Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the High Liner Foods Incorporated Conference Call for the Results of the Second Quarter of 2023. 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. [Operator Instructions] This conference is being recorded today Thursday, August 10, 2023 at 9 AM 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 second 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 that 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, August 9, High Liner Foods reported its financial results for the second quarter ended July 1, 2023. That news release along with the company's MD&A and unaudited condensed interim consolidated financial statements for the second quarter of 2023 have been filed on SEDAR+ and has been found on the investors -- and can be found on the Investor Center section of the High Liner Foods website. If you're interested to receive our news release in the future, please visit the company's website to register. Lastly, please note that the company reports its financial results in US dollars, and therefore, the results to be discussed today are also stated in US 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.

Thank you, Kimberly, and hello everyone. Thank you for joining us today. For the second quarter of 2023, we once again reported strong results for our foodservice business sales volume and dollar growth overall and continue to improve our balance sheet. The strength of our foodservice business is helping to offset the softness that we continue to experience in our retail business. Given the impact of industry headwinds on our business this quarter, I will start by sharing our perspective on changes for our macro environment. I will then discuss highlights from the quarter from an operational and strategic perspective before handing the call over to Anthony and Paul for a more detailed review of our business and financial results. At the macro level, shipping supply and demand dynamics are impacting many industries and frozen seafood’s were exception. This led to marketing different operating conditions, during the second quarter this year, compared to 2022. Q2 last year was characterized by high demand and relatively low inventory levels. In response, we successfully leveraged our supply chain and invested in inventory to meet the needs of our customers. This enabled us to capitalize on market conditions, to strengthen profitability and drive growth. In contrast, Q2's history is characterized by optical demand for protein in retail and elevated levels of inventory for customers, across retail and foodservice and in our own business. In retail, the impact of prolonged inflation on consumers became more pronounced, and is broad-based across all categories. Within the overall category slowdown, in the demand for protein including frozen seafood remaining soft as consumer cut back they are seeking ways to press their budget including easy food stores in their own freezers and finding alternatives to proteins for meal-time solutions. Despite these operating conditions, we still grew the top line of our business year-over-year. Sales increased by $800,000 to $254.3 million and sales volume increased by 600,000 pounds or 1% to 59.4 million pounds. However, the higher carrying cost of inventory and the sharper pricing required to move inventory and compete in the market put pressure, on our profitability. Adjusted EBITDA decreased by $3.3 million or 13% to $22 million. While higher inventory costs are impacting margins this quarter, it also means we need to invest less in inventory in the second half of the year, compared to the same time period prior year which will improve noncash working capital and therefore, cash flow from operations. We will direct this incremental free cash flow from operations towards paying out of debt. As a result, there will be closer to our target leverage ratio while also lowering our annualized cost of capital, strengthening our balance sheet overall, paying out debt remains, a focus for us on the current high interest rate environment. Operationally, we are leveraging the benefits of the diversification of our business supply chain and portfolio. The continued strength of food center during the second quarter, helped to drive growth this quarter. Similarly, the diversification within our Foodservice business allows us to grow in noncommercial casual dining, and QSI. With a broad portfolio of products, we are well positioned to focus on product offerings that are best suited to the evolving customer and consumer needs in both channels. In today's market, that means a combination of value, private label and value add. These are the strategies we are reporting to mitigate the impact of headwinds on our business, and to continue to drive growth despite market pressures. We are preparing, that it will likely take a couple of quarters for inventory levels to return to historic levels from a volume perspective. In light of the macroeconomic conditions, we expect that the grocery sector remain value driven in the back half of the year. Nonetheless, I believe that we will end the year with adjusted EBITDA growth and a much stronger balance sheet. I'm confident that the long-term outlook for highlighter, industry food category overall remains positive. I will now turn the call over to Anthony for more details on how we are delivering value to our customers and consumers and executing against our plans to strengthen our market position and lead in branded value-added set. With that, I'll hand the call over to Anthony.

