Rogers Sugar Inc.

Good morning, ladies and gentlemen, and welcome to the Roger Sugar, Inc. Analyst Call, November 28th Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press the star zero for the operator. Before we begin, please be reminded that today's call may include forward-looking statements regarding our future operations and expectations. Such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today. Please also note that we may refer to some non-IFRS measures in our call. Please refer to the forward-looking disclaimers and non-IFRS measure definitions included in our public filings with the Securities Commission for more information on these items. A replay of this call will be available later today. The replay numbers and passcodes have been provided in our press release, and an archived recording of this call will also be available on our website. I'll now turn the call over to Mike Walton, President and CEO of Roger Sugar. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you all for joining us today. I'll begin the call today with a look at our strong financial results for the fourth quarter and the full fiscal year of 2024. I will also provide an update on the market conditions we are seeing in the sugar and maple businesses and on the work we are doing to position our company for the long-term success. Then I will turn it over to JS, our Chief Financial Officer, for a review of our financial results. I will conclude with an outlook for fiscal 2025. We have an investor presentation accompanying this call. This presentation is available on the investor section of our website. Our strong results for 2024 demonstrates once again how we are delivering value to our customers and our shareholders through our focus on consistent, profitable, and sustainable growth. This is the philosophy behind our Rogers Refined plan that we have discussed with you in the past few conference calls. As a reminder, the four pillars of Rogers Refined are modernizing and growing in our sugar business, driving profitability in maple, maintaining a strong balance sheet, and advancing our ESG program. We are focusing our efforts and our resources in these key areas because we believe this is the right path to making Roger Sugar a better company and a better investment. Once again, our results for the fourth quarter and the full year 2024 are showing the success of this plan. We are positioning our company to take advantage of the favorable market conditions we see today and in the years ahead as we continue to focus on being an industry-leading supplier for our customers while creating value for our shareholders. Beginning with our fourth quarter results, we are reporting adjusted EBITDA of $38 million. This is an improvement of nearly $10 million compared to the fourth quarter last year. Both the sugar and the maple segments contributed to our Q4 profit growth, We achieved this with the benefit of healthy market-based pricing for our products, combined with strong operational execution and an unwavering focus on customer service. Turning to the full year results, our consolidated adjusted EBITDA was $142 million for 2024, compared with $110 million in 2023. In fact, over the past three years, we have delivered growth in our adjusted EBITDA of more than 55%. This was a direct result of our focus on being a supplier of choice to our sugar and maple customers and driving consistent, sustainable, profitable growth within today's favorable market conditions. Looking more closely at sugar, revenue in our sugar segment grew by almost 7% in the fourth quarter and almost 12% for the full year. This was mainly the result of higher market prices for refining-related activities. Adjusted EBITDA in our sugar segment had year-over-year growth of just under 45% for the quarter and over 25% for the full fiscal year. We delivered these results despite the labor disruption at our Vancouver facility in the first half of the year. As we discussed in our last call, the softness in demand from certain North American food and beverage processors persisted into the fourth quarter. This softness is attributable to inflation in food prices across the board and high prices of certain other commodities such as cocoa. To be clear, the food price inflation we are seeing is part of a global trend. Consumer demand has softened as consumers take time to adjust to the impact of broad-based inflation on their food bills. Overall, The impact on our business was a modest decrease of about 5% in sugar volumes for the fourth quarter. This general softness in demand, combined with the impact of our labour disruption in Vancouver in the first half of the year, contributed to a decrease in sales volume for the full year of approximately 5%. We remain confident in the long-term demand for Canadian sugar. Our experienced leadership team has managed this business through past economic cycles. Once the broader market has had time to absorb the impact of inflationary pressure and input costs, the long-term upward trend in demand for sugar-containing products will resume. Now looking at our maple segment, we saw a strong recovery in 2024 from the challenges seen in 2022 and 23. Sales volume increased by 15% for the quarter and 7% for the full year. A combination of volume growth and strong product pricing led to double-digit increases in revenue for the quarter and the full year compared with 2023. Profitability in the maple segment continued to show the benefit of our earlier investments in operational efficiency. Adjusted EBITDA for the full year grew by over 35% to 18 million. We continued to make progress on our LEED project. This is an important and necessary expansion and upgrade of our Montreal refinery and logistic infrastructure. that will add an estimated 100,000 metric tons to our production capacity in eastern Canada. We have mostly completed the planning and design phases associated with LEAP, and the construction phase has begun. Orders for sugar refining equipment and other related large equipment have been placed with suppliers, and some of that equipment is already on site. When we spoke last quarter, I noted that costs for certain key elements of the project were expected to exceed the initial estimates used in our calculations two years ago when we announced the project. Over the past few months, we have worked with our design and construction partners to gather the necessary data and we've reviewed and updated those calculations. We now estimate the total cost to complete LEAP project will range between 280 and 300 million. Contributors to this cost increase include Evolution in the Design, driven by the complexity of the project, market-based increases in construction costs, and newly implemented safety regulations. Many of these incremental costs are related to challenges associated with the repurposing of a section of the Montreal building for the sugar refining portion of the LEAP project. We have also updated the expected completion date of LEAP to the second half of fiscal 26, a delay of approximately six months from our initial estimate. We remain confident in the investment value, which is supported by the robust economic fundamentals of the sugar industry in Canada. We expect the strong demand seen in recent years, along with the related improved pricing in the market, to largely offset the unfavorable impact of the incremental costs and longer construction schedule for the LEAP project. This is a very strategic investment, providing unparalleled connectedness to the eastern domestic market. It is close to our customers. It has a great rail service and is located at a port that is operating year-round, thus facilitating the procurement of raw sugar. LEAP represents an important growth opportunity for our company and for the food transformation industry in Eastern Canada. Our customers are looking to us to meet their needs for the long term. As they grow, we will grow. So they can be confident of our ability to supply sugar when and where they need it. I'll now turn the call over to J.S.

