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Feb. 10, 2022, 7:01 a.m. EST

Roger Sugar Reports First Quarter 2022 Results, Lower Sales Volume from Market Volatility Resulted in Lower Adjusted EBITDA, Gross Margin increasing due to improved pricing

MONTREAL, Feb 10, 2022 (GLOBE NEWSWIRE via COMTEX) -- MONTREAL, Feb. 10, 2022 (GLOBE NEWSWIRE) -- Rogers Sugar Inc.'s ("RSI", "our," "we", "us" or "Rogers") /zigman2/quotes/208987350/delayed CA:RSI +0.98% today reported first quarter fiscal 2022 results with consolidated adjusted EBITDA of $26.1 million.

"We felt greater volatility in customer demand and experienced some unforeseen events impacting our supply chain in Western Canada in the last few weeks of the quarter, resulting in the postponement of anticipated shipments in both of our business segments, said Mike Walton, President and Chief Executive Officer of Rogers and Lantic Inc. We remain positive for our financial outlook for 2022, as we continue to build on improved gross margin, especially in our Sugar segment, and stable volume forecast for both of our segments for the remainder of the year. Finally, we are also pleased with the progress made on the processing of the current beet crop in Alberta, and we anticipate a production volume aligned with expectations for the first time in the last three years."

First Quarter 2022 Consolidated Highlights

(unaudited)
Q1 2022 Q1 2021
Financials ($000s)
Revenues 230,755 223,840
Adjusted gross margin [(1)] 35,800 36,452
Adjusted EBITDA [(1)] 26,062 27,647
Net earnings 17,226 13,773
per share (basic) 0.17 0.13
per share (diluted) 0.15 0.13
Adjusted net earnings [(1)] 10,957 12,248
Adjusted net earnings per share (basic) [(1)] 0.11 0.12
Trailing twelve months free cash flow [(1)] 41,122 39,149
Dividends per share 0.09 0.09
Volumes
Sugar (metric tonnes) 180,043 190,440
Maple Syrup (thousand pounds) 12,286 14,892

(1) See "Cautionary statement on Non-GAAP Measures" section of this press release for definition and reconciliation to GAAP measures.

  • Consolidated adjusted EBITDA for the first quarter of fiscal 2022 was $26.1 million, down $1.6 million from the same quarter last year, largely driven by lower adjusted EBITDA in the Maple segment;

  • Adjusted EBITDA in the Sugar segment was $22.6 million in the first quarter of fiscal 2022, largely in line with the same quarter last year as higher adjusted gross margin was offset by increased administration costs;

  • Sales volumes in the Sugar segment decreased by 10,397 metric tonnes to 180,043 metric tonnes in the first quarter, as lower industrial, consumer and export volumes were partly offset by higher liquid volume;

  • Sugar segment adjusted gross margin improved by $13.06 per metric tonne in the first quarter of 2022 compared to last year due to higher pricing, offsetting the unfavourable variance in sales volume over the same period;

  • Adjusted EBITDA in the Maple segment was $3.4 million in the first quarter, a decrease of $1.5 million from the same quarter last year largely as a result of lower sales volume, higher material, freight and packaging costs as well as higher compensation and employee benefits;

  • Maple segment volume decreased by 2,606,000 pounds to 12,286,000 pounds in the quarter, driven largely by lower demand and timing issues related to shipment delays;

  • Free cash flow for the trailing 12 months ended January 1, 2022 was $41.1 million, an increase of $2.0 million from the same period last year;

  • In the first quarter of 2022, we distributed $0.09 per share to our shareholders for a total amount of $9.3 million;

  • On February 10, 2022, the Board of Directors declared a quarterly dividend of $0.09 per share, payable on April 20, 2022.

Sugar

First Quarter 2022 Sugar Highlights

(unaudited)
Q1 2022 Q1 2021
Financials ($000s)
Revenues 175,907 159,459
Adjusted gross margin [(1)] 31,372 30,696
Per metric tonne ($/ mt) [ (1)] 174.25 161.18
Administration and selling expenses 9,113 7,268
Distribution costs 4,344 5,070
Adjusted EBITDA [(1)] 22,616 22,730
Volumes (metric tonnes)
Total volumes 180,043 190,440

(1) See "Cautionary statement on Non-GAAP Measures" section of this press release for definition and reconciliation to GAAP measures.

In the first quarter of fiscal 2022, revenue increased by $16,4 million compared to the same period last year, despite a reduction in sales volume. The increase was driven by higher prices for #11 world raw sugar, improved pricing from recent negotiations and higher by-product sales revenue. In the first quarter of 2022, the average price for #11 world raw sugar increased to US$0.1951 per pound from US$0.1464 per pound in the first quarter of 2021.

Sugar volume decreased by 10,397 metric tonnes in the first quarter of fiscal 2022 compared to the same quarter last year. Total domestic volume decreased during the current quarter as a reduction in consumer and industrial volumes was partly offset by an increase in liquid volume.

  • Consumer volume decreased due to lower demand from on-going volatility related to COVID-19, high inventory levels at retailers at the beginning of the period and disruption to our supply chain in western Canada caused by unfavourable weather resulting in rail and road closures for an extended period of time, which restricted our shipments for specialty sugar products across the country.

  • Industrial volume was impacted by delayed customer orders driven by COVID-19-related demand volatility, including unexpected plant closures in the latter part of December for some large customers.

  • These reductions were partly offset by the increase in liquid volume during the quarter, mainly due to the continued demand from existing customers.

As expected, export volume decreased from the same quarter last year, as the first quarter of last year included a one-time opportunistic quota under the ratified Canadian United States Mexico agreement ("CUSMA").

Adjusted gross margin increased to $31.4 million in the first quarter of 2022, up from $30.7 million in the same period of 2021. Adjusted gross margin was positively impacted by higher by-products net contribution of $2.7 million and improved customer pricing of $2.0 million; partially offset by the unfavourable impact of lower volume of $4.0 million.

On a per unit basis, adjusted gross margin for the first quarter was $174.25 per metric tonne, higher than the same quarter last year by $13.06 per metric tonne. The favourable variance was due to the increase in overall margin from increased pricing arising from recent negotiations with customers and greater by-product net contribution in the first quarter of 2022.

Adjusted EBITDA for the current quarter decreased by $0.1 million compared to the same period last year, largely as a result of higher administration and selling expenses, mainly due to a non-cash increase in the share-based compensation expense related to performance share units for senior management, largely driven by increased share price in the recent quarter, partly offset by higher adjusted gross margin and lower distribution costs.

Maple

First Quarter 2022 Maple Highlights

(unaudited)
Q1 2022 Q1 2021
Financials ($000s)
Revenues 54,848 64,381
Adjusted gross margin [(1)] 4,428 5,756
As a percentage of revenues (%) [ (1)] 8.1 % 8.9 %
Administration and selling expenses 2,373 2,330
Distribution costs 319 613
Adjusted EBITDA [(1)] 3,446 4,917
Volumes (thousand pounds)
Total volumes 12,286 14,892

(1) See "Cautionary statement on Non-GAAP Measures" section of this press release for definition and reconciliation to GAAP measures.

Revenues for the first quarter of the current fiscal year were $9.5 million lower than the same period last year due mainly to decreased demand from existing customers and timing issues caused by shipment delays due to global supply chain disruptions and carrier shortages for US shipments.

