- Strong cash flow from operations enables High Liner to
reduce net interest bearing debt; increase quarterly dividend -LUNENBURG, NS, Aug. 11 /CNW/ - High Liner Foods Incorporated (TSX:HLF;
HLF.A), a leading North American value-added frozen seafood company, today
reported financial results for the quarter ended July 4, 2009. All amounts are
reported in Canadian dollars unless otherwise stated.Second quarter highlights:
- Board approved a 12% increase to the quarterly dividend payable
September 15, 2009, at $0.07 per share;
- Sales increased 8.2% to $151.4 million, including an increase of 6.8%
in Canadian operations;
- Adjusted EBITDA(1) of $9.1 million;
- Net income of $4.1 million, or fully diluted earnings per share of
$0.22;
- Reduced net interest bearing debt by $27.6 million during the
quarter;"Our business is proving to be fairly recession resistant," said Henry
Demone President and Chief Executive Officer. "While the current economy has
no doubt caused some consumers to change where and how they spend their money,
they continue to buy seafood. Whether they choose to buy their seafood at a
local grocery store, club store, restaurant or cafeteria, our diverse product
offerings ranging from premium to value-priced products are there to meet
their needs."
Second Quarter Financial Results
Second quarter sales increased $11.4 million, or 8.2%, to $151.4 million.
The increase was attributable to currency translation of U.S. sales into
Canadian dollars and continued growth in the Company's Canadian operations.
Approximately half of the Company's operations, including sales, are
denominated in U.S. dollars. Excluding the impact of currency translation
noted above, sales were up 1.2% from the second quarter of 2008.
Adjusted EBITDA for the quarter at $9.1 million was in line with 2008.
The change in the value of the Canadian dollar added $0.5 million as a result
of the conversion of U.S. results to Canadian dollars. Adjusted EBITDA was
6.0% of sales for the quarter compared to 6.4% for the second quarter of last
year.
Net income for the quarter was $4.1 million, or $0.22 per diluted share,
compared to $3.3 million, or $0.18 per diluted share, for the same quarter
last year.-------------------------------------------------------------------------
(Amounts in thousands of Canadian $ except per share amounts)
-------------------------------------------------------------------------
Thirteen Thirteen Twenty-six Twenty-six
weeks ended weeks ended weeks ended weeks ended
July 4, 2009 June 28, 2008 July 4, 2009 June 28, 2008
-------------------------------------------------------------------------
Sales $151,374 $139,960 $334,650 $289,198
-------------------------------------------------------------------------
Adjusted EBITDA $9,070 $8,982 $22,175 $17,803
-------------------------------------------------------------------------
Net income $4,124 $3,280 $10,820 $6,374
-------------------------------------------------------------------------
Adjusted net income(1) $4,087 $3,914 $11,386 $8,338
-------------------------------------------------------------------------
Diluted earnings per
Common Share:
-------------------------------------------------------------------------
Net income $0.22 $0.18 $0.59 $0.36
-------------------------------------------------------------------------
Adjusted net income(1) $0.22 $0.21 $0.62 $0.47
-------------------------------------------------------------------------
(1) Net income excluding one-time integration costs and non-operating
items.Operational Highlights for the Second Quarter
Canada
Sales for the Company's Canadian operations increased 6.8% to $75.3
million with growth in both the retail and food service channels. Price
increases in the first quarter resulted in higher sales for the second quarter
and helped to maintain profitability. However, volume of 17.8 million pounds
for the second quarter represented a decrease of 2.9% from the second quarter
of last year.
Canadian food service sales volume increased 0.5% due to new business
gained in late 2008 and a fully integrated sales and marketing team.
Canadian retail sales volume decreased 6.4% as a result of price
increases implemented in the first quarter, which were necessitated primarily
by higher costs of Alaskan Pollock and wild salmon combined with a weaker
Canadian dollar translated into necessary increases in retail prices.
United States
Sales for the Company's U.S. operations decreased 4.6% in USD to $65.3
million as sales volume decreased 8.8% to 22.3 million pounds.
Following a strong first quarter, U.S. retail sales volume decreased
13.4% in the second quarter, likely attributable to price increases
implemented during the first quarter to offset higher Alaskan Pollock costs.
