HIGH LINER FOODS REPORTS STRONG FIRST QUARTER RESULTS AND ANNOUNCES SECOND DIVIDEND INCREASE FOR THE YEAR
- Growth in U.S. drives first quarter performance -
LUNENBURG, NS, May 17 /CNW/ - High Liner Foods Incorporated (TSX: HLF; HLF.A), a leading North American value-added frozen seafood company, today reported financial results for the thirteen-week period ended April 2, 2011. All amounts are reported in Canadian dollars.
Financial and operational highlights for the first quarter include (all comparisons are relative to the first quarter of 2010, unless otherwise noted):
- Sales increased by 7.3% to $177.1 million
- Sales volume increased by 11.8% to 57.0 million pounds
- Adjusted EBITDA(1) increased by 23.1% to $18.1 million, or 10.2% of
sales
- Net income increased by 25.3% to $9.7 million, or diluted earnings per
share ("EPS") of $0.63, from $7.8 million, or diluted EPS of $0.42
- Completed the integration of Viking Seafoods, Inc. on April 4, 2011.
"We are extremely pleased to report strong growth in sales, Adjusted EBITDA, and net income during the first quarter, largely driven by our U.S. operations, which recorded a 22.8% increase in domestic currency sales," said Henry Demone, president and CEO, High Liner Foods Incorporated. "We were able to achieve impressive sales growth despite the stronger Canadian dollar. We experienced substantial growth in U.S. sales with the launch of new products and expanded distribution for our brands, which helped offset price-driven competitive challenges in our Canadian retail operations. Notwithstanding the weaker Canadian retail results, we are delighted that we significantly improved profitability with double-digit growth rates in Adjusted EBITDA in both Canadian and U.S. markets."
"We are also happy to announce that, on April 4, we successfully completed the integration of Viking Seafoods into our operations with no negative impacts on our customers. This was the first full quarter of Viking Seafoods within High Liner, and we are pleased with its contribution to our results," added Mr. Demone.
Financial Results
More than half of the Company's operations, assets, and liabilities, are denominated in U.S. dollars or impacted by the Canadian/U.S. exchange rate. As such, foreign currency fluctuations affect the reported values of individual lines on the Company's balance sheet and income statement.
The Company adopted International Financial Reporting Standards (IFRS) for fiscal year 2011, with restatement of fiscal 2010 comparative periods. The first quarter of 2011 was High Liner's first period reporting under IFRS. While there were many changes in numbers relating to financial results and financial position, the Company's adoption of IFRS did not result in material changes to EBITDA and net income. However, the book value of shareholders' equity increased by $6.1 million to $163.2 million on our transition to IFRS on January 3, 2010.
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(in thousands except Thirteen weeks Thirteen weeks
per share amounts ended ended
unless otherwise noted) April 2, 2011 April 3, 2010
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Sales in million pounds 57.0 51.0
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Sales in domestic currency $178,833 $161,528
Foreign exchange impact $(1,725) $3,585
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Sales in Canadian dollars $177,108 $165,113
Adjusted EBITDA(1) $18,139 $14,730
Net income $9,729 $7,763
Adjusted net income(2) $9,894 $7,763
Average Shares Outstanding (Diluted) 15,423 18,404
EPS (Diluted) $0.63 $0.42
Adjusted EPS (Diluted)(3) $0.64 $0.42
Sales for the quarter increased to $177.1 million from $165.1 million for the same period a year ago. The 7.3% sales growth was achieved notwithstanding the $5.3 million negative impact of a stronger Canadian dollar, as sales generated by our U.S. operations were translated at a lower U.S. dollar value. Sales in domestic currency, which exclude the impact of currency translation, were $178.8 million compared with $161.5 million for the first quarter of 2010. Viking accounted for sales of $11.8 million. Total sales volume increased by 11.8% to 57.0 million pounds, with sales from the Viking Seafoods acquisition accounting for 9.4% of the increase.
Adjusted EBITDA for the quarter increased by 23.1% to $18.1 million, or 10.2% of sales, from $14.7 million, or 8.9% of sales, for the first quarter last year. In domestic currency, Adjusted EBITDA increased by 27.3% to $18.3 million. The improvement resulted from higher overall sales volumes, plant efficiencies, new product introductions, and lower seafood and other input costs.
Net income for the quarter increased by 25.3% to $9.7 million, or diluted EPS of $0.63, from $7.8 million, or diluted EPS of $0.42, for the first quarter of 2010. The retraction of 3.2 million non-voting shares during the second quarter of 2010 accounted for approximately $0.08 of the increase in diluted EPS. Adjusted net income(2), which excludes after-tax non-recurring business acquisition and integration expenses, was $9.9 million, or diluted EPS(3) of $0.64.
Dividends
Today, the Board of Directors of the Company approved a quarterly dividend of $0.10 per Common and Non-Voting Equity Share payable on June 15, 2011 to shareholders of record on June 1, 2011. This represents an 11.1% increase from the $0.09 quarterly dividend paid on March 15, 2011 and the second dividend increase for the year.
Outlook
"Our strong start to 2011 is very encouraging and supports our optimism for the remainder of the year," said Mr. Demone. "We saw significant improvements in our U.S. sales and volumes during the first quarter and we expect to continue our advertising campaign, expand distribution, and launch new and innovative products. Similarly, we look forward to sustained growth in our U.S. food service operations, as Viking contributes to our results, and new products such as "Fire Roasters™" continue to receive strong market response. In Canada, we have begun to address the largely price-driven challenges we faced in our retail operations through strategies that include increased promotions and the launch of new value-pack commodity products. On the other hand, our Canadian food service sales volume increased by 6.6%, which indicates improving economic conditions with more people dining out."
"Although our profitability during the first quarter improved in both the U.S. and Canada due to increased volumes and cost-reduction strategies, we expect that we will be facing some margin pressures in the near term as we are seeing increasing prices for ingredients and other inputs. We have seen price relief on two of our major species. Nevertheless, there continues to be upward pressure on many seafood commodities. We are continuing our initiatives to improve operating efficiencies and further increase sales volumes to help soften the impact of rising costs," concluded Mr. Demone.
Financial Statements
This news release is not in any way a substitute for reading High Liner's financial statements, including notes to the financial statements, and Management's Discussion and Analysis. The Company's Fiscal First Quarter Interim Financial Statements, which includes the Statements of Financial Position, Income, Comprehensive Income, Changes in Shareholders' Equity, Cash Flows and notes, can be viewed in the Investor Information section of the High Liner Foods website at http://www.highlinerfoods.com/en/home/investorinformation/quarterlyreports.aspx.
Conference Call to Discuss First Quarter Results and Impact of Conversion to IFRS
The Company will host a conference call on Wednesday, May 18, 2011, at 10:30 a.m. ET (11:30 a.m. AT) to discuss its first quarter financial results. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately ten minutes prior to the beginning of the call to ensure participation.
The conference call will be extended to also discuss the impact of High Liner's conversion to International Financial Reporting Standards. Analysts and investors are invited to stay on the call for a more detailed discussion. The presentation that will be used for this part of the conference call can be viewed on the Presentations page of the Investor Information section of the Company's website at http://www.highlinerfoods.com/en/home/investorinformation/presentations.aspx.
The conference call will be archived for replay by telephone until Wednesday, May 25, 2011 at midnight. To access the archived conference call, dial 1-800-642-1687 and enter the reservation number 62113625.
A live audio webcast of the conference call will also be available at www.highlinerfoods.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived on the Company's website for one year.
About High Liner Foods Incorporated
High Liner Foods Incorporated is a leading North American processor and marketer of prepared, value-added frozen seafood. High Liner's branded products are sold throughout the United States, Canada and Mexico under the High Liner®, Fisher Boy®, Mirabel® and Sea Cuisine™ labels, and are available in most grocery and club stores. The Company also sells its High Liner®, FPI®, Mirabel®, and Viking™ food service products to restaurants and institutions, and is a major supplier of private label seafood products to North American food retailers and food service distributors. High Liner Foods is a publicly traded Canadian company, trading under the symbols HLF and HLF.A on the Toronto Stock Exchange.
This document contains forward-looking statements. Forward-looking statements can generally be identified by the use of the conditional tense, the words "may", "should", "would", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective" or "continue" or the negative of these terms or variations of them or words and expressions of similar nature. Specific forward-looking statements in this document include, but are not limited to expectations with respect to, planned volume growth, launch of new products, expanded distribution, increased promotion and advertising, expectations that Viking will increase our market share for broad line value-added seafood products in the U.S. food service industry, higher average raw material and other input costs and our ability to mitigate with increased operating efficiencies and product pricing adjustments, anticipated financial performance, and our market position. These statements are based on a number of factors and assumptions including, but not limited to: availability, demand and prices of raw materials, energy and supplies; the condition of the Canadian and United States economies; product promotions and pricing; foreign exchange rates, especially the rate of exchange of the Canadian dollar to the U.S. dollar; our ability to attract and retain customers and our operating costs; acceptance of new products in the marketplace; increase in sales volume due to advertising and promotions. The statements are not a guarantee of future performance. By their nature, forward-looking statements involve uncertainties and risks that the forecasts and targets will not be achieved. Readers are cautioned not to place undue reliance on forward-looking statements, as actual results may differ materially from those expressed in such forward-looking statements. We include in publicly available documents filed from time to time with securities commissions and the Toronto Stock Exchange, a discussion of the risk factors that can cause anticipated outcomes to differ from actual outcomes. Except as required under applicable securities legislation, we do not undertake to update forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, whether as a result of new information, future events or otherwise.
The Company reports its financial results in accordance with IFRS. Included in this media release are certain non-IFRS financial measures as supplemental indicators of operating performance. These non-IFRS measures are Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Share.
The Company believes these non-IFRS financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS.
For further information about the Company, please visit our website at www.highlinerfoods.com or send an e-mail to investor@highlinerfoodinc.com.
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(1) Adjusted EBITDA is earnings before interest, taxes, depreciation and
amortization, excluding business acquisition, integration costs and
gains/losses on asset disposals, as included in the consolidated
statements of income.
(2) Adjusted net income is net income excluding business acquisition,
integration, and gains/losses on asset disposals, net of income tax.
(3) Adjusted EPS is Adjusted net income, as defined, divided by the
average diluted number of shares.