Rogers Sugar Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 8, 2024

There are 9 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Rogers Sugar First Quarter 2024 Results Conference Call. After the presentation, we will conduct a question and answer session, which will be open only to Call. Please note that this call is being recorded today, February 8, Call 2024 at 8 am Eastern Time. Please be reminded that today's call may include forward looking statements Call regarding future operations and expectations. Such statements involve known and unknown risks and Call that may cause actual results to differ materially from those expressed or implied today.

Operator

Call. Please also note that there may be references to some non GAAP measures during the call. Please refer to the forward looking disclaimers and non GAAP measure Call. Definitions included in the public filings with the Securities Commission for more information on these items. Call.

Operator

A replay of this call will be available later today. The replay numbers and passcode have been provided in the press release Call and an archived recording of this call will also be available on the Rogers Sugar website. I would now like to turn the meeting over to Mike Walton, President and Call. CEO, please go ahead, Mr. Walton.

Speaker 1

Thank you, operator, and good morning, everyone. Thank you all for joining us today. Call. I'll start today by discussing our solid results for the Q1 of fiscal 2024 as well as sharing more detail on our Call. Strong growth outlook for 2024 now the labor situation in Vancouver has settled.

Speaker 1

These results as well as our positive outlook Call demonstrate once again that the underlying sugar market dynamics and long term demand trends continue to be very supportive for our business and Call that our initiatives to drive performance improvements in our Maple business continue to bear fruit. As I did last quarter, Call. I'll discuss briefly what we are doing to position the business for long term success by ensuring we have the right infrastructure Call and right model for running our plants so that we can harness those supportive market dynamics to produce consistent profitable growth over the long term. Call. I'll update you on our project to expand capacity in Eastern Canada, and I'll discuss the labor agreement we've reached in Vancouver Call and enables us to get that site back to full production and in a position to meet rising future demand.

Speaker 1

After that, Call. I'll turn the call over to J. S, our VP, Finance and CFO, for a deeper dive into the financials. Call. We are pleased to be consistent profitable growth by concentrating our efforts on supplying the domestic market.

Speaker 1

This market has very strong fundamentals Call that support long term demand for our sugar. Once again, we saw those fundamentals on display in Q1, Call, and we expect those same positive bigger picture trends to drive strong results throughout fiscal 2024. Call. We expect to build on our record performance in 2023 and deliver another year of higher consolidated revenue and adjusted EBITDA Call in fiscal 2024. At a high level, we generated an increase in 1st quarter revenue of approximately 10% year over year Call as well as growth in gross margin and adjusted gross margin.

Speaker 1

Adjusted EBITDA declined by $2,800,000 Call to $30,700,000 due to a $3,000,000 impact from our labor disruption at our Vancouver plant. Absent that one time effect, Call, we would have seen higher year over year adjusted EBITDA. Nonetheless, it was still one of our best quarters for adjusted EBITDA on record. Call. In Sugar, with Vancouver operating at a reduced capacity, we saw a reduction of volume of approximately 10,000 tons Conference

Operator

Call and a lower adjusted EBITDA.

Speaker 1

Even so, we delivered significant growth in revenue and higher adjusted gross margin per tonne Call as we benefited from stronger demand due to the underlying health of the sugar market. In Maple, we generated higher revenue Call, driven by higher prices. Our recent investments in automation and business process improvements also continue to pay off Call and lower production costs that drive better gross margin. Our Maple order book remains strong and our overall execution against our strategy Call. The Maple business remains a competitive space for all participants.

Speaker 1

I'll now turn to an update on what we are doing to Call. The company for a more sustainable and successful future by optimizing the business to capture the upside from those encouraging demand trends Call that we see in Sugar. Our Eastern Canada expansion project is progressing as planned. Major equipment has been ordered. Call.

Speaker 1

The site work is well underway in Montreal, and we will soon begin in Toronto. If you drive by our site in Montreal, Call. You will see the construction trailer village that has been established. After many months of planning, it is great to see the site work taking place. Call.