Adjusted gross margin for the current quarter was $1.3 million lower than the comparable period last year, largely driven by lower volume sold, higher material, freight and packaging costs as well as increased compensation costs and related employee benefits. Adjusted gross margin percentage for the first quarter of fiscal 2022 was 8.1%, a decrease of 80 basis points compared to the same quarter last year, due mainly to the market-based increase in costs mentioned above.

Adjusted EBITDA for the first quarter of fiscal 2022 decreased by $1.5 million due mainly to lower adjusted gross margin, as explained above.

OUTLOOK

The health and safety of our employees remains our top priority. We are closely following all COVID-19 public health authority recommendations and have enhanced safety protocols in place. To date our plants have operated without any disruption during the COVID-19 pandemic; however, the uncertainty and increased demand volatility make it difficult to estimate the impact on future sale volumes, operations and financial results. We are closely monitoring the situation and will continue to adapt quickly to the changing circumstances.

Despite lower than expected results in both of our segments in the first quarter, we remain optimistic for this year's results and we continue to expect improved financial performance in 2022 in both segments supported by stronger volume and improved margins in the next three quarters.

Sugar

We continue to expect the sugar segment to perform well in fiscal 2022. Underlying domestic demand remains strong across all customer segments supported by the renewal of key customer agreements and favourable pricing adjustments.

In Taber, the harvest season delivered the expected volume of sugar beets; the processing campaign is going as expected and we anticipate completing the slicing of the crop by the end of February. The overall sugar production is expected to yield approximately 120,000 metric tons of beet sugar.

Sales volume expectations remain unchanged and are expected to reach approximately 770,000 metric tonnes, representing a reduction of 9,500 metric tonnes compared to 2021. While we continue to anticipate the domestic volume to grow steadily at about 2%, export opportunities are not expected to be as strong as in 2021, resulting in a reduction in volume. Overall, we expect the following volumes variances for our customer segments:

  • Industrial, our largest segment, is expected to grow at 1% as demand for sugar-containing products remains steady both in Canada and the US.

  • Liquid volume is expected to deliver growth of approximately 2% to 3% driven by continued demand from existing customers.

  • Consumer volume is also expected to grow by 1%, a level aligned with the normalized growth we experienced pre-covid.

  • We anticipate selling less in the export markets in 2022, due to a less favourable market dynamics for high-tier sales.

Despite the reduction of total volume, favourable price adjustments are expected to improve profitability as compared to 2021.

Maintenance programs for the Montreal and Vancouver operating facilities are expected to follow the trend of previous years and are expected to result in a marginal increase in operating costs. For the Taber facility, a return to normal and an improvement in the quality of the sugar beet over 2021 is expected to yield improvement in operating costs.

Distribution costs are expected to increase overall by 5% to 10%, reflecting a higher market price for warehousing, rails and ground transportation.

Spending on capital projects is also expected to be similar to recent periods. For fiscal 2022, we anticipate spending approximately $25.0 million on various capital projects, with approximately a quarter allocated to return-on-investment projects.

Maple

For fiscal 2022, we continue to expect the Maple business segment to outperform our 2021 results, largely driven by improved sales margins, despite the lag in passing through increased costs experienced during the current quarter. We anticipate increased margin from new agreements negotiated with new and existing customers and volume to remain stable at approximately 52 million pounds.

In addition, we expect to continue to drive lower operating costs through ongoing optimization at our manufacturing facilities and efficiency improvements provided by the investments made in our facilities at Granby and Degelis.

Capital investments have been reduced significantly for the Maple segment since 2021, considering the expenditures incurred over the past few years that improved and increased our production capacity. We continue to expect steady growth in demand for Maple-related products, although we expect a tempering from the increase seen during the period of COVID-19.

See Cautionary statement on forward-looking information and NON-GAAP measure sections.

A full copy of Rogers first quarter 2022, including management's discussion and analysis and unaudited condensed consolidated interim financial statements, can be found at www.LanticRogers.com .

Conference Call and Webcast

Rogers will host a conference call to discuss its first quarter fiscal 2022 results on February 10, 2022 starting at 8:00a.m. ET. To participate, please dial 1-888-400-2425. A recording of the conference call will be accessible shortly after the conference, by dialing 1-800-770-2030, access code 9031006#. This recording will be available until February 24, 2022. A live audio webcast of the conference call will also be available via www.LanticRogers.com .

About Rogers Sugar

Rogers is a corporation established under the laws of Canada. The Corporation holds all of the common shares of Lantic and its administrative office is in Montréal, Québec. Lantic operates cane sugar refineries in Montreal, Québec and Vancouver, British Columbia, as well as the only Canadian sugar beet processing facility in Taber, Alberta. Lantic also operate a custom blending and packaging operation and distribution center in Toronto, Ontario. Lantic's sugar products are marketed under the "Lantic" trademark in Eastern Canada, and the "Rogers" trademark in Western Canada and include granulated, icing, cube, yellow and brown sugars, liquid sugars and specialty syrups. Lantic owns all of the common shares of TMTC and its head office is headquartered in Montréal, Québec. TMTC operates bottling plants in Granby, Dégelis and in St-Honore-de-Shenley, Québec and in Websterville, Vermont. TMTC's products include maple syrup and derived maple syrup products supplied under retail private label brands in over fifty countries and also sold under various brand names, such as TMTC, Uncle Luke's, Great Northern, Decacer and Highland Sugarworks.

For more information about Rogers please visit our website at www.LanticRogers.com .

Cautionary Statement Regarding forward-looking information

This report contains statements or information that are or may be "forward-looking statements" or "forward-looking information" within the meaning of applicable Canadian Securities laws. Forward-looking statements may include, without limitation, statements and information which reflect our current expectations with respect to future events and performance. Wherever used, the words "may," "will," "should," "anticipate," "intend," "assume," "expect," "plan," "believe," "estimate," and similar expressions and the negative of such expressions, identify forward-looking statements.

Although this is not an exhaustive list, we caution investors that statements concerning the following subjects are, or are likely to be, forward-looking statements:

  • the impact of the COVID-19 pandemic on our operations

  • future prices of raw sugar

  • natural gas costs

  • beet production forecasts

  • growth of the maple syrup industry and the refined sugar industry

  • the status of labour contracts and negotiations

  • the level of future dividends

  • the status of government regulations and investigations

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, including with respect to the continuity of our operations despite the COVID-19 pandemic, 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 our current 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 as a result of events or circumstances occurring after the date hereof, unless so required by law.

Cautionary Statement Regarding non-GAAP measures

In analyzing results, we supplement the use of financial measures that are calculated and presented in accordance with IFRS with a number of non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that excludes (includes) amounts, or is subject to adjustments that have the effect of excluding (including) amounts, that are included (excluded) in most directly comparable measures calculated and presented in accordance with IFRS. Non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with the non-GAAP financial measures of other companies having the same or similar businesses. We strongly encourage investors to review the unaudited condensed consolidated interim financial statements and publicly filed reports in their entirety, and not to rely on any single financial measure.

