Operator: Good morning, ladies and gentlemen, and welcome to the Rogers Sugar Inc. Analyst Call February 6th Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question-and-session. [Operator Instructions].

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 some non-IFRS measures in our call. Please refer to the forward-looking disclaimers and non-IFRS measure definitions included in our public filings with the Securities Commission for more information on these items. A replay of this call will be available later today and the replay numbers and passcodes have been provided in our press release and an archived 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. Please go ahead.

Mike Walton: Thank you, operator, and good morning, everyone. Thank you all for joining us today. As we begin the review of our business and discuss the strong results of first quarter of 2025 for both of our business segments.

I would like to tell you that we recognize the potential challenges related to the recent discussions and trade policies between the U.S. and Canada, and that we are committed to minimizing the impacts of such challenges on our business while meeting the needs of our customers. I'll begin the call today with some highlights of our strong results in our Sugar and Maple segments for the first quarter of fiscal 2025. I will also provide an update on our LEAP project and on work we are doing to meet the needs of our customers in our Sugar segment over the long term. Then I will turn it over to JS, our Chief Financial Officer for a detailed review of our financial results.

I will conclude with an outlook for the remainder of fiscal 2025. We have an investor presentation accompanying this call. This presentation will be available on the investor section of our website after the call. Let me start by saying that we are in a really great business. Rogers is in a strong position to produce sugar for the North American market.

We have refining facilities with easy access to Western and Eastern markets. Our cane refineries are located next to ports that are able to receive shipments of raw sugar year-round with excellent transportation links to key markets. We have a skilled workforce and a reputation for quality and reliability, and we are the only sugar company that is 100% Canadian owned and operated in Canada. So, turning to the tariff question, the first thing I will say is that you can be assured that we are monitoring the situation very closely. We understand that the imposition of tariffs could have an impact on our financial performance in the future, should tariffs be applied, the magnitude of the impact will depend on the quantum of the tariffs, the timing and duration of such tariffs, and the potential impact on our domestic customers producing sugar containing products for the U.S.

market. Our Sugar segment exports approximately 5% to 10% of its production directly to the U.S. Our industrial customers sell sugar containing products to the U.S. Each year, between 40% and 50% of all of the sugar refined in Canada is exported to the U.S. in the form of sugar containing products by industrial food transformation companies located in Canada.

Conversely, each year, a slightly lower amount of sugar containing products are imported to Canada by U.S. companies. For the Maple segment, we do export to the U.S. as there is not enough production capacity to meet the U.S. demand for maple syrup.

Canada produces 80% of the world's maple syrup. We currently estimate the proportion of Canadian maple syrup sold in the U.S. to be approximately 50% per year on average. Considering what I have just described, we believe there are very little alternatives to supply in the U.S. market for sugar containing products and maple syrup in the near to medium term.

Although we know that potential tariffs would likely have a negative impact, it is very difficult to estimate, especially on the sugar side as counter tariffs are likely going to be in place on sugar containing products coming from the U.S. Still, our responsibility in an environment like this is always to be thinking about how we can fortify ourselves even more. So, that's what we are doing. And of course, we are focusing on meeting the needs of our customers as we always have. It is important to remember, whatever happens, we have been in business for over 135 years and we've seen all types of challenges in trade.

We have not just survived these, but we have thrived within them. I personally participated in the last [indiscernible] [Kurtzman] negotiations, so I'm familiar with the noise we are hearing right now. What this situation does is bring a cloud of uncertainty to our business and that of our customers. One thing is certain, everything we have accomplished during the last three years has strengthened our foundations. Our company is in the best shape in our history and we are well-positioned to weather any new developments on this front.

Our strategy for 2025 focuses once again on delivering value to our customers and our shareholders. Our Rogers Refined framework sets out the pillars behind that strategy. They are modernizing and growing in our sugar business, driving profitability in Maple, maintaining a strong balance sheet, and advancing our ESG program. We continue to make advances in these four key areas because we are confident that this is the right way forward to meet the needs of our customers while providing a fair return to our shareholders. In the last three years, we have reported 12 successive quarters of improved profit year over year and that track record of growth continues with our results for the first quarter of 2025.

