Q1 2025 High Liner Foods Inc Earnings Call
Good morning, ladies and gentlemen, thank you for standing by walking through the highlights for each incorporated conference call for results of the first quarter up 2025.
This time, all participants are in a listen only mode.
Following managements prepared remarks, we will conduct a question and answer session and instructions will be provided at that time for you took it up for questions. If anyone has any difficulties hearing the conference. He stretched to store key followed by zero for operator assistance at any time.
Conference call is being recorded today Wednesday May 14, 2025, or 10 am eastern time for replay purposes, I would now like to turn the call over to Kimberley Stevens Vice President of Finance for Highland Murphy. Please go ahead.
Speaker Change: Good morning, everyone. Thank you for joining the Highlander Foods conference call today to discuss our financial results for the first quarter of 2025 on the call from Thailand, or food, they're called fewer Chief Executive Officer.
Speaker Change: Darryl Bergman, Chief Financial Officer, and Anthony without Chief Commercial Officer.
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 address measures in our MD&A.
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: These statements are based on assumptions that are believed to be reasonable at the time that they are made.
Speaker Change: Lee available information.
Speaker Change: Forward looking statements are subject to risks and uncertainties actual results or events, including operating or financial results could differ materially from those anticipated in these forward looking statements.
Speaker Change: How long or two this includes a thorough discussion of the risks and other factors that could cause its anticipated outcomes to differ from actual okay. It's publicly available disclosure documents, including its most recent annual MD&A and annual information form.
Speaker Change: Please note that Highlander is under no obligation to update any forward looking statements discussed today.
Speaker Change: At the close of markets yesterday may 13th Highlander Foods reported its financial results for the first quarter ended March 29, 2025 that news release, along with the company's MD&A and unaudited condensed interim consolidated financial statements for the first quarter of 2025 have been filed on SEDAR and can also be found on the investor.
Speaker Change: Section of the Highlander Foods' web site.
Speaker Change: He'd like to receive our news releases in the future. Please visit the company's website to register.
Speaker Change: Lastly, please note that the company reports its financial results in U S dollars and therefore the results should be discussed today are also stated in U S dollars unless otherwise noted highlander.
Speaker Change: Hi, Linda its common shares traded on the Toronto stock exchange and are quoted in Canadian dollars I will now turn the call over to Paul for his opening remarks.
Paul: Thank you Kimberly and welcome everyone to our first quarter 2025 conference call.
Speaker Change: I'm joined today by our Chief Financial Officer, Darryl Bergman, and our Chief Commercial Officer, Anthony were set up.
Speaker Change: Before I hand, the call over to Darryl to discuss the details of our financial results I will begin by sharing my perspective on our performance in the quarter.
Speaker Change: That alone in reporting that volatile and uncertain macroeconomic political and trade environments have significant ripple effect on the consumer on our business.
Speaker Change: This is a message we are hearing in earnings calls across industries on both sides of the border.
Speaker Change: Fortunately and as demonstrated by our results the diversification of our global supply chain and cross border operation that span, both foodservice and retail continue to support our resilience and ability to pivot as needed.
As you know is the traditional and culturally significant time for seafood consumption and this has a material impact on the seasonality of our business. The later timing of Easter in 2025 versus 2024 moved three weeks of the length of jewelry from our first quarter reported period into the second quarter. This resulted in an impact on the year over.
Speaker Change: Year results and leading to a decline in volume net sales and adjusted EBITDA compared to the first quarter.
Speaker Change: 'twenty 'twenty four despite the shift we are very encouraged by the progress, we're making across our business and are well positioned to build on the strong finish to Q1.
Speaker Change: Strong start of Q2 to deliver solid financial results for the first half of the year. After the end of 2025.
Speaker Change: With that I will hand, the call over to Darryl to discuss our financial performance.
Darryl Bergman: Thank you, Paul and Hello, everyone as Paul mentioned the diversification in our business continues to support our resilience in a challenging market and our consistent execution is helping us to remain on track for a strong first half of the year.
