Good morning, everyone, and welcome to Sucro Limited's third 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. At this time, I'll turn the call over to Jonathan Taylor. Jonathan, please go ahead.
Thanks, Operator. Good morning, everyone. I want to remind listeners that management's comments during this call may include forward-looking statements. These statements involve various known and unknown risks and uncertainties and are based on management's current expectations and beliefs, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements. Please refer to the text in Sucro's earnings, press release, and financial filings for a discussion of the risks and uncertainties associated with these forward-looking statements. All dollar figures referred to today are in US dollars unless stated otherwise. Q3 marked another successful and productive quarter for Sucro, even amid what continues to be a challenging macro-trade environment and some specific US sugar market issues. We saw strong execution at our operating sites and record year-to-date volume performance, surpassing 600,000 metric tons delivered through September.
Our US conventional raw sugar flows have remained particularly strong, and our refining operations have now largely returned to normal, with volumes and margins back in line with last year's performance. That's particularly evident at our Lackawanna refinery, which continued to improve operational efficiency and delivered solid contribution in Q3. More broadly, our integrated and synergistic business model continues to be a competitive strength. We're coordinating and integrating refining and origin trade flows depending on market conditions, and our wholesale platform is delivering at scale. Importantly, the margin headwinds that affected earlier quarters are mostly behind us. In Q3, we delivered over $10 million in adjusted gross profit, supported not just by increased volume but by cost efficiencies gained through improved logistics. We also continue to benefit through increased scale as we reduce SG&A as a percentage of revenue, creating greater efficiencies and improved margins.
With that, I'll hand it off to our CFO, Stefano D'Aniello, to walk you through the financials in more detail. Stefano?
Thanks, Jonathan, and good morning, everyone. Let's start with volumes and revenue. In Q3, we delivered approximately 148,000 metric tons of sugar, down nearly 18% year over year. However, year-to-date volumes crossed the 600,000 metric ton mark, a record for Sucro. That growth was led by wholesale volumes of conventional sugar in the US, as well as by higher bulk raw sugar sales at origin. Adjusted gross profit came in at $13.4 million, or 10.1% of revenue, compared to $13.8 million and 8% margin last year. Year-to-date adjusted gross profit was $40.4 million, or 7.8% of revenue, compared with $44.7 million and 9% in 2024.
With refinery operations relatively stable year over year, the decrease in adjusted gross profit was driven by lower wholesale organic sugar deliveries in the US and a decrease in volumes and margins in our operation in Mexico, reflective of the market-driven nature of a wholesale business in this geography. Importantly, refining margins have normalized and recovered in Q3, a 35% improvement to $187.66 per metric ton in Q3 2025, and we are now largely through the timing mismatch we flagged earlier this year. In fact, our refining operations saw the strongest results of the prior eight quarters. We expect refining margins to remain strong in Q4 despite challenging market conditions in the US, where we have continued to deliver solid performance through improved cost management.
One notable area of improvement was logistics and freight, where we saw costs go down by 5.7% year over year due to improvements in our land freight management. It is also due to these efforts that year-to-date adjusted EBITDA figures remain consistent with 2024 at $27.5 million, or 5.3% of revenue. These results reflect management's commitment to reducing overhead expenses, with significant headways made in payroll expenses and professional fees. On a non-adjusted basis, Q3 benefited from inventory mark-to-market gains, driven predominantly by the recent changes in the specialty sugar quota system, which has resulted in higher pricing for organic sugar in the US. Putting it all together, net income remains consistent year over year at $29.4 million, compared with $31.1 million in 2024. We expect the positive momentum from Q3 to continue into Q4 to close the year with strong results.
On liquidity and capital, as of September 30, we ended the quarter with over $165 million of unused credit capacity, including $50 million of committed revolver headroom. Working capital remained stable at $119 million. Adjusted leverage was 1.7, and our adjusted net debt-to-capitalization ratio sat at 21.7%, down from the beginning of the year. Our cash conversion cycle was 117 days, a notable improvement from 131 days last year, thanks to proactive working capital management. CapEx-wise, we've revised our full year 2025 projection to $49 million, reflecting updated timing on construction progress. Hamilton now stands at $75 million, including capitalized interest and almost $9 million of CapEx brought forward to improve operational capability at the outset. Accordingly, Hamilton remains aligned with our prior guidance and projections. University Park is now projected at $25 million for 2025, up modestly from our prior estimate.
Belize capital spend will ramp up in 2026, with roughly $5 million targeted next year. Finally, I would like to mention that in Q3, the company completed the acquisition of the minority interest in one of its subsidiaries through the issuance of shares at CAD 13.35, a transaction that is expected to improve our results and margins going forward. With that, I'll pass it back to Jonathan for a project update and some closing remarks.
Thanks, Stefano. Let me start with the project status. Our major refinery projects remain in active construction and on track. In Hamilton, equipment installation and commissioning work continue at a strong pace, with good progress toward commercial startup in the next few months. At University Park, construction and equipment installation are advancing rapidly, keeping us on a path as originally planned. We are excited to announce the Caribbean Sugar Refinery (CSR) project in partnership with Santander Sugar Mill in Belize. CSR will be the only refined sugar refinery in the Caribbean, purposely built to meet regional demand and strengthen food security. By offering raw sugar producers significantly better pricing than the world market, CSR creates a platform for renewed investment in cane farming and milling across CARICOM, investments that would otherwise remain uneconomic and threaten the survival of the regional industry.
This marks Sucro's first move outside North America and positions us with substantial long-term upside. More details to follow as the project advances. As Stefano D'Aniello mentioned, we've modestly revised the capital outlook to reflect additional equipment and packaging capabilities in the refineries, which we believe will strengthen our customer service product mix and quality assurance efforts when the site is online. Although the macro-trade environment has been more volatile than normal, we believe the overall tariff impact, including the recent changes to the US specialty sugar quota system, will have net positive long-term implications for Sucro. As the only certified organic standalone sugar refinery in North America, we're uniquely positioned to benefit from this shift. Meanwhile, our supply relationships in Mexico remain strong, and our diversified sourcing model continues to insulate us from volatility and punitive tariffs.
2025 continues to be a transitional but productive year for us, where we've stayed free cash flow positive, managed logistics and SG&A costs tightly, and delivered record volumes, all while building two new refineries, with more refining capacity coming online and margin conditions beginning to improve. We believe we are well set up for continued improvement and growth in 2026. Before we close, I want to thank our employees across the network. From field logistics to refining operations to finance and risk, your dedication continues to move this business forward. With that, we'll conclude today's remarks. There will be no Q&A on this call. Please reach out to our IR team for any follow-ups. Operator, you may now end the conference.
Thank you. This concludes today's call. Thank you for participating. You may all disconnect.