Rogers Sugar Inc. (“our,” “we”, “us” or “Rogers”) (TSX: RSI) today
reported second quarter fiscal 2023 results with consolidated
adjusted EBITDA of $25.0 million and $58.5 million for the current
quarter and the first six months of the year, respectively.
“Canada’s favourable sugar dynamics and
continued strong demand for sugar containing products drove
increased profitability in the second quarter of fiscal 2023,” said
Mike Walton, President and Chief Executive Officer of Rogers and
Lantic Inc. “We are confident that these trends will continue
throughout 2023 and despite lower sugar production from our Taber
operations, we expect to deliver strong and stable financial
results this year. In our maple business, the impact of improved
pricing, automation projects and improving economic conditions
helps mitigate an otherwise challenging business environment.”
Second Quarter 2023 Consolidated
Highlights(unaudited) |
Q2 2023 |
Q2 2022 |
YTD 2023 |
YTD 2022 |
Financials
($000s) |
|
|
|
|
Revenues |
272,949 |
253,341 |
534,392 |
484,096 |
Gross margin |
41,658 |
33,899 |
82,849 |
77,385 |
Adjusted gross margin(1) |
38,233 |
35,887 |
80,226 |
71,687 |
Results from operating
activities |
21,856 |
15,499 |
48,140 |
42,836 |
EBITDA(1) |
28,445 |
22,029 |
61,158 |
55,777 |
Adjusted EBITDA(1) |
25,020 |
24,017 |
58,535 |
50,079 |
Net earnings |
11,062 |
8,570 |
25,736 |
25,796 |
per share (basic) |
0.11 |
0.08 |
0.25 |
0.25 |
per share (diluted) |
0.10 |
0.08 |
0.23 |
0.24 |
Adjusted net earnings(1) |
9,115 |
9,122 |
24,462 |
20,079 |
Adjusted net earnings per
share (basic)(1) |
0.09 |
0.09 |
0.23 |
0.19 |
Trailing twelve months free
cash flow(1) |
51,807 |
46,560 |
51,807 |
46,560 |
Dividends per share |
0.09 |
0.09 |
0.18 |
0.18 |
|
|
|
|
|
Volumes |
|
|
|
|
Sugar (metric tonnes) |
195,547 |
196,570 |
388,396 |
376,613 |
Maple
Syrup (thousand pounds) |
12,059 |
12,912 |
23,878 |
25,198 |
(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 2023 was $25.0 million and $58.5 million respectively, up
$1.0 million, and $8.4 million from the same periods last year. The
increase in consolidated adjusted EBITDA for both periods was
related to higher adjusted EBITDA in the Sugar segment, partially
offset by lower adjusted EBITDA in the Maple segment;
- Adjusted EBITDA
in the Sugar segment was $22.6 million in the second quarter of
fiscal 2023, up $1.2 million compared to the same period last year,
largely due to higher adjusted gross margin, partially offset by
higher administrative and selling expenses;
- Sales volumes in
the Sugar segment decreased slightly in the second quarter to
195,547 metric tonnes, from 196,570 metric tonnes for the same
period last year;
- Adjusted gross
margin in the Sugar segment improved by $15.51 per metric tonne in
the second quarter of 2023 compared to the same period last year
due to improved average pricing;
- Adjusted EBITDA
in the Maple segment was $2.4 million in the second quarter, a
decrease of $0.3 million from the same quarter last year, largely
as a result of lower adjusted gross margin;
- The volume sold
in the Maple segment decreased by 853,000 pounds to 12,059,000
pounds in the quarter, driven largely by lower demand and
unfavourable market dynamics;
- We are
maintaining our fiscal 2023 sugar sales volume outlook at
approximately 805,000 metric tonnes, reflecting the continued
strong demand in the Canadian industrial sugar market;
- Free cash flow
for the trailing 12 months ended April 1, 2023 was $51.8 million,
an increase of $5.2 million from the same period last year;
- In the second
quarter of fiscal 2023, we distributed $0.09 per share to our
shareholders for a total amount of $9.4 million;
- On May 10, 2023,
the Board of Directors declared a quarterly dividend of $0.09 per
share, payable on or before July 13, 2023; and
- We continue to
work on the design and planning of the prospective expansion
project announced in August 2022. The expansion project would
increase sugar supply by approximately 100,000 metric tonnes in
eastern Canada within the next two to three years. We are expecting
to complete the design and planning stage in the third quarter of
fiscal 2023.
Sugar
Second Quarter 2023 Sugar
Highlights(unaudited) |
Q2 2023 |
Q2 2022 |
YTD 2023 |
YTD 2022 |
Financials ($000s) |
|
|
|
|
Revenues |
216,135 |
195,875 |
421,423 |
371,782 |
Gross margin |
37,075 |
29,030 |
73,113 |
67,836 |
Adjusted gross margin(1) |
34,145 |
31,277 |
71,806 |
62,649 |
Per metric tonne ($/ mt) (1) |
174.62 |
159.11 |
184.88 |
166.35 |
Administration and selling
expenses |
11,101 |
9,415 |
17,736 |
18,527 |
Distribution costs |
5,340 |
5,328 |
10,402 |
9,672 |
Results from operating
activities |
20,634 |
14,287 |
44,975 |
39,637 |
EBITDA(1) |
25,512 |
19,117 |
54,566 |
49,168 |
Adjusted EBITDA(1) |
22,582 |
21,364 |
53,259 |
43,981 |
|
|
|
|
|
Volumes (metric
tonnes) |
|
|
|
|
Total
volume |
195,547 |
196,570 |
388,396 |
376,613 |
(1) See “Cautionary statement on Non-GAAP Measures” section of
this press release for definition and reconciliation to GAAP
measures.
In the second quarter, revenue increased by
$20.3 million, compared to the same periods last year, driven
mainly by higher prices paid for #11 world raw sugar and higher
average pricing for refining related activities.
Overall, sugar volume was stable in the second
quarter of 2023 compared to the same quarter last year, as strong
industrial volumes were offset by lower volumes in our consumer and
export categories.
Gross margin was $37.1 million for the second
quarter and include a gain of $2.9 million for the mark-to-market
of derivative financial instruments. For the same periods last
year, gross margin was $29.0 million with a mark-to-market loss of
$2.2 million.
Adjusted gross margin increased by $2.9 million
in the second quarter compared to the same period last year mainly
as a result of higher sugar sales margin from improved average
pricing on sugar refining related activities. This positive
variance was partially offset by higher production costs mainly
driven by market-based inflationary pressures on operating costs
and higher storage costs for raw sugar as we increased the storage
capacity of our Montreal plant to support the growing demand for
refined sugar in eastern Canada. On a per unit basis, adjusted
gross margin for the second quarter was at $174.62 per metric
tonne, higher than last year by $15.51 per metric tonne. The
favourable variance was mainly due to the increase in overall
margin from improved selling prices, partially offset by higher
production cost, as compared to last year.
Results from operating activities for the second
quarter of 2023 was $20.6 million, an increase of $6.3 million as
compared to the same period last year. These results include gains
and losses from the mark-to-market of derivative financial
instruments.
EBITDA for the second quarter was $25.5 million,
an increase of $6.4 million as compared to same period last year.
These results include gains and losses from the mark-to-market of
derivative financial instruments.
Adjusted EBITDA for the second quarter increased
by $1.2 million compared to the same period last year, largely as a
result of higher adjusted gross margin, partially offset by higher
administration and selling expenses.
Maple Products
Second Quarter 2023 Maple
Highlights(unaudited) |
Q2 2023 |
Q2 2022 |
YTD 2023 |
YTD 2022 |
Financials
($000s) |
|
|
|
|
Revenues |
56,814 |
57,466 |
112,969 |
112,314 |
Gross margin |
4,583 |
4,869 |
9,736 |
9,549 |
Adjusted gross margin(1) |
4,088 |
4,610 |
8,420 |
9,038 |
As a percentage of revenues (%) (1) |
7.2% |
8.0% |
7.5% |
8.0% |
Administration and selling
expenses |
2,865 |
2,705 |
5,527 |
5,079 |
Distribution costs |
496 |
952 |
1,044 |
1,271 |
Results from operating
activities |
1,222 |
1,212 |
3,165 |
3,199 |
EBITDA(1) |
2,933 |
2,912 |
6,592 |
6,609 |
Adjusted EBITDA(1) |
2,438 |
2,653 |
5,276 |
6,098 |
|
|
|
|
|
Volumes (thousand
pounds) |
|
|
|
|
Total
volume |
12,059 |
12,912 |
23,878 |
25,198 |
(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 were $0.7
million lower than the same period last year due to lower volume,
partially offset by higher average selling price.
Gross margin was $4.6 million for the second
quarter of 2023 and includes a gain of $0.5 million for the
mark-to-market of derivative financial instruments. For the same
period last year, gross margin was $4.9 million with a
mark-to-market gain of $0.3 million.
Adjusted gross margin for the second quarter was
$4.1 million, a decrease of $0.5 million as compared to the same
period last year. The unfavourable variance was mainly due to lower
volume as a result of lower demand and unfavourable market
dynamics.
Adjusted gross margin percentage for the current
quarter decreased by 80 basis point to 7.2% compared to the same
period last year. This variance was mainly related to market-based
production cost increases and the timing of passing these increases
to our customers.
Results from operating activities for the second
quarter of 2022 and 2023 amounted to $1.2 million. These results
include gains and losses from the mark-to-market of derivative
financial instruments.
EBITDA for the second quarter of 2022 and 2023
amounted to $2.9 million. These results include gains and losses
from the mark-to-market of derivative financial instruments.
Adjusted EBITDA for the second quarter of fiscal
2022 decreased by $0.2 million compared to the same quarter last
year, largely driven by lower adjusted gross margin, as mentioned
above.
OUTLOOK
Following a solid performance in the second
quarter of 2023, we expect to continue to deliver strong and stable
financial results in 2023. Strong sugar demand and pricing is
expected to continue and provide improved results, despite ongoing
inflationary pressures. We expect our Maple segment will continue
to face a challenging business environment in the second half of
2023, as the unfavourable market and economic conditions
encountered over the last year remain. We intend to mitigate these
unfavourable market conditions with recently negotiated price
increases, and newly implemented production automation
initiatives.
