High Liner Foods, based in Lunenberg, Nova Scotia, Canada, reported double-digit increases in sales value as higher volumes at high prices boosted the company’s profits.
The company’s first quarter financial results for the 13 weeks ending April 2, 2022 show that it earned $294.7 million (EUR 279.8 million), an increase of 21.1%, or 51. 3 million USD (48.7 million EUR), compared to 243.4 million USD (231 million EUR). million) that it earned during the same period in 2021. The rise in revenue was coupled with higher sales volumes – High Liner sold 73.4 million pounds of product in the first quarter, or 5, 2% more than the 69.8 million books sold during the same period in 2021.
“We had a good start to the year, growing sales and volumes as we strive to meet the continued strong demand for our products from retail and foodservice customers and consumers” , said Rod Hepponstall, president and CEO of High Liner Foods. “We grew market share across our businesses, increased Adjusted EBITDA and gross profit, and are more profitable today than before the onset of the COVID-19 pandemic despite inflationary pressures and supply chain pressures.”
The company’s gross profit rose 7.5%, or $4.3 million (€4 million) to $62 million (€58.8 million) in the first quarter. Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also increased, reaching $28.3 million (26.8 million euros) in the first quarter of 2022, compared to $27.8 million (26.4 million euros) in 2021, an increase of 1.8%.
The company said part of the positive performance can be attributed to a rebound in demand from foodservice and institutional customers – demand the company is struggling to meet due to “ongoing supply chain challenges”. ‘global sourcing’. The company said these challenges impacted High Liner’s sales volume by 5%, or four million pounds, in the first quarter.
Shipping delays, raw material supply issues, labor issues, shipping container availability, port congestion, etc. were all cited by the company as ongoing issues, but the company has taken “various steps to mitigate these supply issues” with its customers, he said.
The company said it raised prices in the first quarter to offset some of the additional costs it faced due to inflation.
“These pricing actions, along with a favorable product mix due to increased branded and core product sales, resulted in a 21.1% increase in net sales in the first quarter compared to to a year ago,” High Liner said.
The U.S. restaurant industry’s comeback from the worst of the COVID-19 pandemic has been a boon for High Liner, and the company has attributed some of its positive performance to continued demand in the retail market.
“We believe that the quality, convenience and variety of products and prices in our portfolio, particularly related to added value, will ensure sustained customer and consumer demand over the long term for foodservice and food service customers. retail,” Hepponstall said.
High Liner’s chief financial officer, Paul Jewer, said on the company’s earnings call that rising inflation has not dampened interest in the company’s products.
“We haven’t seen much of the impact of inflationary pressure on demand. We’re very happy with that,” he said.
Hepponstall also disclosed on the company’s first quarter earnings conference call that High Liner had been awarded a major contract, the effects of which will be felt in the second quarter.
“We started shipping to the largest discount chain in the United States, with approximately 8,000 locations,” Hepponstall said. “We’ll start to see that materialize quickly in the second quarter.”
Another windfall for the company relates to an insurance payment the company received after the close of the first quarter as part of its representation and warranty insurance policy. The payment, High Liner said, is related to the due diligence process for High Liner’s acquisition of Rubicon Resources LLC.
High Liner acquired Rubicon Resources, a shrimp importer and distributor located in Culver City, California, United States in 2017, for US$107 million (EUR101 million).
In 2020, High Liner filed a lawsuit in California Superior Court against Brian Wynn alleging he made misrepresentations during the due diligence process, with High Liner seeking “a number of remedies, including cancellation, restitution and damages”. That lawsuit is still ongoing, but according to High Liner, the insurer “agreed that there were breaches of representations made by Mr. Wynn resulting in damages in excess of the policy limit,” High said. Liner.
As a result, the company’s insurer agreed to pay $10 million (9.5 million euros) under its policy, High Liner said.
Overall, Hepponstall said he was “confident” that the company will continue its positive trajectory, despite supply chain and inflation issues.
“I am confident that we will continue to increase sales and deliver year-over-year Adjusted EBITDA growth in the year ahead.[-year] 2022 as we execute our strategy to become the leader in value-added branded seafood in North America,” he said.