Slides
Page 1
Annual Meeting of Shareholders February 5, 2025 Rogers Sugar Inc. TSX: RSI The Canadian Leader In Quality Sugars And Sweeteners Since 1888
Page 2
Forward-looking Statements 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: • The potential impact of US tariffs on export sales of refined sugar, sugar containing products and maple products; • Future demand and related sales volume for refined sugar and maple syrup; • our LEAP Project; • future prices of Raw #11; • natural gas costs; • beet sugar production forecast for our Taber facility; • the level of future dividends; • the status of government regulations and investigations; and • projections regarding future financial performance. 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, 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 this 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 MD&A and we do not undertake any obligation to update or revise any forward-looking information, whether a result of events or circumstances occurring after the date hereof, unless so required by law. 2
Page 3
Our Strategy We seek to generate consistent, profitable and sustainable growth by optimizing our business in order to meet the needs of our customers. Rogers Sugar Inc. The holding company of Lantic Inc. Lantic makes sugar and other all-natural sweeteners under the Rogers and Lantic brands. Lantic owns The Maple Treat Corporation that makes all- natural maple products. TSX: RSI 3
Page 4
4 Our Operations
Page 5
5 Be a great company to Partner with, Work for, and Invest in, by offering a best-in-class portfolio of natural sweetener solutions. We are an essential link in the food supply chain. Our Vision
Page 6
Investment Highlights • A focus on consistent, profitable and sustainable growth has generated a third consecutive year of strong financial results • As the largest publicly traded Canadian sweetener producer, Rogers offers investors the opportunity to benefit from: o Growth in the North American sugar market o Global appeal of Maple products segment • Rogers is further optimizing and growing its business through the "Rogers Refined" program to drive strong results and harness supportive demand trends • Consistent quarterly dividend of 9 cents per share 6
Page 7
Rogers Refined Consistent Profitable Growth and Cash Generation Consistent adjusted EBITDA and cash flow growth to fund business and investment, and dividends to shareholders • Third straight year of growth in adjusted EBITDA • Growing free cash flow to fund growth investments, strengthen balance sheet and improve financial profile. Better company, better investment. 7
Page 8
8 2024 in Review
Page 9
• Secured financing for LEAP and advanced construction • Concluded labour agreement in Vancouver • Expanded sustainable sourcing initiative 2024 Achievements 9 $1.2B Record Revenues 12% $142M Record Adjusted EBITDA 28% $67M Adjusted Net Earnings 50% $73M Free Cash Flow 60% $736M1 Market Capitalization 6.3%1 Dividend yield 1. As of February 5, 2025.
Page 10
0 20 40 60 80 100 120 140 1 2 0 200 400 600 800 1,000 1,200 1 2 2024: A Year of Strong Contributions from Both Segments ADJUSTED EBITDA ($millions) 12% 28% MAPLE SUGAR REVENUE ($millions)
Page 11
11 • Temporary volume headwinds due to impacts of inflation and labour disruption in first half of 2024 • Underlying demand trends continue to be healthy in our markets SUGAR SALES VOLUME (Metric tonnes) Volume Impacted by Labour Action and Inflation 761,055 779,505 794,600 795,307 753,333 2019.5 2020 2020.5 2021 2021.5 2022 2022.5 2023 2023.5 2024 2024.5 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1 2 3 4 5 Series1 Series2 Series3 Series4
Page 12
0 200 400 600 800 1000 1200 1 2 3 4 5 +12% CAGR Strong Markets Drive Revenue Growth in Sugar • Sugar revenues increased by 12% to $998 million • Five-year revenue CAGR of 12% REVENUES ($millions)
Page 13
Improved Pricing Drives Margin Expansion • Adjusted EBITDA in Sugar increased 27% to $124 million driven by improved pricing for sugar refining activities 0 50 100 150 200 250 10,000 30,000 50,000 70,000 90,000 110,000 130,000 1 2 3 4 5 Series1 Series2 ADJUSTED EBITDA ($00s) ADJUSTED OPERATING MARGIN/MT ($CAD)