Our first quarter results reflect our continued focus on consistent profitable sustainable growth. With stronger performance in both business segments, the first quarter was the best quarter in our history. The Sugar segment in particular benefited from higher volumes compared with last year, which was impacted by the labor disruption in Vancouver. Consolidated revenue increased by 12% to CAD323 million with higher contribution from both business segments. Our adjusted EBITDA increased by 29% to almost CAD40 million.

The key contributors were solid revenue growth and improved operating efficiencies in both segments. In the first quarter, our Sugar segment began to see a modest recovery in demand. Prices of other commodities such as cocoa continued to weigh on demand for sugar containing products. Today, that inflationary pressure has moderated, but not disappeared. As we expected, the pace of global food inflation has slowed.

Consumers are adjusting over time to the new reality of food costs. The impact on our top line was a higher volume than anticipated in the first quarter. Together with the improvement in volumes from full production in Vancouver, this quarter saw sugar volumes increase by about 8% compared to the same time last year. Our Maple segment continues to benefit from the market recovery that began in the second half of fiscal 2023. Sales volume increased by 13% for the quarter for a great start to the year.

While pricing continues to be strong and consistent with the first quarter of 2024. Those factors drove growth in revenues in the first quarter. At the same time, we continue to focus on operational efficiency in our Maple segment and our efforts are paying off. The combination of higher sales volume and lower operating costs per unit drove a 22% increase in adjusted EBITDA at $5.7 million for the current quarter. Now, turning to our Eastern Sugar expansion project, 2025 is going to be a year of significant activity and progress on our LEAP project.

We continue to work hard to advance this very important enhancement to our production and distribution capability in Eastern Canada. Construction is well underway at our Montreal refinery. Our people are meeting the challenge of implementing a significant facilities upgrade and expansion while ensuring that our customers continue to receive timely deliveries of the sugar they require. This is no small feat. Our estimates for the total cost to complete the LEAP project remain consistent with our update from last quarter of between $280 and $300 million, and LEAP is on track for completion by the end of 2026.

We should remember that this project addresses the long-term needs of our customers and is integral part of our business strategy to support our business in eastern Canada. This project will add 100,000 tons of capacity located close to our customers in the eastern domestic market. This production growth together with an enhanced rail deliverability will allow us to leverage our location to support the food transformation industry in eastern Canada. LEAP represents an important opportunity to solidify our position as the supplier of choice for our customers. As they plan for their own long-term growth, we will be there to supply the sugar they need.

I'll now turn the call over to JS for discussion on our financials. Jean-

Sebastien Couillard: Thank you, Mike, and good morning, everyone. The improved business performance translated to an increase in adjusted net earnings per share. For the first quarter of 2025, the adjusted earnings per share were $0.15 compared with $0.12 for the same period last year. The adjusted EPS number for the first quarter includes the impact of the equity issue done in the second quarter of 2024, which increased our share outstanding by about 22%.

As Mike said in his remarks, we are pleased with the continued momentum in both of our business segments as we are reporting growth in revenues and profitability in the first quarter. Consolidated revenues for the quarter were $323 million, an increase of 12% compared with the first quarter of 2024. Consolidated adjusted EBITDA increased by close to 30% year-over-year to just under $40 million. Consistent with 2024, our Maple segment accounted for just over 20% of consolidated revenues and 14% of adjusted EBITDA. Together, the strong performance from both of our segments drove an increase in free cash flow of $42 million for the last 12 months., free cash flow was 86 million for the trailing 12 months compared to 44 million for the same period last year.

Now, let's turn to the individual business segments, beginning with sugar. Revenue increased by about 12% to 257 million in the quarter for the Sugar segment. Volume growth was the main driver for this increase, reflecting the impact of the labor disruption in Vancouver on the first quarter of 2024. Export volumes, which increased by about 20,000 tons in the period were the most significant contributor to year-over-year volume growth. You may recall that we had focused on supplying our domestic market during the strike in Vancouver.

