GuruFocus - Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- High Liner Foods Inc (HLNFF) reported a 7.5% increase in adjusted EBITDA, indicating improved profitability.
- The company successfully completed a refinancing of its term loan B ahead of schedule, resulting in interest savings.
- High Liner Foods Inc (HLNFF) increased its dividend by 13.3%, marking the fifth consecutive year of dividend growth.
- The company expanded distribution in strategic areas, including club and premium offerings, which supports future growth.
- High Liner Foods Inc (HLNFF) continues to drive efficiencies across its business, contributing to improved financial performance.
- Sales volume decreased by 6.9% in the third quarter, reflecting challenging market conditions.
- The company experienced a decline in sales by 11.9% due to volume declines and reduced pricing.
- High Liner Foods Inc (HLNFF) faced continued headwinds from consumer pullback and competitive pressures in the retail sector.
- The weaker Canadian dollar negatively impacted the value of reported US dollar sales and gross profit.
- Net cash flows from operating activities decreased significantly, indicating potential liquidity challenges.
A: (CEO) There is some benefit from earlier wins in the year, and we continue to win new business, including new distribution and promotional activities. The trend has improved, although we're not back to top-line growth yet.
Q: Is the intensity of the macro headwinds staying the same or getting worse? When might these headwinds stop impacting your top line?
A: (CCO) Food service has been down and continues to be a headwind, but retail is improving as consumers eat out less. We're seeing traction with innovation and promotional tactics, which is helping offset some of the macro pressures.
Q: Regarding gross margin percentage, is the intensity of promotional activity accelerating going forward?
A: (CEO) Promotional activity will continue, possibly at a slightly higher pace in Q4, as it drives higher gross margin dollars. The impact of mix, particularly with private label business, also affects margins.
Q: Can you parse out the impact from price deflation and mix on sales this quarter?
A: (CEO) It's more of a mix impact than a deflationary price impact. Some species prices are coming back up, and promotional activity can affect net sales outcomes.
Q: Would you expect to see further improvement in volumes into Q4, still down year-over-year but sequentially improved?
A: (CEO) We expect sequential improvement and are working towards top-line growth. We've had a good start to the quarter and aim for a strong finish to the year.
Q: How are SG&A dollars, excluding the DNA component, expected to trend into Q4?
A: (CEO) No significant changes are expected quarter over quarter. There can be some seasonality in marketing spend, but nothing significant between Q3 and Q4.
Q: Can you clarify if the year-over-year EBITDA growth reference includes the fourth quarter of this year?
A: (CEO) Year-to-date, we've had EBITDA growth over the prior year, and we expect to deliver EBITDA growth for the full year, with confidence in our annual performance.
Q: Are you expecting a larger year-over-year increase in SG&A into Q4?
A: (CEO) I was referring to SG&A as a percentage of sales, not expecting significant changes in SG&A dollars sequentially.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.