Thanks Rod, and hello, everyone. Our growth this quarter was driven by the foodservice business which is performing well. We saw broad-based gains across the category, with particularly strong performance in noncommercial, casual dining and quick service restaurants. It was our ninth consecutive quarter of growth and our foodservice business continues to grow at a faster pace than the category. That's not to say, foodservice was immune to the impact of shifting macro conditions, Rod spoke to. A year ago, supply dynamics supported higher pricing in our commodity and unprocessed business. While this is no longer the case in today's market, we are fortunate that we can lean on the areas of our portfolio where we are differentiated in terms of the value add we offer to customers and consumers. Our volumes grew progressively stronger throughout the second quarter and we are encouraged by this trend as well as the gains we made in market share, especially in our targeted growth categories of casual dining and QSR. Aligned with our growth strategy, we also increased volume in our priority species of salmon and shrimp. Growth in shrimp in particular is outpacing the category, supported by our new value-added innovations, which led to new business and expanded distribution during the quarter. As we grew our own market share in foodservice, we also benefited from the market share gains of distributors selling our private label products. These relationships are strategically very important to us, especially given the emphasis on value in current market conditions. We are pleased to expand distribution with a leading distributor during the second quarter and we will continue to invest in these relationships. Alongside private label, the demand for value-added offerings remains strong. Even though the constraints of a tight labor market and COVID restrictions are easing and allowing – and allow for people more people working in the kitchen. Operators continue to be drawn to the simplicity and efficiency of our value-added products. Value-added remains a significant opportunity for us within foodservice, especially in a deflationary environment. And we continue to engage operators with data to support the back-of-house cost savings and menu versatility our value-added products offer. Overall, our strategy of focusing on growth segments and species is working well in food service and our strength in private label and value-added is well suited to the current environment. We continue to see significant development opportunities within casual dining and quick service restaurants and remain focused on differentiating ourselves in the market with data informed expertise to operators in the potential for seafood and the value and versatility of our products. Turning to our retail business. Operating conditions in retail remain challenging, with softer demand from price-sensitive consumers and shifts to value alternatives. To support our business and drive volumes, we are applying data analytics and a detailed understanding of the consumer to formulate strategic promotional offerings to help drive consumers back to the category and help demonstrate value across our brands. For example, we saw market share gains in the US on our Sea Cuisine brand by partnering with one of the largest retailers on impactful promotional activities. We also saw market share gains in Q2 in Canada, driven by our mainstream offerings with the right marketing and promotional focus. The bright spots in an increasingly competitive space, unsurprisingly related to private label and value offerings which were the strongest performers for us during the second quarter. We will remain focused on leveraging the breadth of our portfolio and investing in marketing and strategic promotional activities to support our business, the category and drive the return to normalized inventory levels. I'll now pass the call over to Paul to discuss our financial performance.

Thank you, Anthony and good morning, everyone. Please note that all comparisons provided during my financial review of the second quarter of 2023 are relative to the second quarter of 2022, unless otherwise noted. Sales volume increased in the second quarter by 600,000 pounds or 1% to 59.4 million pounds. In our foodservice business sales volume was high due to increased contract manufacturing business, increased sales in newer product lines and improved customer service levels. The company achieved strong service levels during the second quarter of 2023, as compared to the second quarter of 2022, due to the increased investment in working capital in the latter part of fiscal 2022 and to mitigate the impact of the global supply chain challenges. This was partially offset by lower sales volume in our retail business due to the impact of inflation. This resulted from softer demand for protein including seafood products as consumers switch to lower-cost alternatives. In addition, Easter occurring eight days earlier in 2023 compared to 2022 resulted in lower sales volume in the second quarter of 2023 compared to the same period last year. Sales increased in the second quarter by $800,000 or 0.3% to $254.3 million due to higher sales volumes mentioned previously and pricing actions implemented during fiscal 2022 and the first quarter of 2023 to mitigate inflationary increases on input costs partially offset by changes in sales mix. The weaker Canadian dollar in the second quarter of 2023 compared to the same quarter of 2022 decreased the value of reported US dollar sales from our Canadian dollar-denominated operations by approximately $3.2 million relative to the conversion impact last year. Gross profit decreased in the second quarter by $4.3 million or 7.6% to $52 million and gross profit as a percentage of sales decreased by 180 basis points to 20.4% as compared to 22.2% in the second quarter of 2022. The decrease in gross profit reflects changes in product mix, higher carrying costs associated with higher inventory and some inefficiencies at our plants as a result of the company slowing down production due to higher inventory levels and softer consumer demand discussed previously. The decrease in gross profit was partially offset by the inflationary pricing actions and the increase in sales volume. The weaker Canadian dollar decreased the value of reported US dollar gross profit from our Canadian operations in 2023 by approximately $700,000 relative to the conversion impact last year. Adjusted EBITDA decreased in the second quarter by $3.3 million or 13% to $22 million and adjusted EBITDA as a percentage of sales decreased to 8.7% compared to 10%. The decrease in adjusted EBITDA reflects the decrease in gross profit partially offset by the decrease in net SG&A expenses. The weaker Canadian dollar decreased the value of reported adjusted EBITDA in US dollars from our Canadian operations in 2023 by approximately $200,000 relative to the conversion impact last year. Reported net income decreased in the second quarter by $13.1 million or 68.9% to $5.9 million and diluted earnings per share decreased by $0.37 to $0.17. The decrease in net income reflects the $10 million in insurance proceeds received during the second quarter of 2022, which was classified as business acquisition integration and other expense. The decrease in adjusted EBITDA and an increase in finance costs partly offset by lower income taxes. Excluding the impact of the $10 million in insurance proceeds and certain non-routine or non-cash expenses that are explained in our MD&A adjusted net income in the second quarter of 2023 and 2022 was $10 million, and correspondingly adjusted diluted earnings per share was $0.29 in the second quarter of 2023 and 2022. Turning now to cash flows from operations in the balance sheet. Net cash flows from operating activities in the second quarter of 2023 increased by $36.1 million to an inflow of $45.4 million compared to an inflow of $9.3 million in the same period in 2022, due to continued improvements in noncash working capital after significant investment in inventory during fiscal 2022. We remain focused on continuing to make improvements in working capital in the back half of fiscal 2023, which will result in higher cash flows from operations. Capital expenditures were $9.1 million in the first half of 2023 compared to $5.1 million in the prior year, reflecting the continued investment in our business. Net debt at the end of the second quarter of 2023 decreased by $41.4 million to $344.1 million compared to $385.5 million at the end of fiscal 2022, reflecting lower bank loans and long-term debt as we direct higher cash flows from operation towards net debt. Net debt to adjusted EBITDA was 3.3 times, at July 1, 2023 compared to 3.7 times at the end of fiscal 2022 and 3 times at July 2 2022. Net debt to rolling 12 months adjusted EBITDA increased during fiscal 2022 due to increased investment in inventory. However, we made great progress this quarter in reducing the ratio and getting us closer to our long-term target. In the absence of any major acquisitions, or on planned capital expenditures in 2023, we expect this ratio to be in line with the company's long-term target of 3 times, at the end of fiscal 2023. I will now turn the call over to Rod for some final remarks before opening up the call to questions. Rod?