Revenue growth also benefited from higher pricing for refining related activities. Adjusted gross margin per ton of sugar was 225 in the first quarter, an increase of $26 per ton compared to $199 in the first quarter of 2024. Note that this increase includes the non-recurring proceeds of 2.7 million from an insurance settlement related to prior periods. The positive variance is also associated to the impact of profitability of the labor disruption in Vancouver last year. Adjusted EBITDA for the segment increased by 30% to 34 million in the first quarter compared to 26 million for the same period last year.

Our Maple segment has delivered another quarter of solid financial results. Maple benefited from higher sales volumes to existing customers and robust pricing consistent with the first quarter of 2024. Together, these factors drove revenue growth by 13% year-over-year. Adjusted gross margin improved to 11.5% in the first quarter. Adjusted EBITDA in maple increased by 22% compared with last year, reflecting the ongoing benefits from higher volumes and lower operating costs from the ongoing investment we have made in operational improvements over the last two years.

The strong results from both of our business segments support the strengths of our balance sheet and associated financial metrics. As you heard previously, our strong financial performance over the last three years has led to a sizable increase in our internally generated cash flow CapEx for a quarter for both segments totaled 22 million of which 20 million was attributable to our LEAP project. We currently anticipate to spend about 100 million in connection with the lead project this year. Our financing plan for LEAP is scalable as we have some options. It includes a combination of cash generated from the recent increase in operational cash flows, debt, equity instruments, our existing revolving credit facilities and loans with investee market.

During the quarter, the Six Series debentures totaling 57.4 million matured and we repaid this amount to the holders. Taking into account our available liquidity and future financing needs, we are considering all options regarding the Seven Series convertibles, which mature at the end of June, 2025. Some of those options include cash repayment, conversion to common shares, or refinancing with a similar debt or equity instrument. Looking ahead, we will monitor the financial market and the current situation regarding the potential implementation of export tariffs. We will adjust our spending and our financing strategy accordingly to meet our business objectives.

In closing, I would like to say that we are maintaining our dividend of $0.09 per share for our shareholder this quarter. Once again, this dividend is supported by our excellent financial results. With that, I will turn the call back over to Mike to provide a summary and outlook for 2025.

Mike Walton: Thank you, JS. I'm pleased that we are making a healthy start to 2025.

With all of our facilities back to full production, we are executing and well on track to deliver consistent and stable financial results in 2025. Starting with Sugar, our sales volumes in the first quarter are consistent with our stated expectation of approximately 800,000 metric tons in sales for the full year. Now as mentioned earlier, our volume expectations for 2025 could be impacted if tariffs on exports are imposed by the U.S. in the near future. At our Taber facility, we are still processing the 2024 sugar beet harvest.

We are modestly revising our expectation for the 2024 crop to between 100,000 and 105,000 metric tons of beet sugar due to some unfavorable weather conditions affecting the quality of harvested beets. Based on the current market conditions, gross margin should align with the last few quarters, reflecting strength in market pricing for sugar and sugar containing products, allowing us to mitigate any pressure on our production costs. We do expect moderate increases in operating and maintenance costs at our facilities with the impacts of market-based increases in costs as well as employee wages. We are committed to a responsible approach to cost management and regular facility maintenance. We will also adapt our operational strategy, if the market conditions change in the near term.

Looking at our Maple segment, we expect another strong year in 2025, thanks to the market recovery we've seen over the last few quarters and the solid results for the first quarter. Once again, here our volume and profitability expectations for 2025 could be impacted if tariffs on exports are imposed by the U.S. in the near future. We continue to expect our CapEx spend to fall between CAD25 million and CAD30 million for the year across our business segments, excluding the expenditures related to our LEAP project. This will be an important year for our LEAP project as the majority of the construction work will take place in 2025.

Spending is expected to come in at approximately CAD100 million for the year. As you heard from JS, this overall capital spend is manageable within the financing tools we have in place. However, if market conditions were to change materially, we could adjust the pace and level of our spending to the needs of our business. In summary, we had a great first quarter for both our business segments in terms of revenue, profits, and free cash flow with encouraging contributions from both Sugar and Maple. We have confidence in our products, which are essential ingredients to so many foods that people enjoy.

