TSE:HLF High Liner Foods Q3 2024 Earnings Report C$16.51 -0.10 (-0.60%) As of 04/17/2025 03:59 PM Eastern Earnings HistoryForecast High Liner Foods EPS ResultsActual EPSC$0.27Consensus EPS C$0.38Beat/MissMissed by -C$0.11One Year Ago EPSC$0.19High Liner Foods Revenue ResultsActual RevenueN/AExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AHigh Liner Foods Announcement DetailsQuarterQ3 2024Date11/8/2024TimeAfter Market ClosesConference Call DateFriday, November 8, 2024Conference Call Time2:00PM ETConference Call ResourcesConference Call AudioConference Call TranscriptInterim ReportEarnings HistoryCompany ProfilePowered by High Liner Foods Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 8, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the High Liner Foods Incorporated Conference Call for Results of the Q3 of 2024. At this time, all participants are in a listen only mode. Following management's prepared remarks, we will conduct a question and answer session. Operator00:00:18Instructions will be provided at that time for you to queue up for questions. This conference call is being recorded today, Friday, November 8, 2024 at 2 pm Eastern Time for replay purposes. I would now like to turn the conference over to Kimberly Stevens, Vice President of Finance for High Liner Foods. Please go ahead. Speaker 100:00:47Good afternoon, everyone. Thank you for joining the High Liner Foods conference call today to discuss our financial results for the Q3 of 2024. On the call from High Liner Foods are Paul Jewer, Chief Executive Officer Daryl Borgman, Chief Financial Officer and Anthony Rosetta, Chief Commercial Officer. I'd like to remind listeners that we use certain non IFRS measures and ratios when discussing our financial results as we believe those are useful in assessing the company's financial performance. These measures are fully described and reconciled to IFRS measures in our MD and A. Speaker 100:01:22Listeners 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 discussing the company's strategy, business and market in which the company operates as well as operating and financial performance in the future. These statements are subject to risks and uncertainties and based on assumptions that are believed to be reasonable at the time that they were made and with currently available information. Actual results or events, including auditing or financial results, could differ materially from those anticipated in these forward looking statements. High Liner Foods includes a thorough discussion of the risks and other factors that could cause its anticipated outcomes to differ from actual outcomes in its publicly available disclosure documents, including its most recent annual MD and A and Annual Information Form. Speaker 100:02:15Please note that High Liner Foods is under no obligation to update any forward looking statements discussed today. Before the market opened today, November 8, High Liner Foods reported its financial results for the Q3 ended September 28, 2024. That news release, along with the company's MD and A and unaudited condensed interim consolidated financial statements for the Q3 of 2024 have been filed on SEDAR Plus and can also be found on the Investors section of the High Liner Foods website. If you'd like to receive our news releases in the future, please visit the company's website to register. And lastly, please note that the company reports financial results in U. Speaker 100:02:54S. Dollars and therefore the results to be discussed today are also stated in U. S. Dollars unless otherwise noted. High Liner Foods' common shares trade on the Toronto Stock Exchange and are quoted in Canadian dollars. Speaker 100:03:07I will now turn the call over to Paul for his opening remarks. Speaker 200:03:11Thank you, Kimberly. Hello, everyone, and welcome to our Q3 2024 conference call. I'm joined today by our Chief Financial Officer, Daryl Bergman and our Chief Commercial Officer, Anthony Rosetta. Before I hand over to Daryl to discuss the details of our financial results, I will begin today's call with some high level commentary on the quarter and the progress we are making to drive improved performance across the business. 9 months ago, when we first started to feel the pressure of market headwinds and consumer pullback on our business, I shared that we would adopt an aggressive yet balanced response. Speaker 200:03:45Our goal then as it is now is to support a sustainable recovery for our business that did not drive volume at the expense of profitability or vice versa. We focused on ensuring that our commercial activities supported improved near term performance and the longer term upside for branded and value added seafood category in North America. Our 3rd quarter results show promising signs that this approach is working. Our commercial strategies are gaining traction driving sequential improvement in sales and volume compared to Q2 while holding on to margin. We increased adjusted EBITDA by 7.5% or $1,500,000 for the quarter and grew gross profit as a percentage of sales by 200 basis points. Speaker 200:04:34Consistent with the Q2, our EBITDA growth in Q3 was supported by lower raw material costs and normalized inventory levels. We continue to drive efficiencies across our business and as previously announced, we were pleased to complete a refinancing of our Term Loan B ahead of schedule, which resulted in interest savings. Nonetheless, and as expected, sales and volume continued to decline in the Q3 compared to the prior year, largely driven by some customer and consumer pullback, the continued impact of a decline in contract manufacturing and exiting of low margin business. Despite the continued headwinds, we are encouraged by signs of progress in both our retail and foodservice businesses. We are expanding distribution and leveraging innovation to showcase the fertility and convenience of our products to customers and consumers. Speaker 200:05:26We also continue to capitalize on the diversification of our business, leaning into areas of greatest market stability as consumers shift between channels with a focus on value and premium offerings. Anthony will share more details about this shortly. Overall, the strong execution by the team during the Q3 reinforces my confidence in our continued resilience and improving our overall performance. In the Q4, we will continue to keep a careful eye on costs, mix and efficiencies to support profitable volume recovery and year over year adjusted EBITDA growth despite continued headwinds and anticipated fluctuations in pricing and demand. As we drive towards improved performance, we continue to invest in our business to return to profitable growth. Speaker 200:06:15We are in the fortunate position to be able to do so while also increasing the dividend. The 13.3% dividend increase this quarter is the 5th consecutive year in which the Board has increased the dividend between 2019 2024, a period that encompassed significant market turmoil from the pandemic to supply chain crises. Our ability to continue to support the dividend against the backdrop of market turmoil validates our strategy as do the results generated in the Q3. That said, we continue to believe that our share price does not reflect the underlying value of our company, which is why today we announced an application to once again increase our share buyback program. The growing dividend and continued share buyback program are important elements of our approach to capital allocation, which also includes ongoing investment in our business