Earnings call transcript: High Liner Foods Q2 2025 misses EPS, stock dips

High Liner Foods (HLF) reported its second-quarter 2025 earnings, revealing an EPS of $0.38, which fell short of the forecasted $0.4098 by 7.27%. Revenue also missed expectations, coming in at $239.61 million against a projected $240.63 million. The market reacted with a 1.47% decline in HLF’s stock price, closing at $17.03. This performance reflects challenges such as increased tariffs and raw material costs impacting profit margins. According to InvestingPro analysis, the stock appears undervalued, trading at a notably low P/E ratio of 2.73x, suggesting potential upside opportunity despite current challenges. InvestingPro subscribers can access 10+ additional insights about HLF’s valuation metrics.

Key Takeaways

• EPS and revenue both fell short of forecasts, with a notable EPS miss of 7.27%.
• Stock price decreased by 1.47% following the earnings release.
• Sales volume increased by 6%, indicating strong demand.
• Gross profit margins were compressed by 170 basis points due to cost pressures.
• Acquisitions and new product launches highlight potential future growth.

Company Performance

High Liner Foods saw a mixed performance in Q2 2025. Sales volume rose by 6% to 54.8 million, and sales increased by 9.8% to $239.6 million. The company maintains strong financial fundamentals with a free cash flow yield of 19% and healthy liquidity ratios, as revealed by InvestingPro data. However, the gross profit margin decreased by 170 basis points to 22.3%, influenced by increased tariffs and raw material costs. The company completed the acquisition of Mrs. Paul’s and Bandicant’s brands, aiming to expand its market presence.

Financial Highlights

• Revenue: $239.6 million, up 9.8% year-over-year.
• Earnings per share: $0.38, down from $0.59 in the prior year.
• Gross profit: $53.3 million, up 1.5%.
• Adjusted EBITDA: $25.1 million, up 5.5%.
• Net income: $8.5 million, down 56%.

Earnings vs. Forecast

High Liner Foods reported an EPS of $0.38, missing the forecast of $0.4098 by 7.27%. Revenue was slightly below expectations, with a surprise of -0.42%. This marks a significant miss in comparison to previous quarters, reflecting ongoing challenges in managing costs.

Market Reaction

Following the earnings announcement, High Liner Foods’ stock decreased by 1.47%, closing at $17.03. This movement reflects investor concerns over the earnings miss and the impact of cost pressures on margins. The stock remains within its 52-week range, suggesting moderate volatility. InvestingPro data shows analyst targets ranging from $7 to $11, with the company maintaining a GOOD financial health score of 2.67, indicating resilient fundamentals despite market fluctuations. A comprehensive Pro Research Report analyzing HLF’s market position is available to subscribers.

Outlook & Guidance

Looking forward, High Liner Foods expects adjusted EBITDA growth by year-end and plans to focus on pricing strategies to offset raw material costs. The company anticipates cross-selling opportunities from its newly acquired brands and plans to discuss market expansion in the upcoming Investor Day.

Executive Commentary

CEO Paul Gewer emphasized the importance of innovation, stating, "Innovation is a critical growth lever for us." Chief Commercial Officer Anthony Rosetta highlighted success in the quick service restaurant sector, while Gewer acknowledged the balance between top and bottom line needs.

Risks and Challenges

• Tariffs and rising raw material costs could continue to pressure margins.
• Declining foodservice traffic, particularly in the U.S., may impact future earnings.
• Inflation may affect consumer spending patterns, impacting retail sales.
• Integration of newly acquired brands poses potential operational challenges.
• Market saturation in frozen seafood could limit growth opportunities.

Q&A

During the earnings call, analysts inquired about the impact of the Lenten period on sales, with the company estimating a 2-3% volume growth contribution. Questions also focused on tariff-related cost increases, which the company expects to offset in the second half of the year.

Full transcript - High Liner Foods Incorporated (HLF) Q2 2025:

Conference Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the High Liner Foods Incorporated Conference Call for Results of the 2025. At this time, all participants are in a listen only mode. Following management’s prepared remarks, we will conduct a question and answer session.

