Grows Year over Year Adjusted EBITDA by
"We strengthened the profitability of our business during the first quarter, setting us up well to return to Adjusted EBITDA growth for 2024," said
"With this improved profitability and the benefit of our strong balance sheet and diverse portfolio, we are well equipped to take the necessary steps to address the volume decline that was driven by the elimination of some unprofitable business and reduced contract manufacturing business. We also continue to explore opportunities to invest in the long-term growth potential of our business."
Key financial results, reported in
- Sales volume decreased by 10.0 million pounds, or 13.0%, to 67.0 million pounds compared to 77.0 million pounds and sales decreased by
$52.2 million , or 15.9%, to$277.0 million compared to$329.2 million ; - Gross profit decreased by
$2.9 million , or 4.2%, to$65.5 million compared to$68.4 million , and gross profit as a percentage of sales increased to 23.6% compared to 20.8%; - Adjusted EBITDA(1) increased by
$3.0 million , or 9.6%, to$34.2 million compared to$31.2 million , and Adjusted EBITDA as a percentage of sales increased to 12.4% compared to 9.5%; - Net income increased by
$2.7 million , or 19.4%, to$16.6 million compared to$13.9 million and diluted earnings per share ("EPS") increased to$0.49 per share, compared to$0.40 per share; - Adjusted Net Income(1) increased by
$2.2 million , or 13.4%, to$18.6 million compared to$16.4 million and Adjusted Diluted EPS(1) increased to$0.55 per share compared to$0.48 per share; - Cash Flows from Operations increased by
$4.6 million , or 35.7%, to an inflow of$17.5 million compared to an inflow of$12.9 million ; and - Net Debt(1) to Rolling Twelve-Month Adjusted EBITDA(1) was 2.5x at
March 30, 2024 compared to 2.6x at the end of Fiscal 2023 and 3.7x at end of Fiscal 2022. The Company reverted to normal working capital levels, leading to an improvement in the Net Debt to Rolling Twelve-Month Adjusted EBITDA ratio by the second half of Fiscal 2023.
________________________ |
(1) This is a non-IFRS financial measure. For more information on non-IFRS financial measures, see "Non-IFRS Measures" below and see "Non-IFRS Financial Measures" in our First Quarter 2024 Management's Discussion and Analysis ("1Q2024 MD&A"). |
Financial Results and Operational Update
For the purpose of presenting the Consolidated Financial Statements in USD, CAD-denominated assets and liabilities in the Company's operations are converted using the exchange rate at the reporting date, and revenue and expenses are converted at the average exchange rate of the month in which the transaction occurs. As such, foreign currency fluctuations affect the reported values of individual lines on our balance sheet and income statement. When the USD strengthens (weakening CAD), the reported USD values of the Parent's CAD-denominated items decrease in the Consolidated Financial Statements, and the opposite occurs when the USD weakens (strengthening CAD).
Investors are reminded for purposes of calculating financial ratios, including dividend payout and share price-to-earnings ratios, to take into consideration that the Company's share price and dividend rate are reported in CAD and its earnings, EPS and financial statements are reported in USD.
The financial results in USD for the thirteen weeks ended
Thirteen weeks ended | ||||
(Amounts in 000s, except per share amounts, unless otherwise noted) |
|
| ||
Sales volume (millions of lbs) | 67.0 | 77.0 | ||
Average foreign exchange rate (USD/CAD) | 1.3486 | 1.3526 | ||
Sales | $ 276,972 | $ 329,164 | ||
Gross profit | $ 65,455 | $ 68,405 | ||
Gross profit as a percentage of sales | 23.6 % | 20.8 % | ||
Adjusted EBITDA | $ 34,240 | $ 31,199 | ||
Adjusted EBITDA as a percentage of sales | 12.4 % | 9.5 % | ||
Net income | $ 16,598 | $ 13,888 | ||
Diluted EPS | $ 0.49 | $ 0.40 | ||
Adjusted Net Income | $ 18,590 | $ 16,437 | ||
Adjusted Diluted EPS | $ 0.55 | $ 0.48 | ||
Diluted weighted average number of shares outstanding | 33,551 | 34,537 |
Sales volume for the thirteen weeks ended
Sales in the first quarter of 2024 decreased by
Gross profit in the first quarter of 2024 decreased by
Adjusted EBITDA in the first quarter of 2024 increased by
Reported net income in the first quarter of 2024 increased by
Reported net income in the first quarter of 2024 and 2023 included certain non-routine expenses classified as "business acquisition, integration and other expense." Excluding the impact of these non-routine items or other non-cash expenses, and share-based compensation, Adjusted Net Income in the first quarter of 2024 increased by
Net cash flows provided by operating activities in the first quarter of 2024 increased by
Net Debt decreased by
Net Debt to Rolling Twelve-Month Adjusted EBITDA was 2.5x at
Investment in Norcod AS
On
Outlook
"Our improved profitability during the first quarter puts us in a strong position to deliver Adjusted EBITDA growth for the year, while taking the necessary strategic actions to address our top line performance, said
As High Liner advances its strategy to drive improved near-term performance, the Company continues to explore opportunities for transformative growth through potential M&A activities. As illustrated by our recent investment in Norcod, High Liner is focused on exploring opportunities across the value-chain to position the Company for long-term growth, build shareholder value and continue to return capital to shareholders. The Company is focused on the consistent execution of its branded and value-added strategy, as well as opportunities to further diversify its supply chain and innovate within the frozen seafood category as the means to reinforce its competitive positioning in a dynamic global seafood market.
