High Liner reports improved Q3 sales revenue despite flat volumes
Lunenberg, Nova Scotia-based High Liner Foods has reported improved results across the board in Q3 2021 compared to 2020, thanks to slightly increased sales volumes and an improved mix of products sold.
The company’s sales in Q3 2021 increased by USD 19.7 million (EUR 17.4 million) to USD 214.3 million (EUR 189.4 million) in the quarter, compared to USD 194.6 million (EUR 172 million) in sales in Q3 2020. The company’s sales volumes, by comparison, stayed relatively flat, with an increase of just 0.1 million pounds, or just 0.2 percent, compared to Q3 2020.
"Our financial performance this quarter reflects the strong underlying fundamentals of our business and the proactive action we have taken on pricing, purchasing, and portfolio mix,” High Liner President and CEO Rod Hepponstall said in a release. "We grew net sales and made further profitability gains as we worked hard to fully satisfy demand for our products, especially our branded, valued-added seafood offerings.”
While the company’s sales volumes remained almost the same compared to one year ago, High Liner sold more value-added products and saw its foodservice business improve as COVID-19-related restrictions eased.
“We were able to capitalize on the resurgence in foodservice, despite ongoing pandemic-related pressures, while sustaining retail performance versus the same period last year,” Hepponstall said.
Some of that resurgence was offset by global supply-chain challenges – mainly shipping container availability and raw material supply, according to the company. Shipping container availability has been a problem worldwide since the start of 2021.
High Liner’s gross profit as a percentage of sales increased to 22.4 percent compared to 20 percent, and the company’s gross profit increased by 23.1 percent to USD 47.9 million (EUR 42.3 million), an increase of USD 9 million (EUR 7.9 million) from 2020’s USD 38.9 million (EUR 34.4 million)
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) as a percentage of sales also increased to 10.5 percent in Q3 2021 from 9.8 percent in 2020. Adjusted EBITDA increased by 17.3 percent, or USD 3.3 million (EUR 2.9 million), to USD 22.3 million (EUR 19.7 million) from USD 19.1 million (EUR 16.8 million).
"The High Liner Foods team is doing an excellent job navigating ongoing market challenges while continuing to drive profitability," High Liner Board of Directors Chair Robert Pace said.
That increased profitability led the board to approve a quarterly dividend of CAD 0.10 (USD 0.08, EUR 0.07) per share – to be paid on 15 December – an increase of CAD 0.03 (USD 0.024, EUR 0.021) over the dividend paid during Q3 2021.
"The dividend increase announced today recognizes this continued strong performance and cash-flow position,” Pace said. “The 3.0 cents increase per share brings High Liner Foods closer to its target dividend payout ratio, while still allowing for investment in growth."
The results, Hepponstall said, have the company on track to deliver adjusted EBITDA growth this year, and put the company in a strong position moving into 2022.
"Although pandemic-related pressures stalled the rate of growth this year, we are encouraged by the net sales growth experienced this quarter, and we remain well-positioned to accelerate sales growth in 2022,” he said.
During an investor call on 17 November, Hepponstall added that the pollock supply chain issues caused by a U.S. Customs and Border Protection action against the "Bayside Program" had little impact on High Liner.
“I would say we continued to watch that as it continued to evolve, but it was relatively insignificant in the quarter for us," Hepponstall said.
Photo courtesy of High Liner Foods