Rogers Sugar Inc.’s (“our,” “we”, “us” or “Rogers”) (TSX: RSI)
today reported second quarter fiscal 2022 results with consolidated
adjusted EBITDA of $24.0 million and $50.1 million for the current
quarter and the first six months of the year, respectively.
"The demand for refined sugar was very strong in
the second quarter of 2022, following the volatility and unforeseen
events that negatively impacted our first quarter sales volume,”
said Mike Walton, President and Chief Executive Officer of Rogers
and Lantic Inc. "The increase in sales volume, coupled with margin
improvements and a good production out of our Taber beet sugar
facility are contributing to our positive outlook for our Sugar
segment in 2022. We expect this will more than compensate for the
challenges we are currently experiencing in our Maple segment
relating to inflationary costs pressures.”
Second Quarter 2022 Consolidated
Highlights(unaudited) |
Q2 2022 |
Q2 2021 |
YTD 2022 |
YTD 2021 |
Financials
($000s) |
|
|
|
|
Revenues |
253,341 |
215,929 |
484,096 |
439,769 |
Adjusted gross margin(1) |
35,887 |
27,407 |
71,687 |
63,859 |
Adjusted EBITDA(1) |
24,017 |
21,375 |
50,079 |
49,022 |
Net earnings |
8,570 |
10,778 |
25,796 |
24,551 |
per share (basic) |
0.08 |
0.10 |
0.25 |
0.24 |
per share (diluted) |
0.08 |
0.10 |
0.24 |
0.23 |
Adjusted net earnings(1) |
9,122 |
7,751 |
20,079 |
19,999 |
Adjusted net earnings per
share (basic)(1) |
0.09 |
0.07 |
0.19 |
0.19 |
Trailing twelve months free
cash flow(1) |
46,560 |
46,670 |
44,684 |
46,670 |
Dividends per share |
0.09 |
0.09 |
0.18 |
0.18 |
|
|
|
|
|
Volumes |
|
|
|
|
Sugar (metric tonnes) |
196,570 |
183,749 |
376,613 |
374,189 |
Maple
Syrup (thousand pounds) |
12,912 |
14,214 |
25,198 |
29,106 |
(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 and the first six months of
fiscal 2022 was $24.0 million and $50.1 million respectively, an
increase of $2.6 million and $1.1 million from the same periods
last year, largely driven by higher adjusted EBITDA in the Sugar
segment;
- Adjusted EBITDA
in the Sugar segment was $21.4 million in the second quarter, an
increase of $4.4 million from the same quarter last year, driven by
higher volume, improved pricing and higher production out of our
Taber sugar beet facility; partly offset by increased distribution
costs and administrations and selling expenses;
- Sales volume in
the Sugar segment increased by 7.0% to 196,570 metric tonnes in the
second quarter of the current fiscal year, as stronger industrial,
consumer and liquid volumes were partly offset by a slight
reduction in export volume;
- Adjusted gross
margin in the Sugar segment improved by $40.51 per metric tonne in
the second quarter of fiscal 2022 compared to the same quarter last
year due to higher selling margin and better contribution from our
Taber sugar beet facility;
- Adjusted EBITDA
in the Maple segment was $2.7 million in the second quarter, a
decrease of $1.7 million from the same quarter last year largely as
a result of lower sales volume, higher packaging, freight and
energy costs as well as higher compensation and employee
benefits;
- Maple segment
volume decreased by 1,302,000 pounds to 12,912,000 pounds in the
current quarter, driven mainly by lower demand and timing issues
related to shipping availabilities;
- Free cash flow
for the trailing 12 months ended April 2, 2022 was $46.6 million, a
decrease of $0.1 million from the same period last year;
- On March 30,
2022, the Canadian Border Services Agency (“CBSA”) issued a notice
of the conclusion of its re-investigation concerning dumped sugar
from the United States (US), Denmark, Germany, the Netherlands and
the United Kingdom (UK) and subsidized sugar from the European
Union (EU). The CBSA determined that anti-dumping duties will
continue to apply to imports of dumped sugar from the US, Denmark,
Germany, the Netherlands and the UK and ruled that a countervailing
duty will continue to apply to imports of subsidized EU sugar;
- On April 14,
2022, we renewed the collective labour agreement with the union at
our Taber facility for five years.
- On May 11, 2022,
William Maslechko stepped away from his position as Director of
RSI, effective June 27, 2022. Mr. Maslechko will remain on the
Lantic Inc. Board of Directors. Concurrently, Shelley Potts was
appointed on the Board of Directors of RSI, effective June 27,
2022;
- In the second
quarter of fiscal 2022, we distributed $0.09 per share to our
shareholders for a total amount of $9.3 million; and
- On May 11, 2022,
the Board of Directors declared a quarterly dividend of $0.09 per
share, payable on or before July 13, 2022.
Sugar
Second Quarter 2022 Sugar
Highlights(unaudited) |
Q2 2022 |
Q2 2021 |
YTD 2022 |
YTD 2021 |
Financials
($000s) |
|
|
|
|
Revenues |
195,875 |
155,961 |
371,782 |
315,419 |
Adjusted gross margin(1) |
31,277 |
21,793 |
62,649 |
52,489 |
Per metric tonne ($/ mt) (1) |
159.11 |
118.60 |
166.35 |
140.27 |
Administration and selling
expenses |
9,415 |
5,771 |
18,527 |
13,039 |
Distribution costs |
5,328 |
3,623 |
9,672 |
8,692 |
Adjusted EBITDA(1) |
21,364 |
17,010 |
43,981 |
39,741 |
|
|
|
|
|
Volumes (metric
tonnes) |
|
|
|
|
Total
volume |
196,570 |
183,749 |
376,613 |
374,189 |
(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 2022, revenue
increased by $39.9 million compared to the same period last year,
driven mainly by higher sales volume, higher prices for #11 world
raw sugar, improved pricing and higher by-product sales revenue.
The average price for #11 world raw sugar increased by US 3.9 cent
per pound to US 18.4 cent per pound during the current quarter when
compared to the same quarter last year.
Sugar volume increased by 12,821 metric tonnes
in the second quarter of fiscal 2022 compared to the same quarter
last year as stronger industrial, consumer and liquid volumes were
partly offset by a slight reduction in export volume.
- Industrial and
consumer volumes contributed the largest increase in the quarter as
delayed orders from the first quarter of the year were filled in
the current quarter. Prior order delays, which occurred in the
first quarter of 2022, were caused in part by COVID-19 related
demand volatility, high retail inventory levels and rail and road
closures from unfavourable weather conditions in Western
Canada.
- Liquid volume
during the current quarter also increased mainly due to higher
demand from existing customers.
Adjusted gross margin increased by $9.5 million
in the current quarter compared to the same quarter last year
mainly as a result of higher sugar sales margin of $12.0 million
from higher sales volume and improved pricing and an increased
by-product net contribution of $1.5 million. The favourable
variance was partially offset by higher production costs mainly
driven by higher volume and higher energy and labour costs. On a
per unit basis, adjusted gross margin for the second quarter was at
$159.11 per metric tonne, higher than last year by $40.51 per
metric tonne. The favourable variance was mainly due to the
increase in overall margin from higher volume, improved selling
prices, and higher production of beet sugar at of our Taber
facility during the current quarter, as compared to last year. In
2021, our Taber facility produced less sugar as the quality of the
beets was negatively impacted by unfavourable conditions.
Adjusted EBITDA for the second quarter of fiscal
2022 increased by $4.4 million compared to the same quarter last
year, largely as a result of higher adjusted gross margin, as
mentioned above, partially offset by higher administration and
selling expenses mainly attributable to a non-cash increase in
share-based compensation expense driven by an increase in share
price in recent quarters, higher compensation expense, and higher
distribution costs largely driven by higher freight costs and
additional logistical costs incurred to support the needs of our
customers.