Thanks, Paul. As you've heard out of the call today, while shifting market dynamics are impacting our business. We are deploying a very targeted approach to our portfolio, pricing and customers which is helping to mitigate the impact. We know how to deliver the right product to the right customer at the right price. So we focused and face through this proven strategy. As I said at the beginning of the call, we are prepared that the current headwinds will continue throughout the year and operating conditions into Q3 and Q4 will remain challenging, and different from the environment of the prior year. While this will mean that pressure on profitability continue in the near term, I am confident that, we'll be able to drive top and bottom a growth in the midterm, and in the long term the growth opportunity for our business and the seafood category remains significant. Our confident in the business and our prospects is formed in part by the significant progress we have made over the past four years. We are in a fundamentally different place because of the work we've been undertaking to optimize the portfolio supply chain and drive continuous improvement across the business. I believe that, once we approach historic inventory levels at the end of the year and the market begins to stabilize, we will be able to capitalize on the investments we are making across our business. As the market rebounds, we rate with product innovation and gathers for growth strategies, to support our customers, growth category and create value for all stakeholders. With that said, I will end the call by reiterating my confidence that our business is well positioned despite current headwinds, assuming market conditions do not deteriorate we believe that we will end the year with year-over-year adjusted EBITDA growth and a stronger balance sheet. And I remain confident that the long-term outlook for High Liner and the seafood category overall remains positive. With that, I'll open the line to questions. Operator, please go ahead.

Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. [Operator Instructions] The question in the queue comes from Kyle McPhee from Cormark Securities. Your line is open. Please proceed.

Hi, everyone. To start digging into the retail channel trend a bit can you provide some color on which of your brands or categories are growing and declining, or is the demand softness you're seeing in retail broad-based right now?

Kyle, thanks for the question. It's Anthony. Yes, the retail category overall is seeing pretty consistent declines across brands. The growth -- the only growth that we're seeing in the category is actually in private label right now. And the good news for us is that we are a major supplier of private label across a number of retailers in both Canada and U.S. We are seeing market share gains on our brands and our branded value-added business both in Canada and the U.S., as we're partnering with our retailers on the right promotional and marketing activities.

Got it. Okay. And then as we move into Q3 here, are you seeing any changes in the extent of the demand softness in retail channel or the kind of status quo type headwinds you're seeing?

