Executives at Canadian frozen foods giant High Liner Foods say they are now in a position to consider acquisitions as the company looks to accelerate its growth.
The new interest in potential deals comes as the company emerges from the impact of the global COVID-19 pandemic and a multi-year turnaround that has transformed the business in recent years.
"We are really in a position to move on that if the right opportunity presents itself at the right price and aligns with what we are doing with a strategic perspective," High Liner CFO Paul Jewer said Wednesday in response to an analyst's question during the company's second quarter earnings call.
While the price outlook depends on the global supply chain, changes made to High Liner's own supply chain under its turnaround plan have given the company a competitive edge as it seeks to position itself as North America's leading seafood supplier, High Liner CEO Rod Hepponstall said during the call.
"It has kept our customers in stock with product while our competitors have struggled a bit more and will certainly support our ability to maintain pricing levels even in a deflationary environment," he said.
High Liner saw its adjusted earnings before interest, taxes depreciation, and amortization (EBITDA) climb 29 percent to $25.3 million (€24.5 million) in the second quarter as it continued to benefit from stronger sales and price hikes.
Sales for the group during the quarter increased 33.6 percent to $253.5 million (€245.6 million), with volume up 16.7 percent to 58.8 million pounds. The recovery of the foodservice sector and solid retail performance fueled the sales increase.
While demand for the company's products remains strong, like others in the industry, it is navigating global supply challenges exacerbated by the invasion of Ukraine, inflationary pressures on raw material and ongoing uncertainty related to the COVID-19 pandemic.
Shipping delays and raw material supply issues impacted the company's ability to maximize overall volume sales during the quarter.
As demand continues to exceed expectations, volumes are just below the pre-pandemic levels of 2019, while the company is seeing increased volumes in both retail and particularly foodservice, executives noted.
A drive to explore menu innovations with foodservice customers led to a limited-time menu offer under a new partnership with a leading unnamed quick service restaurant (QSR) customer in the second quarter.
In addition, branded foodservice products continue to ease the pain of labor market shortages on both sides of the US-Canadian border, Hepponstall said.
In the current inflationary environment the High Liner boss said business has been helped by customers acquiring the taste for restaurant-quality value-added products at home during the pandemic.
Against this backdrop and as it looks to attract cost conscious consumers, the company signed a deal to supply a leading discount retailer with around 7,000 stores with fish sticks and popcorn shrimp.
New pack sizes and price points at other major retailers are another component in this area of the company's growth strategy.
High Liner plans to expand distribution of best selling products as it trials "Sea Cuisine" branded potato and herb crusted cod, potato and chipotle salmon and teriyaki sesame salmon lines in selected locations in Canada.
Trials will continue to the end of the year before an expected wider rollout in 2023.
Meanwhile, High Liner plans to build on recent online, TV, social media and influencer-based campaigns.
"Many others in the industry have eased off promotional activities due to lack of supply," Hepponstall said.