Rogers Sugar Inc.’s (the “Company”, “Rogers”, “RSI” or “our,” “we”,
“us”) (TSX: RSI) today reported first quarter fiscal 2024 results
with consolidated adjusted EBITDA of $30.7 million.
“Continued strong domestic demand for quality
refined sugar, as well as improvement to our Maple operations,
combined to drive a solid performance in the first quarter of
fiscal 2024,” said Mike Walton, President and Chief Executive
Officer of Rogers and Lantic Inc. “We are reporting strong
financial results in the first quarter, despite the unfavourable
effect of the labour disruption at our Vancouver sugar refinery
that ended a few days ago. With this event behind us, we are
confident in our ability to deliver improved financial results over
the remainder of the year, demonstrating the robust fundamentals of
our business.”
|
First Quarter 2024 Consolidated
Highlights(unaudited) |
Q1 2024 |
|
Q1 2023 |
| Financials
($000s) |
|
|
|
| Revenues |
288,699 |
|
261,443 |
| Gross margin |
44,644 |
|
41,191 |
| Adjusted gross margin(1) |
42,319 |
|
41,993 |
| Results from operating
activities |
26,110 |
|
26,284 |
| EBITDA(1) |
33,045 |
|
32,713 |
| Adjusted EBITDA(1) |
30,720 |
|
33,515 |
| Net earnings |
13,852 |
|
14,674 |
|
per share (basic) |
0.13 |
|
0.14 |
|
per share (diluted) |
0.11 |
|
0.13 |
| Adjusted net earnings(1) |
12,613 |
|
15,347 |
| Adjusted net earnings per
share (basic)(1) |
0.12 |
|
0.15 |
| Trailing twelve months free
cash flow(1) |
44,261 |
|
57,985 |
| Dividends per share |
0.09 |
|
0.09 |
| |
|
|
|
| Volumes |
|
|
|
| Sugar (metric tonnes) |
182,376 |
|
192,849 |
| Maple
Syrup (thousand pounds) |
11,852 |
|
11,819 |
(1) See “Cautionary statement on Non-IFRS
Measures” section of this press release for definition and
reconciliation to IFRS measures.
- Consolidated
adjusted EBITDA(1) for the first quarter of fiscal 2024 was $30.7
million, a decrease of $2.8 million from the same quarter last
year. Current quarter consolidated adjusted EBITDA(1) decreased as
a result of lower adjusted EBITDA(1) in the Sugar segment,
partially offset by higher adjusted EBITDA(1) in our Maple
segment.
- On February 1,
2024, the unionized employees of the Vancouver sugar refinery,
represented by the Public and Private Workers of Canada Local 8,
ratified a new five-year collective agreement, following a strike
that began on September 28, 2023. The unionized employees are in
the process of returning to work and we anticipate the Vancouver
sugar refinery to return to full production over the next few
weeks. Throughout the labour disruption, production from our Taber
and Montreal facilities have been used to support our customers in
western Canada.
- Adjusted
EBITDA(1) in the Sugar segment was $26.0 million in the first
quarter of fiscal 2024, a reduction of $4.6 million compared to the
same period last year.
- Sales volumes in
the Sugar segment decreased by 10,473 metric tonnes to 182,376
metric tonnes in the first quarter, largely driven by the reduction
of our activities at our Vancouver sugar refinery as a result of
the recent labour disruption.
- Sugar segment
adjusted gross margin(1) amounted to $199 per metric tonne in the
first quarter of 2024 as compared to $195 per metric tonne for the
same period last year, mainly due to higher contribution for sugar
refining activities.
- Adjusted
EBITDA(1) in the Maple segment was $4.7 million in the first
quarter, an increase of $1.8 million from the same quarter last
year, largely driven by higher average selling prices and lower
operating costs.
- Adjusted gross
margin percentage(1) in the Maple segment amounted to 10.3%, as
compared to an adjusted gross margin percentage(1) of 7.7% for the
same period last year, driven by higher average selling prices and
lower operating costs following the implementation of automation
and continuous improvement initiatives in the later part of fiscal
2023.
- In the fourth
quarter of 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 (the “Expansion
Project”). The Expansion Project is progressing as planned and 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
the first half of fiscal 2026.
- Free cash
flow(1) for the trailing 12 months ended December 30, 2023, was
$44.3 million, a decrease of $13.7 million from the same period
last year, as a result of higher capital expenditures, increase in
interest paid, and higher deferred financing fees.
- On November 1,
2023, we amended our revolving credit facility, by extending the
term to October 31, 2027, and by increasing the amount available
for working capital and for the Expansion Project by $75 million to
$340 million.
- In the first
quarter of 2024, we distributed $0.09 per share to our shareholders
for a total of $9.5 million.
- On February 7,
2024, the Board of Directors declared a quarterly dividend of $0.09
per share, payable on or before April 17, 2024.
(1) See “Cautionary statement on Non-IFRS
Measures” section of this press release for definition and
reconciliation to IFRS measures.
Sugar
|
First Quarter 2024 Sugar
Highlights(unaudited) |
Q1 2024 |
|
Q1 2023 |
| Financials
($000s) |
|
|
|
| Revenues |
229,808 |
|
205,287 |
| Gross margin |
36,490 |
|
36,038 |
| Adjusted gross margin(1) |
36,232 |
|
37,661 |
|
Per metric tonne ($/ mt)(1) |
199 |
|
195 |
| Administration and selling
expenses |
9,379 |
|
6,635 |
| Distribution costs |
6,086 |
|
5,062 |
| Results from operating
activities |
21,025 |
|
24,341 |
| EBITDA(1) |
26,300 |
|
29,053 |
| Adjusted EBITDA(1) |
26,042 |
|
30,676 |
| |
|
|
|
| Volumes (metric
tonnes) |
|
|
|
| Total
volumes |
182,376 |
|
192,849 |
(1) See “Cautionary statement on Non-IFRS
Measures” section of this press release for definition and
reconciliation to IFRS measures.
In the first quarter of fiscal 2024, revenues
increased by $24.5 million compared to the same period last year.
The positive variance was largely driven by higher average price
for Raw #11 and higher contribution for refining related
activities, partially offset by lower sales volume as a result of
the recently resolved labour disruption at our Vancouver sugar
refinery.
Sugar volume decreased by 10,473 metric tonnes
in the first quarter of fiscal 2024 compared to the same quarter
last year, driven mainly by the unfavorable net impact of the
reduction in volume produced at our Vancouver facility attributable
to the recent labour disruption.
- Industrial
volume decreased by 3,631 metric tonnes or 3.3% as compared to the
same quarter last year, as a result of the unfavourable impact from
the labour disruption at our Vancouver sugar refinery.
- Consumer volume
decreased by 505 metric tonnes or 1.8% compared to the same period
last year, largely due to timing in demand from our eastern
customers and the impact of the reduced operations at our Vancouver
facility.
- Liquid volume
increased by 701 metric tonnes or 1.7% compared to the same quarter
last year, due to increased demand from eastern customers.
- Export volume
decreased by 7,038 metric tonnes in the first quarter as we
focussed our sales efforts on serving the domestic market
throughout the recent labour disruption at our Vancouver
facility.
Gross margin was $36.5 million for the current
quarter and included a gain of $0.3 million for the mark-to-market
of derivative financial instruments. For the same period last year,
gross margin was $36.0 million with a mark-to-market loss of $1.6
million.
Adjusted gross margin was $36.2 million for the
first quarter of 2024 as compared to $37.7 million for the same
period in 2023. Adjusted gross margin decreased by $1.4 million for
the first three months of 2024, due mainly to lower sales volume
associated with the recently ended labour disruption at our
Vancouver facility and higher production costs, partially offset by
higher margin on sugar refining related activities. The overall
impact of the labour disruption in Vancouver on the first quarter
results is estimated at approximately $3.0 million and reflects the
impact of lower sales volume.
On a per-unit basis, adjusted gross margin for
the first quarter was $199 per metric tonne, higher than the same
quarter last year by $4 per metric tonne. The favourable variance
was mainly due to higher margin, partially offset by higher
production cost, as compared to last year.
Results from operating activities for the first
quarter of fiscal 2024 were $21.0 million, a decrease of $3.3
million from the same period last year. These results included
gains and losses from the mark-to-market of derivative financial
instruments.
EBITDA for the first quarter of fiscal 2024 was
$26.3 million compared to $29.1 million in 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
decreased by $4.6 million compared to the same period last year,
mainly due to lower adjusted gross margin, higher administration
and selling expenses, and higher distribution costs. These
variances include the impact of the labour disruption in Vancouver
for the first quarter, estimated at $3.0 million.
Maple
|
First Quarter 2024 Maple
Highlights(unaudited) |
Q1 2024 |
|
Q1 2023 |
|
Financials ($000s) |
|
|
|
| Revenues |
58,891 |
|
56,156 |
| Gross margin |
8,154 |
|
5,153 |
| Adjusted gross margin(1) |
6,087 |
|
4,332 |
|
As a percentage of revenues (%)(1) |
10.3% |
|
7.7% |
| Administration and selling
expenses |
2,761 |
|
2,662 |
| Distribution costs |
308 |
|
548 |
| Results from operating
activities |
5,085 |
|
1,943 |
| EBITDA(1) |
6,745 |
|
3,660 |
| Adjusted EBITDA(1) |
4,678 |
|
2,839 |
| |
|
|
|
| Volumes (thousand
pounds) |
|
|
|
| Total
volumes |
11,852 |
|
11,819 |
(1) See “Cautionary statement on Non-IFRS
Measures” section of this press release for definition and
reconciliation to IFRS measures.
