Mr. Mike Walton reports

ROGERS SUGAR REPORTS ROBUST FOURTH QUARTER RESULTS AND STRONG 2023 PERFORMANCE DRIVEN BY FOCUSED EXECUTION AND GROWING DEMAND FOR SUGAR

Rogers Sugar Inc. has released fourth quarter of fiscal 2023 results with consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $28.6-million and $110.9-million for the current quarter and the year, respectively.

"Our strong financial performance in 2023 demonstrates the successful execution of our strategy focused on meeting the growing needs of the Canadian market for quality refined sugar," said Mike Walton, president and chief executive officer of Rogers and Lantic Inc. "We are showing our commitment to our customers and positioning the business for long-term health and success by investing in new production assets and optimizing our sugar refining capacity across the country," Mr. Walton added. "In maple, the business showed signs of improvement in the quarter as a result of our ongoing efforts to make production more efficient and lower costs.

"For 2024, we anticipate the trend of solid financial performance to continue for our overall business. However, since the end of September, our business has been impacted by a labour disruption at our Vancouver sugar refining facility. We remain willing to engage in discussions aimed at finding an agreement that works for both parties with the objective of aligning our business to meet the current and future needs of our customers."

• Consolidated adjusted EBITDA for the 2023 fiscal year was $110.9-million, up by 8.5 per cent from the same period in 2022, mainly driven by the strong performance of the sugar segment.
• Consolidated adjusted net earnings for fiscal 2023 were $44.5-million or 42 cents per share, as compared with $40.7-million or 39 cents per share for the same period in 2022, largely driven by the strong performance of the sugar segment.
• Consolidated revenues for fiscal year 2023 amounted to $1.1-billion, an increase of 10 per cent as compared with last year, due mainly to higher average raw sugar prices during the year, higher margin on sugar refining-related activities and higher sugar sales volume at 795,307 metric tonnes.
• Consolidated adjusted EBITDA for the fourth quarter was $28.6-million as compared with $29-million for the same period last year. The decrease in consolidated adjusted EBITDA for the fourth quarter was mainly due to lower adjusted EBITDA in the sugar segment, partially offset by higher adjusted EBITDA in the maple segment.
• Adjusted EBITDA in the sugar segment was $23.7-million for the fourth quarter of fiscal 2023, a decrease of $2.5-million compared with the same period last year, due largely to higher operating and distribution costs, partially offset by higher pricing.
• Adjusted EBITDA in the maple segment for the fourth quarter was higher than last year by $2.1-million, largely driven by improved average selling prices and lower operating costs.
• Free cash flow for the trailing 12 months ended Sept. 30, 2023, was $45.8-million, a decrease of $1-million from the same period last year as a result of higher capital expenditures.
• In the fourth quarter of fiscal 2023, Rogers distributed nine cents per share to its shareholders for a total amount of $9.5-million.
• On Aug. 14, 2023, Rogers filed a short form base shelf prospectus in connection with expected financing initiatives over the next two years.
• On Aug. 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 approximately 100,000 metric tonnes of incremental refined sugar capacity to the growing Canadian market, at an estimated construction cost of approximately $200-million. The financing plan for the project will include financing from debt and equity or equity-like instruments sources, along with Lantic's existing credit facilities and approved loans from Investissement Quebec for up to $65-million. Rogers expects the incremental production and logistic capacity to be in service in the first half of fiscal 2026.
• On Sept. 28, 2023, the unionized employee of the Vancouver sugar refinery, represented by the Public and Private Workers of Canada Local 8, went on strike. As of the date of this press release, the strike is still continuing. Management remains committed in reaching an agreement that is acceptable to both parties. Since the beginning of the strike, the Vancouver sugar refinery, which represents approximately 17 per cent of the company's production of refined sugar, has been operating at approximately a third of its capacity, and Rogers has been using some of the production of its Taber facility to support its customers in Western Canada.
• On Nov. 1, 2023, Rogers amended its revolving credit facility, by extending the term to Oct. 31, 2027, and by increasing the amount available for working capital and for the expansion project by $75-million to $340-million.
• On Nov. 29, 2023, the board of directors declared a quarterly dividend of nine cents per share, payable on or before Feb. 1, 2024.