U.S. food service sales volume decreased 4.2% as fewer people ate away
from home due to the weakened economy. The decrease was more pronounced at
national family and casual dining restaurants, while most other segments
within High Liner's U.S. food service business saw an increase in sales
volume.
Dividends
The Company paid a $0.0625 per share quarterly dividend on June 15, 2009
to Common and Non-Voting Equity shareholders of record on June 1, 2009.
Today, the Board of Directors of the Company resolved to pay a quarterly
dividend in the amount of $0.07 per Common and Non-Voting Equity Share payable
on September 15, 2009 to shareholders of record on September 1, 2009. This
represents a 12% increase and is the third increase to the Company's quarterly
dividend since the acquisition of the FPI business in December 2007.
Outlook
"We remain well positioned for continued growth," said Mr. Demone. "In
the current economy, we are benefiting from our strong value-priced offerings,
including Fisher Boy® in the U.S. and our leading market position in
value-added private label seafood to the grocery store channel. Economic
conditions aside, our continued growth is influenced by strong demographics.
North America has an ageing population and as people get older they generally
eat more seafood. In fact, people over the age of 45 account for half of all
seafood consumption, due partly at least to the known health benefits of
eating fish."
Mr. Demone added: "Our club store sales remain strong. However, we are
losing the tilapia loin business of a major club customer later this year. A
victim of our own success, this customer wants to launch a similar product
under its own label. This is just the nature of the club store business. We
continue to have a strong relationship with all club stores, including this
particular one, and we will continue to provide them a range of products,
including new offerings."
Conference Call
The Company will host a conference call on Wednesday, August 12, 2009 at
10:00 a.m. ET (11:00 a.m. AT) to discuss its second quarter fiscal 2009
financial results. To access the conference call by telephone, dial
416-644-3421 or 1- 800-731-5319. Please connect approximately ten minutes
prior to the beginning of the call to ensure participation. The conference
call will be archived for replay by telephone until Wednesday, August 19, 2009
at midnight. To access the archived conference call, dial 416-640-1917 or
1-877-289-8525 and enter the reservation number 21311016 followed by the
number sign.
A live audio webcast of the conference call will 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 at the above
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®, Royal Sea®, and Sea Cuisine™
labels, and are available in most grocery and club stores. The Company also
sells its High Liner®, FPI® and Mirabel® 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, including sales,
earnings, marketing, and profitability comments for 2009 and beyond. These
statements contain words such as "anticipate", "expect", "could", "should",
"may", "plans", "will", or similar expressions that are based on and arise out
of our experience, our perception of trends, current conditions and expected
future developments as well as other factors. 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 a number of important factors, as discussed herein and in our
other continuous disclosure documents, could cause actual results to 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 thorough discussion of the risk
factors that can cause anticipated outcomes to differ from actual outcomes. We
disclaim any intention or obligation to update or revise forward-looking
statements.
For further information about the Company, please visit our Internet site
at www.highlinerfoods.com or send an e-mail to investor@highlinerfoodinc.com.
Financial Statements
For convenience, this press release includes the Company's Fiscal Second
Quarter Balance Sheets and Statements of Income, Statements of Comprehensive
Income, Statements of Retained Earnings and Statements of Cash Flows.HIGH LINER FOODS INCORPORATED
As at July 4, 2009
(with comparative figures as at June 28, 2008 and January 3, 2009)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)
July 4, 2009 June 28, 2008 January 3, 2009
-------------------------------------------------------------------------
ASSETS
Current:
Cash 4,149 3,969 7,032
Accounts receivable 55,549 60,334 63,873
Income tax receivable 315 1,703 45
Inventories 128,025 114,799 146,863
Prepaid expenses 2,541 2,047 1,782
Future income taxes 1,693 435 1,533
-------------------------------------------------------------------------
Total current assets 192,272 183,287 221,128
-------------------------------------------------------------------------
Property, plant and equipment 56,258 53,160 59,016
-------------------------------------------------------------------------
Other:
Future income taxes 697 1,288 833
Other assets 133 66 133