Maple Products
Second Quarter 2022 Maple
Highlights(unaudited) |
Q2 2022 |
Q2 2021 |
YTD 2022 |
YTD 2021 |
Financials
($000s) |
|
|
|
|
Revenues |
57,466 |
59,968 |
112,314 |
124,350 |
Adjusted gross margin(1) |
4,610 |
5,614 |
9,038 |
11,370 |
As a
percentage of revenues (%) (1) |
8.0% |
9.4% |
8.0% |
9.1% |
Administration and selling
expenses |
2,705 |
2,185 |
5,079 |
4,515 |
Distribution costs |
952 |
721 |
1,271 |
1,334 |
Adjusted EBITDA(1) |
2,653 |
4,365 |
6,098 |
9,281 |
|
|
|
|
|
Volumes (thousand
pounds) |
|
|
|
|
Total
volume |
12,912 |
14,214 |
25,198 |
29,106 |
(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 $2.5 million lower than the same period last year
due mainly to decreased demand from existing customers and timing
issues caused by shipment delays due to global supply chain
disruption and carrier shortages for international shipments.
Adjusted gross margin for the current quarter of
fiscal 2022 were lower by $1.0 million compared to the same period
last year largely driven by a combination of lower sales volume,
higher packaging, freight and energy costs as well as increased
compensation cost and employee benefits incurred to attract and
retain employees in our production facilities. Due to the timing of
pricing negotiations in the Maple segment, we are experiencing a
delay between our cost increases and the associated expected price
increases.
Adjusted gross margin percentage for the current
quarter decreased by 140 basis point to 8.0% compared to the same
period last year. This variance was mainly attributable to
market-based production cost increases discussed above and the
timing of passing these increases to our customers.
Adjusted EBITDA for the second quarter of fiscal
2022 decreased by $1.7 million compared to the same quarter last
year, largely driven by lower adjusted gross margin, as mentioned
above, and higher administration and selling expenses.
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 safety protocols in
place. To date our plants have operated without any significant
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.
As a result of the strong demand and improved
pricing, we are experiencing in our Sugar segment, we continue to
expect improved financial performance in 2022 as compared to 2021.
The strength in our Sugar segment is expected to offset higher
costs from inflationary pressures and lower demand in the Maple
segment.
Sugar
We continue to expect the sugar segment to
perform well in fiscal 2022. Underlying domestic demand remains
strong across all customer segments supported by higher margin from
favourable market-based pricing adjustments.
In Taber, the sugar beet processing campaign was
completed during the current quarter and delivered the expected
volume of sugar. Overall, 121,000 metric tonnes of sugar are
expected from our Taber facility in the current fiscal year, an
increase of 6,000 metric tonnes from last year.
Due to the strong market conditions in our Sugar
segment, we are increasing our sales volume forecast for 2022 by
5,000 metric tonnes to 775,000 metric tonnes. We expect domestic
volumes to grow by 3%, up from our previously forecasted growth of
2%, while our export volumes are expected to be lower as a result
of reduced CUSMA quota opportunities in the current year. Overall,
2022 volumes are expected to be approximately 4,500 metric tonnes
lower than 2021, with volumes expected to change as follows in
2022:
- Industrial, our
largest segment, is expected to grow at 2% as demand for
sugar-containing products remains steady both in Canada and the
US.
- Liquid volume is
expected to deliver growth of approximately 2% to 3% driven by
continued demand from existing customers.
- Consumer volume
is also expected to grow by 3%, a level aligned with the normalized
growth we experienced pre-covid.
- We anticipate
selling less in the export markets in 2022, due to lower
opportunity from CUSMA.
Despite the reduction of total volume,
favourable price adjustments are expected to improve profitability
as compared to 2021.
Maintenance programs for the Montreal and
Vancouver operating facilities are expected to follow the trend of
previous years and are expected to result in a market-based
increase in operating costs. For the Taber facility, a return to
normal crop volume and an improvement in the quality of the sugar
beets over 2021 is expected to an yield improvement in operating
costs.
Distribution costs are expected to increase
overall by 10% to 15%, reflecting a higher market price for
warehousing, rail and ground transportation.
Administration and selling expenses are expected
to increase by 25% to 30% due to a non-cash increase in share-based
compensation expense driven by the increase in share price noted in
recent quarters.
Spending on capital projects is also expected to
be similar to recent periods. For fiscal 2022, we anticipate
spending approximately $25.0 million to $30.0 million on various
capital projects, with approximately a quarter allocated to
return-on-investment projects.
Maple Products
The Maple segment financial results were lower
than anticipated for the first half of 2022, due mainly to lower
volume and unexpected inflationary pressures on costs for packaging
material, freight, and labour; along with shipping challenges
related to the availability of carriers. We expect these financial
and operating challenges to continue for the remainder of 2022. At
the end of the second quarter, we began implementing an updated
pricing strategy with our customers, aimed at recouping these
incremental costs going forward. We anticipate these new prices to
take effect over the next two quarters and lead to improved
margin.
See Cautionary statement on forward-looking
information and NON-GAAP measure sections.
A full copy of Rogers second quarter 2022,
including management’s discussion and analysis and unaudited
condensed consolidated interim financial statements, can be found
at www.LanticRogers.com.
Conference Call and Webcast
We will host a conference call to discuss our
second quarter of fiscal 2022 results on May 12, 2022 starting at
8:00a.m. ET. To participate, please dial 1-888-400-2425. A
recording of the conference call will be accessible shortly after
the conference, by dialing 1-800-770- 2030, access code 9031006#.
This recording will be available until May 26, 2022. 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-Honore-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 also sold under various brand names, such as
TMTC, Uncle Luke’s, 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 our current expectations
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, we
caution investors that statements concerning the following subjects
are, or are likely to be, forward-looking statements:
- the impact of
the COVID-19 pandemic on our operations
- future prices of
raw sugar
- expected
inflationary pressures on costs
- natural gas
costs
- beet production
forecasts
- growth of the
maple syrup industry and the refined sugar industry
- the status of
labour contracts and negotiations
- the level of
future dividends
- the status of
government regulations and investigations
Forward-looking statements are based on
estimates and assumptions made by us in light of our 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 our 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 our current 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 our 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 we do 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 unaudited condensed consolidated
interim 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
MD&A for the current quarter for additional information.
Financial Report Q2 2022
This Management’s Discussion and Analysis
(“MD&A”) of Rogers Sugar Inc.’s (“Rogers”, “RSI” or “our,”
“we”, “us”) dated May 11, 2022 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
2, 2022, as well as the audited consolidated financial statements
and MD&A for the year ended October 2, 2021. 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 our Audit
Committee of Rogers and our 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 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 TMTC, Uncle Luke’s, 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 months of fiscal 2022, we incurred direct costs
amounting to $0.5 million and $0.8 million respectively in relation
to COVID-19. These costs were largely due to 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 and the first six months of
fiscal 2022 was $24.0 million and $50.1 million respectively, an
increase of $2.6 million and $1.1 million from the same periods
last year, largely driven by higher adjusted EBITDA in the Sugar
segment;
- Adjusted EBITDA
in the Sugar segment was $21.4 million in the second quarter, an
increase of $4.4 million from the same quarter last year, driven by
higher volume, improved pricing and higher production out of our
Taber sugar beet facility; partly offset by increased distribution
costs and administrations and selling expenses;
- Sales volume in
the Sugar segment increased by 7.0% to 196,570 metric tonnes in the
second quarter of the current fiscal year, as stronger industrial,
consumer and liquid volumes were partly offset by a slight
reduction in export volume;
- Adjusted gross
margin in the Sugar segment improved by $40.51 per metric tonne in
the second quarter of fiscal 2022 compared to the same quarter last
year due to higher selling margin and better contribution from our
Taber sugar beet facility;
- Adjusted EBITDA
in the Maple segment was $2.7 million in the second quarter, a
decrease of $1.7 million from the same quarter last year largely as
a result of lower sales volume, higher packaging, freight and
energy costs as well as higher compensation and employee
benefits;
- Maple segment
volume decreased by 1,302,000 pounds to 12,912,000 pounds in the
current quarter, driven mainly by lower demand and timing issues
related to shipping availabilities;
- Free cash flow
for the trailing 12 months ended April 2, 2022 was $46.6 million, a
decrease of $0.1 million from the same period last year;
- On March 30,
2022, the Canadian Border Services Agency (“CBSA”) issued a notice
of the conclusion of its re-investigation concerning dumped sugar
from the United States (US), Denmark, Germany, the Netherlands and
the United Kingdom (UK) and subsidized sugar from the European
Union (EU). The CBSA determined that anti-dumping duties will
continue to apply to imports of dumped sugar from the US, Denmark,
Germany, the Netherlands and the UK and ruled that a countervailing
duty will continue to apply to imports of subsidized EU sugar;
- On April 14,
2022, we reached an agreement to renew the collective labour
agreement with the union at our Taber facility for five years;
- On May 11, 2022,
William Maslechko stepped away from his position as Director of
RSI, effective June 27, 2022. Mr. Maslechko will remain on the
Lantic Inc. Board of Directors. Concurrently, Shelley Potts was
appointed on the Board of Directors of RSI, effective June 27,
2022;
- In the second
quarter of fiscal 2022, we distributed $0.09 per share to our
shareholders for a total amount of $9.3 million; and
- On May 11, 2022,
the Board of Directors declared a quarterly dividend of $0.09 per
share, payable on or before July 13, 2022.