Instructions will be provided at that time for you to queue up for questions. This conference call is being recorded today, Friday, 08/08/2025 at ten a. M. Eastern Time for replay purposes. I would now like to turn the call over to Kimberly Stephens, Vice President of Finance and Investor Relations for High Liner Foods.

Please go ahead.

Kimberly Stephens, Vice President of Finance and Investor Relations, High Liner Foods: Good morning everyone. Thank you for joining the High Liner Foods conference call today to discuss our financial results of the 2025. On the call from High Liner Foods are Paul Gewer, Chief Executive Officer, Derek Bergwyn, 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 these are useful in assessing the company’s financial performance. These measures are fully described and reconciled to IFRS measures in our MD and A.

Listeners are also reminded that certain statements made on today’s call may be forward looking statements under applicable securities law. Management may use forward looking statements when discussing the company’s investments and acquisitions, strategy, business and markets in which the company operates as well as operating and financial performance in the future. These statements are based on assumptions that are believed to be reasonable at the time that they were made and currently available information. 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.

Highline R2 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 in its most recent annual MD and A and annual information form. Please note that Highlander Foods is under no obligation to update any forward looking statements discussed. At the close of market yesterday, August 11, August 2, Highline of foods recorded its financial results for the second quarter ended 06/28/2025. That news release along with the company’s MD and A and unaudited condensed interim consolidated financial statements for the 2025 have been filed on SEDAR. Plus, it can also be found in the investor section of the Highline of Foods website.

If you’d like to receive our news releases in the future, please visit the company’s website to register. Lastly, please note that the company reports its financial results in U. S. Dollars and therefore the results to be discussed today are also stated in U. S.

Dollars unless otherwise noted. Highline Foods common shares trade on the Toronto Stock Exchange and are quoted

Paul Gewer, Chief Executive Officer, High Liner Foods: in Canadian dollars. I will now turn the call over to Paul for his opening remarks. Thank you, Kimberly and welcome everyone to our second quarter twenty twenty five conference call. I’m joined today by our Chief Financial Officer, Dale Brugman and our Chief Commercial Officer, Anthony Rosetta. Before I hand the call over to my colleagues to discuss the details of our financial and operational performance, I will begin by sharing my perspective on our second quarter results and the macro environment.

As we shared in Q1, the second quarter got off to a good start. And I’m pleased to say that momentum carried through and resulted in year over year growth on sales, volume and adjusted EBITDA. We certainly saw a boost in the second quarter as a result of the later timing of blend. And as you will hear from Anthony, our targeted promotional activity in partnership with our customers enabled us to capitalize on this culturally significant time for seafood consumption in both retail and food service. While the later electronic helped our results this quarter, it wasn’t the only driver of improved top line performance.

We continue to execute well and this is translating into incremental volume growth with existing and new customers. On the bottom line, we grew adjusted EBITDA year over year at a time of rising raw material costs and tariffs. Despite mitigation efforts, margins compressed during the quarter as higher input and tariff costs could not be fully passed on to the customer. As companies across all industries are grappling with tariffs, questions continue to remain and we expect to continue navigating an unpredictable trade environment. In the second half of the year, we have implemented pricing strategies that will help offset the rising cost of raw materials.

We will tread carefully here, continuing to strike a careful balance between protecting margins and supporting demand and the needs of our customers and consumers. On a brighter note, we are thrilled to have announced and closed on the acquisition of two leading brands from ConAgra, Mrs. Paul’s and Bandicant’s. While we have been active in the M and A market for some time, we’ve taken our time to find the right acquisition and the ConAgra deal checks all the boxes. It was a fantastic opportunity for us to not only secure existing volume, but to benefit from cost and margin synergies over time.

Importantly, we completed the transaction while preserving our balance sheet strength and flexibility, which remains a key strategic advantage for us and a lever for additional accretive growth in the future. While the full financial benefits of the transaction will start to show up next year, we are wasting no time advancing cross selling opportunities and putting the sales team in place to maximize the opportunity we now have to significantly expand our footprint in U. S. Retail. As you will hear from Anthony, we are driving strong performance in our U.

S. Retail business, and this transaction will act as a further catalyst for growth. It leapfrogs us to the second largest producer of frozen seafood in The U. S. In pounds, and we intend to capitalize on this scale to fuel future growth.

