High Liner Foods (TSX:HLF) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Summary
High Liner Foods reported a 4% increase in sales volume to 57 million pounds and a 12.4% increase in sales to $269.3 million for Q2, driven by diversified product demand and new product launches.
Gross profit decreased by 6% due to a $10.1 million inventory loss from a warehouse fire, partially offset by a $7.9 million tariff recovery.
Adjusted EBITDA grew by 20.3% to $30.2 million, reflecting effective cost management and strategic pricing actions.
Net income fell by 40% to $5.1 million, impacted by decreased gross profit, increased distribution expenses, and higher financing costs.
The company expects net debt to adjusted EBITDA ratio to improve, aiming for below 3 times by the end of fiscal 2026.
High Liner Foods is focusing on product innovation, expanding distribution, and leveraging tariff recoveries to support future growth.
The company remains resilient against inflation and continues to focus on operational efficiencies and strategic initiatives to drive profitability.
Full Transcript
Paul
Affordable and convenient protein solutions remain as relevant as ever. For more than 100 years, we have worked in partnership with our customers to navigate changing conditions and deliver compelling value to consumers across North America. We will continue to do so with a balanced and disciplined approach focused on making steady progress on the factors within our control while investing for the opportunity ahead. With that, I will pass the call over to Kimberly to discuss our financial results.
Kimberly
Thanks, Paul, and hello, everyone. As Paul described, our second quarter results reflect continued top-line momentum and year-over-year adjusted EBITDA growth both on a reported basis and when normalizing for the impact of the IEEPA tariffs. This demonstrates progress on the strategic initiatives that we have underway on promotion, price, and plant operations, the benefit of our right-sized organizational structure, and the ongoing cost discipline to support our value proposition amid the inflation and the higher raw material costs.
From a volume perspective, sales volume increased in the second quarter by 2.2 million pounds, or 4%, to 57 million pounds compared to 54.8 million pounds in the second quarter of 2025, due to the sustained demand for High Liner Foods' diversified product portfolio, the successful launch of new product innovation, additional contract manufacturing business, and the volumes associated with the United States Department of Agriculture (USDA) contract.
Sales increased in the second quarter by $29.7 million, or 12.4%, to $269.3 million compared to $239.6 million in the same period last year, driven both by the increased volume as well as increased pricing reflected in inflationary markets. Gross profit decreased in the second quarter by $3.2 million, or 6%, to $50.1 million, and gross profit as a percentage of sales decreased by 370 basis points to 18.6% as compared to 22.3% in the second quarter of 2025.
The decrease in gross profit, though, is largely driven by the $10.1 million in inventory-related losses associated with a fire at a third-party warehouse facility, which the company expects to recover through the recognition of insurance coverage by the end of 2026, and the impact of this has been normalized in both adjusted EBITDA and adjusted net income. The inventory loss is partially offset by the $7.9 million in International Emergency Economic Powers Act (IEEPA) tariff recovery recognized during the second quarter.
Gross profit in the second quarter of 2026 includes approximately $5.7 million in incurred IEEPA-related tariffs in cost of sales, excluding the tariff recovery discussed previously, compared to $2.8 million in the same period of 2025. Distribution expenses, consisting of freight and storage, increased in the second quarter by $2.8 million, or 24.6%, to $14.2 million compared to $11.4 million in the same period in the prior year. The increase in distribution expense was mainly due to the increase of sales volume as well as increased freight costs incurred on the sales associated with the newly acquired brands from Conagra Brands and the incremental distribution costs from increased fuel costs and freight rates. As a percentage of sales, distribution expenses increased to 5.3% in the second quarter compared to 4.8% in the same period in the prior year. Adjusted EBITDA increased in the second quarter by $5.1 million, or 20.3%, to $30.2 million compared to $25.1 million in the same period in the prior year, and adjusted EBITDA as a percentage of sales increased to 11.2% compared to 10.5%. The increase in adjusted EBITDA reflects the company's balanced approach to pricing, favorable SG&A, and the tariff recovery previously mentioned.