SELECTED FINANCIAL DATA AND HIGHLIGHTS
(unaudited) (In thousands of dollars, except volume and per share
information) |
Q2 2022 |
Q2 2021 |
YTD 2022 |
YTD 2021 |
Sugar (metric tonnes) |
196,570 |
183,749 |
376,613 |
374,189 |
Maple syrup (000 pounds) |
12,912 |
14,214 |
25,198 |
29,106 |
Total revenues |
253,341 |
215,929 |
484,096 |
439,769 |
Gross margin |
33,899 |
31,451 |
77,385 |
70,064 |
Adjusted gross margin(1) |
35,887 |
27,407 |
71,687 |
63,859 |
Results from operating
activities |
15,499 |
19,151 |
42,836 |
42,483 |
Adjusted results from
operating activities(1) |
17,487 |
15,107 |
37,138 |
36,278 |
Adjusted EBITDA(1) |
24,017 |
21,375 |
50,079 |
49,022 |
Net earnings |
8,570 |
10,778 |
25,796 |
24,551 |
per share (basic) |
0.08 |
0.10 |
0.25 |
0.24 |
per share (diluted) |
0.08 |
0.10 |
0.24 |
0.23 |
Adjusted net earnings(1) |
9,122 |
7,751 |
20,079 |
19,999 |
Adjusted net earnings per
share (basic)(1) |
0.09 |
0.07 |
0.19 |
0.19 |
Trailing twelve months free
cash flow(1) |
46,560 |
46,670 |
44,684 |
46,670 |
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/ab315f4f-300d-4e02-88a5-f19941580455
Adjusted Net Earnings and Free Cash Flow
TTM: https://www.globenewswire.com/NewsRoom/AttachmentNg/6f996894-e071-40b2-a063-8a19f4ec7c57
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 qualified
under hedged accounting 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 2022 |
Q2 2021 |
|
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
Maple Products |
|
Total |
Mark-to-market on: |
|
|
|
|
|
|
Sugar futures contracts |
2,187 |
|
- |
|
2,187 |
|
1,462 |
- |
|
1,462 |
Foreign exchange forward contracts |
418 |
|
268 |
|
686 |
|
526 |
794 |
|
1,320 |
Total mark-to-market adjustment on derivatives |
2,605 |
|
268 |
|
2,873 |
|
1,988 |
794 |
|
2,782 |
Cumulative timing differences |
(4,852 |
) |
(9 |
) |
(4,861 |
) |
2,642 |
(1,380 |
) |
1,262 |
Total adjustment to costs of sales |
(2,247 |
) |
259 |
|
(1,988 |
) |
4,630 |
(586 |
) |
4,044 |
Income (loss)(In thousands of dollars) |
YTD 2022 |
YTD 2021 |
|
Sugar |
Maple Products |
Total |
Sugar |
Maple Products |
|
Total |
|
Mark-to-market on: |
|
|
|
|
|
|
Sugar futures contracts |
2,310 |
- |
2,310 |
1,041 |
- |
|
1,041 |
|
Foreign exchange forward contracts |
76 |
404 |
480 |
3,823 |
1,892 |
|
5,715 |
|
Total mark-to-market adjustment on derivatives |
2,386 |
404 |
2,790 |
4,864 |
1,892 |
|
6,756 |
|
Cumulative timing differences |
2,801 |
107 |
2,908 |
1,411 |
(1,962 |
) |
(551 |
) |
Total adjustment to costs of sales |
5,187 |
511 |
5,698 |
6,275 |
(70 |
) |
6,205 |
|
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 second quarter of the current
fiscal year, the total cost of sales adjustment is a loss of $2.0
million to be added to the consolidated results versus a gain of
$4.0 million to be deducted from the consolidated results for the
comparable period last year. For the first six months of fiscal
2022, the total cost of sales adjustment is a gain of $5.7 million
to be deducted from the consolidated results compared to a gain of
$6.2 million to be deducted from the consolidated results for the
same period last year.
See the “Non-GAAP measures” section for more
information on these adjustments.
SEGMENTED INFORMATION
Segmented Results(In thousands of dollars) |
Q2 2022 |
Q2 2021 |
|
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
Total |
|
Revenues |
195,875 |
|
57,466 |
|
253,341 |
|
155,961 |
|
59,968 |
215,929 |
|
Gross margin |
29,030 |
|
4,869 |
|
33,899 |
|
26,423 |
|
5,028 |
31,451 |
|
Administration and selling
expenses |
9,415 |
|
2,705 |
|
12,120 |
|
5,771 |
|
2,185 |
7,956 |
|
Distribution costs |
5,328 |
|
952 |
|
6,280 |
|
3,623 |
|
721 |
4,344 |
|
Results from operating activities |
14,287 |
|
1,212 |
|
15,499 |
|
17,029 |
|
2,122 |
19,151 |
|
|
|
|
|
|
|
|
Adjustment to cost of
sales(2) |
2,247 |
|
(259 |
) |
1,988 |
|
(4,630 |
) |
586 |
(4,044 |
) |
Adjusted gross margin(1) |
31,277 |
|
4,610 |
|
35,887 |
|
21,793 |
|
5,614 |
27,407 |
|
Adjusted results from
operating activities(1) |
16,534 |
|
953 |
|
17,487 |
|
12,399 |
|
2,708 |
15,107 |
|
Adjusted EBITDA(1) |
21,364 |
|
2,653 |
|
24,017 |
|
17,010 |
|
4,365 |
21,375 |
|
Additional information: |
|
|
|
|
|
|
Additions to property, plant and equipment and intangible assets,
net of disposals |
3,100 |
|
136 |
|
3,236 |
|
6,876 |
|
367 |
7,243 |
|
Additions to right-of-use assets |
(129 |
) |
- |
|
(129 |
) |
29 |
|
- |
29 |
|
(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 2022 |
YTD 2021 |
|
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
Total |
|
Revenues |
371,782 |
|
112,314 |
|
484,096 |
|
315,419 |
|
124,350 |
439,769 |
|
Gross margin |
67,836 |
|
9,549 |
|
77,385 |
|
58,764 |
|
11,300 |
70,064 |
|
Administration and selling
expenses |
18,527 |
|
5,079 |
|
23,606 |
|
13,039 |
|
4,515 |
17,554 |
|
Distribution costs |
9,672 |
|
1,271 |
|
10,943 |
|
8,692 |
|
1,334 |
10,027 |
|
Results from operating activities |
39,637 |
|
3,199 |
|
42,836 |
|
37,033 |
|
5,450 |
42,483 |
|
|
|
|
|
|
|
|
Adjustment to cost of
sales(2) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
(6,275 |
) |
70 |
(6,205 |
) |
Adjusted Gross margin(1) |
62,649 |
|
9,038 |
|
71,687 |
|
52,489 |
|
11,370 |
63,859 |
|
Adjusted results from
operating activities(1) |
34,450 |
|
2,688 |
|
37,138 |
|
30,758 |
|
5,520 |
36,278 |
|
Adjusted EBITDA(1) |
43,981 |
|
6,098 |
|
50,079 |
|
39,741 |
|
9,281 |
49,022 |
|
Additional information: |
|
|
|
|
|
|
Additions to property, plant and equipment and intangible assets,
net of disposals |
7,093 |
|
355 |
|
7,448 |
|
12,965 |
|
478 |
13,443 |
|
Additions to right-of-use assets |
8,083 |
|
- |
|
8,038 |
|
383 |
|
- |
383 |
|
(1) See “Non-GAAP Measures” section for
definition and reconciliation to GAAP
measures(2) See “Adjusted results” section
Sugar
REVENUES
|
Q2 2022 |
Q2 2021 |
∆ |
YTD 2022 |
YTD 2021 |
∆ |
(In thousands of dollars) |
195,875 |
155,961 |
39,914 |
371,782 |
315,419 |
56,363 |
Sugar Volume Variance and Sugar
Volumes: https://www.globenewswire.com/NewsRoom/AttachmentNg/ea87899d-f589-450a-bd15-e642935ea7eb
In the second quarter and first six months of
fiscal 2022, revenue increased by $39.9 million and $56.4 million
respectively, compared to the same periods last year, driven mainly
by higher sales volume, higher prices for #11 world raw sugar,
improved pricing and higher by-product sales revenue. The average
prices for #11 world raw sugar increased by US 3.9 cent per pound
to US 18.4 cent per pound during the current quarter and by US 5.0
cent per pound to US 18.8 cent per pound for the first half of the
current fiscal year, when compared to the same periods last
year.
