High Liner Foods President and CEO Rod Hepponstall tendered his resignation on August 29 and will step down from the position on or before January 2, 2024. The Lunenburg, Nova Scotia, Canada-headquartered frozen seafood company, which is publicly traded under the symbol HLF on the Toronto Stock Exchange, has begun a comprehensive internal and external search for his replacement.
A press release issued by High Liner stated: “The board of directors would like to thank him for his years of service to the company. Mr. Hepponstall will collaborate on a transition plan, and the company will provide more information in due course.”
Based in Portsmouth, New Hampshire, Hepponstall has acted as director, president and chief executive officer of High Liner since May of 2018. He joined the company after serving almost three years with Boise, Idaho-headquartered Lamb Weston as vice president and general manager for the frozen potato product specialist’s retail and foodservice business.
High Liner Foods is a major processor and marketer of value-added frozen seafood. Its retail branded products are sold throughout the United States and Canada under the High Liner, Fisher Boy, Mirabel, Sea Cuisine and Catch of the Day labels, and are listed by most grocery and club stores. The company also sells branded products to restaurants and institutions under the High Liner, Mirabel, Icelandic Seafood and FPI labels and is a major supplier of private label seafood products to retailers and foodservice distributors.
Among notable achievements at High Liner, Hepponstal successfully merged US and Canadian units into one North American organization, saving costs and improving operating effectiveness.
The announcement of his resignation was made several weeks after financial results for the company’s thirteen and twenty-six week performances, which ended on July 1, was made.
“During the second quarter we once again delivered sales volume and dollar growth,” commented Hepponstall in a statement made of August 9. “Our foodservice business continued to perform well and outpace the category in terms of growth. However, softer consumer demand in the retail category and higher inventory levels across the frozen seafood industry continued in the quarter. This had an impact on our profitability during the quarter and together with higher inventory costs, led to a decline in Adjusted EBITDA, compared to a period of markedly different market conditions a year ago.”
He added: “For the first half of the year, we generated in excess of $50 million in cash flow from operations and improved our leverage ratio to 3.3x. With our stronger balance sheet and diversified portfolio and customer base, I am confident that we are well positioned to navigate headwinds, that will likely persist through the second half of the year. We continue to believe in the growth potential of our business and the category.”
Hepponstall concluded: “At a challenging time globally for the category, as a market leader, we are continuing to invest and innovate despite market headwinds, and we are coupling these efforts with targeted and strategic promotions to support our customers and help us return to normalized inventory levels by the end of the year.”
Key financial data for Q2 2023 relative to the same period the year before, reported in US dollars, are as follows:
• Sales increased by $0.8 million, or 0.3%, to $254.3 million compared to $253.5 million and sales volume increased by 0.6 million pounds, or 1.0%, to 59.4 million pounds compared to 58.8 million pounds;
• Gross profit decreased by $4.3 million, or 7.6%, to $52.0 million compared to $56.3 million, and gross profit as a percentage of sales decreased to 20.4% compared to 22.2%;
• Adjusted EBITDA declined by $3.3 million, or 13.0%, to $22.0 million compared to $25.3 million, and Adjusted EBITDA as a percentage of sales decreased to 8.7% compared to 10.0%;
• Net income fell by $13.1 million, or 68.9%, to $5.9 million compared to $19.0 million and diluted earnings per share (“EPS”) decreased to $0.17 per share, compared to $0.54 per share;
• Adjusted Net Income in the second quarter of 2023 and 2022 was $10.0 million and Adjusted Diluted EPS in the second quarter of 2023 and 2022 was $0.29 per share; and
• Net Debt to Rolling Twelve-Month Adjusted EBITDA was 3.3x at July 1, 2023 compared to 3.7x at the end of Fiscal 2022 and 3.0x at July 2, 2022. This ratio increased during the second half of Fiscal 2022 due to increased investment in inventory.
