High Liner Q3 Profit More than Doubles

Shares of High Liner Foods (HLF) were up Wednesday after the company reported higher sales, adjusted EBITDA, and profit in the third quarter of 2021 than a year ago, boosted by foodservice recovery. High Liner is a Canadian marketer and processor of frozen fish and seafood.

The company’s Foodservice business saw its sales volume increase due to significantly reduced COVID-19 restrictions. However, gains were partially offset by its Retail business, where demand was lower compared to a year ago due to changes in consumer behavior during the pandemic. (See Insiders’ Hot Stocks on TipRanks)

Sales & Earnings

Sales volume increased by 0.2% to 54.8 million pounds, while sales increased by 10.1% to $214.3 million. Adjusted EBITDA rose by 17.3% to $22.4 million.

Net income increased by 137.2% to $8 million in the three months ended July 3, 2021. Diluted EPS increased to $0.23 per share from $0.10 per share in the prior-year quarter.

On an adjusted basis, net income increased by 142.1%, from $3.8 million ($0.11 per diluted share) to $9.2 million ($0.26 per diluted share). Adjusted net income increased by 91.5%, from $5.9 million to $11.3 million. Adjusted diluted EPS increased to $0.32 per share compared to at $0.18 per share a year ago.

Management Commentary

High Liner Foods president and CEO Rod Hepponstall said, “Our financial performance this quarter reflects the strong underlying fundamentals of our business and the proactive action we have taken on pricing, purchasing and portfolio mix. We grew net sales and made further profitability gains as we worked hard to fully satisfy demand for our products, especially our branded, valued-added seafood offerings.

“We were able to capitalize on the resurgence in foodservice, despite ongoing pandemic-related pressures, while sustaining retail performance versus the same period last year.”

He added that High Liner is on track to deliver adjusted EBITDA growth this year as a result of the company’s performance in the third quarter.

Dividend Hike

The frozen seafood company increased its quarterly dividend to $0.10 per share, which represents an increase of $0.03 or 43% from the dividend of $0.07 paid in the third quarter.

Wall Street’s Take

Three months ago, Scotiabank analyst George Doumet maintained a Sell rating on HLF while raising its price target to C$14.50 (from C$14). This implies 5% upside potential.

Overall, consensus on the Street is that HLF is a Moderate Sell based on one Hold and one Sell. The average High Liner Foods price target of C$16.98 implies 23% upside potential to current levels.