as we continue to pursue potential M and A opportunities. Speaker 200:07:15In the near term, we are focused on continuing the momentum of the Q3 to strengthen revenue while preserving profitability in these dynamic market conditions. I will now hand over to Daryl to discuss our financial results. Daryl? Speaker 300:07:46Thanks, Paul, and hello, everyone. Further to Paul's opening remarks, I would like to add that once again our results this quarter are a good indicator of the company's resilience and our ability to drive year over year adjusted EBITDA growth. That said, I will now turn our financial turn to our financial results for the Q3 of 2024. Sales volume decreased in the Q3 by £4,200,000 or 6.9 percent to £56,800,000 The company continued to operate in a challenging market conditions driven by consumer pullback and increased competitive pressures. In the company's retail business, while High Liner Foods experienced year over year decline in volumes, the company once again expanded distribution in strategic areas including club and premium offerings. Speaker 300:08:37The company's food service business, High Liner Foods saw continued success of new value added innovations in terms of volume and expanded distribution and saw continued growth in alternative species despite the overall year over year decline in volume. The sales decreased in the 3rd quarter by $30,800,000 or 11.9 percent to $228,900,000 driven by volume declines amid challenging market conditions and reduced pricing reflecting deflationary markets. Given the highly promotional and price sensitive retail and foodservice markets, the company continues to take actions on promotions, innovations and distribution to strengthen its competitive position and mitigate the impact of external pressures while preserving profitability, which Anthony will provide more insight on here shortly. The weaker Canadian dollar in the Q3 of 2024 compared to the same period in 2023 decreased the value of reported U. S. Speaker 300:09:39Dollar sales from our Canadian denominated operations by approximately $1,000,000 relative to the conversion impact last year. Gross profit decreased in the Q3 by $1,300,000 or 2.6 percent to $48,300,000 and gross profit as a percentage of sales increased by 2% to 21.1% as compared to 19.1% in the Q3 of 2023. The decrease in gross profit is due to lower raw material cost, normalized inventory levels, a more profitable mix and a balanced approach to pricing focused on supporting both the bottom and top line of the business. High Liner Foods continues to drive continuous improvement across operations to ensure prudent cost management. In addition, the weaker Canadian dollar decreased the value of reported U. Speaker 300:10:31S. Dollar gross profit from our Canadian operations in 2024 by $200,000 relative to the conversion impact last year. Adjusted EBITDA increased in the quarter by $1,500,000 or 7.5 percent to $21,500,000 and adjusted EBITDA as a percentage of sales increased favorably to 9.4% compared to 7.7%. The increase in adjusted EBITDA is due to favorable distribution expenses and lower net SG and A expenses, partially offset by lower gross profit. In addition, the weaker Canadian dollar decreased the value of reported adjusted EBITDA in USD from our Canadian operations in 2024 by $100,000 relative to amount relative to the conversion impact last year. Speaker 300:11:23Reported net income decreased in the 3rd quarter by $12,800,000 to $18,300,000 and diluted earnings per share increased by $0.45 to $0.61 The increase in net income is due to increase in adjusted EBITDA and increase in business acquisition, integration and other expenses and a decrease in finance costs and lower depreciation and amortization costs partially offset an increase in income tax expense. Excluding the impact of non routine or non cash expenses that are explained in our MD and A, adjusted net income in the Q3 of 2024 increased by $700,000 or 14.3 percent to $5,600,000 and correspondingly adjusted diluted earnings per share increased by $0.06 to $0.20 in the Q3 of 2024. Turning now to cash flows from operations and the balance sheet. Net cash flows from operating activities in the Q3 of 2024 decreased by $40,600,000 to an inflow of $13,400,000 compared to an inflow of $54,000,000 in the same period in 2023, despite higher net income and lower interest paid. This is due to lower changes in non cash working capital balances compared to the previous year, lower finance costs due to a gain on the modification of the long term debt and lower depreciation and amortization. Speaker 300:12:53The decrease is partially offset by increased cash flows provided by operations. Capital expenditures were $17,200,000 in the 1st 3 quarters of 2024 compared to $13,100,000 in the prior year reflecting the continued investment in our business. Net debt of the Q3 of 2024 decreased by $10,300,000 to $239,600,000 compared to $249,900,000 at the end of fiscal 2023, reflecting lower bank loans, long term debt, lease liabilities and a higher cash balance as at September 28, 2024 as compared to December 31, 2023. Net debt to adjusted EBITDA was 2.4 times at September 28, 2024 compared to 2.6 times at the end of fiscal 2023. The ratio has continued to improve in the 2020 and 2024 due to more net debt and a higher rolling 12 month adjusted EBITDA compared to fiscal 2023. Speaker 300:13:57In the absence of any major acquisitions or unplanned capital expenditures in 2024, we expect this ratio to continue to be lower than the company's long term target of 3 times at the end of fiscal 2024. Notably as well, the early refinancing of High Liners Term Loan B, which was completed in the quarter. This provides a stable platform for organic and accelerated growth strategies. In fact, the refinancing was not only at improved rates, but also oversubscribed, demonstrating the confidence of our lender community that our lender community has in Highline Foods. Also during the Q3, our net debt continued at the lowest levels the company has seen in more than 10 years. Speaker 300:14:45Before I wrap up, I'll provide details on our intention to increase the size of our normal course issuer bid. Our application, which is subject to the approval of the TSX would increase the number of shares at the company that the company intends to purchase from 700,000 to 1,643,340, an increase of 900 and and 43,340 shares. Our move to increase the NCIB, as Paul noted, reflects the Board and management's belief that the share price currently does not reflect the true value of the company. In closing, our strong balance sheet, supportive financial partners, focused team and demonstrated ability to achieve consistent EBITDA performance amid an economic economic backdrop positions us well to support our strategy and capitalize on future growth opportunities. I will now turn the call over to Anthony to discuss our operational Speaker 400:15:44highlights. Thanks, Daryl, and hello, everyone. The 3rd quarter largely played out as expected Speaker 500:15:50in terms of market Speaker 400:15:50conditions, challenges and emerging opportunities. Conditions, challenges and emerging opportunities. We continue to operate in a highly competitive and promotional market on both sides of the border. Consumers remain price sensitive and seafood continues to be a more expensive option for protein and certainly in comparison to other grocery staples. In foodservice, traffic continued to decline across the industry and consumers traded down within foodservice and dined out less