Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the High Liner Foods Inc. Conference Call for Results of the First Quarter of 2023. [Operator Instructions] This conference is being recorded today, Wednesday, May 17, 2023, at 10:00 a.m. Eastern Time for replay purposes. I would now like to turn the call over to Kimberly Stephens, Vice President of Finance for High Liner Foods. Please go ahead.

Good morning, everyone. Thank you for joining the High Liner Foods conference call today to discuss our financial results for the first quarter of 2023. On the call from High Liner Foods are Rod Hepponstall, President and Chief Executive Officer; Anthony Rasetta, Chief Commercial Officer; and Paul Jewer, Executive Vice President and Chief Financial Officer. I would 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&A. Listeners are also reminded that certain statements made on today's call may be forward-looking statements that are subject to risks and uncertainties. Management may use forward-looking statements when discussing the company's strategy and business in the future. Actual operating or financial results could differ materially from those anticipated in these forward-looking statements. High Liner Foods includes a thorough discussion of the risk factors that can cause its anticipated outcomes to differ from actual outcomes in its publicly available disclosure documents, particularly in its MD&A and annual information form. Please note that High Liner Foods is under no obligation to update any forward-looking statements discussed today. After the markets closed yesterday, May 16, High Liner Foods reported its financial results for the first quarter ended April 1, 2023. That news release, along with the company's MD&A and unaudited condensed interim consolidated financial statements for the first quarter of 2023 have been filed on SEDAR 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. 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. High Liner Foods' common shares trade on the Toronto Stock Exchange and are quoted in Canadian dollars. I will now turn the call over to Rod for his opening remarks.

Thanks, Kimberly, and hello, everyone. Thank you for joining us for our first quarter earnings call. On our call today, I'll provide a perspective on our business performance and strategy in the context of evolving customer and consumer trends. Anthony will share operational highlights from our retail and foodservice business in both the U.S. and Canada, and Paul will discuss our financial results. Turning to Q1. Overall, we delivered another strong quarter. We generated double-digit gains in sales, up 11.7% to $329.2 million. Gross profit was up 10.3% to $68.4 million and adjusted EBITDA up 10.2% to $31.2 million. With respect to adjusted EBITDA, Q1 2023 marked 8 consecutive quarters of adjusted EBITDA growth as we continue to focus on strengthening the bottom line of our business. We ensured safe and highly efficient operations across our plants and advanced ongoing continuous improvement initiatives in support of profitability. We delivered excellent service levels for our customers, thanks to our strong inventory and the formats of our integrated global supply chain, global pressures on supply chain are much improved in comparison to the same period last year. During the first 3 months of the year, our foodservice business performed particularly well. And even in comparison to a strong Q1 in 2022 when the industry first started to rebound, we delivered year-over-year gains across key metrics and continue to gain market share in key focus segments. We are growing our foodservice business in a very intentional way as we increase sales in terms of dollars and pounds in the fast-growing segments of casual dining and QSR and most popular species of shrimp and salmon. We continue to see success in our noncommercial business, which includes institutional customers like schools and hospitals. These customers are a strong anchor for our foodservice business in the current economic climate. We increased sales of our higher-margin branded and value-added offering for foodservice customers, providing further indications that our solutions are well suited to deliver efficiency and innovation -- and innovation operators continue to prioritize in the current environment despite improvements to the labor market overall. The strength of our foodservice performance in the first quarter helped offset the impact of softening retail category. After multiple quarters of consumers remaining remarkably resilient to the significant inflation and economic challenges, consumers are more cost conscious and are now making different decisions in the grocery store, impacting our retail business as well. We know how to be strong -- how to be a strong and reliable partner to our customers during tough times. We believe we have a responsibility and opportunity as a leader in our category to work in partnership to help navigate short-term challenges for the long-term benefit of the category overall. Recent history is a perfect example. There were a number of quarters during the pandemic, where the strength of our retail business helped to offset the headwinds we are experiencing in our foodservice business. This experience gives us confidence in our strategy to manage the current retail environment. Specifically, we have successfully leveraged diversification of our business to help mitigate the impact of short-term fluctuations in demand. And we are also well versed in looking beyond market cycles and continuing to invest in our brands, our people and ongoing innovation. The strength of our foodservice business today speaks to our track record, and we are well positioned with the capabilities, resources and expertise to apply the same approach to our retail business in the months ahead. Overall, we are off to a strong start to the year, and the team is relentlessly driving ahead to maximize the opportunities in front of us to grow our business and support and grow the category through the current cycle and for the long term. I remain confident in the outlook of our business and our ability to deliver annual year-over-year sales and adjusted EBITDA growth; we are focused on improvements in working capital through the course of the year will allow us to generate significant cash flow from operations and create value for all of our shareholders. I will now turn the call over to Anthony, who can speak more to the specifics of our strategy in regard and share some operational highlights from the quarter.

