Rogers Sugar Inc

TSX:RSI

Good morning, ladies and gentlemen. Welcome to the Rogers Sugar Inc. Analyst Call May 13 Conference Call. [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 measures 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. 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.

Thank you, operator, and good morning, everyone. Thank you all for joining us today. I'll begin the call today with a discussion of the evolving trade situation and what it means for us, then provide highlights of another strong quarter of performance in our Sugar and Maple segments for the second quarter of fiscal 2025. I will also provide an update on our LEAP Project, especially in light of the current market conditions with the objective of continuing to meet the needs of our sugar customers over the long term. Then I will turn the call 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 is available on the Investors section of our website if you want to follow along.

I'll begin by stating that amid all the economic trade upheaval, our business continues to be resilient. As you know, it was a very volatile quarter from an international trade perspective. That being said, we believe our meaningful competitive position has not changed. In sugar, our facilities are strategically located to serve customers from coast to coast, and we have been a reliable supplier for over 135 years. Our Maple business is the world's largest, delivering quality maple syrup in more than 50 countries. And of course, we are proudly 100% Canadian owned and operated, we think globally and act locally.

While there is a lot in flux in the headlines, what has not changed is our belief in the long-term demand outlook that will drive our business over the coming years in both of our business segments. Maple popularity continues to grow, and we are seeing consumers return to the product globally as inflationary pressures are easing. It is not just consumers that are returning to maple, food manufacturers are also finding renewed interest in this natural sweetener with its unique flavor characteristics. Demand for our sugar from domestic producers of sugar-containing products remains strong. This is supported by another major announcement by a confectionery company just a few weeks ago to increase production in Canada.

Having said all that, we recognize that our investors, employees, suppliers and customers are all trying to understand the impact of the evolving tariff situation and make decisions for their own circumstances. We are committed to being timely and transparent in our communication around this subject. As of today, the key takeaways are that: one, the pending new tariffs have had limited impact on our business and the business of our customers. And two, based on the current state of play, we anticipate much of our production will be administered directly or indirectly by the CUSMA, the Canada, U.S., Mexico agreement signed in 2020.

Considering the volatility associated with the pending tariffs at the end of the second quarter, it is conceivable that a portion of the incremental volume could be partially attributable to customers buying ahead of the potential new tariffs. However, at this time, based on the conversations we have had with our customers, we do not believe that similar purchases will have a material impact on the expected volume of the third quarter. That being said, should tariffs be applied in the future, there could be a significant financial impact to our business, depending on the magnitude and the duration of the tariffs as well as on any potential countermeasures. We continue to monitor the situation closely and engage on a regular basis with the relevant stakeholders and policymakers.

Now, allow me to drill down starting with our Sugar segment, where our strategic focus remains on supplying sugar to the domestic market, including producers of sugar-containing products. Many of those products are exported to the United States. The main thing to understand is that under the current tariff rules, products exported under CUSMA rules of origin are exempted from tariffs. This includes most sugar-containing products exported by domestic food manufacturing customers.

Our Sugar segment also exports a small portion of its refined sugar production between 5% and 10% directly to the U.S. Depending on the rules of origin, this refined sugar could be subject to recent additional tariffs. For example, refined cane sugar exported to the U.S. from our Montreal and Vancouver facilities is subject to the new general 10% tariff rule as this refined sugar retains the origin of Brazil or Central America. These rules generally apply to all U.S. imports of refined sugar. Our beet sugar exports to the U.S. fall under CUSMA as Canadian origin and is not subject to these added tariffs.

For the Maple segment, about 50% of our sales are exported to the U.S. to meet the growing demand for maple syrup. Right now, those sales are exempt under CUSMA from all new tariffs. What is also important to note with Maple is that over 75% of the world's production of pure maple syrup originates in Canada and 2/3 of the U.S. consumption originates from Canada. The U.S. simply cannot supply their domestic needs fully with U.S. production now or into the future. Please keep in mind that none of this is black and white. Tariff applications are complex and depend on many factors, but that's our current understanding of the situation and reflects our current recent cross-border transactions and those of our CUSMA qualified customers.