We have confidence in our people who are providing those customers with top-notch products and top-notch service, while working to build our capability for the future. We recognize that the market conditions are uncertain right now, but we remain confident in the long-term demand for Canadian sugar. As I said earlier, we are focused on managing this business through uncertainty to meet the needs of our customers just as we always have done through the past economic cycles. Finally, I am confident in our ability to navigate any bumps in the road that may arise as we have never been in a stronger position financially in our history. We thank our people and our customers for their dedication and for placing their confidence in us.

And we thank you for joining us on the call today and your interest in Roger sugar. I will now ask the operator to poll for questions.

Operator: Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Michael Van Aelst with TD Cowen.

Please go ahead. Michael

Van Aelst: I'll start off with some of the easier ones. First of all, the lost customer that you alluded to in Western Canada in the liquid business, when did you actually lose that customer, and did you lose it to high fructose corn syrup?

Mike Walton: Yes. Hi, Michael. Good morning.

Exactly. That was kind of a planned transition as domestic volumes were in demand and continue to be in demand. Typical high fructose substitutable volume brings you, as you know, a lower margin, and that was a planned exit on both parties. Michael

Van Aelst: Okay. And when was that?

Mike Walton: It would have been two years ago.

The contract would have been negotiated I believe. Michael

Van Aelst: No, I'm sorry. When did you actually lose the business? Was it just this quarter?

Mike Walton: The volume started to come out of the business this quarter. Michael

Van Aelst: And then, I guess this quarter it looks like it was replaced by export volumes. What's more profitable for you at this stage? Is it the export volumes or the liquid volumes?

Mike Walton: In that case, as you can appreciate with the tightness, we've seen in the last 12, 18 months in the North American market, particularly in Mexico and the United States, high-tier sales still make a heck of a lot of sense for this business.

We always take opportunities when that market presents the economics that are favorable to what we want in our mix. Michael

Van Aelst: And then you had that $2.7 million insurance gain. Is there anything else like this coming in the next few quarters, or was there anything that I can't think of that was last year except for the strike or the labor disruption?
Jean-

Sebastien Couillard: Hi, Mike. It’s JS. No, obviously that was a claim that we made on sugar we had purchased that was contaminated.

Hopefully, we don't have any more of those, but right now, we don't have anything ongoing on that. Michael

Van Aelst: So, I wanted to move on to the tariffs. Obviously, you gave us some numbers here to work with, but the 5% to 10% that is exported directly. So, when you look at the 10,000 metric tons of sugar that you actually have that's tariff-free, would you expect that part of your business to be impacted? Do you think there's a lot of tariffs on the product that is already tariff-free?

Mike Walton: Hi, Michael, that's such a great question. You and ourselves and everybody is asking that, and as you can appreciate that particular playbook changes by the second with zero clarity.

So, the first thing is I want to clarify. We have two Canadian beat quotas. One is the old WTO and the new CUSMA. So, it totals about 20,000 tons of tariff-free beat quota for the United States that we ship annually. And we have no clarification yet because until the federal register is out and we all get to look at facts, we don't know how any potential duties will be applied, if they're going to be applied, and if there will be the stacking of duties.

It's the same question every manufacturer in Canada has. There is zero clarity on that. Michael

Van Aelst: I missed the number that you said, like what percentage, I guess, comes back into Canada as part of sugar containing products?

Mike Walton: Yes, that's the great question, right, because we only look at one side of the equation when everybody is trying to manage risk and understand what the impact would be, but you have to look at the other side as well, which is the countervailing tariffs on imports of similar goods and sector similar goods, whether it's FCPs and or possibly high fructose corn syrup. And when you look at those kinds of baskets together, then it's close to balance. I won't say it's fully balanced, but it's close to balance, Michael.

Slight deficit in U.S. favor actually on the trade bumps. Michael

Van Aelst: I'm surprised it's that big considering the challenges and like the tightness of sugar in the U.S. I was surprised that much is coming up into Canada in sugar containing products. So, the close to that 40%, I guess you said 40% to 50% of sugar -- of all the sugar refined in Canada goes down into the U.S.

and sugar containing products. So, you're saying just under that comes back?

