Q4 2024 High Liner Foods Inc Earnings Call

February 27, 2025

In a listen only mode.

Following managements prepared remarks, we will conduct a question and answer session.

Instructions will be provided at that time for you to queue up for questions.

If anyone has any difficulties hearing the conference. Please press the Star T. All advisor for operator assistance at any time.

This conference call is being recorded today Thursday February 27, 2025, 10, a M eastern time, a replay purposes.

Speaker Change: I would now like to turn the conference call over to Kimberley Stevens, Vice President of Finance, where Highlander Foods. Please go ahead.

Kimberley Stevens: Good morning, everyone. Thank you for joining the Highlander Foods conference call today to discuss our financial results for the fourth quarter 2024.

On the call from highlight our foods are Paul <unk>, Chief Executive Officer, Darrell Berkman, Chief Financial Officer, and Anthony <unk>, Chief Commercial officer.

Good morning, ladies and gentlemen, thank.

Thank you for standing by.

Welcome to the high end that I've seen it's incorporated conference call.

Speaker Change: I would like to remind listeners that we use certain non <unk> measures and ratios when discussing our financial results. As we believe these are useful in assessing the company's financial performance. These measures are fully described and reconciled to IRS measures in our MD&A.

Speaker Change: The fourth quarter of 2024.

At this time.

Speaker Change: Participants are in a listen only mode.

Speaker Change: Following managements prepared remarks, we will conduct a question and answer session.

Chuck: Chuck <unk> will be provided at that time for you to queue up for questions.

Speaker Change: Listeners are also reminded that certain statements made on today's call may be forward looking statements under applicable Securities Law management may use forward looking statements when discussing the company's investments strategy business and markets in which the company operates as well as operating and financial performance in the future. These.

Chuck: Anyone has any difficulties hearing the conference. Please press the Star T. All advisor L for operator assistance at any time.

Chuck: This conference call is being recorded today Thursday February 27, 2025, or 10, a M eastern time for replay purposes.

Speaker Change: <unk> are based on assumptions that are believed to be reasonable at the time that they are made and currently available information.

Speaker Change: I would now like to turn the conference call over to Kimberley Stevens Vice President of Finance, we're highlighting a sense. Please go ahead.

Speaker Change: Forward looking statements are subject to risks and certainties actual results or events, including operating or financial results could differ materially from those anticipated in these forward looking statements.

Kimberley Stevens: Good morning, everyone. Thank you for joining the Highlander Foods conference call today to discuss our financial results for the fourth quarter 2024 on.

Speaker Change: Thailand or foods includes a thorough discussion of these risks and other factors that could cause its anticipated outcomes to differ from actual outcome and it's publicly available disclosure documents, including in its most recent annual MD&A and annual information form.

Speaker Change: On the call from highlight our foods are called your Chief Executive Officer, Darrell Berkman, Chief Financial Officer, and Anthony was that our Chief commercial officer.

Speaker Change: I would like to remind listeners that we used are no and I first measures and ratios when discussing our financial results. As we believe these are useful in assessing the company's financial performance. These measures are fully described and reconciled I harass measures in our MD&A.

Speaker Change: Please note that Highlander foods is under no obligation to update any forward looking events discussed today okay.

Speaker Change: Before the market opened yesterday February 26, Highlander Foods reported its financial results for the fourth quarter ended December 28 2024.

Speaker Change: Listeners are also reminded that certain statements made on todays call maybe forward looking statements under applicable Securities Law management may use forward looking statements when discussing the company's investment strategy business and markets in which the company operates as well as operating and financial performance in the future.

Speaker Change: That news release, along with the company's MD&A and audited consolidated financial statements for fiscal 2024 have been filed on SEDAR plus and can also be found in the investors section of Highlander Foods' web site.

Speaker Change: If you'd like to receive our news release in the future. Please visit the Companys website to register.

Speaker Change: Shipments are based on assumptions that are believed to be reasonable at the time that they are made and currently available information.

Speaker Change: Lastly, please note that the company reports its financial results in U S dollars and therefore the results to be discussed today are also stated in U S dollars unless otherwise noted.

Speaker Change: <unk> Foods' common shares traded on the Toronto stock exchange and are quoted in Canadian dollars.

Paul: I will now turn the call over to Paul for his opening remarks.

Speaker Change: <unk> foods includes a thorough discussion of these risks and other factors that could cause this anticipated outcomes to differ from actual outcome and it's publicly available disclosure documents, including in its most recent annual MD&A and annual information form.

Paul: Thank you Kimberly and welcome everyone I'm joined today by our Chief Financial Officer, Darryl Bergman, and our Chief Commercial Officer, Anthony we're setup.

Paul: Before I hand, the call over to my colleagues I will share my perspective on our performance and outlook, which can be summarized as follows. Our strategy is working we are executing well and the momentum across our business continues.

Speaker Change: Please note that Highlander foods is under no obligation to update any forward thoughts on this discussion.

Speaker Change: Before the market opened yesterday February 26, Highlander Foods reported its financial results for the fourth quarter ended December 28 2020 for.

Paul: To recap last year, we set out to one grow volume in a profitable manner.

Paul: We delivered this in Q4 with a one 3% increase in volume over Q4, 2023, and an eight 7% increase in adjusted EBITDA compared to the fourth quarter last year.

Speaker Change: If you'd like to receive our news releases in the future. Please visit the company's website to register.

Paul: To grow adjusted EBITDA at year over year.

Speaker Change: Lastly, please note that the company reports its financial results in U S dollars and therefore, the result to be discussed today are also stated in U S dollars unless otherwise noted.

Paul: Our strong performance on the bottom line throughout 2024 led to an eight 6% year over year gain.

Paul: Three maintain strong free cash flow, while normalizing inventory levels again, we achieve this and generated a total of $90 6 million in free cash flow from operating activities for the full fiscal year of 2024.

Speaker Change: And if it is common shares traded on the Toronto stock exchange and are quoted in Canadian dollars.

Speaker Change: I'll now turn the call over to Paul for his opening remarks.

Speaker Change: Thank you Kimberly and welcome everyone I'm joined today by our Chief Financial Officer, Darryl Bergman, and our Chief Commercial Officer, Anthony we're setup.

Paul: And for and most significantly we needed to ensure that our response to highly competitive and promotional market conditions appropriately balance the short and long term needs of our customers and consumers is clear to me that we have achieved this as well.

Speaker Change: Before I hand, the call over to my colleagues I will share my perspective on our performance and outlook, which can be summarized as follows.

Speaker Change: Strategy is working we are executing well and the momentum across our business continues.

Paul: I attribute our success across all key metrics in Q4 to strong and consistent execution by our team and the measured and thoughtful approach we took in response to market headwinds.

Speaker Change: To recap last year, we set out to one grow volume in a profitable manner.

Speaker Change: We delivered this in Q4 with a one 3% increase in volume over Q4, 2023, and an eight 7% increase in adjusted EBITDA compared to the fourth quarter last year.

Paul: Throughout the year the team maximize the tools at our disposal to serve our customers and mitigate market conditions.

Paul: From leveraging the diversification of our business and portfolio to capitalizing on our brand heritage and Canada during our 125th anniversary year.

Speaker Change: To grow adjusted EBITDA at year over year.

Speaker Change: Our strong performance on the bottom line throughout 2024 led to an eight 6% year over year gain.

Paul: We're working in partnership with our customers our global team continuously identified and delivered solutions.

Speaker Change: Three maintain strong free cash flow, while normalizing inventory levels.

Speaker Change: And as Daryl will discuss we manage our balance sheet prudently and we remain extremely well positioned financially as a result with low debt and strong free cash flow, we have the financial flexibility needed to invest in our business and build for the future. It's.

Speaker Change: Again, we achieved this and generated a total of $19 6 million in free cash flow from operating activities for the full fiscal year of 2024.

