Rogers Sugar Inc.

Good morning, ladies and gentlemen, and welcome to the February 5th Rogers Sugar, Inc. First Quarter 2026 Results Conference Call. At this time, all lines are in listen-only mode. While we're in the presentation, we will conduct a question and answer session. If at any time during this call you require needed assistance, please press 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 past will be 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 Rogers Sugar.

Thank you, operator, and good morning, everyone. Thank you all for joining us today to discuss our results for the first quarter of 2026. I'll begin by summarizing our results for the quarter with updates from both our sugar and maple segments. I'll also touch on the environment and how we are navigating market developments and positioning Roger Sugar for the months ahead, including an update on our LEAP project. After my remarks, JS, our Chief Financial Officer, will provide a deeper dive into our financial performance for the first quarter. I will then come back to discuss our outlook for the remainder of 2026. We'll conclude with a summary and then open the line for questions from the analysts. As usual, We have an investor presentation accompanying this call. This presentation is available on the investor section of our website for those who want to follow along. Our results in the first quarter underscore the power of discipline execution and a clear strategic vision. Despite the evolving market dynamics around trade policy and tariffs, we delivered strong earnings, advanced our lead project, and continue to strengthen the foundation of our business. This performance reflects on our focus on operational agility, cost management, and above all, an unwavering commitment to serving our customers. At the same time, we remain mindful that the external environment is far from settled. Ongoing shifts in global trade policy and the upcoming Kuzma negotiation continue to introduce uncertainty for the Canadian economy, which ultimately could impact our industry and our markets. While we are confident in our ability to adapt and respond, as we have done for close to 140 years, we know that vigilance and flexibility will be essential in the months ahead. With the momentum we have built in recent years, and the dedication of our Sugar and Maple teams, I am confident that Roger Sugar is positioned to meet the challenges ahead and continue to lead in both of our businesses. Now, looking at the results of our first quarter, we are proud to report consolidated adjusted EBITDA of 47 million, reflecting an 18% increase year-over-year. Adjusted net earnings reached 25 million, up by 27% from last year. We generated $89 million in free cash flow in the trailing 12 months, an increase of about 4% from last year. Our internal cash generation supports ongoing investment in our business and consistent returns to shareholders. Although these strong first quarter results were somewhat boosted by some favorable non-recurring and timing items in comparison to last year, they do show the stability and resilience of our business operating model. They demonstrate the effects of our strategic focus over the last several years on delivering consistent profitable results. I am pleased with the performance from both of our business segments. We support the strong position of financial health we enjoy today. We have the people, the know-how, and the resources we need to meet various challenges while moving forward with the delivery of our lead project. Turning to slide five. Throughout the first quarter, we saw solid performance in both our sugar and maple segments. Demand in our core markets remained steady, with our teams adapting quickly to shifting customer needs and identifying new opportunities for growth. Global food inflation and consumer health focus continue to influence purchasing patterns affecting global sugar demand. Food and beverage producers in certain segments have adjusted their buying patterns in response to consumer behavior. Although we haven't seen a material direct impact on such changes in the Canadian market thus far, we view these changes as part of the normal cycle, with overall domestic demand for sugar remaining stable over time. We are staying agile and focused, working closely with customers to support their evolving needs. Years of experience have taught us that disciplined execution, delivering quality products, and strong customer service help us navigate any environment. Our maple segment continued to build momentum. The incremental sales volume is a good reflection of the recent increase in global demand for maple syrup and maple-related products. Our gross margin percentage has improved from the slight dip seen in the second half of 2025. The quality and availability of the previous crop, coupled with our active syrup procurement activities, supported our ability to deliver reliable results. Looking ahead, we will keep working with producers to ensure a steady supply as demand is expected to continue to grow. In summary, we are beginning 2026 with a strong foundation, a clear effective strategy, and confidence in our ability to create value, even as market conditions continue to shift. This quarter's results show the result of our Rogers Refined model. Through ongoing improvement, focused investment, and disciplined cost control, we keep our operations resilient and ready for change, including challenges from global trade shifts. Rodgers Refined is reflected in our team's commitment and agility. Their dedication to our shared mission enables us to meet uncertainty head-on and act on new opportunities as they arise. Now let me update you on our LEAP expansion project in eastern Canada. This quarter, we continued to progress on the construction activities related to the LEAP project, which is embedded in our strategy to support long-term growth and enhance our supply capabilities in central Canada. The construction site in Montreal remains active with significant progress on facility upgrades, electrical connections, and the integration of new refining technology. Our teams and contractors are working closely to keep the project aligned with our revised schedule. We are seeing tangible results as key infrastructure elements take shape while we are planning the commissioning process with suppliers and business partners. We continue to target a start-up date in the first half of 2027. This schedule reflects our focus on careful execution, taking into account current market conditions and our commitment to maintaining the highest standards of product quality. In addition, we are carrying out the LEAP project with an unwavering commitment to safety. Protecting our people remains our top priority, and we are dedicated to upholding rigorous standards and best practices throughout the organization. Coordinating a major capital project alongside a plant operating at capacity is complex, but our experience and planning are enabling us to advance construction without disrupting our central core business. Our estimate of the cost is completely unchanged, and we are confident that this expansion will boost our ability to serve customers more efficiently throughout central Canada. By increasing our eastern refining capacity, we can respond faster to demand shifts, reduce transportation requirements, and strengthen our overall supply chain. Now, I'll turn the call over to JS for a financial review.