Reported net income decreased in the second quarter by $3.4 million, or 40%, to $5.1 million, while diluted earnings per share decreased to $0.18 compared to $0.28 in the prior year. The decrease in net income reflects the decrease in gross profit previously mentioned, increased distribution expenses, and higher financing costs, partially offset by favorable SG&A and lower business acquisition, integration, and other expense. Excluding the impact of certain non-routine or non-cash expenses that are explained in our MD&A, adjusted net income in the second quarter of 2026 increased by $1.2 million, or 10.4%, to $12.7 million.
Adjusted diluted earnings per share increased to $0.44 from $0.38 in the same period in 2025. With regard to cash flow from operations and the balance sheet, net cash flows from operating activities in the second quarter of 2026 decreased by $18.6 million to an outflow of $3 million compared to an inflow of $15.6 million in the same period in 2025. The decrease is primarily driven by cash outflows from non-cash working capital balances, specifically purchases of inventory and higher accounts receivable balances, partially offset with an increase of accounts payable balances.
Cash flows also increased as a result of higher cash taxes paid. These are partially offset by higher cash flows provided through operations in the second quarter of 2026 compared to the prior year. Net debt at the end of the second quarter of 2026 increased by $13.4 million to $335.8 million compared to $322.4 million at the end of fiscal 2025, reflecting higher bank loans and lease liabilities partially offset with the lower long-term debt and higher cash balances.
Net debt to adjusted EBITDA was 3.6 times at July 4, 2026 compared to 3.5 times at the end of fiscal 2025. We expect the ratio to improve throughout the year and be slightly below the company's long-term target of three times by the end of fiscal 2026. While the company recognized the $7.9 million of tariff recovery received during the second quarter, the company received further tariff recovery of $27.9 million of the total $41.3 million applied for subsequent to quarter end.
This amount will be recognized in the company's third quarter of 2026 financial results. As Paul noted, the recoveries provide an important context for the tariff pressure absorbed by the business during 2025 and 2026, of which approximately half of the tariff recoveries relate to tariff cost of sales in 2025 and the remainder relates to 2026. We are still in the process of analyzing the full tariff impact, including the extent to which those costs may have been partially offset by pricing actions.
Given the number of variables and the assumptions involved, any analysis to isolate normalized performance absent IEEPA tariffs remains complex. However, the broader takeaway is that the recoveries provide further evidence of the underlying resilience, performance, and the potential of our business. I'll now hand over the call to Anthony to discuss our operational performance.
Anthony
Thanks, Kimberly, and hello, everyone. As Paul and Kimberly have outlined, we once again delivered a strong quarter on the top line by sustained demand and improving execution. From a commercial perspective, volumes held despite implementing pricing and reduced promotional activity, we saw improved product availability and a positive reaction to new product innovation leading to new listings and expanded distribution across the 24 new items launched so far in 2026.
In our retail business, we carried the strong momentum we experienced at the start of the year into the second quarter. Operationally, better product availability helped us improve fill rates, meet demand more consistently, and, importantly, grow higher-margin products, including our skin pack product line. While inflation and price sensitivity continue to shape the category, consumers are being deliberate about where they direct their spending and prioritizing restaurant-quality, value-oriented seafood meals at home.
Against this backdrop, the breadth of our portfolio across species, formats, and price points served us well with growth across both premium and value offerings. We delivered strong performance in the Club channel on both the top and bottom line, with consumers continuing to purchase our products after promotions ended. This was very encouraging to see as it validates both the strength of our value proposition beyond price and including the quality, convenience, and breadth of our offering as well as our strategy on promotional investments through the Holiday and Lent period.
We're also seeing the benefit of the overall investment we've made in this growth channel over the past 18 months as our customers are quick to provide prominent placement for our new innovations, including our continued expansion in Sea Cuisine. This premium brand was once again a standout performer during the quarter, driving significant gains across both club and traditional grocery, with family pack growth and new listings expanding its reach.