Sugar
We continue to expect the sugar segment to
perform well in fiscal 2023. Underlying North American demand
remains strong across all customer segments supported by favourable
market dynamics. We expect that improvements in pricing implemented
over the last few quarters will continue to support our financial
results positively, allowing us to mitigate the current impact of
inflationary pressures on costs.
In Taber, the harvest season delivered the
expected volume of sugar beets, and the processing campaign was
completed in early February. The expected sugar production from the
crop is 105,000 metric tonnes, lower than the prior year production
by 15,000 metric tonnes. The lower-than-expected production is
attributable to unfavourable weather conditions encountered in the
later stage of the current year growing period, which negatively
impacted the sugar content of the sugar beets.
We have increased the production plans of our
Montreal and Vancouver cane sugar facilities to mitigate the
production shortfall of our Taber facility and ensure we can
support the growing needs of our customers.
In April 2023, we have concluded a new two-year
agreement with the Alberta Sugar Beet Growers for the supply of
sugar beets to the Taber beet plant, for which the crop harvested
in the fall of 2023 will be the first year of the agreed
contract.
We are maintaining our fiscal 2023 sales volume
expectations of approximately 805,000 metric tonnes. This
represents an increase of 1.3% over 2022. This increase is based on
the continued strong demand of the Canadian domestic industrial
sugar market. Overall, we expect the following year-over-year
volume variances for our customer segments:
-
Industrial, our largest segment, is expected to increase by 3%, as
a result of the continuous strong demand supported by favourable
market dynamics;
-
Liquid volume is expected to grow by 4% driven by continued demand
from existing customers;
-
Consumer volume is expected to remain stable; and
-
A planned 15% reduction in sales to the export markets for 2023,
due to the growing demand and strong economics of the domestic
market. We will consider potential supplemental export sales if
favourable production opportunities arise.
Production costs and maintenance programs for
our three production facilities are expected to be moderately
impacted by the current inflationary pressures, and we continue to
focus on cost control initiatives throughout our operations.
We expect a slight increase in distribution
costs in 2023 as we foresee that recent increases for logistics and
our supply chain costs will remain in the second half of 2023.
Administration and selling expenses are expected
to be stable in 2023.
We have been able to lower the impact of recent
increases in interest rates and energy costs through our multi-year
hedging strategy. We do not anticipate these increases to have a
material impact on our financial results in the near future, as we
expect our hedging strategy will continue to mitigate most of our
exposure to such risks.
Spending on regular business capital projects is
also expected to remain stable for fiscal 2023. We anticipate
spending approximately $25 million on various initiatives. This
capital spending estimate excludes expenditures relating to the
expected capacity expansion of our Montreal sugar refinery and
Toronto distribution centre.
Maple Products
We continue to expect the Maple business segment
to be negatively impacted by high inflation, resulting in lower
demand from retail customers, for the remainder of 2023. We
anticipate the unfavourable impact related to the reduction in
retail demand and the related increased competitiveness of the
market will be mitigated by recently negotiated price increases
with key customers, lower production costs driven by newly
implemented automation projects and favourable recently negotiated
supply agreements for packaging material.
We plan to spend between $1 million and $2
million on capital projects in 2023, which is consistent with
recent years. The main driver for the Maple segment projects is to
improve productivity and profitability through automation.
See “Cautionary Statement Regarding Forward
Looking Information” section below.
A full copy of Rogers second quarter 2023,
including management’s discussion and analysis and unaudited
condensed consolidated interim financial statements, can be found
at www.LanticRogers.com.
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. Refer to “Non-GAAP measures” section at the end of the
MD&A for the current quarter for additional information.
The following is a description of the non-GAAP
measures we used in this press release:
- 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.
- Adjusted results
from operating activities are defined as results from operating
activities adjusted for the adjustment to cost of sales and
goodwill impairment.
- EBITDA is
defined as results from operating activities adjusted for
depreciation, amortization and goodwill impairment.
- Adjusted EBITDA
is defined as EBITDA adjusted for total adjustments to cost of
sales.
- Adjusted net
earnings is defined as net earnings adjusted for the adjustment to
cost of sales, goodwill impairment, net change in fair value in
interest rate swaps and the income tax impact on these
adjustments.
- 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, financial instruments non-cash amount, goodwill
impairment and includes deferred financing charges, funds received
from stock options exercised, capital and intangible assets
expenditures, net of value-added capital expenditures, and payments
of capital leases.
In this press release, 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 our 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 2023 |
Q2 2022 |
Consolidated results(In thousands of dollars) |
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
Maple Products |
|
Total |
|
Gross margin |
37,075 |
|
4,583 |
|
41,658 |
|
29,030 |
4,869 |
|
33,899 |
|
Total
adjustment to the cost of sales(1) |
(2,930 |
) |
(495 |
) |
(3,425 |
) |
2,247 |
(259 |
) |
1,988 |
|
Adjusted gross margin |
34,145 |
|
4,088 |
|
38,233 |
|
31,277 |
4,610 |
|
35,887 |
|
|
|
|
|
|
|
|
Results from operating
activities |
20,634 |
|
1,222 |
|
21,856 |
|
14,287 |
1,212 |
|
15,499 |
|
Total adjustment to the cost
of sales(1) |
(2,930 |
) |
(495 |
) |
(3,425 |
) |
2,247 |
(259 |
) |
1,988 |
|
Adjusted results from operating activities |
17,704 |
|
727 |
|
18,431 |
|
16,534 |
953 |
|
17,487 |
|
|
|
|
|
|
|
|
Results from operating
activities |
20,634 |
|
1,222 |
|
21,856 |
|
14,287 |
1,212 |
|
15,499 |
|
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
4,878 |
|
1,711 |
|
6,589 |
|
4,830 |
1,700 |
|
6,530 |
|
EBITDA(1) |
25,512 |
|
2,933 |
|
28,445 |
|
19,117 |
2,912 |
|
22,029 |
|
|
|
|
|
|
|
|
EBITDA(1) |
25,512 |
|
2,933 |
|
28,445 |
|
19,117 |
2,912 |
|
22,029 |
|
Total
adjustment to the cost of sales(1) |
(2,930 |
) |
(495 |
) |
(3,425 |
) |
2,247 |
(259 |
) |
1,988 |
|
Adjusted EBITDA |
22,582 |
|
2,438 |
|
25,020 |
|
21,364 |
2,653 |
|
24,017 |
|
|
|
|
|
|
|
|
Net (loss) earnings |
|
|
11,062 |
|
|
|
8,570 |
|
Total adjustment to the cost
of sales(1) |
|
|
(3,425 |
) |
|
|
1,988 |
|
Net change in fair value in
interest rate swaps(1) |
|
|
479 |
|
|
|
(1,246 |
) |
Income
taxes on above adjustments |
|
|
999 |
|
|
|
(190 |
) |
Adjusted net earnings |
|
|
9,115 |
|
|
|
9,122 |
|
Net earnings per share
(basic) |
|
|
0.11 |
|
|
|
0.08 |
|
Adjustment for the above |
|
|
(0.02 |
) |
|
|
0.01 |
|
Adjusted net earnings per share (basic) |
|
|
0.09 |
|
|
|
0.09 |
|
(1) See “Adjusted results” section
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
IFRS FINANCIAL MEASURES (CONTINUED)
|
YTD 2023 |
YTD 2022 |
Consolidated results(In thousands of dollars) |
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
|
Total |
|
Gross margin |
73,113 |
|
9,736 |
|
82,849 |
|
67,836 |
|
9,549 |
|
77,385 |
|
Total
adjustment to the cost of sales(1) |
(1,307 |
) |
(1,316 |
) |
(2,623 |
) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
Adjusted gross margin |
71,806 |
|
8,420 |
|
80,226 |
|
62,649 |
|
9,038 |
|
71,687 |
|
|
|
|
|
|
|
|
Results from operating
activities |
44,975 |
|
3,165 |
|
48,140 |
|
39,637 |
|
3,199 |
|
42,836 |
|
Total adjustment to the cost
of sales(1) |
(1,307 |
) |
(1,316 |
) |
(2,623 |
) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
Adjusted results from operating activities |
43,668 |
|
1,849 |
|
45,517 |
|
34,450 |
|
2,688 |
|
37,138 |
|
|
|
|
|
|
|
|
Results from operating
activities |
44,975 |
|
3,165 |
|
48,140 |
|
39,637 |
|
3,199 |
|
42,836 |
|
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
9,591 |
|
3,427 |
|
13,018 |
|
9,531 |
|
3,410 |
|
12,941 |
|
EBITDA(1) |
54,566 |
|
6,592 |
|
61,158 |
|
49,168 |
|
6,609 |
|
55,777 |
|
|
|
|
|
|
|
|
EBITDA(1) |
54,566 |
|
6,592 |
|
61,158 |
|
49,168 |
|
6,609 |
|
55,777 |
|
Total adjustment to the cost
of sales(1) |
(1,307 |
) |
(1,316 |
) |
(2,623 |
) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
Adjusted EBITDA(1) |
53,259 |
|
5,276 |
|
58,535 |
|
43,981 |
|
6,098 |
|
50,079 |
|
|
|
|
|
|
|
|
Net (loss) earnings |
|
|
25,736 |
|
|
|
25,796 |
|
Total adjustment to the cost
of sales(1) |
|
|
(2,623 |
) |
|
|
(5,698 |
) |
Net change in fair value in
interest rate swaps(1) |
|
|
525 |
|
|
|
(1,840 |
) |
Income
taxes on above adjustments |
|
|
824 |
|
|
|
1,821 |
|
Adjusted net earnings |
|
|
24,462 |
|
|
|
20,079 |
|
Net earnings per share
(basic) |
|
|
0.25 |
|
|
|
0.25 |
|
Adjustment for the above |
|
|
(0.02 |
) |
|
|
(0.06 |
) |
Adjusted net earnings per share (basic) |
|
|
0.23 |
|
|
|
0.19 |
|
(1) See “Adjusted results” section
Conference Call and Webcast
We will host a conference call to discuss our
second quarter of fiscal 2023 results on May 10, 2023 starting at
17:30 ET. To participate, please dial 1-888-886-7786. A recording
of the conference call will be accessible shortly after the
conference, by dialing 1-877-674- 7070, access code 401529#. This
recording will be available until May 24, 2023. 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:
- Future demand
for refined sugar and maple syrup;
- our intention to
increase sugar refining capacity and the related eastern Canada
distribution network;
- 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; and
- the impact of
the COVID-19 pandemic on our operations.