So that is the trade situation as it stands right now. We know that it is subject to sudden unpredictable changes. As we have said from the onset of this tariff discussion, we will not speculate on what's next. Our plan is to be transparent in communicating with our stakeholders to focus on providing our customers with sweeteners they need and to take the necessary steps to fortify ourselves against future volatility. Simply put, we are focused on what we control and delivering on our strategic plan. We believe the actions we have taken over the last 3 years have strengthened the foundations of our business in both segments to put us into a very resilient position.

As I've said in the past, we have been in the business for more than 135 years and have seen all types of trade conditions. We have grown and even thrived, and we are well positioned to meet any new developments that are coming our way. We continue to focus on delivering value to our customers and shareholders. Our Rogers Refined framework outlines the pillars underlying this strategy. They are modernizing and growing our Sugar business, driving profitability in Maple, maintaining a strong balance sheet and advancing on our ESG program. We are confident that this framework puts us on the right path to continue to meet the needs of our customers and deliver consistent, profitable, sustainable growth for our shareholders. Our results this quarter reflect continued strong market conditions in both business segments, combined with our efforts to deliver on the pillars of our Rogers Refined framework.

Our adjusted EBITDA decreased by 9% to about $35 million in the second quarter compared to 2024. What is important to note is that the $35 million in adjusted EBITDA is a very strong performance in a historical context. It is the second highest quarter in our history after the record results of last year. Our Maple segment enjoyed record revenue and profitability this quarter. Demand continues to benefit from the global market recovery that began at the end of 2023, and our team successfully capitalized on this opportunity to expand our Maple sales. Our efforts to drive operating efficiencies in Maple have also paid off in strong growth in gross margins and adjusted EBITDA.

We continue to see steady demand in our Sugar segment, although the growth is not as significant as what we've seen in previous quarters for industrial and liquid customers. We have pivoted quickly in the second quarter, taking advantage of direct export opportunities. Here, we have to keep in mind that export volumes were particularly impacted by the labor disruption in Vancouver in the first half of 2024 as we made the decision to prioritize shipments to our domestic customers. Our Sugar segment was also negatively impacted by higher maintenance costs in the current quarter due to an unexpected equipment breakdown at the Montreal refinery and unfavorable product mix. We are pleased with this quarter as it shows the benefit of our focus on market-based pricing and customer service.

Now turning to our Eastern expansion project. We continue to make progress in this very important initiative to add 100,000 metric tons of incremental sugar refining capacity in our Eastern market. We are currently advancing the construction of the project in Montreal, including the refurbishment of the building where the new sugar refining equipment will be located. Work related to the new electrical room and incremental logistic capacity is advancing as well according to our expectations.

During the second quarter, we made the strategic decision to focus our efforts on the Montreal portion of the project, which is the cornerstone of our capacity enhancement. As part of this decision, we have reassigned some of the resources associated with the Toronto portion of the project to support the completion of the Montreal sugar refining component. As a result, we are temporarily pausing some of the work associated with the incremental logistics capacity at our Toronto distribution center to better align the completion of the work at the expected in-service date of the incremental sugar refining capacity in Montreal.

Our estimate for the total cost to complete LEAP Project remains consistent with our year-end update at between $280 million and $300 million, and LEAP is on track for completion by the end of 2026. We remain confident in the long-term strategic value of LEAP to meet the needs of our sugar customers who are planning their own long-term growth. As I mentioned, we just saw another food manufacturer announced expansion in Canada, and the outlook for continued demand growth remains favorable as there are a number of recently announced food manufacturer expansions that have yet to come online. We are fortunate that the project structure allows us the flexibility to make prudent decisions about resource allocation in response to evolving market conditions.

Now I'll turn the call over to JS for a discussion on our financials.