Customers have responded very strongly to our new Sea Cuisine innovations, including our Sea Cuisine Guinness Battered Fish Strips, a highly relevant breaded and battered solution, as well as the Honey Chipotle Salmon and Garlic Bread Crusted Tilapia family packs, which are expanding our value-added portfolio and creating new opportunities for profitable growth. During the quarter, we also began shipping our new Sea Cuisine skillet meals to select retailers across the U.S. This innovation is helping to expand the category with complete restaurant-quality meal solutions that offer the taste, convenience, and protein today's consumers are looking for, with sole, salmon, and shrimp options. We know that uncertainty around how to prepare raw and cooked seafood remains a barrier to greater at-home consumption. At the same time, consumers are dining out less and looking for affordable, low-effort ways to create high-quality dining experiences at home.
Sea Cuisine skillet meals address both needs by making seafood easier and more approachable through a complete meal solution that can be prepared with confidence and minimal effort. We are excited by the opportunity this represents and will continue to prioritize building distribution in both the traditional grocery and club channels in the coming quarters, supported by retailer-specific shopper and digital marketing. Innovation also remains critical on the value side of our portfolio.
During the quarter, we launched new private label products with national discount retailers across value-added salmon, shrimp, and pollock, target growth species for our business that are strategically important as we further diversify our species mix. Mrs. Paul's and Van de Kamp's are now well integrated into our portfolio and we're on track with recognizing the expected synergies and have also secured new distribution. We remain focused on supporting both brands with targeted investment and marketing.
In Canadian retail, we gained significant market share and performed well during the quarter despite the inflationary pressures weighing on the category. Our performance was driven by the strength and diversity of our portfolio across species, which supports the stability of our business and provides a strong value proposition to consumers. We saw strong demand for our pan-seared and High Liner family pack offerings supported by a number of key promotional programs, along with the continued strength in our Catch of the Day product line.
In foodservice, the breadth of our portfolio helped us navigate softer consumer demand, gain market share, and successfully implement price during the quarter. Despite category challenges, consumers remain price sensitive and are trading down in the face of inflationary pressures that are impacting many species, especially cod and haddock. We saw growth in our shrimp, salmon, and pollock offerings, key areas of focus for us with room for further development.
Against this backdrop, we continue to support operators with value-oriented products that keep seafood on the menu amidst inflation-driven price increases, as well as value-added distributor label solutions that help offer better pricing and help operators drive traffic by channel. Our overall performance was again supported by gains in casual dining and non-commercial channels, including long-term care. Turning to innovation, our fully cooked platform represents a key growth opportunity in our pipeline and we're encouraged by our early commercial progress, with permanent listing at a major U.S. convenience customer performing well and expanding to additional locations. In April we introduced the platform to Canadian foodservice and secured initial listings with multiple distributors. Our focus is now on converting that committed distribution and a strong sales pipeline into meaningful volume. Building a new platform of this scale will take time and we're applying the insights from our U.S. rollout to accelerate its development in Canada.
While we expect the operating environment to remain challenged in the back half of the year, the diversity of our portfolio and the strength of our team give me confidence in our ability to execute and build on the progress that we're seeing. With that, I'll hand the call back to Paul for his concluding remarks.
Paul
Thanks, Anthony. This was a quarter with a lot of moving parts, but when you look through the noise, the message is clear. Our business remains resilient and we are taking the necessary steps to return to the level of profitability we have proven our business can deliver. We delivered top and bottom line growth supported by advancements across the strategic initiatives we have underway on price, promotion, cost management, and operational efficiencies.
While we still have work to do, particularly as tariffs continue and higher raw material and other input costs persist, we are encouraged by the traction we are seeing and remain focused on optimizing the factors within our control. As we have said, we expect the benefits of these actions to become even more evident in the second half of the year and the progress we have made in the second quarter gives me confidence in our ability to deliver year-over-year adjusted EBITDA growth independent of any tariff recoveries.
As a market leader with a diversified portfolio, a resilient global supply chain, strong balance sheet, and a track record of navigating challenging market conditions, we are well positioned to drive improved performance in the short term, profitable growth over time. The fundamentals of our business are strong and the long-term opportunity, driven by growing consumer demand for healthy, high-protein, convenient meal solutions, remains as compelling as ever.