Darryl Bergman: Now turning to our financial results for the first quarter of 2025.
Darryl Bergman: Sales volume decreased in the first quarter by 1 million pounds, or one 5% to 66 million pounds.
Lower sales volume is due mainly to the impact of a later lenten timing as Paul noted.
Darryl Bergman: As well as traffic slowdown in foodservice with consumers continuing to pull back on dining outside the home.
Darryl Bergman: This is.
Darryl Bergman: Partially offset however by growth in our contract manufacturing business and an increase in volume in our retail business, where the company's targeted approach to value driven promotion and innovation is supporting expanded distribution, especially in the growing club channel. The company also saw high consumed.
Darryl Bergman: Demand for alternative species.
Darryl Bergman: Sales decreased in the first quarter by $8 6 million or three 1% to $268 4 million driven by the previous Lee mentioned volume impact inclusive of the decline in foodservice the largest part of our business as well as product mix.
Speaker Change: This is partially offset by pricing expanded distribution and increased volumes in retail as well as contract manufacturing growth, which Anthony will provide more insight on here shortly.
Speaker Change: The FX impact in the quarter for the conversion of a weaker Canadian dollar to reported U S. Dollar sale for our Canadian denominated operations resulted in an approximate $3 5 billion decrease compared to the conversion impact for the same period in 2024.
Speaker Change: Gross profit decreased in the quarter by 2 million or three 1% to $63 5 million and gross profit as a percentage of sales increased by 10 basis points to 23, 7% as compared to 23, 6% in the first quarter of 2020 for.
Speaker Change: The decrease in gross profit reflects the decrease in sales and increased promotional activity, partially mitigated by favorable pricing reflected in the improved gross margin as a percentage of sale.
Speaker Change: <unk> continues to drive improvements across the operations to ensure prudent cost management.
Speaker Change: Yes.
Speaker Change: The impact of the weaker Canadian dollar decrease the value of reported U S. Dollar gross profit from our Canadian operations in 2025 by approximately $1 million relative to the conversion impact last year.
Speaker Change: Adjusted EBITDA decreased in the first quarter by $2 1 million or six 1% to $32 1 million and adjusted EBITDA as a percentage of sales decreased to 12% compared to 12, 4%.
Speaker Change: The decrease in adjusted EBITDA reflects the decrease in gross profit.
Speaker Change: Increased net SG&A expenses and increased distribution expenses, the FX impact of the weaker Canadian dollar resulted in a decrease in the value of reported adjusted net adjusted EBITDA in U S dollars by 400000.
Speaker Change: Reported net income decreased in the first quarter by $1 3 million or seven 8% to $15 3 million, while diluted earnings per share increased to 51 cents compared to 49 in the prior year.
Speaker Change: The decrease in net income reflects the decrease in adjusted EBITDA outlined above and higher income taxes offset by a decrease in finance cost and business acquisition integration and other expenses.
Speaker Change: Including the impact of certain non routine or noncash expenses better explained in our MD&A adjusted net income in the first quarter of 2025 decreased by $2 million or 10, 8% to $16 6 million.
Speaker Change: Adjusted diluted earnings per share remained consistent with the prior year at 55.
Speaker Change: With regards to cash flow from operations and the balance sheet.
Speaker Change: Net cash flows from the operating activities in the first quarter of 2025 decreased by $28 1 million to an outflow of $10 6 million compared to an inflow of $17 5 million in the same period in 2024, the decreases driven by unfavorable changes in noncash working capital balances.
Speaker Change: Specifically, a higher increase in accounts receivable balances compared to prior year.
Speaker Change: And lower reductions in inventory, partially offset with increased accounts payable balances in the first quarter of 2025 compared to the same period last year, primarily due to the later timing of the Lenten period in 2025.
Speaker Change: Capital expenditures were $3 1 million in the first quarter of 2025 compared to $2 4 million in the prior year, reflecting the continued investment in our business.
