Sugar and Maple Volume Growth Drive a Sweet Q4 Beat
Source BMO Capital Markets
We maintain our Market Perform following the Q4/20 beat. Volume growth was
solid in both segments, driven by COVID-19-related demand, as well as
improved export and industrial sugar volumes. Sugar EBITDA was a beat, Maple
Products was in line. Both segments enter F2021E with a supportive demand
backdrop; combined with margin mix and lower operating costs, this should
lead to improved EBITDA. While the outlook is generally positive, we believe
sustained earnings improvements are needed for multiple expansion, following
2-3 years of declines.
reported Q4/20 (ending Sept.) adj. EBITDA of $31.2mm, above our estimate of
$24.6mm and consensus of $26.1mm. Adjusted EPS of $0.14 was
above our estimate and consensus of $0.10.
Sugar adj. EBITDA
of $28.0mm (up 42% y/y) was above our $22.6mm estimate. Above
forecast sugar volumes and positive margin mix more than offset
higher-than-expected admin and selling expenses (~$1mm COVID-19 costs). Adj.
GM/MT of $157.51 (+27% y/y) was above our forecast of $134.95.
increased 14.5% y/y to 225k MT (a quarterly record), above our estimate of
210k; +14k impact from extra week. Volumes increased across
all segments, reflecting ongoing COVID-19 retail strength, normalized
industrial demand (vs. earlier COVID-19 disruptions) and expected U.S. TRQ
Sugar segment outlook. Volumes are expected to be up 5,000 MT
(in line with our forecast), with flat liquid volumes and higher industrial
(+4,000 MT) and export (+10,000 MT) volumes, partially offset by lower
consumer volumes (-8,000 MT). The positive volume outlook, combined with
lower operating and supply chain costs vs. F2020, are expected to lead to
F2021E EBITDA growth.
adjusted EBITDA in line. Volumes increased 30% driven by
higher COVID-19-related demand; revenues were in line (+20% y/y).
Lower-than-expected adj. gross margin (7.9% vs. 8.5% forecast, down 180 bps
y/y) was offset by lower-than-expected admin & selling and distribution
expenses, which led to adj. EBITDA of $3.2mm (+27% y/y) being in line. 2021E Maple Products outlook
positive, driven by steady demand growth, gross margin
expansion and realizing gains on manufacturing optimization and efficiency
increased. $6 target based on 9.6x 2022E EV/EBITDA.