Sugar volume increased by 12,821 metric tonnes
in the second quarter of fiscal 2022 compared to the same quarter
last year as stronger industrial, consumer and liquid volumes were
partly offset by a slight reduction in export volume.
- Industrial and
consumer volumes contributed the largest increase in the quarter.
The was mainly due to the delayed orders from the first quarter of
the year that were filled in the current quarter. Prior order
delays, which occurred in the first quarter of 2022, were caused in
part by COVID-19 related demand volatility, high retail inventory
levels and rail and road closures from unfavourable weather
conditions in Western Canada.
- Liquid volume
during the current quarter also increased mainly due to higher
demand from existing customers.
Sugar Volume Variance and Sugar
Volumes: https://www.globenewswire.com/NewsRoom/AttachmentNg/efb6256d-1e2e-4ba4-a234-81ab55a000c4
In the first half of fiscal 2022, sugar volume totaled 376,613
metric tonnes, an increase of 0.6% compared to the same period last
year, as stronger industrial, consumer and liquid volumes were
largely offset by an expected reduction in export volume.
- Industrial
volume increased by 1,884 metric tonnes compared to the same period
last year due mainly to higher demand in 2022.
- Liquid volume
increased by 4,584 metric tonnes during the first six months of the
current fiscal year mainly due to higher demand from existing
customers.
- Consumer volume
remained largely unchanged as delayed orders in the first quarter
of the year were recovered in the current quarter, bringing retail
consumer volume at pre-covid level.
- Export volume
decreased during the first half of the current fiscal year when
compared to the same period last year, as the first half of fiscal
year 2021 included a one-time opportunistic quota under the
ratified Canadian United States Mexico Agreement (“CUSMA”).
GROSS MARGIN
|
Q2 2022 |
Q2 2021 |
|
∆ |
YTD 2022 |
|
YTD 2021 |
|
∆ |
(In thousands of dollars, except per metric tonne information) |
Gross margin |
29,030 |
26,423 |
|
2,607 |
67,836 |
|
58,764 |
|
9,072 |
Total adjustment to cost of sales(2) |
2,247 |
(4,630 |
) |
6,877 |
(5,187 |
) |
(6,275 |
) |
1,088 |
Adjusted gross margin(1) |
31,277 |
21,793 |
|
9,484 |
62,649 |
|
52,489 |
|
10,160 |
Adjusted gross margin per
metric tonne(1) |
159.11 |
118.60 |
|
40.51 |
166.35 |
|
140.27 |
|
26.07 |
Included in gross margin:Depreciation of property, plant and
equipment and right-of-use assets |
4,201 |
3,986 |
|
215 |
8,273 |
|
7,762 |
|
511 |
(1) See “Non-GAAP Measures” section for definition
and reconciliation to GAAP measures(2) See “Adjusted
results” section
Gross margin was $29.0 million and $67.8 million
for the current quarter and the first six months of fiscal 2022 and
include a loss of $2.2 million and a gain of $5.2 million,
respectively, for the mark-to-market of derivative financial
instruments. For the same periods last year, gross margin was $26.4
million and $58.8 million, respectively, with a mark-to-market gain
of $4.6 million and $6.3 million respectively.
Adjusted gross margin was $31.3 million and
$62.6 million for the second quarter and for the first six months
of fiscal 2022, respectively, as compared to $21.8 million and
$52.5 million in the same periods of 2021.
Adjusted gross margin increased by $9.5 million
in the current quarter compared to the same quarter last year
mainly as a result of higher sugar sales margin of $12.0 million
from higher sales volume and improved pricing and an increased
by-product net contribution of $1.5 million. The favourable
variance was partially offset by higher production costs mainly
driven by higher volume and higher energy and labour costs. On a
per unit basis, adjusted gross margin for the second quarter was at
$159.11 per metric tonne, higher than last year by $40.51 per
metric tonne. The favourable variance was mainly due to the
increase in overall margin from higher volume, improved selling
prices, and higher production of beet sugar out of our Taber
facility during the current quarter, as compared to last year. In
2021, our Taber facility produced less sugar as the quality of the
beets was negatively impacted by unfavourable conditions.
Adjusted gross margin for the first six months
of fiscal 2022 was $10.2 million higher than the comparable period
last year, mainly due to higher adjusted gross margin in the second
quarter of fiscal 2022, as explained above. On a per unit basis,
for the first six months of fiscal 2022, adjusted gross margin
amounted to $166.35 per metric tonne compared to $140.27 per metric
tonne. The favourable variance of $26.07 per metric tonne was
mainly due to higher volume sold to customers, improved pricing,
and higher production of beet sugar out of our Taber facility
during the current quarter.
Adjusted Gross
Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/c7251fbd-af0c-4a50-8afd-4e516ecb12ef
OTHER EXPENSES
|
Q2 2022 |
Q2 2021 |
∆ |
YTD 2022 |
YTD 2021 |
∆ |
(In thousands of dollars) |
Administration and selling expenses |
9,415 |
5,771 |
3,644 |
18,527 |
13,039 |
5,488 |
Distribution costs |
5,328 |
3,623 |
1,705 |
9,672 |
8,692 |
980 |
Included in Administration and
selling expenses:Depreciation of property, plant and equipment and
right-of-use assets |
213 |
218 |
(5) |
424 |
440 |
(16) |
Included in Distribution costs:Depreciation of right-of-use
assets |
417 |
407 |
10 |
835 |
781 |
54 |
In the second quarter of fiscal 2022,
administration and selling expenses increased by $3.6 million
compared to the same quarter last year, mainly due to a non-cash
increase in share-based compensation expense driven by an increase
in share price in recent quarters and higher compensation costs and
related employee benefits. This variance was partially offset by
lower COVID related health and safety costs. Distribution costs
increased by $1.7 million compared to the same quarter last year
largely driven by higher freight costs and additional logistical
costs incurred to support our supply chain.