Speaker 1

Recall that we announced the expansion in response to our assessment that we would need a substantial increase in production capacity to meet the growth and demand for our products from food manufacturers in the years to come. We have seen our view validated Call as other producers have followed our lead with their own announcements of capacity increases. As a reminder, Our expansion project will increase our refining capacity by approximately 20% in Eastern Canada. We expect the new capacity Call will begin to come on stream in the first half of fiscal twenty twenty six, and we anticipate no issues in finding a home for the sugar we produce. Call.

Speaker 1

By expanding refining and logistics capacity close to our customer base in Eastern Canada and the U. S, Call. We will reduce our reliance on transporting sugar from our Vancouver plant. This will reduce freight costs and improve margins. It will also leave our Western Call.

Speaker 1

That's a good segue into the big news, Call, which is that we've reached an agreement with the Public and Private Workers of Canada Local 8 in Vancouver. That agreement was ratified last week. Call. As we said throughout, we wanted a deal that worked for both the company and for employees and allowed us to serve customer needs Call and meet growing customer demand. We were also committed to finding a deal that provided fair wages, benefits and working conditions.

Speaker 1

Call. We believe we've done that. You'll recall that our objective was to be able to run Vancouver in a manner that better enables us to meet the long term volume needs of the market. This 5 year agreement puts us in a better position to accomplish that. Call.

Speaker 1

We reached an agreement that gives us multiple levers to pull to raise production. While we have not moved to fully continuous operation, Call. This is a meaningful step in that direction and enables us to better support rising demand. We anticipate we'll be ramping up production over the next few days Call and be back to full production late next week, which is excellent news for our customers. We are mindful that the strike was difficult for some of our customers.

Speaker 1

Call. We acknowledge that, and we apologize for that. On behalf of the entire organization, I want Call. I'd like to thank each and every one of our team members across Canada who came through for our customers during the disruption. Call, and I'd like to recognize the effort of management team members who put in time and effort to get the sugar out the door when it was needed.

Speaker 1

Just as importantly, Call. We look forward to welcoming our hourly employees in Vancouver back to the site as we ramp up operations as quickly and safely as possible. Call. Looking ahead, as I said, we anticipate another year of growth. Following a strong performance in 2023, Call.

Speaker 1

Including our highest sugar volume, consolidated revenue and adjusted EBITDA results to date, we expect this positive trend to continue. Call. We anticipate delivering higher consolidated revenue and adjusted EBITDA in 2024. We expect the continued strength in demand for Sugar to support organic growth for our Sugar business segment throughout 2024. We'll have Vancouver back online Conference Call and Montreal and Taber are running well.

Speaker 1

Considering the recently ended labor strike in Vancouver and its impact on the volume delivered to customers, Call. We expect our initial outlook to decrease by 10,000 metric tons to 790,000 metric tons for the year. In terms of Taber, we Call.

Speaker 2

We are further along in

Speaker 1

the processing of sugar beets than when we last spoke. We anticipate the crop will deliver a volume of beet sugar commensurate with our expectations. Call. In Maple, we continue to expect improved results in 2024, thanks to stronger pricing Call and cost reductions flowing from the automation and business processes we've introduced. But we need a good maple crop to replenish the industry stockpiles Call that have been drawn down.

Speaker 1

We'll know more in April about how this year's maple crop looks once we see what Mother Nature has in store for us this spring. So we'll have more to say about that on our Q2 call. The takeaway is that the outlook for our business in the near term and the long term is strong. Call. We continue to benefit from the favorable market conditions that drove us to record adjusted EBITDA in each of the last two years.

Speaker 1

Call. Our focus on harnessing those market conditions, making improvements to our business and supporting our customers is delivering the consistent profitable growth

Speaker 2

Call that we strive for.

Speaker 1

And with that, I'll turn it over to J. S.

Speaker 2

Well, thank you, Mike, and good morning, everyone. Call. Consolidated revenues for the Q1 were $289,000,000 a 10% increase from the same period last year. Call. Revenues in sugar were up 12% despite lower volume caused from the labor disruption in Vancouver.

Speaker 2

Call. The favorable variance was due to the increase in raw number 11 sugar commodity price and higher contribution from sugar refining activities from recently negotiated agreements. Revenues in Maple were up 5%, mainly from higher pricing, Call, reflecting the recently negotiated price increases associated with the inflationary pressures we have seen over the last few quarters. Call. Consolidated adjusted EBITDA for the Q1 was $30,700,000 down $2,800,000 or 8% Call from the prior year quarter.

