Rogers Sugar : Q3 2022 Report

Rogers Sugar reports higher Adjusted EBITDA supported by the strong performance of its Sugar Business Segment and announces its intention to expand the refining capacity of its Montreal plant and its related eastern distribution network.

Rogers Sugar Inc.'s ("our," "we", "us" or "Rogers") (TSX: RSI) today reported third quarter fiscal 2022 results with consolidated adjusted EBITDA of $23.1 million and $73.2 million for the current quarter and the first nine months of the year, respectively.

We are announcing today our intention to proceed with an expansion of our Montreal refining capacity along with an increase of our Toronto distribution centre logistic and rail infrastructures. The project would increase the eastern refined sugar supply by up to 100,000 metric tonnes annually at a current estimated construction cost of approximately $160 million. We are working with different stakeholders including customers, suppliers, financial institutions, rail providers and government authorities to finalize our plan. We are expecting to deliver this additional capacity to the market within the next two years. We intend to provide regular updates on the project in the coming months.

"The demand for Canadian refined sugar remained very strong in the third quarter of 2022, and we anticipate this situation to continue for the foreseeable future as market dynamics remain favourable," said Mike Walton, President, and Chief Executive Officer of Rogers and Lantic Inc. "We expect the strong market conditions of our Sugar segment will more than offset the challenges we are experiencing in our Maple segment from current inflationary pressures; providing for improved overall financial results in 2022 as compared to 2021." "We are also very excited about our expansion project aimed at supporting the growth of the Canadian food manufacturing industry with quality refined sugar."

Third Quarter 2022 Consolidated Highlights	Q3 2022	Q3 2021	YTD 2022	YTD 2021
(unaudited)
Financials ($000s)
Revenues	254,632	210,931	738,728	650,700
Adjusted gross margin(1)	32,654	25,932	104,341	89,792
Adjusted EBITDA(1)	23,108	17,214	73,187	66,237
Net earnings	3,138	6,836	28,934	31,387
per share (basic)	0.03	0.07	0.28	0.30
per share (diluted)	0.03	0.07	0.28	0.29
Adjusted net earnings(1)	8,419	4,247	28,498	24,246
Adjusted net earnings per share (basic)(1)	0.08	0.04	0.27	0.23
Trailing twelve months free cash flow(1)	49,480	42,084	49,480	42,084
Dividends per share	0.09	0.09	0.27	0.27
Volumes
Sugar (metric tonnes)	203,315	190,563	579,928	564,752
Maple Syrup (thousand pounds)	12,027	11,471	37,225	40,578

• 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 third quarter and the first nine months of fiscal 2022 was $23.1 million and $73.2 million respectively, an increase of $5.9 million and $7.0 million from the same periods last year, largely driven by higher adjusted EBITDA in the Sugar segment;
• Adjusted EBITDA in the Sugar segment was $20.0 million in the third quarter, an increase of $5.7 million from the same quarter last year, driven by higher volume, improved average pricing and higher production at our Taber sugar beet facility; partly offset by increased distribution costs and administrations and selling expenses;
• Sales volume in the Sugar segment increased by 6.7% to 203,315 metric tonnes in the third quarter of the current fiscal year, as sales volume increased in all segments compared to the same period last year;
• Adjusted gross margin in the Sugar segment improved by $24.73 per metric tonne in the third quarter of fiscal 2022 compared to the same quarter last year due to higher selling margin and a stronger contribution from our Taber sugar beet facility;
• Adjusted EBITDA in the Maple segment was $3.1 million in the third quarter, an increase of $0.2 million from the same quarter last year largely as a result of higher sales volume and improved average pricing, partially offset by higher operating costs driven by increased costs for packaging, freight and energy, as well as higher compensation and employee benefits;

• Free cash flow for the trailing 12 months ended July 2, 2022 was $49.5 million, an increase of $7.4 million from the same period last year;
• In the third quarter of fiscal 2022, we distributed $0.09 per share to our shareholders for a total amount of $9.4 million;
• On August 9, 2022, we signed a multi-year supply partnership agreement with Raízen, the largest individual raw sugar exporter on the international market based in Brazil, to source certified non genetically modified organism ("non-GMO") raw sugar for our eastern Canada operations. This new supply agreement will allow our Montreal facility to provide non-GMO refined sugar to our valued customers; and
• On August 10, 2022, the Board of Directors declared a quarterly dividend of $0.09 per share, payable on or before October 12, 2022.

