Lunenburg, Nova Scotia, Canada-based High Liner Foods posted another quarter of adjusted EBITDA growth in Q3 2024 despite lower sales volumes and revenue in the quarter.
High Liner’s adjusted EBITDA for Q3 2024 reached USD 21.5 million (EUR 20 million), an increase of 7.5 percent, or USD 1.5 million (EUR 1.4 million), over the same period of 2023. Adjusted EBITDA as a percentage of sales also increased in the quarter to 9.4 percent, up from 7.7 percent.
The higher adjusted EBITDA came as the company posted lower sales volumes and revenue in Q3 2024 compared to the same period a year prior. High Liner’s sales volume decreased by 6.9 percent, or 4.2 million pounds, to 56.8 million pounds. Revenue decreased even further, dropping 11.9 percent, or USD 30.8 million (EUR 28.6 million), to USD 228.9 million (EUR 212.9 million).
While those numbers were down on the same period in 2023, they were up compared to Q2 2024.
"During the third quarter we delivered another quarter of Adjusted EBITDA growth as well as sequential improvement to sales and volume," High Liner President and CEO Paul Jewer said.
The company’s gross profit also decreased in Q3 2024, dropping 2.6 percent, or USD 1.3 million (EUR 1.2 million), to USD 48.3 million (EUR 44.9 million). While overall gross profit dropped, High Liner reported its gross profit as a percentage of sales increased to 21.1 percent, up from 19.1 percent.
High Liner said the decrease in gross profit was directly related to the decline in sales volume.
“This was partially mitigated by the benefit of lower inventory levels, lower raw material costs, and the favorable changes in the product mix reflected in the improved gross profit as a percentage of sales,” High Liner said.
The company said it has been focusing on promotional strategies and innovation to maintain a positive trajectory amid price sensitive retail and foodservice markets.
“We are executing well to meet the evolving needs of our customers and consumers across both retail and foodservice,” Jewer said. “Our promotional strategies are driving expanded distribution and supporting top line recovery.”
The company said it managed to increase its adjusted EBITDA amid the lower sales and challenging market environment thanks to a more favorable distribution of expenses and lower selling, general, and administrative expenses.
High Liner also said that it has completed refinancing of its USD 240 million (EUR 223 million) Term Loan B. The company said it managed to refinance with a 60-basis point reduction, replacing the prior interest rate at SOFR (secured overnight financing rate) plus 3.75 percent with an interest rate of SOFR plus 3.25 percent. The maturity date of the loan was also extended to July 2031, from October 2026.
Refinancing the loan will save the company USD 1.4 million (EUR 1.3 million) annually in cash interest expenses, High Liner said.
"As noted last quarter, the early refinancing of our Term Loan B was oversubscribed, demonstrating the confidence of our lender community in our business," High Liner Foods CFO Darryl Bergman said. "The refinancing provides High Liner Foods with continued financial stability and a platform to execute on our organic and accelerated growth strategies."
For the year so far, High Liner has posted USD 724 million (EUR 673 million) in sales through the 39 weeks ending 28 September 2024, down from USD 843 million (EUR 784 million) posted during the same period of 2023. Sales volumes have also declined, dropping from 197.4 million pounds in 2023 to 175.4 million pounds in 2024.
Gross profit has also decreased over the period, dropping to USD 166 million (EUR 154 million) from USD 170 million (EUR 158 million). However, gross profit as a percentage of sales has increased from 20.2 percent to 23 percent.
Despite the drops in sales and gross profit over the course of the year, the company’s adjusted EBITDA has increased from USD 73.2 million (EUR 68.1 million) in 2023 to USD 79.5 million (EUR 73.9 million) in 2024.
Looking forward, Jewer said the company’s third quarter performance, along with its performance in the first half of 2024, bodes well for High Liner.
"With a strong balance sheet, low debt ratio, and strong free cash flow generation, we remain well positioned to navigate short-term market challenges, support the continued improvement in the topline of our business, and deliver year-over-year Adjusted EBITDA growth, while continuing to advance our strategy to support long-term value creation for our business,” he said.
