Rogers Sugar Q2 2026 Earnings Report

Rogers Sugar EPS Results

• Actual EPS: C$0.14
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Rogers Sugar Revenue Results

• Actual Revenue: $280.62 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Rogers Sugar Announcement Details

• Quarter: Q2 2026
• Date: 5/7/2026
• Time: After Market Closes
• Conference Call Date: Thursday, May 7, 2026
• Conference Call Time: 5:30PM ET

Rogers Sugar (TSE:RSI) Inc is a Canada based sugar producing company. The company along with its subsidiaries is principally engaged in refining, packaging, and marketing sugar products. The products offered by the company include iced tea mix, stevia, yellow sugar, Cubes, Coconut sugar, and other related sugar products. It operates in the following reportable segments: Sugar and Maple products, of which the majority of the revenue comes from sugar products. Its geographical segments include Canada, which is the key revenue generator; the United States; Europe; and others.

Rogers Sugar Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Rogers delivered strong profitability despite lower shipments, reporting adjusted net income of CAD 19 million in Q2 and consolidated adjusted EBITDA of CAD 38 million (first-half adjusted EBITDA up 15% to CAD 85 million).
• Negative Sentiment: Sugar volumes declined ~12% in Q2 to ~175,000 metric tons and management revised FY26 sugar volume guidance down from 750,000 to 735,000 metric tons, driven mainly by reduced export opportunities for Brazilian-origin refined sugar and a few customer-specific disruptions.
• Positive Sentiment: The LEAP expansion remains on track — raw sugar melting will begin in roughly four weeks, commissioning is still targeted for the first half of 2027, and the project cost guidance remains CAD 280–300 million (FY26 LEAP spend ~CAD 115 million).
• Positive Sentiment: Maple results were softer in Q2 due to product mix and timing, but volumes were stable (~13 million pounds in Q2) and management expects FY26 maple volumes of 56 million pounds, with sufficient supply secured through late 2026 and H1 2027.
• Positive Sentiment: Financial position strengthened via a CAD 57.5 million convertible debenture issuance, trailing-12-month free cash flow of ~CAD 93 million (up 11%), and a maintained quarterly dividend of CAD 0.09 per share, supporting LEAP financing and shareholder distributions.

Presentation

[Operator]

Good evening, ladies and gentlemen, and thank you for joining us today, Thursday, May 7, 2026 for the Rogers Sugar Inc. second quarter results conference call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Before we begin, please be reminded that today's call may include forward-looking statements regarding our future operations and expectations. Such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today. Please also note that we may refer to non-IFRS measures in our call. Please refer to the forward-looking disclaimers and non-IFRS measures definitions included in our public filings with the Securities Commission for more information on these items.

[Operator]

A replay of this call will be available later today. The replay numbers and passcodes have been provided in our press release, and an archive recording of this call will also be available on our website. I'll now turn the call over to Mike Walton, President and CEO of Rogers Sugar.

[Mike Walton, President and CEO at Rogers Sugar]

Thank you, operator. Good afternoon, everyone. Thank you all for joining us today. I'll start with a summary of our second quarter results, covering both the sugar and maple segments. I will also share an update on the Lantic Expansion and Asset Program project and where we stand heading into the second half of the year. Jean-Sébastien Couillard, our Chief Financial Officer, will then walk you through the financial details for the quarter and first six months of fiscal 2026. After which I will return to cover our outlook for the remainder of fiscal 2026. We will wrap up with a brief summary before opening the line for questions from the analysts. Our investor presentation is available on the investor section of our website if you would like to follow along. Let me start by taking a high-level view of the operating environment for a moment.

[Mike Walton, President and CEO at Rogers Sugar]

We operate in a world right now where trade policy is shifting and geopolitical actions are affecting supply chains across every industry. In that environment, both of our business segments have demonstrated their resilience over the past year. Sugar goes into the food people eat every day, and there is no effective and efficient substitute for it. We have been refining sugar in Canada for nearly 140 years, and in that time, we've seen conditions change many times over. Today, we are navigating some headwinds. Food inflation is affecting consumption, population growth is slowing, and we are starting to see some impact from the increased use of GLP-1 medications on food intake more broadly. These are not trivial factors, and we are not dismissing them. Underlying demand for our sugar and maple products is steady. It is not going away.

