Good evening, everyone, and welcome to Sucro Limited's Second Quarter 2025 Earnings Conference Call. Today's call is being recorded. Joining us are Jonathan Taylor, Chief Executive Officer, and Stefano D'Aniello, Chief Financial Officer. I'll now turn the call over to Jonathan Taylor. Mr. Taylor, please go ahead.
Thanks, operator, and good morning, everyone. Q2 was another quarter of strong operational execution and continued delivery across our integrated and diversified platform. We saw customer deliveries increase nearly 120% year -over -year, driven by higher volumes in our U.S. wholesale business and additional raw sugar wholesale business. That volume growth, even at lower margins, translated to records in both revenue and tonnage delivered. Refining volumes also reached a quarterly record, with over 59,000 metric tons delivered, supported by continued ramp-up at Lackawanna. Overall margins were compressed this quarter, as expected due to legacy high-cost raw sugar working through the system. However, we expect those higher costs to be significantly less in the second half, supporting margin recovery to more historical levels. Notwithstanding this surge in overall deliveries, we saw a 21% reduction in SG&A through the first half of 2025, as well as a 6% reduction in interest expense year -over -year. That's a tremendous achievement given the growth in volume and shows how much operating leverage and improved efficiency is being achieved as we continue to scale up our unique business platform. In summary, Sucro is achieving significant growth, reducing its overhead costs, and simultaneously building two new sugar refineries. We are exceptionally well positioned to meet our goals and expectations over the next several years. With that, I'll hand it over to Stefano for the financial details. Stefano.
Thanks, Jonathan, and good morning, everyone. In Q2, we delivered nearly 287,000 metric tons, more than double the prior year, and revenue increased by 68% to $231 million, up from $138 million in Q2 2024. This was driven primarily by bulk sugar forwarding sales and expanded U.S. wholesale business. Adjusted EBITDA came in at $9.7 million, up 13% from last year, despite a tighter margin environment. This highlights the strength of our cost control and the benefits of operating scale. Adjusted gross profit was impacted by the timing of raw sugar input costs, particularly in Canada, where refining margins were compressed due to higher cost inventories flowing through our system. Margins are expected to normalize in the second half of 2025 as we replace that input with current market rolls. SG&A reduction of 25% year -over -year to $6.8 million in nominal dollars was a standout achievement. Particularly, these reductions are structural and reflect disciplined expense management, even as the business scales. Free cash flow of $6.1 million was positive for the sixth consecutive quarter and a quarterly record for true growth, the result of our disciplined capital allocation and cost control. Our interest expense decreased by $2.2 million in the quarter and $0.8 million over the six-month period, driven by lower balances on our revolver line. Again, a significant achievement in light of the growth. Net income for the quarter came in at $2 million, down from $4 million last year, but that's primarily explained by lower unrealized marginal market gains compared to Q2 2024. Our underlying physical operations remain strong and are reflected in steady adjusted EBITDA. Year to date, we have adjusted EBITDA of $19.7 million, EBITDA of $32.8 million, and net income of $14 million. Again, the fact that our adjusted EBITDA figures are in line with those of 2024 means that the difference lies in the relative timing of growth and growth rate of our bulk forward contracts, rather than in our underlying physical operations. Moreover, as we exit Q2, we are seeing higher production levels in Lackawanna and improved margins at both refineries as we switch to lower cost input to fulfill deliveries for the remainder of the year. Liquidity and CapEx. We exited Q2 with $233 million in unused credit lines, including strong capacity in our borrowing base. Our adjusted net debt to EBITDA to capital starts at 27.9%, and our adjusted leverage ratio remains healthy at 1.7x compared to 2.1x at year-end. For the full year, we now expect CapEx of $36.5 million, slightly up from our earlier guidance to respect added warehouse and packaging infrastructure in Hamilton. These are value-enhancing additions that support end-to-end integration from the outset of a project that is poised to be transformative for our business. Looking ahead, we remain focused on managing all business costs and capitalizing on expected margin recovery in the second half, while maintaining the same disciplined approach shown in the first half, with regards to inventory, debt levels, and SG&A. With that, I'll turn it back to Jonathan.
Thanks, Stefano. Let me start with project updates. Both Hamilton and University Park remain ahead of schedule. Considering current construction markets as a major achievement, this is testimony to Sucro's internal engineering and operational capabilities. Hamilton is on track for commercial sugar sales by year-end, and University Park is targeting early 2026. Importantly, we're still very close to budgets, even after incorporating added enhancements in Hamilton. Our team continues to manage both day-to-day operations and major capital builds with precision, and I want to acknowledge the incredible effort from every part of the company. Now, on tariffs and trade policy, the USDA recently announced that organic sugar would no longer be included as part of the U.S. specialty sugar quota. This introduces a significant new dynamic to the organic sugar market, but we believe Sucro is best positioned to benefit due to the significant competitive advantages Sucro has developed in recent years. We are the only standalone organic refiner in North America, which gives us supply chain options that are unavailable to anyone else in the industry. We are currently seeing price adjustments that will largely offset the impact of the increased duties, and we expect to expand our position in that key market. As for broader U.S. tariff actions, the impact on our business has been limited. All major equipment for our refineries was delivered before tariffs took effect, and our sourcing relationships in Mexico, particularly with Beta San Miguel, remain robust. Canadian sugar-containing products also continue to move with minimal disruption. 2025 remains a bridge year for Sucro . We are building and expanding out the refinery portion of our business while simultaneously achieving opportunistic growth in our wholesale business. At the same time, we are taking a very disciplined approach to our overhead costs and keeping our capital flux conservative. All of this as we prepare for a transformational 2026 when we expect two additional refineries to come online and provide significant operating leverage and enhanced margin opportunities. To close, I want to thank every member of the Sucro team. Whether you're refining in Hamilton, managing logistics in Buffalo, or working with suppliers in Mexico, your work drives our results. That concludes today's prepared remarks. There will be no Q&A on this call, but feel free to reach out to our investor relations team with any follow-ups. Operator, you may now end the conference.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.