Premium Brands hits revenue record in Q2 despite hit from low snow crab, lobster prices

Premium Brands Holdings Corporation announced a record Q2 revenue of CAD 1.63 billion (USD 1.2 billion, EUR 1.1 billion), largely buoyed by the company’s specialty foods segment.

The company, which has acquired a number of different seafood firms including Clearwater Seafoods – which it purchased jointly with a coalition of Mi’kmaq First Nations in 2020 – saw its specialty foods segment generate 8.1 percent organic growth and 14.2 percent total growth in the quarter. The positive performance and high revenue resulted in record Q2 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of CAD 152.4 million (USD 113 million, EUR 103 million), a 16.5 percent, or CAD 21.6 million (USD 16 million, EUR 14.6 million), increase compared to Q2 2022.

For the first half of the year, Premium Brands has had over CAD 3 billion (USD EUR) in revenue, and an adjusted EBITDA of CAD 263.1 million (USD 195.5 million, EUR 179 million).

“We are pleased to report another quarter of record sales and adjusted EBITDA as we continue to execute our various growth strategies,” Premium Brands President and CEO George Paleologou said in a release.

While the company performed well overall, aspects of its seafood businesses took financial hits, and Clearwater continued to see losses. The company posted CAD 137.9 million (USD 102.4 million, EUR 93.8 million) in revenue, up from CAD 133.3 million (USD 99.1 million, EUR 90.7 million) in Q2 2022. Despite the increase, the company still posted a net loss of CAD 12.3 million (USD 9.1 million, EUR 8.3 million) in Q2 2023, slightly improved from the loss of CAD 12.8 million (USD 9.5 million, EUR 8.7 million) it posted in the same quarter of 2022.

The company attributed the increase in revenue to sale price inflation driven by the weakened Canadian dollar, the sale of its excess snow crab inventory carried over from 2022, and the strong demand for the company’s self-harvested sea scallops and clams.

However, the company added that its earnings were also hurt by the relatively unprofitable snow crab sales – which replaced higher margin shrimp and Argentine scallop sales – and lower Canadian self-harvested clam margins due to “natural size and grade variability.”

Premium Brands’ premium food distribution segment was also hit by lower lobster market prices. The company owns a number of lobster companies, including  Portland, Maine-based Ready Seafoods; York, Maine-based Maine Coast Shellfish; and Topsham, Maine-based Hancock Gourmet Lobster Company, which was acquired by Ready Seafood in 2019. The low prices hit the company’s premium food distribution segment, contributing to the segment seeing a 4.2 percent, or CAD 24.2 million (USD 17.9, million, EUR 16.4 million), drop in revenue in Q2 2023.

Paleologou added in a results presentation that its acquisition pipeline “remains robust.” The company is in active negotiations with seven seafood companies, with combined sales of CAD 406 million (USD 301 million, EUR 276 million), and is in “early stage” talks with four more seafood companies with combined sales of CAD 310 million (USD 230 million, EUR 210 million).

The company added that discussions with nine seafood companies, with combined sales of CAD 1.4 billion (USD 1 billion, EUR 952 million), are currently “on hold,” but Paleologou said Premium Brands continues to make progress on identifying new opportunities.

“With the various pandemic-related risks and disruptions behind us, we are beginning to once again make significant progress on our various acquisition-related discussions,” Paleologou said. “I'm pleased to report that our M&A group is currently fully engaged on several larger transactions that are progressing as planned.”

Paleologou added that the company expects continued revenue and earning increases as it moves forward with its acquisition strategy.

“Looking forward, we expect the group’s performance to continue to improve, and even accelerate in the latter part of the year as several major capacity expansions come on stream,” he said.  

Photo courtesy of Premium Brands Holdings Corporation