[Mike Walton, President and CEO at Rogers Sugar]

Sugar is a natural, fundamental, and functional ingredient and is essential to the food transformation industry. As for maple products, they are a favorite of customers around the globe. What we know how to do and what we have always done, is manage through changing conditions by staying close to our customers, running our operations well, and keeping a tight grip on costs. Further, the company is in the best shape ever to weather the current challenging environment, having delivered a step change in profitability and cash flow generation in the past few years that enables us to invest in our business while maintaining a strong balance sheet. That is exactly what you will see reflected in our results today as we delivered strong profitability despite lower shipment volumes.

[Mike Walton, President and CEO at Rogers Sugar]

Today, I am pleased to report that Rogers Sugar delivered another quarter of strong financial performance in the second quarter of fiscal 2026. We reported adjusted net income of nearly CAD 19 million, an increase of 15% compared to the same quarter last year. This increase was driven by improved operating performance, particularly in our Sugar segment, which I will discuss shortly. In Q2, consolidated Adjusted EBITDA increased by 10% year-over-year to CAD 38 million. For the first six months of the year, Adjusted EBITDA is up by 15% to CAD 85 million. These results reflect the continued strength of our sugar segment and the disciplined execution of our teams across both businesses. Looking at the Sugar segment, Adjusted EBITDA on sugar was CAD 33 million in the second quarter, a 21% increase over last year, including some benefits from non-recurring and timing favorable variances.

[Mike Walton, President and CEO at Rogers Sugar]

Sugar sales volume in the second quarter was approximately 175,000 metric tons, a decrease of approximately 23,000 metric tons or 12% compared to the same period last year. The volume decline was driven by a few factors. The most significant is a reduction in export volume of approximately 13,000 metric tons. The decrease in export sales is mainly related to the current trade environment, which was not favorable for sales of refined sugar of Brazilian origin in the United States. Export volumes typically carry lower margins, so the impact on our overall profitability was marginal. Industrial volume was lower by approximately 5,000 metric tons, largely due to non-recurring production issues at one of our large industrial customers and some softness in the confectionery sector.

[Mike Walton, President and CEO at Rogers Sugar]

Liquid volume decreased by approximately 6,000 metric tons, primarily related to the loss of a large customer that closed its facility in Western Canada. As JS will describe in the financial section, our strong second quarter results were somewhat boosted by some favorable non-recurring and timing items in comparison to last year. That being said, our ability to manage execution in the current challenging environment do show the stability and resilience of our business operating model. They demonstrate the effects of our strategic focus over the last several years on delivering consistent, profitable results. Now turning to our Maple Business segment, where Adjusted EBITDA was just under CAD 5 million in the second quarter, a decrease of CAD 2 million compared to the same period last year.

[Mike Walton, President and CEO at Rogers Sugar]

This variance was primarily driven by higher production costs associated with a mix of products sold and the timing of expenditures in the current period compared to last year. Here, I would like to point out that the results of the second quarter for our Maple segment were aligned with our expectations. Maple volume was approximately 13 million pounds in the quarter, broadly in line with the same period last year. For the first six months of fiscal 2026, maple volume was 27.5 million pounds, up by almost 1 million pounds from last year, reflecting continued demand from customers all over the world. The 2026 maple syrup crop should yield between 3.5 and 4 pounds per tap in Quebec, which is considered average for the industry.

[Mike Walton, President and CEO at Rogers Sugar]

We have secured enough maple syrup to meet expected customer demand for the remainder of 2026 and the first half of fiscal 2027. We stay close to our producers, ensuring we have the kind of relationship that enables us to secure supply when we need it. Sugar is a mature industry, and volume growth reflects that. We have spent four years building a business that competes on margin and execution rather than volume, we are actually well-suited to this environment. Today's results demonstrate that. What ties both businesses together is a simple philosophy. We are not managing for tonnage. We are managing for consistent, sustainable profitability, and I am satisfied that we are delivering on that commitment. As I highlighted off the top, underpinning all of this is Rogers Refined, the strategic framework we put in place in 2024.

[Mike Walton, President and CEO at Rogers Sugar]

The core idea is straightforward, consistent, sustainable, profitable growth. It deliberately aligned our focus toward disciplined execution, which means managing our cost base, running our refineries efficiently, and maintaining a proactive hedging program that protects our margins from commodity and currency volatility. Sales volume is important. Our commercial approach strategy is underpinned by extracting value from our production facilities while meeting the needs of our customers. When you look at today's results, Rogers Refined is working exactly as intended. Let me give you an update on our LEAP expansion project in Eastern Canada. During the second quarter, we've continued to advance construction activities and the installation of new sugar refining equipment in the main expansion building at our Montreal refinery.