In the fourth quarter of 2023, revenues increased by $36.1-million, compared with the same period last year. The variance was driven mainly by higher average market-price for raw No. 11, and improved average pricing for refining-related activities.

Over all, sugar volume increased slightly in the fourth quarter of 2023 compared with the same quarter last year, as a result of higher export and liquid sales volumes, partially offset by lower volumes in the company's industrial and consumer categories.

Gross margin was $35.5-million for the current quarter and includes a gain of $1.8-million for the mark-to-market of derivative financial instruments. For the same periods last year, gross margin was $26.8-million with a mark-to-market loss of $8.6-million.

Adjusted gross margin decreased by $1.6-million in the current quarter compared with the same quarter last year mainly due to higher operating costs associated with unforeseen electrical maintenance at the Montreal plant and incremental costs associated with the importation of refined white sugar to support customer demand. These unfavourable variances were partially offset by higher sugar sales margin from improved average pricing on sugar refining-related activities. On a per-unit basis, adjusted gross margin for the fourth quarter was $156 per metric tonne, as compared with $165 per metric tonne for the same period last year.

Results from operating activities for the fourth quarter of 2023 were $20.4-million, an increase of $7.7-million as compared with the same period last year. These results include gains and losses from the mark-to-market of derivative financial instruments.

EBITDA for the fourth quarter was $25.5-million, an increase of $7.8-million as compared with same period last year. These results include gains and losses from the mark-to-market of derivative financial instruments.

Adjusted EBITDA for the fourth quarter decreased by $2.5-million compared with the same period last year, largely due to lower adjusted gross margin and higher distribution costs, partially offset by lower administration and selling expenses.

Revenues for the fourth quarter were $4.5-million higher than the same period last year due to improved average selling prices and an increase in sales volume.

Gross margin was $5.7-million for the three months ended in the current fiscal year and includes a loss of $800,000 for the mark-to-market of derivative financial instruments. For the same period last year, gross margin was $1.7-million with a mark-to-market loss of $2.1-million.

Adjusted gross margin for the fourth quarter of fiscal 2023 was higher by $2.7-million due to higher average selling prices, higher sales volume and lower production costs from recent automation initiatives.

Adjusted gross margin percentage for the fourth quarter of 2023 was 12.5 per cent as compared with 8.1 per cent for the same quarter last year. The favourable variance was mainly related to higher average pricing and lower operating costs from savings related to automation initiatives.

Results from operating activities for the current quarter were $2.4-million, compared with a loss $51-million in the same period last year. These results include gains and losses from the mark-to-market of derivative financial instruments and the goodwill impairment recorded in the fourth quarter of 2022.

EBITDA for the fourth quarter of 2023 amounted to $4.1-million, compared with $700,000for the same period last year. These results include gains and losses from the mark-to-market of derivative financial instruments.

Adjusted EBITDA for the current quarter of fiscal 2023 increased by $2.1-million, due to higher average selling price, higher sales volume and lower production costs from recent automation initiatives.

Outlook

Following a solid performance in 2023, Rogers expects to continue to deliver a strong, stable financial performance in 2024. The continued strength in demand and pricing is expected to support stable organic growth for its sugar business segment going forward. Rogers expects its maple segment to modestly recover during 2024 as the unfavourable inflationary pressures encountered over the last two years begin to recede.

Sugar

Rogers expects the sugar segment to perform well in fiscal 2024. Underlying North American demand remains strong across all customer segments supported by favourable market dynamics. Improvements in pricing implemented over the last two years will continue to positively support the company's financial results, allowing it to mitigate the current impact of inflationary pressures on costs. However, the current labour disruption at the company's Vancouver refinery is expected to negatively impact its 2024 financial results, the extent of which is not yet known. The magnitude of the impact will depend mainly on the length of the strike and the potential internal incremental costs associated with servicing the company's Western customers impacted by the labour disruption.