In the near term, we will continue to execute on our branded and value added strategy to support our customers and deliver a strong second half. While we recognize that once again, our ability to deliver profitable growth will be challenged by market headwinds, we remain focused on ending the year with adjusted EBITDA growth. As we capitalize on the benefits of our diversified business, ongoing innovation and relentless focus on delivering healthy, versatile and affordable frozen seafood to our North American customers. I will now hand the call over to Darryl to discuss our financial performance. Darryl?

Thank you, Paul, and hello everyone. As Paul mentioned, our consistent execution across our retail and foodservice businesses, combined with the later Lenten period, supported both the top and bottom line of our business this quarter. While higher than expected costs related to the introduction of tariffs on seafood imported into The US and a negative impact had a negative impact on our Q2 margins, we are confident in our ability to mitigate these challenges going forward with our diversified supply chain and financial flexibility. Turning now to our financial results for the 2025. Sales volume increased in the second quarter by 3,100,000 or 6% to 54,800,000, driven by increased demand across our retail and foodservice businesses, supported by strong execution and the benefit of later timing of the Lenten period of 2025.

Sales increased in the second quarter by $21,300,000 or 9.8% to $239,600,000 decreased sorry, driven by increased volumes as well as a favorable product mix supporting the company’s branded value added strategy. The FX impact in the quarter for the conversion of the weaker Canadian to U. S. Dollar reported sales for our Canadian denominated operations resulted in an approximate $700,000 decrease to the conversion impact for the same period in 2024. Gross profit increased in the second quarter by $800,000 or 1.5% to $53,300,000 and gross profit as a percentage of sales decreased by 170 basis points to 22.3%, as compared to 24% in the 2024.

The increase in gross profit is driven by the increase in sales volume previously mentioned. This was partially offset by increased expenses, as Paul mentioned, related to the introduction of tariffs on seafood imported to The US, as well as higher raw material pricing on selected species, which is reflected in the decline in gross profit as a percentage of sales. High Liner Food continues to drive improvements across operations to ensure prudent cost management, and is actively working to mitigate the ongoing impact of tariffs, while maintaining a balanced approach to pricing focused on supporting both the bottom and top line of the business. The FX impact of the weaker Canadian dollar decreased the value of reported U. S.

Dollar gross profit from our Canadian operations in 2025 by $200,000 relative to the conversion impact last year. Adjusted EBITDA increased in the second quarter by 1,300,000 or 5.5% to $25,100,000 and adjusted EBITDA as a percentage of sales decreased to 10.5 compared to 10.9%. The increase in adjusted EBITDA reflects the increase in net sales and gross profit and the decrease in net SG and A expenses, offset by an increase in distribution expenses. The FX impact of the weaker Canadian dollar resulted in a decrease in the value of reported adjusted EBITDA by about $100,000 Reported net income decreased the second quarter, in the second quarter by $10,800,000 or 56% to $8,500,000 while diluted earnings per share decreased to $0.28 compared to $0.59 in the prior year. The decrease in net income reflects the business acquisition integration and other income reported in the 2024, which was an income position as a result of the Rubicon legal settlement, as compared to a net expense in 2025, which includes costs related to the company’s recent acquisition.

The decrease in net income is also attributed to an increase in finance costs, partially offset with the increase in the adjusted EBITDA and lower income expense. Excluding the impact of certain non routine or non cash expenses that are explained in our MD and A, adjusted net income in the 2025 increased by $300,000 or 2.7% to 11,500,000.0 Adjusted diluted earnings per share increased to $0.38 from $0.35 in 2024. With regards to cash flows from operations and the balance sheet, net cash flows from operating activities in the 2025 decreased by $23,400,000 to an inflow of $15,600,000 compared to an inflow of $39,000,000 in the same period in 2024. The decrease is driven by unfavorable changes in non cash working capital balances, specifically cash outflows from inventory purchases, as well as higher repayments of accounts payable balances due to the later timing of the lent in period in 2025 compared to 2024. Capital expenditures were $7,900,000 in the 2025, compared to $10,100,000 in the prior year, reflecting the continued investment in our business.