[Mike Walton, President and CEO at Rogers Sugar]

We also continued the work related to the deployment of new logistics infrastructure, began the installation of utility-related assets, and completed the new 25 kilovolt electrical connection that will support the entire Montreal refinery in the future. Finally, we have advanced the development of our commissioning plan. This is an exciting time, and I'm pleased with the way our teams and contractors continue to work together to bring this project to life while still operating our Montreal refinery without interruption. Let me point out that the Rogers Refined framework for sustainable operations has underpinned our work plan the whole way through. That means a focus on safety for all of our people and assets. It means planning and testing every step of the way.

[Mike Walton, President and CEO at Rogers Sugar]

We are using this time to train our workforce on all aspects of the new equipment and working with our suppliers and business partners to prepare to bring the new capacity into service. In fact, in less than four weeks, we plan to begin melting raw sugar using some of the recently installed equipment of the LEAP project. This is one of the first steps as we move toward commissioning stage of the project. Our targeted start-up date for the first half of 2027 is unchanged, as is our cost estimate of CAD 280 million-CAD 300 million. Having this production in our Montreal location is a vital strategic advantage. We are located near vital port and rail infrastructure, and more importantly, in proximity to where our customers are locating their production facilities.

[Mike Walton, President and CEO at Rogers Sugar]

We continue to be confident that this capacity growth positions us to serve the customers on a timely, efficient basis over the long term. Now I'll hand the call over to JS for a financial review.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Thank you, Mike. Good afternoon, everyone. If you are following along, we are on slide nine. I will walk through the key financial results for the second quarter and the first six months of fiscal 2026, and then provide some additional context for the remainder of 2026. Adjusted net earnings for the second quarter were CAD 19 million or CAD 0.14 per share compared to CAD 16 million or CAD 0.13 per share in the same period last year. For the first six months, adjusted net earnings were CAD 43 million or CAD 0.34 per share. This represents an increase of CAD 8 million or 22% compared with the first half of fiscal 2025.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

The improvement in Adjusted EBITDA of 10% in the second quarter and 15% in the first half of 2026 were both largely driven by stronger performance in our sugar segment, where healthy and stable sales margins also benefited from some non-recurring and timing-related items. Revenues were CAD 281 million, compared with CAD 338 million in the same quarter last year. For the first half of 2026, revenues came in at CAD 579 million, roughly 14% below last year. The largest contributor was the decrease in the Raw #11 prices, which has marginal impact on our overall profitability as we mitigate commodity price risk variation through our rigorous hedging program. The decrease was also partially due to the reduction in volume sold, as Mike mentioned earlier. Reduction mainly attributable to lower margin export sales.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Our free cash flow for the trailing 12 months came in at about CAD 93 million, an increase of 11% over the same period last year. That improvement was driven by higher Adjusted EBITDA and lower capital expenditures in our ongoing operations, excluding the LEAP project. Free cash flow is how we contribute to the financing of LEAP, service our debt, and fund our dividend. The trend is healthy and moving in the right direction. As I'm discussing our financial results, I would like to point out that our operations and related costs have not been materially impacted thus far by the current situation in the Middle East. Our proactive hedging strategy was successful in mitigating the potential impacts on energy costs, Raw #11 price variation, and transportation and logistic cost increases.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Going forward, we will continue to be proactive and prudent in our approach to manage the risk related to this evolving situation. I am now turning to the individual business segments, starting with our Sugar segment, which drives about 85% of our profitability. Overall, the Sugar segment delivered strong results in the second quarter. Volume was down, but the business delivered improved Adjusted EBITDA in the quarter compared to the same period last year. Sugar-Adjusted EBITDA was CAD 33 million for the second quarter, an increase of CAD 6 million compared to the same period last year. Let me walk through the moving parts. Adjusted gross margin increased by CAD 8.5 million in the second quarter compared to the same period last year. The increase was due to higher margin earned on refining activities of CAD 6.5 million, associated mainly with the mix of products sold during the quarter.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Non-recurring adjustment recorded in the 2Q 2025 for CAD 6 million, lower procurement costs for raw sugar impacting positively the inventory position at the end of the quarter for CAD 3 million, and lower costs in the current quarter for CAD 1.5 million for maintenance. These variances were partially offset by an unfavorable variance on volume sold of 23,500 metric tons, valued at CAD 8.7 million, and largely in the lower margin category of export sales. On a per unit basis, adjusted gross margin was CAD 268 per metric ton in the quarter, compared to CAD 194 per metric ton in the 2Q last year, an increase of CAD 74 per metric ton. This improvement reflects a favorable mix of products sold, lower raw sugar procurement costs, and lower refining costs.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