Since the beginning of the strike, on Sept. 28, 2023, the Vancouver sugar refinery, which represents approximately 17 per cent of the company's production of refined sugar, has been operating at approximately a third of its capacity, and Rogers has been using some of the production of its Taber facility to support its customers in Western Canada. As at the time of preparation of this management's discussion and analysis, Rogers remain committed in reaching an agreement that is acceptable to both parties.

The initial volume expectation for fiscal year 2024 was set at 800,000 metric tonnes, representing an increase of 4,700 metric tonnes as compared with fiscal year 2023. Considering the current labour situation at the Vancouver refinery, Rogers expects its volumes will be lower in 2024 compared with 2023. The reduction in volume sold to customers will depend on the length of the labour disruption. The company will continue to prioritize domestic sales and focus on meeting its commitments to its customers. Rogers will provide updates on the expected impact of the labour disruption on sales volumes as the situation evolves.

The harvest period for the company's sugar beet facility in Taber was completed in early November and it has received the expected quantity of beets from the growers. Rogers is currently in the processing stage of the 2023 sugar beet campaign, with expected completion by the end of February. Based on the company's early assessment, it anticipates the 2023 crop to deliver between 105,000 metric tonnes and 110,000 metric tonnes of beet sugar, consistent with its expectations. The volume expectations align with the acreage contracted with the ASBG (Alberta Sugar Beet Growers) and the volume of sugar beets received.

Production costs and maintenance programs for the company's three production facilities are expected to continue to be moderately impacted by the current inflationary market-based pressures. The company continues to focus on cost control initiatives throughout its operations.

Distribution costs are expected to be stable in 2024. These expenditures reflect the transfer of sugar produced between the company's facilities to serve its customers, including some of the costs associated with meeting the growing market demand with imported refined white sugar from Central America.

Administration and selling expenses are expected to increase in 2024 as compared with 2023, due mainly to market-based increases for compensation expenditures and external services supporting our business.

Rogers anticipates its financing costs to increase in fiscal 2024 due to higher working capital needs, mainly associated with the purchase of raw sugar. The company has been able to mitigate the impact of recent increases in interest rates and energy costs through its multiyear hedging strategy. The company expects its hedging strategy will continue to mitigate such exposure in fiscal 2024.

Spending on regular business capital projects is also expected to remain stable for fiscal 2024. Rogers anticipates spending approximately $25-million on various initiatives. This capital spending estimate excludes expenditures relating to its recently announced production and logistic capacity expansion project in Eastern Canada, which are currently estimated to be at $70-million for fiscal 2024.

Maple products

The maple segment financial results were lower than anticipated for 2023. This was due mainly to lower volume and lingering inflationary pressures on costs. Although Rogers expects these financial and operating pressures to remain in the first part of fiscal 2024, it expects the maple business segment to continue to benefit from automation initiatives at its Granby and Degelis plants. Such initiatives, combined with recently negotiated price increases, are supporting the anticipated modest recovery of the maple business segment in 2024. The expected sales volume for 2024 is stable when compared with 2023 at approximately 43.5 million pounds. The sales volume expectation reflects the sector-wide challenging market dynamics, impacting the global demand for maple syrup.

Capital investments have decreased significantly in recent years. The maple segment is expected to spend between $1-million and $1.5-million annually on capital projects. The main driver for the selected projects is to improve productivity and profitability through automation.

A full copy of Rogers's fourth quarter 2023, 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

Rogers will host a conference call to discuss our fourth quarter of fiscal 2023 results on Nov. 30, 2023, starting at 8 a.m. ET. To participate, please dial 1-888-886-7786. A recording of the conference call will be accessible shortly after the conference, by dialling 1-877-674-7070, access code 805894 followed by the pound key. This recording will be available until Dec. 30, 2023. A live audio webcast of the conference call will also be available via the company's website.

About Rogers Sugar Inc.

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, 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 operate a 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 sold under various brand names.

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