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, 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 current quarter MD&A and the 2022
fourth 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 a result
of events or circumstances occurring after the date hereof, unless
so required by law
Financial Report Q2 2023
This Management’s Discussion and Analysis
(“MD&A”) of Rogers Sugar Inc. (“Rogers”, “RSI” or “our,” “we”,
“us”) dated May 10, 2023 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 1,
2023, as well as the audited consolidated financial statements and
MD&A for the year ended October 1, 2022. 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 Montréal, 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 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.
BUSINESS HIGHLIGHTS
- Consolidated
adjusted EBITDA for the second quarter and the first six months of
fiscal 2023 was $25.0 million and $58.5 million respectively, up
$1.0 million, and $8.4 million from the same periods last year. The
increase in consolidated adjusted EBITDA for both periods was
related to higher adjusted EBITDA in the Sugar segment, partially
offset by lower adjusted EBITDA in the Maple segment;
- Adjusted EBITDA
in the Sugar segment was $22.6 million in the second quarter of
fiscal 2023, up $1.2 million compared to the same period last year,
largely due to higher adjusted gross margin, partially offset by
higher administrative and selling expenses;
- Sales volumes in
the Sugar segment decreased slightly in the second quarter to
195,547 metric tonnes, from 196,570 metric tonnes for the same
period last year;
- Adjusted gross
margin in the Sugar segment improved by $15.51 per metric tonne in
the second quarter of 2023 compared to the same period last year
due to improved average pricing;
- Adjusted EBITDA
in the Maple segment was $2.4 million in the second quarter, a
decrease of $0.3 million from the same quarter last year, largely
as a result of lower adjusted gross margin;
- The volume sold
in the Maple segment decreased by 853,000 pounds to 12,059,000
pounds in the quarter, driven largely by lower demand and
unfavourable market dynamics;
- We are
maintaining our fiscal 2023 sugar sales volume outlook at
approximately 805,000 metric tonnes, reflecting the continued
strong demand in the Canadian industrial sugar market;
- Free cash flow
for the trailing 12 months ended April 1, 2023 was $51.8 million,
an increase of $5.2 million from the same period last year;
- In the second
quarter of fiscal 2023, we distributed $0.09 per share to our
shareholders for a total amount of $9.4 million;
- On May 10, 2023,
the Board of Directors declared a quarterly dividend of $0.09 per
share, payable on July 13, 2023; and
- We continue to
work on the design and planning of the prospective expansion
project announced in August 2022. The expansion project would
increase sugar supply by approximately 100,000 metric tonnes in
eastern Canada within the next two to three years. We are expecting
to complete the design and planning stage in the third quarter of
fiscal 2023.
SELECTED FINANCIAL DATA AND HIGHLIGHTS
(unaudited) (In thousands of dollars, except volume and per share
information) |
Q2 2023 |
Q2 2022 |
|
YTD 2023 |
YTD 2022 |
Sugar (metric tonnes) |
195,547 |
196,570 |
|
388,396 |
376,613 |
Maple syrup (000 pounds) |
12,059 |
12,912 |
|
23,878 |
25,198 |
Total revenues |
272,949 |
253,341 |
|
534,392 |
484,096 |
Gross margin |
41,658 |
33,899 |
|
82,849 |
77,385 |
Adjustment to cost of sale(1) |
3,425 |
(1,988 |
) |
2,623 |
5,698 |
Adjusted gross margin(1) |
38,233 |
35,887 |
|
80,226 |
71,687 |
Results from operating
activities |
21,856 |
15,499 |
|
48,140 |
42,836 |
Adjusted results from
operating activities(1) |
18,431 |
17,487 |
|
45,517 |
37,138 |
EBITDA(1) |
28,445 |
22,029 |
|
61,158 |
55,777 |
Adjusted EBITDA(1) |
25,020 |
24,017 |
|
58,535 |
50,079 |
Net earnings |
11,062 |
8,570 |
|
25,736 |
25,796 |
per share (basic) |
0.11 |
0.08 |
|
0.25 |
0.25 |
per share (diluted) |
0.10 |
0.08 |
|
0.23 |
0.24 |
Adjusted net
earnings(1)(2) |
9,115 |
9,122 |
|
24,462 |
20,079 |
Adjusted net earnings per
share (basic)(1)(2) |
0.09 |
0.09 |
|
0.23 |
0.19 |
Trailing twelve months free
cash flow(1) |
51,807 |
46,560 |
|
51,807 |
46,560 |
Dividends per share |
0.09 |
0.09 |
|
0.18 |
0.18 |
(1) See “Non-GAAP Measures” section for
definition and reconciliation to GAAP measures
Revenues and Adjusted
EBITDA: https://www.globenewswire.com/NewsRoom/AttachmentNg/fc082d81-3f85-4835-8a48-3b27ff6e6184
Adjusted Net Earnings and Free Cash Flow
TTM: https://www.globenewswire.com/NewsRoom/AttachmentNg/2fdd388e-ac03-4f16-a197-238d45af246d
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
condensed consolidated interim statement of earnings. The
unrealized gains/losses related to natural gas futures and interest
rate swaps that qualify under hedged accounting are accounted for
in other comprehensive income. The unrealized gain/losses related
to interest rate swaps that do not qualify under hedged accounting
are accounted in the condensed consolidated interim statement of
earnings. The amount recognized in other comprehensive income is
removed and included in net earnings under the same line item in
the condensed consolidated interim 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, adjusted net earnings, adjusted net earning
per share and trailing twelve months free cash flow 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 2023 |
Q2 2022 |
|
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
|
Total |
|
Mark-to-market on: |
|
|
|
|
|
|
Sugar futures contracts |
4,925 |
|
- |
|
4,925 |
|
2,187 |
|
- |
|
2,187 |
|
Foreign exchange forward contracts |
296 |
|
(160 |
) |
136 |
|
418 |
|
268 |
|
686 |
|
Total mark-to-market adjustment on derivatives |
5,221 |
|
(160 |
) |
5,061 |
|
2,605 |
|
268 |
|
2,873 |
|
Cumulative timing differences |
(2,291 |
) |
655 |
|
(1,636 |
) |
(4,852 |
) |
(9 |
) |
(4,861 |
) |
Total adjustment to costs of sales |
2,930 |
|
495 |
|
3,425 |
|
(2,247 |
) |
259 |
|
(1,988 |
) |
Income (loss)(In thousands of dollars) |
YTD 2023 |
YTD 2022 |
|
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
Maple Products |
Total |
Mark-to-market on: |
|
|
|
|
|
|
Sugar futures contracts |
3,717 |
|
- |
|
3,717 |
|
2,310 |
- |
2,310 |
Foreign exchange forward contracts |
569 |
|
(357 |
) |
212 |
|
76 |
404 |
480 |
Total mark-to-market adjustment on derivatives |
4,286 |
|
(357 |
) |
3,929 |
|
2,386 |
404 |
2,790 |
Cumulative timing differences |
(2,979 |
) |
1,673 |
|
(1,306 |
) |
2,801 |
107 |
2,908 |
Total adjustment to costs of sales |
1,307 |
|
1,316 |
|
2,623 |
|
5,187 |
511 |
5,698 |
Fluctuations in the mark-to-market adjustment on
derivatives are due to the price movements in Raw #11 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 gain of $3.4
million to be deducted from the consolidated results versus a loss
of $2.0 million to be added to the consolidated results for the
comparable period last year. For the first six months of fiscal
2023, the total cost of sales adjustment is a gain of $2.6 million
to be deducted from the consolidated results compared to a gain of
$5.7 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 2023 |
Q2 2022 |
|
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
|
Total |
|
Revenues |
216,135 |
|
56,814 |
|
272,949 |
|
195,875 |
|
57,466 |
|
253,341 |
|
Gross margin |
37,075 |
|
4,583 |
|
41,658 |
|
29,030 |
|
4,869 |
|
33,899 |
|
Administration and selling
expenses |
11,101 |
|
2,865 |
|
13,966 |
|
9,415 |
|
2,705 |
|
12,120 |
|
Distribution costs |
5,340 |
|
496 |
|
5,836 |
|
5,328 |
|
952 |
|
6,280 |
|
Results from operating activities |
20,634 |
|
1,222 |
|
21,856 |
|
14,287 |
|
1,212 |
|
15,499 |
|
|
|
|
|
|
|
|
Adjustment to cost of
sales(2) |
(2,930 |
) |
(495 |
) |
(3,425 |
) |
2,247 |
|
(259 |
) |
1,988 |
|
Adjusted Gross margin(1) |
34,145 |
|
4,088 |
|
38,233 |
|
31,277 |
|
4,610 |
|
35,887 |
|
Adjusted results from
operating activities(1) |
17,704 |
|
727 |
|
18,431 |
|
16,534 |
|
953 |
|
17,487 |
|
EBITDA(1) |
25,512 |
|
2,933 |
|
28,445 |
|
19,117 |
|
2,912 |
|
22,029 |
|
Adjusted EBITDA(1) |
22,582 |
|
2,438 |
|
25,020 |
|
21,364 |
|
2,653 |
|
24,017 |
|
Additional information: |
|
|
|
|
|
|
Additions to property, plant and equipment
and intangible assets, net of disposals |
6,514 |
|
275 |
|
6,789 |
|
3,100 |
|
136 |
|
3,236 |
|
Additions to right-of-use assets |
948 |
|
- |
|
948 |
|
(129 |
) |
- |
|
(129 |
) |
(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 2023 |
YTD 2022 |
|
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
|
Total |
|
Revenues |
421,423 |
|
112,969 |
|
534,392 |
|
371,782 |
|
112,314 |
|
484,096 |
|
Gross margin |
73,113 |
|
9,736 |
|
82,849 |
|
67,836 |
|
9,549 |
|
77,385 |
|
Administration and selling
expenses |
17,736 |
|
5,527 |
|
23,263 |
|
18,527 |
|
5,079 |
|
23,606 |
|
Distribution costs |
10,402 |
|
1,044 |
|
11,446 |
|
9,672 |
|
1,271 |
|
10,943 |
|
Results from operating activities |
44,975 |
|
3,165 |
|
48,140 |
|
39,637 |
|
3,199 |
|
42,836 |
|
|
|
|
|
|
|
|
Adjustment to cost of
sales(2) |
(1,307 |
) |
(1,316 |
) |
(2,623 |
) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
Adjusted Gross margin(1) |
71,806 |
|
8,420 |
|
80,226 |
|
62,649 |
|
9,038 |
|
71,687 |
|
Adjusted results from
operating activities(1) |
43,668 |
|
1,849 |
|
45,517 |
|
34,450 |
|
2,688 |
|
37,138 |
|
EBITDA(1) |
54,566 |
|
6,592 |
|
61,158 |
|
49,168 |
|
6,609 |
|
55,777 |
|
Adjusted EBITDA(1) |
53,259 |
|
5,276 |
|
58,535 |
|
43,981 |
|
6,098 |
|
50,079 |
|
Additional information: |
|
|
|
|
|
|
Additions to property, plant and equipment and
intangible assets, net of disposals |
14,966 |
|
369 |
|
15,335 |
|
7,093 |
|
355 |
|
7,448 |
|
Additions to right-of-use assets |
966 |
|
45 |
|
1,011 |
|
8,083 |
|
- |
|
8,038 |
|
(1) See “Non-GAAP Measures” section for definition and
reconciliation to GAAP measures(2) See “Adjusted results”
section
Sugar
REVENUES
|
Q2 2023 |
Q2 2022 |
∆ |
YTD 2023 |
YTD 2022 |
∆ |
(In thousands of dollars) |
216,135 |
195,875 |
20,260 |
421,423 |
371,782 |
49,641 |
Sugar Volume Variance and Sugar
Volumes: https://www.globenewswire.com/NewsRoom/AttachmentNg/1c5b792d-11ef-4ffa-9e9b-d1de8c43f9a2
In the second quarter and first six months of fiscal 2023,
revenue increased by $20.3 million and $49.6 million respectively,
compared to the same periods last year, driven mainly by higher
prices paid for #11 world raw sugar and higher average pricing for
refining related activities. The average prices for #11 world raw
sugar increased by US 2.3 cent per pound to US 20.7 cent per pound
during the current quarter and by US 1.2 cent per pound to US 20.0
cent per pound for the first half of the current fiscal year, when
compared to the same periods last year.