We use these non-GAAP financial measures in addition to, and in conjunction with, results presented in accordance with IFRS. These non-GAAP financial measures reflect an additional way of viewing aspects of the operations that, when viewed with the IFRS results and the accompanying reconciliations to corresponding IFRS financial measures, may provide a more complete understanding of factors and trends affecting our business. See "Non-GAAP measures" section at the end of the MD&A for the current quarter for additional information.

Financial Report Q1 2022

This Management's Discussion and Analysis ("MD&A") of Rogers Sugar Inc.'s ("Rogers", "RSI" or "our," "we", "us") dated February 10, 2022 should be read in conjunction with the unaudited condensed consolidated interim financial statements and related notes for the three-month period ended January 1, 2022, as well as the audited consolidated financial statements and MD&A for the year ended October 2, 2021. The quarterly unaudited condensed consolidated interim financial statements and any amounts shown in this MD&A were not reviewed nor audited by our external independent auditors. This MD&A refers to Rogers, Lantic Inc. ("Lantic") (Rogers and Lantic together referred as the "Sugar segment"), The Maple Treat Corporation ("Maple Treat") and Highland Sugarworks Inc. ("Highland") (the latter two companies together referred to as "TMTC" or the "Maple segment").

Management is responsible for preparing the MD&A. This MD&A has been reviewed and approved by the Audit Committee of Rogers and its Board of Directors.

OUR BUSINESS

Rogers has a long history of providing high quality sugar products to the Canadian market and has been operating since 1888.

Lantic, Rogers wholly owned subsidiary, operates cane sugar refineries in Montreal, Quebec and Vancouver, British Columbia, as well as the only Canadian sugar beet processing facility in Taber, Alberta. Lantic's sugar products are marketed under the "Lantic" trademark in Eastern Canada, and the "Rogers" trademark in Western Canada and include granulated, icing, cube, yellow and brown sugars, liquid sugars and specialty syrups. We also operate a custom blending and packaging operation and distribution center in Toronto, Ontario.

Maple Treat operates bottling plants in Granby, Degelis and in St-Honore-de-Shenley, Quebec and in Websterville, Vermont. Maple Treat's products include maple syrup and derived maple syrup products supplied under retail private label brands in over fifty countries and are sold under various brand names, such as TMTC, Uncle Luke's, Great Northern, Decacer and Highland Sugarworks.

Our business has two distinct segments - Sugar - which includes refined sugar and by-products and Maple - which includes maple syrup and maple derived products.

UPDATE ON COVID-19

The ongoing COVID-19 pandemic has negatively impacted the global economy, disrupted financial markets and supply chain, significantly restricted business travel and interrupted business activity.

Our business is considered an essential service by the government and as such, our plants have continued to operate at usual capacity. We have established extensive protection measures and protocols to ensure the health and safety of our employees. COVID-19 could have a material effect on our business as it relates to customer demand, supply and delivery chain, operations, labour availability, financial market volatility, pension and benefits liabilities and other economic fundamentals. For the first quarter of 2022, we incurred direct costs amounting to $0.3 million in relation to COVID-19. These costs were largely due to increased health and safety measures implemented across all production facilities.

The effect of COVID-19 on our business may continue for an extended period and the ultimate impact will depend on future developments that are uncertain and cannot be predicted, including and without limitations, the duration and severity of the pandemic, the duration of the government support measures, the effectiveness of the actions taken to contain and treat the disease and the length of time it takes for normal economic and operating conditions to resume.

BUSINESS HIGHLIGHTS

  • Consolidated adjusted EBITDA for the first quarter of fiscal 2022 was $26.1 million, down $1.6 million from the same quarter last year, largely driven by lower adjusted EBITDA in the Maple segment;

  • Adjusted EBITDA in the Sugar segment was $22.6 million in the first quarter of fiscal 2022, largely in line with the same quarter last year as higher adjusted gross margin was offset by increased administration costs;

  • Sales volumes in the Sugar segment decreased by 10,397 metric tonnes to 180,043 metric tonnes in the first quarter, as lower industrial, consumer and export volumes were partly offset by higher liquid volume;

  • Sugar segment adjusted gross margin improved by $13.06 per metric tonne in the first quarter of 2022 compared to last year due to higher pricing, offsetting the unfavourable variance in sales volume over the same period;

  • Adjusted EBITDA in the Maple segment was $3.4 million in the first quarter, a decrease of $1.5 million from the same quarter last year largely as a result of lower sales volume, higher material, freight and packaging costs as well as higher compensation and employee benefits;

  • Maple segment volume decreased by 2,606,000 pounds to 12,286,000 pounds in the quarter, driven largely by lower demand and timing issues related to shipment delays;

  • Free cash flow for the trailing 12 months ended January 1, 2022 was $41.1 million, an increase of $2.0 million from the same period last year;

  • In the first quarter of 2022, we distributed $0.09 per share to our shareholders for a total amount of $9.3 million;

  • On February 10, 2022, the Board of Directors declared a quarterly dividend of $0.09 per share, payable on April 20, 2022.

SELECTED FINANCIAL DATA AND HIGHLIGHTS

(unaudited)

(In thousands of dollars, except volume and per share information)
Q1 2022 Q1 2021
Sugar (metric tonnes) 180,043 190,440
Maple syrup (000 pounds) 12,286 14,892
Total revenues 230,755 223,840
Gross Margin 43,486 38,613
Adjusted gross margin [(1)] 35,800 36,452
Results from operating activities 27,337 23,332
Adjusted results from operating activities [(1)] 19,651 21,171
Adjusted EBITDA [(1)] 26,062 27,647
Net earnings 17,226 13,773
per share (basic) 0.17 0.13
per share (diluted) 0.15 0.13
Adjusted net earnings [(1)] 10,957 12,248
Adjusted net earnings per share (basic) [(1)] 0.11 0.12
Trailing twelve months free cash flow [(1)] 41,122 39,149
Dividends per share 0.09 0.09

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures.

Revenue and Adjusted EBITDA: https://www.globenewswire.com/NewsRoom/AttachmentNg/b22477a8-7ca1-46bf-8665-c354f9f51863

Adjusted Net Earnings and Free Cash Flow: https://www.globenewswire.com/NewsRoom/AttachmentNg/3155dbe3-7ec8-48d8-9bc8-826d9c18e74d

Adjusted results

In the normal course of business, we use derivative financial instruments consisting of sugar futures, foreign exchange forward contracts, natural gas futures and interest rate swaps. We have designated our natural gas futures and our interest rate swap agreements entered into in order to protect us against natural gas prices and interest rate fluctuations as cash flow hedges. Derivative financial instruments pertaining to sugar futures and foreign exchange forward contracts are marked-to-market at each reporting date and are charged to the consolidated statement of earnings. The unrealized gains/losses related to natural gas futures and interest rate swaps qualified under hedged accounting are accounted for in other comprehensive income. The amount recognized in other comprehensive income is removed and included in net earnings under the same line item in the 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 meaningful to management, investors, analysts, and any other interested parties when financial results are adjusted by the gains/losses from financial derivative instruments. These adjusted financial results provide a more complete understanding of factors and trends affecting our business. This measurement is a non-GAAP measurement. See "Non-GAAP measures" section.