Speaker Change: And for and most significantly we needed to ensure that our response to highly competitive and promotional market conditions appropriately balance the short and long term needs of our customers and consumers is clear to me that we have achieved this as well.

Speaker Change: It's a future that I believe over the long term is ripe with opportunities for our business and our category, but also requires constant agility.

Speaker Change: Navigate while continues to be a very dynamic operating environment.

Speaker Change: I attribute our success across all key metrics in Q4, the strong and consistent execution by our team in a measured and thoughtful approach we took in response to market headwinds.

Speaker Change: We have proven that we are resilient and adept at managing the challenges that come our way.

Speaker Change: And considering the current macro environment I fully expect that we will once again need to flex this muscle in 2025.

Speaker Change: Throughout the year the team maximize the tools at our disposal to serve our customers and mitigate market conditions.

Speaker Change: We're certainly prepared for a challenging start to the year as consumers continue to pull back on the dining outside of home and brace for inflationary impacts of tariffs.

Speaker Change: From leveraging the diversification of our business and portfolio to capitalizing on our brand heritage and Canada during our 125th anniversary year.

Speaker Change: We work to offset the impact of external pressures, we will keep a laser focus on the factors within our control our people our portfolio and our supply chain and.

Speaker Change: Working in partnership with our customers our global team continuously identified and delivered solutions.

Speaker Change: And leverage these aspects of our business to show up for our customers and consumers to offer choice value and targeted solutions.

Speaker Change: We will also do so while continuing to plan for the future as we did last year with our strategic investments in its new Norwegian agricultural companies, nor cotton and fjord.

Speaker Change: It's a future that I believe over the long term is ripe with opportunities for our business and our category, but also requires constant agility to navigate what continues to be a very dynamic operating environment.

Speaker Change: As part of yesterday's earnings announcement, we announced our intent to continue new our commitment in these investments that will reinforce our position and influence and emerging growth areas for our industry as.

Speaker Change: We have proven that we are resilient and adept at managing the challenges that come our way and.

Speaker Change: As we disclosed yesterday, we participated in financing rounds for both companies investing approximately $6 million in norcal and $10 million in an fjord. These investments support the continued growth innovation and expansion of to sustainable agriculture leaders preserving our strategic ownership stake.

Speaker Change: And considering the current macro environment I fully expect that we will once again need to flex this muscle in 2025.

Speaker Change: We're certainly prepared for a challenging start to the year as consumers continue to pull back on the dining outside of home and brace for inflationary impacts of tariffs.

Speaker Change: Aligned with our long term goals to drive the future growth of the frozen seafood category in North America.

Speaker Change: We work to offset the impact of external pressures, we will keep a laser focus on the factors within our control our people our portfolio and our supply chain.

Speaker Change: I am excited to leverage the insight and exposure from these investments to support our long term goals in the year ahead, we will continue to strike the right balance between the short and long term needs of our business pivoting as necessary to serve our customers and protect the long term best interests of our company and its stakeholders.

Speaker Change: And leverage these aspects of our business to show up for our customers and consumers to offer choice value and targeted solutions.

Speaker Change: We will also do so while continuing to plan for the future as we did last year with our strategic investments in the new Norwegian agricultural companies, nor cotton and fjord as.

Speaker Change: I'll wrap up the call with more on our outlook for 2025, but for now I will hand, the call over to Darryl to discuss our financial performance Daryl.

Darryl: Thank you, Paul and Hello, everyone before getting into the results for the quarter I do want to reemphasize Paul's note on attributing our success in the quarter to strong and consistent execution by the Highlander team across the whole organization.

Speaker Change: That's part of yesterday's earnings announcement, we announced our intent to continue to meet our commitment in these investments that will reinforce our position and influence in emerging growth areas for our industry as.

As we disclosed yesterday, we participated in financing rounds for both companies investing approximately $6 million in norco and $10 million in an fjord. These investments support the continued growth innovation and expansion to sustainable agriculture leaders preserving our strategic ownership stake.

Darryl: We strengthened our people is a very important driving force behind our continued and continuing success now.

Darryl: Now turning to the results.

Darryl: Sales volume increased in the fourth quarter by 8 million pounds, or one 3% to $60 4 million pounds.

Speaker Change: Aligned with our long term goals to drive the future growth of the frozen seafood category in North America.

Darryl: The higher sales volume is due to an increase in volume in our retail business, where the company's target approach to value driven promotion and innovation is supporting expanded distribution, especially in the growing club channel.

Speaker Change: I'm excited to leverage the insight and exposure from these investments to support our long term goals in the year ahead, we will continue to strike the right balance between the short and long term needs of our business pivoting as necessary to serve our customers and protect the long term best interest of our company and its stakeholders.

And the company's foodservice business volume was flat as a result of the slowdown across the foodservice industry as customers pulled back on dining outside of the home, especially in casual dining.

Speaker Change: I'll wrap up the call with more on our outlook for 2025, but for now I will hand, the call over to Darryl to discuss our financial performance Daryl.

Darryl: The relative stability of the company's noncommercial business of schools hospitals, and long term care and helped to offset market pressures.

Darryl Bergman: Thank you, Paul and Hello, everyone before getting into the results for the quarter I do want to reemphasize Paul's note on attributing our success in the quarter to strong and consistent execution by the Highlander team across the whole organization to strengthen our people is a very important driving force behind our <unk>.

Darryl: As did continued success of new value added innovations in terms of volume and expanded distribution. The company also saw continued growth in alternative species.

Darryl: Sales decreased in the fourth quarter by $2 1 million or 9% to $235 million driven by reduced pricing, reflecting deflationary raw material cost product mix and increased promotional activity, partially offset by the increase in volumes.

Speaker Change: <unk> and continuing success now.

Speaker Change: Now turning to the results.

Speaker Change: Sales volume increased in the fourth quarter by 8 million pounds, or one 3% to $60 4 million pounds.

Darryl: Given the highly promotional and price sensitive retail and foodservice markets. The company continues to promote and innovate while adding distribution strength to its competitive position with which Anthony will provide more insight on here shortly.

Speaker Change: The higher sales volume is due to an increase in volume in our retail business, where the company's target approach to value driven promotion and innovation is support supporting expanded distribution, especially in the growing club channel and.

Darryl: The weaker Canadian dollar in the fourth quarter of 2024 compared to the same period in 2023 decrease the value of reported U S. Dollar sales from our Canadian denominated operations by approximately $1 5 million relative to the conversion impact last year.

Speaker Change: And the company's foodservice business volume was flat as a result of the slowdown across the foodservice industry as customers pulled back on dining outside of the home, especially in casual dining the.

Speaker Change: The relative stability of the company's noncommercial business of schools hospitals, and long term care helped to offset market pressures.

Darryl: Gross profit increased in the fourth quarter by $2 3 million or four 7% to $51 million and gross profit as a percent of sales increased by 120 basis points to 21, 7% as compared to 25% in the fourth quarter of 'twenty three.

Speaker Change: As did continued success of new value added innovation in terms of volume and expanded distribution. The company also saw continued growth in alternative species.

Speaker Change: Sales decreased in the fourth quarter by $2 1 million or 9% to $235 million driven by reduced pricing, reflecting deflationary raw material cost product mix and increased promotional activity, partially offset by the increase in volumes given the highly promotional and price sense.

Darryl: The increase in gross profit is due to lower raw material costs, a more profitable mix a balanced approach to pricing and promotion focused on supporting both the bottom and top line of the business and partially offset by the decrease in sales highlighting foods continues to drive continuous improvement across the operations to ensure proof.

Speaker Change: The retail and foodservice markets. The company continues to promote and innovate.

Darryl: Cost management. In addition, the weaker Canadian dollars decrease the value of reported U S. Dollar gross profit from our Canadian operations in 2024 by $4 million relative to the conversion impact last year.

Anthony: Adding distribution strength to its competitive position with which Anthony will provide more insight on here shortly.