We are committed to capitalizing on that opportunity from a position of stability and strength. With that, we will open the line for questions.
OPERATOR (Operator)
Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touchtone phone. You will then hear a prompt that your hand has been raised, and should you wish to decline from the polling process, please press star followed by two. And if you're using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now should you have any questions.
Thank you. First, we will hear from Luke Hannan at Canaccord Genuity. Please go ahead.
Luke Hannan, Analyst at Canaccord Genuity
Thanks. Good morning, everyone. I wanted to start on the topic of tariffs. So specifically you called out the refunds or the recoveries that you got in Q2 and then also what you've gotten in Q3 to date. Then it was also mentioned in prepared remarks that you're almost undertaking an analysis to figure out what exactly is sort of the normalized earnings power going forward. We can't just take those refunds and add that to the EBITDA to get a sense of exactly what that is, which I do sort of understand in practice for a couple of reasons.
One, you talked about the pricing increases, but also the new tariffs that are in place. And I think I'd like to start with that second piece first. So can you just frame up for us what the net tariff headwind, I guess, or just the gross tariff headwind will be for the balance of the year and then also what to expect on a steady-state basis going forward. I imagine it wouldn't be as much as what the IPA tariff recoveries would imply, but maybe we'll just start there.
Paul
Yeah, sure. I think that's a good place to start, Luke. The reality is you're right. The IEPA tariffs were at higher rates than what we're currently facing in the business today. We transition from those higher EFA tariffs to a short period of basically a 10% tariff on just about everyone, to now a situation where on most countries that we import seafood from into the U.S. we would have either a 10% tariff or a 12.5% tariff depending on the country, with a few actually still remaining at zero.
So we will still have tariffs that we have to pay. We feel good about where we are in terms of having to price for those tariffs; like before, we haven't been able to fully price for them and we've got to continue to manage our business well and try to offset rising raw material costs and inflation in other areas. But it's a better environment as we look forward on tariffs than what it's been in the past. Because the reality in particular with the IPA tariffs is they came fast, they were significant, and we certainly weren't able to pass on all of it in the form of pricing.
Luke Hannan, Analyst at Canaccord Genuity
Okay, and maybe just following up on that last piece there, Paul, typically what we've seen from CPG companies is anytime that there is price that's implemented during the quarter—pricing that's passed—it tends to be a volumetric pullback from the consumer before settling out longer term. Did you see any of that as a function of the price increases? Did you see any pullback in volumes during the quarter? Because on a reported basis, obviously it looks fine, but I'm just wondering if there's anything going on underneath that.
Paul
Yeah, I think as we said in our remarks, the resiliency in the volume has been better than we expected. And some of that is the reality on the species where prices had to go up the most, cod and haddock being a great example. Supply is also a challenge in a scarce market. I think you don't have the elasticity or as much of the elasticity that you might have otherwise had. We feel good about how volume has held up. As you know, in the first quarter, part of that was supported by us in terms of promotional activity.
As we mentioned in the second quarter, I think we're still seeing some positive benefit associated with some of that volume staying even when not on promotion. So we feel good overall about where we are on balancing that need to protect margin while, and having a price in order to do that while also continuing to support growth in the category overall. We'd love to do it in an environment where we didn't have tariffs or where raw material increases weren't as significant as they've been.
But we're managing to do it even in that environment, we believe.
Luke Hannan, Analyst at Canaccord Genuity
Okay, thanks. For my last question and then I'll pass the line, I just want to make sure I understand the moving parts when it comes to refunds as well, specifically when it comes to your net leverage target. So you reiterated that you should finish the year just under three times net leverage. But if I understand it correctly, and if I've done the math correctly, if we take the expected tariff proceeds that you'll get from Q3 and beyond, that should actually show up in adjusted EBITDA as well, purely because of the matching principle.
And so it makes sense why you wouldn't adjust that out. But the number that I get is actually closer to two and a half times rather than just under three times when we account for that. So is there anything, I guess, that we should be thinking about as far as incremental investments in the back half of the year that would get you closer to just under three times versus two and a half?