Mike Walton: Slightly under that would be what comes back and look this is what's so complex, and you raise a really good question. Well, why is some -- you're surprised some goods are coming back into Canada, given the thickness of sugar. It just shows how difficult it is to shift manufacturing platforms on a dime. Manufacturing platforms get set up for running specific products in niche channels and you sometimes don't move those plants.

Michael

Van Aelst: Have you had, I mean, I'm sure you have, but like, is there any insight you can share from your customers that would be impacted by this and how they're thinking about both their existing capacity and the capacity that's under construction right now?

Mike Walton: So, on the sugar side, I would say we saw zero, we got zero insights and saw next to nothing that would tell us that the world's order was changing. It was like us, everybody else, the same thing in the dark with a blindfold on some of this. And we're just managing our business prudently. When you look at what's been installed and is running in Canada for decades, it's not easy to flip that switch and move a cookie from Canada to suddenly being know a cookie being made in the United States, because if they're complex moves, none of that change is going to happen immediately. And so, companies are doing much the same as we and every other manufacturer in Canada is again, waiting to see the details and the federal register so we can have some facts.

Should they come so that we can manage our businesses accordingly. But as we said, previously that we don't -- we're optimistic here. I mean, anything can happen. The rain can come and anything can happen, but you got to think about the logic. It takes decades to set up manufacturing plants that run efficiently and to be competitive in the food production environment that we all compete in.

And to flip that and move it to across the border to another country in moments in time, it's just not practical. Michael

Van Aelst: I guess, I would assume that there's just not the capacity, the sugar production capacity in the U.S. to open that much more capacity -- more production in the U.S.?

Mike Walton: That is such a great observation because don't listen to what I keep coming at. We've got to look at the facts folks. The facts are The U.

S. Is a deficit market. They still import 3 million tons of sugar plus FCP products made in other foreign jurisdictions. There is no way to change that on the diet. Michael

Van Aelst: Is the capacity there to refine it, if they -- if it wasn't, if they didn't have higher cost or higher prices down there, or is there, would they have to add, would the sugar refiners in the U.S.

have to add capacity?

Mike Walton: So, I'm not an expert in capacity in the United States, but my intuition tells me that if the capacity existed, they would be doing more on their own. So, I think there is some capacity, but as in our business, it's the same south of the border. It's the seasonality. You may have some capacity sitting in your refineries in January, February, March, but you're sure as hell not going to have it sitting in July, August and September. Michael

Van Aelst: And then, and so just back on the -- I know that your customers don't have any better visibility, but I'm sure they're already going through contingency planning the same way you are.

And that was what I was trying to ask you about, like is there any insight from them in terms of what their contingency plans would be should this happen? Do you get the sense that they would be I guess, bottom line is do you get the sense that they would put a halt to their facility like their capacity expansion that's underway in Canada and consider moving it into the States?

Mike Walton: Yes, that's a good question. So no, the answer is no, we're not getting any signs of that. And people just like us are making these investments for the long term. The long-term sugar economics are going to favor the current structure that exists today. And plants are expensive, they take a long time to build and capacity that's under construction or has been installed, I would bet it's going to continue to produce and run.

If you look at the trade value, the difference in sugar economics I keep talking about, but the spreads in the U.S. and Canada, and even with the 25 proposed duty, 25% duty, we don't know what that's going to be, maybe zero or whatever. But even with that and given the changes in foreign exchange, it's not all that dramatic. So, I'm pretty sure the Canadian industry will continue to manage through this and recognize the long-term proposition. Food manufacturers don't move in knee jerk reactions.

They tend to look for long stable runs. And I think that's what we'll win in the day at the end of the day in this conversation.

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

John Zamparo: I just want to follow up on Michael's question first.

I'm just trying to understand this. If there's a cost advantage here in Canada from raw pricing of 11 versus 16, if there's a wage advantage in Canada, if there's an FX advantage in Canada and if there's a shortage of production in the U.S. Why is U.S. produced sugar crossing the border into Canada?