Speaker Change: Net debt at the end of the first quarter of 2025 increased by $41 5 million compared to 200.
Speaker Change: And alright, compared sorry, let me rephrase that net debt at the end of the first quarter of 2025 increased by $41 5 million to $274 7 million compared to $233 2 million at the end of fiscal 'twenty, four reflecting higher bank loans and a lower cash balance.
Speaker Change: Really upset by lower long term debt and lease liabilities at March 29, 2025, as compared to December 28 2024.
Speaker Change: The higher net debt is due to slightly higher inventory levels in Q1 versus prior year, which is in line with the later lenten timing.
Speaker Change: Net debt to adjusted EBITDA was two seven times at March 29, 2025, compared to two three times at the end of fiscal 2024.
Speaker Change: The ratio increased due to higher net debt and a lower rolling 52 week adjusted EBITDA compared to the fiscal 2024.
Speaker Change: The absence of any major acquisitions or other planned capital expenditures in 2025, we expect this ratio to continue to be lower than the company's long term target of three times at the end of fiscal 2025.
Speaker Change: In closing I want to reiterate that we are on track for a strong first half of the year, our dedicated and experienced team financial flexibility combined with our targeted thoughtful and consistent strategy continues to support our leading position in the market.
Speaker Change: As we navigate the evolving trade environment and the impact of tariffs, we are taking the necessary steps.
Speaker Change: To implement plan, including pricing actions and other supply chain initiatives to mitigate the impact of these tariffs and reduced the estimated impact on our company and on our customers.
With that I will now pass the call over to Anthony to discuss our commercial highlights.
Anthony: Thanks, Daryl and Hello, everyone. It was another strong quarter of operational performance as we advanced our strategy to provide choice and value to customers and consumers.
Speaker Change: We executed some great promotional strategies in market for lift across retail and foodservice, but as Paul mentioned, the full impact is not yet visible in our financial results given the timing of lent and three weeks of prime promotional time for seafood being pushed into the second quarter in the first quarter.
Speaker Change: <unk>, we continue to experience some softness in foodservice and an improving operating environment in retail looking first at foodservice, while our business was once again impacted by the traffic slowdown in the industry, we continue to hold our own gaining share and offsetting the impact of market weakness.
Speaker Change: More effectively than our competitors, we were able to quickly.
<unk> mitigate the impact of market headwinds by leaning into the quick service restaurant channel and the resilience of our institutional customers, especially in education during.
Speaker Change: During the quarter, we continued to see increased demand for alternative species, demonstrating the enhanced value. These offerings provide to our foodservice operators as we showcased choice and value driven solutions to our customers. Our sales force is extremely proactive in the market demonstrating how our diverse portfolio of.
Speaker Change: <unk> as well as species can help operators optimize menus showcase innovation and support back of house efficiencies. For example, we have some great limited time promotions in market right now on both sides of the border with leading <unk> brands that are supporting our growth in the channel we were three.
Speaker Change: To translate one promotion into a permanent menu spot for a fish reps demonstrating how we are working with our customers and consumers to rethink the potential of seafood as a healthy versatile fast food option our growth in <unk> is well timed as consumers continue to seek value and trade down for.
Speaker Change: Casual dining in search of enhanced value.
Speaker Change: Turning to our retail business, where it's a brighter picture despite having three weeks less of less promotional activity compared to the prior year volumes and sales grew in our retail business in the first quarter as the consumers shifted back to retail we are well positioned to capitalize on the increased traffic with targeted.
Speaker Change: Promotional activity and a diverse portfolio.
Speaker Change: We are delivering quality meal time solutions, whether consumers are seeking an elevated dining experience to take the place.
Of eating out or affordable protein options in Canada. The performance of our value added offering improved during the quarter. However, elsewhere in the market. We continued to feel the competitive pressure of a highly promotional value focused environment. We continue to mitigate the impact of these challenges in the same way that I have.