Net debt at the end of the 2025 increased by $42,700,000 to $275,900,000 compared to $233,200,000 at the end of fiscal twenty twenty four, reflecting higher bank loans and a lower cash balance, partially offset by lower long term debt and lease liabilities as at 06/28/2025, as compared to 12/28/2024. The higher net debt is due to higher inventory levels in Q2 versus the prior year. Net debt to adjusted EBITDA was 2.7 times at 06/28/2025, compared to 2.3 times at the 2024. This ratio is currently below the company’s long term target of three times. In closing, we have a strong balance sheet and focused team with a demonstrated ability to continually meet the evolving needs of our customers and consumers.

Our consistent execution, combined with our diversified business and balanced pricing strategy, positions us well to navigate macro headwinds and reduce the impact of tariff related costs and uncertainties. With that, I’ll pass the call over to Anthony to discuss our operational highlights. Thanks, Darrell, and

Anthony Rosetta, Chief Commercial Officer, High Liner Foods: hello, everyone. It was an exciting quarter in many respects as we saw the planning and investments in Lent promotional activity pay off and support top line growth during the second quarter. This was particularly apparent in U. S. Retail, where our business outperformed the category and we gained market share.

All three of our core U. S. Retail brands, Sea Cuisine, Fisher Boy and Seaworthy delivered double digit volume growth on the back of new distribution gains and effective promotions. We are thrilled with how these brands are performing and will continue to invest to support their performance with promotional activity and product innovations. Our new sequencing shrimp skewers are a great example of a new innovation that’s a timely offering to consumers who are dining out less, but still looking for restaurant quality seafood to enjoy at home.

While the frozen seafood retail category remains under pressure due to inflationary impacts on consumer purchasing decisions, our branded value added offering and targeted promotions are helping to draw the consumer to our products. Our omni channel marketing was extremely effective during the second quarter, outperforming across media, shopper and social, supporting market share gains and driving more consumers to our brand. We look forward to applying our marketing strategies to support the two new brands in our portfolio, Mrs. Paul’s and Vandecants, as well as the innovative Shark Bites product that appeals to a new generation of seafood consumers. We are very excited to take these products to market and support with targeted marketing and promotional activity.

Both brands are long standing consumer favorites, stocked in national retailers across The US, and part of the beauty of the transaction is our diversified customer strength. Our brands are stronger in a different set of national retailers and vice versa, opening up a lot of doors to cross selling opportunities. We’re particularly excited about the expanded footprint in regional grocery stores, which we have been making inroads into and now have a catalyst for expansion. We have hit the ground running and are already meeting with new retailers to discuss the opportunities associated with our full and diversified retail portfolio. Now for an update on our Canadian retail business, where we also saw strong net sales and volume gains.

Our performance was supported in part by effective promotions during Lent, as well as a new rotation in the club channel and stronger branded value added and private label performance. Marketing also played critical role in elevating the profile of our brands and promotional activity, where we continue to lean into our brand heritage to promote our Made in Canada products. Consumer data suggests that Canadians continue to show a strong preference for Canadian or made in Canada brands, and we’re capitalizing on this timely opportunity to showcase our brands. For example, during the quarter, we participated in the culinary series, Savor the North, which highlighted our company’s history in the country and our strong commitment to quality and Canada. Now turning to food service, where we were encouraged to see an uptick in our business this quarter compared to the last three quarters.

Despite category softness and a continued decline in traffic, our strong execution led to growth on the top line of our business, outperforming the industry in volume in Q2. Operators continue to focus on value menus and menu innovation to capture and drive traffic, and we are focused on meeting their needs through a combination of value added offerings and alternative species that can support on value and efficiency while showcasing the versatility of seafood for menu innovation. This is true across commercial and non commercial customers, as while traffic is more stable in non commercial customers, consumer price sensitivity impacts menu choice. We continue to promote alternate species as a means to help soften the inflationary impact on proteins for the consumer, especially in whitefish, as supply of cod tightens and prices rise in response to cod quotas. We saw strong performance in Hague and Southern Blue Whiting during the quarter, and we’ll continue to promote these species alongside Pollock as helpful mitigation strategies for us and solutions for the customer.

