- Strong growth in sales and earnings despite weakened economy -
LUNENBURG, NS, May 13 /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 April 4, 2009. All amounts
are reported in Canadian dollars unless stated otherwise.First quarter highlights:
- Sales of $183.3 million, including an increase of 7.9% in Canadian
operations and an increase of 8.6% in U.S. operations as measured in
U.S. dollars;
- Adjusted EBITDA(1) of $13.1 million, an increase of 48.6% compared to
the first quarter of 2008; and
- Net income of $7.3 million, or fully diluted earnings per share of
$0.40, excluding one-time after-tax integration costs and non-
operating items of approximately $0.6 million ($0.04 per share)."Our robust first quarter results from our strong organization
successfully executing its business plan," said Henry Demone, President and
Chief Executive Officer, High Liner Foods Inc. "Of particular note, we
benefited from new business gained in the Canadian food service channel late
last year and achieved solid sales volume growth in our U.S. retail business.
Sales volumes with national family and casual dining restaurants in the U.S.
were lower, as expected given the economy. However, other segments of our U.S.
food service business did well. We also benefited from a longer promotional
period leading up to Easter due to a later Lent this year."
First Quarter Financial Results
Sales for the first quarter of fiscal 2009 were $183.3 million, an
increase of 22.8% compared to the first quarter of fiscal 2008. With
approximately half of the Company's operations, including sales, denominated
in U.S. dollars, the weaker Canadian dollar increased the value of reported
U.S. sales by approximately $21.7 million. Adjusting for the effect of the
weaker Canadian dollar, consolidated sales increased 8.3% for the quarter due
to higher selling prices and volume gains.
Although price increases were put in place late in 2008 and early in
2009, sales volume increased 1.3% to 49.5 million pounds compared to 48.9
million pounds in the first quarter of last year. Price increases were
necessary to cover the increased cost of seafood and other commodities and to
offset the weakened Canadian dollar.-------------------------------------------------------------------------
(Amounts in thousands of Canadian $ except per share amounts)
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Thirteen Thirteen
Weeks ended Weeks ended
April 4, March 29,
2009 2008
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Sales 183,276 149,238
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Adjusted EBITDA 13,105 8,821
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Net income 6,696 3,094
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Net income excluding one-time integration
costs and non-operating items 7,299 4,424
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Basic earnings per Common Share:
Net income $0.36 $0.20
Net income excluding one-time integration
costs and non-operating items $0.40 $0.30
Diluted earnings per Common Share:
Net income $0.36 $0.18
Net income excluding one-time integration
costs and non-operating items $0.40 $0.26
-------------------------------------------------------------------------Adjusted EBITDA in the quarter increased to $13.1 million from $8.8
million. The change in the value of the Canadian dollar added $1.0 million
related to the conversion of U.S. results to Canadian dollars. The additional
synergies achieved from the FPI acquisition, and higher sales resulting from
new product launches and expansion of distribution for existing products
increased Adjusted EBITDA as a percentage of sales to 7.2% from 5.9%. This
increase in margins is more in line with historical results.
Net income from continuing operations for the first quarter of 2009 was
$6.7 million, or $0.36 per diluted share, compared to $3.1 million, or $0.18
per diluted share, for the same quarter last year.
Operational Highlights for the First Quarter
Canada
Sales for the Company's Canadian operations were up 7.9% to $73.5 million
largely as a result of price increases implemented in the quarter and a strong
performance from the food service channel. The price increases were necessary
to recover rising input costs and to alleviate the impact of the weakening
Canadian dollar. While the increases resulted in higher sales, they kept sales
volume flat at 18.5 million pounds compared to the first quarter of last year.
The Canadian food service business had sales volume growth of 6.8%(2) due
to new business gained in late 2008 and a fully integrated sales and marketing
team. Retail sales volume decreased 5.7%(2) as a result of price increases
implemented in the first quarter, which had a more significant impact on our
higher-priced, and larger sized packages.
United States
Sales for the Company's U.S. operations increased 8.6%, as measured in
U.S. dollars, to US$88.1 million due to particularly strong performance in the
retail channel. The weakened Canadian dollar increased sales reported in
Canadian dollars by approximately $21.7 million. U.S. operations sales volume
for the quarter increased 2.2% to 31.0 million pounds compared to 30.4 million
pounds in the first quarter of 2008.
The U.S. retail business achieved a 7.6%(2) increase in sales volume and
gained additional market share of 1.2 share points (a 15.6% increase) in the
breaded category during the quarter. This increase was across both branded and
club channels.
The U.S. food service business experienced a decline in sales volume of
1.8%(2), due to fewer people eating away from home during the weakened
economy. Despite a more pronounced decrease in volume at national family and
casual dinning restaurants, 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 March 15, 2009
to Common and Non-Voting Equity shareholders of record on March 1, 2009.