Overall, sugar volume was stable in the second
quarter of 2023 when compared to the same quarter last year, as
lower consumer and exports volumes were offset by strong industrial
volumes.
- Industrial
volume increased by 5,194 metric tonnes or 4.7% compared to the
same period last year, as a result of continued strong demand in
the domestic market.
- Consumer volume
decreased by 1,411 metric tonnes or 5.9% compared to the same
quarter last year, mainly due to timing of orders from
customers.
- Liquid volume
increased by 846 metric tonnes or 2.0% compared to the same period
last year mainly due to additional sales from existing
customers.
- Export volume
decreased by 5,652 metric tonnes or 28.4% compared to the same
period last year, as we focused our sales efforts on serving the
domestic market.
Sugar Volume Variance and Sugar
Volumes: https://www.globenewswire.com/NewsRoom/AttachmentNg/79edad6c-4715-4c2d-9621-d415e3df396f
In the first half of fiscal 2023, sugar volume
totaled 388,396 metric tonnes, an increase of approximately 3.1% or
11,783 metric tonnes compared to the same period last year.
- Industrial
volume increased by 17,062 metric tonnes or 8.2% compared to the
same period last year, as a result of the continued strong demand
in the domestic market as seen over the last three quarters.
- Consumer volume
remained largely unchanged from the same period last year.
- Liquid volume
increased by 1,114 metric tonnes or 1.3% compared to last year as a
result of higher demand from existing customers.
- Export volume
decreased by 6,181 metric tonnes or 18.0% compared to last year, as
we continue to focus our sales efforts on serving the domestic
market.
GROSS MARGIN
|
Q2 2023 |
|
Q2 2022 |
∆ |
YTD 2023 |
|
YTD 2022 |
|
∆ |
(In thousands of dollars, except per metric tonne information) |
Gross margin |
37,075 |
|
29,030 |
8,045 |
73,113 |
|
67,836 |
|
5,277 |
Total adjustment to cost of sales(2) |
(2,930 |
) |
2,247 |
(5,177) |
(1,307 |
) |
(5,187 |
) |
3,880 |
Adjusted gross margin(1) |
34,145 |
|
31,277 |
2,868 |
71,806 |
|
62,649 |
|
9,157 |
Adjusted gross margin per
metric tonne(1) |
174.62 |
|
159.11 |
15.51 |
184.88 |
|
166.35 |
|
18.53 |
Included in gross margin: |
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment and right-of-use
assets |
3,372 |
|
4,201 |
(829) |
7,496 |
|
8,273 |
|
(777) |
(1) See “Non-GAAP Measures” section for definition and
reconciliation to GAAP measures(2) See “Adjusted results”
section
Gross margin was $37.1 million and $73.1 million
for the second quarter and the first six months of fiscal 2023, and
includes a gain of $2.9 million and $1.3 million, respectively, for
the mark-to-market of derivative financial instruments. For the
same periods last year, gross margin was $29.0 million and $67.9
million, respectively, with a mark-to-market loss of $2.2 million
and a gain of $5.2 million respectively.
Adjusted gross margin was $34.1 million and
$71.8 million for the second quarter and for the first six months
of fiscal 2023, respectively, as compared to $31.3 million and
$62.6 million in the same periods last year.
Adjusted gross margin increased by $2.9 million
in the second quarter compared to the same period last year mainly
as a result of higher sugar sales margin from improved average
pricing on sugar refining related activities. This positive
variance was partially offset by higher production costs mainly
driven by market-based inflationary pressures on operating costs
and higher storage costs for raw sugar as we increased the storage
capacity of our Montreal plant to support the growing demand for
refined sugar in eastern Canada.
On a per-unit basis, adjusted gross margin for
the second quarter was $174.62 per metric tonne, higher than last
year by $15.51 per metric tonne. The favourable variance was mainly
due to the increase in overall margin from improved selling prices,
partially offset by higher production costs, as compared to last
year.
Adjusted gross margin for the first six months
of fiscal 2023 was $9.2 million higher than the comparable period
last year, mainly due to higher volume and improved average pricing
on sugar refining related activities. This favourable variance was
partially offset by higher production costs mainly driven by
market-based inflationary pressures on operating costs, including
higher energy prices, and higher storage costs for raw sugar, as
explained above.
On a per-unit basis, for the first six months of
fiscal 2023, adjusted gross margin amounted to $184.88 per metric
tonne compared to $166.35 per metric tonne for the same period last
year. The favourable variance of $18.53 per metric tonne was mainly
due to higher volume sold to customers, improved average pricing,
partially offset by higher production costs as explained above.
Adjusted Gross
Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/80f1efd2-205e-4419-9e95-e9ccc09a93b2
OTHER EXPENSES
|
Q2 2023 |
Q2 2022 |
∆ |
YTD 2023 |
YTD 2022 |
∆ |
(In thousands of dollars, except per metric tonne information) |
Administration and selling expenses |
11,101 |
9,415 |
1,686 |
17,737 |
18,527 |
(790) |
Distribution costs |
5,340 |
5,328 |
12 |
10,402 |
9,672 |
730 |
Included in Administration and
selling expenses: |
|
|
|
|
|
|
Depreciation of property, plant and equipment and right-of-use
assets |
318 |
213 |
105 |
539 |
424 |
115 |
Included in Distribution
costs: |
|
|
|
|
|
|
Depreciation of right-of-use assets |
1,188 |
417 |
771 |
1,555 |
835 |
720 |
In the second quarter of fiscal 2023,
administration and selling expenses were higher by $1.7 million
compared to the same quarter last year. The variance was mainly due
to a non-cash increase in share-based compensation expense driven
by an increase in the share price in the current quarter, higher
compensation costs and related employee benefits. Distribution
costs remained stable compared to the same quarter last year.
For the first six months of fiscal 2023,
administration and selling expenses were $0.8 million lower than
the comparable period last year. The variance was mainly due to a
non-cash decrease in share-based compensation expense driven by a
decrease, in the current year, of the average share price used to
value the share-based compensation expense. This variance was
partially offset by higher compensation costs and related benefits.
Distribution costs for the first six months of fiscal 2023
increased by $0.7 million compared to the same period last year,
largely driven by market-based increase in freight costs and
additional logistical costs incurred in the first quarter of fiscal
2023 to support the strong demand in eastern Canada.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED EBITDA
|
Q2 2023 |
|
Q2 2022 |
∆ |
YTD 2023 |
|
YTD 2022 |
|
∆ |
(In thousands of dollars) |
Results from operating activities |
20,634 |
|
14,287 |
6,347 |
44,975 |
|
39,637 |
|
5,338 |
Total
adjustment to cost of sales (2) |
(2,930 |
) |
2,247 |
(5,177) |
(1,307 |
) |
(5,187 |
) |
3,880 |
Adjusted results from operating activities(1) |
17,704 |
|
16,534 |
1,170 |
43,668 |
|
34,450 |
|
9,218 |
Depreciation of property, plant and equipment, right-of-use assets,
and amortization of intangible assets |
4,878 |
|
4,830 |
48 |
9,591 |
|
9,531 |
|
60 |
EBITDA(1) |
25,512 |
|
19,117 |
6,395 |
54,566 |
|
49,168 |
|
5,398 |
Adjusted EBITDA(1) |
22,582 |
|
21,364 |
1,218 |
53,259 |
|
43,981 |
|
9,278 |
(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 2023 year were $20.6
million and $45.0 million, respectively, an increase of $6.3
million and $5.3 million respectively, as compared to same periods
last year. These results include gains and losses from the
mark-to-market of derivative financial instruments.