Employee future benefits 4,251 7,206 3,477
Intangible assets 22,507 20,783 24,065
Goodwill 30,148 29,018 30,767
-------------------------------------------------------------------------
57,736 58,361 59,275
-------------------------------------------------------------------------
306,266 294,808 339,419
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current:
Bank loans 33,531 48,501 39,931
Accounts payable and
accrued liabilities 49,420 48,997 73,611
Income taxes payable 302 91 2,443
Current portion of
long-term debt 2,465 - -
Current portion of capital
lease obligations 475 493 458
-------------------------------------------------------------------------
Total current liabilities 86,193 98,082 116,443
-------------------------------------------------------------------------
Long-term debt 58,862 53,172 63,939
-------------------------------------------------------------------------
Long-term capital lease
obligations 597 501 513
-------------------------------------------------------------------------
Other long-term liabilities 1,725 - 2,112
-------------------------------------------------------------------------
Employee future benefits 1,352 4,149 563
-------------------------------------------------------------------------
Shareholders' Equity:
Preference shares - 50,236 -
Common shares 108,866 59,372 109,787
Contributed surplus 364 369 364
Retained earnings 58,421 44,330 49,897
Accumulated other
comprehensive loss (10,114) (15,403) (4,199)
-------------------------------------------------------------------------
157,537 138,904 155,849
-------------------------------------------------------------------------
306,266 294,808 339,419
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the thirteen and twenty-six weeks ended July 4, 2009
(with comparative figures for the thirteen and twenty-six weeks ended
June 28, 2008)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)
Thirteen Weeks Twenty-Six Weeks
2009 2008 2009 2008
----------------------------------------------- -------------------------
Sales $ 151,374 $ 139,960 $ 334,650 $ 289,198
Cost of sales 120,841 110,348 263,930 226,108
Distribution expenses 7,198 8,518 17,231 17,971
----------------------------------------------- -------------------------
Gross profit 23,335 21,094 53,489 45,119
Commission income 244 355 440 464
Selling, general and
administrative
expenses (16,260) (14,116) (34,972) (30,507)
Foreign exchange gain
(loss) 84 113 (164) (289)
Business acquisition
costs 132 (802) (460) (2,295)
Amortization of
intangible assets (353) (278) (727) (598)
Loss on disposal of
assets and other
expense (180) (11) (340) (114)
Interest expense:
Short-term (463) (701) (961) (1,429)
Long-term (917) (866) (1,928) (1,741)
----------------------------------------------- -------------------------
Income before income
taxes 5,622 4,788 14,377 8,610
----------------------------------------------- -------------------------
Income taxes:
Current (448) (1,211) (1,229) (1,845)
Future (1,050) (297) (2,328) (391)
----------------------------------------------- -------------------------
Total income taxes (1,498) (1,508) (3,557) (2,236)
----------------------------------------------- -------------------------
Net income 4,124 3,280 10,820 6,374
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------
PER SHARE INFORMATION
Earnings per Common
Share
Basic, net income 0.22 0.23 0.59 0.43
Diluted, net income 0.22 0.18 0.59 0.36
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------
Average shares
outstanding for the
period
Basic 18,404,139 13,458,103 18,437,401 13,427,250
Diluted 18,411,417 18,469,488 18,442,547 17,886,145
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------
For the thirteen and twenty-six weeks ended July 4, 2009
(with comparative figures for the thirteen and twenty-six weeks ended
June 28, 2008)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks Twenty-Six Weeks
2009 2008 2009 2008
----------------------------------------------- -------------------------
Net income for the
period 4,124 3,280 10,820 6,374
----------------------------------------------- -------------------------
Other comprehensive
income, net of future
income taxes
Unrealized foreign
exchange (losses)
gains of self-
sustaining foreign
operations (net of
$0.8 million tax
recovery for the
thirteen and
twenty-six weeks
in 2009; net of nil
taxes in 2008) (2,032) (464) (1,127) 1,267
----------------------------------------------- -------------------------
Net (loss) gain on
derivative financial
instruments
designated as cash
flow hedges (net of
$0.8 million income
tax recovery and a
$0.9 million income
tax recovery for the
thirteen and twenty-
six weeks in 2009;
$0.1 million tax
recovery and $0.8
million tax expense
for the thirteen and
twenty-six weeks in
2008) (1,614) 325 (2,210) 1,873
Net (gain) loss on
derivatives designated
as cash flow hedges
in prior periods
transferred to net
income in the current
period (net of $0.5
million and $1.5