Well, thank you, Mike, and good morning, everyone. I will begin my financial remarks on slide 10 with a high-level review of consolidated results before we get into the details of the two segments. Adjusted net earnings per share in the first quarter amounted to 19 cents compared to 15 cents in the first quarter last year. The increase was due to a favorable variance of over 7 million in adjusted EBITDA. This increase of 18% came mainly from the sugar segment, where our business benefited from some timing and non-recurring items while relying on strong sales margins. Free cash flow for the trading 12 months totaled $89 million, consistent with the same period last year. Overall, though, if we exclude timing differences in the payment of tax installments, free cash flow improved by over $11 million. The improvement was the result of stronger operating performance and tight control over working capital. This strong financial performance was delivered in the quarter when revenues declined year over year. Revenues for the quarter were just short of $300 million, down from $331 million in the same period last year. The reduction was largely due to a lower average rod number 11 sugar price and lower sales volume in the sugar segment, partially upset by favorable sales volumes in the maple segment. Although important in the overall performance of both of our business segments, Revenues and associated sales volume are not the primary drivers of our strategy. Our focus remains on delivering what matters most, consistent profitability as measured by adjusted EBITDA and robust free cash flow. Now let's take a moment to review the individual business segments, starting with our sugar segment, which drives about 85% of our profitability. Sales volume was 175,000 metric tons during the quarter, a reduction of about 21,000 tons from the same quarter last year, with a significant portion of the reduction attributable to lower export volumes. The decrease in export sales is mainly related to the current market dynamics, which do not favor the sales of refined sugar of Brazilian origin in the U.S. Although we are disappointed with the volume reductions, We want to point out that this sales category usually has a lower contributed margin. We also experienced a reduction in industrial sales with a non-recurring production issue at one of our key customers. This is the same issue that impacted the last few weeks of the fourth quarter of 2025 and has since been resolved. Overall, revenues in our sugar segment became by about 15% in the quarter to $226 million reflecting the decline in volumes that we have just discussed in a drop in the price for raw number 11 sugar. That being said, our refining margin continued to be healthy and mitigated the decrease. Despite these headwinds, we were able to report improved profitability in the quarter. Adjusted gross margin per ton rose to $304, an increase of $79 from the same period last year. A significant portion of the increase was attributable to favorable timing variances in non-recurring items related to procurement activities, raw sugar freight, and major maintenance programs. The positive adjusted growth margin was also supported by a higher sales margin associated with our disciplined pricing strategy. Adjusted EBITDA for the sugar segment reached $41 million, an increase of $7 million over last year. This performance underscores our focus on protecting margin and managing through volatile market cycles. Distribution costs increased slightly, reflecting an unexpected adjustment we made to our supply chain to meet the needs of our customers. Administration expenses were also slightly higher, mainly reflecting market-based increases in compensation and employees' benefits. Overall, the sugar segment delivered strong results in the first quarter, setting up the foundation for the remainder of 2026. The maple segment also delivered strong financial results in the first quarter, reflecting strong execution and healthy market demand. Revenues increased by 8% to $72 million, driven by higher sales volume as we continue to expand and take advantage of the growing global demand for this beloved sweetener. Interest in maple syrup remains robust, supported by positive customer trends and effective supply management. Adjusted EBITDA for maple was $5.8 million, a slight improvement over the same period last year, as we maintain our overall profitability through disciplined operations. Sales volume were 8% higher in the first quarter, supported by incremental demand from some of our established customers. Adjusted gross margin percentage at 10.6% was consistent with our recovery expectation and reflected the impact of consistent product mix sold during the period. If you recall, margin dipped below 10% in the second half of 2025 as we faced challenges related to mix of products. Over the last few months, we have strengthened our sourcing strategy and are expecting a more stable adjusted gross margin percentage for our maple segment going forward. Looking ahead, we remain focused on supporting our producers' partners and maintaining reliable access to supply as global demand for maple syrup continues to grow. Our strong and stable performance in maple reinforces the value of our diversified platform and positions us well to meet growing demand in this segment. From a capital allocation standpoint, we remain disciplined. We invested in our future by allocating $25 million to capital expenditures, with the bulk of that spent supporting the ongoing progress of our LEAP project. This investment reflects our joint commitment to growth and operational excellence. We continue to support the LEAP project with a diversified funding approach. Our financing plan for the project supports the expected cost, which continues to range between $280 and $300 million. In January, we further enhanced our financial flexibility with a successful issue of our ninth series convertible to ventures. Following the issuance of the eighth series last year, this issue completes the refinancing of sixth and seventh series, which matured in 2024 and 2025. This move anchored our liquidity position and ensures we have the resources to continue to fund our strategic priorities. Our balance sheet remains strong, supported by ample available credit and a robots-free cash flow profile. We maintain our quarterly dividend, reflecting our ongoing commitment to consistent shareholder returns. This approach positions us well to execute on our growth strategy while delivering value to our investors. With that, I will turn the call back over to Mike to provide a summary and outlook for 2026.