The Company cautions that additional challenges in the geopolitical and economic environment may impact the timeline for improvements to its financial performance and its growth agenda.
Dividend
Today, the Company's Board of Directors approved a quarterly dividend of
Conference Call
The Company will host a conference call on
A live audio webcast of the conference call will be available at www.highlinerfoods.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.
The Company's Unaudited Condensed Interim Consolidated Financial Statements and MD&A as at and for the thirteen weeks ended
Non-IFRS Measures
The Company reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). Included in this media release are the following non-IFRS financial measures: Adjusted EBITDA, Adjusted EBITDA as a Percentage of
The Company believes these non-IFRS financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company for the reasons outlined below. These measures do not have any standardized meaning as prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA as a Percentage of Sales
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted for items that are not considered representative of ongoing operational activities of the business. The related margin, Adjusted EBITDA as a Percentage of Sales, is defined as Adjusted EBITDA divided by net sales, where net sales is defined as "Sales" on the consolidated statements of income.
We use Adjusted EBITDA (and Adjusted EBITDA as a percentage of sales) as a performance measure as it approximates cash generated from operations before capital expenditures and changes in working capital, and it excludes the impact of expenses and recoveries associated with certain non-routine items that are not considered representative of the ongoing operational activities, as discussed above, and share-based compensation expense related to the Company's share price. We believe investors and analysts also use Adjusted EBITDA (and Adjusted EBITDA as a percentage of sales) to evaluate the performance of our business. The most directly comparable IFRS measure to Adjusted EBITDA is "Net income" on the consolidated statements of income. Adjusted EBITDA is also useful when comparing to other companies, as it eliminates the differences in earnings that are due to how a company is financed. Also, for the purpose of certain covenants on our credit facilities, "EBITDA" is based on Adjusted EBITDA, with further adjustments as defined in the Company's credit agreements.
The following table reconciles Adjusted EBITDA with measures that are found in our Consolidated Financial Statements, and calculates Adjusted EBITDA as a Percentage of Sales.
Thirteen weeks ended | ||||
(Amounts in $000s) | ||||
Net income | $ 16,598 | $ 13,888 | ||
Add back (deduct): | ||||
Depreciation and amortization expense | 5,624 | 6,068 | ||
Finance costs | 5,914 | 7,044 | ||
Income tax expense | 3,581 | 596 | ||
Standardized EBITDA | 31,717 | 27,596 | ||
Add back (deduct): | ||||
Business acquisition, integration and other expenses (income) | 692 | 1,767 | ||
Impairment of property, plant and equipment | — | — | ||
Gain on disposal of assets | (8) | (71) | ||
Share-based compensation expense | 1,839 | 1,907 | ||
Adjusted EBITDA | $ 34,240 | $ 31,199 | ||
$ 276,972 | $ 329,164 | |||
Adjusted EBITDA as Percentage of Sales | 12.4 % | 9.5 % |
Rolling Twelve-Month Adjusted EBITDA
Rolling twelve months ended | ||||||
(Amounts in $000s) |
|
|
| |||
Net income | $ 34,387 | 31,677 | 53,973 | |||
Add back (deduct): | ||||||
Depreciation and amortization expense | 25,929 | 26,373 | 23,975 | |||
Finance costs | 25,048 | 26,178 | 21,513 | |||
Income tax expense | 5,419 | 2,434 | 7,933 | |||
Standardized EBITDA | 90,783 | 86,662 | 107,394 | |||
Add back (deduct): | ||||||
Business acquisition, integration and other (income) expenses(1) | 5,995 | 7,070 | (5,674) | |||
Impairment of property, plant and equipment | — | — | 332 | |||
Loss on disposal of assets | (46) | (109) | 51 | |||
Share-based compensation expense | 1,401 | 1,469 | 4,623 | |||
Rolling Twelve-Month Adjusted EBITDA | $ 98,133 | 95,092 | 106,726 |
(1) | The business acquisition, integration and other (income) expenses for the rolling twelve months ended |
Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income is net income adjusted for the after-tax impact of items which are not representative of ongoing operational activities of the business and certain non-cash expenses or income. Adjusted Diluted EPS is Adjusted Net Income divided by the average diluted number of shares outstanding.