In addition, the 2nd quarter performance last year was affected by some higher maintenance costs in our Montreal refinery that were non-recurring in nature. For the 1st six months of 2026, adjusted gross margin at CAD 100 million was CAD 17.5 million higher than last year, of which almost CAD 11 million should be considered non-recurring or timing related. The remaining increase was attributable mainly to improved pricing and favorable inventory valuation variance. The positive variance was partially offset by lower sales volume of 44,500 metric tons, largely in the lower margin category of export sales. Finally, our administration and selling expenses were higher by CAD 4 million, driven primarily by cash settled share-based compensation, which was higher in the 2nd quarter of 2026 due to an increase in our share price, along with market-based increases in compensation and employees benefits.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Now moving to our Maple segment. For the second quarter of 2026, the Maple segment delivered results aligned with our expectations, although lower than the same period last year. The reduction of CAD 2 million in Adjusted EBITDA compared with last year relates primarily to mix of products sold impacting production costs, including punctual favorable timing variances benefiting the second quarter of 2025. Adjusted gross margin percentage was 10.7% compared to 13.2% in the same quarter last year, driven by those same factors of production costs and mix. For the first six months of 2026, Adjusted EBITDA of the Maple segment was also aligned with our expectations, despite being lower than last year by CAD 2 million. The unfavorable variance for the first six months was directly related to the factors impacting the second quarter discussed previously.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Adjusted gross margin percentage for the first six months of 2026 was 10.6% compared to 12.3% in the same period last year, driven by those same factors of production costs and mix. As mentioned previously, the results of our Maple segment have been strong so far this year and aligned with our expectations. As Mike will discuss later, we anticipate overall strong results for the Maple segment in 2026, with results in the second half of the year closely aligned with the performance seen in the first six months, reflecting our efforts at optimizing our production assets, stabilizing our sourcing strategy, and securing a reliable supply of syrup for our customers. Turning to our balance sheet. In January, we issued CAD 57.5 million of Ninth Series convertible unsecured debentures maturing in January of 2033.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

The net proceeds were used to reduce the balance on our revolving credit facility, further strengthening our liquidity position. This issue completes our refinancing program that began with the issue of the Eighth Series debentures in 2025. We maintain a prudent and diversified funding platform of convertible debt, equity, internally generated cash flow, and access to credit facilities. This strong financial position gives us the flexibility to complete the LEAP project and execute on our strategic priorities of investing in our businesses and maintaining a consistent distribution to our shareholders. On that note, our board of directors declared a dividend of CAD 0.09 per share to be paid in the third quarter of fiscal 2026. We have paid a quarterly dividend to our shareholders without interruption for over 16 years through commodity cycle, a global pandemic, and now a period of significant trade uncertainty.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

That consistency is something we are proud of and committed to maintaining. With that, I will turn the call back over to Mike to provide a summary and outlook for 2026.

[Mike Walton, President and CEO at Rogers Sugar]

Thank you, JS. Looking at the remainder of the year. As we move through 2026, the business environment remains complex. Trade policy is shifting, geopolitical tensions are affecting supply chains, and some of the longer-term trends I mentioned earlier are starting to show up in our numbers. We are not immune to any of that, but we have navigated difficult conditions before and our approach is the same as it always has been: to stay close to our customers, run our operations well, and manage our costs carefully. Our team remains disciplined in how we allocate capital and pursue opportunities. We are not chasing volume for its own sake. The focus is on long-term customer partnerships that generate sustainable profitability. That is the essence of Rogers Refined. On the trade front, the direct impact on our business has been limited so far.

[Mike Walton, President and CEO at Rogers Sugar]

We are monitoring the situation and engaging with relevant stakeholders. If conditions change, we will adjust. It's as simple as that. The progress we have made over the last several years has put us in a strong position, and our focus for the remainder of 2026 is straightforward. Keep executing, keep delivering, and we will focus on what we control. In the sugar segment, we are revising our volume forecast for the fiscal 2026 from 750,000 metric tons to 735,000 metric tons, a reduction of approximately 6% compared with 2025. Most of that reduction is in export sales, where the trade environment for Brazilian origin refined sugar has reduced the volume of opportunistic sales available to us in the U.S. market. Our domestic Canadian business remains healthy, and we continue to prioritize serving those customers first.

[Mike Walton, President and CEO at Rogers Sugar]

We expect the margin environment in the domestic market to remain stable, and we believe we will continue to offset the impact of lower overall volumes. At our Taber facility, the processing of the 2025 beet campaign was completed in February. We produced 103,000 metric tons of beet sugar, slightly above our original expectation. Looking at our operating costs, we believe that our production and maintenance expenses across all three facilities will increase modestly, driven by market-based cost increases and annual wage adjustments. Also worth mentioning that we do not anticipate significant impact on our energy costs from the current conflict in the Middle East. As JS mentioned previously, our multi-year hedging program should mitigate our exposure in the short and longer term.

[Mike Walton, President and CEO at Rogers Sugar]

Administration and selling expenses will be somewhat higher, reflecting the recent increase in our share price, which flows through to our cash settled share-based compensation, as well as general market increases in costs associated with the planned Canadian International Trade Tribunal review in the second half of the year. Financing costs will increase as we draw on the funding we put in place for the LEAP project. Looking at maple. For maple, we continue to expect a strong year. Our volume forecast remains 56 million pounds for fiscal 2026, representing a growth of approximately 5% over last year. That assumption reflects current global market conditions and the availability of maple syrup from producers. As I mentioned, we have secured sufficient supply to meet our customer demands for the remainder of fiscal 2026 and into the first half of fiscal 2027.

[Mike Walton, President and CEO at Rogers Sugar]

Capital spending in total for fiscal 2026, excluding LEAP project, are focused on automation projects and improved productivity, profitability, and are mainly associated with the sugar segment. We anticipated spending should be consistent with prior years at approximately CAD 27 million. We anticipate spending CAD 115 million in fiscal 2026 on the LEAP project. In summary, the results of the second quarter were consistent with the trajectory we have been discussing recently. We are satisfied with our current performance, showing stable profitability in a volatile macro environment, which is exactly what Rogers Refined is designed to deliver. The great focus of the last few years is showing up in the numbers, and our priorities for the second half of the year are unchanged. Serve our customers well, manage costs carefully, and keep the LEAP project on track for its first half of 2027 in-service date.

[Mike Walton, President and CEO at Rogers Sugar]

Before I hand it back to the operator, I want to recognize our teams. Delivering solid profitability in our most historically challenging quarter while simultaneously building a major expansion of Montreal takes real commitment. Thank you to our people and to our customers and partners for the trust they continue to place in us. With that, we are ready to take your questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for our first question. Your first question comes from the line of Michael Van Aelst from TD Cowen. Your line is now open.

[Michael Van Aelst, Analyst at TD Cowen]

Good afternoon. I wanna start off talking about the sugar volumes a little bit 'cause they do stand out. You did say that you're not chasing volume, but are you losing any contracts to competitive bids? Is it strictly just, you know, customer closed and the trade for the most part?

[Mike Walton, President and CEO at Rogers Sugar]

Yeah, Michael, thanks for the question. Your view is exactly right. The domestic market remains competitive as always, we're not losing business in the domestic market other than the closure that was a year-over-year number that we talked about in Western Canada, the production problems that one of our major customers had in Eastern Canada. Other than that, our business is stable. The losses are exactly in the export business. As you know, there were high tariffs on Brazilian origin sugars, refining doesn't change the origin, the duties were prohibitive to enter into the United States.

[Michael Van Aelst, Analyst at TD Cowen]

What's happening with all the beet sugar that you're producing? If the exports are down and liquid sugar volumes are down, where is that volume going?

[Mike Walton, President and CEO at Rogers Sugar]

Well, the beet sugar goes into the mix like we do from all of our sites. It's not specific for liquid or specific for export. The beet sugar consistently has about 20,000 tons of quota access to the U.S. that goes back through World Trade Organization and the last Canada-United States-Mexico Agreement negotiation. Other than that, beet sugar stays in the domestic market and mostly in the market where it's produced. That business is very stable.

[Michael Van Aelst, Analyst at TD Cowen]

Okay. 'Cause your volume like now you're expecting volumes to be down 6%. I think your 750,000, I seem to remember capacity is around 800,000 or so. Like, when you consider the market conditions today and the trade environment and everything like that and all the trends that you, that you mentioned. Like, if you had to make the decision over again, would you still think LEAP is a good return on investment at this stage?