Thank you, J.S. Now looking at the remainder of the year. As 2026 progresses, we recognize that the business environment is still complex and dynamic. Within that context, I am confident in our ability to adapt thanks to our vigilant approach and decades of experience in managing shifting market trends. Our teams are ready to respond quickly as circumstances evolve. Central to our success is a disciplined go-to-market approach. We are selective in how we allocate resources and pursue opportunities. Our main objective continues to be developing and nurturing long-term partnerships that deliver sustainable profitability. Our commercial team remains focused on meeting customer demand and understanding our target markets, ensuring every decision supports our long-term strategy. While tariffs and trade developments have had minimal direct impact so far. We are fully prepared to adjust course as conditions indicate. We will move forward by fostering strong customer partnerships, being rigorous about cost control, and investing strategically to safeguard our resilience and our competitiveness. The progress we have made over the last several years has led to meaningful gains in profitability and execution. Our goal for 2026 is to continue along the same path and deliver consistent solid performance. Beginning with the sugar segment, our current forecast for sales volume for the year is around 750,000 metric tons. This forecast is at the lower end of the range we provided at the end of the fourth quarter and represents a reduction of approximately 4% compared to 2025. The reduction in volume is mainly impacting lower-margin export sales, as the current trade conditions for Brazilian-origin refined sugar are not favorable. We expect demand from our domestic customers to be stable, and we continue to prioritize domestic sales while being alert to export opportunities as market evolves. Our beet harvest in Tabor was completed in November, and we are now in the late stages of processing the beets, with expected completion by the end of this month. We anticipate the 2025 crop to deliver approximately 100,000 metric tons of beet sugar, consistent with our earlier expectation. Across all our facilities, production and maintenance costs will edge slightly higher this year, driven by market-based cost increases, annual wage increases for employees, We are committed to managing our costs responsibly to maintain our production assets and ensure reliable operations. Distribution costs are expected to increase slightly as we continue to transfer sugar between refiners to meet customer demand pending the completion of our LEAF project. Administration selling expenses are expected to increase slightly in 2026 compared to 2025, reflecting general market increases and incremental costs associated with the planned review of the Canadian International Trade Tribunal scheduled for the second half of 2026. Interest costs will be somewhat higher as we access the funding we have put in place to complete our LEAP project. For Maple, we anticipate another strong year in 2026, continuing the steady growth of the past few years. We expect sales volumes to reach 56 million pounds, an increase of 5% from last year, driven by ongoing strength in global demand. Thanks to a favorable maple crop in 2025, we have been able to meet the expected demand for maple products through most of 2026. We expect to meet any excess volume requirements which serve from the 2026 crop. All segments reflect our best view of current market trends. But we recognize market dynamics can change rapidly, and we're ready to adjust as needed. On the CapEx front, we plan to allocate approximately 27 million across our core businesses this year, excluding LEAP-related spending. LEAP will continue to be our major initiative for 2026 as we press forward with construction and installation of new refining and logistics capacity. Balancing this project with day-to-day operations is challenging but essential to ensure uninterrupted service to our customers. In summary, we started 2026 on a strong note, continuing to build on our momentum in profitable and sustainable growth. Over the past four years, we have transformed Roger Sugar, and our recent results reflect the impact of that evolution. Our focus remains unchanged. maintaining strong partnerships with our customers, prioritizing safety and continuous improvement, managing cash carefully, and driving progress on the LEAP project to support our market. These efforts are anchored by our strong balance sheet and financial discipline, which give us the resilience and flexibility to meet the market demands and create long-term value for our shareholders. I want to recognize our teams at every site for their dedication and commitment to excellence. Your focus on customer service and workplace safety is vital to our continued success. I also extend my thanks to our customers and business partners for their trust and support as we move forward together. I'll now ask the operator to open the line for questions from the analysts.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Michael Van Iox with TD Securities. Your line is now open.