Adjusted results from operating activities in
the second quarter were $1.2 million higher than the same period
last year, mainly due to higher adjusted gross margin, partially
offset by higher administration and selling expenses. Adjusted
results from operating activities for the first six months of
fiscal 2023 were $9.2 million higher than the same period last year
as a result of higher adjusted gross margin, lower administration
and selling expenses, partially offset by higher distribution
costs.
EBITDA for the second quarter and the first six
months of fiscal 2023 were $25.5 million and $54.6 million,
respectively, an increase of $6.4 million and $5.4 million
respectively, as compared to same periods last year. These results
include gains and losses from the mark-to-market of derivative
financial instruments.
Adjusted EBITDA for the second quarter increased
by $1.2 million compared to the same period last year, largely as a
result of higher adjusted gross margin, partially offset by higher
administration and selling expenses. Adjusted EBITDA for the six
months of fiscal 2023 increased by $9.3 million largely due to
higher adjusted gross margin, lower administration and selling
expenses, partially offset by higher distribution costs, as
mentioned above.
Maple
REVENUES
|
Q2 2023 |
Q2 2022 |
∆ |
YTD 2023 |
YTD 2022 |
∆ |
(In thousands of dollars, except volume) |
Volume (000 pounds) |
12,059 |
12,912 |
(853) |
23,878 |
25,198 |
(1,320) |
Revenues |
56,814 |
57,466 |
(652) |
112,969 |
112,314 |
655 |
Maple Volumes and Adjusted Gross
Margin:https://www.globenewswire.com/NewsRoom/AttachmentNg/3ec0e92d-c93d-49b3-9294-7d4d18118022
Revenues for the second quarter were $0.7
million lower than the same period last year due to lower volume,
partially offset by higher average selling price. For the first six
months of fiscal 2023, revenues were $0.7 million higher than the
same period last year due to higher average selling price,
partially offset by lower volume.
GROSS MARGIN
|
Q2 2023 |
|
Q2 2022 |
|
∆ |
YTD 2023 |
|
YTD 2022 |
|
∆ |
(In thousands of dollars, except adjusted gross margin rate
information) |
Gross margin |
4,583 |
|
4,869 |
|
(286) |
9,736 |
|
9,549 |
|
187 |
Total
adjustment to cost of sales (1) (2) |
(495 |
) |
(259 |
) |
(236) |
(1,316 |
) |
(511 |
) |
(805) |
Adjusted gross margin (1) |
4,088 |
|
4,610 |
|
(522) |
8,420 |
|
9,038 |
|
(618) |
Adjusted gross margin
percentage (1) |
7.2 |
% |
8.0 |
% |
(0.8%) |
7.5 |
% |
8.0 |
% |
(0.5%) |
Included in Gross margin: |
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment and right-of-use
assets |
833 |
|
827 |
|
6 |
1,672 |
|
1,666 |
|
6 |
(1) See “Non-GAAP Measures” section for definition and
reconciliation to GAAP measures(2) See “Adjusted results”
section
Gross margin was $4.6 million and $9.7 million
for the second quarter and the first six months of fiscal 2023 and
includes a gain of $0.5 million and $1.3 million respectively, for
the mark-to-market of derivative financial instruments. For the
same periods last year, gross margin was $4.9 million and $9.5
million, respectively, with a mark-to-market gain of $0.3 million
and $0.5 million respectively.
Adjusted gross margin for the second quarter and
the first six months of fiscal 2023 were $4.1 million and $8.4
million, respectively, a decrease of $0.5 million and $0.6 million
respectively, as compared to the same periods last year. The
unfavourable variance was mainly due to lower volume as a result of
reduced demand and unfavourable market dynamics.
Adjusted gross margin percentage for the second
quarter and the first six months of fiscal 2023 were 7.2% and 7.5%
respectively, as compared to 8.0% for both periods last year. The
variance was mainly related to market-based production cost
increases and the timing of passing these increases to our
customers.
OTHER EXPENSES
|
Q2 2023 |
Q2 2022 |
∆ |
YTD 2023 |
YTD 2022 |
∆ |
(In thousands of dollars) |
Administration and selling expenses |
2,865 |
2,705 |
160 |
5,526 |
5,079 |
447 |
Distribution costs |
496 |
952 |
(456) |
1,044 |
1,271 |
(227) |
Included in Administration and
selling expenses: |
|
|
|
|
|
|
Amortization of intangible assets |
878 |
872 |
6 |
1,756 |
1,743 |
13 |
Administration and selling expenses for the
second quarter and for the first six months of fiscal 2023 were
$0.2 million and $0.4 million higher than the comparable periods
last year. These variances were largely due to an increase in
compensation related expenses.
Distribution costs for the second quarter and
for the first six months of fiscal 2023 were lower by $0.5 million
and $0.2 million respectively compared to the same period last
year, mainly due to lower sales volume and lower freight costs.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED EBITDA
|
Q2 2023 |
|
Q2 2022 |
|
∆ |
YTD 2023 |
|
YTD 2022 |
|
∆ |
(In thousands of dollars) |
Results from operating activities |
1,222 |
|
1,212 |
|
10 |
3,165 |
|
3,199 |
|
(34) |
Total adjustment to cost of
sales (1) |
(495 |
) |
(259 |
) |
(236) |
(1,316 |
) |
(511 |
) |
(805) |
Adjusted results from operating activities (1) |
727 |
|
953 |
|
(226) |
1,849 |
|
2,688 |
|
(839) |
Depreciation and
amortization |
1,711 |
|
1,700 |
|
11 |
3,427 |
|
3,410 |
|
17 |
EBITDA (1) |
2,933 |
|
2,912 |
|
21 |
6,592 |
|
6,609 |
|
(17) |
Adjusted EBITDA (1) |
2,438 |
|
2,653 |
|
(215) |
5,276 |
|
6,098 |
|
(822) |
(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 and fiscal 2023
amounted to $1.2 million and $3.2 million respectively. These
results include gains and losses from the mark-to-market of
derivative financial instruments.
Adjusted results from operating activities for
the second quarter and the first six months of fiscal 2023 were
respectively $0.2 million and $0.8 million lower than the
comparable period last year, due mainly to lower adjusted gross
margin, higher administration and selling expenses, partially
offset by lower distribution costs.
EBITDA for the second quarter and the first six
months of 2022 and 2023 amounted to $2.9 million and $6.6 million
respectively. These results include gains and losses from the
mark-to-market of derivative financial instruments.
Adjusted EBITDA for the second quarter of fiscal
2023 decreased by $0.2 million compared to the same period last
year, due to lower adjusted gross margin as explained above.
Adjusted EBITDA for the first six months of fiscal 2023 decreased
by $0.8 million, compared to the same period last year, largely
driven by lower adjusted gross margins and higher administration
and selling expenses, partially offset by lower distribution costs
as explained above.
OUTLOOK
Following a solid performance in the second
quarter of 2023, we expect to continue to deliver strong and stable
financial results in 2023. Strong sugar demand and pricing is
expected to continue and provide improved results, despite ongoing
inflationary pressures. We expect our Maple segment will continue
to face a challenging business environment in the second half of
2023, as the unfavourable market and economic conditions
encountered over the last year remain. We intend to mitigate these
unfavourable market conditions with recently negotiated price
increases, and newly implemented production automation
initiatives.
Sugar
We continue to expect the sugar segment to
perform well in fiscal 2023. Underlying North American demand
remains strong across all customer segments supported by favourable
market dynamics. We expect that improvements in pricing implemented
over the last few quarters will continue to support our financial
results positively, allowing us to mitigate the current impact of
inflationary pressures on costs.
In Taber, the harvest season delivered the
expected volume of sugar beets, and the processing campaign was
completed in early February. The expected sugar production from the
crop is 105,000 metric tonnes, lower than the prior year production
by 15,000 metric tonnes. The lower-than-expected production is
attributable to unfavourable weather conditions encountered in the
later stage of the current year growing period, which negatively
impacted the sugar content of the sugar beets.
We have increased the production plans of our
Montreal and Vancouver cane sugar facilities to mitigate the
production shortfall of our Taber facility and ensure we can
support the growing needs of our customers.
In April 2023, we have concluded a new two-year
agreement with the Alberta Sugar Beet Growers for the supply of
sugar beets to the Taber beet plant, for which the crop harvested
in the fall of 2023 will be the first year of the agreed
contract.
We are maintaining our fiscal 2023 sales volume
expectations of approximately 805,000 metric tonnes. This
represents an increase of 1.3% over 2022. This increase is based on
the continued strong demand of the Canadian domestic industrial
sugar market. Overall, we expect the following year-over-year
volume variances for our customer segments:
-
Industrial, our largest segment, is expected to increase by 3%, as
a result of the continuous strong demand supported by favourable
market dynamics;
-
Liquid volume is expected to grow by 4% driven by continued demand
from existing customers;
-
Consumer volume is expected to remain stable; and
-
A planned 15% reduction in sales to the export markets for 2023,
due to the growing demand and strong economics of the domestic
market. We will consider potential supplemental export sales if
favourable production opportunities arise.
Production costs and maintenance programs for
our three production facilities are expected to be moderately
impacted by the current inflationary pressures, and we continue to
focus on cost control initiatives throughout our operations.
We expect a slight increase in distribution
costs in 2023 as we foresee that recent increases for logistics and
our supply chain costs will remain in the second half of 2023.
Administration and selling expenses are expected
to be stable in 2023.
We have been able to lower the impact of recent
increases in interest rates and energy costs through our multi-year
hedging strategy. We do not anticipate these increases to have a
material impact on our financial results in the near future, as we
expect our hedging strategy will continue to mitigate most of our
exposure to such risks.
Spending on regular business capital projects is
also expected to remain stable for fiscal 2023. We anticipate
spending approximately $25 million on various initiatives. This
capital spending estimate excludes expenditures relating to the
expected capacity expansion of our Montreal sugar refinery and
Toronto distribution centre.
