High Liner sees lower sales volumes but higher revenue in 2021
High Liner Food's saw a slight decrease in sales volume in 2021, but a significant increase in sales value for Q4 and for the year, and the company managed to hit its target of generating year-over-year earnings before interest, taxes, depreciation, and amortization (EBITDA) improvement, according to its latest financial results.
The company achieved revenues of USD 227.8 million (EUR 201.3 million) in Q4 2021 compared to USD 198.4 million (EUR 175.3 million) in the same period of 2020, and USD 48.6 million (EUR 42.9 million) in gross profit compared to USD 43.5 million (EUR 38.4 million). At the same time, the company’s sales volume decreased from 59.6 million pounds in Q4 2020 to 58.7 million pounds in Q4 2021.
For the year, the company saw sales value increase by USD 47.9 million (EUR 42.3 million), or 5.8 percent, to USD 875.4 million (EUR 773.7 million) compared to USD 827.5 million (EUR 731.3 million) in 2020. Sales volume for the year, in contrast, decreased by 7.2 million pounds, or 3 percent, to 233.7 million pounds.
High Liner’s adjusted EBITDA for Q4 2021 decreased by USD 600,000 (EUR 530,000) to USD 20.6 million (EUR 18.2 million). However, for the full year the company’s adjusted EBITDA increased by USD 2.4 million (EUR 2.1 million) or 2.7 percent from USD 88 million (EUR 77.7 million) in 2020 to USD 90.4 million (EUR 79.8 million) in 2021.
“We are pleased, despite the multi-headwind environment, that we grew sales, increased our profitability and, for the third successive year, delivered on our goal of generating year-over-year EBITDA improvement," High Liner President and CEO Rod Hepponstall said. "This is the result of executing against our branded, value-added strategy, strong execution across our organization, and excellent work by our supply-chain team to maximize our product availability by mitigating the impact of major global issues."
The increased adjusted EBITDA marks the third-straight year of improvement for High Liner, and a significant gain from the company’s results in 2018, when it posted an adjusted EBITDA of USD 12 million (EUR 10.6 million). Hepponstall was hired in April 2018 and soon after taking the helm, he instituted a realignment plan to correct sales and EBITDA declines. The company’s 2021 net income indicates the changes wrought by Hepponstall, with the company posting a net income for the full-year 2021 of USD 42.2 million (EUR 37.3 million), up from USD 28.8 million (EUR 25.4 million) in 2020. It also represents a significant increase from 2019, when the company posted a net income of USD 10.2 million (EUR 10.2 million). In the full-year 2018, the company’s adjusted EBITDA was USD 62.4 million (EUR 55.1 million), with USD 1.04 billion (EUR 919 million) in revenue.
Hepponstall said the company’s success amid the COVID-19 pandemic is a testament to its resilience. However, in Q4 2021, the company said supply chain issues impacted its sales volumes by four million pounds as it experienced “shipping delays and raw material supply issues due to global labor shortages, limited shipping container availability, and port congestion and shutdowns.”
"We continue to benefit from our early action on supply chain diversification. However, given the extent of the global supply chain challenges, we were unable to fully satisfy demand for our products in the fourth quarter, impacting overall volumes,” Hepponstall said. “We will continue to pursue all potential avenues to satisfy the strong demand and build inventory in the face of supply challenges that we anticipate will prevail for the first half of 2022."
The company said its foodservice business continues to rebound from lows caused by the COVID-19 pandemic, but that supply-chain challenges are hampering its growth. On a 23 February investor call, Hepponstall saidthe company had not experienced a single quarter of full foodservice demand since the beginning of the pandemic.
High Liner CFO Paul Jewer said the company is still feeling supply constraints in the first quarter of 2022.
“We think we’ll still face some challenges in the first part of 2022, as a result of primarily processing capacity that we see around the world," Jewer said. “We expect that that should start to look better as we move into the back half of 2022.”
Jewer said inflation has also led to increased costs for High Liner, but that those have been offset with pricing adjustments.
“The reality is no one wants to pay more, but we’ve gotten very good at identifying that it is a necessary cost increase," he said.
Hepponstall said the company expects to continue its positive trajectory in 2022.
"We have demonstrated our resilience and our ability to execute as we have delivered ongoing adjusted EBITDA growth and strengthened our customer relationships during the COVID-19 pandemic," Hepponstall said. "We are confident that we will continue to accelerate sales growth and generate year-over-year adjusted EBITDA growth in fiscal 2022 as we execute on our strategy to be the leader in branded, value-added seafood in North America."
Photo courtesy of High Liner Foods