frequently. Speaker 400:16:21This is driven in part by the higher cost of dining outside of the home, with the average check size for a meal in home rising 4% in the quarter. While our diversified business enabled us to benefit from the related improvement in the retail frozen seafood category, we did experience pressure on our foodservice business during Q3. In particular, this quarter, we lapped a successful limited time offer in QSR that ran in Q3 2023. However, we continue to experience relative stability in non commercial and we saw strong performance within the school system where we won additional business this year. We also expanded distribution which will help us offset continued near term pressure. Speaker 400:17:08Turning now to our retail business in which distribution gains were also a bright spot. Our distribution gains continue to be tied to innovation and value and demonstrate how the core attributes of our strategy are working together and supporting improved performance compared to Q2 and laying the groundwork for recovery. In U. S. Retail, we have continued to make inroads with major club retailers driven by product innovation and value associated with club size purchases. Speaker 400:17:39Pairing value with volume allows us to appeal to the value conscious consumer while preserving margin and will remain a key tenet of our strategy moving forward. We are supporting this strategy with targeted marketing activation in partnership with our retailers. We are encouraged by the results so far, both in terms of the number of marketing impressions and how this is translating into expanded distribution, especially in the club channel. While it is early days, retailers have responded positively to developing mutually beneficial campaigns. I'm confident in the opportunities here to support sales and volume recovery and growth over time. Speaker 400:18:21We have some exciting campaigns time to roll out in partnership with retailers to coincide with the Lenten period. From a portfolio perspective, the bright spots I shared in Q2 continued in the Q3. In our U. S. Retail business where the category continues to improve overall, our seaworthy premium Atlantic salmon brand continues to be a top performer and is in fact the fastest growing brand in the category. Speaker 400:18:48During the Q3, we secured new listings and expanded distribution for our value Catch the Day and Fisher Boy brands along with our premium Sea Cuisine and Seaworthy brands. The strong response to these products coupled with the increasing demand by consumers for value and convenience offered by frozen restaurant quality seafood bodes well for our future performance in retail. We will continue to focus on our barbell strategy of leaning into value and premium ends of our portfolio moving forward. In Canadian retail, the category is also improving, albeit not at the same pace as in the U. S. Speaker 400:19:27And remains highly competitive. While competitive pressures continue to negatively impact our share during the Q3, we are capitalizing on the strength of our customer relationships and the opportunities associated with our innovation, brand heritage and customer marketing partnerships to push back against competitive pressure. We also continue to deepen our footprint in the Canadian club category during the Q3 with performance in that channel leading to overall growth in shipments in Q3. Innovation continues to support performance and listings across mainstream retailers with our 2 new value added shrimp innovations off to a promising start as the number 1 and number 3 branded innovations in the category this year. Turning now to alternative species, where the trends we saw in the Q2 continued into the 3rd. Speaker 400:20:22Southern Blue Whiting growth continued in both the U. S. And Canada in retail and foodservice, And we converted another SKU over this species during the quarter. Southern Blue Wedding is a promising value based species that attracts consumers given its cost and taste. And we expect this growth to continue, particularly in our foodservice business going forward. Speaker 400:20:45Overall, I'm encouraged by the progress we made in the Q3 to support the top line while protecting margins. Looking ahead, we intend to build the momentum underway supported by strong consumer and customer engagement and innovation success. I look forward to updating you on our progress in Q4. And with that, I'll hand it back to Paul for his concluding remarks. Speaker 200:21:08Thank you, Anthony. As you've heard today, we are executing well against our targeted strategy to offset headwinds and return to profitable growth. Despite continued market challenges, we are encouraged by our financial and operational performance in the quarter and especially our ability to make press on the top line while continuing to strengthen profitability. We are well positioned to build on our progress in the Q4 as we partner with our customers to support category growth and deliver value, convenience and innovation to consumers seeking seafood as healthy and affordable source of protein. Our strong balance sheet remains a source of competitive advantage and priority for us. Speaker 200:21:50It strengthens our resilience through challenging times and affords us the ability to be measured and strategic in our response. Similarly, it allows us to be patient and disciplined as we explore opportunities for M and A, waiting for the right opportunity to accelerate our growth across the value chain, while continuing to return capital to our shareholders and invest in our business. We are focused on building our 3rd building on our Q3 progress, delivering year over year increase in adjusted EBITDA and pushing towards a return to top line growth while surfacing value for shareholders. With that, I will hand the call over to the operator to open it up for our question and answer period. Operator? Operator00:22:35Thank you. And your first question comes from the line of Kyle McPhee with Cormark Securities. Please go ahead. Speaker 500:23:08Hi, everyone. To start, I want to unpack some of the moving parts feeding your volume performance, which was better than I thought this quarter. It seems like some of these High Liner specific growth initiatives you're outlining are masking more and more of the macro headwind. So first on that topic, can you help us quantify the new wins that you're landing? If we isolate the volume wins in retail and foodservice that you're calling out, what does that look like in terms of year over year growth? Speaker 500:23:35And is it snowballing versus the wins you talked about in recent quarters or you're just kind of benefiting largely from the same ones? Speaker 200:23:43Yes. No, I think there is some benefit from wins we had earlier in the year in foodservice and retail. And we're also continuing to win some new business, including some new distribution and also from the effect of I think some good promotional activity that's helped support volume. And you're right, Kyle. The trend has improved. Speaker 200:24:08We're still not back to top line growth, although certainly have moved in that direction compared to where we were earlier in the year. Speaker 500:24:19Okay. And can you help us kind of quantify when we isolate this movie part the wins? Like is it kind of low single digit like 1%, 2% type volume win isolating this stuff? Speaker 200:24:31Yes. I think that's probably right. Speaker 300:24:37We did have Speaker 200:24:39we did pick up some volume related to USDA's school business, which