Speaker Change: Discussed on previous calls by offering choice across price points working closely with our customers to deliver targeted promotional campaigns and targeting growth in the club channel by pairing value volume and innovation.
Speaker Change: From a product perspective. Notable callouts include the continued positive reception to our tortilla crusted tilapia as well as our new shrimp innovations launched under under our Highlander brand across major retailers, we are leaning into our brand heritage and joining forces with other leading Canadian brands and retailers.
Speaker Change: To promote our made in Canada products.
That being said the improvement in our retail business is even more pronounced south of the border. During the first quarter, we gained market share in both dollars and pounds in the U S. Outperforming the category our three core brands Seaworthy Fisher boy and seek cuisine all grew during the first quarter.
Speaker Change: With Fisher boy, knocking seaworthy off the podium as the fastest growing brand in our category for the quarter. It's a title we're more than happy to share across the portfolio.
Speaker Change: Innovation continues to be a hit in U S club retailers, we saw strong quarter over quarter as well as year over year results from innovations such as our sequencing Cheddar biscuit tilapia and brown butter from cod. Despite the shift of lent across both club and mainstream retailers, we saw strong results.
Speaker Change: <unk> from the launch of our latest innovation the cuisine shrimp skewers.
Speaker Change: We are encouraged by the positive reaction to our skewers, which we expect to continue especially as we head into grilling season. Looking ahead, we will remain focused on strong operational performance as the backbone of our strategy to support our customers and consumers during uncertain economic times with that I'll hand, the call over to <unk>.
Paul: Paul for his final remarks, before we open it up to questions Paul.
Paul: Thanks, Anthony you've heard today that our base business is solid our solutions are relevant in our business is supported by a diverse supply chain that continues to be a source of competitive advantage.
Paul: Continue to be nimble and focused on driving profitable growth by serving our customers with the solutions they need leveraging our supply chain and optimizing the efficiency of our operations as.
As we look to the rest of 2025 and beyond we remain committed to preserving our balance sheet strength, while prudently allocating capital to appropriately balance investment in our business and organic growth with the return of capital to our shareholders through our dividend and ongoing share buybacks.
Paul: We're taking a disciplined patient approach to M&A and we will continue to evaluate opportunities across the value chain that fit within our portfolio provide the appropriate return on investment profile and are aligned with our long term value creation objectives.
Paul: In the short term, we will continue to focus on the factors within our control to mitigate market challenges.
Paul: This includes closely monitoring the evolving global trade environment, and we will continue to leverage the diversity of our global supply chain and plants in both the U S and Canada to mitigate any potential headwinds on our business.
Darryl Bergman: As Daryl mentioned, we are implementing plans, including pricing actions and other supply chain initiatives as appropriate to reduce any impact on our company and our customers.
Darryl Bergman: I remain confident in the inherent stability and strength of our business to deliver adjusted EBITDA growth for the year and continued improvement on the top line.
Darryl Bergman: With that I will now hand over the call to the operator for questions operator.
Yes.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session to ask a question you May press star followed by the number one lingers telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing any keys. Let me draw. Your question you May press star followed by the number too.
Speaker Change: And with that our first question comes from the line of Kyle Mcphee with Cormack Securities. Please go ahead.
Speaker Change: Hello, everyone.
Kyle McPhee: Starting on some of the moving parts on the revenue line are you able to kind of quantify the timing shift impact on volume in Q1, how much of a year over year drag on that kind of ballpark basis.
Kyle McPhee: Yes, it's hard to quantify but what I would say is we had a very strong march to finish the quarter.
Kyle McPhee: And we had a very strong April to start Q2, and when you look at the.
Kyle McPhee: The four months period, rather than the three month period.
Kyle McPhee: We're quite pleased with both the top the top line performance and the bottom line performance and of course, we will.
Kyle McPhee: Comment on that more when we release our <unk>.
Kyle McPhee: First half results Q2, and first half results in August.
Kyle McPhee:
Kyle McPhee: And then yeah.
