High Liner delivers second straight year of higher earnings
High Liner Foods Q4 earnings report indicates that the company managed to increase its adjusted earnings before interest, taxes, debt, and amortization (EBITDA) for the second straight year.
The Lunenburg, Nova Scotia, Canada-based company saw its adjusted EBITDA grow by 12.8 percent in the fourth quarter, and for the fourth quarter adjusted EBITDA as a percentage of sales increased to 10.7 percent compared to 8.5 percent in 2019. Net income, as well, also increased compared to 2019 to USD 10.4 million (EUR 8.5 million), an increase of 346.7 percent over the USD 3 million (EUR 2.4 million) loss posted in 2019.
For the year, adjusted EBITDA as a percentage of sales increased to 10.6 percent compared to 9.1 percent in 2019, and adjusted EBITDA increased to USD 88 million (EUR 72.4 million), or an increase of 3.2 percent over 2019. Adjusted net income also increased by 21 percent, or USD 6.1 million (EUR 5 million), to USD 35.2 million (EUR 28.9 million).
"We could not be more proud of our performance in Q4 and throughout FY 2020," High Liner Foods President and CEO Rod Hepponstall said in a release. "While prioritizing the health and safety of our employees and supporting our customers through the pandemic, we delivered record annual EBITDA margin as a percentage of sales, despite the challenges presented by COVID-19."
The COVID-19 pandemic continues to have an impact on the company’s retail sales, High Liner said in its Q4 report. Starting mid-March 2020, it said, the company had a surge in demand from retail customers.
“The company has been able to meet the increased demand and satisfy its customers by redirecting resources, inventory, and production capacity across its integrated North American operations,” High Liner said.
Overall, the company saw “minimal” impacts to its supply chain due to COVID-19, High Liner said.
“There have been no significant issues with the procurement of raw materials and ingredients, and there have been limited interruptions in transportation and warehousing activities,” the company said.
The strong performance positions the company well for 2021, Hepponstall said.
"Looking ahead, we are well-positioned for further profitability and revenue growth in 2021 and we remain steadfast in our commitment to the health and safety of our employees and support for customers as we collectively continue to navigate through the pandemic,” he said.
During an investor conference call, Hepponstall added that the company plans to invest USD 20 million (EUR 16.4 million) into capital improvements. Those improvements will target improving plant efficiencies, as well as some technological investments to help improve efficiency.
“There is some investment to support, as an example, the packing-end of some lines to support particular products that are moving well,” High Liner Vice President and CFO Paul Jewer said.
The company’s manufacturing facilities, High Liner said, “continue to operate at planned capacity and high efficiency rates” to meet the current demand.
The positive trajectory is a turn-around from low sales figures and revenue drops posted in 2018. Significant challenges forced the company to lay off 14 percent of its salaried workforce as Hepponstall – hired in 2018 – worked to reverse the company’s declines.
Positive EBITDA growth in 2020 is a sign that the company’s long-term strategy is working, and the company said it anticipates delivering a third-straight year of EBITDA growth in 2021.
"With a strong balance sheet, improved cash flow, and a considerably improved leverage ratio ... we are well-equipped to invest in our business and build upon our leadership in branded value-added seafood in North America,” Hepponstall said.
Photo courtesy of High Liner Foods