Well, thank you, Mike, and good morning, everyone. My part of the presentation begins on slide 11. As Mike said in his remarks, we delivered strong financial results throughout 2024. The fourth quarter was no different, with positive revenues and profit growth in both our business segments. Consolidated revenues for the quarter were $333 million, an increase of 8% compared with the fourth quarter of 2023. Consolidated adjusted EBITDA increased by almost 35% during that period to over $38 million. For the full year, revenues increased by almost 12% to $1.2 billion compared with $1.1 billion in 2023. Both our sugar and maple segments reported double-digit growth in revenues year over year. As Mike said, consolidated adjusted EBITDA for the full year increased by over 25% to $142 million. The maple segment accounted for almost 20% of our total revenues, consistent with last year, and 13% of consolidated adjusted EBITDA. Consolidated adjusted net earnings for the full year were $67 million, or $0.56 per share, compared with 45 million, or 42 cents per share in 2023. The EPS number for 2024 includes the impact of the equity issue done in the second quarter, which increased our share outstanding by about 22%. Our strong business results drove an increase of 60% in our full-year free cash flow to 73 million, compared with 46 million in 2023. Now let's look at the individual business segments, starting with sugar. Adjusted EBITDA for the sugar segment increased to 34 million in the fourth quarter compared to 24 million in the same period last year. For the full year, adjusted EBITDA increased to 124 million from 98 million in fiscal 2023. Revenues in our sugar segment were 273 million in the fourth quarter compared with $256 million for the same period last year. For the full year, revenues in our sugar segment were just under $1 billion, an increase of 12% from 2023, mainly related to improved pricing, including the benefit of higher world sugar commodity prices partially offset by lower volume sold. Adjusted gross margin per ton of sugar was $217 in the quarter and $222 for the full year, representing an increase of $61 and $51 per ton, respectively. These favorable variances were due to higher pricing, partially offset by higher production costs. The higher production costs were mainly related to increased maintenance activities in Montreal and Tabor and market-based cost pressures. Administration and selling costs were higher for the quarter and the year, mainly due to market-based increases in compensation and benefit costs, as well as an increase in share-based compensation expense. Now let's move on to the maple segment, where we are reporting strong financial results for a fifth straight quarter. Maple results benefited from higher volumes and improved selling prices. Revenues increased by more than 15% during the quarter and more than 10% for the full year. Adjusted gross margin for this segment improved to 10.3% in fiscal 2024. Adjusted EBITDA in Maple was slightly lower than last year for the fourth quarter due to non-recurring items. For the full year, adjusted EBITDA in the Maple segment was $18 million compared with $13 million in 2023. The strong results of our maple segment seen over the last few quarters reflect the benefits of higher selling prices and higher volumes, as well as the investment in operational improvements implemented over the last two years. Our total capex for the year for both segments, excluding expenditures associated with the LEED project, amounted to $32.5 million. This represents an increase of $6.5 million over 2023, reflecting incremental work done on our aging infrastructures in Montreal. Regarding our lead project, we have spent 53 million thus far, including 42 million in fiscal 2024. Looking more globally at our financial metrics, we continue on our path to maintain a strong balance sheet. Our strong financial performance through the year has translated into a significant uplift in our free cash flow for the year. For 2024, Free cash flow was $73 million, an increase of $28 million over last year. We also executed a successful equity issue in the second quarter, receiving net proceeds of $113 million in support of the financing plan of our LEED project. Our financing plan for the LEED project is scalable, allowing us to meet the incremental expected construction costs Mike has highlighted earlier on. We continue to plan to fund this project through a combination of debt, equity, our existing revolving credit facilities, and internally generated capital. We also have access to funds through two secured loans with Investee Small Quebec. Considering our current liquidity and the timing related to the LEAP-related expenditures, we intend to repay our six-series convertible debentures, which matured in December 2024, using a combination of available cash and or our revolving credit facilities. We will assess the need for future similar financing in the second quarter of fiscal 2025 while also considering the upcoming maturity of the seven series convertible debentures in June 2025. Finally, we have maintained our regular distribution to shareholders this quarter with a dividend of $0.09 per share. With that, I will turn the call back over to Mike to provide a summary and outlook for 2025. Thank you, J.S.