Thanks, Rod, and hello, everyone. Against the operating backdrop Rod has just described, our teams are performing very well. We're consistently showing up as a solutions-oriented partner to our customers. We make it our job to understand our customers' business challenges and opportunities and to bring the market data and consumer insights to support our solutions. This strategy is working. Not only does it differentiate us from the competition, but it also serves to educate and engage our customers on a deeper level. We're using every interaction as an opportunity to not simply win business for today, but to grow the opportunity we have for tomorrow. We are demonstrating to our customers how we see seafood differently and presenting a solid business case and consumer-validated concepts to demonstrate why they should do the same, and it's working. For example, following a new business win during Q1, a leading national convenience store chain in Canada is featuring a fish sandwich on its menu for the first time. We educated the customer on the opportunity, and now they're educating the consumer on how seafood can satisfy on-the-go dining and offer an alternative to more traditional convenience food staples. In addition to new business wins across QSR and casual dining, we're also deepening partnerships with existing customers and distributors with new listings and innovation gaining traction. This work has been supported by the revamp of our foodservice operator website that I mentioned last quarter. The new site highlights the solutions and breadth of our branded and value-added portfolio, and we're driving customer traffic and engagement through digital marketing. We remain closely invested in our customer relationships, and we're very proud to be the recipient of the UniPro Supplier of the Year Award in recognition of our contributions to category growth and our commitment to shared success through partnership. We're executing well against our strategy to grow in priority species of shrimp and salmon. Our new value-added shrimp portfolios in market and is receiving positive reactions. I look forward to reporting back in more detail next quarter. All these examples contributed to another quarter of growth for our food service business, which continues to outpace the rest of the market. Turning to our retail business. As you heard from Rod, the market softened during the first quarter and is a challenge for most categories and all protein suppliers right now. This means a few things for our business. The redistribution of volume from premium products to value offerings we discussed last quarter continues, and we remain focused on ensuring consumers have choice within our portfolio. We're now seeing a shift in market to lower-cost meal solutions. This is occurring across all proteins, including frozen seafood as consumers are seeking to offset the impact of inflation by opting for nonprotein alternatives and meals. As a result, our retail customers want to change their product offering by reducing some branded offerings in favor of private label, prompting a change in our overall mix. Nonetheless, we continue to invest in our brands through promotional activities designed to appeal to the value-conscious consumer and those continuing to prioritize healthy and sustainable food choices. We recognize that evolving consumer behavior is challenging for our retail customers, and we work in partnership with our retailers to invest in shared marketing and simplification of our portfolio offerings with an emphasis on value and choice for consumers. Similar to the pandemic, we're finding that our customers want to focus on offering a robust core product offering, and this is, therefore, where our focus is, too. However, similar to our experience in food service during the pandemic, we will continue to invest in innovation behind the scenes to be ready to lead the market when customer and consumer appetites for a wider range of products and new innovations return, which we believe they inevitably will. We continue to message directly to consumers through social media channels as part of various brand activation campaigns, building on the success of Fisher Boy that we spoke about in the fourth quarter. Despite current retail dynamics, there were some bright spots during the quarter, including expanding distribution in club channels and growth in our private label business as consumers search for value. Our new relationship with a leading discount channel is proceeding well as sales of our Fisher Boy value brand grew month-over-month, especially during Lenten. Across retail and foodservice, we leveraged the early timing of length to profile our brands and received strong support from retailers in the U.S. and Canada. Our marketing efforts in partnership with retailers and as stand-alone brands are evolving and enabling us to strengthen our brand awareness with the consumer and continue to inspire seafood consumption as we execute against our branded and value-added strategy, and continue to show up differently with new ideas for customers and consumers alike. We do so with the goal of offsetting the recessionary impact on our retail business as much as we can by focusing on the factors within our control and growing our business and the category over time. I'll now turn it over to Paul to discuss our financial results.