Mike Walton: Well, as I said earlier, there are some niche goods that it's just not it doesn't create the opportunity to move a factory. We have seen over the last four or five years that trade deficits widening because of the economics and the long-term durability in Canada.

But there are some food sectors in specifics that maybe don't move across back and forth and don't easily move back and forth. And you've seen some channel changes in recent headlines and consolidations on bakeries for example. So, as companies consolidate smaller sites and smaller operations and look at putting more scalable plants in food manufacturing. We've seen the evidence they tend to be putting those in Canada. So over time, I think that's a good road.

But there will always be some niche goods that are just going to be made south of the border and coming to Canada.

John Zamparo: We've heard in some industries of pulling forward of demand in order to get in front of potential tariffs. Have you seen that at all or has there been no change to order patterns and you referenced in the prior answer that there's no change to CapEx plans for any of your large customers that have capacity expansion projects underway, but have you seen any change in immediate demand to try to avoid potential tariffs?

Mike Walton: Yes, of course, and we've seen some of that specifically in our Maple segment, which is more U.S.-sensitive because of customer mix. And so, we've seen since the events of last weekend, we've seen more earnest pulling and building of inventories, pulling earlier orders in the maple business, not so much in the sugar, because we've already had taken some measures and positioned some inventory in the United States to hold some short-term orders should the need arise. But the Maple has seen some pull by large U.S.

retailers as they build some buffer stocks in, but that's only started in the last days. Jean-

Sebastien Couillard: Yes, maybe if I might just add. Maple had very, very strong quarters, and I don't want to give the impression that that was related to pull in Q1. So, the pull that Mike is talking about, it's been literally like in the last week that we've seen, especially on the maple size week.

John Zamparo: I want to shift gears.

We've heard lots about interprovincial trade in Canada. And how that's become a priority for regulators now? I wonder how you'd describe cross-province trade in your industry or industries. Is there potential or imminent desire for that to improve? I wonder how that might impact Rogers Sugar, if at all? And if there is an opportunity, would it be sales related? Would it be margins? I wonder how we should think about that.

Mike Walton: So, great question. That is one of the dialogues of the day, of course.

And right now, in Sugar and Maple, there are no barriers in trade between provinces in Canada. And as you know, we operate in several provinces in Canada with a plant in Vancouver, a plant in Taber, a distribution center in Toronto, a large sugar refinery plant in Montreal, and three maple syrup production plants in eastern Quebec. So, we're well diversified across Canada for serving the needs of our customers, and there are no interprovincial trade barriers in moving goods of Sugar and Maple currently.

John Zamparo: Okay. Just a couple more.

Looking from the consumer's lens, we've seen a pretty rapid reaction from consumers or some consumers at least towards buying Canadian. I wonder how you're thinking about this and how this might impact your strategy? Are you considering changes to labeling or advertising or messaging to consumers? And if so, how long a process might that be?

Mike Walton: That's a great question. I'm glad you asked that. It's almost like a free commercial for us, John. As you'll pick up a 2 kg bag of our sugar anywhere in Canada, you will see on a label or a badge on the front package that says, proudly owned and operated by Canadians.

So, we are 100% Canadian owned and operated. We're the only sugar company in Canada that can say that, and we always have been, and that has been displayed on our retail packaging for decades.

John Zamparo: And are there conversations underway with retailers about how this can be better brought to the attention of consumers?

Mike Walton: It's early days, but I'm sure that's going to be prominent in our business reviews, our sales teams, and our customers in the coming days.

John Zamparo: And then last one, specific to you, Mike, you mentioned that you were involved with the last round of trade agreement negotiations. Can you talk about what you're seeing or hearing this time around versus last time? Does it feel materially different? Obviously, there's a different start to these, but I wonder how much you think is posturing and no one's got a crystal ball, but it feels like you've got a kind of an inside playbook from the last time this happened, and I wonder if you could talk about your experience last time and how this round differs?

Mike Walton: Yes, thanks.