In this value driven environment, the quick service restaurant channel continues to be a bright spot for our business, where we are once again able to grow our market share in the quarter. Our permanent new item on the menu with a leading national customer is performing well, as is a limited time offer with a different national customer that launched this summer. As we partner with QSR customers on promotional items, we are focused on a sweet spot we see of innovating in such a way that delivers significant operational efficiencies for the customer with fresh and relevant menu innovation with particular appeal to a younger demographic. We have a strong innovation pipeline and expect that it will continue to drive incremental volume this year and increasingly will be a focal point of our strategy into 2026 and beyond. In the near term, you can expect a continued focus on strong execution, targeted promotion and customer focused solutions in the back half of the year.

I look forward to updating you on our progress at the

Paul Gewer, Chief Executive Officer, High Liner Foods: end of the third quarter. With that, I’ll hand the call back over to Paul for his final remarks before we open it up to questions. Paul? Thanks, Anthony. As you’ve heard today, we have had a solid start to the year.

Integration following our acquisition is well underway, and we have a strong momentum in our business today. I share Anthony’s excitement about the results as we are seeing from our innovations and the potential here for us to expand beyond our current core offering. Innovation is a critical growth lever for us and an area where we have been steadily building bench strength, leadership and R and D capabilities to continue to win with near term innovations with our current brands, while exploring the potential to expand into new areas of the market for us over the medium to long term. We are actively working on plans and testing new concepts with customers that I look forward to talking more about at our Investor Day in September. In the meantime, we will continue to advance our strategy that is delivering results from our core business and work hard to shore up demand in the face of rising prices across the industry as tariffs on a wide range of goods begin to be passed on to the customer.

We’ve been successful at balancing the top and bottom line needs of the business over the past twelve months, and I am confident that we can continue to do so as we focus on ending the year with adjusted year over year EBITDA growth. With that, I will now pass the call back to the operator for questions. Operator?

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Nivan Yoshim with BMO Capital Markets. Your line is now open.

Nivan Yoshim, Analyst, BMO Capital Markets: Thank you. Good morning, guys. Hopefully, we can just start here on the top line. I know it might be difficult, but are you able to strip out the Lenten benefit that you would have received on volumes this quarter? And then if you can give an update on how volumes are trending to start Q3 as well as your expectations for volume growth in the second half of the year?

Paul Gewer, Chief Executive Officer, High Liner Foods: Yeah. Thanks, Devin. So it is, as you said, difficult to exactly strip out the Lent impact. We grew at 6% in the quarter. Our estimate is if you exclude that Lent impact and have it back in Q1 where it would have been in the prior year, probably would have been more like a couple of percentage points, kind of 2% low single digit growth that we typically expect.

And we wouldn’t highlight at this stage anything significant that would change that expectation for the balance of the year. Of course, subject to what we see in terms of any impact on the consumer from the inflationary impact of tariffs. That we’re certainly managing carefully to support both the top and bottom line. And if it unfolds as it has currently, we think we can continue to manage that. But of course, as we’ve seen, there’s still a lot of uncertainty in that regard.

Nivan Yoshim, Analyst, BMO Capital Markets: Great. Thanks, Paul. And then maybe just moving on to gross margins here. In the context of tariffs driving up some of your input pricing. Can you maybe talk about how you’re thinking about pushing through pricing here in the second half of the year?

Would you expect to fully offset some of the cost pressures that you’re seeing? Or would we still expect some gross margin pressure to continue through the second half of the year?

Paul Gewer, Chief Executive Officer, High Liner Foods: Yeah, I think we can largely offset the cost pressures in the second half of the year. We’ll make some decisions about protecting volume, with key customers and key SKUs. But overall, I think we can largely offset the impact. In the quarter, we couldn’t fully offset the impact and that’s largely driven by timing and frankly the uncertainty on tariffs through that period. The net impact of that tariff impact in the quarter was approximately, we think, about $1,600,000 And we think we have more time as we look to the back half of the year to try to fully offset that.

Nivan Yoshim, Analyst, BMO Capital Markets: Okay. And so that $1,600,000 you referred to, that is the increase in raw material costs directly associated with the tariffs?

Paul Gewer, Chief Executive Officer, High Liner Foods: No, that’s the net impact. So the raw material increase would have been higher than that, but we were able to pass on pricing in the quarter, just not enough to fully offset the increased cost.