is larger volume. So that would be on top of that. But that helped offset some of the contract manufacturing declines that we talked about earlier in the year. Speaker 500:24:58Okay. And then on the macro moving part impacting your top line, would you describe it as the intensity of the macro headwinds staying the same? Is it getting worse? I'm trying to figure out when macro kind of stops showing as a headwind in your moving parts. Because if it's not getting worse, I think you will have largely lapped it after your next quarter. Speaker 400:25:20Yes, Kyle, it's Anthony. I think there's a couple of different things happening. Foodservice is has been down the last few quarters and continues to be down. So that is definitely headwind for us as the larger part of our business and portfolio as traffic was down a couple of percentage points. We're seeing declines in QSR on the value side of foodservice for the first time quarter. Speaker 400:25:44And EATER check is up overall. So that's headwind for us. Offsetting that though is within foodservice as you can imagine as customers are looking for value, they're shifting into distributor label or private label. We do a good the input label, and so have been able to have some relatively stable performance associated with that. In addition to our business in non commercial, like Paul talked about with what we picked up in schools and in school feeding in particular. Speaker 400:26:15And then the other side of it is that retail is improving. So as consumers are eating out less and at home more, which is getting worse than foodservice better in retail, then we're seeing the pickup in retail and some traction and with both our innovation as well as with the distribution and promotional tactics that we have going on. Speaker 500:26:39Thanks for all that color on the moving parts. Last thing I wanted to talk about was your gross margin percentage. So increased promotional activity is one of the moving parts impacting this line item, offsetting some of the lower inventory cost dynamics that you're getting those benefits. So I know Q3 marked a point for increased promotional activity and that likely continues. But I guess my question is, is the intensity of promotion accelerating going forward? Speaker 500:27:06What should we expect there? Or are you just kind of holding on to the existing intensity of promotion? Speaker 200:27:13No, I will continue with the promotional activity perhaps at a slightly higher pace in Q4 because we're seeing the positive effects of that promotional activity and that's driving overall higher gross margin dollars. The other piece though, Kyle, the factor in for sure is just the impact of mix, right? So as we see an increase in some of the private label or bid business that may come at lower margins, but certainly is supportive to the overall gross margin dollar growth. Speaker 500:27:54Okay. That's it for me for now. Thank you. Operator00:28:00Thank you. And your next question comes from the line of Nevan Yoakam with BMO Capital Markets. Please go ahead. Speaker 600:28:08Thank you and good afternoon guys. First, I just wanted to clarify quickly, Paul, I think you mentioned year over year EBITDA growth. Was that in reference to 2024 or was that also including the Q4 of this year? Speaker 200:28:24Yes. It's certainly year to date. We've had EBITDA growth over the prior year. And as we've really been saying through the year, we expect to be able to deliver EBITDA growth for the full year. And obviously with the performance we put up in the 1st three quarters, we are even more confident of that performance on an annual basis. Speaker 600:28:49Okay, perfect. And then just on sales in the quarter, so beyond the volume decline, can you parse out the impact from price deflation as well as mix this quarter? Speaker 200:29:04From a deflation perspective, there's probably not a lot that's factored in. I think it's more of an impact of the volume decline and mix. We because we are starting to see some species, the prices actually come back up off lows earlier in the year. So I would say it's more of a mix impact than a deflationary price impact. Other than obviously promotional activity can have some impact on the net sales outcome. Speaker 600:29:44Okay. That makes sense. And then I guess just sort of as you think about Q4 on a year over year basis when we're looking at volumes here, a nice sequential improvement there in Q3. Would you expect to see a further improvement into Q4 as well, still down year over year, but sequentially improved? Speaker 200:30:06Well, we certainly expect to see a sequential improvement. And as we've been saying, we're really working to get back to top line growth. So we've had a good start to the quarter, but we need to we'll continue to work on having a strong finish to the year. Speaker 600:30:27And then I think we already touched on gross margins. So just on SG and A, it was quite steady on a year over year basis. I was looking for a bit of an increase there. Maybe you can talk about just how SG and A dollars excluding the D and A component are expected to trend into Q4? Speaker 200:30:52Yes. Nothing that I would I'd highlight that should swing the amounts to any degree. The only thing I would say I would caution, we always look at what I'll call adjusted SG and A. So we exclude any impact of long term incentive programs, those kinds of things. So when you exclude that, I wouldn't expect any significant change quarter over quarter. Speaker 200:31:17The one area that there can be some seasonality in is our marketing spend. But again, nothing significant between Q3 and Q4 that I'd highlight. Speaker 600:31:30And so like I guess if it's relatively steady sequentially, you'd be looking for a larger year over year increase into Q4, is that right? Speaker 200:31:42In SG and A as a percentage of sales? I guess I'm not sure I understand the question. Speaker 600:31:50Yes, more on SG and A dollars. Like if your comment was in relation to SG and A dollars being relatively flat sequentially or were you referring to SG and A as a percentage of sales? Speaker 200:32:05I was thinking of SG and A as a percentage of sales, yes. Speaker 600:32:08I see. Okay, perfect. That makes sense. That's it for me. Thank you. Operator00:32:15Thank you. And there are no further questions at this time. I would like to turn it back to Paul Jewer, President and CEO for closing remarks. Speaker 200:32:25Thank you, operator. To close, I want to thank you for joining our call today. We look forward to updating you with our results for the Q4 of 2024 on our next conference call in February. Operator00:32:38Thank you, presenters. And this concludes today's conference call. Thank you all for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallHigh Liner Foods Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsInterim report High Liner Foods Earnings HeadlinesCurrent Report: Highliner FoodsApril 9, 2025 | talkmarkets.comIs There Now An Opportunity In High Liner Foods Incorporated (TSE:HLF)?March 24, 2025 | finance.yahoo.comTrump Treasure April 19Thanks to President Trump… A $900 investment across5 specific cryptos… Could gain 12,000% so quickly that, just 12 months later…April 19, 2025 | Paradigm Press (Ad)HIGH LINER FOODS ANNOUNCES CHANGE OF AUDITOR FOR FISCAL 2025March 14, 2025 | finance.yahoo.comWe Think You Should Be Aware Of Some Concerning Factors In High Liner Foods' (TSE:HLF) EarningsMarch 5, 2025 | finance.yahoo.comToronto Stocks Advance, High Liner Foods Rise on Volume Sales Growth in 