Rogers Sugar Inc.

Good morning, ladies and gentlemen. Welcome to the Roger Sugar, Inc. Analyst Call May 13 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 measures 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 discussion of the evolving trade situation and what it means for us, then provide highlights of another strong quarter of performance in our sugar and maple segments for the second quarter of fiscal 2025. I will also provide an update on our LEAP project, especially in light of the current market conditions, with the objective of continuing to meet the needs of our sugar customers over the long term. Then I will turn the call over to JS, our Chief Financial Officer, for a detailed review of our financial results. I will conclude with an outlook for the remainder of fiscal 2025. We have an investor presentation accompanying this call. This presentation is available on the investor section of our website if you want to follow along. I'll begin by stating that amid all the economic trade upheaval, our business continues to be resilient. As you know, it was a very volatile quarter from an international trade perspective. That being said, we believe our meaningful competitive position has not changed. In sugar, Our facilities are strategically located to serve customers from coast to coast, and we have been a reliable supplier for over 135 years. Our maple business is the world's largest, delivering quality maple syrup in more than 50 countries. And of course, we are proudly 100% Canadian owned and operated. We think globally and act locally. While there is a lot in flux in the headlines, What has not changed is our belief in the long-term demand outlook that will drive our business over the coming years in both of our business segments. Maple's popularity continues to grow, and we are seeing consumers return to the product globally as inflationary pressures are easing. It is not just consumers that are returning to maple. Food manufacturers are also finding renewed interest in this natural sweetener with its unique flavor characteristics. Demand for our sugar from domestic producers of sugar-containing products remains strong. This is supported by another major announcement by a confectionery company just a few weeks ago to increase production in Canada. Having said all that, we recognize that our investors, employees, suppliers, and customers are all trying to understand the impact of the evolving tariff situation and make decisions for their own circumstances. We are committed to being timely and transparent in our communication around this subject. As of today, the key takeaways are that one, the pending new tariffs have had limited impact on our business and the business of our customers. And two, based on the current state of play, we anticipate much of our production will be administered directly or indirectly by the CUSMA, the Canada-U.S.-Mexico Agreement signed in 2020. Considering the volatility associated with the pending tariffs at the end of the second quarter, it is conceivable that a portion of the incremental volume could be partially attributable to customers buying ahead of the potential new tariffs. However, at this time, based on the conversations we have had with our customers, we do not believe that similar purchases will have a material impact on the expected volume of the third quarter. That being said, Could tariffs be applied in the future? There could be a significant financial impact to our business, depending on the magnitude and the duration of the tariffs, as well as on any potential countermeasures. We continue to monitor the situation closely and engage on a regular basis with the relevant stakeholders and policymakers. Now allow me to drill down, starting with our sugar segment, where our strategic focus remains on supplying sugar to the domestic market, including producers of sugar-containing products. Many of those products are exported to the United States. The main thing to understand is that under the current tariff rules, products exported under KUSMA rules of origin are exempted from tariffs. This includes most sugar-containing products exported by domestic food manufacturing customers. Our sugar segment also exports a small portion of its refined sugar production, between 5 and 10 percent, directly to the U.S. Depending on the rules of origin, this refined sugar could be subject to recent additional tariffs. For example, refined cane sugar exported to the US from our Montreal and Vancouver facilities is subject to the new general 10% tariff rule, as this refined sugar retains the origin of Brazil or Central America. These rules generally apply to all US imports of refined sugar. Our beet sugar exports to the US fall under KUSMA, as Canadian origin and is not subject to these added tariffs. For the maple segment, about 50% of our sales are exported to the US to meet the growing demand for maple syrup. Right now, those sales are exempt under KUSMA from all new tariffs. What is also important to note with maple is that over 75% of the world's production of pure maple syrup originates in Canada. and two-thirds of the U.S. consumption originates from Canada. The U.S. simply cannot supply their domestic needs solely with U.S. production now or into the future. Please keep in