Revenues for the first quarter of the current
fiscal year were $2.7 million higher than the same period last
year, driven by increased average selling prices.
Gross margin was $8.2 million for the first
three months of the current fiscal year, including a gain of $2.1
million for the mark-to-market of derivative financial instruments.
For the same period last year, gross margin was $5.1 million with a
mark-to-market gain of $0.8 million.
Adjusted gross margin percentage for the current
quarter was 10.3% as compared to 7.7% for the same period last
year, representing an increase in adjusted gross margin of $1.8
million, mainly due to higher average selling prices and lower
operating costs, following the implementation of automation and
continuous improvement initiatives in the later part of 2023.
Results from operating activities for the first
quarter of fiscal 2024 were $5.1 million, compared to $2.0 million
in the same period last year. These results included gains from the
mark-to-market of derivative financial instruments.
EBITDA for the first quarter of fiscal 2024
amounted to $6.7 million compared to $3.7 million for the same
period last year. These results include gains from the
mark-to-market of derivative financial instruments.
Adjusted EBITDA for the first quarter of fiscal 2024 increased
by $1.8 million to $4.7 million, due mainly to higher adjusted
results from operating activities, as explained above.
OUTLOOK
Following a strong performance in 2023,
including our highest sugar volume, consolidated revenue, and
adjusted EBITDA results to date, we expect this positive trend to
continue and anticipate delivering higher consolidated revenue and
adjusted EBITDA in 2024.
The continued strength in demand for sugar is
expected to support organic growth for our Sugar business segment
throughout 2024. We also expect the financial results of our Maple
segment to improve during 2024, from improved market conditions and
recently implemented production automation and continuous
improvement initiatives.
Sugar
We expect the Sugar segment to perform well in
fiscal 2024, despite the unfavourable impact of the recent labour
disruption in Vancouver that ended on February 1. Underlying North
American demand remains strong across all customer segments
supported by favourable market dynamics. The expected increase in
sugar margin from recently negotiated agreements will have a
positive impact on our financial results, allowing us to mitigate
the recent inflationary pressures on costs, and the lower sales
volume caused by the recent labour disruption in Vancouver.
In the first quarter, the labour disruption
reduced sales volume, resulting in an unfavourable impact on
adjusted EBITDA of approximately $3.0 million. The Vancouver
refinery produces approximately 17% of our refined sugar production
volume. During the strike, the Vancouver sugar refinery has
continued to operate at a reduced level, and we have leveraged our
other facilities in Taber and Montreal to support our valued
customers in western Canada.
The initial volume expectation for fiscal year
2024 was set at 800,000 metric tonnes, representing an increase of
4,700 metric tonnes compared to fiscal year 2023. Considering the
recently ended labour strike in Vancouver and its impact on the
volume delivered to customers, we expect our initial outlook to
decrease by 10,000 metric tonnes, to 790,000 metric tonnes.
The harvest period for our sugar beet facility
in Taber was completed in early November. We are currently in the
processing stage and we anticipate completing the processing of the
sugar beets received in early March. Currently, based on our early
assessment, we anticipate the current crop to deliver between
105,000 metric tonnes and 110,000 metric tonnes of beet sugar,
consistent with our expectations.
Production costs and maintenance programs for
our three production facilities are expected to continue to be
moderately impacted by the current inflationary market-based
pressures, as we continue to focus on cost control initiatives
throughout our operations.
Distribution costs are expected to increase
slightly in 2024. These expenditures reflect the market dynamics
requiring the transfer of sugar produced between our refineries to
meet demand from customers, and some of the costs associated with
servicing customers with imported refined sugar.
Administration and selling expenses are expected
to increase in 2024 as compared to 2023, due mainly to market-based
increases in compensation expenditures and external services.
We anticipate our financing costs to increase in
fiscal 2024 due to higher working capital needs, mainly associated
with the recent increase in Raw #11 price for the purchase of raw
sugar. We have been able to mitigate the impact of recent increases
in interest rates and energy costs through our multi-year hedging
strategy. We expect our 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. We anticipate
spending approximately $25 million on various initiatives. This
capital spending estimate excludes expenditures relating to our
Expansion Project, which are currently estimated at $70 million for
fiscal 2024.
Maple
We expect financial results in our Maple segment
to improve in 2024 over the prior year. The Maple segment financial
results were lower than anticipated in fiscal 2023. This was due
mainly to lower volume and lingering inflationary cost pressures.
Although we expect these financial and operating pressures to
remain in the first part of fiscal 2024, we forecast the Maple
business segment to continue to benefit from automation and
continuous improvement initiatives at our Granby and Dégelis
plants. Such initiatives, combined with recently negotiated price
increases, are supporting the anticipated recovery of our Maple
business segment in 2024.
The expected sales volume for 2024 is stable
when compared to 2023 at approximately 43.5 million lbs. The sales
volume expectation reflects the challenging sector-wide market
conditions, impacting the global demand for maple syrup and the
current low level of maple syrup reserve held by the Producteurs et
Productrices Acéricoles du Québec (“PPAQ”). The reserve of PPAQ has
been depleted in recent years from below average crops.
Capital investments in the Maple segment have
decreased significantly in recent years. We expect to spend between
$1 million and $1.5 million annually on capital projects in this
segment. The main driver for the selected projects is improvement
in productivity and profitability through automation.
See “Forward-Looking Statements” section and
“Risks and Uncertainties” section.
A full copy of Rogers first quarter 2024,
including management’s discussion and analysis and unaudited
condensed consolidated interim financial statements, can be found
at www.LanticRogers.com or on SEDAR+ at www.sedarplus.ca.
Cautionary Statement Regarding Non-IFRS
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-IFRS financial measures. A non-IFRS
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-IFRS financial measures are
not standardized; therefore, it may not be possible to compare
these financial measures with the non-IFRS 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-IFRS financial measures in
addition to, and in conjunction with, results presented in
accordance with IFRS. These non-IFRS 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-IFRS measures” section at the end of the
MD&A for the current quarter for additional information.
The following is a description of the non-IFRS
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 and foreign exchange forward contracts 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 and foreign exchange forward
contracts.
- 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 earnings before interest, taxes, depreciation,
amortization and goodwill impairment.
- Adjusted EBITDA
is defined as adjusted results from operating activities adjusted
to add back depreciation and amortization expenses.
- Adjusted net
earnings is defined as net earnings adjusted for the adjustment to
cost of sales, goodwill impairment 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-IFRS
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-IFRS measures should not be considered in isolation, or
as a substitute for, analysis of our results as reported under
IFRS. Reconciliations of non-IFRS financial measures to the most
directly comparable IFRS financial measures are as follows:
RECONCILIATION OF NON-IFRS FINANCIAL
MEASURES TO IFRS FINANCIAL MEASURES
|
|
|
Q1 2024 |
|
|
|
Q1 2023 |
|
|
Consolidated results(In thousands of dollars) |
Sugar |
|
|
MapleProducts |
|
|
Total |
|
|
Sugar |
|
MapleProducts |
|
|
Total |
|
|
Gross margin |
36,490 |
|
|
8,154 |
|
|
44,644 |
|
|
36,038 |
|
5,153 |
|
|
41,191 |
|
| Total
adjustment to the cost of sales(1) |
(258 |
) |
|
(2,067 |
) |
|
(2,325 |
) |
|
1,623 |
|
(821 |
) |
|
802 |
|
|
Adjusted Gross Margin |
36,232 |
|
|
6,087 |
|
|
42,319 |
|
|
37,661 |
|
4,332 |
|
|
41,993 |
|
|
|
|
|
|
|
|
|
|
| Results from operating
activities |
21,025 |
|
|
5,085 |
|
|
26,110 |
|
|
24,341 |
|
1,943 |
|
|
26,284 |
|
| Total
adjustment to the cost of sales(1) |
(258 |
) |
|
(2,067 |
) |
|
(2,325 |
) |
|
1,623 |
|
(821 |
) |
|
802 |
|
|
Adjusted results from operating activities |
20,767 |
|
|
3,018 |
|
|
23,785 |
|
|
25,964 |
|
1,122 |
|
|
27,086 |
|
|
|
|
|
|
|
|
|
|
| Results from operating
activities |
21,025 |
|
|
5,085 |
|
|
26,110 |
|
|
24,341 |
|
1,943 |
|
|
26,284 |
|
| Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
5,275 |
|
|
1,660 |
|
|
6,935 |
|
|
4,712 |
|
1,717 |
|
|
6,429 |
|
|
EBITDA(1) |
26,300 |
|
|
6,745 |
|
|
33,045 |
|
|
29,053 |
|
3,660 |
|
|
32,713 |
|
|
|
|
|
|
|
|
|
|
| EBITDA(1 |
26,300 |
|
|
6,745 |
|
|
33,045 |
|
|
29,053 |
|
3,660 |
|
|
32,713 |
|
| Total
adjustment to the cost of sales(1) |
(258 |
) |
|
(2,067 |
) |
|
(2,325 |
) |
|
1,623 |
|
(821 |
) |
|
802 |
|
|
Adjusted EBITDA |
26,042 |
|
|
4,678 |
|
|
30,719 |
|
|
30,676 |
|
2,839 |
|
|
33,515 |
|
|
|
|
|
|
|
|
|
|
| Net earnings |
|
|
13,852 |
|
|
|
|
|
14,674 |
|
| Total adjustment to the cost
of sales(1) |
|
|
(2,325 |
) |
|
|
|
|
802 |
|
| Net change in fair value in
interest rate swaps(1) |
|
|
658 |
|
|
|
|
|
46 |
|
| Income
taxes on above adjustments |
|
|
428 |
|
|
|
|
|
(175 |
) |
|
Adjusted net earnings |
|
|
12,613 |
|
|
|
|
|
15,347 |
|
| Net earnings per share
(basic) |
|
|
0.13 |
|
|
|
|
|
0.14 |
|
|
Adjustment for the above |
|
|
(0.01 |
) |
|
|
|
|
0.01 |
|
|
Adjusted net earnings per share (basic) |
|
|
0.12 |
|
|
|
|
|
0.15 |
|
(1) See “Adjusted results” section of the
MD&A for additional information
Conference Call and Webcast
Rogers will host a conference call to discuss
its first quarter fiscal 2024 results on February 8, 2024 starting
at 8:00a.m. 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 805894#.