Thank you. Good morning. I want to start on this. I want to start on the sugar side on the volumes. So the customer that had their own issues, did any of that flow into Q2? And is the lost volume something that you expect to be recaptured or those lost sales by the customer so you won't be able to recapture that?

Yeah, Michael, the first part to answer your question is no, the problem didn't go into Q2. It lagged into Q1 only. And they are back in production now and resolved their issues. And as far as making up the volume, these kinds of plants are running at capacity. So not likely, although who knows, they could pick up something from one of their other sites that we wouldn't be able to supply in new supply and new demand. But we expect it to pick those volumes up across other pieces in the market. The market gives you lots of opportunities and puts and takes through the years, you know, and that's why we're still staying in our range at the 750.

Okay. And then you talked about improved average pricing. How much of that was just for mix, like exports falling, versus price increases that actually helped the margins? Mike, it's Jess here. It's a combination of both. I think, you know, the reduction in export had some impact on it, but we also have seen some continued strong pricing in the market. And so, probably half and half. Okay. Okay. And then, so, if I look at the gross margin differences, because there's some pretty severe non-recurring items this quarter. So the timing of the production and recovery costs, was that just pushed into Q2? And so we should just reverse that in Q2? Yeah, so a portion of the timing is going to be in Q2. For example, the shutdown, which is our annual shutdown, happened in the first week of Q2 instead of the last week of Q1. And so that will move into the next quarter. And so in the rest of the non-recurring, obviously that's not going to change. Okay. So, yeah, exactly. So, the $8 million should come in Q2? No, not all of it. So, a portion of it. I would say half of it will come into Q2. The $8 million is made of non-recurring and timing. So, I'd say 50% of it is non-recurring. The rest is one time. Okay. All right. And then the supply chain issues – on the sugar distribution side, was that tied to this customer or was there something different? No, it was something different. So we had some issues and we had customers that had to go pick up at a different location. And obviously when this happened, we are compensating customers. So can you explain what those issues were and how they were resolved? Yeah, we had some technical issues with some of our rail cars. And so what would end up happening is we had customers supposed to pick up in Toronto that came and pick up in Montreal. That has been resolved. We fixed those railcars. Okay. And then, sorry, I'll come back and I'll let somebody else ask questions. I'll come back on that, please.

