Vancouver, British Columbia, Canada-based Premium Brands Holding Corporation posted strong third-quarter 2022 revenue, though sales at its Clearwater Seafoods subsidiary flagged slightly due to delayed crab sales and a stronger Canadian dollar.
The company posted Q3 revenues of CAD 1.62 billion (USD 1.2 billion, EUR 1.19 billion), a CAD 282.1 million (USD 210 million, EUR 208 million) increase compared to Q3 2021. The company also posted a record Q3 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of CAD 141.2 million (USD 105.1 million, EUR 104.3 million), a 15.2 percent, or CAD 18.6 million (USD 13.8 million, EUR 13.7 million), increase over 2021.
“We are pleased to report another quarter of record sales and EBITDA as we continue to see a gradual return to more-normal operating conditions. We are particularly encouraged by the trend in our results as our performance got progressively better through the course of the quarter,” Premium Brands President and CEO George Paleologou said.
Clearwater Seafoods, which the company acquired in November 2020, saw its performance drop slightly in Q3 2022 compared to the same period in 2021. Clearwater had sales of CAD 157.7 million (USD 117.3 million, EUR 116.5 million), down from CAD 158.4 million (USD 117.9 million, EUR 117 million) a year prior. Its gross profit declined from CAD 53.1 million (USD 39.5 million, EUR 39.2 million) in Q3 2021 to CAD 50.6 million (USD 37.6 million, EUR 37.4 million) in Q3 2022.
according to Premium Brands, the drop was caused by a combination of the delayed sale of snow crab inventory “in anticipation of more favorable pricing later in the year” and a stronger Canadian dollar.
“Clearwater chose to hold on to its snow crab inventory instead of selling it at a loss,” Paleologou said during an investor conference call. “This action appears to have been an astute decision as snow crab prices are recovering.”
The snow crab market in Eastern Canada was tumultuous in 2022, as processors announced in June that the market was “not functioning in a normal manner” to a point that some processors said they were “compelled to respond” to market uncertainty. Part of the turmoil was caused by debates over the price setting process for snow crab, with fishermen with the Fish Food and Allied Workers Union pushing for a higher price than what was ultimately agreed on.
However, the lower price that was initially settled on – CAD 7.60 (USD 5.65, EUR 5.61) – ended up being too high and the price eventually dropped to CAD 6.22 (USD 4.63, EUR 4.59). Even at that price, processors were facing losses on crab – a big reason why Clearwater held onto its inventory.
According to Paleologou that challenge environment was handled well by Clearwater.
“Despite the challenging margins in the snow crab business and substantially higher fuel costs, Clearwater’s discipline, cost management, very good commercial execution helped deliver solid results,” he said.
One change of pace for Premium Brands was a lack of acquisitions during Q3 2022. The company resumed its aggressive acquisition strategy in 2020, and the company has acquired multiple seafood brands since – including Clearwater, Quebec, Canada-based Mermax, and Starboard Seafood.
“We did not complete any acquisitions during the quarter, prioritizing capital allocations like capacity expansions, and process automation initiatives instead,” Paleologou said.
Photo courtesy of Premium Brands
