High Liner Foods (HLF) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA grew by $1.8 million (8.2%) to $23.8 million in Q2 2024, with gross profit and margins improving despite a 13% decline in sales volume and a 14.2% drop in sales revenue, driven by lower raw material costs and normalized inventory.

• Net income surged 227.1% to $19.3 million, aided by a $9.8 million gain from a litigation settlement, while adjusted net income rose 12% to $11.2 million.

• The company continued to exit low-margin business and contract manufacturing, focusing on profitability and operational efficiency.

• Maintained leadership in value-added frozen seafood across North America, supported by diversified brands and supply chain.

• Continued commitment to sustainability, responsible sourcing, and ESG initiatives, with notable reductions in GHG emissions and food waste.

Financial highlights

• Gross profit reached $52.5 million (24% of sales, up from 20.4%), with gross margin rising by 3.6 percentage points year-over-year.

• Adjusted EBITDA was $23.8 million (10.9% of sales, up from 8.7%).

• Diluted EPS increased by $0.42 to $0.59; adjusted diluted EPS rose by $0.06 to $0.35.

• Net cash flows from operations were $39 million, down from $45.4 million year-over-year.

• Capital expenditures totaled $10.1 million in the first half, up from $9.1 million.

Outlook and guidance

• Management expects continued market challenges and short-term pressure but remains confident in achieving annual adjusted EBITDA growth.

• Focus remains on branded and value-added strategy, supply chain diversification, and innovation.

• Anticipates increased promotional activity in the second half to support volume.

• Net debt to adjusted EBITDA expected to remain below the long-term target of 3.0x.

• Exploring M&A opportunities, highlighted by recent investments in Norcod and Andfjord.