Thank you, Mike, and good morning, everyone. I will begin my financial remarks on Slide 9. In opening, I would like to highlight that we are discussing our financial results on an adjusted basis as we believe such basis is more representative of our business. This is consistent with the presentation in our MD&A. Our adjusted results include mark-to-market adjustments on derivative contracts on sugar and foreign exchange that we use in the normal course of our business. This is part of our risk management program to minimize the financial impact of price volatility. Our quarterly earnings reflect mark-to-market adjustments on the value of these derivatives. We report adjusted EBITDA and adjusted earnings because we believe they give the most appropriate representation of our results.

The strong performance in both of our business segments generated adjusted net earnings of $16 million or $0.13 per share compared to $19 million or $0.17 per share for the same period last year. The difference is mainly attributable to 2 factors: the first being the lower adjusted EBITDA from our Sugar segment. The second, which applies to the per share variance being the higher weighted average shares outstanding following the equity issue completed in the second quarter of 2024, which increased our average shares outstanding by 18%. Both our segments are showing good revenue momentum.

Consolidated revenues in the quarter was $326 million, an increase of 8% compared with the second quarter of 2024. Overall, consolidated adjusted EBITDA declined by about 9% compared with the same period last year due to lower results in the Sugar segment. That being said, and as mentioned by Mike earlier on, I would like to point out that this is still the second highest second quarter in our history.

Our Maple segment had its best quarterly adjusted EBITDA in history. For the second quarter, Maple accounted for just over 20% of both consolidated revenues and adjusted EBITDA, reflecting the very strong quarter for this business segment. Together, the strong performance in both of our business segments drove an increase of nearly 50% in our trailing 12 months free cash flow to $83 million. This shows how our efforts in recent years have successfully increased the profitability of both of our business segments. The strong performance in both our businesses in the first half of 2025 has further fortified our financial position. Consolidated adjusted EBITDA for the first 6 months of the year increased by 8% to just over $74 million, supporting our $26 million increase in free cash flow over the last 12 months.

Turning to the individual business segments, beginning with Sugar. Revenues for the Sugar segment increased by about 7% to $261 million. As in the first quarter, volume growth was the main driver of this increase with the Vancouver refinery operating at full capacity following the labor disruption in the first half of 2024. Export volumes were the most significant contributors to volume gains in the quarter with an increase of about 19,000 tons compared to 2024. Export volumes were lower during the disruption as we prioritize supply to our domestic customers. Higher export volumes may also reflect some pull forward of purchases by export customers in light of pending U.S. tariffs.

Adjusted gross margin per ton of sugar was $194 per ton, a decrease of $55 per ton compared to the second quarter of 2024. The 2 main contributors to this decline were unfavorable mix as export volumes carry lower margins and higher maintenance costs in the Sugar segment due to unexpected equipment breakdowns at the Montreal refinery. The lower adjusted margin explains the reduction of approximately $5 million in adjusted EBITDA for the Sugar segment in the second quarter.

As mentioned previously, our Maple segment delivered a record quarter of financial results. Maple revenues benefited from a 13% increase in sales volume year-over-year at 13 million pounds, driven by strong demand for maple syrup from new and existing customers, consistent with the market recovery that began in late 2023. Adjusted gross margin in Maple improved to just over 13% or almost $9 million, another record for this segment. Adjusted EBITDA in Maple amounted to $7 million for the second quarter, higher than last year's balance of $5 million.

Profitability in Maple continues to benefit from stable operating costs as a result of our investment in operating efficiencies over the past 2 years and from strong volume growth. Although some incremental volume in the second quarter might be attributable to advanced purchasing associated with the U.S. trade and tariff situation, we have also seen more favorable global market conditions, allowing our sales team to increase sales volume in recent quarters. As I said earlier, our strong operating results are driving substantial growth in our internally generated cash flow, which contributes to the health of our balance sheet.

