Rogers Sugar : Q4 2020 Report

Rogers Sugar Inc.

Press release - 4th Quarter 2020 Results

• ADJUSTED EBITA OF $92.3 MILLION FOR FISCAL 2020 - 5% INCREASE OVER PRIOR YEAR
• SUGAR REVENUES HIGHER DUE TO RECORD BREAKING SALES VOLUMES IN THE FOURTH QUARTER ACROSS ALL MARKET SEGMENTS
• STRONG SALES VOLUME IN MAPLE DRIVING HIGHER REVENUE FOR THE QUARTER AND THE YEAR

Rogers Sugar Inc.'s (the "Company" or "Rogers") (TSX: RSI) today reported fourth quarter and year-to-date fiscal 2020 results. The Company recorded adjusted EBITDA (1) of $31.2 million and $92.3 million for fourth quarter and fiscal 2020, respectively, versus $22.2 million and $87.8 million for the comparable periods last year.

"Our strong fiscal 2020 performance is a direct result of the efforts of our agile committed team and our long-term strategic vision to continue to build a resilient, successful company," said John Holliday, President and Chief Executive Officer of Rogers and Lantic Inc. "During the year, we generated higher revenue, improved margins, and increased free cash flow, all while dealing with the impacts of a global pandemic, a severely curtailed beet harvest and rail blockades. During this time, the safety of our people has remained our top priority and by implementing thorough safety practices and protocols, our operations have continued to perform at full capacity. In addition, we successfully restructured our supply chain to ensure our customers' needs were met while also completing our capital improvement projects that will drive long-term efficiency and cost improvements. Looking forward to fiscal 2021, we expect that our strong performance will continue due to the continued firm demand from our customers and to a reduction in operational and distribution costs mostly related to the return of a normal harvest and beet sugar production in Taber."

Update on COVID-19

In December 2019, a novel strain of coronavirus, known as COVID-19 was identified. As of March 20, 2020, COVID-19 had spread to over 100 countries and been declared a pandemic by the World Health Organization. COVID-19 has negatively impacted the global economy, disrupted financial markets and supply chain, significantly restricted business travel and interrupted business activity.

Our business is considered essential services by the government and as such, the Company's plants have continued to operate at usual capacity. The Company has established extensive protection measures and protocols to ensure the health and safety of its employees. COVID-19 could have a material effect on our business as it relates to customer demand, supply and delivery chain, operations, financial market volatility, pension and benefits liabilities and other economic fundamentals.

The effect of COVID-19 on our business may continue for an extended period and the ultimate impact on the Company will depend on future developments that are uncertain and cannot be predicted, including and without limitations, the duration and severity of the pandemic, the duration of the government support measures, the effectiveness of the actions taken to contain and treat the disease, and the length of time it takes for normal economic and operating conditions to resume.

Rogers Sugar Inc.

Press release - 4th Quarter 2020 Results

Fourth Quarter Highlights

Highlights of the consolidated results are as follows:

(unaudited)				Fourth Quarter				Fiscal Year
(In thousands of dollars, except volume and per share information)	2020		2019		2020		2019
Sugar (metric tonnes)		225,396			196,903			761,055				741,144
Maple syrup ('000 pounds)		13,181			10,163			53,180				42,377
		$			$			$				$
Total revenues		246,212			207,572			860,801				794,292
Gross margin	37,890			29,073		126,199			122,575
Results from operating activities		22,829			(32,800)			68,010				24,147
Net (loss) earnings		12,952			(40,021)			35,419				(8,167)
Net (loss) earnings per share (basic)	0.13			(0.38)		0.34			(0.08)
Net (loss) earnings per share (diluted)		0.12			(0.38)			0.34				(0.08)
Dividends per share		0.09			0.09			0.36				0.36
Non- IFRS results (1)	40,065					126,118
Adjusted Gross Margin (1)			29,026			116,578
Adjusted results from operating activities (1)		25,004			17,153			67,929			68,150
Adjusted EBITDA (1)		31,231			22,215			92,259			87,808
Adjusted net earnings (1)	14,551			9,910		35,245		37,079
Adjusted net earnings per share (basic) (1)		0.14			0.09			0.34			0.35
Trailing twelve months free cash flow (1)		40,001			30,843			40,001			30,843