Anthony: The weaker Canadian dollar in the fourth quarter of 2024 compared to the same period in 2023 decrease the value of reported U S. Dollar sales from our Canadian denominated operations by approximately $1 5 million relative to the conversion impact last year.

Darryl: Adjusted EBITDA increased in the fourth quarter by $1 9 million or eight 7% to $23 8 million and adjusted EBITDA as a percentage of sales increased favorably to 10, 1% compared to nine 2% the increase in adjusted EBITDA reflects the increase in gross profit.

Gross profit increased in the fourth quarter by $2 3 million or four 7% to $51 million and gross profit as a percent of sales increased by 120 basis points to 21, 7% as compared to 25% in the fourth quarter of 'twenty three.

Darryl: Favorable distribution expenses, partially offset by increased SG&A. In addition, weaker Canadian dollar decrease the value of reported adjusted.

Darryl: EBITDA in U S dollars from our Canadian operations in 2024 by $2 million relative to the conversion impact last year.

Anthony: The increase in gross profit is due to lower raw material costs, a more profitable mix a balanced approach to pricing and promotion focused on supporting both the bottom and top line of the business and partially offset by the decrease in sales high Langer foods continues to drive continuous improvement across the operations to ensure proof.

Darryl: Reported net income decreased in the fourth quarter by $2 5 million or seven 8% to $5 9 million. However, diluted earnings per share remained consistent with the prior year at 20 <unk>.

Darryl: The decrease in net income reflects the increase in SG&A expenses and higher income tax expense, partially offset by the increase in gross profit and lower finance costs.

Anthony: Cost management. In addition, the weaker Canadian dollar decrease the value of reported U S. Dollar gross profit from our Canadian operations in 2024 by <unk> 4 million relative to the conversion impact last year.

Darryl: Excluding the impact of certain non routine or noncash expenses that are explained in our MD&A. Adjusted net income in the fourth quarter of 2024 increased by $5 2 million or 71, 2% to $12 5 million and correspondingly adjusted diluted earnings per share increased.

Anthony: Adjusted EBITDA increased in the fourth quarter by $1 9 million or eight 7% to $23 8 million and adjusted EBITDA as a percentage of sales increased favorably to 10, 1% compared to nine 2% the increase in adjusted EBITDA reflects the increase in gross profit.

Darryl: By 18.

Darryl: To <unk> 41 in the fourth quarter of 2024.

Favorable distribution expenses, partially offset by increased SG&A. In addition, weaker Canadian dollar decrease the value of reported adjusted.

Darryl: Now turning now to our cash flows from operations and the balance sheet net cash flows from operating activities in the fourth quarter of 2024 decreased by $46 3 million to an inflow of $20 6 million compared to an inflow of $6 $66 9 million in the same period in 2023.

Anthony: EBITDA in U S dollars from our Canadian operations in 2024 by <unk> 2 million relative to the conversion impact last year.

Anthony: Reported net income decreased in the fourth quarter by $5 million or seven 8% to $5 9 million. However, diluted earnings per share remained consistent with the prior year at 20.

Darryl: The decrease was driven by reduced depreciation expense and lower changes in non cash working capital balances.

Darryl: Specifically within inventories accounts receivable and accounts payable.

Anthony: The decrease in net income reflects the increase in SG&A expenses and higher income tax expense, partially offset by the increase in gross profit and lower finance costs.

Darryl: This is partially offset by the lower interest and income taxes paid capital expense expenditures were $23 8 million in 2024 compared to $19 million in the prior year, reflecting the continued investment in our business.

Anthony: Excluding the impact of certain non routine or noncash expenses that are explained in our MD&A. Adjusted net income in the fourth quarter of 2024 increased by $5 2 million or 71, 2% to $12 5 million and a correspondingly adjusted diluted earnings per share increase.

Darryl: Net debt at the end of the fourth quarter of 2024 decreased by $16 7 million to $233 2 million compared to $249 9 million at the end of fiscal 'twenty, three reflecting lower bank loans lower debt term lease liabilities and a higher cash balance at the.

Anthony: By 18.

Anthony: To <unk> 41 in the fourth quarter of 2024.

Darryl: At December 28, 2024, as compared to December 32023.

Anthony: Now turning now to our cash flows from operations and the balance sheet net cash flows from operating activities in the fourth quarter of 2024 decreased by $46 3 million to an inflow of $20 6 million compared to an inflow of $666 9 million in the same period in 2023.

Darryl: Net debt to adjusted EBITDA was two three times at December 28, 2024, compared to two six times at the end of fiscal 'twenty three.

Darryl: The ratio has continued to improve in 2024 due to lower net debt and a higher rolling 12 month, adjusted EBITDA compared to fiscal 'twenty, three and the absence of any major acquisitions or unplanned capital expenditures in 2025, we expect this ratio to continue to be lower than the companies.

Anthony: The decrease was driven by reduced depreciation expense and lower changes in non cash working capital balances.

Anthony: Specifically within inventories accounts receivable and accounts payable.

Anthony: This is partially offset by the lower interest and income taxes paid capital expenses expenditures were $23 8 million in 2024 compared to $19 million in the prior year, reflecting the continued investment in our business.

Darryl: Long term target of three times at the end of fiscal 'twenty five.

Darryl: As a final note.

Darryl: I would say that against a dynamic and uncertain backdrop, our financial position provides us the strength.

Anthony: Net debt at the end of the fourth quarter of 2024 decreased by $16 7 million to $233 2 million compared to $249 9 million at the end of fiscal 'twenty, three reflecting lower bank loans lower debt term lease liabilities and a higher cash balance at the.

Darryl: And flexibility to manage near term challenges, while investing in our future and positioning the company for growth as we advance our plans to unlock value from growth opportunities for our shareholders. Our consistent strong free cash flow supports a sustainable dividend ongoing share buyback program and a reliable.

Anthony: At December 28, 2024, as compared to December 30, <unk> 2023.

Darryl: <unk> stable investment in the face of market volatility I will now turn the call over to Anthony to discuss our operational highlights.

Anthony: Net debt to adjusted EBITDA was two three times at December 28, 2024, compared to two six times at the end of fiscal 'twenty three.

Anthony: Thanks, Sarah and Hello, everyone I'll start by echoing Paul and Darryl remarks that we're pleased by our performance in Q4.

Anthony: The ratio has continued to improve in 2024 due to lower net debt and a higher rolling 12 months adjusted EBITDA compared to fiscal 'twenty, three and the absence of any major acquisitions or unplanned capital expenditures in 2025, we expect this ratio to continue to be lower than the companies.

Speaker Change: <unk> been laying the groundwork to grow volume in our business all year, and it's validating to see that work start to pay off the.

Speaker Change: The distribution gains made in the third quarter helped to drive improvements in volume in the fourth quarter.

Speaker Change: As did the strategic investments in promotions and ongoing innovations, we've delivered to our customers throughout the year.

Anthony: Long term target of three times at the end of fiscal 'twenty five.

Speaker Change: While we were encouraged by our fourth quarter results market conditions during the fourth quarter remained challenging and the slowdown in foodservice the largest area of our business became more pronounced.

Anthony: As a final note.

Anthony: I would say that against that dynamic and uncertain backdrop, our financial position provides us the strength.

Anthony: And flexibility to manage near term challenges, while investing in our future and positioning the company for growth as we advance our plans to unlock value from growth opportunities for our shareholders. Our consistent strong free cash flow supports a sustainable dividend ongoing share buyback program and a reliable.

Speaker Change: This was the case across the foodservice industry as consumers are pulling back on dining outside of the home and trading down within the category.

Speaker Change: Our U S distributor and branded value added business performed well as did our noncommercial business, although it softened compared to the third quarter and the prior year as Dino traffic was down in most segments.

Anthony: <unk> stable investment in the face of market volatility I will now turn the call over to Anthony to discuss our operational highlights.