Speaker 2

The Sugar segment adjusted EBITDA was $4,700,000 lower than prior year Call and reflects the unfavorable impact of the Vancouver labor disruption estimated at $3,000,000 for the quarter. Call. The Maple segment adjusted EBITDA was higher than last year by $1,900,000 reflecting Call. The improved contribution margin from higher pricing and continuous improvement initiatives. Consolidated adjusted net earnings were $12,600,000 or $0.12 per share as compared to $15,400,000 or $0.15 per share in the Q1 of last year.

Speaker 2

Call. Free cash flow for the trailing 12 months was $44,300,000 lower than the same period last year Call. As we saw the effect of higher borrowing costs and higher plant related capital expenditure, our liquidity and cash generation Call. We continue to support our dividend distribution policy aimed at providing a stable return to our shareholders. Call.

Speaker 2

In connection with the solid results of the Q1, the Board of Directors approved a payment of a dividend of $0.09 per share, Conference Call, representing a payout ratio of 75%. This is consistent with the level of quarterly dividends paid for the last several years. Let's now review the financial highlights of the Sugar segment. Sales volume was down by approximately 5% in the quarter, Call, mainly due to the disruption in Vancouver. The reduction in volume produced out of our Vancouver facility was partially offset by the support of our Taber Call.

Speaker 2

Overall, the volume reduction related to the labor disruption was estimated at 10,000 metric tons. Call. Adjusted gross margin decreased by $1,400,000 in the quarter, mainly from the lower volume sold. However, Call. On a per unit basis, adjusted gross margin increased by approximately $4 per metric tonne to $199 per metric tonne Call as a result of higher margin on recently negotiated agreements.

Speaker 2

This reflects the strong market dynamics of

Speaker 3

the Sugar

Speaker 2

segment. Call. Distribution costs increased by $1,000,000 from the prior year period as we move more sugar between facilities to support customers across Canada. Call. Administration and selling expenses were up by $2,700,000 compared to the same period last year.

Speaker 2

Call. This is mainly due to the fact that in the Q1 of 2023, we saw a non recurring and non cash reduction in share based compensation Call. Adjusted EBITDA in the Sugar segment was 26,000,000 Call, down by $4,700,000 from the same quarter last year. The unfavorable variance was mainly due to lower adjusted gross margin, Call, higher administration and selling expenses and higher distribution costs. As we mentioned earlier, our first quarter results include the net impact Call of the strike estimated at $3,000,000 These results also reflect the increase of $2,700,000 Call and administrative costs from the non recurring and non cash impact of the PSU's accrual variation.

Speaker 2

If we normalize for those two items, Call. Our financial results for the Sugar segment compare favorably to last year. We believe our strong first quarter financial results Call. Are a good reflection of the positive outlook we have for the Sugar segment for the remainder of 2024. Call.

Speaker 2

Now let's turn our attention to the financial results of the Maple segment. Building on a strong 2023 finish, Call. The Q1 provided for improved adjusted EBITDA as compared to the same period last year for Maple. Adjusted EBITDA at Call. $4,700,000 was higher by $1,900,000 The incremental profitability of the Maple segment Call was directly related to recent actions taken to improve the gross margin as sales remained stable at around £12,000,000 for the quarter.

Speaker 2

Call. The positive pricing trend continued in the Q1 as overall pricing improved by 5%, reflecting the recent inflationary pressures seen on the market. Call. Operating costs have decreased from recently implemented automation and continuous improvement initiatives. For the Q1, Call.

Speaker 2

The adjusted gross margin was 10.7% compared to 7.7% from the same quarter last year. Call. We believe this level of gross margin is sustainable for the rest of 2024 and should support the recovery of our Maple business segment going forward. Call. That being said, we remain cautious as the global maple sector remains volatile and subject to external challenges Call.

Speaker 2

The PPAC reserve is at its lowest level in many years Call and the maple syrup production of the upcoming crop will likely play a key role in the overall performance of the maple market. Before I conclude, I would like to make a few comments on the financing of our expansion project in Eastern Canada and our available liquidity. Call. As mentioned previously, the construction of our project has begun and is moving forward as planned. Our financing plan still include a combination of debt and equity or equity life instruments, including the support of $65,000,000 in loans from the Quebec government.