This recording will be available until April 30, 2024. 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 Montréal, Québec 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 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 approximately fifty countries and sold
under various brand names.
For more information about Rogers please visit
our website at www.LanticRogers.com.
Cautionary Statement Regarding
Forward-Looking Information
This report contains statements or information
that are or may be “forward-looking statements” or “forward-looking
information” within the meaning of applicable Canadian Securities
laws. Forward-looking statements may include, without limitation,
statements and information which reflect our current expectations
with respect to future events and performance. Wherever used, the
words “may,” “will,” “should,” “anticipate,” “intend,” “assume,”
“expect,” “plan,” “believe,” “estimate,” and similar expressions
and the negative of such expressions, identify forward-looking
statements. Although this is not an exhaustive list, we caution
investors that statements concerning the following subjects are, or
are likely to be, forward-looking statements:
- the estimated impact of the recent
labour disruption at our Vancouver sugar refinery;
- demand for
refined sugar and maple syrup;
- sales volumes
for sugar and maple syrup;
- our Expansion
Project;
- future prices of
Raw #11;
- expected
inflationary pressures on costs;
- natural gas
costs;
- beet sugar
production forecast for our Taber facility;
- growth of the
maple syrup industry and the refined sugar industry;
- the level of
future dividends; and
- the status of
government regulations and investigations
Forward-looking statements are based on
estimates and assumptions made by us in light of our experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors that we believe are
appropriate and reasonable in the circumstances, 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 2023
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 Q1 2024
This Management’s Discussion and Analysis
(“MD&A”) of Rogers Sugar Inc.’s (the “Company”, “Rogers”, “RSI”
or “our,” “we”, “us”) dated February 7, 2024 should be read in
conjunction with the unaudited condensed consolidated interim
financial statements and related notes for the three-month period
ended December 30, 2023, as well as the audited consolidated
financial statements and MD&A for the year ended September 30,
2023. 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 Montreal, Québec and Vancouver, British
Columbia, as well as the only Canadian sugar beet processing
facility in Taber, Alberta. Lantic’s sugar products are generally
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 in 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
approximately fifty countries and are sold under various brand
names.
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(1) for the first quarter of fiscal 2024 was $30.7
million, a decrease of $2.8 million from the same quarter last
year. Current quarter consolidated adjusted EBITDA(1) decreased as
a result of lower adjusted EBITDA(1) in the Sugar segment,
partially offset by higher adjusted EBITDA(1) in our Maple
segment.
- On February 1,
2024, the unionized employees of the Vancouver sugar refinery,
represented by the Public and Private Workers of Canada Local 8,
ratified a new five-year collective agreement, following a strike
that began on September 28, 2023. The unionized employees are in
the process of returning to work and we anticipate the Vancouver
sugar refinery to return to full production over the next few
weeks. Throughout the labour disruption, production from our Taber
and Montreal facilities have been used to support our customers in
western Canada.
- Adjusted
EBITDA(1) in the Sugar segment was $26.0 million in the first
quarter of fiscal 2024, a reduction of $4.6 million compared to the
same period last year.
- Sales volumes in
the Sugar segment decreased by 10,473 metric tonnes to 182,376
metric tonnes in the first quarter, largely driven by the reduction
of our activities at our Vancouver sugar refinery as a result of
the recent labour disruption.
- Sugar segment
adjusted gross margin(1) amounted to $199 per metric tonne in the
first quarter of 2024 as compared to $195 per metric tonne for the
same period last year, mainly due to higher contribution for sugar
refining activities.
- Adjusted
EBITDA(1) in the Maple segment was $4.7 million in the first
quarter, an increase of $1.8 million from the same quarter last
year, largely driven by higher average selling prices and lower
operating costs.
- Adjusted gross
margin percentage(1) in the Maple segment amounted to 10.3%, as
compared to an adjusted gross margin percentage(1) of 7.7% for the
same period last year, driven by higher average selling prices and
lower operating costs following the implementation of automation
and continuous improvement initiatives in the later part of fiscal
2023.
- In the fourth
quarter of 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 (the “Expansion
Project”). The Expansion Project is progressing as planned and 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
the first half of fiscal 2026.
- Free cash
flow(1) for the trailing 12 months ended December 30, 2023, was
$44.3 million, a decrease of $13.7 million from the same period
last year, as a result of higher capital expenditures, increase in
interest paid, and higher deferred financing fees.
- On November 1,
2023, we amended our revolving credit facility, by extending the
term to October 31, 2027, and by increasing the amount available
for working capital and for the Expansion Project by $75 million to
$340 million.
- In the first
quarter of 2024, we distributed $0.09 per share to our shareholders
for a total of $9.5 million.
- On February 7,
2024, the Board of Directors declared a quarterly dividend of $0.09
per share, payable on or before April 17, 2024.
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS measures
SELECTED FINANCIAL DATA AND HIGHLIGHTS
|
(unaudited)(In thousands of dollars, except volume and per share
information) |
Q1 2024 |
|
|
Q1 2023 |
|
|
Sugar (metric tonnes) |
182,376 |
|
|
192,849 |
|
| Maple syrup (000 pounds) |
11,852 |
|
|
11,819 |
|
| Total revenues |
288,699 |
|
|
261,443 |
|
| Gross margin |
44,644 |
|
|
41,191 |
|
|
Adjustment to cost of sale(1) |
2,325 |
|
|
(802 |
) |
|
Adjusted gross margin(1) |
42,319 |
|
|
41,993 |
|
| Results from operating
activities |
26,110 |
|
|
26,284 |
|
| Adjusted results from
operating activities(1) |
23,785 |
|
|
27,086 |
|
| EBITDA(1) |
33,045 |
|
|
32,713 |
|
| Adjusted EBITDA(1) |
30,720 |
|
|
33,515 |
|
| Net earnings |
13,852 |
|
|
14,674 |
|
|
per share (basic) |
0.13 |
|
|
0.14 |
|
|
per share (diluted) |
0.11 |
|
|
0.13 |
|
| Adjusted net earnings(1) |
12,613 |
|
|
15,347 |
|
| Adjusted net earnings per
share (basic)(1) |
0.12 |
|
|
0.15 |
|
| Trailing twelve months free
cash flow(1) |
44,261 |
|
|
57,985 |
|
|
Dividends per share |
0.09 |
|
|
0.09 |
|
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS measures.
Revenues and Adjusted
EBITDA: https://www.globenewswire.com/NewsRoom/AttachmentNg/b672c657-04d5-47ab-b270-6aeea820af72
Adjusted Net Earnings and Free Cash Flow
TTM: https://www.globenewswire.com/NewsRoom/AttachmentNg/6b849203-fc39-4149-a249-c118fc7ef5a8
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 price 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 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 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
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
representative of our business to management, investors, analysts,
and any other interested parties when financial results are
adjusted by the gains/losses from financial derivative instruments
that do not qualify for hedge accounting. These adjusted financial
results provide a more complete understanding of factors and trends
affecting our business. This measurement is a non-IFRS measurement.
See “Non-IFRS measures” section.
We use the non-IFRS adjusted results of the
operating company to measure and to evaluate the performance of the
business through our adjusted gross margin, adjusted gross margin
percentage, adjusted gross margin rate, adjusted results from
operating activities, adjusted EBITDA, adjusted net earnings,
adjusted net earnings per share and trailing twelve months free
cash flow. These non-IFRS measures are evaluated on a consolidated
basis and at a segmented level, excluding adjusted gross margin
percentage, adjusted gross margin per metric tonne, 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 earnings 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-IFRS measures” section.
OUR RESULTS ARE ADJUSTED AS FOLLOWS:
|
Income (loss)(In thousands of dollars) |
Q1 2024 |
Q1 2023 |
|
|
Sugar |
|
|
MapleProducts |
|
|
Total |
|
|
Sugar |
|
|
MapleProducts |
|
|
Total |
|
|
Mark-to-market on: |
|
|
|
|
|
|
|
|
|
Sugar futures contracts |
(2,690 |
) |
|
- |
|
|
(2,690 |
) |
|
(1,208 |
) |
|
- |
|
|
(1,208 |
) |
|
Foreign exchange forward contracts |
(124 |
) |
|
1,856 |
|
|
1,732 |
|
|
273 |
|
|
(197 |
) |
|
76 |
|
|
Total mark-to-market adjustment on derivatives |
(2,814 |
) |
|
1,856 |
|
|
(958 |
) |
|
(935 |
) |
|
(197 |
) |
|
(1,132 |
) |
|
Cumulative timing differences |
3,072 |
|
|
211 |
|
|
3,283 |
|
|
(688 |
) |
|
1,018 |
|
|
330 |
|
|
Total adjustment to costs of sales |
258 |
|
|
2,067 |
|
|
2,325 |
|
|
(1,623 |
) |
|
821 |
|
|
(802 |
) |
Fluctuations in the mark-to-market adjustment on
derivatives are due to the price movements in the Raw #11 sugar
market (“Raw #11”) 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 first quarter of the current
year, the total cost of sales adjustment is a gain of $2.3 million
to be deducted from the consolidated results versus a loss of $0.8
million to be added to the consolidated results for the comparable
quarter last year.
