Rogers Sugar Inc.: 2nd Quarter 2020 Results

ALL PLANTS FULLY OPERATING WITH NO SIGNIFICANT FINANCIAL IMPACT FROM
COVID-19 IN THE QUARTERMONTREAL, May 05, 2020 (GLOBE NEWSWIRE) — Rogers Sugar Inc. (the “Company” or “Rogers”) (TSX: RSI) today reported its second quarter fiscal 2020 results. The Company recorded adjusted EBITDA ⁽¹⁾ of $16.5 million and $46.7 million for the current quarter and year-to-date, in line with the comparable periods last year.“The COVID-19 pandemic has made the past few months very challenging for us all and had far reaching health and economic impacts,” said John Holliday, President and Chief Executive Officer of Rogers and Lantic Inc. “As an essential service, our operations have continued uninterrupted and serviced uncharacteristically strong consumer demand. Our employees have risen to the challenge of adapting to new processes, implemented to keep them safe and to keep our production moving during these unprecedented times. Without their commitment and care, our ability to deliver essential products, such as sugar and maple syrup, to our customers would not be possible. We truly appreciate their efforts and will continue to operate in a safe and responsible way that protects our people and our products.”Impact of COVID-19The operations of each of our Sugar and Maple products segments are considered as an essential service and as a result, the Company’s plants have continued to operate fully, despite the COVID-19 pandemic.  While most of our salaried employees are able to work from home, employees in our operations have continued to come to work and as result, our production volumes have not been significantly impacted by COVID-19.  The health and safety of our employees is our top priority and the Company has put in place extensive protection measures, including a special committee comprised of representatives from each site that meets on a daily basis, social distancing measures, additional personal protective equipment requirements, increased sanitation and rigorous disinfection procedures, temperature monitoring of all personnel prior to entry into one of our locations as well as daily follow-ups by the Company’s nurses regarding all health related questions and concerns.  For the second quarter, the financial impact of COVID-19 has been minimal for both segments. Second Quarter HighlightsHighlights of the consolidated results are as follows:⁽¹⁾ See “Non-GAAP Measures” section of the MD&A for definition and reconciliation to GAAP measures
⁽²⁾ The current period results include the impacts from the adoption of the new IFRS 16 Leases as discussed in note 3 (b) of the unaudited condensed consolidated interim financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparableCOVID-19 added complexity to our manufacturing operations but did not have a significant financial impact for the quarter as operations at each of our Sugar and Maple products segments are considered as an essential service and the Company’s plants have continued to operate fully.Total sugar volume was in line with the prior year.Overall Adjusted EBITDA ⁽¹⁾ was comparable to the prior year for the quarter and year-to-date as the increase in the Sugar segment was offset by a decrease in the Maple products segment.The final step in the maple segment footprint optimization project was completed during the quarter with the physical move to the new Granby location at the end of January.  Commissioning of the new bottling line continued during the quarter.   While gradual improvements were made since the start-up and further line efficiencies are expected in Granby in the future, the temporary increase in headcount and overtime, has contributed in increasing production volume which increased sales and operating costs in the current year. The footprint optimization is still expected to generate long-term benefits through improved efficiencies and lower operating costsRevolving credit facility covenant at 2.25 times pro-forma debt to pro-forma Adjusted EBITDA, well below its maximum of 3.5 times.Outstanding revolving credit facility at $201.0 million with $64.0 million available for drawdown and no repayments required until June 28, 2024.Free cash flow ⁽¹⁾ for the trailing twelve months ending March 28, 2020 was $9.9 million lower than the previous year mainly due to lower adjusted EBITDA ⁽¹⁾, increased of $3.1 million in shares purchased under the NCIB, increased capital and intangible spending, net of operational excellence capital, higher payments for capital leases and interest paid, partially offset by a reduction in income taxes paid and pension plan contributionsRogers returned $14.7 million to shareholders during the quarter, of which $9.4 million was through dividends and $5.4 million was through share repurchases.  The Normal Course Issuer Bid terminated on March 30, 2020, with 1,500,000 common shares purchased since inception on May 24, 2019On May 5, 2020, the Board of Directors declared a quarterly dividend of $0.09.The United States Trade Representative (“USTR”) announced a refined sugar Tariff-rate Quota (“TRQ”), ending September 30, 2020 with 5,000 metric tonnes allocated to Canada which can only be supplied by Taber, as well as a Global refined TRQ to be supplied on a first-come, first serve basis ending June 29, 2020.  The Company intends to maximize its export volume to the U.S. under the Global TRQ and to fully utilize the additional TRQ allocated to Canada.    Please refer to the MD&A for additional details on the consolidated results of the Company. Segmented InformationThe following is a table showing the key results by segments: