Q2 2026 Rogers Sugar Inc Earnings Call

May 7, 2026

Operator 2: Good evening, ladies and gentlemen, and thank you for joining us today, Thursday, 7 May 2026 for the Rogers Sugar Inc. Q2 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 0 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: Good evening, ladies and gentlemen, and thank you for joining us today, Thursday, 7 May 2026 for the Rogers Sugar Inc. Q2 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 0 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.

Speaker #2: At this time, all lines are in a 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 *0 for the operator.

Speaker #2: 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.

Speaker #2: 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 file links with the Securities Commission for more information on these items.

Speaker #2: 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.

Operator 2: 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.

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.

Speaker #2: I'll now turn the call over to Mike Walton. President and CEO of Rogers Sugar. Thank you, operator, and good afternoon, everyone. Thank you all for joining us today.

Mike Walton: Thank you, operator, good afternoon, everyone. Thank you all for joining us today. I'll start with a summary of our Q2 results, covering both the Sugar and Maple segments. I will also share an update on the LEAP project and where we stand heading into the H2 of the year. J.S., our Chief Financial Officer, will then walk you through the financial details for Q2 and H1 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.

Speaker #2: 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 LEAP project and where we stand heading into the second half of the year.

Speaker #2: JS, our chief financial officer, will then walk you through the financial details for the quarter and for six months of fiscal 2026. After which, I will return to cover our outlook for the remainder of fiscal 2026.

Speaker #2: 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.

Speaker #2: If you would like to follow along. Let me start by taking a high-level view of the operating environment for a moment. We operate in a world right now where trade policy is shifting and geopolitical actions are affecting supply chains across every industry.

Mike Walton: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: These are not trivial factors, and we are not dismissing them. But underlying demand for our sugar and maple products is steady. It is not going away.

Speaker #2: 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.

Mike Walton: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: That is exactly what you will see reflected in our results today, as we delivered strong profitability despite lower shipment volumes. So today, I am pleased to report that Rogers Sugar delivered another quarter of strong financial performance in the second quarter of fiscal 2026.

Mike Walton: Today, I am pleased to report that Rogers Sugar delivered another quarter of strong financial performance in Q2 of fiscal 2026. We reported adjusted net earnings 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 6 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 Q2, a 21% increase over last year, including some benefits from non-recurring and timing favorable variances.

Speaker #2: We reported adjusted net income of nearly $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.

Speaker #2: In Q2, consolidated adjusted EBITDA increased by 10% year over year to $38 million. For the first six months of the year, adjusted EBITDA is up by 15% to $85 million.

Speaker #2: These results reflect a continued strength of our sugar segment and the disciplined execution of our routines across both businesses. Looking at the sugar segment, adjusted EBITDA on sugar was $33 million in the second quarter, a 21% increase over last year.

Speaker #2: Including some benefits from non-recurring and timing-favorable variances. 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.

Mike Walton: Sugar sales volume in Q2 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 1 of our large industrial customers and some softness in the confectionary sector.

Speaker #2: 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 was mainly related to the current trade environment, which was not favorable for sales of refined sugar of Brazilian origin.

Speaker #2: 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.

Speaker #2: 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.

Mike Walton: 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 Q2 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 Q2, a decrease of CAD 2 million compared to the same period last year.

Speaker #2: That being said, our ability to manage execution in the current challenging environment does 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.

Speaker #2: Now turning to our maple business segment, where adjusted EBITDA was just under $5 million in the second quarter, a decrease of $2 million compared to the same period last year.

Speaker #2: This variance was primarily driven by higher production costs associated with the mix of products sold and the timing of expenditures in the current period compared to last year.

Mike Walton: 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 Q2 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.

Speaker #2: 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 in the quarter, broadly in line with the same period last year.

Speaker #2: For the first six months of fiscal 2026, maple volume was $27.5 million, up by almost $1 million from last year, reflecting continued demand from customers all over the world.

Speaker #2: The 2026 maple syrup crop should yield between 3.5 and 4 pounds per tap, in Quebec, which is considered average for the industry. We have secured enough maple syrup to meet expected customer demand for the remainder of 2026 and the first half of fiscal 2027.

Mike Walton: We have secured enough maple syrup to meet expected customer demand for the remainder of 2026 and the H1 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.

Speaker #2: We've stayed 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.

Speaker #2: Because 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.

Speaker #2: 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.

Speaker #2: And I am satisfied that we are delivering on that commitment. As I highlighted off the top, underpinning all of this is Rogers Refine, the strategic framework we put in place in 2024.

Speaker #2: 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 es efficiently and maintaining a proactive hedging program that protects our margins from commodity and currency volatility.

Mike Walton: 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. 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. Now, let me give you an update on our LEAP expansion project in Eastern Canada. During Q2, we've continued to advance construction activities and the installation of new sugar refining equipment in the main expansion building at our Montreal refinery.

Speaker #2: Sales volume is important, but our commercial approach strategy is underpinned by extracting value from our production facilities while meeting the needs of our customers.

Speaker #2: When you look at today's results, Rogers Refine is working exactly as intended. Now let me give you an update on our LEAP expansion project in Eastern Canada.

Speaker #2: During the second quarter, we've continued to advance construction activities in the installation of new sugar refining equipment in the main expansion building at our Montreal refinery.

Speaker #2: 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.

Mike Walton: 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 kV 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.

Speaker #2: 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.

Speaker #2: And let me point out that the Rogers Refine 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.

Speaker #2: It means planning and testing every step of the way. 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.

Mike Walton: 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 H1 2027 is unchanged, as is our cost estimate of CAD 280 to 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: As is, our cost amount is $280 million to $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.

Speaker #2: 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.

Mike Walton: 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.

Speaker #1: Thank you, Mike, and 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.

Jean-Sébastien Couillard: Thank you, Mike, and good afternoon, everyone. If you are following along, we are on slide 9. I will walk through the key financial results for Q2 and H1 of fiscal 2026, and then provide some additional context for the remainder of 2026. adjusted net earnings for Q2 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 H1, 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 H1 of fiscal 2025.

JS Couillard: Thank you, Mike, and good afternoon, everyone. If you are following along, we are on slide 9. I will walk through the key financial results for Q2 and H1 of fiscal 2026, and then provide some additional context for the remainder of 2026. adjusted net earnings for Q2 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 H1, 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 H1 of fiscal 2025.

Speaker #1: Adjusted net earnings for the second quarter were $19 million, or 14 cents per share compared to $16 million, or 13 cents per share in the same period last year.

Speaker #1: For the first six months, adjusted net earnings were $43 million, or $0.34 per share. This represents an increase of $8 million, or 22%, compared with the first half of fiscal 2025.

Speaker #1: 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.

Jean-Sébastien Couillard: The improvement in adjusted EBITDA of 10% in Q2 and 15% in H1 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 H1 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.

JS Couillard: The improvement in adjusted EBITDA of 10% in Q2 and 15% in H1 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 H1 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.

Speaker #1: Revenues were $281 million, compared with $338 million in the same quarter last year. For the first half of 2026, revenues came in at $579 million, roughly 14% below last year.

Speaker #1: The largest contributor was the decrease in the raw number 11 prices which, as marginal impact on our overall profitability, as we mitigate commodity price risk variation through our rigorous hedging program.

Speaker #1: The decrease was also partially due to the reduction in volume sold, as Mike mentioned earlier, reduction mainly attributable to lower margin export sales. Our free cash flow for the trading 12 months came in at about $93 million, an increase of 11% over the same period last year.

Jean-Sébastien Couillard: 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 am 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 impact on energy costs, Raw #11 price variation, and transportation and logistic cost increases.

JS Couillard: 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 am 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 impact on energy costs, Raw #11 price variation, and transportation and logistic cost increases.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: Our proactive hedging strategy was successful in mitigating the potential impacts on energy costs, raw number 11 price variation, and transportation and logistic cost increases.

Speaker #1: 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.

Jean-Sébastien Couillard: 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 Q2. 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 Q2, 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 Q2 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 a mix of products sold during the quarter.

JS Couillard: 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 Q2. 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 Q2, 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 Q2 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 a mix of products sold during the quarter.

Speaker #1: Overall, the sugar segment delivers 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.

Speaker #1: Sugar adjusted EBITDA was $33 million for the second quarter, an increase of $6 million compared to the same period last year. Let me walk through the moving parts.

Speaker #1: Adjusted gross margin increased by 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 $6.5 million, associated mainly with the mix of products sold during the quarter.

Speaker #1: Non-recurring adjustment recorded in the second quarter of 2025 for $6 million, lower procurement costs for raw sugar impacting positively the inventory position at the end of the quarter for $3 million, and lower costs in the current quarter for $1.5 million for maintenance.

Jean-Sébastien Couillard: Non-recurring adjustment recorded in Q2 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 Q2 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.

JS Couillard: Non-recurring adjustment recorded in Q2 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 Q2 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.

Speaker #1: These variances were partially offset by an unfavorable variance on volume sold of $23.5 metric tons, valued at $8.7 million, and largely in the lower margin category of export sales.

Speaker #1: On a per-unit basis, adjusted gross margin was $268 per metric ton in the quarter compared to $194 per metric ton in the second quarter last year.

Speaker #1: An increase of $74 per metric ton. This improvement reflects a favorable mix of products sold, lower raw sugar procurement costs, and lower refining costs.

Speaker #1: In addition, the second quarter performance last year was affected by some higher maintenance costs in our Montreal refinery that were non-recurring in nature. For the first six months of 2026, adjusted gross margin at $100 million was $17.5 million higher than last year, of which almost $11 million should be considered non-recurring or timing-related.

Jean-Sébastien Couillard: In addition, the Q2 performance last year was affected by some higher maintenance costs in our Montreal refinery that were non-recurring in nature. For the H1 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 Q2 of 2026 due to an increase in our share price, along with market-based increases in compensation and employees benefits.

JS Couillard: In addition, the Q2 performance last year was affected by some higher maintenance costs in our Montreal refinery that were non-recurring in nature. For the H1 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 Q2 of 2026 due to an increase in our share price, along with market-based increases in compensation and employees benefits.

Speaker #1: 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 44.5 metric tons, largely in the lower-margin category of export sales.

Speaker #1: Finally, our administration and selling expenses were higher by $4 million, driven primarily by cash settled share-based compensation, which was higher in the second quarter of 2026 due to an increase in our share price, along with market-based increases in compensation and employees' benefits.

Speaker #1: 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 $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.

Jean-Sébastien Couillard: Moving to our Maple segment. For Q2 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 Q2 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 H1 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 H1 was directly related to the factors impacting Q2 discussed previously.

JS Couillard: Moving to our Maple segment. For Q2 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 Q2 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 H1 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 H1 was directly related to the factors impacting Q2 discussed previously.

Speaker #1: 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.

Speaker #1: 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 $2 million.

Speaker #1: The unfavorable variance for the first six months was directly related to the factors impacting the second quarter discussed previously. 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.

Jean-Sébastien Couillard: Adjusted gross margin percentage for H1 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 H2 of the year closely aligned with the performance seen in H1, 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.

JS Couillard: Adjusted gross margin percentage for H1 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 H2 of the year closely aligned with the performance seen in H1, 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.

Speaker #1: 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.

Speaker #1: Turning to our balance sheet, in January, we issued $57.5 million of ninth series convertible unsecured debentures maturing in January of 2033. The net proceeds were used to reduce the balance on our revolving credit facility, further strengthening our liquidity position.

Jean-Sébastien Couillard: 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 Q3 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.

JS Couillard: 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 Q3 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.

Speaker #1: 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.

Speaker #1: On that note, our Board of Directors declared a dividend of $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 the commodity cycle, a global pandemic, and now a period of significant trade uncertainty.

Speaker #1: 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.

Jean-Sébastien Couillard: 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.

JS Couillard: 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.

Speaker #2: Thank you, JS. Now 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.

Mike Walton: Thank you, JS. Now 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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 Refine.

Speaker #2: On the trade front, the direct impact on our business has been limited so far. We are monitoring the situation and engaging with relevant stakeholders.

Mike Walton: 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. Our focus for the remainder of 2026 is straightforward. Keep executing, keep delivering. 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 US market. Our domestic Canadian business remains healthy. We continue to prioritize serving those customers first.

Speaker #2: 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.

Speaker #2: 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 of reduction of approximately 6% compared with 2025.

Speaker #2: 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 US market.

Speaker #2: Our domestic Canadian business remains healthy, and we continue to prioritize serving those customers first. 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.

Mike Walton: 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. Worth mentioning that we do not anticipate significant impact on our energy costs from the current conflict in the Middle East. As J.S. mentioned previously, our multi-year hedging program should mitigate our exposure in the short and longer term.

Speaker #2: At our table facility, the processing of the 2025 BEAT campaign was completed in February. We produced 103,000 metric tons of beet sugar, slightly above our original expectation.

Speaker #2: 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.

Speaker #2: 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: 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 H2 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 demand through the remainder of fiscal 2026 and into the H1 of fiscal 2027. Capital spending.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Now 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.

Speaker #2: 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 through the remainder of fiscal 2026 and into the first half of fiscal 2027.

Speaker #2: Capital spending in total for fiscal 2026, excluding LEAP project, our focus on automation projects and improved productivity profitability and our mainly associated with the sugar segment.

Mike Walton: 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 Q2 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. Our priorities for the H2 of the year are unchanged. Serve our customers well, manage costs carefully, and keep the LEAP project on track for its H1 of 2027 in-service date.

Speaker #2: We anticipated spending should be consistent with prior years at approximately $27 million. We anticipate spending $115 million in fiscal 2026 on the LEAP project.

Speaker #2: 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 and a volatile macro environment, which is exactly what Rogers Refine is designed to deliver.

Speaker #2: 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.

Speaker #2: Serve our customers well, manage costs carefully, and keep the LEAP project on track for its first half of 2027 in service date. Before I hand it back to the operator, I want to recognize our teams.

Mike Walton: 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 at 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.

Speaker #2: Delivering solid profitability in our most historically challenging quarter, while simultaneously building a major expansion at Montreal, takes real commitment. Thank you to our people and to our customers and partners for the trust they continue to place in us.

Speaker #2: With that, we are ready to take your questions.

Speaker #1: 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 touchstone phone.

Operator 2: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Michael Van Aelst from TD Cowen.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by number two. If you are 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.

Speaker #1: 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.

Speaker #1: 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 Elst from TD Cowen.

Speaker #1: Your line is now open.

Speaker #2: Good afternoon. I want to start off talking about the sugar volumes a little bit because they do stand out. And you did say that you're not chasing volume, but are you losing any contracts to competitive bids, or is it strictly just customer closed and the trade for the most part?

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

Speaker #3: Yeah, Michael, thanks for the question. Your view is exactly right. The domestic market remains competitive as always, but we're not losing business in the domestic market.

Mike Walton: Michael, thanks for the question. Your view is exactly right. The domestic market remains competitive as always, but 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 and 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, and refining doesn't change the origin, and therefore, the duties were prohibitive to enter into the United States.

Speaker #3: Other than the closure that was a year-over-year number that we talked about in Western Canada, and then the production problems that one of our major customers had in Eastern Canada.

Speaker #3: 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 and refining doesn't change the origin, and therefore the duties were prohibitive to enter into the United States.

Michael Van Aelst: What's happening with all the beet sugar that you're producing then if the exports are down and liquid sugar volumes are down, where is that volume going?

Speaker #2: So, what's happening with all the beet sugar that you're producing, then? If the exports are down and liquid sugar volumes are down, where is that volume going?

Michael Van Aelst: What's happening with all the beet sugar that you're producing then if the exports are down and liquid sugar volumes are down, where is that volume going?

Speaker #3: Well, the beet sugars, it goes into the mix like we do from all of our sites. And it's not specific for liquid or specific for export.

Mike Walton: Well, the beet sugar is, it 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 United States that goes back through WTO and the last CUSMA 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.

Speaker #3: The beet sugars consistently has about 20,000 tons of quota access to the United States that goes back through WTO in the Las Cruces negotiation.

Speaker #3: Other than that, beet sugar stays in the domestic market and mostly in the market where it's produced. And that business is very stable.

Speaker #2: Okay. Because your volume, now you're expecting volumes to be down 6%. I think you're 750. I seem to remember capacity is around 800 or conditions today, and the trade environment and everything like that, and all the trends that you mentioned, is if you had to make the decision over again, would you still think LEAP is a good return on investment at this stage?

Michael Van Aelst: Okay. Your volume, like, now you're expecting volumes to be down 6%. I think your 750. I seem to remember capacity is around 800 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: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #2: Okay. And that's good to hear. And are your customers' facilities or are going to be ready, or is the demand going to be there, do you think, when you open in the first half of '27, or is it going to be a very gradual ramp-up?

Michael Van Aelst: Okay. That's good to hear. Are your customers' facilities going to be ready or is the demand going to be there, do you think, when you open in H1 2027, or is it going to be a more like a very gradual ramp-up?

Speaker #3: Yeah, we've said no longer to 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.

Mike Walton: Yeah, we've said all along it'll 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 a softness in demand because of food inflation, 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 SCPs to foreign markets. We see that recovering because our customers are calling it recovering.

Speaker #3: So that's been part of our plan all along. But if you look at other major customers that we have, that have been reporting publicly as well lately, yeah, there's been a softness in demand because of food inflation and population decline, and calorie consumption decline in developed countries.

Speaker #3: But everybody's got an outlook because of food inflation easing on cocoa, which is a big driver for us for SCPs to foreign markets. We see that recovering because our customers are calling it recovering.

Speaker #3: 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 $250 million plant expansion.

Mike Walton: The other investments that we 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.

Speaker #3: So the market, despite all the headwinds and the volatility, remains very interested in developing more SCP production in Canada.

Speaker #2: Okay, thank you very much. I'll let somebody else ask questions, and I'll go back.

Michael Van Aelst: Okay. Thank you very much. I'll let somebody else ask questions.

Mike Walton: Thanks, Michael. Thanks.

Speaker #3: Thanks, Michael. Thanks.

Speaker #1: Your next question comes from the line of John Zamparo from Scotiabank. Please go ahead.

Operator 2: Your next question comes from the line of John Zamparo from Scotiabank. Please go ahead.

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

Speaker #4: 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, and mix is obviously a component here with the lower export sales.

John Zamparo: 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, and 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.

Speaker #4: But I wonder if you could talk about some of the other factors that are driving your gross margin performance.

Speaker #2: Hi, John. It's JS here. Yeah, so if we look at the year-over-year, last year was unusually low. And then, because of the reason we just mentioned, we had significant maintenance costs that were mainly one-time in nature.

Jean-Sébastien Couillard: Hi, John, it's JS here. Yeah. If we look at the year over year, last year was unusually low, and then because of the reason we just mentioned. We had, you know, significant maintenance costs that were more mainly one-time in nature. And then 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. And we've also had, we benefit from a lift on our inventory valuation because of the, you know, some of the pricing that we are pricing at in going in the future for this type of inventory.

JS Couillard: Hi, John, it's JS here. Yeah. If we look at the year over year, last year was unusually low, and then because of the reason we just mentioned. We had, you know, significant maintenance costs that were more mainly one-time in nature. And then 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. And we've also had, we benefit from a lift on our inventory valuation because of the, you know, some of the pricing that we are pricing at in going in the future for this type of inventory.

Speaker #2: And then this year, we have benefited from the mix of having less export, which are lower—we have lower contributed margin for those. And we've also had—we benefit from a lift on our inventory evaluation because of some of the pricing that we are pricing out and going in the future for this type of inventory.

Speaker #2: So if we look at the two together, you could see one is unusually high, the other one is unusually low. But if you look at the—and trying to look and going forward, I think there's probably a better proxy if we look at the last eight quarters together.

Jean-Sébastien Couillard: If we look at the 2 together, you could see 1 is unusually high, the other 1 is unusually low. If you look at the, you know, in trying to look and going forward, I think, there's probably a better proxy if we look at the, you know, the last 8 quarters together.

JS Couillard: If we look at the 2 together, you could see 1 is unusually high, the other 1 is unusually low. If you look at the, you know, in trying to look and going forward, I think, there's probably a better proxy if we look at the, you know, the last 8 quarters together.

Speaker #4: Okay, that's helpful. Thank you. On GLP-1s, I wonder what you're hearing from your larger customers in terms of how to address that or how to offset that.

John Zamparo: Okay. That's helpful. Thank you. On GLP-1s, 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?

Speaker #4: 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?

Speaker #3: Yeah, John. It's an interesting question. We're not going to speculate. We're following it as close as everybody else. The fact is, sugar is a functional ingredient.

Mike Walton: 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, 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.

Speaker #3: It's not just for sweetness. It's also a functional ingredient for cooking and baking and preserving food products. So I think it's going to be a bit of an anomaly, but we're paying attention to it like everybody else and seeing where this is going to go.

Speaker #4: Yeah, okay, fair enough. And 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.

John Zamparo: Yeah. Okay. Fair enough. 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?

Speaker #4: I wonder if you could elaborate a bit more on that. How far ahead precisely have you hedged natural gas costs, and is it 100% through that timeline, or is there some variability?

Jean-Sébastien Couillard: It's a very good question. You know, when all issue of the war broke in the Middle East, you know, there is not a material impact for us. We look at it 5 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 5 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.

Speaker #2: It's a very good question. And when all issue of the war broke in the Middle East, we there is not a material impact for us.

JS Couillard: It's a very good question. You know, when all issue of the war broke in the Middle East, you know, there is not a material impact for us. We look at it 5 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 5 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.

Speaker #2: We look at it five years ahead. And we are in a risk management business. So we've through the years, we've always tried to hedge a significant portion of our future consumption.

Speaker #2: So if you look in the next five years, obviously, the shorter term is almost back to back. And then as you go longer, to the third, fourth, and fifth year, well, there's still a majority of our position that's hedged.

Speaker #4: Okay. That's very helpful, thank you. I'll pass it on.

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

Speaker #3: Thank you, John.

Jean-Sébastien Couillard: Thank you, John.

JS Couillard: Thank you, John.

Speaker #1: Your next question comes from the line of Frederick Tremblay from Desjardins. Please go ahead.

Operator 2: Your next question comes from the line of Frederic Tremblay from Desjardins. Please go ahead.

Operator: Your next question comes from the line of Frederic Tremblay from Desjardins. Please go ahead.

Speaker #4: Thank you. I wanted to ask a couple of questions on maple. First, we noticed that employees at one of your large maple peers went on strike over recently.

Frederic Tremblay: 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, you know, recently, a strike that lasted over a month. Just wondering if you're seeing any positive volume impact from that.

Speaker #4: Strike that lasted over a month. Just wondering if you're seeing any positive volume impacts from that?

Speaker #2: No, unfortunately, it's the environment for these kinds of things in the market these days. No impact on our business one way or another in any material way.

Mike Walton: No, unfortunately, that's the environment for these kinds of things 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, but as far as we understand, they continue to serve their customers, and I assume like us, we play long term, and we defend our customers and look after them in times like this.

Speaker #2: Just a little bit of noise, as you would expect. But as far as we understand, they continue to serve their customers. And I assume, like us, we play long-term, and we defend our customers and look after them in times like this.

Speaker #4: Perfect. That's helpful. And then 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?

Frederic Tremblay: 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?

Mike Walton: Actually the mix of products sold, there's also last quarter was very favorable. That's, you know, why there's the anomaly was more the Q2 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. If you recall, last year, the H2 of the year was a bit more difficult because, you know, servicing those customer, we had to use more expensive syrup. Now this year it's gonna be more balanced.

Speaker #2: Actually, the mix of products sold last quarter was very favorable. So that's why the anomaly is more in the second quarter last year, whereas this quarter, it's a bit more flat and aligned with our expectations.

Speaker #2: And so 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.

Speaker #2: And therefore, we were able to benefit. And if you recall, last year, the second half of the year was a bit more difficult because, servicing those customers, we had to use more expensive syrup.

Speaker #2: Now, this year, it's going to be more balanced.

Speaker #4: Yeah. Perfect. Thanks for that reminder. I'll get back into queue. Thanks.

Frederic Tremblay: Yeah, perfect. Thanks for that reminder. I'll get back. Thank you. Thanks.

Speaker #3: Thanks, Fred.

Mike Walton: Thanks, Fred.

Speaker #1: Your next question comes from the line of Nathan Poe from National Bank Financial. Please go ahead.

Operator 2: Your next question comes from the line of Nathan Po from National Bank Financial. Please go ahead.

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

Speaker #5: 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 the potential for big changes to USMCA this year, can you walk us through how you're thinking about your exposure there?

Nathan Po: Hi, good evening, everyone. Thanks for taking my question. The first question I have is, with the US 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?

Speaker #2: Yeah, 301 is interesting. And we've been paying attention to it, obviously. Nathan and I have been around 45 years, so I find this stuff fascinating.

Mike Walton: Yeah, 301 is interesting, and 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. We 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% to 8% of what we refine goes to the US as refined sugar, so 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's just but one part.

Speaker #2: As crazy as that sounds, but just a reminder that, from a refined sugar point of view, on a high tier—which is Bill 301—it’s a very small amount of sugar. Five to eight percent of what we refine goes to the U.S. as a refined sugar.

Speaker #2: So, very minimal impact to us, and not going to feature big in my worry list. And as far as Kuzma, look, we're not going to speculate on Kuzma.

Speaker #2: We have it all along. We're paying attention to it. We're working with officials to make sure everybody understands the importance overall to the Canadian economy.

Speaker #2: Sugar is just about one part. The food manufacturing—it's a huge implication. So we're staying close to it, but I won't speculate on what may or may not happen coming out of Kuzma.

Mike Walton: The 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.

Speaker #5: Thanks for that color. And 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 site for the LEAP commissioning?

Nathan Po: 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?

Speaker #2: That's a really great moving piece. The electrical connection is a huge change. It's a big change in an asset like that, and we're glad to get that done.

Mike Walton: That's a really great moving piece. The electrical connection is a huge change. It's a big change in an asset like that and 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. 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.

Speaker #2: And 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.

Speaker #2: The next big step after the melting starts is the pan will go in. It's the biggest piece in a sugar refinery. It's not as complex as everything else we've already done, but it's kind of the big milestone where we do the last big lift, the last big piece of gear goes in, and we close up the roof.

Mike Walton: 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.

Speaker #2: And then we're now just into ticking and tying everything together, and getting it ready for full commissioning.

Speaker #5: Thank you very much. Those are all the questions I had.

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

Speaker #2: Thank you.

Jean-Sébastien Couillard: Thank you.

JS Couillard: Thank you.

Speaker #4: Thanks, Nathan.

Jean-Sébastien Couillard: Thanks, Nathan.

Mike Walton: Thanks, Nathan.

Speaker #1: Your next question comes from the line of Michael Van Elst from TD Cowen. Please go ahead.

Operator 2: Your next question comes from the line of Michael Van Aelst from TD Cowen. Please go ahead.

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

Speaker #4: Hi again. So, last quarter, when you talked about the sugar outlook, you said that you expected DA to be slightly better for the year.

Michael Van Aelst: 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 H1 of the year. What does that mean for H2?

Speaker #4: And now you're up 15% in the first half of the year. What does that mean for the second half?

Mike Walton: It's a good question. I think we're expecting You know, there was a few things in the H1 as we mentioned, that kind of played in our favor, some timing difference and some and some one-times. You know, for example, we had settlement of a sand claim in the Q1 that we had last year. I think we are expecting a more regular type of operation in the H2. 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 H2 of the year.

Speaker #2: It's a good question. I think we're expecting there was a few things in the first half, as we mentioned, that kind of played in our favor.

Speaker #2: Some timing difference and some one-times 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.

Speaker #2: I think we are maintaining our outlook that we will do slightly better than what we did before, exactly like you said. But I'm not expecting us to be 15% ahead—definitely not for the second half of the year.

Speaker #4: Right. But I mean, if you're only slightly better for the full year, then—I mean, it could mean a meaningful drop in the second half of the year, like 10%, let's call it.

Michael Van Aelst: Right. I mean, if you're only slightly better for the full year, then it could mean a meaningful drop in H2 of the year, like 10%, let's call it.

Speaker #2: Well, I.

Speaker #4: Is that what you're suggesting?

Mike Walton: Well, I-

Michael Van Aelst: Is that what you're suggesting?

Speaker #2: No, we're not suggesting that. What I'm suggesting is something more closely aligned with what we had last year, as far as outlook for the rest of the year.

Mike Walton: 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 for the rest of the year.

Speaker #4: Okay. All right. That's helpful. And I could look back because I know you've gone through the CITT a lot of times. A number of times since I've been covering you guys.

Michael Van Aelst: Okay. All right. That's helpful. What I could look back because I know you've gone through the CITT 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?

Speaker #4: But can you just remind me what those legal costs would be, and such?

Speaker #2: Yeah. We're expecting it's probably somewhere between 1 and 2 million dollars depending on the work that's going to be done this year and next year.

Mike Walton: Yeah. We're expecting, you know, it's probably somewhere between, you know, CAD 1 and 2 million dollar 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.

Speaker #2: There's a bit of a timing here. So it's not 100% clear when everything is going to happen. So I think some of it will hit us this year and some of it will probably be in fiscal year 2027.

Speaker #4: Okay. All right. Thanks again.

Jean-Sébastien Couillard: All right. Thanks again.

Michael Van Aelst: All right. Thanks again.