4QFebruary 26, 2025 | marketwatch.comSee More High Liner Foods Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like High Liner Foods? Sign up for Earnings360's daily newsletter to receive timely earnings updates on High Liner Foods and other key companies, straight to your email. Email Address About High Liner FoodsHigh Liner Foods (TSE:HLF) is the leading North American processor and marketer of value-added frozen seafood. Their retail branded products are sold throughout the United States, Canada and Mexico under the High Liner, Fisher Boy, Sea Cuisine and C. Wirthy & Co. labels, and are available in most grocery and club stores. They also sell branded products under the High Liner, Icelandic Seafood, and FPI labels to restaurants and institutions, and are a major supplier of private-label, value-added frozen seafood products to North American food retailers and foodservice distributors.View High Liner Foods ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? Why Analysts Boosted United Airlines Stock Ahead of EarningsLamb Weston Stock Rises, Earnings Provide Calm Amidst ChaosIntuitive Machines Gains After Earnings Beat, NASA Missions Ahead Upcoming Earnings Tesla (4/22/2025)Intuitive Surgical (4/22/2025)Verizon Communications (4/22/2025)Canadian National Railway (4/22/2025)Novartis (4/22/2025)RTX (4/22/2025)3M (4/22/2025)Capital One Financial (4/22/2025)General Electric (4/22/2025)Danaher (4/22/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 7 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the High Liner Foods Incorporated Conference Call for Results of the Q3 of 2024. At this time, all participants are in a listen only mode. Following management's prepared remarks, we will conduct a question and answer session. Operator00:00:18Instructions will be provided at that time for you to queue up for questions. This conference call is being recorded today, Friday, November 8, 2024 at 2 pm Eastern Time for replay purposes. I would now like to turn the conference over to Kimberly Stevens, Vice President of Finance for High Liner Foods. Please go ahead. Speaker 100:00:47Good afternoon, everyone. Thank you for joining the High Liner Foods conference call today to discuss our financial results for the Q3 of 2024. On the call from High Liner Foods are Paul Jewer, Chief Executive Officer Daryl Borgman, Chief Financial Officer and Anthony Rosetta, Chief Commercial Officer. I'd like to remind listeners that we use certain non IFRS measures and ratios when discussing our financial results as we believe those are useful in assessing the company's financial performance. These measures are fully described and reconciled to IFRS measures in our MD and A. Speaker 100:01:22Listeners 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 discussing the company's strategy, business and market in which the company operates as well as operating and financial performance in the future. These statements are subject to risks and uncertainties and based on assumptions that are believed to be reasonable at the time that they were made and with currently available information. Actual results or events, including auditing or financial results, could differ materially from those anticipated in these forward looking statements. High Liner Foods includes a thorough discussion of the risks and other factors that could cause its anticipated outcomes to differ from actual outcomes in its publicly available disclosure documents, including its most recent annual MD and A and Annual Information Form. Speaker 100:02:15Please note that High Liner Foods is under no obligation to update any forward looking statements discussed today. Before the market opened today, November 8, High Liner Foods reported its financial results for the Q3 ended September 28, 2024. That news release, along with the company's MD and A and unaudited condensed interim consolidated financial statements for the Q3 of 2024 have been filed on SEDAR Plus and can also be found on the Investors section of the High Liner Foods website. If you'd like to receive our news releases in the future, please visit the company's website to register. And lastly, please note that the company reports financial results in U. Speaker 100:02:54S. Dollars and therefore the results to be discussed today are also stated in U. S. Dollars unless otherwise noted. High Liner Foods' common shares trade on the Toronto Stock Exchange and are quoted in Canadian dollars. Speaker 100:03:07I will now turn the call over to Paul for his opening remarks. Speaker 200:03:11Thank you, Kimberly. Hello, everyone, and welcome to our Q3 2024 conference call. I'm joined today by our Chief Financial Officer, Daryl Bergman and our Chief Commercial Officer, Anthony Rosetta. Before I hand over to Daryl to discuss the details of our financial results, I will begin today's call with some high level commentary on the quarter and the progress we are making to drive improved performance across the business. 9 months ago, when we first started to feel the pressure of market headwinds and consumer pullback on our business, I shared that we would adopt an aggressive yet balanced response. Speaker 200:03:45Our goal then as it is now is to support a sustainable recovery for our business that did not drive volume at the expense of profitability or vice versa. We focused on ensuring that our commercial activities supported improved near term performance and the longer term upside for branded and value added seafood category in North America. Our 3rd quarter results show promising signs that this approach is working. Our commercial strategies are gaining traction driving sequential improvement in sales and volume compared to Q2 while holding on to margin. We increased adjusted EBITDA by 7.5% or $1,500,000 for the quarter and grew gross profit as a percentage of sales by 200 basis points. Speaker 200:04:34Consistent with the Q2, our EBITDA growth in Q3 was supported by lower raw material costs and normalized inventory levels. We continue to drive efficiencies across our business and as previously announced, we were pleased to complete a refinancing of our Term Loan B ahead of schedule, which resulted in interest savings. Nonetheless, and as expected, sales and volume continued to decline in the Q3 compared to the prior year, largely driven by some customer and consumer pullback, the continued impact of a decline in contract manufacturing and exiting of low margin business. Despite the continued headwinds, we are encouraged by signs of progress in both our retail and foodservice businesses. We are expanding distribution and leveraging innovation to showcase the fertility and convenience of our products to customers and consumers. Speaker 200:05:26We also continue to capitalize on the diversification of our business, leaning into areas of greatest market stability as consumers shift between channels with a focus on value and premium offerings. Anthony will share more details about this shortly. Overall, the strong execution by the team during the Q3 reinforces my confidence in our continued resilience and improving our overall performance. In the Q4, we will continue to keep a careful eye on costs, mix and efficiencies to support profitable volume recovery and year over year adjusted EBITDA growth despite continued headwinds and anticipated fluctuations in pricing and demand. As we drive towards improved performance, we continue to invest in our business to return to profitable growth. Speaker 200:06:15We are in the fortunate position to be able to do so while also increasing