The one thing I won't do, and I've said it many times, and I try to counsel our whole group of employees not to, is we won't speculate. This is a different environment. It's unique to itself and that's, I guess as kind as I can be about it. Yes, the last time as I said it, there's a lot of noise around this type of negotiation style and it's not unfamiliar to me. We've been there before.

It's a little louder right now, a little short term, a little more intense on a shorter term, but I don't think characteristically materially different. And we continue to engage with government parties like across the country. And we encourage government parties on both sides of the quarter to come together, find a resolution and let cooler hits prevail. Because in the end, that's what everybody needs. And I'm -- we're doing our part in behind the scenes to encourage people to take that approach.

It's just noise, we should not get distracted by the noise. We should focus on delivering against our strategy and delivering value for our shareholders.

Operator: And your next question comes from the line of Frederick Tremblay with Desjardins. Please go ahead.

Frederick Tremblay: Thanks for all the insights on the tariff and trade situation.

Much appreciated. Just maybe switching to the Maple volume outlook, we noticed that seems like you're now expecting 2 million pounds increase in volume in Maple that's up from 0.5 million pound in your prior outlook. So just wondering, if there's anything market related that is providing you with this increased confidence on the outlook? Or is it that you maybe want some larger pieces of business recently? Just maybe a bit more color on that volume side in Maple.

Mike Walton: Thanks, Fred. Yes, as I said in my comments earlier, we're more optimistic in the Maple side as we see compound annual growth rates in across the globe starting to pick up and grow again.

Coming out of this period of food inflation where people slowed down procurement of maple products in particular, we're seeing a return to more normal, more traditional buying patterns and growth in the business. And as far as winning customers, we can continue to peak every single day in this business. We intend to maintain and slightly improve our market share and key markets and that we're going to stick to that strategy and continues to grow this business.

Frederick Tremblay: And then can you speak to the I mean the operating leverage in that business in Q1, we saw gross margin and Maple was improved quite a bit. Is that something that you feel is sustainable given the more positive volume outlook that you have there?
Jean-

Sebastien Couillard: Hi Fred.

It's JS here. Maple -- our Maple business, we've done a fair bit of work over the last two years on automation and cost -- improve control over cost improvement efficiencies. About half of our costs in Maple, I would say, are fixed costs. So obviously, whenever there's good volume, it gives a bit of a lift to our gross margin. So, we believe that if the volume continues to be where we think it's going to be from a target standpoint, and we think that this type of margin we're at 11.5% in Q1, we believe we can continue on the same front.

Operator: [Operator Instructions] Your next question comes from the line of Zachary Evershed with National Bank Financial. Please go ahead.

Zachary Evershed: So just a follow-up on Fred's questions on Maple. How are discussions around pricing evolving this year?

Mike Walton: Yes. We continue to extract value where we can in that business.

We're getting improved pricing in some sectors and continue to create that value. Equally, as JS said, we've been as we've reported in previous quarters, we've invested in the maple business and automation and some other things that allow that business to run at a lower cost as well. So, we're extracting value in pricing and extracting value in excellent operating performance at the plant level.

Operator: Sorry, Zack, are you on mute? We'll proceed with the next question. So, we do have from Nathan Powell with National Bank Financial.

Please go ahead.

Nathan Powell: So, in Q1, we saw a bigger inventory build, higher than we've seen in historic years. Can you give any color on what's driving that working capital investment? Is it related to what you said regarding Sugar and Maple and those customers perhaps building up inventories in anticipation of any tariffs or anything like that?
Jean-

Sebastien Couillard: Hi, it’s JS. A lot of it is timing for raws. So, vessels of raw sugar rise at different times, and it was really more of a timing.

We had vessels arriving towards the end of the quarter in both of our location, and that's what drives that's what drove the price. We also I mean our plants have been running well. So, from a finished product standpoint, we had a fair bit of inventory from a timing perspective, but it's just working capital. It's not I wouldn't call that a sustainable investment in working capital. This is all about timing.

Mike Walton: And I want to add to that. Some of this is done with purpose. As you refer to our Rogers Refined program, we want to satisfy our customers giving them products when they need it and where they want it. And so, we as part of one of our strategies this year, got really focused on making sure we had sugar available because it's been a tight market in the last few years. We're proud of the team and what they were able to deliver.