[Mike Walton, President and CEO at Rogers Sugar]

It is absolutely the right position to take long term for this business. As you know, when we announced LEAP, we were moving 20,000 tons and more a year from Western Canada to support Eastern Canada. When you look at all the public announcements that have made in the last few months in Central Canada for new plant expansions and new capacity, absolutely this capacity is required on the medium long term in Eastern Canada.

[Michael Van Aelst, Analyst at TD Cowen]

Okay. That's good to hear. Are your customers' facilities gonna be ready or is the demand gonna be there, do you think, when you open in the first half of 2027? Is it gonna be a more like a very gradual ramp-up?

[Mike Walton, President and CEO at Rogers Sugar]

Yeah. We've said all along it'd be a gradual ramp-up. It could be 12 to 18 months, maybe longer, depending on the demand and commissioning an asset of the size that we've built in Montreal. That's been part of our plan all along. If you look at other major customers that we have that have been reporting publicly as well lately, yeah, there's been softness in demand because of food inflation and population decline and calorie consumption decline in developed countries. Everybody's got an outlook because of food inflation easing on cocoa, which is a big driver for us for Sugar-Containing Products to foreign markets. We see that recovering because our customers are calling it recovering.

[Mike Walton, President and CEO at Rogers Sugar]

Also, the other investments that we've talked about, notably since the last quarter, a big plant expansion of a customer of ours in Montreal made an announcement of a CAD 250 million plant expansion. The market, despite all the headwinds and the volatility, remains very interested in developing more SCP production in Canada.

[Michael Van Aelst, Analyst at TD Cowen]

Okay. Thank you very much. I'll let somebody else ask questions, and I'll be back.

[Mike Walton, President and CEO at Rogers Sugar]

Thanks, Michael. Thanks.

[Operator]

Your next question comes from the line of John Zamparo from Scotiabank. Please go ahead.

[John Zamparo, Analyst at Scotiabank]

Thanks. Good afternoon. I wanted to ask about the gross margin performance in the quarter. It was up sharply year-over-year. You called out the one-time items from last year, mix is obviously a component here with the lower export sales. I wonder if you could talk about some of the other factors that are driving your gross margin performance.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Hi, John. It's JS here. If we look at the year-over-year, last year was unusually low, then because of the reason we just mentioned. We had, you know, significant maintenance costs that were more mainly one time in nature. This year is, we have benefited from the mix of having less export, which are lower, you know, we have lower contributed margin for those. We've also had, we benefit from a lift on our on our inventory valuation because of the pricing that we are pricing at in going in the future for this type of inventory. If we look at the two together, you could see one is

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Unusually high, the other one is unusually low. If you look at the, you know, in trying to look and going forward, I think, there's a probably a better proxy if we look at the, you know, the last eight quarters, together.

[John Zamparo, Analyst at Scotiabank]

Okay. That's helpful. Thank you. On GLP-1, I wonder what you're hearing from your larger customers in terms of how to address that or how to offset that. Is there anything you can share that would help us understand how this might evolve over the next couple of years, particularly as generics come into play?

[Mike Walton, President and CEO at Rogers Sugar]

Yeah, John, it's an interesting question. We're not gonna speculate. We're following it as close as everybody else. The fact is sugar is a functional ingredient. It's not just for sweetness, it's also a functional ingredient for cooking and baking and preserving food products. I think it's gonna be a bit of an anomaly, but we're paying attention to it like everybody else and seeing where this is gonna go.

[John Zamparo, Analyst at Scotiabank]

Yeah. Okay. Fair enough. Then one last one and I'll pass it on. You referenced the multi-year hedging program on energy costs. I think this is a subject on many investors' minds. I wonder if you could elaborate a bit more on that. How far ahead precisely have you hedged natural gas costs? Is it 100% through that timeline, or is there some variability?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

It's a very good question. You know, when the issue of the war broke in the Middle East, you know, there's not a material impact for us. We look at it five years ahead. We are in a risk management business. You know, we've through the years, we've always tried to hedge, you know, a significant portion of our future consumption. If you look in the next five years, obviously the shorter term is almost back to back. As you go longer, you know, to the third, fourth, and fifth year, well, there's still a majority of our position that's hedged.