Nivan Yoshim, Analyst, BMO Capital Markets: Oh, I see. Got it. Thanks for taking my questions.

Conference Operator: Your next question comes from Michael Glenn with Raymond James. Your line is now open.

Michael Glenn, Analyst, Raymond James: Hey, good morning. So I just want to dig into what to how to think about 3Q gross margins relative to 2Q and there’s a lot happening. So you’re integrating the acquisition. You have some higher tariff related costs, you’re putting through price. I think Q3 is seasonally a lower gross margin historically.

I’m just trying to put all of these things together and think about how 3Q gross margins might look relative to 2Q.

Paul Gewer, Chief Executive Officer, High Liner Foods: Yeah, sure. You’re right to point out, Michael, there is some seasonality on margins. So looking at Q3 a year ago rather than the comparison to Q2 is probably a better starting point. In terms of the tariff piece, as we talked about, we believe we can largely offset the increase in COGS associated with that through our pricing and mediation efforts. In terms of the ConEGRA impact, that as we’ve mentioned before, that’ll be largely insignificant for the back half of the year.

We’ll start to see a more positive impact on gross margin percentage in dollars in 2026.

Michael Glenn, Analyst, Raymond James: Okay. So you would expect 3Q to follow sort of normal seasonality? Or

Paul Gewer, Chief Executive Officer, High Liner Foods: At this stage, we’d expect the third quarter to be more like the typical seasonal trend compared to a year ago. I’ll be honest, just given the impact and the fluctuations in tariffs and the ability to pass on price, We’re really looking at it more in terms of the back half rather than the quarter specifically. But at this stage, barring anything more substantial or significantly different than what we’re seeing thus far, feel good about our ability to manage margin.

Michael Glenn, Analyst, Raymond James: Okay. And just to you provided commentary on the foodservice businesses, but just to dig into The U. S. And Canadian businesses right now, like what type of diverging trends are you seeing in the two markets? Does anything stand out in terms of the customers in those markets?

Anthony Rosetta, Chief Commercial Officer, High Liner Foods: Hey Michael, it’s Anthony. Yeah, from a food service perspective, we are seeing a slowdown more acutely in The US than in Canada in terms of traffic declines and consumers dining out less and eating at home more. Our Canadian food service business did outperform our US food service business. And I think that’s indicative of the general trends in the market. I will say that across dining out channels, there was softness, but we did really well, particularly in quick service restaurants with our value offerings and agreements we’ve come to with some big national retailers.

And so we’re winning disproportionately there because of the consumer trend towards value. And then obviously continuing to try and double down as you heard the success we’re having in retail.

Michael Glenn, Analyst, Raymond James: Okay, and when you think about, you mentioned the cross selling opportunity associated with the new retail brands. When do you think we would start to see that roll through in financial results?

Anthony Rosetta, Chief Commercial Officer, High Liner Foods: Yeah, well, we’re in the transitionary period right now where we’re taking ownership of the brands and starting to have really positive conversations with our customers. I think they’re pleased with manufacturer and now owning and taking over these brands. So we are working on the promotional plans for the back half of this year, but I think you’ll see most of the benefit coming early next year as we are taking full control and ownership, particularly of the Lent period and our Lent execution. So, our focus is making sure the brands are well supported promotionally for the balance of this year and with marketing spends and into early next year. Then we’ll start to see some of the benefits of expanding innovation in the portfolio across Canada and The U.

S. Into the second, probably in the 2026.

Michael Glenn, Analyst, Raymond James: Okay, thank you.

Conference Operator: Your next question comes from Ryland Conrad with RBC Capital Markets. Your line is now open.

Ryland Conrad, Analyst, RBC Capital Markets: Hey, good morning guys. Thanks for taking my questions. Just to start off, the lower SG and A as a percentage of sales did kind of offset some of that gross margin pressure in the quarter. So could you unpack the drivers there? And is that a dynamic that we could expect to continue into the back half?

Paul Gewer, Chief Executive Officer, High Liner Foods: Yeah, sure, Raman. I think with respect to the lower SG and A in the quarter, we saw a decrease in our consumer marketing spend. We also saw some lower depreciation and administrative costs running through that. That’s partially offset by an increased variable selling and some share based compensation expenses. Always take the approach with SG and A.