See the “Non-IFRS measures” section for more
information on these adjustments.
SEGMENTED INFORMATION
|
Segmented Results(In thousands of dollars) |
Q1 2024 |
Q1 2023 |
|
|
Sugar |
|
|
Maple Products |
|
|
Total |
|
|
Sugar |
|
|
Maple Products |
|
|
|
Total |
|
|
Revenues |
229,808 |
|
|
58,891 |
|
|
288,699 |
|
|
205,287 |
|
|
56,156 |
|
|
261,443 |
|
| Gross margin |
36,490 |
|
|
8,154 |
|
|
44,644 |
|
|
36,038 |
|
|
5,153 |
|
|
41,191 |
|
| Administration and selling
expenses |
9,379 |
|
|
2,761 |
|
|
12,140 |
|
|
6,635 |
|
|
2,662 |
|
|
9,297 |
|
| Distribution costs |
6,086 |
|
|
308 |
|
|
6,394 |
|
|
5,062 |
|
|
548 |
|
|
5,610 |
|
|
Results from operating activities |
21,025 |
|
|
5,085 |
|
|
26,110 |
|
|
24,341 |
|
|
1,943 |
|
|
26,284 |
|
| |
|
|
|
|
|
|
|
|
|
| Adjustment to cost of
sales(2) |
(258 |
) |
|
(2,067 |
) |
|
(2,325 |
) |
|
1,623 |
|
|
(821 |
) |
|
802 |
|
| Adjusted gross margin(1) |
36,232 |
|
|
6,087 |
|
|
42,319 |
|
|
37,661 |
|
|
4,332 |
|
|
41,993 |
|
| Adjusted results from
operating activities(1) |
20,767 |
|
|
3,018 |
|
|
23,785 |
|
|
25,964 |
|
|
1,122 |
|
|
27,086 |
|
| EBITDA(1) |
26,300 |
|
|
6,745 |
|
|
33,045 |
|
|
29,053 |
|
|
3,659 |
|
|
32,713 |
|
| Adjusted EBITDA(1) |
26,042 |
|
|
4,678 |
|
|
30,720 |
|
|
30,676 |
|
|
2,839 |
|
|
33,515 |
|
| Additional information: |
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment and
intangible assets, net of disposals |
14,948 |
|
|
188 |
|
|
15,136 |
|
|
8,452 |
|
|
94 |
|
|
8,546 |
|
|
Additions to right-of-use assets |
82 |
|
|
51 |
|
|
133 |
|
|
18 |
|
|
45 |
|
|
63 |
|
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS
measures(2) See “Adjusted results” section
Sugar
REVENUES
|
|
Q1 2024 |
Q1 2023 |
∆ |
|
(In thousands of dollars) |
229,808 |
205,287 |
24,521 |
Sugar Volume Variance and Sugar
Volumes: https://www.globenewswire.com/NewsRoom/AttachmentNg/10510e09-96ce-4ec1-a041-b9a49584b25f
In the first quarter of fiscal 2024, revenues
increased by $24.5 million compared to the same period last year.
The positive variance was largely driven by higher average price
for Raw #11 and higher contribution for refining related
activities, partially offset by lower sales volume as a result of
the recently resolved labour disruption at our Vancouver sugar
refinery. In the first quarter of 2024, the average price for Raw
#11 increased to US 25.6 cents per pound from US 19.2 cents per
pound in the first quarter of 2023.
Sugar volume decreased by 10,473 metric tonnes
in the first quarter of fiscal 2024 compared to the same quarter
last year, driven mainly by the unfavorable net impact of the
reduction in volume produced at our Vancouver facility attributable
to the recent labour disruption.
- Industrial
volume decreased by 3,631 metric tonnes or 3.3% as compared to the
same quarter last year, as a result of the unfavourable impact from
the labour disruption at our Vancouver facility.
- Consumer volume
slightly decreased by 505 metric tonnes or 1.8% compared to the
same period last year, largely due to timing in demand from our
eastern customers and the impact of the reduced operations at our
Vancouver facility.
- Liquid volume
increased by 701 metric tonnes or 1.7% compared to the same quarter
last year, due to increased demand from eastern customers.
- Export volume
decreased by 7,038 metric tonnes in the first quarter as we
focussed our sales efforts on serving the domestic market
throughout the recent labour disruption at our Vancouver
facility.
GROSS MARGIN
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
|
(In thousands of dollars, except per metric tonne information) |
|
|
|
|
Gross margin |
36,490 |
|
36,038 |
|
452 |
|
|
Total adjustment to cost of sales(2) |
(258 |
) |
1,623 |
|
(1,881 |
) |
|
Adjusted gross margin(1) |
36,232 |
|
37,661 |
|
(1,429 |
) |
| Adjusted gross margin per
metric tonne(1) |
199 |
|
195 |
|
4 |
|
|
Included in gross margin:Depreciation of property, plant and
equipment and right-of-use assets |
4,174 |
|
4,124 |
|
50 |
|
(1) See “Non-IFRS Measures” section for definition
and reconciliation to IFRS measures(2) See “Adjusted
results” section
Gross margin was $36.5 million for the current
quarter and included a gain of $0.3 million for the mark-to-market
of derivative financial instruments. For the same period last year,
gross margin was $36.0 million with a mark-to-market loss of $1.6
million.
Adjusted gross margin was $36.2 million for the
first quarter of 2024 as compared to $37.7 million for the same
period in 2023. Adjusted gross margin decreased by $1.4 million for
the first three months of 2024, due mainly to lower sales volume
associated with the recently ended labour disruption at our
Vancouver facility and higher production costs, partially offset by
higher contribution on sugar refining related activities. The
overall impact of the labour disruption in Vancouver on the first
quarter results is estimated at approximately $3.0 million and
includes the impact of lower sales volume.
On a per-unit basis, adjusted gross margin for
the first quarter was $199 per metric tonne, higher than the same
quarter last year by $4 per metric tonne. The favourable variance
was mainly due to higher margin, partially offset by higher
production cost, as compared to last year.
Adjusted Gross
Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/53faf034-4dd8-4df2-837f-fb2f7ec09157
OTHER EXPENSES
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
|
(In thousands of dollars, except per metric tonne information) |
|
|
|
|
|
|
|
Administration and selling expenses |
9,379 |
|
6,635 |
|
2,744 |
|
| Distribution
costs |
6,086 |
|
5,062 |
|
1,024 |
|
| Included in
Administration and selling expenses: |
|
|
|
|
|
|
|
Depreciation of property, plant and equipment and right-of-use
assets |
198 |
|
221 |
|
(23 |
) |
| Included in
Distribution costs: |
|
|
|
|
|
|
|
Depreciation of right-of-use assets |
903 |
|
367 |
|
536 |
|
For the first quarter of fiscal 2024,
administration and selling expenses increased by $2.7 million
compared to the same quarter last year. The variance was mainly due
to a reduction in share-based compensation expense recorded in the
first quarter of 2023 in relation to performance share units for
senior management. The non-cash decrease recorded in the first
quarter of 2023 was largely driven by a decrease in share price
during that quarter.
Distribution costs in the first quarter of 2024
increased by $1.0 million compared to the same period last year.
The increase was mainly due to higher transfer of sugar between our
facilities to support the needs of our customers.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED
EBITDA
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
|
(In thousands of dollars) |
|
|
|
|
|
|
|
Results from operating activities |
21,025 |
|
24,341 |
|
(3,316 |
) |
| Total
adjustment to cost of sales(2) |
(258 |
) |
1,623 |
|
(1,881 |
) |
| Adjusted
results from operating activities(1) |
20,767 |
|
25,964 |
|
(5,197 |
) |
|
Depreciation of property, plant and equipment, right-of-useassets,
and amortization of intangible assets |
5,275 |
|
4,712 |
|
563 |
|
|
EBITDA(1) |
26,300 |
|
29,053 |
|
(2,753 |
) |
|
Adjusted EBITDA(1) |
26,042 |
|
30,676 |
|
(4,634 |
) |
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS
measures(2) See “Adjusted results” section
Results from operating activities for the first
quarter of fiscal 2024 were $21.0 million, a decrease of $3.3
million from the same period last year. These results included
gains and losses from the mark-to-market of derivative financial
instruments.
Adjusted results from operating activities in
the first quarter of fiscal 2024 decreased by $5.2 million compared
to the same period last year, mainly due to lower adjusted gross
margin, the increase in administration and selling expenses, and
higher distribution costs. These variances include the impact of
the labour disruption in Vancouver for the first quarter.