the dividend. The 13.3% dividend increase this quarter is the 5th consecutive year in which the Board has increased the dividend between 2019 2024, a period that encompassed significant market turmoil from the pandemic to supply chain crises. Our ability to continue to support the dividend against the backdrop of market turmoil validates our strategy as do the results generated in the Q3. That said, we continue to believe that our share price does not reflect the underlying value of our company, which is why today we announced an application to once again increase our share buyback program. The growing dividend and continued share buyback program are important elements of our approach to capital allocation, which also includes ongoing investment in our business as we continue to pursue potential M and A opportunities. Speaker 200:07:15In the near term, we are focused on continuing the momentum of the Q3 to strengthen revenue while preserving profitability in these dynamic market conditions. I will now hand over to Daryl to discuss our financial results. Daryl? Speaker 300:07:46Thanks, Paul, and hello, everyone. Further to Paul's opening remarks, I would like to add that once again our results this quarter are a good indicator of the company's resilience and our ability to drive year over year adjusted EBITDA growth. That said, I will now turn our financial turn to our financial results for the Q3 of 2024. Sales volume decreased in the Q3 by £4,200,000 or 6.9 percent to £56,800,000 The company continued to operate in a challenging market conditions driven by consumer pullback and increased competitive pressures. In the company's retail business, while High Liner Foods experienced year over year decline in volumes, the company once again expanded distribution in strategic areas including club and premium offerings. Speaker 300:08:37The company's food service business, High Liner Foods saw continued success of new value added innovations in terms of volume and expanded distribution and saw continued growth in alternative species despite the overall year over year decline in volume. The sales decreased in the 3rd quarter by $30,800,000 or 11.9 percent to $228,900,000 driven by volume declines amid challenging market conditions and reduced pricing reflecting deflationary markets. Given the highly promotional and price sensitive retail and foodservice markets, the company continues to take actions on promotions, innovations and distribution to strengthen its competitive position and mitigate the impact of external pressures while preserving profitability, which Anthony will provide more insight on here shortly. The weaker Canadian dollar in the Q3 of 2024 compared to the same period in 2023 decreased the value of reported U. S. Speaker 300:09:39Dollar sales from our Canadian denominated operations by approximately $1,000,000 relative to the conversion impact last year. Gross profit decreased in the Q3 by $1,300,000 or 2.6 percent to $48,300,000 and gross profit as a percentage of sales increased by 2% to 21.1% as compared to 19.1% in the Q3 of 2023. The decrease in gross profit is due to lower raw material cost, normalized inventory levels, a more profitable mix and a balanced approach to pricing focused on supporting both the bottom and top line of the business. High Liner Foods continues to drive continuous improvement across operations to ensure prudent cost management. In addition, the weaker Canadian dollar decreased the value of reported U. Speaker 300:10:31S. Dollar gross profit from our Canadian operations in 2024 by $200,000 relative to the conversion impact last year. Adjusted EBITDA increased in the quarter by $1,500,000 or 7.5 percent to $21,500,000 and adjusted EBITDA as a percentage of sales increased favorably to 9.4% compared to 7.7%. The increase in adjusted EBITDA is due to favorable distribution expenses and lower net SG and A expenses, partially offset by lower gross profit. In addition, the weaker Canadian dollar decreased the value of reported adjusted EBITDA in USD from our Canadian operations in 2024 by $100,000 relative to amount relative to the conversion impact last year. Speaker 300:11:23Reported net income decreased in the 3rd quarter by $12,800,000 to $18,300,000 and diluted earnings per share increased by $0.45 to $0.61 The increase in net income is due to increase in adjusted EBITDA and increase in business acquisition, integration and other expenses and a decrease in finance costs and lower depreciation and amortization costs partially offset an increase in income tax expense. Excluding the impact of non routine or non cash expenses that are explained in our MD and A, adjusted net income in the Q3 of 2024 increased by $700,000 or 14.3 percent to $5,600,000 and correspondingly adjusted diluted earnings per share increased by $0.06 to $0.20 in the Q3 of 2024. Turning now to cash flows from operations and the balance sheet. Net cash flows from operating activities in the Q3 of 2024 decreased by $40,600,000 to an inflow of $13,400,000 compared to an inflow of $54,000,000 in the same period in 2023, despite higher net income and lower interest paid. This is due to lower changes in non cash working capital balances compared to the previous year, lower finance costs due to a gain on the modification of the long term debt and lower depreciation and amortization. Speaker 300:12:53The decrease is partially offset by increased cash flows provided by operations. Capital expenditures were $17,200,000 in the 1st 3 quarters of 2024 compared to $13,100,000 in the prior year reflecting the continued investment in our business. Net debt of the Q3 of 2024 decreased by $10,300,000 to $239,600,000 compared to $249,900,000 at the end of fiscal 2023, reflecting lower bank loans, long term debt, lease liabilities and a higher cash balance as at September 28, 2024 as compared to December 31, 2023. Net debt to adjusted EBITDA was 2.4 times at September 28, 2024 compared to 2.6 times at the end of fiscal 2023. The ratio has continued to improve in the 2020 and 2024 due to more net debt and a higher rolling 12 month adjusted EBITDA compared to fiscal 2023. Speaker 300:13:57In the absence of any major acquisitions or unplanned capital expenditures in 2024, we expect this ratio to continue to be lower than the company's long term target of 3 times at the end of fiscal 2024. Notably as well, the early refinancing of High Liners Term Loan B, which was completed in the quarter. This provides a stable platform for organic and accelerated growth strategies. In fact, the refinancing was not only at improved rates, but also oversubscribed, demonstrating the confidence of our lender community that our lender community has in Highline Foods. Also during the Q3, our net debt continued at the lowest levels the company has seen in more than 10 years. Speaker 300:14:45Before I wrap up, I'll provide details on our intention to increase the size of our normal course issuer bid. Our application, which is subject to the approval of the TSX would increase the number of shares at the company that the company intends to purchase from 700,000 to 1,643,340, an increase of 900 and and 43,340 shares. Our move to increase the NCIB, as Paul noted, reflects the Board and management's belief that the share price currently does not reflect the true value of the company. In closing, our strong balance sheet, supportive financial partners, focused team and demonstrated ability to achieve consistent EBITDA performance amid an economic economic backdrop positions us well to support our