million income tax
expense for the
thirteen and twenty-
six weeks in 2009;
$0.1 million and
$0.1 million of
income tax recovery
for the thirteen and
twenty-six weeks in
2008) (1,229) 200 (3,081) 258
----------------------------------------------- -------------------------
Net (loss) gain on
derivatives designated
as cash flow hedges (2,843) 525 (5,291) 2,131
----------------------------------------------- -------------------------
Other comprehensive (loss)
income (4,875) 61 (6,418) 3,398
----------------------------------------------- -------------------------
Comprehensive (loss)
income (751) 3,341 4,402 9,772
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------
For the thirteen and twenty-six weeks ended July 4, 2009
(with comparative figures for the thirteen and twenty-six weeks ended
June 28, 2008)
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks Twenty-Six Weeks
2009 2008 2009 2008
----------------------------------------------- -------------------------
Balance, beginning of
period 55,444 41,972 49,897 40,112
Net income for the
period 4,124 3,280 10,820 6,374
Dividends:
Common shares (1,147) (672) (2,301) (1,342)
Series A preference
shares - (250) - (500)
Second preference
shares - - - (166)
Share issuance
expenses - - 5 (148)
----------------------------------------------- -------------------------
Balance, end of
period 58,421 44,330 58,421 44,330
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------
For the thirteen and twenty-six weeks ended July 4, 2009
(with comparative figures for the thirteen and twenty-six weeks ended
June 28, 2008)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks Twenty-Six Weeks
2009 2008 2009 2008
----------------------------------------------- -------------------------
Cash provided by
(used in) operations:
Net income from
operations for the
period 4,124 3,280 10,820 6,374
Charges (credits)
to income not
involving cash
from operations:
Depreciation and
amortization 2,252 1,919 4,581 3,827
Loss (gain) on
disposal of assets 194 (1) 347 77
Stock compensation
expense (reversal) 54 (136) 55 (21)
Payments of
employee future
benefits (in excess
of expense) less
than expense 487 (542) 2 (541)
Unrealized foreign
exchange loss
(gain) 760 (318) 897 382
Future income taxes 1,050 297 2,328 391
----------------------------------------------- -------------------------
Cash flow from
operations before
changes in non-cash
working capital 8,921 4,499 19,030 10,489
Net change in non-cash
working capital
balances 15,945 (2,075) (11,694) 721
----------------------------------------------- -------------------------
24,866 2,424 7,336 11,210
----------------------------------------------- -------------------------
Cash (used in) provided
by financing
activities:
Change in current
bank loans (22,076) 2,151 (4,641) (14,043)
Repayment of long-
term capital lease
obligations (109) (197) (210) (323)
Dividends paid:
Second Preference - - - (166)
Series A Preference - (250) - (500)
Common (1,147) (672) (2,301) (1,342)
Share issuance cost - - 5 (148)
Share repurchase (921) - (921) -
Preference share
redemption - - - (18)
Issue of equity
shares - 248 - 451
----------------------------------------------- -------------------------
(24,253) 1,280 (8,068) (16,089)
----------------------------------------------- -------------------------
Cash (used in) provided
by investing activities:
Purchase of property,
plant and equipment
(net of investment
tax credits) (1,310) (519) (2,093) (1,019)
Net proceeds
(expenditures) on
disposal of assets 6 (12) 11 (33)
Use of investment tax
credits - 493 - 752
Business acquisition
adjustment - (5) - 1,902
----------------------------------------------- -------------------------
(1,304) (43) (2,082) 1,602
----------------------------------------------- -------------------------
Foreign exchange impact
on cash (75) (20) (69) 182
----------------------------------------------- -------------------------
Decrease in cash during
the period (766) 3,641 (2,883) (3,095)
Cash, beginning of
period 4,915 328 7,032 7,064
----------------------------------------------- -------------------------
Cash, end of period 4,149 3,969 4,149 3,969
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------
----------------
(1) Adjusted earnings before interest, taxes, depreciation and
amortization, business acquisition costs, other income and non-
operating transactions as disclosed on the consolidated statements of
income. Management believes that EBITDA is a useful performance
measure as it approximates cash generated from operations, before
capital expenditures and changes in working capital and excludes
unusual items. EBITDA also assists comparison among companies as it
eliminates the differences in earnings due to how a company is
financed. The calculation of Adjusted EBITDA follows the general
principles and guidance for reporting EBITDA issued by the Canadian
Institute of Chartered Accountants.%SEDAR: 00001789E
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