For the first six months of fiscal 2022,
administration and selling expenses were $5.5 million higher than
the comparable period last year, mainly due to the increase in
share-based compensation expenses, as mentioned above. Distribution
cost increased by $1.0 million compared to the first six months of
last year largely driven by increased distribution costs during the
current quarter, as explained above.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED EBITDA
|
Q2 2022 |
Q2 2021 |
|
∆ |
|
YTD 2022 |
|
YTD 2021 |
|
∆ |
(In thousands of dollars) |
Results from operating activities |
14,287 |
17,029 |
|
(2,742) |
|
39,637 |
|
37,033 |
|
2,604 |
Total
adjustment to cost of sales (2) |
2,247 |
(4,630 |
) |
6,877 |
|
(5,187 |
) |
(6,275 |
) |
1,088 |
Adjusted results from operating activities(1) |
16,534 |
12,399 |
|
4,135 |
|
34,450 |
|
30,758 |
|
3,692 |
Depreciation of property, plant and equipment, right-of-use assets,
and amortization of intangible assets |
4,830 |
4,611 |
|
219 |
|
9,531 |
|
8,983 |
|
548 |
Adjusted EBITDA(1) |
21,364 |
17,010 |
|
4,354 |
|
43,981 |
|
39,741 |
|
4,241 |
(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 fiscal 2022 were $14.3 million
and $39.6 million, respectively, as compared to $17.0 million and
$37.0 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, higher non-cash depreciation and amortization expense
mainly from increased asset retirement obligations had a negative
impact on the results from operating activities.
Adjusted results from operating activities for
the second quarter of fiscal 2022 were $4.1 million higher than the
same period last year, mainly due to higher adjusted gross margin,
partially offset by higher administration and selling expenses as
well as higher distribution costs. Adjusted results from operating
activities for the first six months of fiscal 2022 were $3.7
million higher than the same period last year as higher adjusted
gross margin was partially offset by higher distribution costs and
administration and selling expenses.
Adjusted EBITDA for the second quarter and the
first six month of fiscal 2022 increased by $4.4 million and $ 4.2
million, respectively, compared to the same periods last year,
largely as a result of higher adjusted results from operating
activities mainly in the second quarter.
Maple
REVENUES
|
Q2 2022 |
Q2 2021 |
∆ |
YTD 2022 |
YTD 2021 |
∆ |
(In thousands of dollars, except volume) |
Volume (000 pounds) |
12,912 |
14,214 |
(1,302) |
25,198 |
29,106 |
(3,908) |
Revenues |
57,466 |
59,968 |
(2,502) |
112,314 |
124,350 |
(12,036) |
Maple Volumes and Adjusted Gross
Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/17f6b60c-c7fa-46c8-9ae5-8e53d9bfb1d0
Revenues for the second quarter and the first
six months of the current fiscal year were $2.5 million and $12.0
million lower than the same periods last year due mainly to
decreased demand from existing customers and timing issues caused
by shipment delays due to global supply chain disruption and
carrier shortages for international shipments.
GROSS MARGIN
|
Q2 2022 |
|
Q2 2021 |
|
∆ |
YTD 2022 |
|
YTD 2021 |
|
∆ |
(In thousands of dollars, except adjusted gross margin rate
information) |
Gross margin |
4,869 |
|
5,028 |
|
(159) |
9,549 |
|
11,300 |
|
(1,751) |
Total
adjustment to cost of sales(2) |
(259 |
) |
586 |
|
(845) |
(511 |
) |
70 |
|
(581) |
Adjusted gross margin(1) |
4,610 |
|
5,614 |
|
(1,004) |
9,038 |
|
11,370 |
|
(2,332) |
Adjusted gross margin
percentage(1) |
8.0 |
% |
9.4 |
% |
-1.4% |
8.0 |
% |
9.1 |
% |
-1.1% |
Included in Gross margin:Depreciation of property, plant and
equipment and right-of-use assets |
827 |
|
785 |
|
42 |
1,666 |
|
1,767 |
|
(101) |
(1) See “Non-GAAP Measures” section for
definition and reconciliation to GAAP
measures(2) See “Adjusted results” section
Gross margin was $4.9 million and $9.5 million
for the three and six months ended in the current fiscal year and
include a gain of $0.3 and $0.5 million respectively, for the
mark-to-market of derivative financial instruments. For the same
periods last year, gross margin was $5.0 million and $11.3 million,
respectively, with a mark-to-market loss of $0.6 million and $0.1
million.
Adjusted gross margin for the current quarter
and the first six months of fiscal 2022 were lower by $1.0 million
and $2.3 million respectively compared to the same periods last
year, largely driven by a combination of lower sales volume, higher
packaging, freight and energy costs as well as increased
compensation cost and employee benefits incurred to attract and
retain employees in our production facilities. Due to the timing of
pricing negotiations in the Maple segment, we are experiencing a
delay between our cost increases and the associated expected price
increases.
Adjusted gross margin percentage for the current
quarter and the first six months of fiscal 2022 decreased by 140
basis point and 110 basis points respectively, to 8.0% for both
periods when compared to the same periods last year. These
variances were mainly attributable to market-based production cost
increases discussed above and the timing of passing these increases
to our customers.
OTHER EXPENSES
|
Q2 2022 |
Q2 2021 |
∆ |
YTD 2022 |
YTD 2021 |
∆ |
(In thousands of dollars) |
Administration and selling expenses |
2,705 |
2,185 |
520 |
5,079 |
4,515 |
564 |
Distribution costs |
952 |
721 |
231 |
1,271 |
1,334 |
(63) |
Included in Administration and selling expenses:Amortization of
intangible assets |
872 |
872 |
- |
1,743 |
1,747 |
(4) |
Administration and selling expenses for the
current quarter and the first six months of fiscal 2022 increased
by $0.5 million and $0.6 million respectively, compared to the same
periods last year, due mainly to increased compensation and
employees benefits as well as higher recruitment expenses.
Distribution costs for the second quarter of
fiscal 2022 were higher by $0.2 million compared to the same period
last year, largely due to higher net freight cost related to
market-based pricing increases in the quarter. For the first six
months of fiscal 2022, distribution costs were lower by $0.1
million when compared to the same period last year, due to lower
volume, partially offset by higher freight costs.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED EBITDA
|
Q2 2022 |
|
Q2 2021 |
∆ |
YTD 2022 |
|
YTD 2021 |
∆ |
(In thousands of dollars) |
Results from operating activities |
1,212 |
|
2,122 |
(910) |
3,199 |
|
5,450 |
(2,251) |
Total
adjustment to cost of sales(2) |
(259 |
) |
586 |
(845) |
(511 |
) |
70 |
(581) |
Adjusted results from operating activities(1) |
953 |
|
2,708 |
(1,755) |
2,688 |
|
5,520 |
(2,832) |
Non-recurring expenses: |
|
|
|
|
|
|
Other one-time non-recurring items |
- |
|
- |
- |
- |
|
247 |
(247) |
Depreciation and amortization |
1,700 |
|
1,657 |
43 |
3,410 |
|
3,514 |
(104) |
Adjusted EBITDA(1) |
2,653 |
|
4,365 |
(1,712) |
6,098 |
|
9,281 |
(3,183) |
(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 fiscal 2022 were $1.2 million
and $3.2 million respectively, compared to $2.1 million and $5.5
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.
Certain non-cash items and non-recurring
expenses had an impact on the results from operating activities. As
such, we believe 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.
Adjusted results from operating activities for
the current quarter and the first six months of fiscal 2022 were
respectively $1.8 million and $2.8 million lower than the
comparable periods last year, due mainly to lower adjusted gross
margin and higher administration and selling expenses, as explained
above.
Adjusted EBITDA for the second quarter and the
first six months of fiscal 2022 decreased by $1.7 million and $3.2
million, respectively, compared to the same periods last year,
largely driven by lower adjusted gross margins and higher
administration and selling expenses, 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 safety protocols in
place. To date our plants have operated without any significant
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.
As a result of the strong demand and improved
margin, we are experiencing in our Sugar segment, we continue to
expect improved financial performance in 2022 as compared to 2021.
The strength in our Sugar segment is expected to offset higher
costs from inflationary pressures and lower demand in the Maple
segment.
Sugar
We continue to expect the sugar segment to
perform well in fiscal 2022. Underlying domestic demand remains
strong across all customer segments supported by higher margin from
favourable market-based pricing adjustments.