Speaker Change: You've called out more retail channel wins as this new wins landed within Q1 or is this kind of the benefit of wins, we've seen over the last couple of quarters that just have not been lot just wondering how the ongoing momentum looks in the retail channel for wins.
Speaker Change: Yeah, Kyle it's Anthony it's actually both so the success we've been seeing in our club channel is something that started in the back half of last year as we continue to launch new innovation as well as up our promotional activity. But in addition, we increased promotions in the first part of this year for lent in and as I talked about fish.
Speaker Change: Boy our value brand was the fastest growing brand in the in the category and then we have even more innovation that we've just launched like the secrecy and shrimp skewers I mentioned previously.
Speaker Change: In addition to that we're building new distribution across the portfolio across the cuisine seaworthy, our Atlantic salmon business as well as in Fisher boy, and so thats, new and driving some acceleration in the first quarter.
Speaker Change: Got it okay, great to hear that.
Speaker Change: And then on the gross margin line.
Speaker Change: Gross margin percentage was flattish year over year and that's despite FX headwinds.
Speaker Change: Mixed headwinds from what I think is increased contract manufacturing and value category gains.
Speaker Change: Our promotional activity, so where is this big positive offset coming from that's allowing you to hold margin steady. Despite all these headwinds can you kind of isolate some of those big main positive moving patients that we can assess the durability.
Speaker Change: Sure. So a couple of things I'd comment on there one is the.
Speaker Change: Mix shift there was some mix shift to contract manufacturing right that performance was better this quarter than a year ago, but.
Speaker Change: But it didn't have a significant.
Speaker Change: Impact on merchant so we're pleased overall with how mix landed.
Speaker Change: And the impact on margin.
Speaker Change: We're doing what we can to manage costs well in the business and where necessary passing on price, particularly in a few species, where there has been some cost inflation in.
Speaker Change: In order to support margin and the other thing that supported the overall positive mix is a good growth in branded value added products in the quarter and so I think when you balance all of those things out.
Speaker Change: You're right we are pleased.
Speaker Change: Right.
Speaker Change: The margin performance that we would be able to deliver.
Speaker Change: Okay. Thanks for the color I'll pass it along.
Speaker Change: And your next question comes from the line of Luke Hannan with Canaccord Genuity. Please go ahead.
Luke Hannan: Yes, thanks, good morning, everyone.
Luke Hannan: Paul I just wanted to come back to if we were to go back to last quarter. I think you had mentioned that a reasonable expectation for the year as far as volumes would be mid single digit growth are you still comfortable with that being the outlook and then if so can you frame up for US we're contract manufacturing sort of fits within that I mean, you mentioned volumes were stronger thus far.
Luke Hannan: In Q1, specifically for contract manufacturing, but is there more that we should expect on that front as 2025 plays out.
Luke Hannan: No I don't think we would expect more on contract manufacturing, we're just happy to see it back to being a stable level compared to what was down a bit in 2024.
Luke Hannan: On the volume front, yeah, we still believe that we can grow volumes.
Luke Hannan: As you suggested to the to the the rest of the year.
Luke Hannan: <unk> earlier, we did have strong performance in April because of the later learnt so off to a good start there.
Luke Hannan: The only thing that will be of course, keeping our eyes on particularly in the back half of the year is.
Luke Hannan: What impact if any does an inflationary tariff impacted environment have on on the customer and the consumer.
Luke Hannan: That would be the only call out I would say where we were.
Luke Hannan: We'll want to evaluate that.
Luke Hannan: But in terms of our performance.
Luke Hannan: And what we can drive in our business from our innovation efforts from improving execution.
Luke Hannan: From promotional activity.
Luke Hannan: And.
Speaker Change: All of the things that Anthony highlighted we're doing for the customer and the consumer.
Speaker Change: We do have confidence in both the topline and bottom line trajectory for the balance of the year.