Okay, Michael. Thanks. Your next question comes from John Zampera with Scotiabank. Your line is now open.

Thank you. Good morning. I wanted to ask about the volume guide on the sugar side, the reduction to the lower end of the previous guide. Is that primarily from the decline you saw in Q1, whether that's export-specific or related to that one customer you referenced, or is there something related to Qs 2 through 4 that's influencing that guide change?

Yeah, better both, John. We export businesses. We've reported in the past on a direct sugar basis is less than 10% of our total volume. And so anything that we were producing at that time that was a Brazilian origin didn't cross into the U.S. because of the new tariff. So most of it was in the first quarter, and our customer event was in the first quarter. And then Q2 would be less impact based on those export contracts because we've already repositioned them.

Okay, understood. And export challenges aside, you said you now expect domestic sales growth to be stable against the prior guide of growing modestly. So, again, is that related purely to Q1, or is there anything incremental to that?

No, it's just a stable long-term for the rest of the year. It's consistent with what we're seeing globally across all markets, whether it be in Europe, Brazil, the United States, or Mexico. It's We're seeing the cycle, the commodity cycle in sugar, and it's just slightly lower coming in the forward months.

Okay. And there was a comment about lower confectionary demand in Q1 due to timing. Can you add some more color there?

Yeah, we had – we saw, all of us, for the last 18 months or maybe 24 months, the spike in cocoa prices globally and the impact of that inflation in unit costs in those in those products. And so we saw a pricing lag in the pricing coming to the retailers. And so that started showing up, you know, late in 25 and into Q1 and it started to reduce sales input at the retail side for those products.

Okay, understood. And then last one, and I'll get back in the queue afterwards. The four and a half million in non recurring gains, JS. You referenced penalties received and pricing adjustments. Can you elaborate on that? Yeah. So, we got some last year. We had some contamination, for example, on some of the vessels. It's been fairly something that happened to different sugar refiners and sugar coming from Brazil. So, we got compensated for that. So, this thing happened in 25, obviously, in somehow our production costs, and we got compensated in the first quarter. So that's part of the one-time. And on the freight, it's just market pricing adjustment for freight. Okay. So just to clarify, there was $8 million from the last question, $8 million in total costs. Half of that was one-time, half of that was timing, and then the $4.5 million, that's the gains. That's purely one-time. We got that right? Yeah, that's a good – that's fair to say. Okay, that's great. Thank you very much. Thanks, John.

Your next question comes from Steven McLeod with BMO Capital Markets. Your line is now open.

Thank you. Good morning, guys. I just wanted to circle around. I was going to ask about non-referral, but it sounds like we've already figured that out. Just with respect to, like, putting the kind of the moving parts together around the timing and gross market metric time potentially shifting into fiscal Q2, would you still expect kind of on a full-year basis sort of a stable, adjusted gross market metric time outlook?

The short answer is yes. I think we are, you know, we've seen some slight improvement in the adjusted gross margin, and a lot of it is related to the mix of the products that we're going to sell. So, you know, if you're removing some of the export sales that are usually carrying lower margin, then the rest, you know, your per metric ton should increase. So last year we did it at 224. Obviously, the 304 is a bit of an outlier in the first quarter, so that's We're still, overall, we're expecting to do better than last year on the gross margin, on an adjusted gross margin for metric done basis. And that's mainly because of the mix of what we're going to sell.

Right. Okay. Okay. Thank you. And then just turning to the maple segment, would you also expect kind of that margin to be sort of stable year over year? Are you still kind of expecting, you know, margins to be in that kind of 8% range on adjusted EBITDA?

Well, yeah, on adjusted EBITDA, yeah, sorry. So our adjusted growth margin is at just about 10% right now. So, you know, between 10 and 11 is usually our target, and usually it translates to around an 8% EBITDA margin. That's our forecast for the rest of the year.

Okay, that's great. And then maybe just finally, just ahead of, you know, the Kuzma negotiations, you know, I guess is there a way to – get a sense of sort of how you're feeling about those negotiations heading into the process. Just wondering if you can get any color there.