Page 14
An Update on LEAP: Our Eastern Expansion Project LEAP will expand our production capacity by an estimated 100,000 metric tonnes • Total cost estimate to complete is $280- $300 million • Contributors to updated cost estimate: • Design additions driven by complexity of project, repurposing of an older facility in Montreal • Market-based increases in construction costs • New safety regulations • Completion targeted for end of fiscal 2026 • Planning and design phases are complete, construction phase is underway • Equipment has been ordered and is arriving in Montreal • Financing plan is in place and scalable • Greater cash from on-going operations • Increased revolving credit facility • Equity issue completed • Loans agreements with IQ secured Progress Updates 14
Page 15
Maple Volume • Volume increased by 3.1 million pounds as compared to 2023, mainly driven by higher customer demand • Favourable harvest allows for replenishment of reserves 0 10,000 20,000 30,000 40,000 50,000 60,000 1 2 3 4 5 MAPLE SALES VOLUME (000 Lbs) 15
Page 16
Improved Profitability in Maple • Adjusted EBITDA increased by 36% to $18 million in fiscal 2024 compared to last year 0% 2% 4% 6% 8% 10% 12% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 1 2 3 4 5 Series1 Series2 16 ADJUSTED EBITDA ($000s) ADJUSTED GROSS MARGIN (%)
Page 17
• Strong performance from both business segments, drives record full year adjusted EBITDA in 2024 • Our business has a stable base supporting its financial performance from year to year FY 2024 FY 2023 FY 2022 SUGAR (MT) 753,333 795,307 794,600 MAPLE SYRUP (‘000 POUNDS) 46,947 43,871 47,063 (000’s) ADJUSTED EBIT $112,760 $84,568 $75,990 ADJUSTED EBITDA $141,603 $110,854 $102,138 ADJUSTED NET INCOME $66,660 $44,494 $40,659 17 Consolidated Non-GAAP Results
Page 18
• Increase of $28M in Free Cash Flow over 2023 mainly related to strong financial results • Increase in capital expenditures due mainly to investment in production assets • 2024 dividend payout ratio fell to 60% (000’s) FY 2024 FY 2023 FY 2022 OPERATING ACTIVITIES: CASH FLOW FROM OPERATING ACTIVITIES $79,790 $44,318 $21,552 NON-CASH ITEMS/DERIVATIVE FINANCIAL INSTRUMENTS $29,680 $30,855 $49,041 $109,470 $75,173 $70,593 FINANCING ACTIVITIES: PAYMENT OF LEASES OBLIGATION $(6,700) $(5,419) $(5,150) PAYMENT OF DEFERRED FINANCING FEES $(646) $(1,308) $(268) $(7,346) $(6,727) $(5,418) INVESTMENT ACTIVITIES: TOTAL CAPITAL EXPENDITURES, EXCLUDING LEAP PROJECT RELATED CAPITAL EXPENDITURES $(32,506) $(25,654) $(23,730) LESS: OPERATIONAL EXCELLENCE CAPITAL EXPENDITURES $3,723 $2,973 $5,306 $(28,783) $(22,681) $(18,424) FREE CASH FLOW $73,341 $45,765 $46,751 DECLARED DIVIDENDS $44,000 $37,750 $37,500 Dividend Payout Ratio: 60% 82% 80% 18 Consolidated Free Cash Flow
Page 19
19 2025 Outlook
Page 20
20 Outlook for 2025 • Based on the recent trend, we expect consistent financial performance in 2025, with expected volume of 800,000 metric tones in sugar and growth in demand in Maple. • However, the expected sales volume and consistent financial performance of both of our business segments could be impacted by potential tariffs on exports to the US. The potential impact on RSI would depend on the following: – The quantum of the tariffs – currently expected at 25% – The timing and duration of the tariffs – The impact on some our domestic sugar industrial and liquid customers that are exporting sugar containing product to the US • Progress on LEAP expansion project • Continued focus on maintaining a strong balance sheet
Page 21
21 • Providing a safe and healthy working environment for our employees • Continuing our focus on excellence in customer service, while adapting our business to potential changes in trade policies with the US • Making progress on our LEAP Project to increase our production and logistics capability • Building on momentum from operational improvements in our Maple segment • Advancing our ESG initiatives Delivering value to shareholders through, consistent, sustainable and profitable growth Fiscal 2025 Focus