CapEx for the quarter was about $23 million, of which $16 million was related to our LEAP Project. We currently expect spending approximately $80 million on the LEAP Project this year, a decrease from our earlier estimate of about $110 million. This is due to our prudent decision to adjust the pacing of the construction activity at our Toronto logistics expansion to focus on the Montreal sugar refining portion of the project. As we have said, our financing plan for LEAP is flexible and scalable, incorporating the equity issue completed in 2024, access to our revolving line of credit, loans from Investissement Quebec and our own growing level of internally generated capital.

During the quarter, we had a successful issue of our 8 Series convertible debentures. We are pleased with the reception of this issue in the market. Our initial plan was to raise $75 million, which was upsized to $100 million due to investors' demand and later increased to $115 million with the exercise of the overallotment option by the dealers. We used a portion of the proceeds to finance the payout of $57.5 million of the 6 Series convertible debentures that matured on December 31, 2024. The remaining net proceeds will be used to provide flexibility and options for the upcoming maturity of the 7 Series debentures of $98 million in June 2025 and the financing need of the LEAP project going forward.

As it relates to the 7 series of debentures, which matures at the end of June 2025, some of the options we are considering include repayment in cash, conversion to common shares or refinancing in the near future, subject to market conditions. Looking ahead, we are monitoring conditions in the financial markets and in the markets for our products. Our strong balance sheet and healthy cash flows gives us a lot of flexibility to adjust our spending and financing plans accordingly to meet our business objectives.

Finally, we are glad to announce that we are maintaining our common share dividend at $0.09 per share for this quarter. Our dividend is well supported by the ongoing strong returns from our business.

With that, I will turn the call back over to Mike to provide a summary and outlook for 2025.

Thank you, JS. I'm pleased with our results for the first half of 2025. With all of our facilities back to full production, we are executing well and on track to deliver consistent, stable financial results in 2025. I'll talk now in more detail about our outlook for the year ahead.

Starting with Sugar, we are seeing stable underlying demand from our North American sugar customers. We expect strong financial results in our Sugar segment overall, with some of the items affecting costs in the second quarter expected to be nonrecurring. Our sales volume outlook for 2025 is now at 785,000 metric tons. Overall, this represents a year-over-year increase of about 1% from 2024, if we adjust for the unfavorable impact of the labor disruption in Vancouver, which reduced volume in the first 2 quarters of the last fiscal year.

The reduction of 15,000 metric tons from the previous outlook considers some lingering softness in demand from our industrial customers due to higher prices for other ingredients such as cocoa. Further, we anticipate that demand for the balance of the year could be affected by market volatility associated with potential U.S. tariffs, especially as it relates to export sales.

At our Taber facility, the processing stage of the 2024 sugar beet harvest is complete and yielded a lower-than-expected volume of 100,000 metric tons of beet sugar. The lower yield was due to unfavorable weather conditions affecting the quality of harvested beets. For 2025, I am pleased to announce that we have just agreed on a new contract with the ASBG for the supply of sugar beets to our Taber factory for the next 5 years.

We do expect moderate increases in our operating and maintenance costs at our facilities with the impacts of market-based increases in costs as well as employee wages, along with the impact of equipment issue this quarter in Montreal. We are committed to prudent management of our operating costs and proper maintenance of our assets and facilities.

Looking at our Maple segment, we expect another strong year in 2025 with expected volume growth of approximately 3 million pounds for the year, thanks to the market recovery we have seen over the last 2 quarters and the solid results of the first 2 quarters of 2025. The maple production for the 2025 crop was above average for the industry, and we fully expect to secure the maple serve required to meet expected customer demand. Our expectations for both our Sugar and Maple segments are based on current market conditions and are subject to change with the evolving trade situation.

Looking at our CapEx plans, we continue to expect our CapEx spend to fall between $25 million and $30 million for the year across our business segments, excluding expenditures related to our LEAP project. This will be an active year for our LEAP with the bulk of the work at the Montreal refinery happening in 2025. Spending is expected to come in at approximately $80 million for the full year. As you heard from JS, the capital spend is manageable within the financing framework we put in place in 2024.