Speaker Change: This is an industry issue and one that we're prepared to support our customers through as we seek to mitigate the impact on our business by delivering tailored solutions. For example, we have seen a shift to private and distributor label products as our customers are seeking a greater efficiencies and the ability to offer enhanced VAT.

Anthony: Thanks, Sarah and Hello, everyone I'll start by echoing Paul and Darryl remarks that we're pleased by our performance in Q4.

Anthony: <unk> been laying the groundwork to grow volume in our business all year, and it's validating to see that work start to pay off the.

Speaker Change: <unk> in a highly promotional and competitive market.

The distribution gains made in the third quarter helped to drive improvements in volume in the fourth quarter as did the strategic investments in promotions and ongoing innovations we've delivered to our customers throughout the year.

Speaker Change: As a key contributor to private and distributor label, we're able to capitalize on this demand and provide solutions to our foodservice customers, while simultaneously supporting volume during a period of market softness.

Anthony: While we were encouraged by our fourth quarter results market conditions during the fourth quarter remained challenging and the slowdown in foodservice the largest area of our business became more pronounced.

Speaker Change: Similarly, our portfolio of innovative alternative species equips us with value driven solutions for operators, who want to maintain high quality white fish on the menu, but at a more affordable price point.

Anthony: This was the case across the foodservice industry as consumers are pulling back on dining outside of the home and trading down within the category.

Speaker Change: During the fourth quarter, we expanded distribution of our delicious whitefish alternative southern blue waiting to new customers seeking a value driven alternative to cod on the menu.

Anthony: Our U S distributor and branded value added business performed well as did our non commercial business, although it soften compared to the third quarter and the prior year as Dino traffic was down in most segments.

Speaker Change: <unk> is also a great white fish alternative to our customers.

Speaker Change: And we've launched an expanded hake assortment in Q1 to capitalize on this interest and deliver enhanced value to operators. We also continued to focus on targeted sales of our value added products to support back of house efficiencies our value added portfolio delivers innovative consistent and cost effective.

Anthony: This is an industry issue and one that we're prepared to support our customers through as we seek to mitigate the impact on our business by delivering tailored solutions. For example, we have seen a shift to private and distributor label products as our customers are seeking a greater efficiencies and the ability to offer enhanced <unk>.

Speaker Change: <unk> to ease operator concerns.

Anthony: <unk> in a highly promotional and competitive market.

Speaker Change: During fiscal 2024, we expanded distribution of our value added shrimp skus and expanded our portfolio of Atlantic salmon offerings, which is aligned to our strategic focus on these growth species.

As a key contributor to private and distributor label, we're able to capitalize on this demand and provide solutions to our foodservice customers, while simultaneously supporting volume during a period of market softness.

Speaker Change: While we continue to explore growth opportunities across our target species in segments, we're prepared for the industry headwinds to continue.

Anthony: Similarly, our portfolio of innovative alternative species equips us with value driven solutions for operators, who want to maintain high quality white fish on the menu, but at a more affordable price point.

Speaker Change: And are confident that we are well positioned to support operators and navigate short term volatility we.

Speaker Change: We will continue to emphasize innovative solutions using data driven insights to customize recommendations and implement promotional and marketing activations and partnerships with key distributors and operator partners.

Anthony: During the fourth quarter, we expanded distribution of our delicious whitefish alternative southern Blue Whiting to new customers seeking a value driven alternative to cod on the <unk>.

Anthony: <unk> is also a great whitefish alternatives to our customers and we've launched an expanded hake assortment in Q1 to capitalize on this interest and deliver enhanced value to operators. We also continued to focus on targeted sales of our value added products to support back of house efficiencies are value added poor.

Speaker Change: Turning now to retail in both the U S and Canadian retail the category continues to rebound, but it is still highly promotional and competitive <unk>.

Speaker Change: Nonetheless, we're making gains in our U S retail business, we grew top line in both pounds and dollars with our premium Atlantic Salmon brands seaworthy remaining one of the fastest growing brands in the category.

Anthony: Folio delivers innovative consistent and cost effective solutions to ease operator concerns.

Speaker Change: And we secured new distribution with National U S retailers.

Anthony: During fiscal 2024, we expanded distribution of our value added shrimp skus and expanded our portfolio of Atlantic salmon offerings, which is aligned to our strategic focus on these growth species.

Speaker Change: On the value side Fisher Boy also continues to perform well with increased sales in discount and value channels and.

Speaker Change: In our Canadian retail business, we increased value added sales as a result of targeted promotional activity in partnership with retailers and an emphasis on digital activation.

Anthony: While we continue to explore growth opportunities across our target species in segments. We're prepared for the industry headwinds to continue and are confident that we are well positioned to support operators and navigate short term volatility.

Speaker Change: In partnership with our retail customers. We have developed targeted promotions that are currently in market and we will remain in place through the lenten periods to capitalize on the seasonal appeal of seafood to draw consumers back to the category and support further volume recovery.

Anthony: We will continue to emphasize innovative solutions using data driven insights to customize recommendations and implement promotional and marketing activations and partnerships with key distributors and operator partners.

Speaker Change: Across U S and Canadian retail, we had another great quarter in the club channel wrapping up a successful 12 months of growth driven by new listings and expanded distribution.

Anthony: Turning now to retail in both the U S and Canadian retail the category continues to rebound, but it is still highly promotional and competitive nonetheless, we're making gains in our U S. Retail business. We grew top line in both pounds and dollars with our premium Atlantic Salmon brand seaworthy remaining one of the fab.

Speaker Change: We're particularly pleased to secure the launch of our <unk> tortilla Crusted tilapia and a club retailer for the first time in Canada in 2025.

Speaker Change: Throughout 2020 for innovative product launches and limited time offers enabled us to pair innovation with volume to offer value beyond price and incentivize the new consumers to try our products.

Anthony: Just growing brands in the category.

Anthony: And we secured new distribution with National U S retailers on the value side Fisher Boy also continues to perform well with increased sales in discount and value channels and.

Speaker Change: This strategy supports volume growth without resorting to deep discounting that is prevalent in our category within mainstream retailers.

Anthony: In our Canadian retail business, we increased value added sales as a result of targeted promotional activity in partnership with retailers and an emphasis on digital activation in partnership with our retail customers. We have developed targeted promotions that are currently in market and we will remain in place through the lenten periods to cat.

As we look to 2025, we recognize that consumer behavior is still highly value driven and anticipate that this will shape, both the retail and foodservice landscape in the year ahead.

Speaker Change: <unk> timing of the Lenten period, a key period for seafood consumption and sales will inevitably impact Q1 performance as compared to 2024. Nonetheless, we are still confident that we will continue to deliver solid operational and financial results. Overall, we're very encouraged by what we achieved in <unk>.

Anthony: The lives on the seasonal appeal of seafood to draw consumers back to the category and support further volume recovery.

Anthony: Across the U S and Canadian retail we had another great quarter in the club channel wrapping up a successful 12 months of growth driven by new listings and expanded distribution.

Speaker Change: 2024, I am confident we can withstand market pressures and support profitable growth.

Anthony: We were particularly pleased to secure the launch of our <unk> tortilla Crusted tilapia and a club retailer for the first time in Canada in 2025.

Speaker Change: Over the year with that I'll hand, it back over to Paul for his final remarks before we open it up to questions Paul.

Anthony: Throughout 2020 for innovative product launches and limited time offers enabled us to pair innovation with volume to offer value beyond price and incentivize new consumers to try our products. This.

Thank you Anthony as you have heard today, we delivered a solid finish to 2020 for 2024 offered no shortage of macroeconomic headwinds that we were able to adapt to and either mitigate the impact of our leverage into a new opportunity for us as all signs suggest that headwinds are set to continue into 2025.

Anthony: This strategy supports volume growth without resorting to deep discounting that is prevalent in our category within mainstream retailers.