Sugar

Third Quarter 2022 Sugar Highlights	Q3 2022	Q3 2021	YTD 2022	YTD 2021
(unaudited)
Financials ($000s)
Revenues	200,276	161,237	572,058	476,656
Adjusted gross margin(1)	28,195	21,714	90,844	74,204
Per metric tonne ($/ mt) (1)	138.68	113.95	156.65	131.39
Administration and selling expenses	8,067	8,163	26,594	21,202
Distribution costs	5,053	3,747	14,724	12,439
Adjusted EBITDA(1)	19,979	14,265	63,960	54,007
Volumes (metric tonnes)
Total volume	203,315	190,563	579,928	564,752

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

In the third quarter of fiscal 2022, revenue increased by $39.0 million compared to the same period last year, driven mainly by higher sales volume, higher prices for #11 world raw sugar, improved average pricing and higher by-product sales revenue. The average price for #11 world raw sugar increased by US 2.3 cent per pound to US 19.2 cent per pound during the current quarter when compared to the same quarter last year.

Sugar volume increased by 12,752 metric tonnes in the third quarter of fiscal 2022 compared to the same quarter last year, due mainly to stronger industrial and liquid volumes.

• Industrial volume contributed the largest increase in the quarter, due mainly to higher demand from existing customers producing sugar containing products for consumption in North America.
• Liquid volume during the current quarter also increased due to higher demand from existing customers.

Adjusted gross margin increased by $6.5 million in the current quarter compared to the same quarter last year mainly as a result of higher sugar sales margin of $12.2 million from higher sales volume, improved average pricing and increased by-product net contribution of $0.5 million. The favourable variance was partially offset by higher production costs mainly driven by increased volume and higher energy and labour costs. On a per unit basis, adjusted gross margin for the third quarter was at $138.68 per metric tonne, higher than last year by $24.73 per metric tonne. The favourable variance was mainly due to the increase in overall margin from higher volume, improved selling prices, and higher production of beet sugar out of our Taber facility, as compared to last year. In 2021, our Taber facility produced less sugar as the quality of the beets was negatively impacted by unfavourable storage conditions.

Adjusted EBITDA for the third quarter of fiscal 2022 increased by $5.7 million compared to the same quarter last year, largely as a result of higher adjusted gross margin, as mentioned above, partially offset by higher distribution costs largely driven by higher freight costs and additional logistical costs incurred to support the strong demand in eastern Canada.

Maple

Third Quarter 2022 Maple Highlights	Q3 2022	Q3 2021	YTD 2022	YTD 2021
(unaudited)
Financials ($000s)
Revenues	54,356	49,694	166,670	174,044
Adjusted gross margin(1)	4,459	4,218	13,497	15,588
As a percentage of revenues (%) (1)	8.2%	8.5%	8.1%	9.0%
Administration and selling expenses	2,560	2,563	7,639	7,078
Distribution costs	447	529	1,718	1,864
Adjusted EBITDA(1)	3,129	2,949	9,227	12,230
Volumes (thousand pounds)
Total volume	12,027	11,471	37,225	40,578

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

Revenues for the third quarter of the current fiscal year were $4.7 million higher than the same period last year at $54.4 million, mainly due to higher volume and higher sales price.