mind that none of this is black and white. Tariff applications are complex and depend on many factors, but that's our current understanding of the situation and reflects our current recent cross-border transactions, and those of our KUSMA-qualified customers. So that is the trade situation as it stands right now. We know that it is subject to sudden, unpredictable changes. As we have said from the onset of this tariff discussion, we will not speculate on what's next. Our plan is to be transparent in communicating with our stakeholders, to focus on providing our customers with sweeteners they need, and to take the necessary steps to fortify ourselves against future volatility. Simply put, we are focused on what we control and delivering on our strategic plan. We believe the actions we have taken over the last three years have strengthened the foundations of our business in both segments to put us into a very resilient position. As I've said in the past, we have been in the business for more than 135 years and have seen all types of trade conditions. We have grown and even thrived, and we are well positioned to meet any new developments that are coming our way. We continue to focus on delivering value to our customers and shareholders. Our Rogers refined framework outlines the pillars underlying this strategy. They are modernizing and growing our sugar business, driving profitability in maple, maintaining a strong balance sheet, and advancing on our ESG program. We are confident that this framework puts us on the right path to continue to meet the needs of our customers and deliver consistent, profitable, sustainable growth for our shareholders. Our results this quarter reflect continued strong market conditions in both business segments, combined with our efforts to deliver on the pillars of our Rogers refined framework. Our adjusted EBITDA decreased by 9% to about $35 million in the second quarter compared to 2024. What is important to note is that the $35 million in adjusted EBITDA is a very strong performance in a historical context. It is the second highest quarter in our history after the record results of last year. Our maple segment enjoyed record revenue and profitability this quarter. Demand continues to benefit from the global market recovery that began at the end of 2023, and our team successfully capitalized on this opportunity to expand our maple sales. Our efforts to drive operating efficiencies in maple have also paid off in strong growth in gross margins and adjusted EBITDA. We continue to see steady demand in our sugar segments. although the growth is not as significant as what we'd seen in previous quarters for industrial and liquid customers. We have pivoted quickly in the second quarter, taking advantage of direct export opportunities. Here we have to keep in mind that export volumes were particularly impacted by the labor disruption in Vancouver in the first half of 2024, as we made the decision to prioritize shipments to our domestic customers. Our sugar segment, was also negatively impacted by higher maintenance costs in the current quarter due to an unexpected equipment breakdown at the Montreal refinery and unfavorable product mix. We are pleased with this quarter as it shows the benefit of our focus on market-based pricing and customer service. Now turning to our Eastern expansion project, we continue to make progress in this very important initiative to add 100,000 metric tons of incremental sugar refining capacity in our eastern market. We are currently advancing the construction of the project in Montreal, including the refurbishment of the building where the new sugar refining equipment will be located. Work related to the new electrical room and incremental logistic capacity is advancing as well, according to our expectations. During the second quarter, we made the strategic decision to focus our efforts on the Montreal portion of the project. which is the cornerstone of our capacity enhancement. As part of this decision, we have reassigned some of the resources associated with the Toronto portion of the project to support the completion of the Montreal sugar refining component. As a result, we are temporarily pausing some of the work associated with the incremental logistics capacity at our Toronto Distribution Centre to better align the completion of the work at the expected and service date of the incremental sugar refining capacity in Montreal. Our estimate for the total cost of complete LEAP project remains consistent with our year-end update at between 280 and 300 million, and LEAP is on track for completion by the end of 2026. We remain confident in the long-term strategic value of LEAP to meet the needs of our sugar customers who are planning their own long-term growth. As I mentioned, we just saw another food manufacturer announce expansion in Canada, and the outlook for continued demand growth remains favorable as there are a number of recently announced food manufacturer expansions that have yet to come online. We are fortunate that the project structure allows us the flexibility to make prudent decisions about resource allocation in response to evolving market conditions. Now, I'll turn the call over to J.S., for discussion on our financials.

Thank you, Mike, and good morning, everyone.