Speaker Change: We will stay the course with our strategy and continue to run our business in a proactive and prudent manner.

Anthony: As we look to 2025, we recognize that consumer behavior is still highly value driven and anticipate that this will shape, both the retail and foodservice landscape in the year ahead. The late timing of the Lenten period, a key period for seafood consumption and sales will inevitably impact Q1 performance.

Speaker Change: We are prepared that market conditions may cause fluctuations in our performance throughout the year, but we are confident that we will be able to rebound build on the momentum of the fourth quarter and drive top and bottom line growth over the course of the year.

Speaker Change: We will of course continue to carefully assess market conditions and make necessary pivots to serve our customers and support our business.

Anthony: <unk> as compared to 2024. Nonetheless, we are still confident that we will continue to deliver solid operational and financial results.

Speaker Change: As I said on the start of the call I am extremely passionate and optimistic on the long term opportunity for seafood as consumers need and desire for healthy sustainable sources of protein will endure through market cycles trends and disruptions.

Anthony: Overall, we're very encouraged by what we achieved in 2024, I'm confident we can withstand market pressures and support profitable growth over the year with that I'll hand, it back over to Paul for his final remarks before we open it up to questions Paul.

Speaker Change: New opportunities come hand in hand, with challenges and as we adapt to market conditions. Today. We will also continue to look ahead to strengthen our position or the consumer customers and the category is heading tomorrow.

Speaker Change: Thank you Anthony as you've heard today, we delivered a solid finish to 2020 for 2024 offered no shortage of macroeconomic headwinds that we were able to adapt to and either mitigate the impact of our leverage into a new opportunity for US is all signs suggest that headwinds are set to continue into 2025.

Speaker Change: We're doing this with respect to our operations for example, leaning into club discount and digital channels as well as alternative species and we are also prioritizing where the market is heading with respect to the emerging growth and importance of agriculture and sustainable seafood procurement.

Speaker Change: We will stay the course with our strategy and continue to run our business in a proactive and prudent manner.

Speaker Change: We are prepared that market conditions may cause fluctuations in our proposal for a less throughout the year, but we are confident that we will be able to rebound build on the momentum of the fourth quarter and drive top and bottom line growth over the course of the year.

Speaker Change: It's clear that agriculture will play an important role in ensuring steady and sustainable supply of seafood for the future and our investments in North <unk> opened the door for us to continue to be at the forefront of the evolving global supply chain.

Speaker Change: We will of course continue to carefully assess market conditions and make necessary pivots to serve our customers and support our business.

Speaker Change: We will continue to actively leverage these relationships to bring <unk> products to North America in 2025, and <unk> products in the future as they become available.

Speaker Change: As we execute against our strategy, we remain focused on preserving our balance sheet strength and we will continue to prudently allocate capital and strike an appropriate balance between investment in our business and our future and the return of capital to our shareholders through our dividend and ongoing share buybacks. We also.

Speaker Change: Continuing to pursue M&A opportunities as part of our strategy to enhance near term performance and achieve transformative growth and long term value creation.

Speaker Change: We're doing this with respect to our operations for example, leaning into club discounts and digital channels as well as alternative species and we are also prioritizing where the market is heading with respect to the emerging growth and importance of agriculture and sustainable seafood procurement.

Speaker Change: Forward to another successful year ahead, as we advance our business and unlock value for our shareholders with that I will hand, the call over to the operator to open it up for our Q&A period.

It's clear that agriculture will play an important role in ensuring steady and sustainable supply of seafood for the future and our investments in norco and Ann fjord open the door for us to continue to be at the forefront of the evolving global supply chain.

Speaker Change: Operator.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchstone filing.

Speaker Change: Should you wish to cancel your request. Please press the star followed by the Q. If you are using a speaker phone. Please let's dance that Macquarie pressing any themes.

Speaker Change: We'll continue to actively leverage these relationships to bring the archived products to North America in 2025, and <unk> products in the future as they become available.

Once again that is star one should you wish to ask a question.

Speaker Change: Your first question is from Kyle Mcphee from core Mark Securities. Your line is now open.

Kyle McPhee: Hello, everyone.

Speaker Change: Good quarter.

Speaker Change: First question for me the volume and revenue performance was better than I thought in Q4, and I just want to better understand some of the moving parts here.

Speaker Change: We continue to pursue M&A opportunities as part of our strategy to enhance near term performance and achieve transformative growth and long term value creation.

Speaker Change: In prior quarters, there was a lot of year over year drag from on purpose elimination of some of your lower margin volume I think it started in Q1 last year. So I don't think it was lapped yet for Q4, but can you tell us how the drag from these on purpose cuts impacted Q4.

Speaker Change: Look forward to another successful year ahead, as we advance our business and unlock value for our shareholders.

Speaker Change: Versus prior quarters or does the drag go away.

Speaker Change: With that I will hand, the call over to the operator to open it up for our Q&A period operator.

Speaker Change: It was certainly less than Q4 call in by the end of the quarter, you're right. We have largely lapped it now but the other thing I would point out as we talked about in earlier quarters is we had some declines in our contract manufacturing business earlier in the year those declines had also.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your touch upon filing.

Speaker Change: Should you wish to cancel your request. Please press the star followed by the Q1.

Speaker Change: Dissipated by the time, we got into the fourth quarter, so the volume and.

Speaker Change: We're using a speaker phone please lift the handset before pressing.

Speaker Change: Once again that is star one should you wish to ask a question.

And sales performance really is reflective of improvements in retail performance in the foodservice distributor business and less of a drag from from the things you highlighted.

Speaker Change: Your first question is from Kyle Mcphee from Walmart Securities. Your line is now open.

Speaker Change: Hello, everyone.

Speaker Change: Got it Okay, and then on that that year over year gain in the retail channel can you help us quantify how large that that gain was in Q4, if we just isolate that moving part I mean, my math here on the moving parts are suggesting it was nicely into the double digit range, but can you confirm that.

Speaker Change: Good quarter.

Speaker Change: First question for me the volume and revenue performance was better than I thought in Q4, and I just want to better understand some of the moving parts here.

Speaker Change: That would be high.

Speaker Change: It was positive but it wasn't it wasn't quite into the double digit range.

Speaker Change: Can you tell us how the drag from these on purpose cuts impacted Q4.

Speaker Change: And it was driven by iOS, Anthony referred to a pretty pretty good performance in particular in the.

Speaker Change: Versus prior quarters or did the drag go away.

Speaker Change: It was certainly less than Q4 call and by the end of the quarter, you're right. We have largely lapped it now but the other thing I would point out as we talked about in earlier quarters is we had some declines in our contract manufacturing business earlier in the year those declines had also.

Speaker Change: In the club channel.

Speaker Change: We're certainly focused particularly in this environment, where we're seeing some shifting between dining at home and dining out.

Speaker Change: We see opportunity for continued growth in retail.

Speaker Change: And Kyle just built in addition to the success we saw in the club channel with expanded distribution increased promotion the brands that we're seeing growth in U S. Retail in particular are aligned with what we're seeing in the macro dynamics. So we gained on seaworthy, our premium Atlantic salmon Brandon as people are dining out.

Speaker Change: Dissipated by the time, we got into the fourth quarter, so the volume and.

Speaker Change: And sales performance really is reflective of improvements.

Speaker Change: Improvements in retail that performance in the foodservice distributor business and less of a drag from from the things you highlighted.

Speaker Change: Les and home more there'll be looking for restaurant quality solutions at home. In addition, we saw gains in the value side of our portfolio and Fisher boy given the continued impacts of inflation. So feeling good about the breadth of the portfolio we have to be successful in this market.

Speaker Change: Got it Okay, and then on that that year over year gain in the retail channel.

Speaker Change: Help us quantify how large that that gain was in Q4, if we just isolate that moving part I mean, my math here on the moving parts are suggesting that was nicely into the double digit range, but can you confirm that.

Speaker Change: Got it okay.