[John Zamparo, Analyst at Scotiabank]

Okay. That's very helpful. Thank you. I'll pass it on.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Thank you, John.

[Operator]

Your next question comes from the line of Frédéric Tremblay from Desjardins Capital Markets. Please go ahead.

[Frédéric Tremblay, Analyst at Desjardins Capital Markets]

Thank you. I wanted to ask a couple questions on Maple. First, we noticed that employees at one of your large Maple peers went on strike over, you know, recently, a strike that lasted over a month. Just wondering if you're seeing any positive volume impacts from that?

[Mike Walton, President and CEO at Rogers Sugar]

No, unfortunately, that's the environment for these kinds of things in, in the market these days. No impact in our business one way or another of any material way. Just a little bit of noise as you would expect. As far as we understand, they continue to serve their customers. I assume like us, we play long-term and we defend our customers and look after them in times like this.

[Frédéric Tremblay, Analyst at Desjardins Capital Markets]

Perfect. That's helpful. Still in Maple there, you did point out some less favorable mix of products sold in the quarter. Is that something that was isolated to this quarter, or is that expected to continue?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Actually the mix of products sold, last quarter was very favorable. You know, that's why the anomaly was more the second quarter last year, where this quarter it's a bit more flat and aligned with our expectations. It was mainly in the industrial sectors where we had a greater inventory of what we call industrial syrup to serve some of those customers, and therefore we were able to benefit. Last year, the second half of the year was a bit more difficult because, you know, servicing those customer, we had to use more expensive syrup. It's gonna be more balanced.

[Frédéric Tremblay, Analyst at Desjardins Capital Markets]

Yeah. Perfect. Thanks for that reminder. I'll get back. Thank you. Thanks.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Thanks, Fréd.

[Operator]

Your next question comes from the line of Nathan Poole from National Bank Financial. Please go ahead.

[Nathan Poole, Analyst at National Bank Financial]

Hi. Good evening, everyone. Thanks for taking my question. The first question I have is, with the U.S. looking at new potential tariffs under Section 301 and potential for big changes to USMCA this year, can you walk us through how you're thinking about your exposure there?

[Mike Walton, President and CEO at Rogers Sugar]

Yeah, 301 is interesting, we've been paying attention to it, obviously. You know, Nathan, I've been around 45 years, so I find this stuff fascinating, as crazy as that sounds. Just a reminder that from a refined sugar point of view on a high tier, which is Section 301 that's focused on, it's a very small amount of sugar. 5%-8% of what we refine goes to the U.S. as refined sugar. Very minimal impact to us and not gonna feature big in my worry list. As far as CUSMA, look, we're not gonna speculate on CUSMA. We haven't all along. We're paying attention to it. We're working with officials to make sure everybody understand the importance overall to the Canadian economy. Sugar is just about one part.

[Mike Walton, President and CEO at Rogers Sugar]

In food manufacturing it's a huge implication. We're staying close to it, but I won't speculate on what may or may not happen coming out of CUSMA.

[Nathan Poole, Analyst at National Bank Financial]

Thanks for that color. With the electrical connection in and sugar melting starting up in about a month, what are the major milestones you still have to hit to make sure you stay on side for the LEAP commissioning?

[Mike Walton, President and CEO at Rogers Sugar]

That's a really great moving piece. The electrical connection is a huge change. It's a big change in an asset like that. We're glad to get that done. Starting to commission as we build is in order to save time and money and train our employees on it is a really clever idea the team came up with to maximize what we're doing. The next big step after the melting starts is the pan will go in. It's the biggest piece in a sugar refinery.

[Mike Walton, President and CEO at Rogers Sugar]

It's, it's not as complex as everything else we've already done, but it's kind of the big milestone where the last big lift, the last big piece of gear goes in and we close up the roof and then, we're now just into ticking and tying everything together and getting it ready for full commissioning.

[Nathan Poole, Analyst at National Bank Financial]

Thank you very much. Those are all the questions I had.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Thank you.

[Operator]

Your next question comes from the line of Michael Van Aelst from TD Cowen. Please go ahead.

[Michael Van Aelst, Analyst at TD Cowen]

Hi again. Last quarter when you talked about the sugar outlook, you said that, you expected EBITDA to be slightly better for the year, and now you're up 15% in the first half of the year. What does that mean for the second half?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

It's a good question. I think we're expecting, you know, there was a few things in the first half, as we mentioned, that kind of played in our favor, some timing difference and some one-times. You know, for example, we had settlement of a sand claim in the first quarter that we had last year. I think we are expecting a more regular type of operation in the second half. I think we are maintaining, you know, our outlook that we will do slightly better than what we did before, exactly like you said. You know, I'm not expecting us to be 15% ahead, definitely not for the second half of the year.