It's one of the first years that I can remember and I've been around here for about 40 plus years where we had a 100% fill rate against our retail customers in most channels for a difficult Q1, which is a critical quarter for Christmas baking and fall baking. So, really great execution and you get there by good plant performance and building some inventory to carry us through to fill those orders. We'll continue to use that inventory in Q2 and provide excellent service to our customers.

Operator: Thank you. And your next question comes from the line of Stephen MacLeod with BMO Capital Markets.

Please go ahead.

Stephen MacLeod: So, Mike, I know you gave a bunch of a good preamble with respect to tariffs, so I don't want to spend too much time on it. But I guess my question was just and I don't think you addressed this specifically, but if you did, I apologize. But can you just give a little bit of color around what sort of customer feedback you've gotten from your SCP customers that ship to the U.S. with respect to tariffs, if any? Or are people just taking a bit of a wait and see approach at this point?

Mike Walton: Yes, thanks.

Yes. And playback recording, I do give some feedback to that, but I'll give it to you again now. We are not getting any feedback directly from our customers at this stage, it's quite quiet. People are doing the same as we are waiting to see facts until the Federal Register is pushed out and we get, tariff lines with tariff rules, nobody should react. And of course, as we know, we didn't get such an implementation.

So, people take a wait and see. Overall, you've got to look at the big picture context. The sugar economics of producing in Canada, given the changes in foreign exchange, given everything else, long-term cycles for plants, people are still likely going to stick with their base where they are now and continue to do what we're doing.

Stephen MacLeod: And then just with respect to the Sugar segment, another strong quarter of adjusted gross margin per metric ton. And I'm just curious if you can give a little bit of color around how you expect that to evolve through the balance of the year?
Jean-

Sebastien Couillard: Hi, Stephen, it's JS.

I think, the one thing is obviously we had a lift of about $15 per metric ton this quarter for the one time that settlement we have. So, I think we expect this to be fairly consistent throughout the year. So, obviously, but we're taking into the business, there's no material change to our business. We believe that this will be fairly consistent. There's a bit of seasonality overall, but I think, if you use the same seasonality that we've had in prior quarters, then that would give us a good proxy for what our margins will be.

Stephen MacLeod: And when you say consistent, do you mean consistent with the level you're at now or consistent with last year's numbers?
Jean-

Sebastien Couillard: Consistent with the level we are, normalize it for the one time that we've had, which is represent about $15 per metric ton.

Stephen MacLeod: And then maybe just finally on the Maple business, similarly, like nice strong margins in the quarter, good year-over-year expansion. And just wondering what the key drivers were there and how do you expect sort of that to evolve through the year as well?

Mike Walton: We're quite happy with the way business in Maple is tracking. We're getting some growth as consumers can return to Maple after the period of food inflation. So, we're seeing some compound annual growth rates creeping back across the whole industry, not just our business.

The industry is much more healthy. We've done a lot of things in the last year or so that investing in automations and in the plants and our plants are operating well. Our teams are doing an amazing job of running the plants and getting costs in order. And so, our business performance is contributing and as well as our reliability as a supplier. And therefore, we're getting some pricing in the market.

And so, I would say right now Maple, the business is firing on all cylinders.

Operator: Thank you. And I'm showing no further questions at this time. I would like to turn it back to Mike Walton for closing remarks.

Mike Walton: Thank you.

And just -- thank you, everybody, for joining us today. And just a couple of clarifying points at the end just to make sure, we just delivered the best quarter in the history of our company after 12 successive strong quarters, most of them records. And I want to be clear that the quarter we just delivered had nothing to do with frontloading for potential U.S. tariffs. It was the performance of the business.

And so therefore, as we've said, the Company has never been in a stronger financial position. We're ready. We're batting down, we're operating well, and should there be some sort of tariffs, keep in mind there will be counter tariffs and we'll be there to extract the value we can for the business. We're in it for the long term, and so our customers, so I'm pretty sure we're going to come through any bumps that may come towards us. So, thank you for joining us today, and we'll see you next quarter.

Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.