Speaker Change: No that would be high it was it was positive but it wasn't it wasn't quite into the double digit range.

Speaker Change: These gains in retail.

Speaker Change: Sounds like it was club channel heavy.

Speaker Change: Sustained sources of new volumes for high liner or is any of this kind of payoff from.

Speaker Change: And it was driven by anthem.

Speaker Change: Anthony referred to a pretty pretty good performance in particular in the in the club channel.

Speaker Change: Promotional activity, that's not necessarily permanent or maybe channel stocking tailwind for new listings I'm just trying to figure out how much of this is going to show in the upcoming quarters.

Speaker Change: We're certainly focused particularly in this environment, where we're seeing some shifting between dining at home and dining out.

Speaker Change: So we feel good about the consistency of the listing base that we've gained in club and across the distribution in traditional channels as well some of them are limited edition items and rotations, but we feel good that we have a full calendar of them in 2025 to keep the momentum going.

Speaker Change: We see opportunity for continued growth in retail.

Speaker Change: And Kyle just to build in addition to the success we saw in the club channel with expanded distribution increased promotion the brands that we're seeing growth in U S. Retail in particular are aligned with what we're seeing in the macro dynamics. So we gained on seaworthy, our premium Atlantic salmon Brandon as people are dining out.

Kyle McPhee: And Kyle as we highlighted that the bigger impact on I'll call, it seasonality or quarter over quarter sales will be the shift in timing.

Speaker Change: Timing as we highlighted.

Speaker Change: Less than in home more there'll be looking for restaurant quality solutions at home. In addition, we saw gains in the value side of our portfolio and Fisher boy given the continued impacts of inflation. So feeling good about the breadth of the portfolio we have to be successful in this market.

Kyle McPhee: Yes of course, okay.

Kyle McPhee: And then last one on the moving parts on the top line here the year Foodservice channel.

Was weak macro headwinds can you quantify just how weak it was year over year.

Kyle McPhee: So traffic was down in foodservice as an overall channel a couple of percentage points and we saw that decline.

Speaker Change: Got it okay.

Speaker Change: This these gains in retail and it sounds like it was club channel heavy.

Kyle McPhee: Kind of consistently across segments that was new this quarter as well, where we saw declines in even in some of the value segments within foodservice. So it was a couple of points down.

Speaker Change: These sustained sources of new volume for high liner or is any of this kind of payoffs from <unk>.

Kyle McPhee: Got it okay.

Kyle McPhee: And then Paul you mentioned Youre looking for volume gains year over year in 2025 does any of that rooted in normalization of consumer demand post all the macro pressures from the trailing year or do you think highlanders growing volume regardless of if we see that more normalized demand pattern.

Kyle McPhee: I think we have the opportunity to grow volume, regardless because of the initiatives. We have in place. The one one thing I would highlight that will certainly have to manage through is the potential impact of ongoing inflation, particularly as you think of <unk>.

Speaker Change: And Kyle as we highlighted that the bigger impact on I'll call, it seasonality or quarter over quarter sales will be the shift in our implied timing as we highlighted.

Speaker Change: Yes of course, okay.

Kyle McPhee: <unk> impact in the U S and what impact that could have on on consumer demand, but borrowing borrowing that we certainly think we have good plans in place to support volume growth in a category.

Speaker Change: And then last one on the moving parts on the top line here the year Foodservice channel.

Speaker Change: Weak macro headlines can you quantify just how weak it was year over year.

Speaker Change: So traffic was down in foodservice as an overall channel a couple of percentage points and we saw that decline.

Kyle McPhee: That really should have good volume growth as we look forward.

Speaker Change: Kind of consistently across segments that was new this quarter as well, where we saw declines in even in some of the value segments within foodservice. So it was a couple of points down.

Kyle McPhee: Okay. Thanks for the comments I'll pass it on.

Kyle McPhee: Thank you.

Speaker Change: Next question is from <unk> <unk> from BMO capital markets. Your line is now open.

Speaker Change: Got it okay.

Speaker Change: Yes. Thank you good morning, and congratulations on a strong finish to the year.

Speaker Change: And then Paul you mentioned Youre looking for volume gains year over year. In 2025 is there any of that rooted in normalization of consumer demand post all of the macro pressures from the trailing year or do you think hardliners growing volume regardless of if we see that more normalized demand pattern.

Speaker Change: And then we can start with volumes in 2025, just with the Lenten period delayed can you quantify what that revenue hit could be in Q1, and then where did you get that all back into Q2.

Speaker Change: I think we have the opportunity to grow volume, regardless because of the initiatives. We have in place. The one one thing I would highlight that will certainly have to manage through is the potential impact of ongoing inflation right, particularly as you think of tariff impact in the U S and what impact that could have on on consumer demand.

Speaker Change: Yes, it's hard to quantify at this stage.

Speaker Change: Because we're really just in the early stages.

Speaker Change: Not even fully into let yet.

Speaker Change: It's about a three week shift.

Speaker Change: And so more length is really now in March instead of February and finishes in April instead of instead of March so.

Speaker Change: But borrowing.

Speaker Change: Barring borrowing that we certainly think we have good plans in place to support volume growth in a category.

Speaker Change: Hard to quantify it from a dollar perspective, yet, but we do think there'll be some impact, but yes, youre right. Our view would be first half of the year that quarter over quarter impact that will.

Speaker Change: That really should has led volume growth as we look forward.

We'll make up in Q2, the recover from some of the declines in in Q1.

Speaker Change: Okay. Thanks for the comments I'll pass it on.

Speaker Change: Yeah, and what we're focused on evidenced obviously continuing to make sure we have strong promotional activity at the lunch period. So that we are picking up steam in March and April as well as from the innovation that we have launching right around the same time in both retail and foodservice.

Speaker Change: Thank you Noah.

Chen: Next question is from <unk> Chen from BMO capital markets. Your line is now open.

Speaker Change: Okay.

Speaker Change: Yes. Thank you good morning, and congratulations on a strong finish to the year.

Speaker Change: Hoping we can start with the volumes in 2025, just with the Lenten period delayed can you quantify what that revenue hit could be in Q1, and then where did you get that all back into Q2.

Speaker Change: Okay I understood.

Speaker Change: And then maybe just higher level on the volume outlook for the full year I know that each one comp is a bit easier it gets a little tougher and tougher.

Speaker Change: Yes, it's hard to quantify at this stage because we're really just in the early stages, well actually not even fully into let yet because what it's about a three week shift.

Speaker Change: <unk> given the 2020 for cadence can you talk about your expectations for volume growth for the full year and then how that breaks down in each one versus HQ.

Speaker Change: Could we possibly see like.

Speaker Change: And so more length is really now in March instead of February and finishes in April instead of instead of March so.

Speaker Change: Low deep low double digit volume growth in today to the first half.

Speaker Change: Double digit would be would be high for sure I mean, we typically would suggest we would expect more of a low to mid.

Speaker Change: It's hard to quantify it from a dollar perspective, yet, but we do think there'll be some impact, but yes, youre right. Our view would be first half of the year that's quarter over quarter impact that will flow.

Speaker Change: Single digit volume growth.

Speaker Change: And that with that with that leverage we have in our business. It presents an opportunity for us to to obviously grow profitability at a rate.

Speaker Change: We will make up in Q2 to recover from some of the declines in in Q1.

Speaker Change: Should be slightly above that.

Speaker Change: Yeah, and what we're focused on evidenced obviously continuing to make sure we have strong promotional activity at the lunch period. So that we're picking up steam in March and April as well as from the innovation that we have launching right around the same time in both retail and foodservice.

Speaker Change: Okay and is it fair to say that just given the year over year comp you would expect volumes to be a bit stronger than the first half of the year relative to the second.

Speaker Change: No I wouldn't say that and part of the reason for that is.

Speaker Change: Some of the plans that we have in place to support volume growth materialize as the year unfolds right. So.