I think we'll continue to see the trends continue in the third quarter Kyle and expect some improvement in stabilization coming later in the year.

And Kyle, I would add. It's Paul. We have found some opportunities more recently where promotional activity has helped to drive volume particularly in some of our brands. So we'll certainly continue with that, as we look through the back half of the year.

Got it. Okay. And then regarding service levels the client shortening issues in the past was that fully gone in Q2, or is there still some minor drag there from that?

Yes. No, that's really fully gone. There were about 600,000 pounds we shorted in Q2 and we always have a similar level of shorting in any quarter compared to 4 million pounds a year ago. So the work that we did the investment we made in inventory really has resolved the supply chain challenges we faced last year.

Got it. Okay. And then on pricing, can you tell us what the price gain was in Q2? I know we can look at the gap between revenue and volume, but you also mentioned mix impacts in there. So what was that pure price component in Q2?

Yes. So you're right. There was certainly some mix as we saw some shifts across channels and across product lines. From a pricing perspective, most of the inflationary pricing is behind us. We had to cover inflationary costs in 2022, a little bit in the first quarter. So, now as we look forward, we actually expect we'll see a little bit of deflation impact in pricing in the back half of the year, because we're also seeing a little bit of benefit in terms of deflationary costs as we look forward as well.

Okay. Are you able to give us a feel for the extent of that price completion in the back half of the year?

I don't expect it to be significant at this stage, but it certainly won't be the significant inflation we saw a year ago.

Got it. Okay. And in addition to your inputs coming down and you may be passing on some of that ratio to your customers. Are you also looking at bringing down pricing eventually just to stimulate more demand given the consumer response to the pricing levels that we're seeing right now?

Yes. I think it depends on the category. So, certainly in our commodity business, there are -- as costs come down there will be the opportunity for us to pass that through and we believe that can be helpful to demand. In other parts of our business, as I mentioned earlier, we're taking the advantage to do some promotional activity to drive volume because we believe that can get the consumer and customer to respond and can support demand.

Yeah. I think the build Kyle is, like Paul said, certainly partnering on the promotional activity that is going to be focused on stimulating growth for the overall category. We certainly invested in data and analytics to allow us to partner with our customers on best for the category and driving category growth as well as managing the appropriate level of profitability. And then, the other piece we'll use is our mix, because we supply and support private label because we have the breadth of the portfolio between value and premium and consumers are still looking for the convenience at the right price will leverage the breadth of the portfolio to both marketing and promotional activities to drive growth.

Okay. Got it. And then, last one for me. In this demand environment we're in now, the things you can do with OpEx expenses to help offset the EBITDA level impact of the softer top line outlook. And if so what are some of those things and maybe help quantify it for?

Yeah. Sure. I mean, some of those areas on SG&A costs, we've certainly taken some action in the second quarter and you'll see the benefit of some of that in the back half of the year. We're also very carefully managing our costs associated with their supply chain, so both in production facilities and in terms of transportation and logistics. So we feel good about our ability to manage costs, as we look through the back half of the year. And really our focus is going to be on driving the right demand for our products getting the right pricing and therefore, improving our margins.

Okay. What about like, specifically marketing type spend? I know you ramped that in recent years. It sounds like you're going to do targeted promotion but do you dial back part of that marketing budget given the demand environment? Is that one of the moving parts?

Yeah. In some places we may make that decision where it just -- the marketing does aren't getting the benefit that we're looking for. But we're also continuing to be supportive of our brands. So in some cases, we'll certainly continue with that spend, because we see an opportunity to support the brands and drive more demand for the products.

Yeah, the only build I'd have Kyle, Anthony here, is that we're continuing -- we will absolutely continue to invest in our brands and we'll put it toward the highest return items. So we're also investing in our capabilities to measure ROI, and to make sure that we are first and foremost putting our dollars closest to the consumer -- with our customer largely in-store and online and digital where we're seeing some really good returns and some really positive ROIs in the first half of the year.

And Kyle, I think Rod said it well upfront. While there is some short-term impact on demand we still feel very strongly about the long-term demand opportunities in our category. And so it's important for us to continue to invest in areas where we see those opportunities for growth.

Got it. Okay. Thanks for the update. That's it for me.

There are no further questions at this time. So I will turn the call over to Rod Hepponstall, for any closing remarks.

Also I want to thank you for joining our call today. We look forward to updating you with our results for the third quarter of 2023, in our next conference call in November. Please stay, safe and well.

Thank you. Ladies and gentlemen, this will conclude today's conference. Please disconnect your lines.