EBITDA for the first quarter of fiscal 2024 was
$26.3 million compared to $29.1 million in 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
decreased by $4.6 million compared to the same period last year,
mainly due to lower adjusted gross margin, higher administration
and selling expenses, and higher distribution costs. These
variances include the impact of the labour disruption in Vancouver
for the first quarter, estimated at $3.0 million.
Maple Products
REVENUES
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
|
(In thousands of dollars, except volume) |
|
|
|
|
|
|
|
Volume (000 pounds) |
11,852 |
|
11,819 |
|
33 |
|
|
Revenues |
58,891 |
|
56,156 |
|
2,735 |
|
Maple Volumes and Adjusted Gross
Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/06cfa5b1-467d-40b5-967d-ed0c27a0b8f8
Revenues for the first quarter of the current
fiscal year were $2.7 million higher than the same period last
year, driven by increased average selling prices.
GROSS MARGIN
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
|
(In thousands of dollars, except adjusted gross margin
percentage) |
|
|
|
Gross margin |
8,154 |
|
5,153 |
|
3,001 |
|
| Total
adjustment to cost of sales(1) (2) |
(2,067 |
) |
(821 |
) |
(1,246 |
) |
|
Adjusted gross margin(1) |
6,087 |
|
4,332 |
|
1,755 |
|
| Adjusted gross margin
percentage(1) |
10.3 |
% |
7.7 |
% |
2.6 |
% |
| Included in gross margin: |
|
|
|
|
|
|
|
Depreciation of property, plant and equipment and
right-of-use assets |
778 |
|
838 |
|
(60 |
) |
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS
measures(2) See “Adjusted results” section
Gross margin was $8.2 million for the first
three months of the current fiscal year, including a gain of $2.1
million for the mark-to-market of derivative financial instruments.
For the same period last year, gross margin was $5.1 million with a
mark-to-market gain of $0.8 million.
Adjusted gross margin percentage for the current
quarter was 10.3% as compared to 7.7% for the same period last
year, representing an increase in adjusted gross margin of $1.8
million, mainly due to higher average selling prices and lower
operating costs, following the implementation of automation and
continuous improvement initiatives in the later part of 2023.
OTHER EXPENSES
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
|
(In thousands of dollars) |
|
|
|
|
Administration and selling expenses |
2,761 |
|
2,662 |
|
99 |
|
|
Distribution costs |
308 |
|
548 |
|
(240 |
) |
|
Included in Administration and selling expenses: |
|
|
|
|
|
|
|
Amortization of intangible assets |
882 |
|
878 |
|
4 |
|
Administration and selling expenses for the
first quarter of the current fiscal year slightly increased by $0.1
million compared to the same period last year, largely due to
market-based increases in business support costs. Distribution
costs decreased by $0.2 million in the current quarter compared to
the same quarter last year, mainly due to lower logistic costs and
higher recovery of such costs from customers.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED
EBITDA
|
|
Q1 2024 |
Q1 2023 |
∆ |
|
(In thousands of dollars) |
|
|
|
|
|
|
Results from operating activities |
5,085 |
|
1,943 |
|
3,142 |
|
|
Total adjustment to cost of sales(1) (2) |
(2,067 |
) |
(821 |
) |
(1,246 |
) |
|
Adjusted results from operating activities(1) |
3,018 |
|
1,122 |
|
1,896 |
|
|
Depreciation and amortization |
1,660 |
|
1,717 |
|
(57 |
) |
|
EBITDA(1) |
6,745 |
|
3,660 |
|
3,085 |
|
|
Adjusted EBITDA(1) |
4,678 |
|
2,839 |
|
1,839 |
|
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS
measures(2) See “Adjusted results” section
Results from operating activities for the first
quarter of fiscal 2024 were $5.1 million, compared to $2.0 million
in the same period last year. These results included gains from the
mark-to-market of derivative financial instruments.
Adjusted results from operating activities for
the current quarter of 2024 were $1.9 million higher than the
comparable period last year, mainly due to higher adjusted gross
margin and lower distribution costs.
EBITDA for the first quarter of fiscal 2024
amounted to $6.7 million compared to $3.7 million for the same
period last year. These results include gains from the
mark-to-market of derivative financial instruments.
Adjusted EBITDA for the first quarter of fiscal
2024 increased by $1.8 million to $4.7 million, due mainly to
higher adjusted results from operating activities, as explained
above.
OUTLOOK
Following a strong performance in 2023,
including our highest sugar volume, consolidated revenue, and
adjusted EBITDA results to date, we expect this positive trend to
continue and anticipate delivering higher consolidated revenue and
adjusted EBITDA in 2024.
The continued strength in demand for sugar is
expected to support organic growth for our Sugar business segment
throughout 2024. We also expect the financial results of our Maple
segment to improve during 2024, from improved market conditions and
recently implemented production automation and continuous
improvement initiatives.
Sugar
We expect the Sugar segment to perform well in
fiscal 2024, despite the unfavourable impact of the recent labour
disruption in Vancouver that ended on February 1. Underlying North
American demand remains strong across all customer segments
supported by favourable market dynamics. The expected increase in
sugar margin from recently negotiated agreements will have a
positive impact on our financial results, allowing us to mitigate
the recent inflationary pressures on costs, and the lower sales
volume caused by the recent labour disruption in Vancouver.
In the first quarter, the labour disruption
reduced sales volume, resulting in an unfavourable impact on
adjusted EBITDA of approximately $3.0 million. The Vancouver
refinery produces approximately 17% of our refined sugar production
volume. During the strike, the Vancouver sugar refinery has
continued to operate at a reduced level, and we have leveraged our
other facilities in Taber and Montreal to support our valued
customers in western Canada.
The initial volume expectation for fiscal year
2024 was set at 800,000 metric tonnes, representing an increase of
4,700 metric tonnes compared to fiscal year 2023. Considering the
recently ended labour strike in Vancouver and its impact on the
volume delivered to customers, we expect our initial outlook to
decrease by 10,000 metric tonnes, to 790,000 metric tonnes.
The harvest period for our sugar beet facility
in Taber was completed in early November. We are currently in the
processing stage and we anticipate completing the processing of the
sugar beets received in early March. Currently, based on our early
assessment, we anticipate the current crop to deliver between
105,000 metric tonnes and 110,000 metric tonnes of beet sugar,
consistent with our expectations.
Production costs and maintenance programs for
our three production facilities are expected to continue to be
moderately impacted by the current inflationary market-based
pressures, as we continue to focus on cost control initiatives
throughout our operations.
Distribution costs are expected to increase
slightly in 2024. These expenditures reflect the market dynamics
requiring the transfer of sugar produced between our refineries to
meet demand from customers, and some of the costs associated with
servicing customers with imported refined sugar.
Administration and selling expenses are expected
to increase in 2024 as compared to 2023, due mainly to market-based
increases in compensation expenditures and external services.
We anticipate our financing costs to increase in
fiscal 2024 due to higher working capital needs, mainly associated
with the recent increase in Raw #11 price for the purchase of raw
sugar. We have been able to mitigate the impact of recent increases
in interest rates and energy costs through our multi-year hedging
strategy. We expect our 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. We anticipate
spending approximately $25 million on various initiatives. This
capital spending estimate excludes expenditures relating to our
Expansion Project, which are currently estimated at $70 million for
fiscal 2024.
Maple
We expect financial results in our Maple segment
to improve in 2024 over the prior year. The Maple segment financial
results were lower than anticipated in fiscal 2023. This was due
mainly to lower volume and lingering inflationary cost pressures.
Although we expect these financial and operating pressures to
remain in the first part of fiscal 2024, we forecast the Maple
business segment to continue to benefit from automation and
continuous improvement initiatives at our Granby and Dégelis
plants. Such initiatives, combined with recently negotiated price
increases, are supporting the anticipated recovery of our Maple
business segment in 2024.
The expected sales volume for 2024 is stable
when compared to 2023 at approximately 43.5 million lbs. The sales
volume expectation reflects the challenging sector-wide market
conditions, impacting the global demand for maple syrup and the
current low level of maple syrup reserve held by the Producteurs et
Productrices Acéricoles du Québec (“PPAQ”). The reserve of PPAQ has
been depleted in recent years from below average crops.
Capital investments in the Maple segment have
decreased significantly in recent years. We expect to spend between
$1 million and $1.5 million annually on capital projects in this
segment. The main driver for the selected projects is improvement
in productivity and profitability through automation.
See “Forward-Looking Statements” section and
“Risks and Uncertainties” section.
CONSOLIDATED RESULTS AND SELECTED
FINANCIAL INFORMATION
|
|
Q1 2024 |
|
Q1 2023 |
|
|
(Unaudited)(In thousands of dollars, except volume and per share
information) |
|
|
|
|
|
Sugar (metric tonnes) |
182,376 |
|
192,849 |
|
|
Maple syrup (000 pounds) |
11,852 |
|
11,819 |
|
|
Total revenues |
288,699 |
|
261,443 |
|
|
Gross margin |
44,644 |
|
41,191 |
|
|
Adjusted gross margin(1) |
42,319 |
|
41,993 |
|
|
Results from operating activities |
26,110 |
|
26,284 |
|
|
Adjusted results from operating activities(1) |
23,785 |
|
27,086 |
|
|
EBITDA(1) |
33,045 |
|
32,713 |
|
|
Adjusted EBITDA(1) |
30,720 |
|
33,515 |
|
| Net
finance costs |
6,906 |
|
6,183 |
|
|
Income tax expense |
5,352 |
|
5,427 |
|
| Net
earnings |
13,852 |
|
14,674 |
|
|
per share (basic) |
0.13 |
|
0.14 |
|
|
per share (diluted) |
0.11 |
|
0.13 |
|
|
Adjusted net earnings(1) |
12,613 |
|
15,347 |
|
|
per share (basic)(1) |
0.12 |
|
0.15 |
|
|
Dividends per share |
0.09 |
|
0.09 |
|
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS measures
Total revenues
Revenues increased by $27.3 million for the
first quarter of fiscal 2024 compared to the same quarter last
year. The increase in revenue was mainly attributable to higher
prices paid for Raw #11 and higher average pricing for
refining-related activities in the Sugar segment, as well as higher
pricing in the Maple segment. This favorable variance was partially
offset by lower sales volume in the Sugar segment in connection
with the labour disruption at our Vancouver sugar refinery.
