, identify forward-looking statements.
Although this is not an exhaustive list, Rogers
cautions investors that statements concerning the following
subjects are, or are likely to be, forward-looking
statements:
- future prices of raw sugar
- natural gas costs
- the opening of special refined sugar quotas in the United
States (“U.S.”)
- beet production forecasts
- growth of the maple syrup industry
- the status of labour contracts and negotiations
- the level of future dividends
- the status of government regulations and investigations
- the impact of the COVID-19 pandemic on the Corporation and its
operations.
Forward-looking statements are based on
estimates and assumptions made by Rogers in light of its experience
and perception of historical trends, current conditions and
expected future developments, as well as other factors that we
believe are appropriate and reasonable in the circumstances,
including with respect to the continuity of its operations despite
the COVID-19 pandemic, but there can be no assurance that such
estimates and assumptions will prove to be correct. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. Actual performance or results could differ
materially from those reflected in the forward-looking statements,
historical results or current expectations. Readers should
also refer to the section “Risks and Uncertainties” in this
MD&A for additional information on risk factors and other
events that are not within our control. These risks are also
referred to in Rogers’ Annual Information Form in the “Risk
Factors” section.
Although we believe that the expectations and
assumptions on which forward-looking information is based are
reasonable under the current circumstances, readers are cautioned
not to rely unduly on this forward-looking information as no
assurance can be given that it will prove to be correct.
Forward-looking information contained herein is made as at the date
of this MD&A and Rogers does not undertake any obligation to
update or revise any forward-looking information, whether as a
result of events or circumstances occurring after the date hereof,
unless so required by law.
The complete financial statements are available at the
following
link: http://ml.globenewswire.com/Resource/Download/e1720ffc-a10f-4d4f-b648-9d3cb1002ff6
For further information Mr. Jean-Sébastien
CouillardVice President of Finance, Chief Financial Officer and
Corporate SecretaryPhone: (514) 940-4350 Email:
jscouillard@lantic.ca
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