Maple
We continue to expect the Maple business segment
to be negatively impacted by high inflation, resulting in lower
demand from retail customers, for the remainder of 2023. We
anticipate the unfavourable impact related to the reduction in
retail demand and the related increased competitiveness of the
market will be mitigated by recently negotiated price increases
with key customers, lower production costs driven by newly
implemented automation projects and favourable recently negotiated
supply agreements for packaging material.
We plan to spend between $1 million and $2
million on capital projects in 2023, which is consistent with
recent years. The main driver for the Maple segment projects is to
improve productivity and profitability through automation.
See “Forward Looking Statements” section and
“Risks and Uncertainties” section.
CONSOLIDATED RESULTS AND SELECTED FINANCIAL
INFORMATION
|
Q2 2023 |
Q2 2022 |
YTD 2023 |
YTD 2022 |
(unaudited)(In thousands of dollars, except volume and per share
information) |
|
|
Sugar (metric tonnes) |
195,547 |
196,570 |
388,396 |
376,613 |
Maple syrup (000 pounds) |
12,059 |
12,912 |
23,878 |
25,198 |
Total revenues |
272,949 |
253,341 |
534,392 |
484,096 |
Gross margin |
41,658 |
33,899 |
82,849 |
77,385 |
Adjusted gross margin(1) |
38,233 |
35,887 |
80,226 |
71,687 |
Results from operating
activities |
21,856 |
15,499 |
48,140 |
42,836 |
Adjusted results from
operating activities(1) |
18,431 |
17,487 |
45,517 |
37,138 |
EBITDA(1) |
28,445 |
22,030 |
61,158 |
55,777 |
Adjusted EBITDA(1) |
25,020 |
24,017 |
58,535 |
50,079 |
Net finance costs |
6,346 |
3,707 |
12,529 |
8,124 |
Income tax expense |
4,448 |
3,222 |
9,875 |
8,916 |
Net earnings |
11,062 |
8,570 |
25,736 |
25,796 |
per share (basic) |
0.11 |
0.08 |
0.25 |
0.25 |
per share (diluted) |
0.10 |
0.08 |
0.23 |
0.24 |
Adjusted net earnings(1) |
9,115 |
9,122 |
24,462 |
20,079 |
per share (basic)(1) |
0.09 |
0.09 |
0.23 |
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 $19.6 million and $50.3
million respectively for the second quarter and the first six
months of fiscal 2023 compared to the same periods last year. The
increase in revenue was mainly attributable to higher pricing and
increased sales volume in the Sugar segment, as well as higher
pricing in the Maple segment, partially offset by lower sales
volume in the Maple segment.
Gross margin
Gross margin increased by $7.8 million and $5.4
million respectively for the second quarter and for the first six
months of fiscal 2023 compared to the same periods last year.
Excluding the mark-to-market of derivative financial instruments,
adjusted gross margin for the current quarter and the first six
months of 2023 increased by $2.3 million and $8.5 million
respectively, compared to the same period last year. These positive
variances were mainly due to higher adjusted gross margin in the
Sugar segment, partially offset by lower adjusted gross margin in
Maple segment.
For the Sugar segment, the adjusted gross margin
per metric tonne for the second quarter and for the first six
months of fiscal 2023 were higher by $15.51 per metric tonne and
$18.53 per metric tonne respectively, when compared to the same
period last year. For the Maple segment, the adjusted gross margin
percentage for the current quarter and the first six months period
of fiscal 2023 were lower by 0.8% and 0.5%, respectively, when
compared to the same period last year.
Results from operating activities
Results from operating activities for the second
quarter were $21.9 million compared to $15.5 million in the same
period last year, representing an increase of $6.5 million. For the
first six months of fiscal 2023, results from operating activities
were $45.5 million compared to $37.1 million for the same period
last year, representing an increase of $8.4 million. Excluding the
mark-to-market of derivative financial instruments, adjusted
results from operating activities for the second quarter amounted
to $18.4 million compared to $17.5 million in the same period last
year, an increase of $0.9 million. For the first six months of
fiscal 2023, adjusted results from operating activities were $45.5
million compared to $37.1 million for the same period last year,
representing an increase of $8.4 million. The improvement of
adjusted results from operating activities in both periods was
mainly driven by higher contribution from the Sugar segment in
2023.
Net finance costs
|
Q2 2023 |
Q2 2022 |
|
∆ |
YTD 2023 |
YTD 2022 |
|
∆ |
(In thousands of dollars) |
Interest expense on convertible unsecured subordinated debentures,
including accretion expense (1) |
2,131 |
2,119 |
|
12 |
|
4,258 |
4,169 |
|
89 |
|
Interest on revolving credit
facility |
2,158 |
1,357 |
|
801 |
|
3,529 |
2,643 |
|
886 |
|
Interest on senior guaranteed
notes |
899 |
905 |
|
(6 |
) |
1,796 |
1,802 |
|
(6 |
) |
Amortization of deferred
financing fees |
303 |
311 |
|
(8 |
) |
617 |
617 |
|
- |
|
Interest on Producteurs et
Productrices Acéricoles du Québec supplier balance |
130 |
12 |
|
118 |
|
1,305 |
272 |
|
1,033 |
|
Other interest expense |
1 |
1 |
|
- |
|
11 |
2 |
|
9 |
|
Interest accretion on
discounted lease obligations |
245 |
248 |
|
(3 |
) |
488 |
459 |
|
29 |
|
Net change in fair value of
interest rate swaps |
479 |
(1,246 |
) |
1,725 |
|
525 |
(1,840 |
) |
2,365 |
|
Net finance costs |
6,346 |
3,707 |
|
2,639 |
|
12,529 |
8,124 |
|
4,405 |
|
(1) Includes accretion expense of $256 and $505 for the three
and six months ended April 1, 2023 (April 2, 2022 - $242 and $478,
respectively)
For the second quarter of 2023, net finance
costs were higher by $2.6 million compared to the same periods last
year, largely driven by the impact of market-based changes in fair
value related to interest rate swaps contracts and higher interest
expense on our revolving credit facility from higher average
borrowing. For the first six months of fiscal 2023, net finance
costs were higher by $4.4 million compared to the same periods last
year, driven by the impact of market-based changes in fair value
related to interest rate swaps contracts, the increase in interest
expense related to the Producteurs et Productrices Acéricoles du
Québec (“PPAQ”) for maple syrup purchases and the increase in
interest expense on our revolving credit facility from higher
average borrowing.
Taxation
|
Q2 2023 |
Q2 2022 |
|
∆ |
YTD 2023 |
YTD 2022 |
|
∆ |
(In thousands of dollars) |
Current |
3,246 |
3,439 |
|
(193) |
8,008 |
10,158 |
|
(2,150) |
Deferred |
1,202 |
(217 |
) |
1,419 |
1,867 |
(1,242 |
) |
3,109 |
Income tax expense |
4,448 |
3,222 |
|
1,226 |
9,875 |
8,916 |
|
959 |
The variations in current and deferred tax
expense for the current quarter and the first six months of fiscal
2023 are consistent with the variation in earnings before income
taxes during the same periods 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 month of fiscal 2023 were higher by $2.5 million and
lower by $0.1 million respectively, compared to the same periods
last year.
Adjusted net earnings in the second quarter of
fiscal 2023 and fiscal 2022 amounted to $9.1 million, respectively.
Adjusted net earning for the first six month of fiscal 2023 were
$4.4 million higher 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 consolidated financial statements and non-GAAP
measures of the Company for the last eight quarters:
(In
thousands of dollars, except for volumes and per share
information) |
QUARTERS(2) |
|
2023 |
2022 |
2021 |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Sugar volumes (MT) |
195,547 |
|
192,849 |
|
214,672 |
|
203,315 |
|
196,570 |
|
180,043 |
|
214,753 |
|
190,563 |
|
Maple
products volumes (‘000 pounds) |
12,059 |
|
11,819 |
|
9,838 |
|
12,027 |
|
12,912 |
|
12,286 |
|
11,678 |
|
11,471 |
|
Total
revenues |
272,949 |
|
261,443 |
|
267,406 |
|
254,632 |
|
253,341 |
|
230,755 |
|
243,231 |
|
210,931 |
|
Gross
margin |
41,658 |
|
41,191 |
|
28,472 |
|
24,948 |
|
33,899 |
|
43,486 |
|
39,616 |
|
30,064 |
|
Adjusted
gross margin(1) |
38,233 |
|
41,993 |
|
39,141 |
|
32,654 |
|
35,887 |
|
35,800 |
|
31,020 |
|
25,932 |
|
Results
from operations |
21,856 |
|
26,284 |
|
(38,345 |
) |
8,822 |
|
15,499 |
|
27,337 |
|
26,952 |
|
15,062 |
|
Adjusted
results from operations(1) |
18,431 |
|
27,086 |
|
22,324 |
|
16,528 |
|
17,487 |
|
19,651 |
|
18,356 |
|
10,930 |
|
EBITDA(1) |
28,445 |
|
32,713 |
|
18,283 |
|
15,402 |
|
22,029 |
|
33,748 |
|
33,382 |
|
21,346 |
|
Adjusted
EBITDA(1) |
25,020 |
|
33,515 |
|
28,952 |
|
23,108 |
|
24,017 |
|
26,061 |
|
24,786 |
|
17,214 |
|
Net
(loss) earnings |
11,062 |
|
14,674 |
|
(45,502 |
) |
3,138 |
|
8,570 |
|
17,226 |
|
16,140 |
|
6,836 |
|
Per share - basic |
0.11 |
|
0.14 |
|
(0.44 |
) |
0.03 |
|
0.08 |
|
0.17 |
|
0.16 |
|
0.07 |
|
Per share - diluted |
0.10 |
|
0.13 |
|
(0.44 |
) |
0.03 |
|
0.08 |
|
0.15 |
|
0.15 |
|
0.07 |
|
Adjusted
net earnings(1) |
9,115 |
|
15,347 |
|
12,161 |
|
8,419 |
|
9,122 |
|
10,957 |
|
9,620 |
|
4,247 |
|
Per share - basic |
0.09 |
|
0.15 |
|
0.12 |
|
0.08 |
|
0.09 |
|
0.11 |
|
0.09 |
|
0.04 |
|
Per share - diluted |
0.09 |
|
0.14 |
|
0.11 |
|
0.08 |
|
0.09 |
|
0.10 |
|
0.09 |
|
0.04 |
|
Sugar -
Adjusted gross margin rate per MT(1) |
174.62 |
|
195.29 |
|
164.55 |
|
138.68 |
|
159.11 |
|
174.25 |
|
121.16 |
|
113.95 |
|
Maple - Adjusted gross margin percentage(1) |
7.2 |
% |
7.7 |
% |
8.1 |
% |
8.2 |
% |
8.0 |
% |
8.1 |
% |
9.7 |
% |
9.4 |
% |
(1) See “Non-GAAP Measures” section for definition and
reconciliation to GAAP measures(2) All quarters are 13 weeks
Historically the first quarter (October to
December) and the fourth quarter (July to September) of the fiscal
year are the best quarters for the sugar segment for adjusted gross
margin, adjusted EBITDA, and adjusted net earnings due to the
favourable sales product mix associated with an increased
proportion of consumer sales during these periods of the year. At
the same time, the second quarter (January to March) and the third
quarter (April to June) historically have the lowest volumes as
well as an unfavourable sales product mix, resulting in lower
adjusted gross margins, adjusted EBITDA, and adjusted net earnings.
