Mr. Mike Walton reports

ROGERS SUGAR REPORTS SECOND QUARTER 2023 RESULTS; CONTINUED STRONG PERFORMANCE DRIVEN BY HIGHER PROFITABILITY IN SUGAR

Rogers Sugar Inc. has released second quarter fiscal 2023 results with consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) 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 Sugar 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."

• 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 with 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 with 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 $300,000 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.
• It is maintaining its 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, it distributed nine cents per share to its shareholders for a total amount of $9.4-million.
• On May 10, 2023, the board of directors declared a quarterly dividend of nine cents per share, payable on or before July 13, 2023.
• It continues 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. It is expecting to complete the design and planning stage in the third quarter of fiscal 2023.

Outlook

Following a solid performance in the second quarter of 2023, it expects to continue to deliver strong and stable financial results in 2023. Strong sugar demand and pricing are expected to continue and provide improved results, despite continuing inflationary pressures. It expects its 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. It intends to mitigate these unfavourable market conditions with recently negotiated price increases and newly implemented production automation initiatives.

Sugar

It continues 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. It expects that improvements in pricing implemented over the last few quarters will continue to support its financial results positively, allowing it 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.

It has increased the production plans of its Montreal and Vancouver cane sugar facilities to mitigate the production shortfall of its Taber facility and ensure it can support the growing needs of its customers.

In April, 2023, it 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.

It is maintaining its fiscal 2023 sales volume expectations of approximately 805,000 metric tonnes. This represents an increase of 1.3 per cent over 2022. This increase is based on the continued strong demand of the Canadian domestic industrial sugar market. Over all, it expects the following year-over-year volume variances for its customer segments:

• Industrial, its largest segment, is expected to increase by 3 per cent, as a result of the continuous strong demand supported by favourable market dynamics.
• Liquid volume is expected to grow by 4 per cent driven by continued demand from existing customers.
• Consumer volume is expected to remain stable.
• A planned 15-per-cent reduction in sales to the export markets for 2023 is due to the growing demand and strong economics of the domestic market. It will consider potential supplemental export sales if favourable production opportunities arise.

Production costs and maintenance programs for its three production facilities are expected to be moderately impacted by the current inflationary pressures, and the company continues to focus on cost control initiatives throughout its operations.

It expects a slight increase in distribution costs in 2023 as it foresees that recent increases for logistics and its supply chain costs will remain in the second half of 2023.

Administration and selling expenses are expected to be stable in 2023.

It has been able to lower the impact of recent increases in interest rates and energy costs through its multiyear hedging strategy. It does not anticipate these increases to have a material impact on its financial results in the near future, as it expects its hedging strategy will continue to mitigate most of its exposure to such risks.

Spending on regular business capital projects is also expected to remain stable for fiscal 2023. It anticipates spending approximately $25-million on various initiatives. This capital spending estimate excludes expenditures relating to the expected capacity expansion of its Montreal sugar refinery and Toronto distribution centre.

Maple products

It continues to expect the maple business segment to be negatively impacted by high inflation, resulting in lower demand from retail customers, for the rest of 2023. It anticipates 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.

It plans 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.

A full copy of Rogers Sugar's second quarter 2023 results, including management's discussion and analysis and unaudited condensed consolidated interim financial statements, can be found at the company's website.

Conference call and webcast

It will host a conference call to discuss its second quarter of fiscal 2023 results on May 10, 2023, starting at 5:30 p.m. ET. To participate, please dial 1-888-886-7786. A recording of the conference call will be available shortly after the conference, by dialling 1-877-674- 7070, access code 401529 followed by the number sign. This recording will be available until May 24, 2023. A live audio webcast of the conference call will also be available on the company's website.

About Rogers Sugar Inc.

Rogers Sugar 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 Montreal, Que. Lantic operates cane sugar refineries in Montreal, Que., and Vancouver, B.C., as well as the only Canadian sugar beet processing facility in Taber, Alta. Lantic also operates a custom blending and packaging operation and distribution centre in Toronto, Ont. 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 Montreal, Que. TMTC operates bottling plants in Granby, Degelis and in St-Honore-de-Shenley, Que., and in Websterville, Vt. TMTC's products include maple syrup and derived maple syrup products supplied under retail private label brands in over 50 countries and are also sold under various brand names, such as TMTC, Uncle Luke's, Great Northern, Decacer and Highland Sugarworks.

We seek Safe Harbor.