Speaker Change: Mhm, Okay understood.

Speaker Change: And then maybe just higher level on the volume outlook.

Speaker Change: I think despite what you've identified in terms of the year over year lapping.

Speaker Change: For the full year I know the <unk> comp is a bit easier it gets a little tougher.

Speaker Change: Still feel that we have an opportunity to drive volume growth in.

Speaker Change: <unk> given the 2020 for cadence can you talk about your expectations for volume growth for the full year and then how that breaks down in <unk> versus <unk> two.

Speaker Change: In both the back half and.

Speaker Change: Fantastic.

Speaker Change: Okay understood. Thank you and then maybe just moving on to price and mix.

Speaker Change: Could we possibly see like low deep low double digit volume growth in today to the first half.

Speaker Change: Can you talk about your expectations for raw.

Speaker Change: Material costs.

Speaker Change: The double digit would be would be high for sure I mean.

Speaker Change: And then as well I would say promotional activity going into 2025, and then particularly with respect to raw material costs, given some of the talk around tariffs.

Speaker Change: We typically would suggest we would expect more lower to mid <unk>.

Speaker Change: Single digit volume growth.

Speaker Change: And that with that with the leverage we have in our business. It presents an opportunity for us to to.

Speaker Change: Yes, I mean, we will expect to see some higher raw material costs in 2025.

Speaker Change: Obviously grow profitability at a rate that should be slightly above that.

Speaker Change: That will materialize in particular in a couple of species part of <unk> would be two that I would point to because of a of a.

Speaker Change: Okay and is it fair to say that just given the year over year comp you would expect volumes to be a bit stronger than the first half of the year relative to the second.

Speaker Change: A shortage of.

Speaker Change: Card supply in the market.

Speaker Change: Youre right tariffs can have an impact on cost.

Speaker Change: No I wouldn't say that and part of the reason for that is.

Speaker Change: We've demonstrated in the past if necessary.

Speaker Change: Some of the plans that we have in place to support volume growth materialize as the year unfolds right. So.

Speaker Change: An additional price to cover any tariff impact, particularly as it relates to raw material.

Speaker Change: I think despite what you've identified in terms of the year over year lapping.

Speaker Change: And.

Speaker Change: We think however.

Speaker Change: We still feel that we have an opportunity to drive volume growth in.

Speaker Change: We focus on managing costs as efficiently as we can as well so we're going to work hard to try to offset some of that inflationary pressure on the raw materials side with good cost management.

Speaker Change: In both the back half and in the slide test.

Speaker Change: Okay understood. Thank you and then maybe just moving on to price and mix.

Speaker Change: Across the rest of our business, we may add to your point on promotional activity.

Speaker Change: Can you talk about your expectations for raw material costs.

Speaker Change: We're focused on delivering gross margin dollars and EBITDA dollars. So there may be situations, where we'll accept some decline in percentages of gross margin or EBITDA to support volume growth.

Speaker Change: And then as well I would say promotional activity going into 2025.

Speaker Change: And then particularly with respect to raw material costs, given some of the talk around tariffs.

Speaker Change: Yeah, I mean, we will expect to see some higher raw material costs in 2025.

Speaker Change: The category has been more promotional than.

Speaker Change: And we want to make sure we're doing what we can to maintain and grow share there as well.

Speaker Change: That will materialize in particular, a couple of species pod and had it would be two that I would point to because of a shortage of scotts.

Speaker Change: Okay.

Speaker Change: Okay, Great and then I guess naturally.

Speaker Change: On your last point there the EBITDA margin improvement we saw in 2024.

Speaker Change: <unk> card supply in the market.

Speaker Change: Youre right tariffs can have an impact on cost and as we've demonstrated in the past if necessary.

Speaker Change: Partially due to a decline in contract manufacturing.

Speaker Change: And as MS coming back into 2025 is it possible for you to maintain margins at that Ken.

Pass on additional price.

Speaker Change: Cover any tariff impact.

Speaker Change: 10, 8% level.

Speaker Change: Particularly as it relates to raw material.

Speaker Change: We're very pleased at 10, 8%.

Speaker Change: And we.

Speaker Change: We think.

Speaker Change: That's higher than we normally normally it would actually guide people to we often talk about 10% being a longer term target for EBITDA margins and we're going to work hard to keep it above 10, obviously, but.

Speaker Change: However, we.

Speaker Change: Focus on managing costs as efficiently as we can as well so we're going to work hard to try to offset some of that inflationary pressure on the raw materials side with good cost management.

Speaker Change: Across the rest of our business, we may add to your point on promotional activity.

Speaker Change: If it settles if it settles in.

Speaker Change: The lower <unk>.

Speaker Change: It's supportive of volume growth and the generation of EBITDA dollars, then, we'll certainly except that as well and youre right to point out the impacted mix can happen in our business because as you know.

Speaker Change: Theres quite a variance in terms of profitability on parts of our portfolio. So.

Speaker Change: And we want to make sure we're doing what we can to maintain and grow share there as well.

Speaker Change: That can have I would say more of a temporary impact on margin performance not as much of a longer term impact on our margin performance.

Speaker Change: Okay, Great and then I guess naturally.

Speaker Change: To your last point there the EBIT margin improvement we saw in 2024.

Kyle McPhee: Okay. Thanks, Paul.

Speaker Change: Pass along into Q.

Speaker Change: It was partially due to a decline in contract manufacturing.

Speaker Change: Thank you. Your next question is from Kyle Mcphee from core Mark Securities. Your line is now open.

Speaker Change: And as MS coming back into 2025 is it possible for you to maintain margins at 10.

Speaker Change: 10, 8% level.

Kyle McPhee: Hi, again, I just wanted to touch on.

Speaker Change: We're very pleased at 10, 8%.

Speaker Change: The M&A theme you.

Speaker Change: You guys got a good balance sheet continue to print free cash flow. It seems like you have with building base of excess capital and I think part of your playbook to deploy that in M&A I'm curious, if the macro and political uncertainty.

Speaker Change: That's higher than we normally normally it would actually guide people to we often talk about 10% being a longer term target for EBITDA margins, we're going to work hard to keep it above 10, obviously, but.

Speaker Change: A delay in any of your timelines to deploy capital into M&A.

Speaker Change: If it settles if it settles in.

Speaker Change: The lower turns.

Speaker Change: Not at all and in fact, I would suggest it may create opportunity for us.

Speaker Change: Cause it's supportive of volume growth and the generation of EBITDA dollars will certainly accept that as well and you are right to point out the impact that mix can happen in our business because as you know.

Kyle McPhee: As you point out Kyle we get to approach this from a position of strength and as others may may struggle in this environment.

Speaker Change: There is quite a variance in terms of profitability on parts of our portfolio. So.

Kyle McPhee: It may present, even more opportunities for us. So we're still very focused on us we think it's a great opportunity for long term value creation.

Speaker Change: That can have I would say more of a temporary impact on margin performance not as much of a longer term impact on our margin performance.

Kyle McPhee: And we're very active in looking at those opportunities.

Kyle McPhee: Got it.

Speaker Change: Okay. Thanks, Paul.

Kyle McPhee: Hello.

Speaker Change: Pass along into Q.

Speaker Change: For smaller types of investments like we've seen you do in the op.

Speaker Change: You're doing the aquaculture space or are there kind of larger transactions that are you could qualify as advanced stage.

Speaker Change: Thank you. Your next question is from Kyle Mcphee from core Mark Securities. Your line is now open.

Speaker Change: Hi, again, I just wanted to touch on.

Speaker Change: Looking at.

Speaker Change: Yes, it's certainly a mix.

Speaker Change: The M&A theme you.

Speaker Change: And we're willing as we've shown to invest.

Speaker Change: You guys got a good balance sheet you continue to print free cash flow. It seems like you have with building base of excess capital I think part of your playbook to deploy that in M&A I'm curious, if the macro and political uncertainty.

