This article first appeared on GuruFocus .
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Sales Volume:Increased by 2.2 million pounds, or 4%, to 57 million pounds in Q2 2026, compared to 54.8 million pounds in Q2 2025.
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Sales:Increased by $29.7 million, or 12.4%, to $269.3 million, compared to $239.6 million in the same period last year.
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Gross Profit:Decreased by $3.2 million, or 6%, to $50.1 million, with gross margin down 370 basis points to 18.6% from 22.3% in Q2 2025.
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Distribution Expenses:Increased by $2.8 million, or 24.6%, to $14.2 million, compared to $11.4 million in the prior year.
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Adjusted EBITDA:Increased by $5.1 million, or 20.3%, to $30.2 million, compared to $25.1 million in Q2 2025.
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Reported Net Income:Decreased by $3.4 million, or 40%, to $5.1 million, with diluted EPS down to $0.18 from $0.28 in the prior year.
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Adjusted Net Income:Increased by $1.2 million, or 10.4%, to $12.7 million, with adjusted diluted EPS up to $0.44 from $0.38 in Q2 2025.
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Net Cash Flows from Operating Activities:Decreased by $18.6 million to an outflow of $3 million, compared to an inflow of $15.6 million in Q2 2025.
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Net Debt:Increased by $13.4 million to $335.8 million, compared to $322.4 million at the end of fiscal 2025.
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Net Debt to Adjusted EBITDA:3.6 times at July 4, 2026, compared to 3.5 times at the end of fiscal 2025.
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IEEPA Tariff Recovery:Recognized $7.9 million in Q2 2026, with an additional $27.9 million of the total $41.3 million applied for received subsequent to quarter end.
Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Adjusted EBITDA increased 20.3% year-over-year to $30.2 million, with margin expanding to 11.2% from 10.5%.
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Sales volume grew 4% to 57 million pounds, driven by sustained demand, new product innovation, and contract manufacturing.
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Retail performance remained strong, with improved fill rates and growth in higher-margin products like skin pack and Sea Cuisine.
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The company received $7.9 million in IEPA tariff recoveries in Q2 and an additional $27.9 million after quarter-end, providing cash flow support.
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New product launches, including Sea Cuisine Skillet meals and Guinness battered fish strips, are expanding distribution and driving category growth.
Negative Points
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Gross profit decreased 6% to $50.1 million, with gross margin down 370 basis points to 18.6% due to inflation and tariffs.
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The company incurred a $10.1 million inventory loss from a third-party warehouse fire, impacting reported net income.
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Net income fell 40% to $5.1 million, and diluted EPS dropped to $0.18 from $0.28, reflecting higher costs and expenses.
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Net debt increased to $335.8 million, with leverage at 3.6 times adjusted EBITDA, above the long-term target of 3 times.
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Ongoing inflation in raw materials, fuel, and tariffs continues to pressure margins, with expectations of further cost increases in pollock and pink salmon.
Q & A Highlights
Q: What is the net tariff headwind for the balance of the year, and what should we expect on a steady-state basis going forward? A: Paul Jewer (CEO) explained that the IEPA tariffs were at higher rates than what the company is currently facing. The business has transitioned from those higher tariffs to a situation where most countries have a 10% or 12.5% tariff, with a few at zero. While tariffs will still be paid, the current environment is better than the past because the IEPA tariffs came fast and were significant, preventing the company from passing on all costs through pricing.
Q: Did you see any volumetric pullback from consumers as a result of the price increases implemented during the quarter? A: Paul Jewer (CEO) stated that volume resiliency has been better than expected. In scarce markets like cod and haddock, where supply is a challenge, there is less elasticity. The company feels good about how volume has held up, noting that some volume from promotional activity in Q1 remained even when promotions ended in Q2.
Q: Can you frame the accounting for the $27.9 million tariff recovery received after quarter end, and will it be identical to Q2? A: Kimberly Stephens (CFO) confirmed that the $27.9 million recovery will be recognized in the third quarter of 2026 financial results and will be recorded in cost of sales, identical to the $7.9 million recognized in Q2.
Q: Even after accounting for tariff recoveries and the inventory loss, gross margins are down materially year-over-year. Do we need more pricing to improve the margin profile in the second half? A: Paul Jewer (CEO) noted that while there was a tariff recovery, the company also incurred tariff costs in the quarter. Margin compression is also due to mix, with growth coming from lower-margin USDA and industrial volume. He acknowledged that more work is needed on pricing and promotions, but operational improvements in the supply chain are starting to kick in and will support margin expansion.
Q: Should we expect operational improvements to be gradual or a step change in the back half of the year? A: Paul Jewer (CEO) indicated that improvements will be more gradual, growing through Q3 and Q4 and into the first quarter of next year, as the company squeezes benefits out of better operational execution in its plants.
Q: What is your outlook for inflation for the rest of the year, and will it be easier to hold on to price? A: Paul Jewer (CEO) stated that inflation on cod and haddock is already in the numbers, but the company is seeing inflation in Pollock due to strong demand and in pink salmon due to challenging catch rates in Alaska. He expects inflation to continue and will manage it through cost savings and operational efficiency initiatives to protect margins while maintaining value.
Q: Are you expecting volume growth to moderate in the second half of the year given tougher comps? A: Anthony Rasetta (Chief Commercial Officer) stated that the company is still expecting low single-digit volume growth for the full year, despite lapping the Conagra Brands acquisition and USDA contract benefits in the second half.
Q: Can you provide detail on the potential magnitude of gross margin improvement in Q3 and Q4, and could it exceed 20%? A: Kimberly Stephens (CFO) indicated that pricing implemented in Q2 retail will favorably impact gross margin in Q3 and Q4. She anticipates the company will be able to maintain a gross margin percentage just shy of 20% in the back half of the year.
Q: Are you incrementally more positive on the full-year outlook for year-over-year EBITDA growth than you were at Q1? A: Paul Jewer (CEO) confirmed that the company is incrementally more positive after Q2 than after Q1, based on Q2 performance and an updated outlook for the back half of the year, considering progress on initiatives and the current tariff reality.
Q: Is the elevated inflation across the industry being driven by demand or supply, and will it alleviate next year? A: Paul Jewer (CEO) explained that inflation varies by species: cod is supply-driven due to stock challenges in Norway, haddock is demand-driven as people switched from cod, pollock is demand-driven as an affordable alternative, and pink salmon is supply-driven due to a tough catch season. He noted some alleviation in cod, good supply in haddock and pollock, but expects Pacific salmon supply challenges to continue until next summer.
Q: Given the CapEx guidance is unchanged, should we expect a meaningful step up in the back half of the year? A: Kimberly Stephens (CFO) stated that historically, the majority of CapEx spend occurs in Q3 due to maintenance projects. The company anticipates total capital expenditures for the year to remain consistent with the past few years, ranging between $20 million and $25 million.
Q: Is there a willingness to invest some of the 10% EBITDA margin target over the next few years to drive more consistent volume growth? A: Paul Jewer (CEO) acknowledged that the company has already done this to some extent, driven by inflation and protecting margin dollars. However, the long-term target remains the 10% range, achieved through efficiencies and cost savings rather than pricing alone, to continue supporting category growth.
Q: Does the Conagra platform open doors for other types of acquisitions that you wouldn't have looked at in the past? A: Paul Jewer (CEO) stated that the Conagra acquisition builds confidence in the company's ability to execute acquisitions well. While it doesn't necessarily open doors to different types of acquisitions, it positions the company well for other M&A opportunities in the fragmented seafood space.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