We use the non-GAAP adjusted results of the operating company to measure and to evaluate the performance of the business through our adjusted gross margin, adjusted results from operating activities, adjusted EBITDA, adjusted net earnings, adjusted net earnings per share and trailing twelve months free cash flow. In addition, we believe that these measures are important to our investors and parties evaluating our performance and comparing such performance to past results. We also use adjusted gross margin, adjusted EBITDA, adjusted results from operating activities and adjusted net earnings when discussing results with the Board of Directors, analysts, investors, banks and other interested parties. See "Non-GAAP measures" section.

OUR RESULTS ARE ADJUSTED AS FOLLOWS:

Income (loss)
(In thousands of dollars)
Q1 2022 Q1 2021
Sugar Maple
Products
Total Sugar Maple
Products
Total
Mark-to-market on:
Sugar futures contracts 123 - 123 (421 ) - (421 )
Foreign exchange forward contracts (342 ) 136 (206 ) 3,296 1,098 4,394
Total mark-to-market adjustment on derivatives (219 ) 136 (83 ) 2,875 1,098 3,973
Cumulative timing differences 7,653 116 7,769 (1,229 ) (583 ) (1,812 )
Total adjustment to costs of sales 7,434 252 7,686 1,646 515 2,161

Fluctuations in the mark-to-market adjustment on derivatives are due to the price movements in #11 world raw sugar and foreign exchange variations.

We recognize cumulative timing differences, as a result of mark-to-market gains or losses, only when sugar is sold to a customer. The gains or losses on sugar and related foreign exchange paper transactions are largely offset by corresponding gains or losses from the physical transactions, namely sale and purchase contracts with customers and suppliers.

The above-described adjustments are added to or deducted from the mark-to-market results to arrive at the total adjustment to cost of sales. For the first quarter of the current year, the total cost of sales adjustment is a gain of $7.7 million to be deducted from the consolidated results versus a gain of $2.2 million to be deducted from the consolidated results for the comparable quarter last year.

See the "Non-GAAP measures" section for more information on these adjustments.

SEGMENTED INFORMATION

Segmented Results
(In thousands of dollars)
Q1 2022 Q1 2021
Sugar Maple
Products
Total Sugar Maple
Products
Total
Revenues 175,907 54,848 230,755 159,459 64,381 223,840
Gross margin 38,806 4,680 43,486 32,342 6,271 38,613
Administration and selling expenses 9,113 2,373 11,486 7,268 2,330 9,598
Distribution costs 4,344 319 4,663 5,070 613 5,683
Results from operating activities 25,349 1,988 27,337 20,004 3,328 23,332
Adjustment to cost of sales [(] [2] [)] (7,434 ) (252 ) (7,686 ) (1,646 ) (515 ) (2,161 )
Adjusted Gross margin [(1)] 31,372 4,428 35,800 30,696 5,756 36,452
Adjusted results from operating activities [(1)] 17,915 1,736 19,651 18,358 2,813 21,171
Adjusted EBITDA [(1)] 22,616 3,446 26,062 22,730 4,917 27,647
Additional information:
Additions to property, plant and equipment and intangible assets, net of disposals 3,993 219 4,212 6,089 111 6,200
Additions to right-of-use assets 8,167 - 8,167 354 - 354

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures
(2) See "Adjusted results" section

Sugar

REVENUES

Q1 2022 Q1 2021 D
(In thousands of dollars) 175,907 159,459 16,448

Sugar Volume Variance and Sugar Volumes: https://www.globenewswire.com/NewsRoom/AttachmentNg/2f72e09e-3ccb-4990-81c4-e283f008c133

In the first quarter of fiscal 2022, revenue increased by $16.4 million compared to the same period last year, despite a reduction in sales volume. The increase was driven by higher prices for #11 world raw sugar, improved pricing from recent negotiations and higher by-product sales revenue. In the first quarter of 2022, the average price for #11 world raw sugar increased to US$0.1951 per pound from US$0.1464 per pound in the first quarter of 2021.

Sugar volume decreased by 10,397 metric tonnes in the first quarter of fiscal 2022 compared to the same quarter last year. Total domestic volume decreased during the current quarter as a reduction in consumer and industrial volumes was partly offset by an increase in liquid volume.

  • Consumer volume decreased due to lower demand from on-going volatility related to COVID-19, high inventory levels at retailers at the beginning of the period and disruption to our supply chain in western Canada caused by unfavourable weather resulting in rail and road closures for an extended period of time, which restricted our shipments for specialty sugar products across the country.

  • Industrial volume was impacted by delayed customer orders driven by COVID-19-related demand volatility, including unexpected plant closures in the latter part of December for some large customers.

  • These reductions were partly offset by the increase in liquid volume during the quarter, mainly due to the continued demand from existing customers.

As expected, export volume decreased from the same quarter last year, as the first quarter of last year included a one-time opportunistic quota under the ratified Canadian United States Mexico agreement ("CUSMA").

GROSS MARGIN

Q1 2022 Q1 2021 D
(In thousands of dollars, except per metric tonne information)
Gross margin 38,806 32,342 6,464
Total adjustment to cost of sales [(2)] (7,434 ) (1,646 ) (5,788 )
Adjusted gross margin [(1)] 31,372 30,696 676
Adjusted gross margin per metric tonne [(1) ] 174.25 161.18 13.06
Included in Gross margin:
Depreciation of property, plant and equipment and
right-of-use assets
4,072 3,776 296

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures
(2) See "Adjusted results" section

Gross margin was $38.8 million for the current quarter and included a gain of $7.4 million for the mark-to-market of derivative financial instruments. For the same period last year, gross margin was $32.3 million with a mark-to-market gain of $1.6 million.

Adjusted gross margin increased to $31.4 million in the first quarter of 2022, up from $30.7 million in the same period of 2021. Adjusted gross margin was positively impacted by higher by-products net contribution of $2.7 million and improved customer pricing of $2.0 million; partially offset by the unfavourable impact of lower volume of $4.0 million.

On a per unit basis, adjusted gross margin for the first quarter was $174.25 per metric tonne, higher than the same quarter last year by $13.06 per metric tonne. The favourable variance was due to the increase in overall margin from increased pricing arising from recent negotiations with customers and greater by-product net contribution in the first quarter of 2022.

Adjusted Gross Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/74a0fd3e-94bd-4de1-b1fb-c2c6eaccdb26

OTHER EXPENSES

Q1 2022 Q1 2021 D
(In thousands of dollars)
Administration and selling expenses 9,113 7,268 1,845
Distribution costs 4,344 5,070 (726 )
Included in Administration and selling expenses:
Depreciation of property, plant and equipment and
right-of-use assets
211 222 (11 )
Included in Distribution costs:
Depreciation of right-of-use assets
418 374 44

In the first quarter of fiscal 2022, administration and selling expenses increased by $1.8 million compared to the same quarter last year, mainly due to an increase in the share-based compensation expense related to performance share units for senior management. The non-cash increase of this provision was largely driven by increased share price in the recent quarter. Distribution costs decreased by $0.7 million as costs associated with reconfiguring our supply chain to serve our customers were lower compared to the same quarter last year.

RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED EBITDA

Q1 2022 Q1 2021 D
(In thousands of dollars)
Results from operating activities 25,349 20,004 5,345
Total adjustment to cost of sales [(2)] (7,434 ) (1,646 ) (5,788 )
Adjusted results from operating activities [(1)] 17,915 18,358 (443 )
Depreciation of property, plant and equipment, right-of-use assets, and amortization of intangible assets 4,701 4,372 329
Adjusted EBITDA [(1)] 22,616 22,730 (114 )

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures
(2) See "Adjusted results" section

Results from operating activities for the first quarter of fiscal 2022 were $25.3 million, an increase of $5.3 million from the same period last year. These results included gains from the mark-to-market of derivative financial instruments, as well as timing differences in the recognition of any gains and losses on the liquidation of derivative instruments. In addition, higher non-cash depreciation and amortization expense mainly from increased asset retirement obligations had a negative impact on the results from operating activities.

Adjusted results from operating activities in the first quarter of fiscal 2022 were $0.4 million lower than the same period last year, mainly due to higher administration and selling expenses, partly offset by higher adjusted gross margin and lower distribution costs as explained above.

Adjusted EBITDA for the current quarter decreased by $0.1 million compared to the same period last year, largely as a result of lower adjusted results from operation, as explained above.

Maple Products

REVENUES

Q1 2022 Q1 2021 D
(In thousands of dollars, except volume)
Volume (000 pounds) 12,286 14,892 (2,606 )
Revenues 54,848 64,381 (9,533 )

Maple Volumes and Adjusted Gross Margin: https://www.globenewswire.com/NewsRoom/AttachmentNg/e148dd5d-4ccd-47dd-bfa7-a1953ab7b027

Revenues for the first quarter of the current fiscal year were $9.5 million lower than the same period last year due mainly to decreased demand from existing customers and timing issues caused by shipment delays due to global supply chain disruptions and carrier shortages for US shipments.

GROSS MARGIN

Q1 2022 Q1 2021 D
(In thousands of dollars, except adjusted gross margin rate information)
Gross margin 4,680 6,271 (1,591 )
Total adjustment to cost of sales [(2)] (252 ) (515 ) 263
Adjusted gross margin [(1)] 4,428 5,756 (1,328 )
Adjusted gross margin percentage [(1)] 8.1 % 8.9 % -0.8 %
Included in Gross margin:
Depreciation of property, plant and equipment and
right-of-use assets
839 992 (153 )

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures
(2) See "Adjusted results" section

Gross margin was $4.7 million for the first three months of the current fiscal year, including a gain of $0.3 million for the mark-to-market of derivative financial instruments. For the same period last year, gross margin was $6.3 million with a mark-to-market gain of $0.5 million.

Adjusted gross margin for the current quarter was $1.3 million lower than the comparable period last year, largely driven by lower volume sold, higher material, freight and packaging costs as well as increased compensation costs and related employee benefits. Adjusted gross margin percentage for the first quarter of fiscal 2022 was 8.1%, a decrease of 80 basis points compared to the same quarter last year, due mainly to the market-based increase in costs mentioned above.

Other expenses

Q1 2022 Q1 2021 D
(In thousands of dollars)
Administration and selling expenses 2,373 2,330 43
Distribution costs 319 613 (294 )
Included in Administration and selling expenses:
Amortization of intangible assets
871 865 6

Administration and selling expenses for the first quarter of the current fiscal year remained largely unchanged compared to the same period last year. Distribution costs decreased by $0.3 million in the current quarter compared to the same quarter last year, due mainly to a reduction in net freight costs attributable to lower volume sold.

Results from operating activities and Adjusted EBITDA

Q1 2022 Q1 2021 D
(In thousands of dollars)
Results from operating activities 1,988 3,328 (1,340 )
Total adjustment to cost of sales [(2)] (252 ) (515 ) 263
Adjusted results from operating activities [(1)] 1,736 2,813 (1,077 )
Non-recurring expenses:
Other one-time non-recurring items - 247 (247 )
Depreciation and amortization 1,710 1,857 (147 )
Adjusted EBITDA [(1)] 3,446 4,917 (1,471 )

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures
(2) See "Adjusted results" section

Results from operating activities for the first quarter of fiscal 2022 decreased to $2.0 million, compared to $3.3 million in the same period last year. These results included gains from the mark-to-market of derivative financial instruments, as well as timing differences in the recognition of any gains and losses on the liquidation of derivative instruments.

Certain non-cash items and non-recurring expenses had an impact on the results from operating activities. As such, we believe that the Maple segment's financial results are more meaningful to management, investors, analysts, and any other interested parties when financial results are adjusted for the above-mentioned items.

Adjusted results from operating activities for the current quarter of 2022 were $1.1 million lower than the comparable period last year, due to lower adjusted gross margin, partially offset by lower distribution costs, as explained above.

Adjusted EBITDA for the first quarter of fiscal 2022 decreased by $1.5 million due mainly to lower adjusted results from operating activities, as explained above.

OUTLOOK

The health and safety of our employees remains our top priority. We are closely following all COVID-19 public health authority recommendations and have enhanced safety protocols in place. To date our plants have operated without any disruption during the COVID-19 pandemic; however, the uncertainty and increased demand volatility make it difficult to estimate the impact on future sale volumes, operations and financial results. We are closely monitoring the situation and will continue to adapt quickly to the changing circumstances.

Despite lower than expected results in both of our segments in the first quarter, we remain optimistic for this year's results and we continue to expect improved financial performance in 2022 in both segments supported by stronger volume and improved margins in the next three quarters.

Sugar

We continue to expect the sugar segment to perform well in fiscal 2022. Underlying domestic demand remains strong across all customer segments supported by the renewal of key customer agreements and favourable pricing adjustments.

In Taber, the harvest season delivered the expected volume of sugar beets; the processing campaign is going as expected and we anticipate completing the slicing of the crop by the end of February. The overall sugar production is expected to yield approximately 120,000 metric tons of beet sugar.

Sales volume expectations remain unchanged and are expected to reach approximately 770,000 metric tonnes, representing a reduction of 9,500 metric tonnes compared to 2021. While we continue to anticipate the domestic volume to grow steadily at about 2%, export opportunities are not expected to be as strong as in 2021, resulting in a reduction in volume. Overall, we expect the following volumes variances for our customer segments:

  • Industrial, our largest segment, is expected to grow at 1% as demand for sugar-containing products remains steady both in Canada and the US.

  • Liquid volume is expected to deliver growth of approximately 2% to 3% driven by continued demand from existing customers.

  • Consumer volume is also expected to grow by 1%, a level aligned with the normalized growth we experienced pre-covid.

  • We anticipate selling less in the export markets in 2022, due to a less favourable market dynamics for high-tier sales.

Despite the reduction of total volume, favourable price adjustments are expected to improve profitability as compared to 2021.

Maintenance programs for the Montreal and Vancouver operating facilities are expected to follow the trend of previous years and are expected to result in a marginal increase in operating costs. For the Taber facility, a return to normal and an improvement in the quality of the sugar beet over 2021 is expected to yield improvement in operating costs.

Distribution costs are expected to increase overall by 5% to 10%, reflecting a higher market price for warehousing, rails and ground transportation.

Spending on capital projects is also expected to be similar to recent periods. For fiscal 2022, we anticipate spending approximately $25.0 million on various capital projects, with approximately a quarter allocated to return-on-investment projects.