[Michael Van Aelst, Analyst at TD Cowen]

Right. I mean, if you're only slightly better for the full year, then it could mean a meaningful drop in the second half of the year, like 10%, let's call it. Is that?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Well [crosstalk].

[Michael Van Aelst, Analyst at TD Cowen]

Is that what you're suggesting?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

No, we're not suggesting that. What I'm suggesting is something more closely aligned with what we had last year, as far as as outlook for the rest of the year.

[Michael Van Aelst, Analyst at TD Cowen]

Okay. All right. That's helpful. I could look back, 'cause I know you've gone through the Canadian International Trade Tribunal a lot of times, number of times since I've been covering you guys. Can you just remind me what those legal costs would be and such?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Yeah. We're expecting You know, it's probably somewhere between, you know, CAD 1 million and CAD 2 million, depending on the work that's gonna be done this year and next year. There's a bit of a timing here, so it's not 100% clear when everything is gonna happen. I think some of it will hit us this year and some of it will probably be in fiscal year 2027.

[Michael Van Aelst, Analyst at TD Cowen]

Yeah. All right. Thanks again.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Thanks, Michael.

[Operator]

Your next question comes from the line Stephen MacLeod from BMO Capital Markets. Please go ahead.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Thank you. Good evening, guys. I hopped on a little bit late for the call, so I apologize if maybe some of my questions have been answered. I just wanted to zero in on the very strong adjusted gross margin per metric ton in the quarter. I was just wondering, can you. Two questions. What would the number have been excluding the non-recurring adjustments? Secondly, kinda how do you expect that, you know, strong number that you've seen now and for two quarters to evolve for the balance back half of 2026?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Yeah, that's a good question. When we're looking at adjusted gross margin, going forward, you know, we think it's gonna be closely aligned with what we had last year on a normalized basis. And if you look from a normalized basis, you know, in the current quarter, we probably have, you know, somewhere around like CAD 50 of lift from some of those, you know, between CAD 40 and CAD 50 of lift from those, either one-time or the mix. Because the mix actually, you know, tend to push us at a higher level because with lower exports that are carrying lower margin and obviously, you know, everything else takes a little bit of a boost.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Okay. Okay, that's helpful. Then just turning to the maple business, you know, in terms of the adjusted gross margin and what was down year over year, I'm just wondering if you can isolate what sort of the key drivers were there. Then similarly, do you still think that the full year gross margin in the maple business will kind of be in that 10%-10.5% range?

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

First question, the first part of your question regarding last year. Last year, we had a second quarter that was a bit of an anomaly. Even if you're looking at the whole first half of the year, we were higher. We kind of went down a little bit in the second half, and the main reason was some of the mix of the product we sold, we had, you know, what we call more industrial syrup to match some of those industrial sales. Therefore, and we've used it faster than we've done in the past, instead of like, you know, trying to level it throughout the year. This year is a bit different. Our supply is a bit different, and it's gonna be more, you know, you won't see peaks between quarter.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

It should be fairly stable. Going through your, the second part of your question, margin, to be between 10% and 11% is what we have achieved so far this year, and that's what we're expecting for the remainder of the year.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Okay, that's great. Thanks, JS. I appreciate it.

[Jean-Sébastien Couillard, CFO at Rogers Sugar]

Thanks, Stephen.

[Operator]

There are no further questions at this time. I will now turn the call over to Mr. Mike Walton. Please continue.

[Mike Walton, President and CEO at Rogers Sugar]

Thank you all for joining us today. As a 100% Canadian owned and operated sweetener company, we are proud of what this company has built over nearly 140 years, and I hope today's results give you a sense of why. We look forward to speaking with you again when we report our third quarter and wish you a good evening. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Jean-Sébastien Couillard, CFO
• Mike Walton, President and CEO

Analysts

• Frédéric Tremblay, Analyst at Desjardins Capital Markets
• John Zamparo, Analyst at Scotiabank
• Michael Van Aelst, Analyst at TD Cowen
• Nathan Poole, Analyst at National Bank Financial
• Stephen MacLeod, Analyst at BMO Capital Markets