Adjusted gross margin for the current quarter of fiscal 2022 was higher by $0.2 million due to higher volume and higher sales price, partially offset by higher operating costs. Operating costs increased largely as a result of higher packaging, freight and energy costs as well as increased compensation cost and employee benefits incurred to attract and retain employees in our production facilities.

Adjusted gross margin percentage for the current quarter decreased by 30 basis point compared to the same period last year, mainly attributable to market-based production cost increases discussed above and the timing of passing these increases through to our customers.

Adjusted EBITDA for the third quarter of fiscal 2022 increased by $0.2 million, due to higher 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 safety protocols in place. To date our plants have operated without any significant 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.

As a result of the strong demand and improved margins, we are experiencing in our Sugar segment, we continue to expect improved financial performance in 2022 as compared to 2021. The strength in our Sugar segment is expected to offset higher costs from inflationary pressures and lower demand in the Maple segment.

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 favourable market dynamics.

In Taber, the sugar beet processing campaign was completed and delivered the expected volume of sugar. Overall, 121,000 metric tonnes of sugar are expected from our Taber facility in the current fiscal year, an increase of 6,000 metric tonnes from last year.

Due to the strong market conditions in our Sugar segment, we are increasing our sales volume forecast for 2022 by 10,000 metric tonnes to 785,000 metric tonnes. We expect domestic volumes to grow by 2.5% from 2021, while our export volumes are expected to be lower as a result of reduced CUSMA quota opportunities in the current year. Overall, 2022 volumes are expected to be approximately 5,000 metric tonnes higher than 2021, with volumes expected to change as follows in 2022:

• Industrial, our largest segment, is expected to grow at 3% as demand for sugar-containing products remains steady both in Canada and the US.
• Liquid volume is expected to deliver growth of 3% driven by continued demand from existing customers.
• Consumer volume is expected to decrease by 2.5%, as volumes return to normalized pre-COVID levels.
• We anticipate selling less in the export markets in 2022, due to reduced CUSMA opportunities.

The combination of higher volume and 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 market-based increase in operating costs. For the Taber facility, a return to normal crop volume and an improvement in the quality of the sugar beets over 2021 is expected to yield an improvement in operating costs.

Distribution costs are expected to increase overall by 30% from 2021, reflecting additional transfers of volume from the west to the east to meet customer demand and higher market prices for warehousing, rail and ground transportation.

Administration and selling expenses are expected to increase by 25% due to a non-cash increase in share-based compensation expense driven by the increase in share price noted in recent quarters, partially offset by lower COVID-19 related expenditures.

Spending on capital projects is also expected to be lower for fiscal 2022, due to timing and supply chain challenges. We anticipate spending approximately $20.0 million on various capital projects.

We have been able to mitigate the potential unfavourable impact on our business of the recent increases in interest rates and energy costs through our multi-years 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.

Maple

The Maple segment financial results were lower than anticipated for the first nine months of 2022, due mainly to lower volume and unexpected inflationary pressure on costs for packaging material, freight, and labour; along with global shipping challenges related to the availability of carriers. We expect these financial and operating pressures to continue for the remainder of 2022. At the end of the second quarter, we began implementing an updated pricing strategy with our customers, aimed at recouping these incremental costs going forward. The expected improvement in pricing to customers to recover these unanticipated cost increases is not occurring as fast as initially anticipated. This is due to the current market conditions and the competitiveness of the Maple Syrup market, which has been impacted by a strong crop in 2022.

A full copy of Rogers third 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

We will host a conference call to discuss our third quarter of fiscal 2022 results on August 11, 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 August 25, 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:

• our intention to increase sugar refining capacity and the related eastern Canada distribution network
• the impact of the COVID-19 pandemic on our operations
• future prices of raw sugar
• expected inflationary pressures on costs
• 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 our ability to finance and complete the expansion project of our Montreal plant and eastern distribution network, 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.

For further information

Mr. Jean-Sébastien Couillard

Vice President of Finance, Chief Financial Officer and Corporate Secretary

Phone: [phone]

Email: [e-mail]