Speaker 2

Call. In November, we also increased the availability amount under our revolving credit facility by 75,000,000 Call to $340,000,000 building more flexibility to accommodate increases in working capital and for the Eastern Canada expansion project. Call. At the end of the Q1, the amount outstanding under our credit facility was $165,000,000 aligned with the balance outstanding at the same period last year. Call.

Speaker 2

The revolving credit facility has been used to finance the early stage of the expansion project. Thus far approximately $20,000,000 has been spent in connection with the project. As the project advances, we will continue to evaluate our financing options Call and assess the opportune time to access the capital market and complete our financing plan. What's important Call is that we are in no rush and that we are well positioned to access the market at the opportune time. We will provide updates as things evolve.

Speaker 2

Call. In conclusion, I want to emphasis that we are very satisfied with our Q1 financial results and are confident in the ability of our business to continue to show Call. Our Sugar segment performed well despite the strike in Vancouver and we believe with the labor disruption now behind us, Call. We will be able to fully benefit from the strength of the Canadian sugar market going forward. Our Maple segment financial results have improved significantly over the last two quarters showing that Maple is on a positive path.

Speaker 2

Overall, we anticipate delivering higher revenues Call and higher adjusted EBITDA for both of our business segments in 2024 as compared to 2023, supporting our business strategy Call to serve our customers and create value for our shareholders. With that, I would like to turn the call back over to the operator for questions.

Speaker 4

Call.

Operator

Call. Your first question comes from George Doumet with Scotiabank. Please go ahead.

Speaker 5

Call. Yes. Hi, good morning guys. For the impact of the strike in Q2, should we expect Call. Same level, just adjusting for the number of days.

Speaker 5

And can you maybe reconcile your comments, Jess, on the higher EBITDA for Sugar Call. For this year versus the lower kind of tonnage sugar, how we expect that to play out? Call.

Speaker 6

Absolutely, George. From I'll start with the strike. Dollars 3,000,000 I think roughly about $1,000,000 a month is what Call. The going rate meters, a couple of things, especially as we readjust our purchase of raw sugars. But I think it will be a fair assumption to use Call.

Speaker 6

And in the Q2, an extra month probably of strike in the modeling Going forward for adjusted EBITDA. And second part of your question on the sugar, the optimism that we're showing in sugar, Call. It's mainly based on the market right now. We are seeing continued strength in the market Call. And some of the recent agreements that we have signed with customers are providing for improved margins.

Speaker 6

And so in the Q1, we were about $4 per metric ton Conference Call. Better than last year. I think it's when we look at this, we will be probably above that for the rest of the year.

Speaker 5

That's helpful. Thanks. And just shifting over the Maple Call. Also some optimism there. Is it fair to assume that you would expect kind of gross margins to have kind of march up to 12% range similar to what we had in Q4 Call.

Speaker 5

Kind of as the year goes by. Is that a fair assumption as well?

Speaker 6

I think it's 2 quarters in a row of strong results for Maple. I think Q4 had a couple of year end adjustments that pushed us a little bit around the 12%. We're at 10.3% in the Q1. I think I said 10.7% Conference Call. In the script, but it was actually 10.3%, so I'm correcting that.

Speaker 6

But all that being said, I think we are Call. In double digit margin and we haven't been there in a few quarters. So we're happy. I think we're taking it Call. As it comes in maple, the crop is going to actually play a significant impact.

Speaker 6

I think as you might have seen in some of the newspapers across Canada that Call. Pricing going forward and availability of supply. So I think to summarize, I think we're quite happy with the 10 point

Speaker 5

It looks like you guys guided for $7,000,000 for the Montreal expansion budget to be deployed this year. I'm just curious what's the biggest constraint Call. To deploying maybe a quicker amount of CapEx this year than the $70,000,000 What's kind of holding it back there?

