While earnings rose almost 40% to US $5 million, second quarter sales for High Liner Foods slipped slightly at 0.7%, or $1.6 million, to $224.7 million in comparison with the like period in 2015.
For the first half of 2016 ending on July 2, sales decreased by $21.4 million, or 4.0%, to $515.2 million compared to $536.6 million rung up during the first 26 weeks of 2015.
“We are pleased with the results of the second quarter of 2016, returning to sales volume growth and achieving higher adjusted EBITDA as a result of improved execution and higher supply chain optimization savings compared to the second quarter last year. Also, free cash flow from operations continued to be strong, allowing us to reduce debt and further improve our debt leverage ratios,” stated Keith Decker, president and chief executive officer of the Lunenburg, Nova Scotia, Canada-headquartered frozen seafood company.
Decker used the occasion of the earnings declaration on August 16 to also announce the sale of the company’s scallop operations and whitefish processing plant in New Bedford, Massachusetts, to Blue Harvest Fisheries for $8 million plus the value of scallop inventories. The transaction is expected to close within the next several weeks.
“As part of this agreement, Blue Harvest will supply High Liner Foods with scallops so that we can continue to supply high-quality scallop products to our valued customers,” said Decker.
While the scallop processing plant is fully operational, the packing of value-added fish products ceased at this facility in mid-July, following the transfer of this production to the company’s other manufacturing sites.
High Liner announced earlier this year that it would cease value-added fish operations at the New Bedford factory, which was purchased from the Seattle-based American Seafoods Group in 2013, to reduce excess capacity across its North American production network, in an effort to improve manufacturing efficiencies and help the company achieve supply chain optimization objectives. The annual ongoing pre-tax reduction in operating costs resulting from the consolidation is estimated to be approximately $7.0 million, with a nominal portion of this amount to be realized in the last half of 2016.
Looking ahead, Decker commented: “We remain focused on growing sales volume and earnings in the back half of 2016 in what we expect will remain a relatively stable raw material cost environment. Completing outstanding supply chain optimization activities also remains a priority, and we continue to believe a minimum of $20 million in annual costs savings on a run-rate basis will be achieved by the end of 2016.”
About High Liner
High Liner Foods’ retail branded products are sold throughout the United States, Canada and Mexico under the High Liner, Fisher Boy, Mirabel and Sea Cuisine labels, and are available in most grocery and club stores. The company also markets branded products under the High Liner, Icelandic Seafood, FPI, Viking, Mirabel, Samband of Iceland and American Pride Seafood labels to restaurants and institutions, and is a major supplier of private label value-added frozen seafood items to North American food retailers and foodservice distributors.