In Taber, the sugar beet processing campaign was
completed during the current quarter and delivered the expected
volume of sugar. Overall, 121,000 metric tonnes of sugar are
expected from our Taber facility in the current fiscal year, an
increase of 6,000 metric tonnes from last year.
Due to the strong market conditions in our Sugar
segment, we are increasing our sales volume forecast for 2022 by
5,000 metric tonnes to 775,000 metric tonnes. We expect domestic
volumes to grow by 3%, up from our previously forecasted 2%, while
our export volumes are expected to be lower as a result of reduced
CUSMA quota opportunities in the current year. Overall, 2022
volumes are expected to be approximately 4,500 metric tonnes lower
than 2021, with volumes expected to change as follows in 2022:
- Industrial, our
largest segment, is expected to grow at 2% as demand for
sugar-containing products remains steady both in Canada and the
US.
- Liquid volume is
expected to deliver growth of approximately 2% to 3% driven by
continued demand from existing customers.
- Consumer volume
is also expected to grow by 3%, a level aligned with the normalized
growth we experienced pre-covid.
- We anticipate
selling less in the export markets in 2022, due to lower
opportunity from CUSMA.
Despite the reduction of total volume,
favourable price adjustments are expected to improve profitability
as compared to 2021.
Maintenance programs for the Montreal and
Vancouver operating facilities are expected to follow the trend of
previous years and are expected to result in a market-based
increase in operating costs. For the Taber facility, a return to
normal crop volume and an improvement in the quality of the sugar
beets over 2021 is expected to yield an improvement in operating
costs.
Distribution costs are expected to increase
overall by 10% to 15%, reflecting a higher market price for
warehousing, rail and ground transportation.
Administration and selling expenses are expected
to increase by 25% to 30% due to a non-cash increase in share-based
compensation expense driven by the increase in share price noted in
recent quarters.
Spending on capital projects is also expected to
be similar to recent periods. For fiscal 2022, we anticipate
spending approximately $25.0 million to $30.0 million on various
capital projects, with approximately a quarter allocated to
return-on-investment projects.
Maple
The Maple segment financial results were lower
than anticipated for the first half of 2022, due mainly to lower
volume and unexpected inflationary pressure on costs for packaging
material, freight, and labour; along with shipping challenges
related to the availability of carriers. We expect these financial
and operating pressures to continue for the remainder of 2022. At
the end of the second quarter, we began implementing an updated
pricing strategy with our customers, aimed at recouping these
incremental costs going forward. We anticipate these new prices to
take effect over the next two quarters and lead to improved
margin.
See “Forward Looking Statements” section and
“Risks and Uncertainties” section.
CONSOLIDATED RESULTS AND SELECTED
FINANCIAL INFORMATION
|
Q2 2022 |
Q2 2021 |
YTD 2022 |
YTD 2021 |
(unaudited)(In thousands of dollars, except volume and per share
information) |
|
|
Sugar (metric tonnes) |
196,570 |
183,749 |
376,613 |
374,189 |
Maple syrup (000 pounds) |
12,912 |
14,214 |
25,198 |
29,106 |
Total revenues |
253,341 |
215,929 |
484,096 |
439,769 |
Gross margin |
33,899 |
31,451 |
77,385 |
70,064 |
Adjusted gross margin(1) |
35,887 |
27,407 |
71,687 |
63,859 |
Results from operating
activities |
15,499 |
19,151 |
42,836 |
42,483 |
Adjusted results from
operating activities(1) |
17,487 |
15,107 |
37,138 |
36,278 |
Adjusted EBITDA(1) |
24,017 |
21,375 |
50,079 |
49,022 |
Net finance costs |
3,707 |
4,383 |
8,124 |
9,079 |
Income tax expense |
3,222 |
3,990 |
8,916 |
8,853 |
Net earnings |
8,570 |
10,778 |
25,796 |
24,551 |
per share (basic) |
0.08 |
0.10 |
0.25 |
0.24 |
per share (diluted) |
0.08 |
0.10 |
0.24 |
0.23 |
Adjusted net earnings(1) |
9,122 |
7,751 |
20,079 |
19,999 |
per share (basic)(1) |
0.09 |
0.07 |
0.19 |
0.19 |
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 $37.4 million and $44.3
million for the second quarter and for the first six months of
fiscal 2022 respectively versus comparable periods last year. The
increase in revenue was mainly attributable to higher pricing and
sales volume and higher by-product sales in the Sugar segment,
partially offset by lower sales volume in the Maple segment.
Gross margin
Excluding the mark-to-market of derivative
financial instruments, adjusted gross margin for the second quarter
of the current fiscal year increased by $8.5 million compared to
the same period last year, mainly as a result of higher adjusted
gross margin in the Sugar segment, partially offset by lower
adjusted gross margin the Maple segment. For the Sugar segment, the
adjusted gross margin per metric tonne was higher by $40.51 per
metric tonne and for the Maple segment, the adjusted gross margin
percentage was lower by 1.4% when compared to the same period last
year.
For the first six months of fiscal 2022,
adjusted gross margin was $7.8 million higher than the first half
of fiscal 2021, driven largely by the increased adjusted gross
margin in the Sugar segment during the current quarter.
Results from operating activities
Excluding the mark-to-market of derivative
financial instruments, adjusted results from operating activities
for the current quarter amounted to $17.5 million compared to $15.1
million in the same quarter last year, an increase of $2.4 million.
For the first six months of fiscal 2022, adjusted results from
operating activities were $37.1 million compared to $36.3 million,
representing an increase of $0.8 million. The improvement in both
periods was mainly driven by higher contribution from the Sugar
segment during the first half of the current fiscal year.
Net finance costs
|
Q2 2022 |
Q2 2021 |
∆ |
YTD 2022 |
YTD 2021 |
∆ |
(In thousands of dollars) |
Interest expense on convertible unsecured subordinated
debentures |
2,119 |
|
2,102 |
17 |
4,169 |
|
4,140 |
29 |
Interest on revolving credit
facility |
1,357 |
|
1,644 |
(287) |
2,643 |
|
3,356 |
(713) |
Interest on senior guaranteed
notes |
905 |
|
- |
905 |
1,802 |
|
- |
1,802 |
Amortization of deferred
financing fees |
311 |
|
297 |
14 |
617 |
|
593 |
24 |
Net change in fair value of
interest rate swaps |
(1,246 |
) |
- |
(1,246) |
(1,840 |
) |
- |
(1,840) |
Other interest expense |
261 |
|
340 |
(79) |
733 |
|
990 |
(257) |
Net finance costs |
3,707 |
|
4,383 |
(676) |
8,124 |
|
9,079 |
(955) |
For the second quarter and first six months of
the current fiscal year, net finance costs were lower by $0.7
million and $1.0 million respectively, compared to the same periods
last year, largely driven by the favourable impact of changes in
fair value related to interest rate swap contracts and lower
average interest cost on the revolving credit facility from lower
average balance outstanding. This reduction was partially offset by
additional interest expense on the senior guaranteed notes issued
during the third quarter of fiscal 2021.
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 2022 |
Q2 2021 |
∆ |
YTD 2022 |
YTD 2021 |
∆ |
(In thousands of dollars) |
Current |
3,439 |
|
3,479 |
(40) |
10,158 |
|
8,255 |
1,903 |
Deferred |
(217 |
) |
511 |
(728) |
(1,242 |
) |
598 |
(1,840) |
Income tax expense |
3,222 |
|
3,990 |
(768) |
8,916 |
|
8,853 |
62 |
The variation in current and deferred tax
expense period-over-period is consistent with the variation in
earnings before income taxes during the current quarter compared to
the same quarter last year.
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 of fiscal 2022 were lower by $2.2 million and
higher by $1.2 million respectively, compared to the same periods
last year. These variances were mainly attributable to non-cash
variances in the mark-to-market of derivative financial instruments
associated with sugar futures contracts and foreign exchange
forward contracts, partially offset by income tax expenses.