In summary, we are starting the year off strongly with solid contributions from both our business segments. While the near-term outlook contains elements of uncertainty, we are confident that we are in a solid position to meet these challenges from a position of strength. We will continue to seek opportunities to fortify that position while exercising our options to make prudent decisions about resource allocation in the near term. In the longer term, we remain confident that Rogers Refined framework is the right way forward on our path to consistent, sustainable profitable growth.

We are in a great business, and that has not changed, nor has our commitment to the customers. On behalf of our management team, I thank our teams from coast to coast for their hard work and dedication and our customers for their confidence and partnership. And together with JS, I thank you for joining us on the call today and for your interest in Rogers Sugar.

I will now ask the operator to poll for questions.

[Operator Instructions] And your first question comes from the line of Stephen MacLeod with BMO Capital Markets.

Just wondering if -- just with respect to the Sugar segment, wondering if you can provide a little bit of color around your outlook for margins? And then what have you seen for volumes on a Q3 to-date basis, just given some of the moving parts that you saw in Q2?

Stephen, it's JS here. I think from a margin standpoint, I think we've mentioned in our script that there was a few onetime impact of a breakdown in Montreal that probably took somewhere around $20 per metric ton of impact. There was also a different mix that has a little bit of an impact. So I think our margin is for the rest of the year will be consistent with what we had predicted earlier on.

The second portion of your question is on the volume side. The indication we have following the quarter on the volume is aligned with the forecast that we are putting forward at 785,000 metric tons. So we are aligned what we've seen in the following month in the month of April is actually aligned with what our expectation was. There hasn't been -- there was a little bit of pull, I think, in relation to the tariffs, but not as much as we think it could have been. And so we're fairly comfortable with the 785,000 metric tons that we put forward in our outlook.

Okay. That's great. And then just on the margins, you talked about -- I was going to ask about the onetime items or these impacts of Montreal and the equipment breakdown. So is that largely behind you? I mean, if it was a $20 per metric ton headwind in Q2, do you expect that to be normalized when you get to Q3 and Q4?

Yes, that would certainly be the expectation. Obviously, it's manufacturing plant, sometimes things are in flux, but considering the maintenance program and the capital investment we've made in the plant over the last few years, I think those are behind us. And we're -- as I mentioned earlier, we're expecting to go back to the type of margin that we've seen or close to what we've seen depending on mix in the first quarter of the year and then the last 2 quarters of last year.

And Stephen, if I can add to the issues at the refinery, they happened early in the quarter, and we're seeing the refinery turn to a stable operation, and we remain focused on that trend, which is really important, as you can appreciate on a plant that size. So we're confident in what we've seen so far in the last half of the quarter and what we're seeing so far in this quarter that the Montreal plant has returned to normal operations.

Okay. That's great. And then maybe just turning to the Maple segment. It sounds like you did see a little bit of buy ahead due to the tariff situation. So I'm just curious -- well, I guess, firstly, is that the right way to think about it? I mean, a little bit. And then secondly, are you able to quantify sort of how much you think might have been pull forward of demand?

Yes. Thanks for the question. And we had a little bit of pull from some of our U.S. customers. And it was modest, I would say. And it was hard to quantify in the chaos of the time because at the same time, as we've said, maple consumption is growing globally. So both things were happening in the quarter. And what we've seen so far coming into this quarter is our order book is really solid. And so that would tell us that the buy-in pull ahead was really modest on the scheme of things.

And your next question comes from the line of Michael Van Aelst with TD Cowen.

So just continuing on Maple, I guess, the gross margin was exceptionally strong. And I'm wondering if there's anything onetime in that margin that we shouldn't expect to continue going forward?

Mike, it's JS here. It's a good question. Yes, there is a little bit of onetime in this -- in the margin. I think when we look at some of the purchasing patterns that we've had, so we probably estimate somewhere about $0.5 million of onetime that we have in there, which will bring back -- will bring the margin back around the 11.5%, which we've seen in recent quarters on a normalized basis.

