Premium Brands Holdings Corporation has acquired another seafood company in Quebec, continuing its streak of acquisitions in a quarter during which it recorded revenue and earnings.
The Richmond, British Columbia, Canada-based company announced during its regular Q3 2023 results presentation its acquisition of Rivière-au-Renard, Quebec, Canada-based seafood distributor Menu-Mer.
“Menu-Mer, whose market focus complements the geographical reach of our Quebec-based Viandex and C&C businesses, will be leveraging access to our ecosystem to enhance their buying power and expand the portfolio of products they can offer their customers," Premium Brands President and CEO George Paleologou said. "Our acquisitions pipeline remains very robust and we are in active dialogues with many small and large businesses. Correspondingly, we are well-positioned to complete more transactions in 2024.”
According to its investor presentation, Premium Brands is in active acquisitive negotiations with seven different seafood companies with combined sales of CAD 406 million (USD 295 million, EUR 272 million). It also said it is in “discussions” with four seafood companies with sales totaling CAD 310 million (USD 225 million, EUR 208 million), and has identified a future acquisition opportunity of a firm with CAD 54 million (USD 39 million, EUR 36 million) in sales. It said it has put nine potential seafood industry acquisitions – of firms with combined sales of nearly CAD 1.45 billion (USD 1.05 billion, EUR 974 million) – on hold.
Premium Brands has rapidly rolled up the North American lobster sector, acquiring Starboard Seafood, Maine Coast, Hancock Gourmet Lobster Co., Viandex, and North Delta Seafood in 2019 and 2020 and Ready Seafood in 2018. The company briefly paused its acquisitions during the Covid-19 pandemic, but resumed its acquisition strategy in August 2020.
Premium Brands also announced that it is constructing a new, 60,000-quare-food value-added seafood processing facility in Auburn, Maine, U.S.A.
The latest acquisition announcement came amid another record-breaking quarter for Premium Brands. The company posted sales revenue of CAD 1.64 billion (USD 1.19 billion, EUR 1.1 billion) in Q3 2023, a 1.3 percent – or CAD 21 million (USD 15.3 million, EUR 14.1 million) – increase compared to Q3 2022. That total is also a slight increase from Q2 2023, which saw a record Q2 revenue of CAD 1.63 billion (USD 1.18 billion, EUR 1.09 billion).
Premium Brands also posted record adjusted earnings before income, taxes, depreciation, and amortization (EBITDA) for the quarter. The company posted an adjusted EBITDA in Q3 2023 of CAD 158.8 million (USD 115.6 million, EUR 106.7 million), an increase of 12.5 percent, or CAD 17.6 million (USD 12.8 million, EUR 11.8 million), compared to Q3 2022.
The improved adjusted EBITDA in Q3 2023 was accompanied by an improved adjusted EBITDA margin of 9.7 percent, up from 8.7 percent in Q3 2022.
“We are pleased to report another quarter of record sales and adjusted EBITDA as we continue to make solid progress on our long-term value creation strategies, a clear indication of which is the 300-basis point improvement in our specialty food segment’s adjusted EBITDA margin,” Paleologou said.
The positive quarter was largely thanks to the specialty food division, as Q3 2023 was again held back by its Maine lobster business, along with some quarter-specific delays in the company’s sandwich and protein business ,Paleologou said.
The Maine lobster catch has lagged behind totals caught last year by millions of pounds. In total, the company said, Maine’s lobster industry has caught 11.5 million fewer pounds so far in 2023 than it did in 2022, a 20.3 percent decline. September saw the biggest change year-over-year, with 4.5 million fewer pounds, a drop of 27.8 percent compared to September 2022.
Sales at Clearwater – which Premium Brands purchased jointly with a coalition of Mi’kmaq First Nations in 2020 – also fell, though net losses tightened. The company posted sales of CAD 149.6 million (USD 108.9 million, EUR 100.5 million) in Q3 2023, down from the CAD 157.7 million (USD 114.8 million, EUR 106 million) it posted in the same quarter of 2022.
Despite the lower sales, net losses at Clearwater in Q3 2023 were only CAD 3.2 million (USD 2.3 million, EUR 2.1 million), an improvement from the loss of CAD 9.2 million (USD 6.7 million, EUR 6.2 million) the company posted in 2022.
The sales drop, Premium Brands said, was largely related to the delayed delivery of a new Canadian shrimp and turbot vessel, which it expects to begin operating in December; an unfavorable mix in the natural size and grade of harvested clams; and increased consumer price sensitivity to products in Europe impacting sales of products like Patagonian scallops from Argentina.
The negatives, Premium Brands said, were “partially offset” by improved snow crab sales returning to pre-2023 levels after normalization of the market, and favorable conditions for Clearwater’s Canadian sea scallops.
Looking forward, the Premium Brands said it has had to revise its overall 2023 outlook downward due to the challenges faced by lobster in Q3, which it said it expects will continue in Q4. The company is now projecting between CAD 6.3 billion and CAD 6.4 billion (USD 4.58 billion and USD 4.66 billion, EUR 4.23 billion and EUR 4.3 billion) in revenue, down from CAD 6.4 billion and CAD 6.6 billion (USD 4.66 billion and USD 4.8 billion, EUR 4.3 billion and EUR 4.43 billion) for 2023. The company also predicts a lower adjusted EBITDA of between CAD 575 million and CAD 590 million (USD 418 million and USD 429 million, EUR 386 million and EUR 396 million), down from CAD 590 million and CAD 610 million (USD 429 million and USD 444 million, EUR 396 million and EUR 410 million) for the full year.
Photo courtesy of Premium Brands Holdings Corporation