• 1. See "Non-GAAP Measures" section of the MD&A for definition and reconciliation to GAAP measures
• Adjusted EBITDA of $92.3 million and free cash flow of $40.0 million were better than 2019 by $4.5 million and $9.2 million respectively;
• Record sales volume for sugar in the fourth quarter of 2020 at 225,396 metric tonnes, representing a normalized increase of 7.3% when considering the extra week of production of the current quarter;
• Lower adjusted EBITDA in Maple despite higher customer demand caused by continuous market competition pressuring margins
• For the year, the Company incurred unforeseen expenses amounting to $3.4 million in relation with COVID-19. These costs were largely due to increased health and safety measures and premium pay for employees;
• During the year, RSI purchase and cancelled 1,377,394 shares for a total cash consideration of $6,5 million
• In fiscal 2020, RSI distributed $0.36 per share to its shareholders for a total amount of $37.4 million; and
• On November 25, 2020, the Board of Directors declared a quarterly dividend of $0.09.

Please refer to the MD&A for additional details on the consolidated results of the Company.

Rogers Sugar Inc.

Press release - 4th Quarter 2020 Results

Segmented Information

The following is a table showing the key results by segments:

Consolidated results		Fourth Quarter Fiscal 2020						Fourth Quarter Fiscal 2019
(In thousands of dollars)				Maple									Maple
		Sugar		Products		Total					Sugar		Products		Total
Revenues	$	188,666	$	57,546	$	246,212				$	159,432	$	48,140	$	207,572
Gross margin		32,198		5,692		37,890					24,643		4,430		29,073
Administration and selling expenses		7,803		2,589		10,392					4,730		2,622		7,352
Distribution costs		4,197		472		4,669					3,465		1,056		4,521
Goodwill impairment		-		-		-					-		50,000		50,000
Results from operating activities (EBIT)	$	20,198	$	2,631	$	22,829				$	16,448	$	(49,248)	$	(32,800)
Non- GAAP results (1)
Adjusted Gross Margin (1)	$	35,503	$	4,562	$	40,065				$	24,358	$	4,668	$	29,026
Adjusted results from operating activities (Adjusted
EBIT) (1)	$	23,503	$	1,501	$	25,004				$	16,163	$	990	$	17,153
Adjusted EBITDA (1)	$	27,982	$	3,249	$	31,231				$	19,662	$	2,553	$	22,215
Additional information:
Addition to property, plant and equipment and		8,394		578		8,972
intangible assets								7,054		1,081		8,135
Consolidated results				Fiscal 2020									Fiscal 2019
(In thousands of dollars)				Maple									Maple
		Sugar		Products		Total					Sugar		Products		Total
Revenues	$	631,263	$	229,538	$	860,801				$	595,878	$	198,414	$	794,292
Gross margin		105,088		21,111		126,199					100,301		22,274		122,575
Administration and selling expenses		27,959		10,981		38,940					21,609		9,962		31,571
Distribution costs		16,266		2,983		19,249					13,153		3,704		16,857
Goodwill impairment		-		-		-					-		50,000		50,000
Results from operating activities (EBIT)	$	60,863	$	7,147	$	68,010				$	65,539	$	(41,392)	$	24,147
Non- GAAP results:
Adjusted Gross Margin (1)	$	106,212	$	19,906	$	126,118			$	94,032	$	22,546	$	116,578
Adjusted results from operating activities (Adjusted
EBIT)(1)	$	61,987	$	5,942	$	67,929			$	59,270	$	8,880	$	68,150
Adjusted EBITDA (1)	$	78,877	$	13,382	$	92,259			$	73,135	$	14,673	$	87,808
Additional information:
Addition to property, plant and equipment and		20,711		6,569		27,280
intangible assets								22,645		4,468		27,113

1. See "Non-GAAP Measures" section of the MD&A for definition and reconciliation to GAAP measures

Sugar

Strong performance in the sugar segment in the fourth quarter and full year fiscal 2020 was driven by increased volumes across almost all segments of the sugar business and improved adjusted gross margin. Approximately 14,000 metric tonnes of the volume increase in the fourth quarter and the current year is attributable to the extra week of fiscal 2020.