Gross margin
Gross margin increased by $3.5 million for the
current quarter compared to the same period last year. Excluding
the mark-to-market of derivative financial instruments, adjusted
gross margin for the first quarter of the current year increased by
$0.3 million, mainly as a result of higher adjusted gross margin
from the Maple segment, partially offset by lower adjusted gross
margin from the Sugar segment. For the Sugar segment, the adjusted
gross margin per metric tonne for the current quarter at $199 per
metric tonne was higher than the same period last year by $4 per
metric tonnes. For the Maple segment, the adjusted gross margin
percentage for the quarter at 10.3% was higher by 2.6% when
compared to the same period last year.
Results from operating activities
Results from operating activities for the
current quarter were $26.1 million compared to $26.3 million for
the same quarter last year. Excluding the mark-to-market of
derivative financial instruments, adjusted results from operating
activities for the current quarter amounted to $23.8 million
compared to $27.1 million for the same quarter last year, a
decrease of $3.3 million. The decrease in the current quarter was
mainly driven by lower contribution from the Sugar segment as a
result of the reduced operations at our Vancouver sugar refinery
associated with the labour disruption.
Net finance costs
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
(In thousands of dollars) |
|
|
|
|
|
|
Interest expense on convertible unsecured subordinated debentures,
including accretion expense (1) |
2,140 |
|
2,126 |
|
14 |
|
| Interest on
revolving credit facility |
1,760 |
|
1,371 |
|
389 |
|
| Interest on senior
guaranteed notes, including accretion of $51 (December 31, 2022 -
$27) |
921 |
|
897 |
|
24 |
|
| Amortization of
deferred financing fees |
326 |
|
314 |
|
12 |
|
| Interest on
Producteurs et Productrices Acéricoles du Québec supplier
balance |
694 |
|
1,177 |
|
(483 |
) |
| Other interest
expense |
1 |
|
10 |
|
(9 |
) |
| Interest accretion
on discounted lease obligations |
406 |
|
242 |
|
164 |
|
| Net change in fair
value of interest rate swap |
658 |
|
46 |
|
612 |
|
|
Net finance costs |
6,906 |
|
6,183 |
|
723 |
|
(1) Includes accretion expense of $263 for the three months
ended December 30, 2023 (December 31, 2022 - $249)
For the first quarter of the current year, net
finance costs were $0.7 million higher than the comparable period
last year, mainly due to the impact of market-based changes in fair
value related to interest rate swaps contracts, and the increase in
interest expense on our revolving credit facility from higher
average borrowing, partially offset by lower interest expense
related to lower purchase of maple syrup from PPAQ.
Taxation
|
|
Q1 2024 |
|
Q1 2023 |
|
∆ |
|
(In thousands of dollars) |
|
|
|
|
|
|
Current |
3,870 |
|
4,762 |
|
(892 |
) |
|
Deferred |
1,482 |
|
665 |
|
817 |
|
|
Income tax expense |
5,352 |
|
5,427 |
|
(75 |
) |
The variation in current and deferred tax
expense period-over-period is consistent with the variation in
earnings before income taxes during the current quarter compared to
the same quarter last year.
Deferred income taxes reflect temporary
differences, which result primarily from the difference between the
amount of depreciation claimed for tax purposes and the amount of
depreciation recognized for financial reporting purposes, losses
carried forward, 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 first quarter of fiscal 2024
were $0.8 million lower than in the comparable period last year.
This decrease was mainly attributable to higher net finance cost
and lower results from operating activities, partially offset by a
non-cash favourable variance in the mark-to-market of derivative
financial instruments.
Adjusted net earnings in the first quarter of
fiscal 2024 were $2.7 million lower than in the comparable period
last year. This decrease was mainly attributable to lower adjusted
results from operating activities from the Sugar segment, partially
offset by higher adjusted results from operating activities in the
Maple segment.
Summary of quarterly results
The following is a summary of selected financial
information of the unaudited condensed consolidated interim
financial statements and non-IFRS measures of RSI for the last
eight quarters:
| (In
thousands of dollars, except for volumes and per share
information) |
QUARTERS(2) |
|
|
2024 |
2023 |
2022 |
|
|
First |
Fourth |
Third |
Second |
First |
Fourth |
Third |
Second |
|
Sugar volumes (MT) |
182,376 |
|
215,500 |
|
191,411 |
|
195,547 |
|
192,849 |
|
|
214,672 |
|
203,315 |
|
196,570 |
|
| Maple products volumes (‘000
pounds) |
11,852 |
|
10,363 |
|
9,630 |
|
12,059 |
|
11,819 |
|
|
9,838 |
|
12,027 |
|
12,912 |
|
| Total revenues |
288,699 |
|
308,036 |
|
262,285 |
|
272,949 |
|
261,443 |
|
|
267,406 |
|
254,632 |
|
253,341 |
|
| Gross margin |
44,644 |
|
41,192 |
|
41,685 |
|
41,659 |
|
41,191 |
|
|
28,472 |
|
24,948 |
|
33,899 |
|
| Adjusted gross margin(1) |
42,319 |
|
40,193 |
|
34,912 |
|
38,233 |
|
41,993 |
|
|
39,141 |
|
32,654 |
|
35,887 |
|
| Results from operations |
26,110 |
|
22,815 |
|
24,008 |
|
21,856 |
|
26,284 |
|
|
(38,346 |
) |
8,822 |
|
15,499 |
|
| Adjusted results from
operations(1) |
23,785 |
|
21,816 |
|
17,235 |
|
18,431 |
|
27,086 |
|
|
22,324 |
|
16,528 |
|
17,487 |
|
| EBITDA(1) |
33,045 |
|
29,568 |
|
30,523 |
|
28,445 |
|
32,713 |
|
|
18,283 |
|
15,402 |
|
22,029 |
|
| Adjusted EBITDA(1) |
30,720 |
|
28,569 |
|
23,750 |
|
25,020 |
|
33,515 |
|
|
28,954 |
|
23,108 |
|
24,017 |
|
| Net (loss) earnings |
13,852 |
|
11,876 |
|
14,177 |
|
11,062 |
|
14,674 |
|
|
(45,503 |
) |
3,138 |
|
8,570 |
|
|
Per share - basic |
0.13 |
|
0.12 |
|
0.13 |
|
0.11 |
|
0.14 |
|
|
(0.44 |
) |
0.03 |
|
0.08 |
|
|
Per share - diluted |
0.11 |
|
0.09 |
|
0.12 |
|
0.10 |
|
0.13 |
|
|
(0.44 |
) |
0.04 |
|
0.08 |
|
| Adjusted net earnings(1) |
12,613 |
|
11,283 |
|
8,749 |
|
9,115 |
|
15,347 |
|
|
12,161 |
|
8,419 |
|
9,122 |
|
|
Per share - basic |
0.12 |
|
0.11 |
|
0.08 |
|
0.09 |
|
0.15 |
|
|
0.12 |
|
0.08 |
|
0.09 |
|
|
Per share - diluted |
0.10 |
|
0.10 |
|
0.08 |
|
0.09 |
|
0.14 |
|
|
0.11 |
|
0.08 |
|
0.09 |
|
| Sugar - Adjusted gross margin
rate per MT(1) |
199 |
|
156 |
|
159 |
|
175 |
|
195 |
|
|
165 |
|
139 |
|
159 |
|
| Maple -
Adjusted gross margin percentage(1) |
10.3 |
% |
12.5 |
% |
9.5 |
% |
7.2 |
% |
7.7 |
% |
|
8.1 |
% |
8.2 |
% |
8.0 |
% |
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS
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 strongest quarters for the Sugar segment in terms of
adjusted gross margin, adjusted EBITDA, and adjusted net earnings
due to the favourable sales product mix associated with an higher
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 less favourable product sales mix, resulting in lower
adjusted gross margins, adjusted EBITDA, and adjusted net earnings.
Over the last eight quarters, this trend was less correlated due to
sustained strong demand in the domestic market and sales that were
delayed in the first quarter of fiscal 2023. The first two quarters
of fiscal 2024 are not expected to follow the historical trend due
to the impact from reduced activities at our Vancouver sugar
refinery in connection with the labour disruption.
Usually, there is minimal seasonality in the
Maple products segment. However, over the last two years, we have
experienced volatility in sales volumes partially attributable to
the highly competitive market and the global volatility in economic
conditions.