Kimberly
No, Luke, your math is exactly right. You know, outside of the tariff impact, we're also seeing improved leverage ratio because of just how we're operating the business. But obviously the impact of the IPA tariffs, both in adjusted EBITDA as well as the cash received, will get us approximately, I think, to where the numbers are that you listed.
Luke Hannan, Analyst at Canaccord Genuity
Okay, I'll pass the line, thanks.
OPERATOR (Operator)
Next question will be from Michael Glenn at Raymond James. Please go ahead.
Michael Glenn, Analyst at Raymond James
So maybe just some follow-ons there. As we look into Q3, the accounting for the 27.9 will be identical to how we saw the accounting take place this quarter. Just want to make sure I'm thinking about that right.
Kimberly
Yes, exactly. It'll be in cost of sales.
Michael Glenn, Analyst at Raymond James
Okay. And then are you able to indicate, like, what the blended average rate was you were paying under the IPA tariffs?
Paul
Oh, God, that would be hard to do. If you look at the blended average rate now, Michael, of, you know, somewhere between 10 and 12 and a half, I think under IPA tariffs, it would have been in the high teens for sure. Because there were some countries that were, you know, north of 20, and there were a lot of countries that were in those high teens and there were a few countries that were 10. So that's an order of magnitude. I certainly don't have any, you know, more specific analysis to help you with that.
Michael Glenn, Analyst at Raymond James
No, that's fine. I was just trying to gauge how to think about that a little bit. And then, Kimberly, you touched on the inventory build in Q2. At least from my side, it was unexpected to see that size of an inventory build take place right now. Can you maybe give a little bit of insight into that?
Kimberly
Yeah, absolutely. I'd say a third of it is actually related to the higher inflation that we're seeing in crossroads species. And then we're also doing opportunistic buying, both just to secure volume as well as just getting ahead of some of the upcoming inflationary impact that we're expected to see in some of our key species as well.
Michael Glenn, Analyst at Raymond James
Okay, and then maybe one for Anthony. On the product introductions that you're talking about in retail, are the introductions you're making at retail, are they additive to floor space or are they replacing other products? And then maybe, to follow on that, maybe speak to overall grocery trends towards square footage to seafood right now.
Anthony
Thanks. Yeah. Hi, Michael. Yes, I think the answer is we are helping the category gain space. When you think about line extension, as we would consider it on something like Guinness, that wouldn't be incremental to a shelf. It's incremental to us, but probably not for the category overall, versus something like the Skillet Meals launch that we just introduced, where it's absolutely incremental to seafood. There are placements happening in the meals, frozen meals section, which is incremental to seafood, as well as some of them happening within seafood overall.
When you think about the club channel, which is where we've had the most success, that's completely incremental, because if you think about going into a Costco and you see a pallet space or a space in the freezer door, that would be expanded distribution also. So within grocery, I think we're seeing a nice tailwind as consumers are shifting somewhat, given the inflationary environment, away from eating out and into at-home. So we're seeing the category volume hold up even in spite of the inflationary pressures, while the introduction of the innovation that we have both on the premium side with the success of Sea Cuisine, and on the value side in Sea Cuisine with the launch of our value packs, as well as, you know, what we're doing within club and private label, we continue to help the category stay propped up in an inflationary environment.
Michael Glenn, Analyst at Raymond James
Okay, thank you.
OPERATOR (Operator)
Next question will be from Georges Dumay at Ventum Financial. Please go ahead.
Georges Dumay, Analyst at Ventum Financial
Hi. Good morning, guys. Even after accounting for the tariff recoveries and the inventory loss, it feels that, you know, gross margins are down materially year over year. So can you talk — do we need to take more pricing to kind of raise, get a better margin profile in the second half? And maybe some of the offsets as we go into the second half of the year that improve that margin will be helpful?
Paul
Yeah, I think there's a couple things, George, you're right. You've identified the tariff recovery piece and the insurance piece. But also remember that while we had a tariff recovery, we also had tariff costs in the quarter that we incurred that the refunds relate to. So I think you got to factor that into the analysis. And then you're right, there is some margin compression associated with mix. Certainly Kimberly in her remarks spoke about where some of our growth was coming from.