Speaker Change: Okay, Great and then maybe following up on what you just mentioned there the tariffs situation I appreciate it's probably difficult to pull this impact out but I mean have you seen play did you see anything play out either in Q1 and are thus far into Q2 that showed a specific consumer response to tariffs or at this point I think.
Speaker Change: The overall commentary that we've heard from yourself and then from other folks in our coverage universe is just broader macro pressures seem to be what's driving the consumer more.
Speaker Change: I guess the question is are you seeing anything specific thus far in consumer behavior that seems to be directly tied to tariffs as opposed to just broader macro weakness.
Speaker Change: Yeah, no nothing nothing specific thus far.
Speaker Change: Would certainly be too early and certainly be too early in our business in particular, when you think about the length of our supply chain. The fact that the buildup inventory going into the into the wet period.
Speaker Change: And thus far the consumer has continued to support seafood consumption.
So.
Speaker Change: Nothing we'd highlight there, but we will continue continue to continue to monitor it and make sure.
Speaker Change: With the diversity of our supply chain, we have lots of mitigation plans that will we will focus on to try to help out our customers and consumers wherever we can we will have to price.
Speaker Change: That's necessary.
Speaker Change: And we will continue to do so.
Speaker Change: To bring value to the consumer including with some of the alternative species, we've launched over the last year.
Speaker Change: <unk>, which which also helped the customer facing.
Speaker Change: Spacing.
Speaker Change: Potentially higher prices across categories.
Speaker Change: Great last one for me and then I'll pass the line just on innovation you touched on a few of the different skus that you've introduced during the quarter and then also in quarters past can you frame up for us I mean, it seems like some some companies are leaning a little bit more into innovation, particularly now given the trade down environment as it seems to be.
Speaker Change: Element of resilience or durability to volume growth. There can you frame up for us the pace of innovation introduction that you have in your portfolio right now is it any different from what you've done in years past.
Speaker Change: Hey, Lucas Anthony Yes, definitely we are ramping up our focus on innovation, we think that in this environment in particular.
Speaker Change: The breadth of the portfolio, we've always been proud of and having value mainstream and premium products is really important but also making sure that we have the right products for the right channels, where consumers are shifting to so as I mentioned earlier, where we're certainly upping our innovation focus in club and value channels and has.
Speaker Change: Focus on distribution there, we continue to bring even premium products into retail when consumers are potentially eating out at restaurants less than looking for restaurant quality experiences at home and so what we're doing to expand distribution on our sea worthy Atlantic Salmon brand and then introduce new shrimp innovation in both Canada and U S are.
Speaker Change: Important and then in foodservice, we are using innovation to also bring value to the consumer.
Speaker Change: With alternative species, so cod and haddock in particular are challenged on pricing and supply availability and so by introducing alternative species like K paid most recently or southern Blue Whiting, which we've had previously a good quality white fish, but offering value against our existing core.
Speaker Change: Species, that's how we've been focusing but definitely ramping up innovation.
Speaker Change: Okay I appreciate it thank you very much.
Speaker Change: Yes.
Speaker Change: And your next question comes from the line of <unk> with BMO capital markets. Please go ahead.
Speaker Change: Yeah. Thanks, Good morning, guys, Paul on the tariffs team here a little bit more just wondering if there was any impact on your raw material costs in Q1, and then Paul if you can kind of expand on some of those mitigation.
Speaker Change: Steps that you talked about taking just for the remainder of the year.
Speaker Change: Yeah sure. So no no impact really on our raw material costs in Q1, we'll start to see some impact.
Speaker Change: In raw material costs, perhaps in Q2 late Q2, but it will really start to flow through.
Speaker Change: Coming out of inventory, if you will and flow into Cogs.
Speaker Change: More in the back half of the year.
Speaker Change: From a mitigation perspective, I think the primary mitigation.
Speaker Change: The diversity of our supply chain.
Speaker Change: We buy seafood from I think close to 30 countries around the world.
Speaker Change: We have multiple suppliers.