strategy and capitalize on future growth opportunities. I will now turn the call over to Anthony to discuss our operational Speaker 400:15:44highlights. Thanks, Daryl, and hello, everyone. The 3rd quarter largely played out as expected Speaker 500:15:50in terms of market Speaker 400:15:50conditions, challenges and emerging opportunities. Conditions, challenges and emerging opportunities. We continue to operate in a highly competitive and promotional market on both sides of the border. Consumers remain price sensitive and seafood continues to be a more expensive option for protein and certainly in comparison to other grocery staples. In foodservice, traffic continued to decline across the industry and consumers traded down within foodservice and dined out less frequently. Speaker 400:16:21This is driven in part by the higher cost of dining outside of the home, with the average check size for a meal in home rising 4% in the quarter. While our diversified business enabled us to benefit from the related improvement in the retail frozen seafood category, we did experience pressure on our foodservice business during Q3. In particular, this quarter, we lapped a successful limited time offer in QSR that ran in Q3 2023. However, we continue to experience relative stability in non commercial and we saw strong performance within the school system where we won additional business this year. We also expanded distribution which will help us offset continued near term pressure. Speaker 400:17:08Turning now to our retail business in which distribution gains were also a bright spot. Our distribution gains continue to be tied to innovation and value and demonstrate how the core attributes of our strategy are working together and supporting improved performance compared to Q2 and laying the groundwork for recovery. In U. S. Retail, we have continued to make inroads with major club retailers driven by product innovation and value associated with club size purchases. Speaker 400:17:39Pairing value with volume allows us to appeal to the value conscious consumer while preserving margin and will remain a key tenet of our strategy moving forward. We are supporting this strategy with targeted marketing activation in partnership with our retailers. We are encouraged by the results so far, both in terms of the number of marketing impressions and how this is translating into expanded distribution, especially in the club channel. While it is early days, retailers have responded positively to developing mutually beneficial campaigns. I'm confident in the opportunities here to support sales and volume recovery and growth over time. Speaker 400:18:21We have some exciting campaigns time to roll out in partnership with retailers to coincide with the Lenten period. From a portfolio perspective, the bright spots I shared in Q2 continued in the Q3. In our U. S. Retail business where the category continues to improve overall, our seaworthy premium Atlantic salmon brand continues to be a top performer and is in fact the fastest growing brand in the category. Speaker 400:18:48During the Q3, we secured new listings and expanded distribution for our value Catch the Day and Fisher Boy brands along with our premium Sea Cuisine and Seaworthy brands. The strong response to these products coupled with the increasing demand by consumers for value and convenience offered by frozen restaurant quality seafood bodes well for our future performance in retail. We will continue to focus on our barbell strategy of leaning into value and premium ends of our portfolio moving forward. In Canadian retail, the category is also improving, albeit not at the same pace as in the U. S. Speaker 400:19:27And remains highly competitive. While competitive pressures continue to negatively impact our share during the Q3, we are capitalizing on the strength of our customer relationships and the opportunities associated with our innovation, brand heritage and customer marketing partnerships to push back against competitive pressure. We also continue to deepen our footprint in the Canadian club category during the Q3 with performance in that channel leading to overall growth in shipments in Q3. Innovation continues to support performance and listings across mainstream retailers with our 2 new value added shrimp innovations off to a promising start as the number 1 and number 3 branded innovations in the category this year. Turning now to alternative species, where the trends we saw in the Q2 continued into the 3rd. Speaker 400:20:22Southern Blue Whiting growth continued in both the U. S. And Canada in retail and foodservice, And we converted another SKU over this species during the quarter. Southern Blue Wedding is a promising value based species that attracts consumers given its cost and taste. And we expect this growth to continue, particularly in our foodservice business going forward. Speaker 400:20:45Overall, I'm encouraged by the progress we made in the Q3 to support the top line while protecting margins. Looking ahead, we intend to build the momentum underway supported by strong consumer and customer engagement and innovation success. I look forward to updating you on our progress in Q4. And with that, I'll hand it back to Paul for his concluding remarks. Speaker 200:21:08Thank you, Anthony. As you've heard today, we are executing well against our targeted strategy to offset headwinds and return to profitable growth. Despite continued market challenges, we are encouraged by our financial and operational performance in the quarter and especially our ability to make press on the top line while continuing to strengthen profitability. We are well positioned to build on our progress in the Q4 as we partner with our customers to support category growth and deliver value, convenience and innovation to consumers seeking seafood as healthy and affordable source of protein. Our strong balance sheet remains a source of competitive advantage and priority for us. Speaker 200:21:50It strengthens our resilience through challenging times and affords us the ability to be measured and strategic in our response. Similarly, it allows us to be patient and disciplined as we explore opportunities for M and A, waiting for the right opportunity to accelerate our growth across the value chain, while continuing to return capital to our shareholders and invest in our business. We are focused on building our 3rd building on our Q3 progress, delivering year over year increase in adjusted EBITDA and pushing towards a return to top line growth while surfacing value for shareholders. With that, I will hand the call over to the operator to open it up for our question and answer period. Operator? Operator00:22:35Thank you. And your first question comes from the line of Kyle McPhee with Cormark Securities. Please go ahead. Speaker 500:23:08Hi, everyone. To start, I want to unpack some of the moving parts feeding your volume performance, which was better than I thought this quarter. It seems like some of these High Liner specific growth initiatives you're outlining are masking more and more of the macro headwind. So first on that topic, can you help us quantify the new wins that you're landing? If we isolate the volume wins in retail and foodservice that you're calling out, what does that look like in terms of year over year growth? Speaker 500:23:35And is it snowballing versus the wins you talked about in recent quarters or you're just kind of benefiting largely from the same ones? Speaker 200:23:43Yes. No, I think there is some benefit from wins we had earlier