Financial condition
| (In
thousands of dollars) |
December 30, 2023 |
|
|
December 31, 2022 |
|
|
September 30, 2023 |
|
|
Total assets |
$ |
934,726 |
|
|
$ |
916,377 |
|
|
$ |
960,901 |
|
|
Total liabilities |
|
628,606 |
|
|
|
626,299 |
|
|
|
654,005 |
|
The increase in total assets of $18.3 million in
the current fiscal quarter compared to the same quarter last year
is mainly due to an increase in prepaid expenses of $21.8 million
in connection with the pre-payment of a raw sugar vessel, higher
property, plant, and equipment of $25.5 million largely associated
with the Expansion Project, and an increase in right of use assets
of $6.8 million related to new leases for storages facilities and
logistic related equipment. The increase in total assets is
partially offset by a market-based decrease in derivatives
financial instruments assets of $12.5 million, a reduction in cash
of $7.1 million, lower trade and other receivables of $5.3 million,
a decrease in inventory of $7.9 million and lower intangible assets
of $3.2 million.
Total liabilities for the current fiscal quarter
increased by $2.3 million compared to the same quarter last year
due mainly to an increase in trade and other payables of $7.4
million, higher lease obligations of $7.1 million associated with
the increase in right of use assets, and deferred tax liabilities
of $4.6 million. This variance was partially offset by a decrease
in employee benefits of $15.8 million reflecting the market-based
impact of the actuarial valuation performed at the end of fiscal
2023, and a decrease in derivatives financial instruments
liabilities of $1.4 million.
Liquidity
Cash flow generated by Lantic is mainly paid to
Rogers in the form 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 distributions of cash
arising from the compliance of financial covenants for the
year.
|
|
Q1 2024 |
|
Q1 2023 |
|
|
|
(In thousands of dollars) |
|
Net cash flow from (used in) operating activities |
23,267 |
|
(8,894 |
) |
| Cash flow (used
in) from financing activities |
(4,687 |
) |
28,562 |
|
| Cash flow used in
investing activities |
(12,783 |
) |
(6,780 |
) |
| Effect
of changes in exchange rate on cash |
(9 |
) |
(152 |
) |
|
Net increase in cash |
5,788 |
|
12,736 |
|
Cash flow from operating activities for the
current quarter increased by $32.2 million compared to the same
period last year, due mainly to a positive working capital variance
of $27.5 million, higher net earnings adjusted for non-cash items
of $2.4 million and lower interest and income taxes paid of $2.2
million.
Cash flow from financing activities was lower by
$33.2 million for the current quarter compared to the same quarter
last year due mainly to lower increase in borrowing from the
revolving credit facility of $32.0 million.
The cash flow used in investing activities
increased by $6.0 million in the current quarter compared to the
same period last year due mainly to the capitalization of $8.4
million in expenditures in connection with the Expansion
Project.
Free cash flow
We believe it is appropriate to measure free
cash flow that is generated by our operations. Free cash flow is a
non-IFRS 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 and intangible assets,
net of value-added capital expenditures, and the payment of lease
obligations.
|
|
Trailing twelve months |
|
(In thousands of dollars) |
2024 |
|
2023 |
|
|
Cash flow from operations |
76,479 |
|
48,020 |
|
| Adjustments: |
|
|
|
Changes in non-cash working capital |
7,494 |
|
16,351 |
|
|
Mark-to-market and derivative timing adjustments |
(12,386 |
) |
19,004 |
|
|
Payment of deferred financing fees |
(1,810 |
) |
- |
|
|
Financial instruments non-cash amount |
3,974 |
|
(1,141 |
) |
|
Capital expenditures and intangible assets |
(41,401 |
) |
(27,672 |
) |
|
Value-added capital expenditures |
17,750 |
|
8,533 |
|
|
Payment of lease obligations |
(5,839 |
) |
(5,110 |
) |
|
Free cash flow(1) |
44,261 |
|
57,985 |
|
|
Declared dividends |
37,812 |
|
37,563 |
|
(1) See “Non-IFRS Measures” section for
definition and reconciliation to IFRS measures.
Free Cash
Flow: https://www.globenewswire.com/NewsRoom/AttachmentNg/d402fdb4-bc5e-461c-8288-d9a451523836
Free cash flow for the trailing twelve months
ended December 30, 2023, amounted to $44.3 million, representing a
decrease of $13.7 million compared to the same period last year.
This decrease in free cash flow was mainly due to higher capital
expenditures net of value-added capital expenditures of $4.5
million, the reduction of non-cash impact of $1.6 million related
to the variance in the accrual for cash-settled share-based
compensation of senior management, the increase in payment of
interest and deferred financing fees of $6.1 million, lower
adjusted EBITDA of $1.5 million and higher pension expense, net of
contributions of $1.5 million. This variance was partially offset
by the decrease in income taxes paid of $2.3 million.
Capital and intangible asset expenditures, net
of value-added capital expenditures, increased by $5.2 million
compared to last year’s rolling twelve months due mainly to higher
investment in production assets. 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 2024 as compared to the same
period in 2023, was mainly related to costs incurred in connection
with the Expansion Project amounting to $8.4 million.
Interest paid for the trailing twelve months
ended December 30, 2023, increased by $4.4 million compared to last
year due mainly to higher interest paid on our revolving credit
facility from higher average borrowing and higher interest paid to
the PPAQ for maple syrup purchases. Deferred financing fees for the
trailing twelve months ended December 30, 2023, increased by $1.7
million compared to last year, largely due to financing costs paid
in relation with Expansion Project.
The Board of Directors declared a quarterly
dividend of 9.0 cents per common share every quarter, totalling
36.0 cents for both trailing twelve-month 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 $8.4 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 September 30, 2023, Annual Report, except for the
capital commitments to complete the Expansion Project for a total
value of $129.0 million to be incurred to fiscal 2026.
As at December 30, 2023, Lantic had commitments
to purchase a total of 752,000 metric tonnes of raw sugar, of which
412,163 metric tonnes had been priced for a total dollar commitment
of $328.7 million.
Capital resources
As at December 30, 2023, Lantic had a total of
$340.0 million available working capital under the revolving credit
facility, which matures on October 31, 2027, from which it can
borrow at prime rate, SOFR rate or under Adjusted Term CORRA loan
(which is Term CORRA plus an adjustment varying between 30 to 32
basis points), plus 20 to 250 basis points, based on the
achievement of certain financial ratios. As at December 30, 2023, a
total of $589.6 million of assets have been pledged as security for
the revolving credit facility, compared to $576.7 million as at
December 31, 2022; including trade receivables, inventories and
property, plant and equipment.
As at December 30, 2023, $165.0 million had been
drawn from the revolving credit facility and $8.8 million in cash
was also available.
As at December 30, 2023, the Company had $155.0
million total face value outstanding convertible unsecured
subordinated debentures from which $57.4 million is maturing on
December 31, 2024, and $97.6 million maturing on June 30, 2025.
Cash requirements for working capital and other
capital expenditures are expected to be funded 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 December 30, 2023, Lantic was in
compliance with all the covenants under its revolving credit
facility.
OUTSTANDING SECURITIES
A total of 105,096,120 shares were outstanding
as at December 30, 2023 and 105,147,602 as at February 7, 2024,
compared with 104,430,135 as at December 31, 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 September 30, 2023. This document is
available on SEDAR+ at www.sedarplus.ca. or on our website at
www.LanticRogers.com.
The risk factors titled Employees Relations with
Unionized Employees and Recently Announced Eastern Capacity
Expansion Project, included in the Management’s Discussion and
Analysis section of our Annual Report for the year ended September
30, 2023, should be updated to consider the following as of the
date of this MD&A.
Labour Disruption at Vancouver Sugar
Refinery
On February 1, 2024, the unionized employees of
the Vancouver sugar refinery, represented by the Public and Private
Workers of Canada Local 8 ratified a new five-years collective
agreement, following a strike that begun on September 28, 2023. The
unionized employees are in the process of returning to work and we
anticipate the Vancouver sugar refinery to return to full
production over the next few weeks. Throughout the labour
disruption, production from our Taber and Montreal facilities have
been used to support our customers in western Canada.
This recently resolved labour disruption is
expected to negatively impact our financial results for 2024, the
extent of which is not yet fully known, and will depend mainly on
the potential internal incremental costs associated with this
event.
Expansion Project
The completion of our Expansion Project is
subject to several conditions and risks, certain of which are
outside of the control of Lantic. The detailed engineering plan for
the project has been completed and includes estimates as it relates
to costs, construction period and incremental production capacity.
The expected total cost of the project is estimated at
approximately $200 million.
Delays and cost overruns may occur in completing
the construction of the Expansion Project. A number of factors that
could cause such delays or cost overruns include, without
limitation, permitting delays, construction pricing escalation,
changing engineering and design requirements, the performance of
contractors, labour disruptions, adverse weather conditions and the
availability of financing. Even when complete, the new installed
capacity and other related assets may not operate as planned due to
design or manufacturing flaws, which may not all be covered by
warranty. Mechanical breakdown could occur in equipment after the
period of warranty has expired, resulting in loss of production as
well as the cost of repair.
In addition, in order to complete the project,
Lantic might need to further amend existing credit facilities and
potentially enter into additional financing agreements in order to
finance the construction. Lantic’s ability to secure the overall
financing for the project is related to several factors, including
market demand for refined sugar, the final cost for the project and
the borrowing conditions in the financial market.
There can be no assurance that the Expansion
Project will be completed, or that it will be completed in the
expected timeframe of approximately two years, providing the
expected incremental volume at the expected cost. Failure by Lantic
to complete the Expansion Project under the expected conditions
could have a material impact on the performance, and financial
results and conditions of Rogers.