Yeah, sure, Stephen. It's a murky piece of ground for everybody in North America, I think, these days. You know, as we've said all along, you know, we've been around for 140 years and we've seen these kinds of trade disputes come and go. The fact of the matter is that The U.S. market's a deficit market on sugar production. It has to import sugar or sugar-containing products. And the manufactured goods that we're talking about are very complex production lines and production systems, and it would take a long time to make any meaningful shifts to move plants out of Canada, as an example, as some people fear. We don't see any meaningful change there, and we're optimistic that seeing the impacts of these kinds of moves immediate impact on inflation that consumers, especially in U.S. or Canadian markets, that probably would temper any massive disruption. But that's an opinion of one. We'll see how it goes. We'll remain focused on it. We'll remain in the background advocating for what's right for the long term for our industry and hope that calmer hits prevail in the end.

Right. Okay. Great. Thanks, guys.

Thanks. Ladies and gentlemen, as a reminder, should you have a question, please press star 1. Your next question comes from Nathan Poole with National Bank. Your line is now open.

Good morning, guys. Congrats on the quarter. Thank you. So on the LEAP project, it's mentioned in the presentation that startup is going to be in line with expected demand growth. Did we be inferring that there is other customer capacity that needs to be wrapped up around that time as well, or new customer wins are over the horizon, or is that just a general comment?

Well, it's been both. We've seen pretty steady growth in the refined sugar and the SCP production in Canada over several years, and so that was the impetus for doing the leak to begin with. And we expect to see that growth as a return once we come under the higher inflation cocoa market, which we've already seen happen, and cocoa prices have down substantially. So we expect that growth to continue. And as you know, there's been many public announcements, several of them in an Ontario-based area, of new manufacturing capacity coming into Canada from foreign jurisdictions, and those plants have yet to start construction. So we're pretty optimistic based on what we know and what we've heard. our major customers are doing on the long-term and sugar-containing product manufacturing channel.

All right. That's great, Colin. And regarding the volumes and the one-time adjustments heading into Q2, how does this affect your working capital seasonality in 2026?

We're not expecting any major impact on our working capital. So if you look at some of the big impact on our working capital is always level of inventory that we're carrying, especially on the raw sugar side. And we've adjusted delivery of our vessels to mirror the volume of sugar that we're expecting to sell. Okay. Thank you for the color. I'll turn it over.

Your next question comes from . Your line is now open.

Thank you. Good morning. Good morning, . Just maybe one clarification on the sugar volume outlook.

The outlook implies a 4% over-year annual decline. Q1 was down 11%. I'm just maybe it would be helpful to get a bit of color sort of the pace of improvement on the over-year trends there and maybe the key drivers of that. And like you mentioned, you know, those export volumes being repositioned, maybe starting in Q2.

So, if you could just maybe provide a bit more color to help us understand how that's all going to evolve over the year to get to that four-year guidance that you've provided.

Yeah, Fred, there's a lot of moving pieces, as you can imagine. If we all just look back, it's only been 370 days, I think, since we entered this new world of trade chaos. And we've navigated amazing through this with constant pivots and adjusting to what our plans are. We've put a plan together now to finish the balance of the year that delivers this range that we've put together on the volume. Some of that includes the swapping of some cargoes so that we'll We'll swap out a Brazilian origin for a non-Brazilian origin, so that allows us to continue to produce some products and deliver our contracted volumes. So, as I said, there's many things going on. As we've proved over the last four years, this is a group that knows how to pivot and maximize the opportunities and take advantage where we can.

Okay.

Thanks for that. That's all I have.

Thanks, Rick.

Your next question comes from Michael Van Elf with TD Securities. Your line is now open.