in the year in foodservice and retail. And we're also continuing to win some new business, including some new distribution and also from the effect of I think some good promotional activity that's helped support volume. And you're right, Kyle. The trend has improved. Speaker 200:24:08We're still not back to top line growth, although certainly have moved in that direction compared to where we were earlier in the year. Speaker 500:24:19Okay. And can you help us kind of quantify when we isolate this movie part the wins? Like is it kind of low single digit like 1%, 2% type volume win isolating this stuff? Speaker 200:24:31Yes. I think that's probably right. Speaker 300:24:37We did have Speaker 200:24:39we did pick up some volume related to USDA's school business, which is larger volume. So that would be on top of that. But that helped offset some of the contract manufacturing declines that we talked about earlier in the year. Speaker 500:24:58Okay. And then on the macro moving part impacting your top line, would you describe it as the intensity of the macro headwinds staying the same? Is it getting worse? I'm trying to figure out when macro kind of stops showing as a headwind in your moving parts. Because if it's not getting worse, I think you will have largely lapped it after your next quarter. Speaker 400:25:20Yes, Kyle, it's Anthony. I think there's a couple of different things happening. Foodservice is has been down the last few quarters and continues to be down. So that is definitely headwind for us as the larger part of our business and portfolio as traffic was down a couple of percentage points. We're seeing declines in QSR on the value side of foodservice for the first time quarter. Speaker 400:25:44And EATER check is up overall. So that's headwind for us. Offsetting that though is within foodservice as you can imagine as customers are looking for value, they're shifting into distributor label or private label. We do a good the input label, and so have been able to have some relatively stable performance associated with that. In addition to our business in non commercial, like Paul talked about with what we picked up in schools and in school feeding in particular. Speaker 400:26:15And then the other side of it is that retail is improving. So as consumers are eating out less and at home more, which is getting worse than foodservice better in retail, then we're seeing the pickup in retail and some traction and with both our innovation as well as with the distribution and promotional tactics that we have going on. Speaker 500:26:39Thanks for all that color on the moving parts. Last thing I wanted to talk about was your gross margin percentage. So increased promotional activity is one of the moving parts impacting this line item, offsetting some of the lower inventory cost dynamics that you're getting those benefits. So I know Q3 marked a point for increased promotional activity and that likely continues. But I guess my question is, is the intensity of promotion accelerating going forward? Speaker 500:27:06What should we expect there? Or are you just kind of holding on to the existing intensity of promotion? Speaker 200:27:13No, I will continue with the promotional activity perhaps at a slightly higher pace in Q4 because we're seeing the positive effects of that promotional activity and that's driving overall higher gross margin dollars. The other piece though, Kyle, the factor in for sure is just the impact of mix, right? So as we see an increase in some of the private label or bid business that may come at lower margins, but certainly is supportive to the overall gross margin dollar growth. Speaker 500:27:54Okay. That's it for me for now. Thank you. Operator00:28:00Thank you. And your next question comes from the line of Nevan Yoakam with BMO Capital Markets. Please go ahead. Speaker 600:28:08Thank you and good afternoon guys. First, I just wanted to clarify quickly, Paul, I think you mentioned year over year EBITDA growth. Was that in reference to 2024 or was that also including the Q4 of this year? Speaker 200:28:24Yes. It's certainly year to date. We've had EBITDA growth over the prior year. And as we've really been saying through the year, we expect to be able to deliver EBITDA growth for the full year. And obviously with the performance we put up in the 1st three quarters, we are even more confident of that performance on an annual basis. Speaker 600:28:49Okay, perfect. And then just on sales in the quarter, so beyond the volume decline, can you parse out the impact from price deflation as well as mix this quarter? Speaker 200:29:04From a deflation perspective, there's probably not a lot that's factored in. I think it's more of an impact of the volume decline and mix. We because we are starting to see some species, the prices actually come back up off lows earlier in the year. So I would say it's more of a mix impact than a deflationary price impact. Other than obviously promotional activity can have some impact on the net sales outcome. Speaker 600:29:44Okay. That makes sense. And then I guess just sort of as you think about Q4 on a year over year basis when we're looking at volumes here, a nice sequential improvement there in Q3. Would you expect to see a further improvement into Q4 as well, still down year over year, but sequentially improved? Speaker 200:30:06Well, we certainly expect to see a sequential improvement. And as we've been saying, we're really working to get back to top line growth. So we've had a good start to the quarter, but we need to we'll continue to work on having a strong finish to the year. Speaker 600:30:27And then I think we already touched on gross margins. So just on SG and A, it was quite steady on a year over year basis. I was looking for a bit of an increase there. Maybe you can talk about just how SG and A dollars excluding the D and A component are expected to trend into Q4? Speaker 200:30:52Yes. Nothing that I would I'd highlight that should swing the amounts to any degree. The only thing I would say I would caution, we always look at what I'll call adjusted SG and A. So we exclude any impact of long term incentive programs, those kinds of things. So when you exclude that, I wouldn't expect any significant change quarter over quarter. Speaker 200:31:17The one area that there can be some seasonality in is our marketing spend. But again, nothing significant between Q3 and Q4 that I'd highlight. Speaker 600:31:30And so like I guess if it's relatively steady sequentially, you'd be looking for a larger year over year increase into Q4, is that right? Speaker 200:31:42In SG and A as a percentage of sales? I guess I'm not sure I understand the question. Speaker 600:31:50Yes, more on SG and A dollars. Like if your comment was in relation to SG and A dollars being relatively flat sequentially or were you referring to SG and A as a percentage of sales? Speaker 200:32:05I was thinking of SG and A as a percentage of sales, yes. Speaker 600:32:08I see. Okay, perfect. That makes sense. That's it for me. Thank you. Operator00:32:15Thank you. And there are no further questions at this time. I would like to turn it back to Paul Jewer, President and CEO for closing remarks. Speaker 200:32:25Thank you, operator. To close, I want to thank you for joining our call today. We look forward to updating you with our results for the Q4 of 2024 on our next conference call in February. Operator00:32:38Thank you, presenters. And this concludes today's conference call. Thank you all for participating. You may now disconnect.Read morePowered by