And if you think about USDA or industrial volume as an example, then that's going to be at some lower margins on average. Then the other thing you have to factor in is just, frankly, the math of significant inflation. When you deliver the same gross margin dollars or EBITDA dollars on a significantly inflated sales number, even when you pass on the dollars, it results in some margin compression. But I think you're also right. You know, the reality is we still have some more work to do on pricing and promotion.
I thought we made quite a bit of progress in the second quarter, but more to come there. And the operational improvements, particularly in our supply chain, that we have available to us, we started to see those kick in in the second quarter, but there's still more opportunity there that will be supportive of margin expansion as well. Yeah.
Georges Dumay, Analyst at Ventum Financial
On that topic of operational improvements, should we expect that to be more gradual in the next few quarters into next year, or would you expect a bit of a step change in kind of the back half?
Paul
No, I think you're right. I think it's more gradual. It's squeezing the benefit out of better operational execution at plants, one of the more significant opportunities. So I would see that as growing through Q3 and Q4 into the first quarter of next year.
Georges Dumay, Analyst at Ventum Financial
One quick one, if I may. Kimberly, you mentioned kind of upcoming inflation. I'm just wondering about your outlook for inflation for the rest of the year, if you expect perhaps some of the whitefish prices to come off a little bit. And in that context, just wondering also if you think in this environment it'd be easier to hold on to price at all. Thanks.
Kimberly
Yeah. I think on whitefish species, George, a lot of that inflation, certainly on cod and haddock, is already in the number because it's been so significant, as you know, over the last 18 months. Where we will see some inflation and are starting to see some inflation is in pollock. Demand there has been good, so we're seeing some inflation in that species. And we're certainly expecting to see some inflation in pink salmon, because the catch rates in Alaska on pink salmon this year have certainly been a challenge on the supply front.
So I think it's changing where it's showing up in terms of the species mix. But there still is going to be inflation as we look forward. Of course we're managing through the inflation on higher fuel prices and how that affects obviously distribution and shipping costs, but also how it affects packaging and other ingredients in that regard. So we're not expecting inflation to go away. It's going to have to be something that we continue to manage as we look forward.
And of course we talked about the tariff piece as well. But I think the other thing, and just as a reminder, that we're trying to do is wherever we can find cost savings and operational efficiency initiatives so that we can cover the cost of some of that inflation while protecting margins so that we can maintain value for customers and consumers in the category.
Georges Dumay, Analyst at Ventum Financial
Great. Thanks for the answers.
OPERATOR (Operator)
Next question will be from Nevaeh Muertum at BMO Capital Markets. Please go ahead.
Nevaeh Muertum, Analyst at BMO Capital Markets
Yeah, thank you and good morning. You touched on it a little bit earlier, but I just wanted to circle back to the H2 volume outlook. You know, first half results were strong, but I think comps get a little bit tougher here in the second half of the year. You're going to benefit, or you're going to lap the benefit, from Conagra Brands' acquisition in Q3 and then the USDA contract in Q4. So as we think about the second half of the year, are you expecting volume growth to moderate as we move through?
Anthony
Yeah, I think as Paul said earlier, we're really happy with how volume has held up in spite of some of the inflation. I think in terms of guidance on the full year, with what we know we're going to be lapping, we're still in that low single-digit volume growth for the full year. So yeah, expecting that for the full year outlook.
Nevaeh Muertum, Analyst at BMO Capital Markets
Okay, thanks, Anthony. And then on gross margins, maybe just excluding the potential tariff refunds and some of the other one-time costs, you're up against a relatively easier gross margin comp in the second half of the year. Can you provide some detail on the potential magnitude of an improvement as we move through Q3 and then into Q4, and could we potentially see gross margin above the 20% level in the second half of the year?