Adjusted net earnings in the current quarter and
the first six months of fiscal 2022 were higher by $1.4 million and
$0.1 million respectively, compared to the same periods last year,
largely attributable to higher adjusted results from operating
activities from the Sugar segment.
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) |
|
2022 |
2021 |
2020 |
|
Second |
First |
|
Fourth |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Sugar Volume (MT) |
196,570 |
|
180,043 |
|
214,753 |
|
190,563 |
|
183,749 |
|
190,440 |
|
225,396 |
|
172,054 |
|
Maple products volume (000
pounds) |
12,912 |
|
12,286 |
|
11,678 |
|
11,471 |
|
14,214 |
|
14,892 |
|
13,181 |
|
14,313 |
|
Total revenues |
253,341 |
|
230,755 |
|
243,231 |
|
210,931 |
|
215,929 |
|
223,840 |
|
246,212 |
|
206,147 |
|
Gross margin |
33,899 |
|
43,486 |
|
39,616 |
|
30,064 |
|
31,451 |
|
38,613 |
|
37,890 |
|
29,873 |
|
Adjusted gross margin(1) |
35,887 |
|
35,800 |
|
31,020 |
|
25,932 |
|
27,407 |
|
36,452 |
|
40,065 |
|
25,915 |
|
Results from operations |
15,499 |
|
27,337 |
|
26,952 |
|
15,062 |
|
19,151 |
|
23,332 |
|
22,829 |
|
12,372 |
|
Adjusted results from
operations(1) |
17,487 |
|
19,651 |
|
18,356 |
|
10,930 |
|
15,107 |
|
21,171 |
|
25,004 |
|
8,414 |
|
Adjusted EBITDA |
24,017 |
|
26,062 |
|
24,786 |
|
17,214 |
|
21,375 |
|
27,647 |
|
31,231 |
|
14,279 |
|
Net earnings |
8,570 |
|
17,226 |
|
16,140 |
|
6,836 |
|
10,778 |
|
13,773 |
|
12,952 |
|
5,538 |
|
Per share - basic |
0.08 |
|
0.17 |
|
0.16 |
|
0.07 |
|
0.10 |
|
0.13 |
|
0.13 |
|
0.05 |
|
Per share - diluted |
0.08 |
|
0.15 |
|
0.15 |
|
0.07 |
|
0.10 |
|
0.13 |
|
0.12 |
|
0.05 |
|
Adjusted net earnings(1) |
9,122 |
|
10,957 |
|
9,620 |
|
4,247 |
|
7,751 |
|
12,248 |
|
14,551 |
|
2,560 |
|
Per share - basic |
0.09 |
|
0.11 |
|
0.09 |
|
0.04 |
|
0.07 |
|
0.12 |
|
0.14 |
|
0.02 |
|
Per share - diluted |
0.09 |
|
0.10 |
|
0.09 |
|
0.04 |
|
0.07 |
|
0.11 |
|
0.14 |
|
0.02 |
|
Sugar - Adjusted gross margin
rate per MT(1) |
159.11 |
|
174.25 |
|
121.16 |
|
113.95 |
|
118,60 |
|
161.18 |
|
157.51 |
|
120.45 |
|
Maple -
Adjusted gross margin percentage(1) |
8.0 |
% |
8.1 |
% |
9.7 |
% |
8.5 |
% |
9.4 |
% |
8.9 |
% |
7.9 |
% |
8.4 |
% |
(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
Historically the first quarter (October to
December) of the fiscal year is the best quarter of the sugar
segment for adjusted gross margin 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
volumes as well as an unfavourable customer mix, resulting in lower
revenues, adjusted gross margins and adjusted net earnings. This
trend was different in the second quarter of 2022 as several sales
that were delayed in the first quarter of the year materialized in
the second quarter.
Usually, there is minimal seasonality in the
Maple products segment. However, since the third quarter of fiscal
2020, we are experiencing volatility in sales volume partially
attributable to the pandemic.
Financial condition
(In
thousands of dollars) |
April 2, 2022 |
April 3, 2021 |
October 2, 2021 |
Total assets |
$ |
907,376 |
$ |
831,514 |
$ |
879,930 |
Total
liabilities |
|
570,158 |
|
553,348 |
|
560,972 |
The increase in total assets in the current
fiscal quarter compared to the same quarter last year was mainly
due to an increase in inventory of $22.3 million, trade and other
receivables of $ 21.3 million, derivatives financial instruments
assets of $20.5 million and cash of $8.8 million.
Total liabilities for the current fiscal quarter
increased by $16.8 million compared to the same quarter last year
due mainly to the senior guaranteed notes that were issued in the
third quarter of fiscal 2021 for $98.8 million and the increase in
trade and other payables of $16.2 million, in deferred tax
liabilities of $13.7 million and in lease obligations of $5.3
million. This variance was partially offset by a reduction in the
revolving credit facility balance of $90.0 million and in employee
benefits liabilities of $ 30.4 million.
Liquidity
Cash flow generated by Lantic is mainly paid to
Rogers by way 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 distribution of cash
arising from the compliance of financial covenants for the
year.
|
Q2 2022 |
|
Q2 2021 |
|
YTD 2022 |
|
YTD 2021 |
|
(In thousands of dollars) |
Net cash
flow from operating activities |
20,460 |
|
9,687 |
|
(14,902 |
) |
4,981 |
|
Cash flow used in
financing activities |
(9,407 |
) |
(10,328 |
) |
16,000 |
|
6,637 |
|
Cash flow used in
investing activities |
(3,559 |
) |
(7,715 |
) |
(6,397 |
) |
(12,096 |
) |
Effect
of changes in exchange rate on cash |
(75 |
) |
25 |
|
(58 |
) |
(19 |
) |
Net increase (decrease) in cash |
7,419 |
|
(8,331 |
) |
(5,357 |
) |
(497 |
) |
Cash flow from operating activities for the
current quarter increased by $10.8 million compared to the same
quarter last year, due mainly to a positive non-cash working
capital variation of $16.6 million, offset by lower net earnings
adjusted for non-cash items of $4.9 million and income taxes paid
of $1.1 million. For the first six months of 2022, cash flow from
operating activities decreased by $19.9 million, mainly
attributable to a negative non-cash working capital variation of
$17.8 million and higher interest and income taxes paid of $6.1
million, offset by higher net earnings adjusted for non-cash items
of $4.0 million.
Cash flow used in financing activities was lower
by $0.9 million for the current quarter compared to the same
quarter last year due mainly to cash received from the issuance of
shares related to stock options that have been exercised during the
period of $2.2 million, partially offset by an increase in
borrowings from the revolving credit facility of $1.0 million. For
the first six months of fiscal 2022, cash flow from financing
activities increased by $9.4 million compared to the same period
last year largely as a result of an increase in borrowings from the
revolving credit facility and the bank overdraft of $6.8 million
and the cash received from the issuance of shares related to stock
options that have been exercised during the period of $2.5
million.
The cash outflow used in investing activities
for the current quarter and the first six months of fiscal 2022
were lower by $4.2 million and $5.7 million respectively, compared
to the same periods last year. The variances were mainly related to
timing of capital expenditures.
In order to provide additional information, we
believe it is appropriate to measure free cash flow that is
generated by our operations. 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 value added capital
expenditures, and the payment of lease obligation.
FREE CASH FLOW
|
Trailing twelve months |
(In thousands of dollars) |
2022 |
|
2021 |
|
Cash flow from operations |
58,714 |
|
48,855 |
|
Adjustments: |
|
|
Changes in non-cash working capital |
28,983 |
|
23,122 |
|
Mark-to-market and derivative timing adjustments |
(19,815 |
) |
(7,916 |
) |
Amortization of transitional balances |
- |
|
(138 |
) |
Financial instruments non-cash amount |
(975 |
) |
5,932 |
|
Capital expenditures and intangible assets |
(18,979 |
) |
(27,838 |
) |
Value added capital expenditures |
3,765 |
|
9,707 |
|
Payment of leases obligation |
(5,133 |
) |
(5,054 |
) |
Free cash flow(1) |
46,560 |
|
46,670 |
|
Declared dividends |
37,376 |
|
37,275 |
|
Share
repurchased |
- |
|
80 |
|
(1) See “Non-GAAP Measures” section for
definition and reconciliation to GAAP measures.