Thank you. So, just circling back on sugar, so you talked about lower volumes for the year and slightly higher gross margins, but then also some inflationary pressures and distribution and . So, do you, I think last quarter you said you expected sugar every day to be roughly stable this year. Is that something you still expect? I think we might slightly be better than what we did last year, and that's because some of the one time that we receive in the first quarter will actually stick. So if you look at the results of the first quarter, yes, there are timing issues, but there's also some non-recurring impact that are going to stick on our results for the year. So I think we should expect a slight improvement based on the Q1. I think for the remainder of the year, I think we'll be aligned to what we were initially expecting. Okay. And then on the maple side, you touched on or you commented that you changed your maple sourcing, and that's going to help stabilize gross margins. Can you explain what you did and how that's going to keep your margins a little more stable going forward?

Yeah. So, Michael, we haven't changed our sourcing. We've doubled down on our activity in making sure we hold syrup, like many of our competitors. you know, we bought inventory that was available through the feedback reserve, and so we hold that to ensure we cover our sales. And we're in the season now where we're all meeting with producers, and we're making sure that the producers know that, you know, we're a well-capitalized company, and we're available to take the syrup as the crop comes off. And so just continuing like we do on every other sector of our business, building relationships with growers, whether they're deep or cane growers in Brazil and Central America. So We're just applying our good disciplined approach to long-term business partnerships and making sure that people know who we are.

Okay, great. Thank you very much.

Ladies and gentlemen, as a reminder, should you have a question, please press star 1. Your next question comes from John Zampora with Scotiabank. Your line is now open.

Hi. Thanks for taking the follow-up. Mike, I think in your prepared remarks, you referenced that you were seeking out new opportunities for growth, and I wonder if you can unpack that a bit. I presume you're always trying to do that, but I wonder if there was anything that led you to make that comment in this quarter.

Yeah, sure. It seems to be what everybody's talking about in Canada these days, John. But we've been doing it. The maple business is distributed in over 50 countries. So this is not new for us. We've been in the maple business over seven years, and we're looking at those strong relationships and partnerships we've developed in those other countries and seeing where we can leverage it against other things. As a great example, we just had our commercial team and some others in Dubai on a trade mission and attending the Dubai Food Conference. So we're not going to sit on our laurels and wait for markets to come and correct themselves on our doorstep. We're going to theirs like we always have and we'll continue to do.

Okay. I appreciate that example. And I wanted to ask about pricing. You said that was contributing to some top-line growth in the quarter. I wonder what level of of resistance or how you characterize the resistance you're seeing to inflation, even if it's driven by commodities, there's, there's a good amount of pushback from consumers. Uh, there's a good amount of talk in the media about this. I wonder how those conversations go on passing through commodity driven pricing.

Yeah, we're very fortunate, uh, uh, in one, in one major respect is that the commodity number 11s are down to a four year lows. And, uh, because, as I said earlier in the call, we've got a slowdown globally on demand and a strengthening production side. So we're going to see lower commodity levels going forward, which really helps negate the food inflation that has anything to do with sugar. And we've seen cocoa prices come down dramatically in the last six months and more recently in the last two or three months. more correction. So, on the food inflation items that impact specifically sugar containing products and the high sugar content goods like we'd like to be in, we're seeing things improving rapidly on the cost side.

Okay. Thanks for that. And then last one, on the major maintenance that fell into FQ2 Two parts to this. Is that the typical amount? Is it annually about $8 million? And does that change once LEAP is completed? Do you still incur that level of maintenance expense, or does that decline once LEAP is done? Yeah, John, this is JS here. So $8 million is not all related to maintenance, so there's a portion of it, I'd say probably 50% is related to that. And our maintenance program is spent throughout the year. What we didn't spend in the first quarter was we have one major shutdown every year. And that didn't get spent, and a portion of that amount didn't get spent in the first quarter, and it got spent early in the second quarter. So we're not seeing, you know, obviously when LEED comes along, you will continue to have the same type of maintenance program on the current facility, and obviously we'll have incremental maintenance because the new assets will have to be maintained. And so, we will see some incremental maintenance that should be commensurate with the amount of volume that we are going to push through the system. Okay. Understood. Thank you.

I don't know for the questions at this time. I will now turn the call over to Mike Walton for closing remarks.

Well, thank you all for joining us today, and thank you for your continued interest in Roger Sugar. Of course, Roger Sugar is the only 100% Canadian-owned and operated sweetener company in Canada, and we look forward to seeing you on Q2. Have a good day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.