Speaker 6

Call. Well, if you look at the project, it's aligned with what we I mean, initially, I think we had thought it would probably be around 95,000,000 The first guidance we gave, it's mainly about the timing where some of those equipment will arrive. And so it hasn't changed the schedule of the project, which we believe will in line around half of twenty twenty six first half of twenty twenty six. But some of those big piece of equipment that have been ordered, Call. It might arrive a bit later, not later to be installed, but when you take possession and then the amount of deposit you put on those piece of equipment.

Speaker 6

That's one that's actually moved the cash flow. But it hasn't really impact the timing of the in service date for the project.

Speaker 5

Call.

Operator

Your next question comes from Michael Daniels with

Speaker 7

Call. Just to finish up on George's question there. So you've Call. Allocated or secured $75,000,000 more for the expansion from your line of credit, your credit facility. Have you made any progress in determining where the rest of the funding is going to come from?

Speaker 6

It's a good question, Michael. We've Call. When we announced the project, we were targeting a fifty-fifty like equityequity instruments versus that. Call. We are still aligned with this expectation.

Speaker 6

Line of credit, a lot of it is a bit of on timing and we We were going to increase line of credit to considering a strike, we were holding obviously on going to market to make sure we had a resolution out of our Vancouver Call. Labor disruption. So we wanted to create a bit more flexibility. And there's also some timing on when we're going to draw on the IQ loans Call. And I'll be this loan is secured.

Speaker 6

So for us, we wanted just to build potential cushion if for some reason Call. We needed to wait a little bit on into going into the potentially going into the equity market. But overall, we're still looking at around a fifty-fifty Call.

Speaker 7

And then Call. Good to see that the Vancouver strike has been resolved. But you made some comments about increasing production out of Vancouver, but how do you do that? Call. What gives you the ability to do that given that you didn't get that continuous production

Speaker 1

option? Call. Yes, Michael, it's Mike. I'll take that question and good morning. The what's really critical after a long protracted negotiation, we went into Call.

Speaker 1

This is trying to increase capacity other than Vancouver site to support the growth in the market. That was objective. How we got there was the only starting position was continuous shifts. Call. But what's really important in the end, the parties work together on solutions to enhance production and the new agreement provides mechanisms to that effect including Call.

Speaker 1

The possibility to go to a 20 fourseven operation. So, it's just we achieved our objectives just done in a different way. Call.

Speaker 7

Okay. So what percentage increase can you get out of Vancouver? And where would that volume end up?

Speaker 6

It's a good question. I think depending on the levers and how also it's going to be related to the opportunities on sales out west, Call. We think we can get probably somewhere between 10% 20% incremental capacity out of our Vancouver facility going forward.

Speaker 1

Call. And Michael, we're going to continue on with part of this agreement is we're going to do some investments in the plant to help debottleneck certain areas because Call. Simply turning it on and asking to do 50% more isn't an instant on. With this new agreement, it will allow us to make those kinds of decisions and investments. Call.

Speaker 1

And so over time, some of it shorter than longer, we'll see that new capacity ramp up.

Speaker 7

Okay, great. Thank you. Call. On the maple side, you talked about the low, I guess, reserves in Quebec. Call.

Speaker 7

What do we look for in the harvest or what do we look for in the weather to see if there's going to be a good harvest because like right now, we're having a very pretty warm winter other than a few weeks in Quebec.

Speaker 1

Call. Yes, Michael, I wish I had the answer to that question. And if you talk to every producer that's producing SOP, they'll all give you a different outcome. Call. And so we're mindful of that.

Speaker 1

We'll have to see. We can't predict. We'll see what Mother Nature does. Call. You have to remember that in the last few years, PPAC has expanded the number of tops in production.

Speaker 1

Call. And so we've got more taps pulling more sap now and so the business the industry has broadened Call. And PPAC also put price increases into the producers in the last 2 years. So pricing is there for the producers Call. And I think that will incent the work to be done to get the SAP that the market should need.

Speaker 1

Mother Nature will decide in the end how much that is, but Call? We remain optimistic as the best we can right now, but planning out various scenarios to deal with the market.

Speaker 7

Okay. Call. And I think in your outlook statement, 1, you said you expect higher revenues and EBITDA in Maple, but you also commented about Call. Some pressures to start the year. Is that reflected in Q1 or is that going to be Call.

Speaker 7

Do we expect more pressures in Q2 before some of these price increases to take in?