Thank you, Anthony, and good morning, everyone. Please note that all comparisons provided during my financial review of the first quarter of 2023 are relative to the first quarter of 2022, unless otherwise noted. Sales volume increased in the first quarter by 3.6 million pounds to 77 million pounds. In our foodservice business, sales volume was higher due to increased sales in newer product lines, new business, an increase in our contract manufacturing business and improved customer service levels. The company achieved strong service levels during the first quarter of 2023 as compared to the first quarter of 2022 due to the increased investment in working capital in the latter part of fiscal 2022 to mitigate the impact of the global supply chain challenges. This was partially offset by lower sales volume in our retail business during the Lenten period, primarily due to consumers becoming more price conscious, resulting in softer demand for protein, including seafood products as consumers switched to lower-cost meal solutions. Sales increased in the first quarter by $34.5 million or 11.7% to $329.2 million due to higher sales volumes discussed previously and pricing actions implemented during fiscal 2022 and the first quarter of 2023, to mitigate and general increase on input costs. The weaker Canadian dollar in the first quarter of 2023, compared to the same quarter of 2022, decreased the value of reported U.S. dollar sales from our Canadian dollar-denominated operations by approximately $4.4 million, relative to the conversion impact last year. Gross profit increased in the first quarter by $6.4 million or 10.3% to $68.4 million, while gross profit as a percentage of sales decreased by 20 basis points to 20.8% as compared to 21% in the first quarter of 2022. The increase in gross profit dollars reflects the higher sales volume and pricing actions discussed previously, despite inflationary increases in input costs as well as some improvement in operating efficiencies at our plants, partially offset by a change in product mix. The weaker Canadian dollar decreased the value of reported U.S. dollar gross profit from our Canadian operations in 2023 by approximately $800,000 relative to the conversion impact last year. Adjusted EBITDA increased in the first quarter by $2.9 million or 10.2% to $31.2 million, while adjusted EBITDA as a percentage of sales decreased slightly to 9.5% compared to 9.6%. The increased adjusted EBITDA is a result of the increase in gross profit, partially offset by the increase in distribution and net SG&A expenses. The weaker Canadian dollar decreased the value of reported adjusted EBITDA in U.S. dollars from our Canadian operations in 2023 by approximately $100,000 relative to the conversion impact last year. Reported net income decreased in the first quarter by $700,000 or 4.8% to $13.9 million and diluted earnings per share decreased by $0.02 to $0.40. The decrease in net income was due to higher finance costs as a result of higher interest rates and bank loans, higher share-based compensation expense and business acquisition, integration and other expenses which was partially offset by the increase in adjusted EBITDA and lower income taxes. Excluding the impact of certain nonroutine or noncash expenses that are explained in our MD&A, adjusted net income in the first quarter of 2023 increased by $1.3 million or 8.6% to $16.4 million. And correspondingly, adjusted diluted earnings per share increased $0.05 to $0.48 compared to $0.43 in the same period in the prior year. Turning now to cash flows from operations and the balance sheet. Net cash flows from operating activities in the quarter of 2023 increased by $32.6 million to an inflow of $12.9 million compared to an outflow of $19.7 million in the same period in 2022, due to higher cash flows from operations and improvements in noncash working capital after significant investment in inventory during fiscal 2022. We are focused on continuing to make improvements in working capital through fiscal 2023, which will result in significantly higher cash flows from operations. Net debt at the end of the first quarter of 2023 decreased by $6.2 million to $379.3 million compared to $385.5 million at the end of fiscal 2022, reflecting lower bank loans, long-term debt and lease liabilities. Net debt to adjusted EBITDA was 3.6x at April 1, 2023 compared to 3.7x at the end of fiscal 2022, and 3.2x at April 2, 2022. Net debt to rolling 12 months adjusted EBITDA increased during fiscal 2022 due to increased investment in inventory in order to mitigate the impact of the global supply chain challenges. In the absence of any major acquisitions or unplanned capital expenditures, 2023, we expect this ratio to be in line with the company's long-term target of 3x at the end of fiscal 2023. We continue to remain confident in our liquidity position and we will utilize our $200 million working capital credit facility as required throughout the year. I will now turn the call over to Rod for some final remarks before opening up the call to questions. Rod?

Thank you, Paul and Anthony, for your commentary on our business. It's clear that there's a lot of great work underway aligned with our purpose to reimagine seafood and our goal to become a North American leader in branded value-added seafood by changing the way we see food. I continue to believe our diverse portfolio, global supply chain, customer focused and forward-looking strategy, High Liner continues to be well positioned to be resilient against fluid market dynamics in the near term and continue to grow top and bottom line of our business. As you heard from Paul, we are working to improve free cash flow and our leverage ratio and remain optimistic that we will generate significant cash flow from operations this year. As we manage our business to maximize value and returns today, we also maintain a long-term perspective and continue to strategize on the best ways to transform the category and expand the upside of our business. Our approach will always be grounded in principles of sustainable and responsible business practices, and we remain committed to advancing our environment and social and governance goals. As outlined in our recently published CSR report for 2022, we are accelerating the pace of change within our organization and have committed to a 30/30 goal, which means that we are driving to reduce Scope 1 and Scope 2 greenhouse gas emissions from our operations by 30% versus the 2021 baseline and to reduce food loss and waste intensity in our operations by 50% by 2030 versus our 2018 baseline. These goals align with our overall efforts to continue to drive efficiencies and continuous improvement across our business. I am pleased with our progress to date and look forward to reporting back on our progress when we report our Q2 results in August. With that, I will open the line to questions. Operator, please go ahead.

