VANCOUVER, British Columbia, Feb. 09, 2023 (GLOBE NEWSWIRE) -- Rogers Sugar Inc.’s (“RSI”, “our,” “we”, “us” or “Rogers”) (TSX: RSI) today reported first quarter fiscal 2023 results with consolidated adjusted EBITDA of $33.5 million.

“Fiscal 2023 began well as the trends established in 2022 continued to drive strong sugar performance in the first quarter,” said Mike Walton, President and Chief Executive Officer of Rogers and Lantic Inc. “Ongoing firm demand from the industrial sugar domestic market has led to increased sales volumes expectations for the year and we are well positioned to meet the growing demand, despite slightly lower-than-expected sugar volumes from our 2022 Taber crop. We are still anticipating recovery for our Maple segment in 2023, as the current inflationary pressures recede.”

• Consolidated adjusted EBITDA for the first quarter of fiscal 2023 was $33.5 million, up $7.4 million from the same quarter last year. Current quarter consolidated adjusted EBITDA increased as a result of higher adjusted EBITDA in the Sugar segment; partially offset by lower adjusted EBITDA in our Maple segment;
• Adjusted EBITDA in the Sugar segment was $30.7 million in the first quarter of fiscal 2023, up $8.1 million compared to the same period last year, largely due to higher volume and adjusted gross margin, along with a decrease in administration costs;
• Sales volumes in the Sugar segment increased by 12,806 metric tonnes to 192,849 metric tonnes in the first quarter, largely driven by increased demand for industrial volume;
• Sugar segment adjusted gross margin improved by $21.04 per metric tonne in the first quarter of 2023 compared to the same period last year due to improved average pricing;
• Adjusted EBITDA in the Maple segment was $2.8 million in the first quarter, a decrease of $0.6 million from the same quarter last year, largely as a result of lower adjusted gross margin and an increase in administration, distribution and selling expense;
• Maple segment volume decreased by 467,000 pounds to 11,819,000 pounds in the quarter, driven largely by lower demand and unfavourable market dynamics;
• We increased fiscal 2023 sugar sales volume expectations by 15,000 metric tonnes to approximately 805,000 metric tonnes, due to continued strong demand in the Canadian domestic industrial sugar market;
• Free cash flow for the trailing 12 months ended December 31, 2022 was $58.0 million, an increase of $16.9 million from the same period last year;
• In the first quarter of 2023, we distributed $0.09 per share to our shareholders for a total amount of $9.4 million;
• On January 20, 2023, the amount available for working capital under the revolving credit facility was increased from $200 million to $265 million, under the approved accordion feature of $400 million;
• We continue to work on the design and planning stage of our planned expansion project announced in August 2022. The expansion project would increase supply by approximately 100,000 metric tonnes in Eastern Canada within the next two to three years. We are expecting to complete the design and planning stage in the third quarter of fiscal 2023.  
• On February 8, 2023, the Board of Directors declared a quarterly dividend of $0.09 per share, payable on April 19, 2023.

Sugar

In the first quarter of fiscal 2023, revenue increased by $29.4 million compared to the same period last year. The positive variance was driven mainly by higher sales volume and higher average pricing for refining related activities.

Sugar volume increased by 12,806 metric tonnes in the first quarter of fiscal 2023 compared to the same quarter last year, due mainly to stronger industrial and consumer volumes.

• Industrial volume increased by 11,868 metric tonnes or 12.1% as compared to the same quarter last year, as a result of continued strong demand in the domestic market. This is consistent with the trend experienced in the second half of 2022.
• Consumer volume increased by 1,200 metric tonnes or 4.6% compared to the same period last year, largely due to timing in demand from our eastern customers.
• Liquid volume sold to our customers was stable as compared to the same quarter last year.
• As expected, export volume decreased by 529 metric tonnes in the first quarter as we continue to focus our sales efforts on serving the domestic market.

Gross margin was $36.0 million for the current quarter and included a loss of $1.6 million for the mark-to-market of derivative financial instruments. For the same period last year, gross margin was $38.8 million with a mark-to-market gain of $7.4 million.

Adjusted gross margin was $37.7 million for the first quarter of 2023 as compared to $31.4 million for the same period in 2022. Adjusted gross margin increased by $6.3 million mainly as a result of higher volume and improved average pricing for refined sugar. This positive variance was partially offset by market-based inflationary pressures on operating costs. On a per unit basis, adjusted gross margin for the first quarter was $195.29 per metric tonne, higher than the same quarter last year by $21.04 per metric tonne. The favourable variance was mainly due to higher selling prices, partially offset by higher production cost, as compared to last year.

Results from operating activities for the first quarter of fiscal 2023 were $24.3 million, a decrease of $1.0 million from the same period last year. These results included gains and losses 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.

EBITDA for the first quarter of fiscal 2023 was $29.1 million compared to $30.1 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 increased by $8.1 million compared to the same period last year, largely as a result of higher adjusted results from operation.

Maple

Revenues for the first quarter of the current fiscal year were $1.3 million higher than the same period last year, driven by higher average selling price related to recent negotiations with customers, partially offset by lower volume from lower demand from existing customers.