Okay. And what was that tied to the $0.5 million?

There are rebates that are calculated on purchase that we never really know until the end. So a portion of that and some adjustments to our unit cost that we've done for the first 6 months of the year.

So that's the rebates from the PPAC, I guess, that's because of the volumes?

That's correct.

Correct.

Okay. All right. And then on the LEAP project, what I guess why was the shift in the focus to Montreal necessary? And it comes with a meaningful reduction in the CapEx this year. So why was that necessary? And is that something you can catch up on by the time this facility opens by the end of 2026?

Yes, Michael, I can add some color to that on the LEAP side. So the Montreal site, as you know, it won't be ready until late '26, at the end of '26. And what we've done in Toronto is we started the work, the demolition is done. The infrastructure is in for civil works and electrical and gas and other things. So it will be construction ready, but I didn't need to continue plowing away in Toronto when it would be ready perhaps, say, 10 months before Montreal's capacity comes on. And given the complexity of the Montreal project, it is a big project. I wanted all my resources focused on the cornerstone, which is Montreal. And then we'll reassess later this summer and turn the taps back on potentially in Toronto early in the year. We have lots of time to work in between the 2.

Okay. Yes. So I'm just -- I guess, I was wondering if the cutback in the CapEx is also tied at all to your debentures that are coming up for refinancing and allowing you to delay the decision on that to some degree.

Mike, it's JS. No, it's not really tied to it. Obviously, it will have an impact on the timing, but it was not something that the decision we made in relation to that.

Yes, not at all. It's execution, Michael. It's just getting really focused on the critical project in Montreal and making sure it stays in the track we wanted to go on.

And your next question comes from the line of John Zamparo with Scotiabank.

I also wanted to ask about LEAP as a follow-up. Did something change in order to make that decision necessary? It sounds like a logical enough decision, but I wonder what changed in the quarter to have you do that? I wouldn't have thought it was an either/or item. And are there any, I suppose, potential risks to the timing on completing Montreal?

So no risk on the timing. And if you followed our plan for the last 3 years of Rogers refining how we're getting the growth and continued results that we're driving in this business, I'm a big believer in focus. And the Montreal project is very complex. I saw zero value. So as you pointed out, a logical decision, zero value and plowing ahead in Toronto and having an asset ready in Toronto with no feed supplied to it for Montreal for 6 or 8 months later. So it's purely a focus, purely driving execution, no other reason than that. And we can turn it back on when we're ready. And as I said, we've done all the demolition, the groundworks are ready, and it's construction ready to restart when I deem it necessary and prudent.

Yes. Okay. Understood. And secondly, on LEAP, are there any other major milestones upcoming in the next couple of quarters that could give you even more confidence on the $280 million to $300 million number?

Yes, we're continuing that, that project evolves every day, as you can appreciate with the complexity. But we're into the big lift now. The big tower crane is up, tanks are going in, equipment is being installed. Infrastructure work is being completed. So as we get into the summer months and probably by our next call, our confidence level, we'll be able to provide more clarity on that. Right now, we don't see any diversions. But as we get further down this runway, of course, we'll have better clarity if there is any surprises. But right now, I'm not expecting any.

Okay. I appreciate the color on the trade scenario and what is subject to tariffs and what is not. I wonder about when you talk about sugar exports being subject to the 10% tariff, can you make adjustments internally to ship beet sugar instead to effectively avoid that tariff? Are there costs associated with that? Or is that something you're already doing?

Well, John, I don't want to spill all my secret sauce here in the open lines here, but there are many ways to deal with tariffs. And as we said, I've been around a long time, and I know the tariff regimes well. I've been involved in trade negotiations for decades. And we'll -- as we always say, we don't just survive, we thrive in these circumstances, and we'll use all of our flexibility and leverage to do what we need to do to drive the value in the business.

And your next question comes from the line of Zach Evershed with National Bank Financial.