Maple Products

For fiscal 2022, we continue to expect the Maple business segment to outperform our 2021 results, largely driven by improved sales margins, despite the lag in passing through increased costs experienced during the current quarter. We anticipate increased margin from new agreements negotiated with new and existing customers and volume to remain stable at approximately 52 million pounds.

In addition, we expect to continue to drive lower operating costs through ongoing optimization at our manufacturing facilities and efficiency improvements provided by the investments made in our facilities at Granby and Degelis.

Capital investments have been reduced significantly for the Maple segment since 2021, considering the expenditures incurred over the past few years that improved and increased our production capacity. We continue to expect steady growth in demand for Maple-related products, although we expect a tempering from the increase seen during the period of COVID-19.

See "Forward Looking Statements" section and "Risks and Uncertainties" section.

CONSOLIDATED RESULTS AND SELECTED FINANCIAL INFORMATION

Q1 2022 Q1 2021
(unaudited)
(In thousands of dollars, except volume and per share information)
Sugar (metric tonnes) 180,043 190,440
Maple syrup (000 pounds) 12,286 14,892
Total revenues 230,755 223,840
Gross margin 43,486 38,613
Adjusted Gross Margin [(1)] 35,800 36,452
Results from operating activities 27,337 23,332
Adjusted results from operating activities [(1)] 19,651 21,171
Adjusted EBITDA [(1)] 26,062 27,647
Net finance costs 4,417 4,696
Income tax expense 5,694 4,863
Net earnings 17,226 13,773
per share (basic) 0.17 0.13
per share (diluted) 0.15 0.13
Adjusted net earnings [(1)] 10,957 12,248
per share (basic) [(1)] 0.11 0.12
Dividends per share 0.09 0.09

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures

Total revenues

Revenues increased by $6.9 million for the first quarter of fiscal 2022 compared to the same quarter last year. The increase in revenue for the quarter was mainly attributable to higher pricing and higher by-product sales in the Sugar segment, partially offset by lower sales volume in the Sugar and Maple segments.

Gross margin

Excluding the mark-to-market of derivative financial instruments, adjusted gross margin for the first quarter of the current year decreased by $0.7 million, mainly as a result of lower adjusted gross margin from the Maple segment offset by higher adjusted gross margin from the Sugar segment. For the Sugar segment, the adjusted gross margin per metric tonne for the current quarter was higher by $13.06 per metric tonne. For the Maple segment, the adjusted gross margin percentage decreased by 80 basis points for the quarter when compared to the same period last year.

Results from operating activities

Excluding the mark-to-market of derivative financial instruments, adjusted results from operating activities for the current quarter amounted to $19.7 million compared to $21.2 million in the same quarter last year, a decrease of $1.5 million. The reduction in the current quarter was mainly driven by lower contribution from both segments, as explained previously.

Net finance costs

Q1 2022 Q1 2021 D
(In thousands of dollars)
Interest expense on convertible unsecured subordinated debentures 2,050 2,038 12
Interest on revolving credit facility 1,286 1,712 (426 )
Interest on senior guaranteed notes 896 - 896
Amortization of deferred financing fees 306 296 10
Net change in fair value of interest rate swaps (594 ) - (594 )
Other interest expense 473 650 (177 )
Net finance costs 4,417 4,696 (279 )

For the first quarter of the current year, net finance costs were $0.3 million lower than the comparable period last year, due mainly to the favourable impact of changes in fair value related to interest rate swaps contracts and lower average interest cost on the revolving credit facility from lower balance and lower average interest rate. This reduction was partially offset by additional interest expense on the senior guaranteed note issued during the third quarter of 2021.

Other interest expense pertains mainly to interest payable to the Producteurs et Productrices Acericoles du Quebec ("PPAQ") on syrup purchases, in accordance with the PPAQ payment terms and interest accretion on discounted lease obligations.

Taxation

Q1 2022 Q1 2021 D
(In thousands of dollars)
Current 6,719 4,776 1,943
Deferred (1,025 ) 87 (1,112 )
Income tax expense 5,694 4,863 831

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 depreciation claimed for tax purposes and depreciation amounts recognized for financial reporting purposes, employee future benefits and derivative financial instruments. Deferred income tax assets and liabilities are measured using the enacted or substantively enacted tax rates anticipated to apply to income in the years in which temporary differences are expected to be realized or reversed. The effect of a change in income tax rates on future income taxes is recognized in income in the period in which the change occurs.

Net earnings

Net earnings in the first quarter of fiscal 2022 were $3.5 million higher than the comparable period last year. This increase was mainly attributable to a non cash favourable variance in the mark-to-market of derivative financial instruments associated with sugar futures contracts and foreign exchange forward contracts, partially offset by higher income tax expenses.

Adjusted net earnings in the first quarter of fiscal 2022 were $1.3 million lower than the comparable period last year. This decrease was mainly attributable to lower adjusted results from operating activities from both segments.

Summary of Quarterly Results

The following is a summary of selected financial information of the unaudited condensed consolidated interim financial statements and non-GAAP measures of RSI for the last eight quarters:

(In thousands of dollars, except for volumes
and per share information)
QUARTERS [(2)]
2022 2021 2020
First Fourth Third Second First Fourth Third Second
Sugar volumes (MT) 180,043 214,753 190,563 183,749 190,440 225,396 172,054 175,226
Maple products volumes ('000 pounds) 12,286 11,678 11,471 14,214 14,892 13,181 14,313 12,893
Total revenues 230,755 243,231 210,931 215,929 223,840 246,212 206,147 199,126
Gross margin 43,486 39,616 30,064 31,451 38,613 37,890 29,873 19,390
Adjusted gross margin [(] [1] [)] 35,800 31,020 25,932 27,407 36,452 40,065 25,915 23,612
Results from operations 27,337 26,952 15,062 19,151 23,332 22,829 12,372 6,058
Adjusted results from operations [(] [1] [)] 19,651 18,356 10,930 15,107 21,171 25,004 8,414 10,280
Adjusted EBITDA [(1)] 26,062 24,786 17,214 21,375 27,647 31,231 14,279 16,522
Net earnings (loss) 17,226 16,140 6,836 10,778 13,773 12,952 5,538 965
Per share - basic 0.17 0.16 0.07 0.10 0.13 0.13 0.05 0.01
Per share - diluted 0.15 0.15 0.07 0.10 0.13 0.12 0.05 0.01
Adjusted net earnings [(1)] 10,957 9,620 4,247 7,751 12,248 14,551 2,560 4,036
Per share - basic 0.11 0.09 0.04 0.07 0.12 0.14 0.02 0.04
Per share - diluted 0.10 0.09 0.04 0.07 0.11 0.14 0.02 0.04
Sugar - Adjusted gross margin rate per MT [(1) ] 174.25 121.16 113.95 118,60 161.18 157.51 120.45 109.63
Maple - Adjusted gross margin percentage [(] [1] [)] 8.1 % 9.7 % 8.5 % 9.4 % 8.9 % 7.9 % 8.4 % 7.9 %

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures
(2) All quarters are 13 weeks with the exception of the fourth quarter of 2020 which is 14 weeks

Historically the first quarter (October to December) of the fiscal year is the best quarter of the sugar segment for adjusted gross margins and adjusted net earnings due to the favourable sales mix associated with an increased proportion of consumer sales during that period of the year. At the same time, the second quarter (January to March) historically has the lowest volumes as well as an unfavourable customer mix, resulting in lower revenues, adjusted gross margins and adjusted net earnings.