Gross margin was $5.2 million for the first three months of the current fiscal year, including a gain of $0.8 million for the mark-to-market of derivative financial instruments. For the same period last year, gross margin was $4.7 million with a mark-to-market gain of $0.3 million.

Adjusted gross margin percentage for the current quarter was 7.7% as compared to 8.1% for the same period last year, representing a decrease in adjusted gross margin of $0.1 million.

Results from operating activities for the first quarter of fiscal 2023 were $1.9 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, as well as timing differences in the recognition of any gains and losses on the liquidation of derivative instruments.

EBITDA for the first quarter of fiscal 2023 and for the same period last year amounted to $3.7 million. These results include gains and losses from the mark-to-market of derivative financial instruments.

Adjusted EBITDA for the first quarter of fiscal 2023 decreased by $0.6 million to $2.8 million, due mainly to lower adjusted results from operating activities.

OUTLOOK

Following our strong performance in the first quarter of 2023, we expect to continue to deliver strong and stable financial results in 2023. Strong sugar demand and pricing is expected to continue and provide stable results, despite ongoing inflationary pressures. We expect our Maple segment to recover in fiscal 2023 as the unfavourable market and economics conditions encountered over the last year begin to recede.

Sugar

We continue to expect the sugar segment to perform well in fiscal 2023. Underlying North American demand remains strong across all customer segments supported by favourable market dynamics. We expect that improvements in pricing implemented over the last few quarters will continue to support our financial results positively, allowing us to mitigate the current impact of inflationary pressures on costs.

In Taber, the harvest season delivered the expected volume of sugar beets; the processing campaign is on-going, and we anticipate completing the slicing of the crop by the end of February. Unfavourable weather conditions encountered in the later stage of the current year growing period negatively impacted the sugar content of the sugar beets received. Accordingly, the overall sugar production is expected to yield approximately 105,000 metric tonnes of beet sugar, a decrease of 15,000 metric tons compared to last year. We are implementing a revised production plan at our Montreal and Vancouver production facilities to mitigate this shortfall and meet the needs of our customers.

We have increased our fiscal 2023 sales volume expectations to approximately 805,000 metric tonnes. This represents an increase of 1.3% over 2022 and an increase of 15,000 metric tonnes from our last outlook. This increase is based on the continued strong demand of the Canadian domestic industrial sugar market. Overall, we expect the following year-over-year volume variances for our customer segments:

• Industrial, our largest segment, is expected to increase by 3%, as a result of the continuous strong demand supported by favourable market dynamic;
• Liquid volume is expected to grow by 4% driven by continued demand from existing customers;
• Consumer volume is expected to increase by 2% for 2023, due to higher demand; and
• A planned 15% reduction in sales to the export markets for 2023, due to the growing demand and strong economics of the domestic market. We will consider potential supplemental export sales if favourable production opportunities arise.

Production costs and maintenance programs for our three production facilities are expected to be moderately impacted by the current inflationary market-based pressures, as we continue to focus on cost control initiatives throughout our operations.

We expect a slight increase in distribution costs in 2023, as we foresee that recent cost increases for logistics and our supply chain activities will remain. Administration and selling expenses are expected to be stable in 2023.

We have been able to mitigate the impact of recent increases in interest rates and energy costs through our multi-year hedging strategy. We do not anticipate these increases to have a material impact on our financial results in the near future, as we expect our hedging strategy will continue to mitigate such risks.

Spending on regular business capital projects is also expected to remain stable for fiscal 2023. We anticipate spending approximately $25 million on various initiatives, with approximately a quarter allocated to return-on-investment projects. This capital spending estimate excludes expenditures relating to the potential capacity expansion of our Montreal sugar refinery and Toronto distribution centre.

Maple

Despite lower-than-expected results in the Maple segment in the first quarter, we continue to expect the Maple business segment to recover and to deliver slightly improved financial performance in 2023 as compared to 2022. We have recently seen an increase in average pricing and expect this trend to continue throughout the year. We anticipate, over the next few quarters, that price increases will mitigate the recent market-based cost increases our Maple segment faced over the last year.

We plan to spend between $1 million and $2 million on capital projects in 2023, which is consistent with recent years. The main driver for the Maple segment projects is to improve productivity and profitability through automation.

See “Cautionary Statement Regarding Forward Looking Information” section below.

A full copy of Rogers first quarter 2023, including management’s discussion and analysis and unaudited condensed consolidated interim financial statements, can be found at [u]#" Revenues and Adjusted EBITDA Revenues and Adjusted EBITDA
#" Adjusted Net Earnings and Free Cash Flow TTM Adjusted Net Earnings and Free Cash Flow TTM
#" Sugar Volume Variance and Sugar Volumes Sugar Volume Variance and Sugar Volumes
#" Adjusted Gross Margin Adjusted Gross Margin
#" Maple Volumes and Adjusted Gross Margin Maple Volumes and Adjusted Gross Margin
#" Free Cash Flow Free Cash Flow