Speaker #3: Thanks, Michael.

Mike Walton: Thanks, Michael.

Speaker #1: Your next question comes from the line of Stephen McLeod from BMO Capital Markets. Please go ahead.

Operator 2: Your next question comes from the line of Stephen MacLeod from BMO Capital Markets. Please go ahead.

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

Speaker #5: 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.

Stephen MacLeod: Thank you. Good evening. 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 2 questions. What would the number have been excluding the non-recurring adjustments? Secondly, how do you expect that, you know, strong number that you've seen now and for 2 quarters to evolve for the balance H2 of 2026?

Speaker #5: But I just wanted to zero in on the very strong adjusted gross margin per metric ton in the quarter. And I was just wondering, can you two questions.

Speaker #5: What would the number have been, excluding the non-recurring adjustments? And then secondly, how do you expect that strong number that you've seen now for two quarters to evolve for the balance of the back half of 2026?

Speaker #2: Yeah, that's a good question. When we're looking at adjusted gross margin going forward, we think it's going to be closely aligned with what we had last year on a normalized basis.

Jean-Sébastien Couillard: 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 from a normalized basis. 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. The mix actually, you know, tend to push us at a higher level because with lower exports that are carrying lower margin than obviously, you know, everything else takes a little bit of a boost.

JS Couillard: 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 from a normalized basis. 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. The mix actually, you know, tend to push us at a higher level because with lower exports that are carrying lower margin than obviously, you know, everything else takes a little bit of a boost.

Speaker #2: And if you look from a normalized basis, in the current quarter, we probably have somewhere around like $50 of lift from some of those between 40 and 50 dollars of lift from those either one-time or the mix because the mix actually tend to push us at a higher level because with lower exports that are carrying lower margin and obviously everything else takes a little bit of a boost.

Speaker #5: Okay. Okay. That's helpful. And then maybe just turning to the maple business—in terms of the adjusted gross margin, it was down year over year.

Stephen MacLeod: Okay. Okay, that's helpful. maybe 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. similarly, do you still think that the full year gross margin in the maple business will kind of be in that 10% to 10.5% range?

Speaker #5: And I'm just wondering if you can isolate what sort of the key drivers were there. And then, similarly, do you still think that the full-year gross margin in the maple business will kind of be in that 10 to 10.5 percent range?

Jean-Sébastien Couillard: The first part of your question regarding last year. Last year we had a Q2 that was a bit of an anomaly, and even if you're looking at the whole H1 of the year, we were higher. Then we kind of went down a little bit in the H2. 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 and therefore 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.

Speaker #2: The 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.

JS Couillard: The first part of your question regarding last year. Last year we had a Q2 that was a bit of an anomaly, and even if you're looking at the whole H1 of the year, we were higher. Then we kind of went down a little bit in the H2. 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 and therefore 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.

Speaker #2: And even if you're looking at the whole first half of the year, we were higher. And then we kind of went down a little bit in the second half.

Speaker #2: And the main reason was some of the mix of the product we sold. We had what we call more industrial syrup to match some of those industrial sales.

Speaker #2: And therefore, we've used it faster than we have done in the past, instead of trying to level it throughout the year. This year is a bit different.

Jean-Sébastien Couillard: Our supply is a bit different and it's gonna be more, you know, you won't see peaks between quarters. 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.

Speaker #2: Our supply is a bit different, and it's going to be more—you won't see peaks between quarters. It should be fairly stable. And going through the second part of your question: margin. To be between 10 and 11 percent is what we have achieved so far this year.

JS Couillard: Our supply is a bit different and it's gonna be more, you know, you won't see peaks between quarters. 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.

Speaker #2: And that's what we're expecting for the remainder of the year.

Speaker #5: Okay. That's great. Thanks, Jess. I appreciate it.

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

Speaker #2: Thanks, Stephen.

Jean-Sébastien Couillard: Thanks, Stephen.

JS Couillard: Thanks, Stephen.

Speaker #1: There are no further questions at this time. I will now turn the call over to Mr. Mike Walton. Please continue.

Operator 2: There are no further questions at this time. I will now turn the call over to Mr. Mike Walton. Please continue.

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

Speaker #3: 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.

Mike Walton: 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 Q3 and wish you a good evening. Thank you.

Speaker #3: 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.

Speaker #3: Thank you.

Operator 2: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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