Speaker Change: Many of the species that we that we procure we've got very strong relationships there.
Speaker Change: We we can move either the source of the raw material around whether that's possible or also moved where the the primary processing of that raw material occurs.
Speaker Change: We've done some of that we've done a lot of that over the course of the last five years, but we've even looked at doing that a little more recently.
As we've seen differential tariffs on different countries.
Speaker Change: Then finally, we have the benefit I think somewhat uniquely having menu value added manufacturing facilities in both Canada and the U S.
Speaker Change: So that gives us the opportunity to ensure.
Speaker Change: That we're producing the product in the right place to meet the customers' needs.
Speaker Change: Those geographies. So we feel good about the mitigation strategies, we have in place to try to.
Speaker Change: <unk> reduced the cost impact.
Speaker Change: With that we don't have to pass on as much price into the market as possible but of course, then that is the other the other mitigation is if costs are up for the industry.
Speaker Change: Then I will pass the pond where necessary.
Speaker Change: Great. That's helpful and then maybe just as an extension.
Speaker Change: Are you able to provide an update on the U S trade representative declining 5% tariff exclusion I believe that's coming due at the end of May just wondering if you have any indication.
Speaker Change: On what could happen there, whether that's lumped into some of the negotiations.
Speaker Change: Right.
Speaker Change: No.
I assume it's.
Speaker Change: Being part of the conversations that are ongoing with regards to tariffs.
Speaker Change: No.
Speaker Change: As we've done already is we've seen tariffs change over the course of the last days and weeks and months.
Speaker Change: We'll continue to react accordingly.
Speaker Change: We get more clarity on that.
Speaker Change: Okay understood.
Speaker Change: Last quarter, you talked about bringing nor card products into North America are you able to provide an update there just on timing and then do you have a sense of how these products can be used whether that would be in retail or foodservice and then value added or otherwise.
Speaker Change: Yeah I think.
Speaker Change: We're very happy with the progress we've made we've got the right processing arrangements in place so that the <unk> product.
Speaker Change: It's coming into the market in the form that we want.
Speaker Change: Frozen.
Speaker Change: Philips and lines.
Speaker Change: And portions.
Speaker Change: And we think initially it will more likely be foodservice, where that product is targeted and more likely are actually not be value added.
Speaker Change: Because it's a it's frankly a wonderful.
Speaker Change: More premium eating experience.
Speaker Change: And we think there are.
Speaker Change: Parts of the foodservice channel, all that where that product will fit very very well, we think it will be available in the.
Speaker Change: A market certainly no later than Q4 this year.
Speaker Change: Okay, great that's exciting.
Speaker Change: And then just one last one for me on leverage.
Speaker Change: If you hit your target for year over year EBITDA growth.
Speaker Change: Based on my forecast it looks like net debt to EBITDA would be.
Speaker Change: Around two times, maybe even that sub two times level. Just wondering if you have a minimum floor wherever you would start to to use buybacks to make sure you don't go below a certain level.
Speaker Change: Yes.
Speaker Change: We're probably forecasting like as we said to get the end of the year to about $2 three back to where we were at $2 seven now our target ranges around three.
Speaker Change: Again, what's going to move that in Irvine is.
Speaker Change: How we look at both.
Speaker Change: Both our <unk>.
Speaker Change: <unk> invested in the business.
Speaker Change: Also looking at inorganic opportunities, but with respect to a floor specifically.
Speaker Change: We're going to maximize it.
Speaker Change: The use of that.
Speaker Change: That type of capital across the range of probably.
Speaker Change: I wouldn't go think we'd get down to the one seven range, but would definitely be above two.
Speaker Change: Great. Thanks for the answers guys.
Paul I: Okay. Thank you and we have no further questions at this time I would like to turn it back to Paul <unk> for closing remarks.
Paul I: Thank you operator, and thank you everyone for joining the call today, we look forward to updating you with our results for the second quarter of 2025 on our next conference call in August.
Okay.
Paul I: Thank you and ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.