We use Adjusted Net Income and Adjusted Diluted EPS to assess the performance of our business without the effects of the above-mentioned items, and we believe our investors and analysts also use these measures. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. The most comparable IFRS financial measures are net income and EPS.
The table below reconciles our Adjusted Net Income with measures that are found in our Consolidated Financial Statements and calculates Adjusted Diluted EPS.
Thirteen weeks ended | Thirteen weeks ended | ||||||||
$000s | Adjusted | $000s | Adjusted | ||||||
Net income | $ 16,598 | $ 0.49 | $ 13,888 | $ 0.40 | |||||
Add back (deduct): | |||||||||
Business acquisition, integration and other (income) expenses | 692 | 0.02 | 1,767 | 0.05 | |||||
Share-based compensation expense | 1,839 | 0.05 | 1,907 | 0.06 | |||||
Tax impact of reconciling items (1) | (539) | (0.01) | (1,125) | (0.03) | |||||
Adjusted Net Income | $ 18,590 | $ 0.55 | $ 16,437 | $ 0.48 | |||||
Average shares for the period (000s) | 33,551 | 34,537 |
Net Debt and Net Debt to Rolling Twelve-Month Adjusted EBITDA
Net Debt is calculated as the sum of bank loans, long-term debt (excluding deferred finance costs and modification gains/losses) and lease liabilities, less cash.
We consider Net Debt to be an important indicator of our Company's financial leverage because it represents the amount of debt that is not covered by available cash. We believe investors and analysts use Net Debt to determine the Company's financial leverage. Net Debt has no comparable IFRS financial measure, but rather is calculated using several asset and liability items in the consolidated statements of financial position.
Net Debt to Rolling Twelve-Month Adjusted EBITDA is calculated as Net Debt divided by Rolling Twelve-Month Adjusted EBITDA (see above). We consider Net Debt to Rolling Twelve-Month Adjusted EBITDA to be an important indicator of our ability to generate sufficient earnings to service our debt, that enhances understanding of our financial performance and highlights operational trends. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies; however, the calculations of Adjusted EBITDA may not be comparable to those of other companies, which limits their usefulness as comparative measures.
The following table reconciles Net Debt to IFRS measures reported as at the end of the indicated periods in the consolidated statements of financial position and calculates Net Debt to Rolling Twelve-Month Adjusted EBITDA.
(Amounts in $000s) |
|
|
| |||
Bank loans | $ 6,965 | $ 2,559 | $ 123,770 | |||
Add-back: Deferred finance costs included in bank loans (1) | 408 | 441 | 541 | |||
Total bank loans | 7,373 | 3,000 | 124,311 | |||
Long-term debt | 230,339 | 233,791 | 236,632 | |||
Current portion of long-term debt | 7,500 | 5,625 | 7,500 | |||
Add-back: Deferred finance costs included in long-term debt (2) | 3,273 | 3,607 | 4,627 | |||
Less: Net loss on modification of debt (3) | (357) | (393) | (504) | |||
Total term loan debt | 240,755 | 242,630 | 248,255 | |||
Long-term portion of lease liabilities | 6,082 | 6,997 | 2,325 | |||
Current portion of lease liabilities | 4,351 | 4,589 | 4,426 | |||
Total lease liabilities | 10,433 | 11,586 | 6,751 | |||
Less: Cash | (13,871) | (7,300) | — | |||
Net Debt | $ 244,690 | $ 249,916 | $ 379,317 | |||
Rolling Twelve-Month Adjusted EBITDA | $ 98,133 | 95,092 | $ 106,726 | |||
Net Debt to Rolling Twelve-Month Adjusted EBITDA | 2.5x | 2.6x | 3.6x |
(1) | Represents deferred finance costs that are included in "Bank loans" in the consolidated statements of financial position. See Note 3 to the Consolidated Financial Statements. |
(2) | Represents deferred finance costs that are included in "Long-term debt" in the consolidated statements of financial position. See Note 4 to the Consolidated Financial Statements. |
(3) | The net gain/loss on modification of debt has been excluded from the calculation of Net Debt as it does not represent the expected cash outflows from the term loan facility. |
Forward Looking Statements
Forward-looking statements can generally be identified by the use of the conditional tense, the words "may", "should", "would", "could", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective", "goal", "remain" or "continue" or the negative of these terms or variations of them or words and expressions of similar nature. Forward-looking statements in this press release include, but are not limited to, statements regarding the business strategies and operational activities of
About
For further information about the Company, please visit our website at www.highlinerfoods.com or send an e-mail to investor@highlinerfoods.com.
SOURCE
© Canada Newswire, source