Blue Star Foods’ revenue increased 19 percent year over year to USD 2.3 million (EUR 2.1 million) in Q1 2024, but the company still posted a net loss of USD 1.1 million (EUR 1 million) in the period ending 31 March.
Blue Star CEO John Keeler blamed the quarterly loss on higher operating expenses and a loss on settlement of debt. The company’s adjusted EBITDA loss for the quarter reached USD 600,000 (EUR 553,000).
The loss still marked an improvement, though, on Q1 2023, when the company posted net losses of USD 2 million (EUR 1.9 million), primarily due to an increase in poundage sold, according to the company's results statement.
“We returned to revenue growth and greatly improved our margins and efficiencies which have led to a significant reduction in our losses,” Blue Star CEO John Keeler said.
Blue Star, an importer of pasteurized crab meat and operator of the Taste of BC recirculating aquaculture system (RAS) steelhead farm in Canada, is exploring an expansion of its RAS soft-shell crab farm in Beaufort County, South Carolina, U.S.A., Keeler said.
“We had a successful seasonal start to production at our RAS platform in South Carolina, which encompasses over 100 tanks and utilizes our proprietary bio-plan,” he said. “Currently, we have more demand than what are able to supply with full tanks of crab peelers against the rapid growth in soft shell crab demand.”
Blue Star reported executing a Transformational Master Service Agreement (MSA) with an unnamed fully integrated seafood provider in Q1 2024 and entering into a supply agreement to provide manufacturing of meals to the U.S. military via a partnership with Eagle Rising food solutions.
Blue Star was listed as a creditor in the 20 May Red Lobster bankruptcy filing, but the company’s breach of contract lawsuit against Blue Star remains active.
In the original complaint filed in July 2023, Red Lobster claimed Blue Star failed to supply contracted crabmeat, causing the large seafood restaurant chain to take certain high-profit items off its menu and lose “substantial” revenue.
The damages exceed USD 500,000 (EUR 461,000), according to Red Lobster.
Blue Star agreed to provide Red Lobster with 67,248 pounds of crabmeat between October 2020 and March 2021 via Performance Food Group, according to the complaint. Blue Star provided all the crabmeat for that contract, but its subsequent contract, which spanned from April through September 2021 and called for Blue Star to provide 114,539 pounds of crabmeat to Red Lobster, was not fulfilled.
Blue Star has argued the case should be dismissed, saying it “could not forecast the world-wide impact that Covid-19 had throughout the world and specifically in Vietnam.”
In April 2021, Vietnam experienced a fast-spreading outbreak of more than 350,000 Covid-19 cases in a wave of the disease that lasted through September 2021.
“Vietnam was shut down, and [we] could not meet its requirements under the contract; no alternative sources of crabmeat came to fruition,” Blue Star said.