Speaker Change: On a minority basis for opportunities that can support us over the long term.

Speaker Change: The greatest opportunity to support accelerated growth is to actually buy businesses and we're absolutely looking at those as well and most of those opportunities are still going to be small to medium opportunities rather than really big ones, but.

Speaker Change: The delay in any of your timelines to deploy capital into M&A.

Speaker Change: Not at all and in fact, I would suggest it may create opportunity for us.

Speaker Change: As you point out we get to approach this from a position of strength and as others may may struggle in this environment.

Speaker Change: We would love when we would look forward to being able to string together a couple of those good small to medium opportunities.

Speaker Change: Got it okay, great to hear thank you that's it from me.

Speaker Change: It may present, even more opportunities for us. So we are we're still very focused on us. We think it's a it's a great opportunity for long term value creation.

Speaker Change: Thank you.

Speaker Change: There are no further questions at this time I'm sorry, we have a follow up Tom Novaya from BMO capital markets. Please go ahead.

Speaker Change: And we're very active in looking at those opportunities.

Speaker Change: Got it.

Speaker Change: The pipeline followed.

Tom Novaya: Yes. Thank you.

Speaker Change: For smaller types of investments like we've seen you do in the off.

Tom Novaya: So just two more from me on the on the U S tariffs.

Speaker Change: You're doing the Aqua culture space or are there kind of larger transactions that are you could qualify as advanced stage.

Tom Novaya: Including on Canada, as well as Chinese products.

Tom Novaya: To quantify or kind of put a number around the potential impact that might have on your business I know, you've previously called out about a $6 million impact deployment.

Looking at.

Speaker Change: Yes, it's certainly a mix.

Speaker Change: And we're willing as we've shown to invest.

Speaker Change: On a minority basis for opportunities that can support us over the long term, but the greatest opportunity to support accelerated growth is to actually buy businesses and we're absolutely looking at those as well and most of those opportunities are still going to be small to medium.

Tom Novaya: Before mitigating measures if the U S had reinstated 25% tariffs on China can you just comment on whether that figure would still be in the ballpark.

Tom Novaya: Yes.

Tom Novaya: Terms of the absolute impact the number obviously as the tariffs are broader would be bigger than that but we still feel very strong strongly about our mitigation plans.

Speaker Change: <unk>, rather than really big ones, but.

Tom Novaya: And what we've demonstrated in the past on the tariffs on China in particular.

Speaker Change: Would love, we would look forward to being able to string together a couple of those good small to medium opportunities.

Tom Novaya: Is if it's necessary to pass price we will.

Speaker Change: Got it okay, great to hear thank you that's it from me.

Tom Novaya: And we really manage through those historically without any negative impact on the bottom line and that's that's our plan.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: There are no further questions at this time I'm sorry, we have a follow up Tom <unk> from BMO capital markets. Please go ahead.

Tom Novaya: As we look at those on the potential tariffs between Canada and the U S. I think what I should highlight there is we're in the fortunate position of having production capacity in both the U S and in Canada. In fact, most of what we sell in the U S. Today is made in the U S. Most of what we sell in Canada today as.

Tom: Yes. Thank you.

So just two more from me on the on the U S tariffs.

Tom: Including on Canada, as well as Chinese products are able to.

Tom: To quantify or kind of put a number around the potential impact that might have on your business I know, you've previously called out about a $6 million impact.

Tom Novaya: <unk> at our plant in Leuna Berg.

Tom Novaya: Do have some volume that's produced in Canada. It goes to the U S. But it is less than 10% of our sales overall and we have.

Guinea measures, if the U S and reinstated 25% tariffs on China.

Tom Novaya: Plans in place and capacity available to be able to mitigate impacts there as well.

Speaker Change: Comment on whether that figure would still be in the ballpark.

Speaker Change: Yeah in terms of the absolute impact the number obviously as the tariffs are broader would be bigger than that but we still feel very strong strongly about our mitigation plans.

Okay, that's great to hear and then just the last one for me.

Tom Novaya: Pulling a little bit on the capital allocation team wondering if you could talk about your pecking order for dividends share buybacks and paying down debt and then investing in M&A.

Speaker Change: And what we've demonstrated in the past on the tariffs on China in particular.

Speaker Change: Is if it's necessary to pass price we will.

Tom Novaya: Again, it's going it's a balanced approach to each with respects, we're always looking to see where we can.

Speaker Change: And we really manage through those historically without any negative impact on the bottom line and that's our that's our plan.

Tom Novaya: Maximize shareholder value so from.

Tom Novaya: From a standpoint of.

Speaker Change: As we look at those on the potential tariffs between Canada and the U S. I think what I should highlight there is we're in the fortunate position of having production capacity in both the U S and in Canada. In fact, most of what we sell in the U S. Today is made in the U S. Most of what we sell in Canada today as.

Tom Novaya: Opportunity again, we're going to continue with the the.

Tom Novaya: <unk> on the share back program share buyback program throughout the year and be able to maximize the allowable under the the MTI beta buyback M&A.

Tom Novaya: M&A opportunities again are going to.

Tom Novaya: They're going to come.

Speaker Change: <unk> at our plant in Leuna birth.

Tom Novaya: Yes.

Tom Novaya: Not as predictable, but when they arise we're going to be able to.

Speaker Change: Do have some some volume that's produced in Canada. It goes to the U S. But it is less than 10% of our sales overall.

Tom Novaya: To address that and with respect to capital allocation for internal growth again, we're going to look to that and continue to.

Speaker Change: We have.

Speaker Change: Plans in place and capacity available to be able to mitigate impacts there as well.

Tom Novaya: Applied capital as we have planned through the budget in 2025.

Speaker Change: Okay, that's great to hear and then just the last one for me.

Speaker Change: Great to hear thanks, again, guys congratulations on the quarter.

Speaker Change: Pulling a little bit on the capital allocation team.

Tom Novaya: Thanks.

Speaker Change: If you could talk about your pecking order for dividends share buybacks and paying down debt and then investing in M&A.

Tom Novaya: Thank you there are no further questions at this time I will.

Paul Schuler: Now I'll hand, the call back over to Paul Schuler for closing remarks.

Speaker Change: Oh.

Speaker Change: Again, it's good it's a balanced approach to each with respects, we're always looking to see where we can maximize shareholder value. So from.

Paul Schuler: Thank you operator, and thank you all for joining us on this call today.

Paul Schuler: We look forward to updating you on our results for the first quarter of 2025 on our next conference call in May.

Speaker Change: From a standpoint of.

Speaker Change: Opportunity again, we're going to continue with the the.

Speaker Change: The NCI via on the share back program the share buyback program throughout the year and be able to maximize the allowable under the the MTI beta buyback M&A.

Paul Schuler: Thank you.

Paul Schuler: Ladies and gentlemen, the conference has now ended thank you all for joining and you may all disconnect your lines.

Speaker Change: M&A opportunities again are going to.

Speaker Change: They're going to come.

Speaker Change: Yes.

Speaker Change: Not as predictable, but when they arise we're going to be able to.

Speaker Change: To address that and with respect to capital allocation for internal growth again, we're going to look to that and continue to.

Speaker Change: Apply capital as we have planned through the budget in 2025.

Speaker Change: Yes, great to hear thanks, again, guys Congratulations on Dakota.

Speaker Change: Thank you.

Speaker Change: Thank you there are no further questions at this time.

Paul Schuler: I will hand, the call back over to Paul Schuler predict closing remarks.

Paul Schuler: Thank you operator, and thank you all for joining us on this call today.

Paul Schuler: We look forward to updating you on our results for the first quarter of 2025 on our next conference call in May.

Paul Schuler: Thank you.

Paul Schuler: Ladies and gentlemen, the conference has now ended thank you all for joining and you may all disconnect your lines.

Q4 2024 High Liner Foods Inc Earnings Call

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