[Operator Instructions] First question comes from Liam Dotchison, Cormark Securities.

It was nice to see a volume of 4.9% year-over-year. It looks like some of the gains came from the elimination of client order shorting. But I'm just looking to confirm that. So was there any clients earning I didn't quantify anything as you've done in past quarters. And then also, is that lack of shorting expected to hold true through Q2 and the rest of 2023?

Yes. Great, Liam. Thanks for the question. It's Paul. You're right, we did have significantly less shorting in the first quarter of 2023 compared to 2022. It was just approximately 1 million pounds in 2023. You'll recall in each of the quarters in 2022, it was more like 4 million pounds. So very pleased that the investment we made in inventory improved that service level to our customers quite significantly. And to your second question, we believe we can sustain that kind of service level and even improve it slightly through the balance of the year, as we still have a good inventory position to support the business.

Okay, got it. And then on the volume growth and declines in foodservice and retail channels, so the growth in foodservice decline in retail, can you help us quantify the extent of those volume moves. They seem to be kind of approximately offsetting each other, but I'm really just wondering how big the foodservice gain is and how big the retail decline is.

Yes.

Sorry, go ahead.

Yes. So I'll turn it over to Anthony in a moment. But just in terms of the magnitude, you're right, the foodservice growth was more than enough to offset the retail line. So very pleased that we continue to see that growth in foodservice. In fact, I would highlight that our foodservice volume in 2023 was back to being above the levels that we experienced pre-COVID in 2019. Anthony, I'll turn it over to you to answer some more questions about foodservice and retail.

Yes. Thanks, Paul, and thanks for the question, Liam. I think as Paul said, very pleased that our foodservice business has been able to hold up very well and that we're gaining share in the marketplace overall. We continue to have really sustained success in our areas of under development like QSR and casual dining and an underdeveloped species like shrimp and salmon, but we're also seeing really strong gains in the places where we have strength in our noncommercial channels like schools, hospitals, long-term care facilities. And certainly, while the inflationary impacts are hurting proteins overall within retail, we're focused on offering a really good value and choice for customers and consumers. We're focusing on channels that are growing faster in terms of value channels, and we'll continue to partner with them on the right promo strategies and marketing strategies to get the category turned around.

It's great to hear again there. Just regarding that decline in retail, maybe a little bit more. Is there any other dynamic other than consumer pressure underlying the softness, maybe remaining COVID lapping from Omicron last year that I think we're just lapping right now in Q1 and then some have been leading to any retail demand that was artificially eye. So just any other dynamic there other than that underlying consumer pressure?

No, Liam, we're not seeing that. It's mostly due to the inflationary impacts right now. We are continuing to work with retailers. And again, there are pockets of gains within retail, which we're contributing to. So again, seeing growth in discount in club. We had some really nice wins this quarter in our club business with new innovation as well as supporting the value channel, both in Canada and the U.S. but not seeing any remnants of other past dynamics that are impacting the retail performance.

And then sorry, just last thing on that retail given those wins, are you seeing the same level of softness into Q2? Or is it getting better or maybe even a bit worse kind of through Q2, the rest of the 2023 year?

Yes, we're certainly seeing the retail trends continue into the first part of the second quarter.

Great. Just moving on to margins then on the gross margin percentage, you called out product mix as 1 negative moving part. So maybe just a little more explanation on what that is in more detail.

Yes, sure. So the primary area where our margins are a bit lower in foodservice was that we referred to our contract manufacturing business, where we had some good performance in the first quarter. The margins there are typically lower than what we would experience in our own branded value-added business. That would be the primary piece. We also did see some margin -- lower margins in our commodity business, but pleased overall with the margin performance in our branded value-added business.

Got it. And then just last 1 for me here, guys. So just on EBITDA. SG&A was up a lot in Q1. So can you explain the culprit and the reasons for that added spend on the SG&A line? And -- is there anything onetime or temporary in there? Just trying to kind of get a feel here for the line item on the go forward.

Yes. There is a little bit of onetime in there that you see is excluded from adjusted EBITDA. That's about $1 million. What also is excluded from adjusted EBITDA is share-based compensation expense. So there would be that. But in terms of the normal operating expense side, a couple of things. One, continue to invest more to support our brand. And so there was some higher consumer spending in the first quarter. We also had some higher SG&A costs in, I'd say, our corporate function. That's more about content and visibility increase in cost there.

Thank you. There are no further questions. I will turn the call back to Rod Hepponstall for closing remarks.

To close, I want to thank you for joining our call today. We look forward to updating you with our results for the second quarter of 2023 on our next conference call in August. Please stay safe and well.

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.