ROGER SUGAR REPORTS FOURTH QUARTER 2021 RESULTS, SOLID PERFORMANCE FROM THE MAPLE AND SUGAR SEGMENTS, DRIVEN BY STEADY DEMAND FROM CUSTOMERS
Rogers Sugar Inc. has provided its fourth quarter fiscal 2021 results with consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $24.8-million and $91.0-million for the current quarter and the year, respectively.
"We are pleased with the results achieved in the fourth quarter in both of our business segments, as we met our volume targets with improved overall sales margins," said Mike Walton, president and chief executive officer of Rogers and Lantic Inc. "In 2021, our team delivered strong financial results as we successfully navigated through unfavorable crop conditions in Alberta and the continued impacts of a global pandemic on customer demand and supply chain. This performance is a testament to the collaboration and dedication of our employees and of our operational flexibility to ensure customer needs were met.
"Over the next year, we anticipate improved financial performance for both of our business segments, supported by normal operating conditions in Alberta and a return to a more traditional and profitable sales mix. This will allow us to continue to create value for our shareholders."
FOURTH QUARTER 2021 CONSOLIDATED HIGHLIGHTS Q4 2021 (1) Q4 2020 (1) FY 2021 (2) FY 2020 (2) Financials ($000s) Revenues $243,231 $246,212 $893,931 $860,801 Adjusted gross margin 31,020 40,065 120,811 126,118 Adjusted EBITDA 24,786 31,231 91,022 92,259 Net earnings 16,140 12,952 47,527 35,419 per share (basic) 0.16 0.13 0.46 0.34 per share (diluted) 0.15 0.12 0.44 0.34 Adjusted net earnings 9,620 14,551 33,866 35,245 Adjusted net earnings per share (basic) 0.09 0.14 0.33 0.34 Trailing twelve months free cash flow 45,505 46,537 45,505 46,537 Dividends per share 0.09 0.09 0.36 0.36 Volumes Sugar (metric tonnes) 214,753 225,396 779,505 761,055 Maple Syrup (thousand pounds) 11,678 13,181 52,255 53,180 (1) The fourth quarter of fiscal 2021 consists of 13 weeks and the fourth quarter of 2020 consists of 14 weeks. (2) Fiscal 2021 consists of 52 weeks and fiscal 2020 consists of 53 weeks.
- The fourth quarter and the 2021 fiscal year consist of 13 weeks and 52 weeks respectively, while the comparative periods for last fiscal year consisted of 14 weeks and 53 weeks respectively. The impact of the additional week of fiscal 2020 on volume for the sugar segment and the maple segment is approximately 15,000 metric tonnes of sugar and one million pounds of maple syrup.
- Consolidated adjusted EBITDA for the fourth quarter of 2021 was $24.8-million, down $6.4-million from the same quarter last year, driven by lower adjusted EBITDA in the sugar segment including approximately $6.0-million of non-recurring variances, partially offset by higher adjusted EBITDA in the maple segment.
- Adjusted EBITDA for the 2021 fiscal year was $91.0-million, down 1.3 per cent from the same period in 2020, largely as a result of lower adjusted EBITDA in the sugar segment, partially offset by higher adjusted EBITDA in the maple segment.
- Sales volume in the sugar segment decreased by 4.7 per cent to 214,753 metric tonnes in the fourth quarter of 2021, including the 2020 extra week impact of approximately 15,000 metric tonnes making volume higher than the same quarter last year. For the whole 2021 fiscal year, volume was 779,505, an increase of 2.4 per cent compared with 2020, despite one less week in 2021.
- Adjusted EBITDA in the maple segment was $4.2-million in the fourth quarter, an increase of $900,000 or 27.8 per cent from the same quarter last year as a result of lower operating costs, lower administration and selling expenses as well as lower distribution costs.
- Free cash flow for the trailing 12 months ended Oct. 2, 2021, was $45.5-million, slightly lower than the prior year balance of $46.5-million.
- In the fourth quarter of 2021, the company distributed nine cents per share to its shareholders for a total amount of $9.3-million.
- On Aug. 6, 2021, the Canadian International Trade Tribunal issued a decision to pursue its order against dumped and subsidized sugar from the United States, European Union and the United Kingdom. Anti-dumping and countervailing duties will continue to be applied on imported sugar from these regions. The applicable future tariff for anti-dumping and countervailing duties is currently under review by the Canadian Border Service Agency. A decision is expected later in 2022.
