High Liner posts Q3 results, on track to EBITDA growth in 2020
High Liner Foods’ third-quarter earnings report indicates the company saw decreased sales volume and revenue, but had increased adjusted earnings before interest, taxes, debt, and amortization (EBITDA) and a “strong financial performance” overall.
High Liner’s sales volume decreased by 5.5 million pounds, or 9.1 percent, to 54.7 million pounds in the third quarter, compared to the 60.2 million pounds sold in 2019. So far this year, the company has sold 181.3 million pounds, a decrease from 199.1 million pounds sold at the same time last year.
Sales on that volume decreased in Q3 by USD 25.5 million (EUR 21.4 million), or 11.6 percent, to USD 194.6 million (EUR 163.7 million), compared to USD 220.1 million (EUR 185.2 million) last year.
Gross profit as a percentage of sales, however, increased to 20 percent, even as gross profit decreased slightly by 8.3 percent to USD 38.9 million (EUR 32.7 million) from USD 42.4 million (EUR 35.6 million) in 2019.
Adjusted EBITDA as a percentage of sales increased by 9.8 percent, over the same period in 2019, and adjusted EBITDA increased by USD 2.6 million (EUR 2.1 million), or 15.8 percent, to USD 19.1 million (EUR 16 million).
“I’m pleased to report another quarter of improving performance for High Liner Foods,” High Liner President and CEO Rod Hepponstall said during a conference call reviewing the results. “Operationally, we are fully dedicated to our customers, and consistently meeting their evolving needs supported by our robust and resilient supply chain.”
High Liner’s foodservice and retail segment, Hepponstall said, continues to be impacted by the COVID-19 pandemic. That has allowed the company’s retail products to make significant gains.
“Overall our retail business in Q3 continues to trend in the right direction, both in terms of new business and profitability gains,” Hepponstall said. “Market conditions are ripe for growth for High Liner Foods.”
A large part of that retail gain, he said, is related to new premium product launches – like a sweet bourbon salmon – and the company’s capitalization on food trends such as snacking.
“Our snacking products are helping to show consumers how to turn to seafood for any number of eating occasions,” Hepponstall said.
New markets are picking up their value added products as well. Hepponstall mentioned that a large retailer – without specifying on the name – has picked up a new shrimp product.
“We’re seeing new customer acquisitions, greater velocity on our products, and certainly some channel shifts are happening as well,” Hepponstall said.
The overall successes have Hepponstall confident that the company will be able to post improvements in Q4 and in 2020 overall.
"We have enhanced our business operations and overall financial health, generating significant improvements to cash flow, profitability, and leverage, strengthening our ability to navigate market challenges and deliver ongoing Adjusted EBITDA improvements,” Hepponstall said. “Moving forward, our increased cash flow will enable us to invest further in our business, our brands, and ongoing product innovation, while continuing to reduce debt and support a higher dividend."
According to High Liner Chief Financial Officer Paul Jewer, the company is planning to increase its capital expenditures in 2021 thanks to the strong financial performance in 2020.
“We believe we’ll be in a position in 2021 to increase our [capital expenditures] up to at least historical levels, which would be in the neighborhood of [USD] 50 million (EUR 42 million) a year,” Jewer said.
"We are ready to seize the opportunity to grow our value-added business, capitalizing on our market leadership in Canada and the significant runway for growth in the U.S market,” Hepponstall said. “As we activate plans for growth, we will continue to strengthen the bottom line and drive the improvements and efficiencies that will deliver ongoing adjusted EBITDA improvement."
Photo courtesy of High Liner Foods