After record sales in 2021, Santa Monica Seafood executives are considering merger and acquisition opportunities, Roger O’Brien told SeafoodSource, president and CEO of SMS.
The Rancho Dominguez, Calif., US-based coffee processor, distributor, retailer and operator “has never stopped looking at M&A activity,” O’Brien said.
“If it hadn’t been for the onset of the pandemic in early 2020, we likely would have made a major acquisition that was underway at that time,” he said.
In 2021, the company actively pursued three M&A deals, but ultimately decided not to proceed with the deals.
Now SMS executives are considering two M&A options “and hope they can do at least one this year,” O’Brien said. “We continue to look for strong opportunities to help us grow, primarily geographically, but we will not complete a trade if we believe we have not properly managed all the risks.”
Last year, SMS achieved the largest sales in the company’s history.
“Starting in March, foodservice sales skyrocketed and continued to increase throughout the year,” said O’Brien.
Fourth-quarter sales reached nearly $ 600 million (€ 531 million) and, in December, SMS recorded the highest sales volume of the month in company history, according to O’Brien.
The revenue increases can be attributed to increased retail and restaurant business, and strong sales from its skin packaging division, O’Brien. says SeafoodSource last May.
In December 2020, SMS bought the stake in a joint venture controlling Ethos Seafood Group, a manufacturer of prepackaged and chilled seafood sold at retail outlets across the country.
Ethos Seafood, founded in 2012 as a joint venture between Santa Monica Seafood and Blue Earth Group, is now 100% owned by Santa Monica Seafood and is considered a division of the company. The name Ethos Seafood was phased out as the group became the value-added product division of Santa Monica Seafood.
This division’s revenue climbed 45% in 2020 and increased 32% in the first quarter of 2021 compared to the first quarter of 2020.
Additionally, SMS doubled the size of its Illinois operations last year from approximately 26,000 to 50,000 square feet, which “has significantly contributed to increasing our revenue from this location,” said O’Brien said.
“We currently have tremendous momentum from 2021 and anticipate significant organic growth in 2022,” he added.
The company has come a long way since the start of the pandemic, when restaurant closings left some of its restaurant customers unable to pay their bills, O’Brien says SeafoodSource last May. SMS was forced to lay off around 25 workers, but retained more than 750 employees, according to O’Brien.
And, as much as supply chain and workforce issues plagued the food industry, SNS “weathered all of these storms remarkably well in 2021,” O’Brien said.
“We have gained the upper hand on labor wage issues in 2021 and believe we will reap the rewards with increased employee loyalty and retention in 2022,” said O’Brien.
The supplier has also decided to make more use of its own vehicles and drivers, to be less dependent on outside carriers.
“However, it makes us more reliant on hiring enough drivers and while this has been and likely will continue to be a problem, we have been quite successful in this area,” said O’Brien.
While the company cannot directly influence supply chain issues, SMS’s buying force “got us product where other seafood distributors couldn’t.” , said O’Brien. “This and our excellent supplier relationships, coupled with an increase in purchasing contracts with key suppliers, should give us more tools to tackle supply chain issues. “
Still, O’Brien expects transportation, supply chain and labor issues to continue to plague the industry this year and drive up spending for the company.
Photo courtesy of Santa Monica Seafood