Grows Year over Year Adjusted EBITDA by $3.0 million LUNENBURG, NS, May 14, 2024 /CNW/ - High Liner Foods Incorporated (TSX:HLF) ("High Liner Foods" or "the Company"), a leading North American value-added frozen seafood company, today announced financial results for the thirteen weeks ended March 30, 2024. "We strengthened the profitability of our business during the first quarter, setting us up well to return to Adjusted EBITDA growth for 2024," said Paul Jewer, President and Chief Executive Officer for High Liner Foods. "The steps we took last year to accelerate the return to normalized inventory levels helped drive margin improvements during the first quarter, which was also supported by a more profitable mix and lower costs in our business. Our growth in Adjusted EBDITA enabled us to continue to grow cash flow and further strengthen our balance sheet." "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 U.S. dollars ("USD"), for the thirteen weeks ended March 30, 2024, or the first quarter of 2024, are as follows (unless otherwise noted, all comparisons are relative to the first quarter of 2023):  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 March 30, 2024 and April 1, 2023 are summarized in the following table: Thirteen weeks ended (Amounts in 000s, except per share amounts, unless otherwise noted) March 30,2024 April 1,2023 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 March 30, 2024, or the first quarter of 2024, decreased by 10.0 million pounds, or 13.0%, to 67.0 million pounds compared to 77.0 million pounds in the thirteen weeks ended April 1, 2023. High Liner Foods' foodservice business was impacted by both a decline in contract manufacturing business, the exit of some unprofitable business, and some overall market softness.  The Company continues to benefit from diversification of its foodservice customer base across non-commercial and commercial customers as well as its strategic focus on high growth channels and species. The decrease was also driven by lower sales volume in our retail business, including during the Lenten period, as the retail market continued to experience challenges as a result of consumer price sensitivity and competitive pressure in a highly promotional environment. Sales in the first quarter of 2024 decreased by $52.2 million, or 15.9%, to $277.0 million compared to $329.2 million in the same period in 2023, The decrease in sales is mainly driven by reduced volumes previously mentioned and reduced pricing reflecting deflationary markets, partially offset by favourable sales mix.  The stronger Canadian dollar in the first quarter of 2024 compared to the same quarter of 2023 increased the value of reported USD sales from our CAD-denominated operations by approximately $0.2 million relative to the conversion impact last year. Gross profit in the first quarter of 2024 decreased by $2.9 million to $65.5 million compared to $68.4 million in the same period in 2023 and gross profit as a percentage of sales increased by 280 basis points to 23.6% compared to 20.8%. The decrease in gross profit reflects the decline in sales volume previously mentioned. This was partially mitigated by the benefit of lower inventory levels and the favourable changes in product mix reflected in the improved gross profit as a percentage of sales. In addition, the stronger Canadian dollar increased the value of reported USD gross profit from our CAD-denominated operations by nominal amounts  relative to the conversion impact last year. Adjusted EBITDA in the first quarter of 2024 increased by $3.0 million to $34.2 million compared to $31.2 million in the same period in 2023 and Adjusted EBITDA as a percentage of sales increased to 12.4% compared to 9.5%. The increase is a result of decreased net SG&A expenses and decreased distribution costs, partially offset by the decrease in gross profit. Reported net income in the first quarter of 2024 increased by $2.7 million to net income of $16.6 million (diluted EPS of $0.49) compared to $13.9 million (diluted EPS of $0.40) in the same period in 2023. The increase in net income is due to the increase in Adjusted EBITDA, a decrease in Business Acquisition, Integration and Other Expenses, and a decrease in finance costs, discussed in the Finance Costs section of this MD&A, partially offset by an increase in income tax expense. 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 $2.2 million, or 13.4% to $18.6 million compared to $16.4 million in the same period in the prior year and Adjusted Diluted EPS increased $0.07 in the first quarter of 2024 to $0.55 as compared to $0.48 in the same period in the prior year. Net cash flows provided by operating activities in the first quarter of 2024 increased by $4.6 million to an inflow of $17.5 million compared to an inflow of $12.9 million in the same period in 2023 due to  favourable changes in non-cash working capital and higher cash flows provided by operations, including higher net income, lower finance costs, lower depreciation & amortization, partially offset by higher income tax expense. Capital expenditures were $2.4 million in the first quarter of 2024 compared to $3.0 million in the prior year reflecting the continued significant investment in the business. Net Debt decreased by $5.2 million to $244.7 million at March 30, 2024 compared to $249.9 million at December 30, 2023, reflecting lower long-term debt, lease liabilities, and a higher cash balance, partially offset by higher bank loans as at March 30, 2024, as compared to December 30, 2023. Net Debt to Rolling Twelve-Month Adjusted EBITDA was 2.5x at March 30, 2024 compared to 2.6x at the end of Fiscal 2023 and 3.7x at December 31, 2022. In the latter half of Fiscal 2022, the Net Debt to Rolling Twelve-Months Adjusted EBITDA rose due to increased investment in working capital and inflation in raw materials. However, by the second half of 2023, the Company had reverted to normal working capital levels, leading to an improvement in the Net Debt to Rolling Twelve-Month Adjusted EBITDA ratio. In the absence of any major acquisitions or unplanned capital expenditures in 2024, we expect this ratio to continue to be lower than the Company's long-term target of 3.0x at the end of Fiscal 2024. Investment in Norcod AS On March 21, 2024, High Liner Foods invested $5 million in exchange for 4,412,000 common shares of Norcod AS ("Norcod"), a leader in responsible and sustainable cod aquaculture based in Trondheim, Norway. The Company believes this investment is an important step forward in the Company's long-term growth strategy, including gaining exposure to the growing cod aquaculture market. 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 Mr. Jewer.  "In an uncertain macroeconomic environment, we are focused on delivering compelling value to a broad base of customers and consumers.  I remain confident in our strategy and believe that the additional work underway related to price, innovation and distribution will ...