Kimberly
Nevin, this is Kimberly. Yeah, as I think Anthony and Paul have been able to indicate, we've been able to get some of the pricing through in retail in Q2, and so that will roll into Q3 and Q4 and favorably impact our gross margin percentage. I anticipate that we will be able to maintain that into the back half of the year. I would say just shy of 20% is probably a good outlook to be
UNKNOWN Analyst
Okay. Thanks, Kimberly. And then finally, just putting it all together, the outlook for year-over-year EBITDA growth, you know, ignoring some of the benefits that you're receiving from these tariff refunds, would you say that you're incrementally more positive on the full-year outlook than you were at Q1? And if so, can you maybe give a couple of reasons as to why that's the case?
Kimberly
Yeah, I think we are incrementally more positive now after Q2 than we were after Q1 for a couple reasons. One, just based on the Q2 performance and two, as we've updated our outlook for the back half of the year with the progress we've made on some of the initiatives that we've talked about, what we currently see in terms of the tariff reality. So, yeah, I think we are incrementally more positive after Q2 than we were after Q1.
UNKNOWN Analyst
Okay, that's helpful, thank you.
OPERATOR (Operator)
Next question will be from Michael Glenn at Raymond James. Please go ahead.
Michael Glenn, Analyst at Raymond James
Hey Paul, I just wanted to follow on the inflation discussion for the industry because the level does seem quite elevated. So is this a demand situation driving it or is it a supply situation that's driving? I'm just trying to understand where the primary source for the inflation is across the supply chain right now.
Paul
Yeah, sure, it's a great question. And it does vary by species. So in the case of cod, it's a supply-driven inflation because cod stocks, particularly in Norway, which is a major source, have been a challenge. In haddock, interestingly enough, I would call it a demand-driven inflation because haddock is a species that as cod prices went up, many people switched to haddock and so that caused inflation in haddock. On pollock, I would say it's more of a demand-driven inflation because pollock demand as a more affordable whitefish alternative to cod and haddock has been strong.
And in pink salmon, as I mentioned, that's more of a supply-driven inflationary dynamic because it's been a tough catch season in Alaska. And listen, that fishery is always cyclical in terms of good catches and tougher catches. But this year was, I would say, more tougher than expected. I'm sorry, just to finish that comment. I would say the good news is on aquaculture species, pricing is more favorable because there's better matching of the supply and demand dynamics.
Michael Glenn, Analyst at Raymond James
Okay. And some of the supply-driven situation you're seeing or describing, do you see that alleviating next year or will it continue?
Paul
Yeah, on cod, I would say we're seeing a little bit of alleviation, but not much. And we're trying, as you know, in that scenario to do what we can with, you know, Newfoundland cod, where it definitely is alleviating because the quota is growing there, and with farmed cod, where the volume is also growing. The supply situation in haddock is actually good. We don't see any concerns with the supply situation in pollock. And I think Pacific salmon, the challenge is going to be, you know, it's going to be a tough year on Pacific salmon, but typically a tough year is followed by a good year.
So we'll see what next summer brings. But until then, I think we would expect to see supply challenges on the Pacific salmon front.
Michael Glenn, Analyst at Raymond James
Okay, thank you.
OPERATOR (Operator)
Next question will be from Rylan Conrad at RBC Capital Markets. Please go ahead.
Rylan Conrad, Analyst at RBC Capital Markets
Yeah, thanks very much. Good morning. To start, I know your CapEx guidance is unchanged for the year, but just given what we've seen spent so far in the first half, could you give us a bit of a sense of whether you expect a meaningful step-up in the back half or are you tracking towards the lower end of that range?
Kimberly
Yeah, Rylan, if you looked at a historical CapEx spend, the majority of it usually is in Q3 because we spend a lot of time investing in our maintenance projects during that time period. So we are anticipating that the overall capital expenditures for the year will remain consistent with what you've seen in the past few years, which is ranging anywhere between 20 and 25 million.
Rylan Conrad, Analyst at RBC Capital Markets
Okay, got it, thank you. And then just SG&A so far has been in the low 8% range as a percentage of sales this year. How should we be thinking about the continuation of that trend in the back half? Just as you've completed some organizational changes and would also continue to invest in innovation.