(In thousands of dollars, except volume)		Fourth Quarter			Fiscal Year
		2020		2019			2020		2019
Revenues	$	188,666	$	159,432		$	631,263	$	595,878
Volume (MT) as at September 28, 2019		196,903					741,144
Variation:										(MT
Industrial		10,367					(10,850)
Consumer		5,818					19,770
Liquid		5,418					5,642
Export		6,890					5,349
Total variation		28,493					19,911
Volume as at October 3, 2020		225,396					761,055

Rogers Sugar Inc.

Press release - 4th Quarter 2020 Results

Revenues increased in the fourth quarter of fiscal 2020 and for the year due to an extra week of operation in fiscal 2020, higher weighted average raw sugar values in Canadian dollars as well as an increase in overall volumes.

Volumes in the industrial market segment increased in the fourth quarter mostly due to the extra week of shipments and the return to normal demand for certain large industrial accounts earlier impacted by the COVID-19 pandemic. For the full year, industrial volumes were lower than last year due to reduced demand in the third quarter driven by the COVID-19 pandemic which resulted in less demand for manufacturing of food products destined for the food service sector. Industrial volumes were also impacted by the non-recurring sales to a competitor that occurred in the first quarter of fiscal year 2019 and by the rail blockades that took place in the second quarter of the current fiscal year, which created difficulties in servicing our Ontario customers.

Consumer volumes increased in the fourth quarter and full year in 2020 due to the extra week of shipments in the current year and continued strong retail demand driven by the increase in home baking associated with the COVID-19 pandemic.

Liquid volumes increased in the current quarter and the current year as a result of the extra week of shipments in 2020 along with additional demand from existing customers.

Finally, export volumes increased in the current quarter and the full year driven by additional U.S. global refined Tariff-Rate Quotas ("TRQ") in fiscal 2020. In total the Company sold 5,349 metric tonnes more than in the previous year. Most of the extra volume was sold in the fourth quarter of 2020. The export sales for 2020 amounted to approximately 57,000 metric tonnes of which approximately 18,000 metric tonnes were entered against the various US refined TRQs.

		Fourth Quarter					Fiscal Year
(In thousands of dollars, except per metric tonne information)		2020		2019					2020		2019
Gross margin	$	32,198	$	24,643				$	105,088	$	100,301
Total adjustment to cost of sales (1) (2)		3,305		(285)					1,124		(6,269)
Adjusted gross margin (1)	$	35,503	$	24,358			$	106,212	$	94,032
Gross margin per metric tonne	$	142.85	$	125.15			$	138.08	$	135.33
Adjusted gross margin per metric tonne	$	157.51	$	123.71	$	139.56	$	126.87
Included in Gross margin:	$	3,920			$	14,918
Depreciation of property, plant and equipment and right-of-use assets	$	3,298	$	13,072

1. See "Non-GAAP Measures" section of the MD&A for definition and reconciliation to GAAP measures
2. See "Adjusted results" section of the MD&A

Adjusted gross margin for the current quarter was $11.1 million or 45.8% higher than the last quarter of fiscal 2019. For the fourth quarter of 2020, the adjusted gross margin per metric tonne was $33.80 higher than the prior year. The favourable variance in adjusted gross margin per metric tonne was mainly related to higher sales volume in the grocery and exports segments.

For fiscal 2020, adjusted gross margin increased by $12.2 million or 13%. For fiscal 2020, adjusted gross margin per metric tonne increased by $12.69 compared to fiscal 2019. The favourable variance in adjusted gross margin per metric tonne was again mainly related to higher sales volume in the grocery and export segments and from lower volume originating from our beet sugar plant in Taber.