NON-IFRS 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-IFRS financial measures. A non-IFRS
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-IFRS financial measures are
not standardized; therefore, it may not be possible to compare
these financial measures with the non-IFRS 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-IFRS financial measures in
addition to, and in conjunction with, results presented in
accordance with IFRS. These non-IFRS 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-IFRS
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 and foreign exchange forward contracts 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 and foreign exchange forward
contracts.
- 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 earnings before interest, taxes, depreciation,
amortization and goodwill impairment.
- Adjusted EBITDA
is defined as adjusted results from operating activities adjusted
to add back depreciation and amortization expenses.
- Adjusted net
earnings is defined as net earnings adjusted for the adjustment to
cost of sales, goodwill impairment 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-IFRS
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-IFRS measures should not be considered in isolation, or
as a substitute for, analysis of our results as reported under
IFRS. Reconciliations of non-IFRS financial measures to the most
directly comparable IFRS financial measures are as follows:
RECONCILIATION OF NON-IFRS FINANCIAL
MEASURES TO IFRS FINANCIAL MEASURES
|
|
Q1 2024 |
Q1 2023 |
|
Consolidated results(In thousands of dollars) |
Sugar |
|
MapleProducts |
|
Total |
|
|
Sugar |
|
MapleProducts |
|
Total |
|
|
Gross margin |
36,490 |
|
8,154 |
|
44,644 |
|
|
36,038 |
|
5,153 |
|
41,191 |
|
| Total
adjustment to the cost of sales(1) |
(258 |
) |
(2,067 |
) |
(2,325 |
) |
|
1,623 |
|
(821 |
) |
802 |
|
|
Adjusted gross margin |
36,232 |
|
6,087 |
|
42,319 |
|
|
37,661 |
|
4,332 |
|
41,993 |
|
|
|
|
|
|
|
|
|
|
| Results from operating
activities |
21,025 |
|
5,085 |
|
26,110 |
|
|
24,341 |
|
1,943 |
|
26,284 |
|
| Total
adjustment to the cost of sales(1) |
(258 |
) |
(2,067 |
) |
(2,325 |
) |
|
1,623 |
|
(821 |
) |
802 |
|
|
Adjusted results from operating activities |
20,767 |
|
3,018 |
|
23,785 |
|
|
25,964 |
|
1,122 |
|
27,086 |
|
|
|
|
|
|
|
|
|
|
| Results from operating
activities |
21,025 |
|
5,085 |
|
26,110 |
|
|
24,341 |
|
1,943 |
|
26,284 |
|
| Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
5,275 |
|
1,660 |
|
6,935 |
|
|
4,712 |
|
1,717 |
|
6,429 |
|
|
EBITDA(1) |
26,300 |
|
6,745 |
|
33,045 |
|
|
29,053 |
|
3,660 |
|
32,713 |
|
|
|
|
|
|
|
|
|
|
| EBITDA(1 |
26,300 |
|
6,745 |
|
33,045 |
|
|
29,053 |
|
3,660 |
|
32,713 |
|
| Total
adjustment to the cost of sales(1) |
(258 |
) |
(2,067 |
) |
(2,325 |
) |
|
1,623 |
|
(821 |
) |
802 |
|
|
Adjusted EBITDA |
26,042 |
|
4,678 |
|
30,719 |
|
|
30,676 |
|
2,839 |
|
33,515 |
|
|
|
|
|
|
|
|
|
|
| Net earnings |
|
|
13,852 |
|
|
|
|
|
14,674 |
|
| Total adjustment to the cost
of sales(1) |
|
|
(2,325 |
) |
|
|
|
|
802 |
|
| Net change in fair value in
interest rate swaps(1) |
|
|
658 |
|
|
|
|
|
46 |
|
| Income
taxes on above adjustments |
|
|
428 |
|
|
|
|
|
(175 |
) |
|
Adjusted net earnings |
|
|
12,613 |
|
|
|
|
|
15,347 |
|
| Net earnings per share
(basic) |
|
|
0.13 |
|
|
|
|
|
0.14 |
|
|
Adjustment for the above |
|
|
(0.01 |
) |
|
|
|
|
0.01 |
|
|
Adjusted net earnings per share (basic) |
|
|
0.12 |
|
|
|
|
|
0.15 |
|
(1) See “Adjusted results” section
RECONCILIATION OF NON-IFRS FINANCIAL
MEASURES TO IFRS FINANCIAL MEASURES (CONTINUED)
| (In
thousands of dollars, except for volumesand per share
information) |
QUARTERS(1)(2) |
|
|
2024 |
|
2023 |
2022 |
|
|
First |
|
Fourth |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Second |
|
|
Gross margin |
44,644 |
|
41,192 |
|
41,685 |
|
41,658 |
|
41,191 |
|
28,472 |
|
24,948 |
|
33,899 |
|
| Total
adjustment to the cost of sales(2) |
(2,325 |
) |
(999 |
) |
(6,773 |
) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
|
Adjusted gross margin |
42,319 |
|
40,193 |
|
34,912 |
|
38,233 |
|
41,993 |
|
39,141 |
|
32,654 |
|
35,887 |
|
|
|
|
|
|
|
|
|
|
|
| Results from operating
activities |
26,110 |
|
22,815 |
|
24,008 |
|
21,856 |
|
26,284 |
|
(38,345 |
) |
8,822 |
|
15,499 |
|
| Total adjustment to the cost
of sales(2) |
(2,325 |
) |
(999 |
) |
(6,773 |
) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
|
Goodwill impairment |
- |
|
- |
|
- |
|
- |
|
- |
|
50,000 |
|
- |
|
- |
|
|
Adjusted results from operating activities |
23,785 |
|
21,816 |
|
17,235 |
|
18,431 |
|
27,086 |
|
22,324 |
|
16,528 |
|
17,487 |
|
|
|
|
|
|
|
|
|
|
|
| Results from operating
activities |
26,110 |
|
22,815 |
|
24,008 |
|
21,856 |
|
26,284 |
|
(38,345 |
) |
8,822 |
|
15,499 |
|
| Depreciation of property,
plant and equipment, amortization of intangible assets and
right-of-use assets |
6,935 |
|
6,753 |
|
6,515 |
|
6,589 |
|
6,429 |
|
6,628 |
|
6,580 |
|
6,530 |
|
|
Goodwill impairment |
- |
|
- |
|
- |
|
- |
|
- |
|
50,000 |
|
- |
|
- |
|
|
EBITDA |
33,045 |
|
29,568 |
|
30,523 |
|
28,445 |
|
32,713 |
|
18,283 |
|
15,402 |
|
22,029 |
|
|
|
|
|
|
|
|
|
|
|
| EBITDA |
33,045 |
|
29,568 |
|
30,523 |
|
28,445 |
|
32,713 |
|
18,283 |
|
15,402 |
|
22,029 |
|
| Total
adjustment to the cost of sales(2) |
(2,325 |
) |
(999 |
) |
(6,773 |
) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
|
Adjusted EBITDA |
30,720 |
|
28,569 |
|
23,750 |
|
25,020 |
|
33,515 |
|
28,952 |
|
23,108 |
|
24,017 |
|
|
|
|
|
|
|
|
|
|
|
| Net (loss) earnings |
13,852 |
|
11,876 |
|
14,177 |
|
11,062 |
|
14,674 |
|
(45,502 |
) |
3,138 |
|
8,570 |
|
| Total adjustment to the cost
of sales(2) |
(2,325 |
) |
(999 |
) |
(6,773 |
) |
(3,425 |
) |
802 |
|
10,669 |
|
7,706 |
|
1,988 |
|
| Goodwill impairment |
- |
|
- |
|
- |
|
- |
|
- |
|
50,000 |
|
- |
|
- |
|
| Net change in fair value in
interest rate swaps(2) |
658 |
|
201 |
|
(203 |
) |
479 |
|
46 |
|
(328 |
) |
(632 |
) |
(1,246 |
) |
| Income
taxes on above adjustments |
428 |
|
205 |
|
1,548 |
|
999 |
|
(175 |
) |
(2,678 |
) |
(1,793 |
) |
(190 |
) |
|
Adjusted net earnings |
12,613 |
|
11,283 |
|
8,749 |
|
9,115 |
|
15,347 |
|
12,161 |
|
8,419 |
|
9,122 |
|
(1) All quarters are 13 weeks
(2) See “Adjusted results” sectionCRITICAL
ACCOUNTING ESTIMATES
For the first quarter of fiscal 2024, there were no significant
changes in the critical accounting estimate as disclosed in our
Management’s Discussion and Analysis of the September 30, 2023
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 condensed interim financial
statements for the first quarter of fiscal 2024. 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
interim financial statements and to note 3 (q) of the 2023 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 period beginning on October 1, 2023 and
ended on December 30, 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:
- the estimated
impact of the recent labour disruption at our Vancouver sugar
refinery;
- demand for
refined sugar and maple syrup;
- sales volumes
for sugar and maple syrup;
- our Expansion
Project;
- future prices of
Raw #11;
- expected
inflationary pressures on costs;
- natural gas
costs;
- beet sugar
production forecast for our Taber facility;
- growth of the
maple syrup industry and the refined sugar industry;
- the level of
future dividends; and
- the status of
government regulations and investigations
Forward-looking statements are based on
estimates and assumptions made by us in light of our experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors that we believe are
appropriate and reasonable in the circumstances, 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/42b76842-2168-4f03-81c8-6473b7d6c2d3
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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