Speaker 6

I think it's reflected in Q1, Mike. Call. What we've seen on pricing, we have about a 5% pricing increase in the Q1 and I think this will continue. Call. We've had those there might be a little bit more room there as well going forward.

Speaker 6

However, I think the limitation on Maple Call. We are still expecting around between £43,000,000 £45,000,000 which is aligned with last year where we did about 40,000,000 I think 43.2 or something Call. And so, if there is for some reason there was a bigger crop and there was more syrup available, there might be some business And so that's why we're being a little bit careful. But from a pricing standpoint, a lot of the price increase have gone through. But as contracts are being renewed, Call.

Speaker 6

We're obviously pricing those at market, so there could still be a little bit of upside there for the rest of the year.

Speaker 1

And Michael, if I can add to that, as we've said many times Call. Maple syrup is a luxury product and we're sitting in a high inflationary market for food. And so we saw Consumption globally across the entire industry dropped for the last 20 months, just starting to see a bit of a recovery and now we have another round of price increases coming Call. So it will continue, I believe, that dampened overall consumer demand. That's why we're going to keep our numbers in the same room as we had last year Call.

Speaker 1

And be cautiously optimistic that the pricing from the producers will

Speaker 7

hold. Okay. And final question, Call. You talked about your rate your interest rates and your energy costs, the inflation in those areas being mitigated Call by hedging this year. I'm wondering how far out that hedging goes and do we expect to see a meaningful increase in some of these costs Call.

Speaker 7

As they roll off?

Speaker 6

It's a very good question. If we look at our financials, we have some hedgings that are going up to June Call. 25 and most of the outstanding portion of our revolving credit facility. We are starting to monitor how we're going to The potential money funding activities that we're going to do. I think we're all looking at what interest rates are going to where interest rates are going to go.

Speaker 6

I think if you'd ask me that question a couple of quarters ago, I was a bit more nervous. If I look at the longer term of the curve, it seems to start coming down nicely. So, I think we will be call. Starting to be more proactive and looking and establishing hedges to mitigate those potential costs in the future for interest rates. Call.

Speaker 6

For natural gas, we're monitoring natural gas. We go up to approximately 2029 in some of our hedging strategies. And Call. We have hedges in place that are fairly predictable and will keep our costs to a level that for us is acceptable and shouldn't have a material impact on

Operator

Call. Your next question comes from Call. Zachary Evershed with National Bank Financial. Please go ahead.

Speaker 8

Good morning, everyone. Congrats on the quarter.

Speaker 1

Call. Thank you. Good morning. Hi.

Speaker 8

So with the major equipment ordered and site work started in Montreal, how much risk do you see of The budget is still going over as costs escalate. What are the major milestones remaining?

Speaker 6

That's a very good question. I think the key here in this project, and I think we this is how we approach it. We had spent a huge amount of time at the beginning establishing, Call. Looking at detailed engineering with our business partners in there. And so there are risks and Especially, we're beginning the demolition part and it is an old building.

Speaker 6

There's no hiding behind that. However, I I think we believe we've done huge amount of work in designing and making sure that we will stay Conference Call. Within the envelope that we're providing, which is around $200,000,000 for the capacity increase. And I think what we also have to remember is that this envelope also The logistic plan for Toronto, a lot of and a lot of logistic even in Montreal where we're increasing the capacity, especially for rail loading Call. In Montreal, so a lot of people are looking at our well, this seems expensive for the capacity you're putting there, but there's a huge amount of logistics associated with this project Call?

Speaker 6

That is going into our Toronto distribution center, but also within the Montreal plant that will also benefit the current business that We have the current production we have.

Speaker 8

That's good color. Thank you. You mentioned that there were conflicting opinions among growers for the impact of a warm winter on maple production. Is there historical context around that, that it could go either way?

Speaker 1

Call? No, not really. It's you talk to farmers in any agriculture crop anywhere in the country, they all have different opinions and That's just standard way it goes. We look at a 5 year average on top production and we estimate what the 5 year average is and we benchmark our Call. Production based on that and then see how the crop goes.

Speaker 1

Some regions will be different than others depending on how the weather performs and we'll watch and wait and see. Call.