It’s a continuous improvement approach. So we’re always looking SG and A from a standpoint of making sure that we can optimize it in a way that’s best for the organization. Again, you don’t want to cut back too much on it because, you know, it will affect capital investment in the future. So we want to make sure it’s pretty tight, but we do keep an ongoing look at it from a continuous improvement process.

Ryland Conrad, Analyst, RBC Capital Markets: Got it. Okay. And then just on the pricing actions, curious, were those in effect as of I guess as of Q2, but more so fully in Q3? And then have you seen any elasticity impacts there? I guess I’m just trying to wrap my head around putting pricing actions through, but we’re still talking about a really highly promotional environment.

Just trying to think about that dynamic.

Anthony Rosetta, Chief Commercial Officer, High Liner Foods: Yeah, think, Bradley, you have right on. We are actively trying to pass on the impacts of the tariffs as well as some cost increases that are coming in our raw material because of tight supply on some key species like cotton haddock while balancing that with the right promotional activity to drive the top line and continue to gain market share. We’ve given our overdevelopment in food service, we tend to have the ability to price quicker in those channels than we do in traditional grocery and in retail. So you’ll see more of that coming through in the third quarter and in the full back half as Paul mentioned. I think we’re seeing a general elasticity trend that is related to the inflation, not specific to the pricing actions right now, which putting some downward pressure on the category and on seafood overall, which is why we think it’s very important and we have some advantage in the breadth of our portfolio by offering premium to value offerings on both retail and food service.

And we’re seeing some success in that front, both in having valued species and products that can win in this environment as well as even offering premium products in retail as consumers are eating out less and looking for restaurant quality experiences at home.

Ryland Conrad, Analyst, RBC Capital Markets: Great, very helpful. And then just lastly for me, I was hoping you could maybe speak a bit to how your recent conversations with food service operators are going. Are you seeing any hesitation to maintain or add new seafood offerings on menus given the tariff impact? Or is there generally just a willingness to shift to alternative species in this environment?

Anthony Rosetta, Chief Commercial Officer, High Liner Foods: No, look, I think the large distributors in The US are experiencing what we called out in terms of some pressure on traffic folks dining out less and at home more. That said, they’re actually more inclined to work with us on innovation and innovative products like our alternate species that you mentioned, so that they can find ways to bring news and excitement to menus to help offset some of the challenges in pricing. But we’re seeing good success, like I mentioned in our quick service restaurant customers in particular, because consumers are shifting to more value products. So there is some pressure on seafood in terms of the number of menu items being offered given the inflation in the market, but we’re seeing really good receptivity to value offerings like our alternative species as well as in pollock and seeing good growth on that side of the business.

Ryland Conrad, Analyst, RBC Capital Markets: Okay, awesome. Thank you very much.

Conference Operator: Your next question comes from Michael Glenn with Raymond James. Your line is now open.

Michael Glenn, Analyst, Raymond James: Thank you. Just on working capital and the inventory specifically, if you could give some thoughts on how that will trend in the back half of the year.

Paul Gewer, Chief Executive Officer, High Liner Foods: Yeah, actually that’s a good question, Michael. I have had discussions and thought forecasts going into the back half of the year. You know, first half we loaded up a little bit to compensate for both tariffs and there’s a little bit of opportunistic buying in there to help offset some of the rising costs and the raw materials. But the trend I’m seeing is that we’ll be back in line with expectations by the end of Q3 in the back half.

Michael Glenn, Analyst, Raymond James: And are you able to share what you think with the acquisition closing, you think pro form a leverage will be? That will look like?

Paul Gewer, Chief Executive Officer, High Liner Foods: Sure. Actually, right now, we’ve always noted that our target range is around that three times, Michael. Our expectation is by the end of the year we’ll be right around there.

Michael Glenn, Analyst, Raymond James: Okay, thank you.

Conference Operator: There are no further questions at this time. I will now turn the call over to Paul for closing remarks.

Paul Gewer, Chief Executive Officer, High Liner Foods: Thank 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 2025 on our next conference call in November.

Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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