This trend did not materialize in the second quarter of 2022 as
sales that were delayed in the first quarter of the year
materialized in the second quarter, resulting in more favourable
sales product mix and stronger financial performance.
Usually, there is minimal seasonality in the
Maple products segment. However, over the last two years, we have
experienced volatility in sales volume partially attributable to
the pandemic, the highly competitive market, and the global
volatility in economic conditions.
Financial condition
(In
thousands of dollars) |
April 1, 2023 |
April 2, 2022 |
October 1, 2022 |
Total assets |
$ |
905,889 |
$ |
907,376 |
$ |
937,956 |
Total
liabilities |
|
616,800 |
|
570,158 |
|
646,537 |
The decrease in total assets of $1.5 million in
the current fiscal quarter compared to the same quarter last year
was mainly due to a decrease in cash and cash equivalent of $8.3
million, the goodwill impairment of $50.0 million recorded in the
fourth quarter of 2022, a decrease in derivatives financial
instruments assets of $8.9 million, and a reduction of right of use
asset of$2.7 millions. This variance was partially offset by an
increase in trade and other receivables of $11.7 million,
inventories of $41.5 million and property, plant and equipment of
$14.2 million.
Total liabilities for the current fiscal quarter
increased by $46.6 million compared to the same quarter last year
due mainly to a higher outstanding balance under the revolving
credit facility of $60.0 million, partially offset by a reduction
in employee benefits of $11.2 million and a decrease in trade and
other payables of $1.9 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 compliance of financial covenants for the year.
|
Q2 2023 |
|
Q2 2022 |
|
YTD 2023 |
|
YTD 2022 |
|
(In thousands of dollars) |
|
|
|
|
|
|
|
|
Net cash flow (used in) from operating activities |
(24,621 |
) |
20,460 |
|
(33,515 |
) |
(14,902 |
) |
Cash flow (used in) from
financing activities |
19,798 |
|
(9,407 |
) |
48,360 |
|
16,000 |
|
Cash flow used in investing
activities |
(6,114 |
) |
(3,559 |
) |
(12,894 |
) |
(6,397 |
) |
Effect
of changes in exchange rate on cash |
(3 |
) |
(75 |
) |
(155 |
) |
(58 |
) |
Net increase (decrease) in cash |
(10,940 |
) |
7,419 |
|
1,796 |
|
(5,357 |
) |
Cash flow from operating activities for the
current quarter decreased by $45.1 million compared to the same
quarter last year, due mainly to a negative non-cash working
capital variation of $45.8 million and higher interest and income
taxes paid of $5.7 million. This variance was partially offset by
higher net earnings adjusted for non-cash items of $6.4 million.
For the first six month of 2023, cash flow from operating
activities decreased by $18.6 million compared to the same period
last year, as a result of a negative non-cash working capital
variation of $19.0 million and lower net earnings adjusted for
non-cash items of $1.4 million. This variance was partially offset
by lower higher interest and income taxes paid of $1.8 million.
Cash flow from financing activities increased by
$29.2 million for the current quarter compared to the same period
last year due mainly to an increase in borrowings from the
revolving credit facility. For the first six months of fiscal 2023,
cash flow from financing activities increased by $32.3 million
compared to same period last year largely due to the increase of
borrowings from the revolving credit facility.
The cash outflow used in investing activities
for the current quarter and the first six months of 2023 were
higher by $2.6 million and $6.5 million respectively, compared to
the same periods last year. The variances were mainly related to
timing of regular capital expenditures and the capitalization of an
amount of $5.4 million in connection with the planning and design
stage of our planned expansion project in eastern Canada.
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 obligations.
FREE CASH FLOW
|
Trailing twelve months |
(In thousands of dollars) |
2023 |
|
2022 |
|
Cash flow from operations |
2,939 |
|
58,714 |
|
Adjustments: |
|
|
Changes in non-cash working capital |
60,793 |
|
28,983 |
|
Mark-to-market and derivative timing adjustments |
15,316 |
|
(19,815 |
) |
Financial instruments non-cash amount |
(2,298 |
) |
(975 |
) |
Capital expenditures and intangible assets |
(30,227 |
) |
(18,979 |
) |
Value added capital expenditures |
10,505 |
|
3,765 |
|
Payment of leases obligation |
(5,221 |
) |
(5,133 |
) |
Free cash flow (1) |
51,807 |
|
46,560 |
|
Declared dividends |
37,622 |
|
37,376 |
|
(1) See “Non-GAAP Measures” section for definition and
reconciliation to GAAP measures.
Free Cash
Flow: https://www.globenewswire.com/NewsRoom/AttachmentNg/58271935-4acd-4ae1-836c-d03defa08e24
Free cash flow for the trailing twelve months
ending April 1,2023 amounted to $51.8 million, representing an
increase of $5.2 million compared to the same period last year.
This increase in free cash flow was mainly due to higher adjusted
EBITDA of $14.9 million, excluding the non-cash impact related to
the variance in the accrual for share-based compensation of senior
managements, partially offset by the increase in interest paid and
higher capital expenditure.
Capital and intangible assets expenditures, net
of value-added capital expenditures, increased by $4.5 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 increase in
the amount spent in value added capital expenditures for 2023 as
compared to the same period in 2022, was mainly related to costs
amounting to $5.4 million incurred in connection with the planning
and design stage of our proposed capacity expansion project for
eastern Canada.
The Board of Directors declared a quarterly
dividend of 9.0 cents per common share every quarter, totalling
36.0 cents for the 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 and financial instruments non-cash
amount of $13.0 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 1, 2022 Annual Report.
As at April 1, 2023, Lantic had commitments to
purchase a total of 381,000 metric tonnes of raw sugar, of which
225,411 metric tonnes had been priced for a total dollar commitment
of $135.1 million.
Capital resources
On January 20, 2023, the revolving credit
facility was amended. The most significant change is the increase
of the balance available for working capital from $200.0 million to
$265.0 million, under the approved accordion feature of $400
million.
As at April 1, 2023, Lantic had a total of
$265.0 million of available working capital from its revolving
credit facility, 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 1, 2023, a total
of $581.9 million of assets have been pledged as security for the
revolving credit facility, compared to $513.1 million as at April
2, 2022; including trade receivables, inventories and property,
plant and equipment.
As at April 1, 2023, $195.0 million had been
drawn from the revolving credit facility and $4.1 million in cash
was also available.
Cash requirements for working capital and
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 our expected cash requirements.
As at April 1, 2023, Lantic was in compliance
with all the covenants under its revolving credit facility.
OUTSTANDING SECURITIES
A total of 104,848,674 shares were outstanding
as at April 1, 2023 and May 10, 2023, respectively (104,195,845 as
at April 2, 2022).
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 1, 2022. This document is
available on SEDAR at www.sedar.com or on our website at
www.LanticRogers.com.
INFORMATION ON COVID-19
We continue to closely monitor the impacts of
the COVID-19 on our business. 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, suppliers, customers and other
business partners. In addition to standard operating procedures
designed to maintain safe operations, we have implemented disease
prevention plans in each location to provide guidance on health and
safety measures.
The effect of COVID-19 on our business will
depend on future developments that are uncertain and cannot be
predicted including, without limitations, the duration and severity
of the pandemic, the duration of government mitigation measures,
the effectiveness of the actions taken to contain and treat the
virus, and the length of time it takes for normal economic and
operating conditions to resume.
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 we used 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.
- Adjusted results
from operating activities are defined as results from operating
activities adjusted for the adjustment to cost of sales and
goodwill impairment.
- EBITDA is
defined as results from operating activities adjusted for
depreciation, amortization and goodwill impairment.
- Adjusted EBITDA
is defined as EBITDA adjusted for total adjustments to cost of
sales.
- Adjusted net
earnings is defined as net earnings adjusted for the adjustment to
cost of sales, goodwill impairment, net change in fair value in
interest rate swaps and the income tax impact on these
adjustments.
