Mr. Mike Walton reports

ROGERS SUGAR REPORTS THIRD QUARTER 2023 RESULTS; CONTINUED STRONG PERFORMANCE DRIVEN BY SUGAR SEGMENT

Rogers Sugar Inc. has released third quarter of fiscal 2023 results with consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $23.8-million and $82.3-million for the current quarter and the first nine months of the year, respectively.

"Our business continues to deliver consistent, profitable growth, supported by the strength of the domestic Canadian sugar market, generating improved adjusted EBITDA for the third quarter," said Mike Walton, President and Chief Executive Officer of Rogers and Lantic Inc. "We are confident this favourable trend will continue and result in a strong financial performance for 2023. Today, we are also pleased to officially announce an investment of approximately $200 million in our refining capacity and logistics infrastructure in eastern Canada, allowing us to meet the growing needs of our customers by increasing our sugar refining capacity by 100,000 metric tonnes."

Consolidated adjusted EBITDA for the third quarter and the first nine months of fiscal 2023 was $23.8 million and $82.3 million respectively, up $0.6 million, and $9.1 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 a slight decrease in adjusted EBITDA in the Maple segment;

Adjusted EBITDA in the Sugar segment was $20.7 million for the third quarter of fiscal 2023, up $0.7 million compared to the same period last year, largely due to higher adjusted gross margin, partially offset by higher distribution costs;

Sales volume in the Sugar segment was aligned with our expectations at 191,411 metric tonnes, a decrease of 11,904 metric tonnes compared to the same period last year. This expected decrease in volume can be primarily attributed to the impact of an unforeseen peak in demand resulting from a temporary market disruption in the second half of fiscal 2022;

We lowered our 2023 volume outlook in the Sugar segment to 800,000 metric tonnes, a decrease of 5,000 metric tonnes from our previous estimate, due to current market dynamics and the timing differences in orders from large customers. Expected sales volume in 2023 represents an increase of 5,000 metric tonnes or 1% compared to the volume sold in 2022;

Adjusted gross margin in the Sugar segment improved by $20.63 per metric tonne in the third quarter of 2023 compared to the same period last year due to improved average pricing;

Adjusted EBITDA in the Maple segment was $3.0 million in the third quarter of fiscal 2023, a slight decline when compared to the same period last year;

Sales volumes in the Maple segment decreased by 2.4 million pounds to 9.6 million pounds in the quarter, driven largely by lower demand. The decrease in volume was partially offset by higher pricing and lower operating costs;

On August 11, 2023, the Board of Directors of Lantic approved the expansion of the production and logistic capacity of its eastern sugar refining operations in Montreal and Toronto. This investment is expected to provide 100,000 metric tonnes of incremental refined sugar capacity to the growing Canadian market, at an estimated construction cost of approximately $200 million. We expect the incremental production and logistic capacity to be in service in approximately two years.

Free cash flow for the trailing 12 months ended July 1, 2023, was $47.8 million, a slight decrease of $1.6 million from the same period last year, as a result of higher capital expenditures stemming largely from the costs incurred in connection with the design and planning phase of our capacity and logistic expansion project in eastern Canada;

In the third quarter of fiscal 2023, we distributed $0.09 per share to our shareholders for a total amount of $9.4 million;

On August 11, 2023, the Board of Directors declared a quarterly dividend of $0.09 per share, payable on or before October 12, 2023; and

On August 11, 2023, the Board of Directors approved the filing of a short-form base shelf prospectus in connection with expected financing initiatives over the next two years.

Sugar

In the third quarter, revenue increased by $15.6 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 decreased by 11,904 metric tonnes in the third quarter of 2023 when compared to the same quarter last year, as a result of lower industrial and export sales volume, partially offset by higher consumer and liquid volume. The reduction in industrial volume in the current quarter was largely due to the impact of an unforeseen peak in demand resulting from a temporary market disruption event that occurred in the second half of fiscal 2022.

Gross margin was $35.8 million for the third quarter and include a gain of $5.3 million for the mark-to-market of derivative financial instruments. For the same periods last year, gross margin was $21.3 million with a mark-to-market loss of $6.9 million.

Adjusted gross margin increased by $2.3 million in the third quarter compared to the same period last year largely due to higher sugar sales margin from improved average pricing on sugar refining related activities. This positive variance was partially offset by lower sales volume, higher production costs mainly driven by market-based inflationary pressures on operating costs and higher energy prices. On a per-unit basis, adjusted gross margin for the third quarter was $159.31 per metric tonne, higher than last year by $20.63 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.