- On Aug. 23, 2021, the company announced that John Holliday, president and chief executive officer of Rogers Sugar and Lantic, would retire. Mike Walton, previously chief operating officer of Lantic and president of TMTC, has been appointed president and CEO of Rogers Sugar and Lantic effective Oct. 4, 2021, with Mr. Holliday staying with the organization in an advisory role for the next few months.
- On Oct. 27, 2021, after several months of negotiations, the company reached an agreement for the renewal of the collective labour agreement with the main union at its Montreal facility for a period of five years.
- On Nov. 23, 2021, the company extended the maturity of its revolving credit facility to Nov. 23, 2026, and it amended the revolving credit facility by reducing the available credit by $65-million, from a total of $265-million to $200-million.
- On Nov. 24, 2021, the board of directors declared a quarterly dividend of nine cents per share, payable on or before Feb. 1, 2022.
Outlook
The health and safety of the company's employees remain its top priority. Rogers Sugar is closely following all COVID-19 public health authority recommendations and has enhanced safety protocols in place. Since the beginning of the COVID-19 pandemic, the company's plants have operated without significant disruption. The uncertainty and increased demand volatility continue to make it difficult to estimate the impact on future sale volumes, operations and financial results. Rogers Sugar is closely monitoring the situation and will continue to adapt quickly to the changing circumstances.
In fiscal 2021, the company's financial results for its sugar segment were negatively impacted by issues it anticipates will not occur in 2022. Over all, Rogers Sugar believes its adjusted EBITDA of 2021 was negatively impacted by over $10.0-million in relation with such issues. This includes weather-related unfavourable impacts with its sugar beets in Alberta, the costs associated with the recognition of prior period past service charge related to the new Montreal refinery collective bargaining agreement, and the lingering effects of COVID-19-related expenditures for preventive measures and logistics.
Recognizing these unusual conditions in fiscal 2021, the company expects, for 2022, improved financial performance across both of its business segments, supported by strong demand for sugar and maple syrup and improved margins in both sectors.
Sugar
The company expects the sugar segment to perform well in fiscal 2022. The underlying demand remains strong across all its customer segments in its domestic market while it is anticipating a reduction in the export market. The company also anticipates a return to normal for its beet sugar operations in Taber for 2022. Thus far, the 2021 harvest season has delivered the expected volume of sugar beets. The processing of the sugar beets is currently going according to schedule and is expected to be completed by the end of February.
Rogers Sugar expects sales volume for 2022 to reach approximately 770,000 metric tonnes, representing a reduction of 9,500 metric tonnes compared with 2021. While the company anticipates the domestic volume to grow steadily at 2 per cent, exports opportunities will not be as high as in 2021, resulting in a reduction in volume. Over all, the company sees the following volumes variances for its customer segments:
- Industrial, which is the company's largest segment, is expected to grow at a modest 1 per cent as demand for sugar-containing products remains steady both in Canada and the United States.
- Liquid volume is expected to deliver growth of approximately 2 per cent to 3 per cent driven by continued demand from existing customers as well as new customer acquisitions.
The company also expects its consumer business to be up 2 per cent to 3 per cent, which is more in line with normalized growth that it experienced pre-COVID-19.
The company anticipates to sell less into export markets in 2022 since it does not foresee the United States issuing a tariff rate quota and the market dynamics for high-tier sales are not as favourable.
Despite the reduction of total volume, favourable price mix will contribute to improved profitability as compared with 2021.
Maintenance programs for the Montreal and Vancouver operating facilities are expected to follow the trend of previous years and should provide for marginal increase in operating costs. For the Taber facility, a return to normal and an improvement in the quality of the sugar beet over 2021 is expected to yield improvement in operating costs.
Spending on capital projects is also expected to be similar to recent periods. For fiscal 2022, the company anticipates spending approximately $25.0-million on various capital projects, with approximately a quarter allocated to return-on-investment projects.
Maple
For fiscal 2022, the company expects the maple business segment to outperform the 2021 results. Its outlook is mainly based on expected improvement to sales margins, a trend established in 2021 and driven by successful contract negotiations with new and existing customers.
Competitive pressures in the maple industry, along with market volatility from the COVID-19 pandemic, have impacted the pace of margin improvement in 2021. For 2022, Rogers Sugar anticipates an increase in margin from new agreements negotiated with new and existing customers and volume to remain stable at approximately 52 million lb.
In addition, the company expects to continue to drive lower operating costs through continuing optimization at its manufacturing facilities and efficiency improvements provided by the investments made in its facilities at Granby and Degelis.
Capital investments have been reduced significantly for the maple segment since 2021, considering the expenditures incurred over the past few years improved and increased the production capacity. The company continues to expect steady growth in demand for maple-related products although it expects a tempering from the increase seen during the period of COVID-19.