- 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, financial instruments non-cash amount, goodwill
impairment and includes deferred financing charges, funds received
from stock options exercised, capital and intangible assets
expenditures, net of value-added 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 our 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 2023 |
Q2 2022 |
Consolidated results(In thousands of dollars) |
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
Maple Products |
|
Total |
|
Gross margin |
37,075 |
|
4,583 |
|
41,658 |
|
29,030 |
4,869 |
|
33,899 |
|
Total
adjustment to the cost of sales(1) |
(2,930 |
) |
(495 |
) |
(3,425 |
) |
2,247 |
(259 |
) |
1,988 |
|
Adjusted gross margin |
34,145 |
|
4,088 |
|
38,233 |
|
31,277 |
4,610 |
|
35,887 |
|
|
|
|
|
|
|
|
Results from operating
activities |
20,634 |
|
1,222 |
|
21,856 |
|
14,287 |
1,212 |
|
15,499 |
|
Total adjustment to the cost
of sales(1) |
(2,930 |
) |
(495 |
) |
(3,425 |
) |
2,247 |
(259 |
) |
1,988 |
|
Adjusted results from operating activities |
17,704 |
|
727 |
|
18,431 |
|
16,534 |
953 |
|
17,487 |
|
|
|
|
|
|
|
|
Results from operating
activities |
20,634 |
|
1,222 |
|
21,856 |
|
14,287 |
1,212 |
|
15,499 |
|
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
4,878 |
|
1,711 |
|
6,589 |
|
4,830 |
1,700 |
|
6,530 |
|
EBITDA(1) |
25,512 |
|
2,933 |
|
28,445 |
|
19,117 |
2,912 |
|
22,029 |
|
|
|
|
|
|
|
|
EBITDA(1) |
25,512 |
|
2,933 |
|
28,445 |
|
19,117 |
2,912 |
|
22,029 |
|
Total
adjustment to the cost of sales(1) |
(2,930 |
) |
(495 |
) |
(3,425 |
) |
2,247 |
(259 |
) |
1,988 |
|
Adjusted EBITDA |
22,582 |
|
2,438 |
|
25,020 |
|
21,364 |
2,653 |
|
24,017 |
|
|
|
|
|
|
|
|
Net earnings |
|
|
11,062 |
|
|
|
8,570 |
|
Total adjustment to the cost
of sales(1) |
|
|
(3,425 |
) |
|
|
1,988 |
|
Net change in fair value in
interest rate swaps(1) |
|
|
479 |
|
|
|
(1,246 |
) |
Income
taxes on above adjustments |
|
|
999 |
|
|
|
(190 |
) |
Adjusted net earnings |
|
|
9,115 |
|
|
|
9,122 |
|
Net earnings per share
(basic) |
|
|
0.11 |
|
|
|
0.08 |
|
Adjustment for the above |
|
|
(0.02 |
) |
|
|
0.01 |
|
Adjusted net earnings per share (basic) |
|
|
0.09 |
|
|
|
0.09 |
|
(1) See “Adjusted results” section
|
YTD 2023 |
YTD 2022 |
Consolidated results(In thousands of dollars) |
Sugar |
|
Maple Products |
|
Total |
|
Sugar |
|
Maple Products |
|
Total |
|
Gross margin |
73,113 |
|
9,736 |
|
82,849 |
|
67,836 |
|
9,549 |
|
77,385 |
|
Total
adjustment to the cost of sales(1) |
(1,307 |
) |
(1,316 |
) |
(2,623 |
) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
Adjusted gross margin |
71,806 |
|
8,420 |
|
80,226 |
|
62,649 |
|
9,038 |
|
71,687 |
|
|
|
|
|
|
|
|
Results from operating
activities |
44,975 |
|
3,165 |
|
48,140 |
|
39,637 |
|
3,199 |
|
42,836 |
|
Total adjustment to the cost
of sales(1) |
(1,307 |
) |
(1,316 |
) |
(2,623 |
) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
Adjusted results from operating activities |
43,668 |
|
1,849 |
|
45,517 |
|
34,450 |
|
2,688 |
|
37,138 |
|
|
|
|
|
|
|
|
Results from operating
activities |
44,975 |
|
3,165 |
|
48,140 |
|
39,637 |
|
3,199 |
|
42,836 |
|
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
9,591 |
|
3,427 |
|
13,018 |
|
9,531 |
|
3,410 |
|
12,941 |
|
EBITDA(1) |
54,566 |
|
6,592 |
|
61,158 |
|
49,168 |
|
6,609 |
|
55,777 |
|
|
|
|
|
|
|
|
EBITDA(1) |
54,566 |
|
6,592 |
|
61,158 |
|
49,168 |
|
6,609 |
|
55,777 |
|
Total adjustment to the cost
of sales(1) |
(1,307 |
) |
(1,316 |
) |
(2,623 |
) |
(5,187 |
) |
(511 |
) |
(5,698 |
) |
Adjusted EBITDA(1) |
53,259 |
|
5,276 |
|
58,535 |
|
43,981 |
|
6,098 |
|
50,079 |
|
|
|
|
|
|
|
|
Net earnings |
|
|
25,736 |
|
|
|
25,796 |
|
Total adjustment to the cost
of sales(1) |
|
|
(2,623 |
) |
|
|
(5,698 |
) |
Net change in fair value in
interest rate swaps(1) |
|
|
525 |
|
|
|
(1,840 |
) |
Income
taxes on above adjustments |
|
|
824 |
|
|
|
1,821 |
|
Adjusted net earnings |
|
|
24,462 |
|
|
|
20,079 |
|
Net earnings per share
(basic) |
|
|
0.25 |
|
|
|
0.25 |
|
Adjustment for the above |
|
|
(0.02 |
) |
|
|
(0.06 |
) |
Adjusted net earnings per share (basic) |
|
|
0.23 |
|
|
|
0.19 |
|
(2) See “Adjusted results” section
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
IFRS FINANCIAL MEASURES (CONTINUED)
(In thousands of dollars, except for volumes and per share
information) |
QUARTERS(1)(2) |
|
2023 |
2022 |
2021 |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Second |
|
First |
|
Third |
|
Second |
|
Gross margin |
41,658 |
|
41,191 |
|
28,472 |
|
24,948 |
|
33,899 |
|
43,486 |
|
39,616 |
|
30,064 |
|
Total
adjustment to the cost of sales(2) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
(7,686 |
) |
(8,596 |
) |
(4,132 |
) |
Adjusted gross margin |
38,233 |
|
41,993 |
|
39,141 |
|
32,654 |
|
35,887 |
|
35,800 |
|
31,020 |
|
25,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities |
21,856 |
|
26,284 |
|
(38,345 |
) |
8,822 |
|
15,499 |
|
27,337 |
|
26,952 |
|
15,062 |
|
Total adjustment to the cost
of sales(2) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
(7,686 |
) |
(8,596 |
) |
(4,132 |
) |
Goodwill impairment |
- |
|
- |
|
50,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Adjusted results from operating activities |
18,431 |
|
27,086 |
|
22,324 |
|
16,528 |
|
17,487 |
|
19,651 |
|
18,356 |
|
10,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities |
21,856 |
|
26,284 |
|
(38,345 |
) |
8,822 |
|
15,499 |
|
27,337 |
|
26,952 |
|
15,062 |
|
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
6,589 |
|
6,429 |
|
6,628 |
|
6,580 |
|
6,530 |
|
6,410 |
|
6,430 |
|
6,284 |
|
Goodwill impairment |
- |
|
- |
|
50,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
EBITDA |
28,445 |
|
32,713 |
|
18,283 |
|
15,402 |
|
22,029 |
|
33,747 |
|
33,382 |
|
21,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
28,445 |
|
32,713 |
|
18,283 |
|
15,402 |
|
22,029 |
|
33,747 |
|
33,382 |
|
21,346 |
|
Total
adjustment to the cost of sales(2) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
(7,686 |
) |
(8,596 |
) |
(4,132 |
) |
Adjusted EBITDA |
25,020 |
|
33,515 |
|
28,952 |
|
23,108 |
|
24,017 |
|
26,061 |
|
24,786 |
|
17,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings |
11,062 |
|
14,674 |
|
(45,502 |
) |
3,138 |
|
8,570 |
|
17,226 |
|
16,140 |
|
6,836 |
|
Total adjustment to the cost
of sales(2) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
(7,686 |
) |
(8,596 |
) |
(4,132 |
) |
Goodwill impairment |
- |
|
- |
|
50,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Net change in fair value in
interest rate swaps(2) |
479 |
|
46 |
|
(328 |
) |
(632 |
) |
(1,246 |
) |
(594 |
) |
(162 |
) |
613 |
|
Income
taxes on above adjustments |
999 |
|
(175 |
) |
(2,678 |
) |
(1,793 |
) |
(190 |
) |
2,011 |
|
2,238 |
|
930 |
|
Adjusted net earnings |
9,115 |
|
15,347 |
|
12,161 |
|
8,419 |
|
9,122 |
|
10,957 |
|
9,620 |
|
4,247 |
|
(1) All quarters are 13 weeks(2) See “Adjusted results”
section
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
IFRS FINANCIAL MEASURES (CONTINUED)
(In thousands of dollars, except for volumes and per share
information |
YTD 2023 |
YTD 2022 |
Gross margin |
82,849 |
77,385 |
Total
adjustment to the cost of sales(1) |
(2,623) |
(5,698) |
Adjusted gross margin |
80,226 |
71,687 |
|
|
|
Results from operating
activities |
48,140 |
42,836 |
Total adjustment to the cost
of sales(1) |
(2,623) |
(5,698) |
Adjusted results from operating activities |
45,517 |
37,138 |
|
|
|
Results from operating
activities |
48,140 |
42,836 |
Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
13,018 |
12,941 |
EBITDA |
61,158 |
55,777 |
|
|
|
EBITDA |
61,158 |
55,777 |
Total
adjustment to the cost of sales(1) |
(2,623) |
(5,698) |
Adjusted EBITDA |
58,535 |
50,079 |
|
|
|
Net earnings |
25,736 |
25,796 |
Total adjustment to the cost
of sales(1) |
(2,623) |
(5,698) |
Net change in fair value in
interest rate swaps(2) |
525 |
(1,840) |
Income
taxes on above adjustments |
824 |
1,821 |
Adjusted net earnings |
24,462 |
20,079 |
(1) See “Adjusted results” section
CRITICAL ACCOUNTING ESTIMATES
For the second quarter of fiscal 2023, there were no significant
changes in the critical accounting estimate as disclosed in our
Management’s Discussion and Analysis of the October 1, 2022 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 fiscal 2023.
Management has reviewed such new standards and proposed amendments,
and does not anticipate that they will have a material impact on
Rogers’ financial statements. Refer to note 3 of the unaudited
condensed consolidated interim financial statements and to note 3
(q) of the 2022 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 1, 2023 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:
- demand for
refined sugar and maple syrup
- our intention to
increase sugar refining capacity and the related eastern Canada
distribution network
- 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
- the impact of
the COVID-19 pandemic on our operations
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, 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 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/55915ab9-3ee1-4d44-abe6-7cabc1d6b0b1
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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