Kimberly
Yeah, exactly. The cost-savings initiative that we undertook in the beginning of Q2 will remain consistent throughout the year. And I would say that we're on track of continuing to invest in key priorities in the business as well. So that trend should continue into the full end of the year.
Rylan Conrad, Analyst at RBC Capital Markets
Okay, great. And then just last for me, we're certainly seeing a protein tailwind more broadly around food categories. So I believe last year you outlined an opportunity around improving the protein messaging on your product packaging. So I was just curious if you could give us an update there, just where you are in that process, and then if it has already been implemented, are you seeing that clearer messaging going to resonate with consumers?
Anthony
Hey Rylan, this is Anthony. Yes, the answer is yes. We continue to do that. Every new product launch and every time we're touching our current packaging, we're making sure that we're calling that out. In particular, I'll note the new launch of the Sea Cuisine skillet meals that we have right now. One of the key features that we're featuring on pack and in our consumer communication is the high protein content in it. From a meals standpoint, there isn't a lot of seafood currently offered in the market right now, and so we think that's a great opportunity for us.
And consumers told us they were interested in the variety that we would be bringing. But beyond that, the high protein count, I mean, we're talking 19 to 22 grams of protein in a serving within these new Sea Cuisine skillet meals that we have in the market. So yes, we are continuing to do that. We think we're seeing the benefit. That's what helps continue to kind of stabilize and hold the volume on our business in the face of this inflationary market, and always have seen that as a tailwind in seafood, and hopefully that will continue going forward.
Rylan Conrad, Analyst at RBC Capital Markets
Great. Appreciate the color. Thank you.
OPERATOR (Operator)
And ladies and gentlemen, a reminder to please press star one should you have any questions. Thank you. Next, a follow-up from Georges Dumay at Ventum Financial. Please go ahead.
Georges Dumay, Analyst at Ventum Financial
Thanks for squeezing me. And I just have a high-level question I wanted to ask you. Paul, I know historically we've targeted that kind of 10% EBITDA margin range, but taking into account the current operating environment, is there a willingness to invest some of that margin over the next few years to perhaps drive more consistent volume growth?
Paul
Yeah, I think, George, you've seen us do that a little bit, frankly, even over the last few quarters. And part of that, as we talked about earlier, is just driven by the nature of inflation and protecting margin dollars, not being always able to protect margin rate. But I would say over time our target would still be to be in that 10% range. The way you get there, to your point, in this environment is you've got to find ways to deliver on efficiencies and cost-saving benefits because you're not going to be able to do it all in pricing if you want to be able to continue to support the growth in the category.
Some of the pricing is clearly absolutely necessary given the magnitude of the raw material increases, but where you can find ways not to have to price, or price and find ways to promote to support volume in the category, we're always going to continue to work with our customers to look at doing that. But it's, listen, this is a balance, as you know, that, you know, if you look at an individual quarter or even an individual year, you may be a little out of balance.
But over time we've been pretty effective at making sure that we stay in that right balance.
Georges Dumay, Analyst at Ventum Financial
Thanks. And one last point, if I may. Does the Conagra platform that we currently have in place open any doors for other types of acquisitions that perhaps we wouldn't have looked at in the past?
Paul
I wouldn't say it opens the doors for more acquisitions that we might not have looked at in the past. I think it continues to build our confidence on our ability to do acquisitions well. The reality is we implemented, we integrated the Conagra business quickly. We believe we integrated it well. Our teams are now managing it well. I think the Conagra business, the Conagra brands for us give us more opportunity on growth in and around our core with some innovation actually coming associated with those brands.
And it just instills our confidence that there will be other M&A opportunities, not necessarily exactly like the Conagra brands one, but in a fragmented space like seafood is, there will be other M&A opportunities that we believe we'll be well positioned to continue to execute on.
Georges Dumay, Analyst at Ventum Financial
Thanks again for your answers.
OPERATOR (Operator)
At this time, we have no other questions registered. I would like to turn the call back over to Paul.
Paul
Great. Thank you, operator. And thank you all for joining our call today. We look forward to updating you with our results for the third quarter of 2026 on our next conference call in November.
OPERATOR (Operator)
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines. Have a great week.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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