Usually, there is minimal seasonality in the Maple products segment. However, since the third quarter of fiscal 2020, we experienced volatility in sales volume partially attributable to the pandemic.

Financial condition


(In thousands of dollars) January 1, 2022 January 2, 2021 October 2, 2021
Total assets $ 892,366 $ 863,044 $ 879,930
Total liabilities 568,214 589,291 560,972

The increase in total assets in the current fiscal quarter compared to the same quarter prior year is mainly due to higher inventory of $38.2 million and higher property, plant and equipment of $9.0 million, partially offset by a reduction of trade receivable of $10.3 million and reduction in cash of $6.9 million.

Total liabilities for the current fiscal quarter decreased by $21.1 million compared to the same quarter last year due mainly to a reduction in the revolving credit facility balance of $89 million, in employee benefits liabilities of $ 29.8 million and in trade and other payables of $18.6 million. This variance was partially offset by the senior guaranteed notes issued in April 2021 of $98.8 million and by an increase in deferred taxes liabilities of $11.5 million and lease obligations of $6.4 million.

Liquidity

Cash flow generated by Lantic is mainly paid to Rogers by way of interest on the subordinated notes of Lantic held by Rogers, after taking a reasonable reserve for capital expenditures, debt reimbursement and working capital. The cash received by Rogers is used to pay administrative expenses, interest on the convertible debentures, income taxes and dividends to its shareholders. Lantic had no restrictions on distributions of cash arising from the compliance of financial covenants for the year.

Q1 2022 Q1 2021
(In thousands of dollars)
Net cash flow from operating activities (35,361 ) (4,724 )
Cash flow from financing activities 25,407 16,983
Cash flow used in investing activities (2,838 ) (4,381 )
Effect of changes in exchange rate on cash 16 (44 )
Net increase (decrease) in cash (12,776 ) 7,834

Cash flow from operating activities for the current quarter decreased by $30.6 million compared to the same period last year, due mainly to an increase in inventory of $38.4 million and a decrease in trade and other payable of $7.9 millions, partially offset by a decrease of trade and other receivables of $11.6 million.

Cash flow from financing activities was higher by $8.4 million for the current quarter compared to the same quarter last year due mainly to a higher increase in borrowings from the revolving credit facility and the bank overdraft of $7.8 millions.

The cash outflow used in investing activities decreased by $ 1.5 million in the current quarter compared to the same period last year due mainly to the timing of capital expenditures.

In order to provide additional information, we believe it is appropriate to measure free cash flow that is generated by our operations. Free cash flow is a non-GAAP measure and is defined as cash flow from operations excluding changes in non-cash working capital, mark-to-market and derivative timing adjustments and financial instruments' non-cash amounts, and including capital expenditures, net of value added capital expenditures, and the payment of lease obligation.

Free cash flow

Trailing twelve months
(In thousands of dollars) 2022 2021
Cash flow from operations 47,941 45,767
Adjustments:
Changes in non-cash working capital 45,752 8,518
Mark-to-market and derivative timing adjustments (24,601 ) 364
Amortization of transitional balances - (218 )
Financial instruments non-cash amount (5,491 ) 5,503
Capital expenditures and intangible assets (23,135 ) (26,185 )
Value added capital expenditures 5,487 10,478
Payment of leases obligation (4,831 ) (5,078 )
Free cash flow [(1)] 41,122 39,149
Declared dividends 37,318 37,275
Share repurchased - (5,473 )

(1) See "Non-GAAP Measures" section for definition and reconciliation to GAAP measures.

Free Cash Flow: https://www.globenewswire.com/NewsRoom/AttachmentNg/2f8b23de-c663-4608-ae4a-33a3b1fc7692

Free cash flow for the trailing twelve months ending on January 1, 2022 amounted to $41.1 million, representing an increase of $2.0 million compared to the same period last year. This increase in free cash flow was mainly due to lower interest paid of $3.1 million and an increase in EBITDA of $5.6 million, excluding non cash items related to future pension liabilities included in the Montreal collective agreement and senior management compensation related to our performance share units program. This variance was partially offset by an increase in income tax payments and higher capital expenditures net of value added capital expenditures.

Capital and intangible assets expenditures, net of value added capital expenditures, increased by $1.9 million compared to last year's rolling twelve months due mainly to timing in spending. Free cash flow is not reduced by value added capital expenditures, as these projects are not necessary for the operation of the plants but are undertaken because of the operational savings that are realized once the projects are completed.

The Board of Directors declared a quarterly dividend of 9.0 cents per common share every quarter, totalling 36.0 cents for both trailing twelve months periods.

Changes in non-cash operating working capital represent year-over-year movements in current assets, such as accounts receivable and inventories, and current liabilities, such as accounts payable. Movements in these accounts are due mainly to timing in the collection of receivables, receipts of raw sugar and payment of liabilities. Increases or decreases in such accounts are due to timing issues and therefore do not constitute free cash flow. Such increases or decreases are financed from available cash or from our available credit facility. Increases or decreases in bank indebtedness are also due to timing issues from the above and therefore do not constitute available free cash flow.

The combined impact of the mark-to-market and derivative timing adjustments, amortization of transitional balances and financial instruments non-cash amount of $30.1 million for the current rolling twelve months does not represent cash items as these contracts will be settled when the physical transactions occur, which is the reason for the adjustment to free cash flow.

Contractual obligations

There are no material changes in the contractual obligations table disclosed in the Management's Discussion and Analysis of the October 2, 2021 Annual Report.

As at January 1, 2022, Lantic had commitments to purchase a total of 984,000 metric tonnes of raw sugar, of which 282,768 metric tonnes had been priced for a total dollar commitment of $163.9 million.

Capital resources

Lantic has a total of $200 million of available working capital under the revolving credit facility, which matures on November 23, 2026, from which it can borrow at prime rate, LIBOR rate or under bankers' acceptances, plus 20 to 250 basis points, based on achieving certain financial ratios. As at January 1, 2022, a total of $523.5 million of assets have been pledged as security for the revolving credit facility, compared to $485.7 million as at January 2, 2021; including trade receivables, inventories and property, plant and equipment.

As at January 1, 2022, $136.0 million had been drawn from the revolving credit facility and $2.9 million in cash was also available.

Cash requirements for working capital and other capital expenditures are expected to be paid from available cash resources and funds generated from operations. We believe that the unused credit under the revolving credit facility is adequate to meet our expected cash requirements.

As at January 1, 2022, Lantic was in compliance with all the covenants under its revolving credit facility.

OUTSTANDING SECURITIES

A total of 103,731,923 shares were outstanding as at January 1, 2022 and February 10, 2022, respectively (103,536,923 as at January 2, 2021).

On June 1, 2020, Rogers received approval from the Toronto Stock Exchange to proceed with a Normal Course Issuer Bid ("2020 NCIB"), under which it may purchase up to 1,500,000 common shares. In addition, Rogers entered into an automatic share purchase agreement with Scotia Capital Inc. in connection with the 2020 NCIB. Under the agreement, Scotia may acquire, at its discretion, common shares on Rogers' behalf during certain "black-out" periods, subject to certain parameters as to price and number of shares. The 2020 NCIB commenced on June 3, 2020 and terminated on June 2, 2021. No shares have been purchased under the 2020 NCIB.