Free Cash
Flow: https://www.globenewswire.com/NewsRoom/AttachmentNg/2c5c0f35-e986-4a32-9b41-e3a064542e49
Free cash flow for the trailing twelve months
ending on April 2, 2022 amounted to $46.6 million, representing a
decrease of $0.1 million compared to the same period last year.
This decrease in free cash flow was mainly due to higher interest
and income taxes paid of $7.4 million partially offset by an
increase in adjusted EBITDA of $5.2 million, excluding non-cash
items related to future pension liabilities included in the
Montreal collective agreement and senior management compensation
related to our performance share units program, and lower capital
expenditures net of value added capital expenditures.
Capital and intangible assets expenditures, net
of value added capital expenditures, decreased by $2.9 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.
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.
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 payable. 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. 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 amount of $20.8 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 2, 2021 Annual Report.
As at April 2, 2022, Lantic had commitments to
purchase a total of 882,000 metric tonnes of raw sugar, of which
267,145 metric tonnes had been priced for a total dollar commitment
of $151.7 million.
Capital resources
Lantic has a total of $200 million of available
working capital under the revolving credit facility, which matures
on November 23, 2026, 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 2, 2022, a
total of $513.1 million of assets have been pledged as security for
the revolving credit facility, compared to $470.3 million as at
April 3, 2021; including trade receivables, inventories and
property, plant and equipment.
As at April 2, 2022, $135.0 million had been
drawn from the revolving credit facility and $10.3 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. We believe that the
unused credit under the revolving credit facility is adequate to
meet our expected cash requirements.
As at April 2, 2022, Lantic was in compliance
with all the covenants under its revolving credit facility.
OUTSTANDING SECURITIES
A total of 104,195,845 shares were outstanding
as at April 2, 2022 and May 11, 2022, respectively (103,536,923 as
at April 3, 2021).
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 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
terminated on June 2, 2021. No shares have been purchased under the
2020 NCIB.
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 2, 2021. 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 unaudited condensed 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 RSI 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 are 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 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 2022 |
Q2 2021 |
Consolidated results(In thousands of dollars) |
Sugar |
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
Total |
|
Gross margin |
29,030 |
4,869 |
|
33,899 |
|
26,423 |
|
5,028 |
31,451 |
|
Total
adjustment to the cost of sales(1) |
2,247 |
(259 |
) |
1,988 |
|
(4,630 |
) |
586 |
(4,044 |
) |
Adjusted Gross Margin |
31,277 |
4,610 |
|
35,887 |
|
21,793 |
|
5,614 |
27,407 |
|
Results from operating
activities |
14,287 |
1,212 |
|
15,499 |
|
17,029 |
|
2,122 |
19,151 |
|
Total
adjustment to the cost of sales(1) |
2,247 |
(259 |
) |
1,988 |
|
(4,630 |
) |
586 |
(4,044 |
) |
Adjusted results from operating activities |
16,534 |
953 |
|
17,487 |
|
12,399 |
|
2,708 |
15,107 |
|
Results from operating
activities |
14,287 |
1,212 |
|
15,499 |
|
17,029 |
|
2,122 |
19,151 |
|
Total adjustment to the cost
of sales(1) |
2,247 |
(259 |
) |
1,988 |
|
(4,630 |
) |
586 |
(4,044 |
) |
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
4,830 |
1,700 |
|
6,530 |
|
4,611 |
|
1,657 |
6,268 |
|
Maple
Segment non-recurring costs |
- |
- |
|
- |
|
- |
|
- |
- |
|
Adjusted EBITDA |
21,364 |
2,653 |
|
24,017 |
|
17,010 |
|
4,365 |
21,375 |
|
Net earnings |
|
|
8,570 |
|
|
|
10,778 |
|
Total adjustment to the cost
of sales(1) |
|
|
1,988 |
|
|
|
(4,044 |
) |
Net change in fair value in
interest rate swaps(1) |
|
|
(1,246 |
) |
|
|
- |
|
Income
taxes on above adjustments |
|
|
(190 |
) |
|
|
1,017 |
|
Adjusted net earnings |
|
|
9,122 |
|
|
|
7,751 |
|
Net earnings per share
(basic) |
|
|
0.08 |
|
|
|
0.10 |
|
Adjustment for the above |
|
|
0.01 |
|
|
|
(0.03 |
) |
Adjusted net earnings per share (basic) |
|
|
0.09 |
|
|
|
0.07 |
|
(1) See “Adjusted results” section
|
YTD 2022 |
YTD 2021 |
Consolidated results(In thousands of dollars) |
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
Total |
|
Gross margin |
67,836 |
|
9,549 |
|
77,385 |
|
58,764 |
|
11,300 |
70,064 |
|
Total
adjustment to the cost of sales(1) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
(6,275 |
) |
70 |
(6,205 |
) |
Adjusted Gross Margin |
62,649 |
|
9,038 |
|
71,687 |
|
52,489 |
|
11,370 |
63,859 |
|
Results from operating
activities |
39,637 |
|
3,199 |
|
42,836 |
|
37,033 |
|
5,450 |
42,483 |
|
Total
adjustment to the cost of sales(1) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
(6,275 |
) |
70 |
(6,205 |
) |
Adjusted results from operating activities |
34,450 |
|
2,688 |
|
37,138 |
|
30,758 |
|
5,520 |
36,278 |
|
Results from operating
activities |
39,637 |
|
3,199 |
|
42,836 |
|
37,033 |
|
5,450 |
42,483 |
|
Total adjustment to the cost
of sales(1) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
(6,275 |
) |
70 |
(6,205 |
) |
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
9,531 |
|
3,410 |
|
12,941 |
|
8,983 |
|
3,514 |
12,497 |
|
Maple
Segment non-recurring costs |
- |
|
- |
|
- |
|
- |
|
247 |
247 |
|
Adjusted EBITDA |
43,981 |
|
6,098 |
|
50,079 |
|
39,741 |
|
9,281 |
49,022 |
|
Net earnings |
|
|
25,796 |
|
|
|
24,551 |
|
Total adjustment to the cost
of sales(1) |
|
|
(5,698 |
) |
|
|
(6,205 |
) |
Net change in fair value in
interest rate swaps(1) |
|
|
(1,840 |
) |
|
|
- |
|
Income
taxes on above adjustments |
|
|
1,821 |
|
|
|
1,653 |
|
Adjusted net earnings |
|
|
20,079 |
|
|
|
19,999 |
|
Net earnings per share
(basic) |
|
|
0.25 |
|
|
|
0.24 |
|
Adjustment for the above |
|
|
(0.06 |
) |
|
|
(0.05 |
) |
Adjusted net earnings per share (basic) |
|
|
0.19 |
|
|
|
0.19 |
|
(1) See “Adjusted results” section |
|
|
|
|
|
|
CRITICAL ACCOUNTING ESTIMATES
For the second quarter and the first six month of fiscal 2022,
there were no significant changes in the critical accounting
estimate as disclosed in our Management’s Discussion and Analysis
of the October 2, 2021 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 first quarter of fiscal 2022.
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 (a) of the unaudited
condensed interim financial statements and to note 3 (r) of the
2021 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 2, 2022 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 our current expectations
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, we
caution investors that statements concerning the following subjects
are, or are likely to be, forward-looking statements:
- the impact of
the COVID-19 pandemic on our operations
- future prices of
raw sugar
- expected
inflationary pressures on costs
- natural gas
costs
- beet production
forecasts
- growth of the
maple syrup industry and the refined sugar industry
- the status of
labour contracts and negotiations
- the level of
future dividends
- the status of
government regulations and investigations
Forward-looking statements are based on
estimates and assumptions made by us in light of our 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 our 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 our 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 we do 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/55cc046b-6481-4419-ade0-3ead3d47c93f
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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