Results from operating activities for the third quarter of 2023 was $21.1 million, an increase of $13.0 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 third quarter was $26.0 million, an increase of $13.0 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 third quarter increased by $0.7 million compared to the same period last year, largely driven by higher adjusted gross margin, partially offset by higher distribution costs.

Maple Products

Revenues for the third quarter were $7.9 million lower than the same period last year due to lower volume, partially offset by higher average selling price.

Gross margin was $5.9 million for the third quarter of 2023 and includes a gain of $1.5 million for the mark-to-market of derivative financial instruments. For the same period last year, gross margin was $3.7 million with a mark-to-market loss of $0.8 million.

Adjusted gross margin for the third quarter of fiscal 2022 and 2023 amounted to $4.4 million respectively. The reduction in volume sold of 2.4 million pounds was offset by higher pricing and favourable customer mix in the third quarter of fiscal 2023.

Adjusted gross margin percentage for the current quarter increased by 130 basis point compared to the same period last year, mainly due to incremental pricing negotiated with our customers, and favourable customer mix on volume sold.

Results from operating activities for the third quarter of 2023 were $2.9 million, compared to $0.7 million in the same period last year. These results include gains and losses from the mark-to-market of derivative financial instruments.

EBITDA for the third quarter of 2023 amounted to $4.5 million, compared to $2.3 million for the same period last year. These results include gains and losses from the mark-to-market of derivative financial instruments.

Adjusted EBITDA for the third quarter of fiscal 2023 decreased by $0.1 million compared to the same quarter last year, largely driven by lower adjusted gross margins and higher administration and selling expenses, partially offset by lower distribution costs.

OUTLOOK

Following a solid performance in the third 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 for the remainder 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 year 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 current year crop yielded 104,000 metric tonnes, lower than the prior year production by 16,000 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 and arranged for the temporary importation of refined white sugar from Central-America, to mitigate the production shortfall of our Taber facility and ensure we can support our commitments to our customers.

In April 2023, we 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 have slightly reduced our fiscal 2023 sales volume expectations to approximately 800,000 metric tonnes from 805,000 metric tonnes. The decrease of 5,000 metric tonnes reflects current market dynamics and timing differences in orders from large customers. While down slightly from previous expectations, our full-year 2023 volume outlook of 800,000 metric tonnes for the Sugar segment represents an increase of over 5,000 metric tonnes or 1% over 2022, which was our highest sales volume year on record. Overall, we expect the following year-over-year volume variances for our customer segments:

Industrial, our largest segment, is expected to increase by 2%, as a result of the continuous strong demand supported by favourable market dynamics;

Liquid volume is expected to grow by 1% driven by continued demand from existing customers;

Consumer volume is expected to remain stable; and

A planned 9% reduction in sales to the export markets for 2023, due to the growing demand and strong economics of the domestic market.

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 an increase in distribution costs in 2023, reflecting the incremental needs to move sugar between our facilities to support the demand of our customers and the recent related inflationary-based increases for logistics and supply chain costs.

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

We have been able to mitigate 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 operating results in the near future, as we expect our hedging strategy will continue to mitigate most of our exposure to such risks. However, we anticipate higher net finance costs, mainly from higher working capital requirements.

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 our recently announced production and logistic capacity expansion project in eastern Canada, which are currently estimated at $13 millions for fiscal 2023.

Maple Products

For the remainder of 2023, we expect the global Maple industry to be negatively impacted by high inflation, resulting in lower global demand from retail customers. 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.

The expected spending for capital projects for 2023 is approximately $1.0 million, which is consistent with recent years. The main driver for the Maple segment projects is to improve productivity and profitability through automation.

Conference Call and Webcast

We will host a conference call to discuss our third quarter of fiscal 2023 results on August 14, 2023 starting at 8:00 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 029620#. This recording will be available until September 14, 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 Montreal, Quebec. Lantic operates cane sugar refineries in Montreal, Quebec and Vancouver, British Columbia, as well as the only Canadian sugar beet processing facility in Taber, Alberta. Lantic also operate a 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 Montreal, Quebec. TMTC operates bottling plants in Granby, Degelis and in St-Honore-de-Shenley, Quebec 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.

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