On May 22, 2019, Rogers received approval from the Toronto Stock Exchange to proceed with a Normal Course Issuer Bid ("2019 NCIB"), under which it may purchase up to 1,500,000 common shares. The 2019 NCIB commenced on May 24, 2019 and terminated on March 30, 2020, whereby all common shares had been purchased. Under the 2019 NCIB, the Company purchased 1,500,000 common shares having a book value of $1.4 million for a total cash consideration of $7.1 million. All shares purchased were cancelled.

RISK AND UNCERTAINTIES

Rogers' business and operations are substantially affected by many factors, including prevailing margins on refined sugar and its ability to market sugar and maple products competitively, sourcing of raw material supplies, weather conditions, operating costs and government programs and regulations.

Risk factors in our business and operations are discussed in the Management's Discussion and Analysis of our Annual Report for the year ended October 2, 2021. This document is available on SEDAR at www.sedar.com or on our website at www.LanticRogers.com .

NON-GAAP MEASURES

In analyzing results, we supplement the use of financial measures that are calculated and presented in accordance with IFRS with a number of non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that excludes (includes) amounts or is subject to adjustments that have the effect of excluding (including) amounts, that are included (excluded) in most directly comparable measures calculated and presented in accordance with IFRS. Non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with the non-GAAP financial measures of other companies having the same or similar businesses. We strongly encourage investors to review the unaudited condensed consolidated interim financial statements and publicly filed reports in their entirety, and not to rely on any single financial measure.

We use these non-GAAP financial measures in addition to, and in conjunction with, results presented in accordance with IFRS. These non-GAAP financial measures reflect an additional way of viewing aspects of the operations that, when viewed with the IFRS results and the accompanying reconciliations to corresponding IFRS financial measures, may provide a more complete understanding of factors and trends affecting our business.

The following is a description of the non-GAAP measures used by RSI in the MD&A:

  • Adjusted gross margin is defined as gross margin adjusted for:

  • Adjusted results from operating activities is defined as results from operating activities adjusted for the adjustment to cost of sales, the amortization of transitional balances to cost of sales for cash flow hedges.

  • Adjusted EBITDA is defined as adjusted results from operating activities adjusted to add back depreciation and amortization expenses and the Maple segment non-recurring expenses.

  • Adjusted net earnings is defined as net earnings adjusted for the adjustment to cost of sales, the amortization of transitional balances to cost of sales for cash flow hedges, the amortization of transitional balance to net finance costs, the impact of changes in fair value related to interest rate swaps contracts, and the income tax impact on these adjustments. Amortization of transitional balance to net finance costs is defined as the transitional marked-to-market balance of the interest rate swaps outstanding as of October 1, 2016, amortized over time based on their respective settlement date until all existing interest rate swaps agreements have expired, as shown in the notes to the consolidated financial statements.

  • 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, amortization of transitional balances, financial instruments non-cash amount, and includes deferred financing charges, capital and intangible assets expenditures, net of value added capital expenditures, and payments of capital leases.

In the MD&A, we discuss the non-GAAP financial measures, including the reasons why we believe these measures provide useful information regarding the financial condition, results of operations, cash flows and financial position, as applicable. We also discuss, to the extent material, the additional purposes, if any, for which these measures are used. These non-GAAP measures should not be considered in isolation, or as a substitute for, analysis of RSI's results as reported under GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable IFRS financial measures are as follows:

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO IFRS FINANCIAL MEASURES

Q1 2022 Q1 2021
Consolidated results
(In thousands of dollars)
Sugar Maple
Products
Total Sugar Maple
Products
Total
Gross margin 38,806 4,680 43,486 32,342 6,271 38,613
Total adjustment to the cost of sales [(1)] (7,434 ) (252 ) (7,686 ) (1,646 ) (515 ) (2,161 )
Adjusted Gross Margin 31,372 4,428 35,800 30,696 5,756 36,452
Results from operating activities 25,349 1,988 27,337 20,004 3,328 23,332
Total adjustment to the cost of sales [(1)] (7,434 ) (252 ) (7,686 ) (1,646 ) (515 ) (2,161 )
Adjusted results from operating activities 17,915 1,736 19,651 18,358 2,813 21,171
Results from operating activities 25,349 1,988 27,337 20,004 3,328 23,332
Total adjustment to the cost of sales [(1)] (7,434 ) (252 ) (7,686 ) (1,646 ) (515 ) (2,161 )
Depreciation of property, plant and equipment, amortization of intangible assets and right-of-use assets 4,701 1,710 6,411 4,372 1,857 6,229
Maple Segment non-recurring costs - - - - 247 247
Adjusted EBITDA 22,616 3,446 26,062 22,730 4,917 27,647
Net earnings 17,226 13,773
Total adjustment to the cost of sales [(1)] (7,686 ) (2,161 )
Net change in fair value in interest rate swaps [(1)] (594 ) -
Income taxes on above adjustments 2,011 636
Adjusted net earnings 10,957 12,248
Net earnings per share (basic) 0.17 0.13
Adjustment for the above (0.06 ) (0.01 )
Adjusted net earnings per share (basic) 0.11 0.12

(1) See "Adjusted results" section

CRITICAL ACCOUNTING ESTIMATES

For the first quarter of fiscal 2022, there were no significant changes in the critical accounting estimate as disclosed in our Management's Discussion and Analysis of the October 2, 2021 Annual Report.

CHANGES IN ACCOUNTING PRINCIPLES AND PRACTICES NOT YET ADOPTED

A number of new standards, and amendments to standards and interpretations, are not yet effective and have not been applied in preparing the unaudited consolidated interim financial statements for the first quarter of fiscal 2022. Management has reviewed such new standards, proposed amendments and does not anticipate that they will have a material impact on Rogers' financial statements. Refer to note 3 (a) of the unaudited condensed interim financial statements and to note 3 (r) of the 2021 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 three-month period ended January 1, 2022 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 impact of the COVID-19 pandemic on our operations

  • future prices of raw sugar

  • natural gas costs

  • beet production forecasts

  • growth of the maple syrup industry and the refined sugar industry

  • the status of labour contracts and negotiations

  • the level of future dividends

  • the status of government regulations and investigations

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, including with respect to the continuity of our operations despite the COVID-19 pandemic, 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 as 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/36e6f1d1-a176-43f5-86c4-6e9d9b9f9d0a

For further information
Mr. Jean-Sebastien Couillard
Vice President of Finance, Chief Financial Officer and Corporate Secretary
Phone: (514) 940-4350
Email: jscouillard@lantic.ca

COMTEX_402124071/2471/2022-02-10T07:00:49

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(C) Copyright 2022 GlobeNewswire, Inc. All rights reserved.

/zigman2/quotes/208987350/delayed
CA : Canada: Toronto
$ 6.17
+0.06 +0.98%
Volume: 45,582
July 7, 2022 12:20p
P/E Ratio
13.61
Dividend Yield
5.83%
Market Cap
$636.64 million
Rev. per Employee
N/A
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