Operator

Your next question comes from

Speaker 4

Call. I'm Just trying to think maybe beyond the current reserve situation and inflation in Maple. I was curious to get your views Call. What type of volume growth the Maple industry and maybe your Maple business could achieve under, let's say, a normal market condition if

Speaker 1

Coming out of COVID when we had the 2 back to back year spikes in demand, global demand, we've produced as much as Call. £51,000,000 in our existing platform. So we've got lots of room for growth and still not running all sites at 20 fourseven. Call. And as also we've reported previously, we've spent some money in automation and business process improvements that are making our plants more efficient and more productive.

Speaker 1

Call. We have lots of room for growth. And as the market expands and consumption continues to grow, then we'll be there to feed that.

Speaker 4

Call. Yes. It's actually a good segue into my next question. I was actually curious as to what your Call. Production capacity would be now in terms of Maple following your recent automation investments.

Speaker 4

From your answer, I gather you don't see a need to for significant CapEx investments like we're seeing in Sugar for your Maple business in the coming years?

Speaker 1

Call. Yes, that's correct, Fred. As I said, we hit 51 and we weren't even touching into what we had for fully installed capacity. So we've got lots of room within existing assets.

Speaker 4

Call. That's helpful. Thank you. Thank you.

Operator

Call. Your next question comes from Navane Yossian with BMO Capital Markets. Please go ahead.

Speaker 3

Thank you. Good morning, guys. Good morning.

Speaker 2

I was hoping you could

Speaker 3

go back to Vancouver. Just wondering if this new collective agreement and then potentially the higher production would change your expectations for importing refined white for the rest of the year?

Speaker 1

Yes, that is ultimately the objective is to get to as I said in previous calls, Call. Our preference is to source all the sugar we need for the market from our existing facilities produced by our own employees, Call. And we'll be working hard to get towards that. And as Vancouver ramps up and the Taber crop finishes, then we'll reassess as we do every quarter of what our needs are for imports. Call.

Speaker 1

Our objective is to supply the customers and the growing demand in Canada. And if imports are required, we'll do that until we get all the production we need from our plants.

Speaker 3

Call. Okay, understood. And then are you able to quantify what you guys would be importing today? And then call. What would be baked into your guidance in terms of refined white for the rest of the year?

Speaker 6

Yes, I think in the past we've said Between 10,021,000 is what we've been building on an annual basis. I think looking at the impact of Call. It will still take a few weeks to ramp up and go back to capacity. So we still have that. However, Call.

Speaker 6

I think with the guidance we have there and the results of the Q1, which I think I mentioned earlier was $4 per metric ton better. Call. It's still a better solution for us than importing and it's better for two reasons. Obviously, they're financially better, but also we have call. What I would say, a greater control on production, SKUs, quality and so on.

Speaker 6

So, it requires less effort, not less effort, but it's quite different Call. Type of effort from our side to make sure that we deliver the same quality of sugar to our customers.

Speaker 1

Evan, if I can add to that. One thing we've seen firsthand and we put boots on the ground in the countries at origin where we're importing sugar from, it's not an easy gig with global supply chain logistics Call. But it's not optimal. It comes with its challenges.

Speaker 3

Okay, that's helpful. Call. And then just back to sugar, I think you touched on it briefly, but benchmark prices have been quite volatile recently. Call. Just hoping you can talk about whether this has had any impact on your negotiation with customers and then any commentary you can provide around expectations Call for pricing for the remainder of the year?

Speaker 1

Yes, we can continue to compete in the Canadian market and Support our customers and their growth and obviously with the amount of sugar production sugar Food production, that's a man sugar that has been growing in Canada for a number of years. We're still in the right zone to support that growth and continued Call. Increases in production and plant capacity from our customers in Canada. The U. S.

Speaker 1

Market and European markets are very high priced sugar markets, especially in the last few years, Call. And we don't see that going away. So increases in food manufacturing in Canada, taking advantages of the Canadian market, both from a sugar point of view and a business

Operator

Call. There are no further questions at this time. Please proceed.

Speaker 1

Thank you, everybody, and we'll speak to you next quarter. Call.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect

Powered by Quartr
Earnings Conference Call
Rogers Sugar Q1 2024
00:00 / 00:00