It's Nate on the call for Zach this morning. So last quarter, we saw a big working capital outflow, which seemed to reverse course this quarter. How should we expect working capital to trend for the rest of the year?

I think we're expecting to have a bit of a lift. I think there was some timing on inventory from a working capital standpoint and the delivery of some vessels. And so we're expecting to be -- I mean, I think we have working capital going -- well, we used more working capital in the first 6 months of the year, and we're hoping probably to reverse almost half of that incremental over the remaining 6 months of the year.

Okay. And in the outlook, you continue to prioritize domestic sales, but will take advantage of export opportunities. Does this mean that even with the current tariff regime, export sales are still lacking expectations?

Yes. We -- export sales are always opportunistic for us, and we've trimmed a little bit of them that maybe aren't as logical as they were prior to tariffs. But the tariff is quite minor when you look at foreign exchange and sugar pricing overall. [ Number 11s ] have dropped down a fair amount. So I don't see a big shift for us right now, but we will always focus on our domestic customers. That's what we're here for. And I think we'll see some of that volume start to strengthen domestically coming anyway. So I think we'll continue the path that we're on. When it makes sense, we'll do it. When it doesn't, we'll do a little less.

Fair enough. Makes sense. And just one last one with respect to Maple. Just stepping back, you've spoken about global demand recovery occurring since 2023. Maple perhaps might be more of a -- maple syrup might be perhaps considered a more luxury product to some demographics. How do you kind of square that global recovery with perhaps current consumer sentiment with respect to all this uncertainty in the macro volatility?

We've seen it's somewhat baffling to see the growth globally in maple syrup recently at the numbers that we've been seeing. And it's a natural sweetener. People -- there was pent-up demand from when the volume was down because of inflationary pressures. It seems to have stabilized and consumers have returned to it and not just consumers, but manufactured industrial users as well. So the natural sweetener, the value proposition of Maple has got a lot of people's attention, consumers and manufacturers. And we're seeing that growth. As I said earlier, we're pretty happy with what we see in front of us with an order book as well. So I think it's sticky. I think it's got some legs.

And your next question comes from the line of Frederic Tremblay with Desjardins.

Most of my questions have been answered, but I do have one more. Just with the -- in the global movements and in the global trade environment, just wondering if you can comment on the supply environment for raw sugar from South America. Have you seen any sort of variations either positive or negative in your ability to procure sugar from Brazil, for example?

We've seen no issues in supply and we do long-term contracts, long-term supply agreements. We've had no disruptions in that supply. And as you may recall from previous quarters, a year or so ago, we, in fact, doubled our on-site storage of raw sugar to make sure we wouldn't be impacted on logistics of ocean freight lineups and things like that. So we see absolutely no risk in our raw sugar supply going forward for any of our sites.

[Operator Instructions] Your next question comes from the line of Michael Van Aelst with TD Cowen.

Yes. Actually, just on those freight costs that kind of reminds me the -- talking to people like the container costs seem to be jumping a lot. I don't know if that's affecting your type of containers that you -- I know you don't use containers for your type of ships. But is there any -- is the global trade challenges right now affecting the price of your transportation of raw materials?

Yes. No, we have not seen any of those impacts. And Michael, as you would appreciate, we -- most of our contracts are customer freight driven, but we negotiate long-term agreements on freight that we control, and we haven't seen any of those imbalances impact us whatsoever.

Okay. And I know you said that the market -- so far, you're not really seeing much of an impact or limited impact so far from tied to tariffs, but you did reduce your guidance for 2025 by 15,000 metric tons. So is that -- do you think you're being conservative? Or is there something that you're seeing in this quarter?

So a couple of factors, Michael. First, it's a little bit of what I call shrinkflation. I've talked about in previous quarters. If you and I stop and buy a chocolate bar in the way home and it's 20% smaller, we're not buying an extra one at the end of the week. So unit sales are good, I think, in the confectionery category, but poundage is down. And so we're seeing a little bit of that, and we're just reflecting that in our guidance going forward. Overall, year-over-year, the total volume that's still up in these impacted categories. It's just not as strong as we thought it might be. And so we're just changing the guidance a little bit for that. And we also, as we reported, had less beet sugar. So some of the opportunistic sales into the U.S. may have trimmed down a little bit because of the smaller beet crop.

Okay. And then getting back to the LEAP -- or sorry, LEAP and the Montreal unexpected maintenance. I'm wondering if any of the downtime in the Montreal facility was tied to work you were doing or disruption from the LEAP project.

It's a very good logical question. And I can tell you emphatically, no, not related whatsoever. We have a team that -- part of the team is that's their full mandate is to make sure LEAP does not impact daily operations because you know what it's like. You've seen it side by side, it's a big beast, and that's a critical component of our management and execution of the project. Problem we had was actually in the refining side, unrelated whatsoever, a piece of equipment that went down. And unfortunately, with the excellence of our team in Montreal, what normally would have been a much longer shutdown to repair this equipment, they got it up in really quite impressive short period of time. But nonetheless, it created a bump in the system, and it was a little more costly than we'd like to have for these kinds of repairs. But they are -- they do come along. It's -- they're big pieces of gear. And when they go, they go.

Is there any -- like any reason to believe that these occurrences might decrease post your investments in LEAP?

Yes. I think these are so unrelated and it's just equipment in big plants. It's something goes wrong once in a while and it's how you respond to it that gets you back into the market. So the only LEAP would do is have -- we have more capacity, obviously, and be able to pull on that harder if we had the need to do so. But as far as equipment reliability, they're going to stand on their own. Of course, everything in LEAP will be new. But on the other side of the refinery, the bigger piece, it will still be the same gear, and we continue to invest in our CapEx to try and be ahead of these equipment failures. And I think our track record for the last few years would say we've done a pretty good job until this recent event. And they'll never be zero. There will always be something. And as I said earlier, it's our preparation for that and our ability to pivot around it and supply the market, and that's what we'll focus on.

And actually, maybe I'll throw in one more question. Bottom line -- you gave some top line forecast. You had a really good start in Q1, although EBITDA was a little softer year-over-year, at least in Q2. Are you still expecting some reasonable [ prop ] EBITDA growth on a consolidated basis this year?

I think we do. I think we're -- I mean, last year was a record year. I think, obviously, we're not expecting the same jump from '23 that we had from '22 to '24 from '24 to '25. I think it's -- I will be a bit more modest as far as, but we're still expecting growth, as we mentioned in our outlook.

Yes. The business is at a new operating level, Michael, in the last 3 years, we've arrived where we are now, and we're not going to give up that ground. And the business is healthy and has enough diversity in it that we're pretty confident in how the year should end.

And we do have a follow-up question coming from the line of John Zamparo with Scotiabank.

I wanted to ask about the expansion plans of customers and just generally what you're hearing from customers, it's encouraging to see that one confectionery maker move forward with its expansion in Canada. I wonder if there's anything else you can share from those who you kind of have your eye on for potential expansions in Canada.

That's a great observation. And I think that, that one was the most recent one is probably the largest, in fact, is the largest we've seen in Canada amongst all these announcements that have been made in the last 24 months. And so are there more? Yes, we're aware of other dialogue that is going on, but we wouldn't be at liberty to say anything about it. But Canada continues to be a good long-term play for sugar-containing product manufacturing.

And as we said long time ago, logic should prevail. The fact should prevail long term, and we're seeing that confidence as well by these big multinationals that you saw just recently announced in Ontario for their new plant. So things may have slowed a little bit for a few months as it feels as we've seen in other sectors, but it doesn't feel that way in sugar and the sugar containing product, food manufacturing. Food manufacturing is still going to continue to grow, I believe.

And we have no further questions at this time. I would like to turn it back to Mr. Mike Walton for closing remarks.

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

Thank you, presenters. And this concludes today's conference call. Thank you all for joining. You may now disconnect.