Subsequent to the end of the quarter, the Board of Directors of the
Company resolved to pay a quarterly dividend in the amount of $0.0625 per
Common and Non-Voting Equity Share payable on June 15, 2009 to shareholders of
record on June 1, 2009. This will be the twenty-third consecutive quarterly
dividend paid by the Company on its common shares.
Outlook
"We are well-positioned to successfully navigate through these troubling
economic times," said Mr. Demone. "Now well over a year since our acquisition
of FPI, we are benefiting from the successful integration and the synergies
achieved to date. We will drive continued growth in our business by leveraging
our core High Liner and FPI brands, strengthened market positions, and
expanded product development expertise. At the same time we will remain
diligent in controlling our costs in the current economic environment. We
expect continued volatility in the U.S. and Canadian dollar exchange rate and
therefore we continue to manage this risk through a disciplined hedging
policy. Although some seafood and other input cost increases are leveling,
many of these costs remain higher than their historical average over the past
few years."
Conference Call
The Company will host a conference call on Thursday, May 14, 2009 at
10:30 a.m. ET (11:30 a.m. AT) to discuss its first quarter fiscal 2009
results. To access the conference call by telephone, dial 416-644-3425 or
1-800-590-1817. 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 Thursday, May 21, 2009 at midnight. To
access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and
enter the reservation number 21304145 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 First
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 April 4, 2009
(with comparative figures as at March 29, 2008 and January 3, 2009)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)
April 4, March 29, January 3,
2009 2008 2009
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ASSETS
Current:
Cash 4,915 328 7,032
Accounts receivable 67,431 65,543 63,873
Income tax receivable - 1,865 45
Inventories 145,209 121,959 146,863
Prepaid expenses 2,168 2,496 1,782
Future income taxes 1,338 567 1,533
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Total current assets 221,061 192,758 221,128
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Property, plant and equipment 58,659 57,962 59,016
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Other:
Future income taxes 688 1,586 833
Other assets 133 69 133
Employee future benefits 4,155 6,848 3,477
Intangible assets 24,097 20,951 24,065
Goodwill 31,044 23,331 30,767
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60,117 52,785 59,275
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339,837 303,505 339,419
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Bank loans 58,069 46,552 39,931
Accounts payable and accrued
liabilities 51,677 61,330 73,611
Income taxes payable 734 153 2,443
Current portion of long-term
debt 1,286 - -
Current portion of capital
lease obligations 458 525 458
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Total current liabilities 112,224 108,560 116,443
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Long-term debt 63,913 53,950 63,939
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Long-term capital lease
obligations 447 422 513
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Other long-term liabilities 2,126 - 2,112
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Employee future benefits 771 4,336 563
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Shareholders' Equity:
Preference shares - 50,236 -
Common shares 109,787 59,093 109,787
Contributed surplus 364 400 364
Retained earnings 55,444 41,972 49,897
Accumulated other comprehensive
loss (5,239) (15,464) (4,199)
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160,356 136,237 155,849
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339,837 303,505 339,419
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HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended April 4, 2009
(with comparative figures for the thirteen weeks ended March 29, 2008)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)
Thirteen Weeks
2009 2008
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Sales $ 183,276 $ 149,238
Cost of sales 142,787 115,482
Distribution expenses 10,034 9,567
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Gross profit 30,455 24,189
Commission income 196 109
Selling, general and administrative expenses (19,013) (16,555)
Foreign exchange loss (248) (402)
Business acquisition costs (592) (1,493)
Amortization of intangible assets (374) (320)
Loss on disposal of assets and other expense (160) (103)
Interest expense
Short-term (498) (728)
Long-term (1,011) (875)
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Income before income taxes 8,755 3,822
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Income taxes
Current (781) (634)
Future (1,278) (94)
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Total income taxes (2,059) (728)
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Net income 6,696 3,094
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PER SHARE INFORMATION
Earnings per Common Share
Basic, net income 0.36 0.20
Diluted, net income 0.36 0.18
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Average shares outstanding for the period
Basic 18,470,663 13,396,396
Diluted 18,473,687 17,303,300
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HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended April 4, 2009
(with comparative figures for the thirteen weeks ended March 29, 2008)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks
2009 2008
-------------------------------------------------------------------------
Net income for the period 6,696 3,094
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Other comprehensive income, net of future
income taxes
Unrealized foreign exchange gains of
self-sustaining foreign operations
(net of nil taxes in 2009 and 2008) 905 1,731
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Net (loss) gain on derivative financial
instruments designated as cash flow hedges
(net of $0.1 million income tax recovery in
2009; $0.9 million income tax expense in 2008) (596) 1,548
Net (gain) loss on derivatives designated
as cash flow hedges in prior periods
transferred to net income in the current
period (net of $1.0 million income tax expense
in 2009; $0.1 million income tax recovery in
2008) (1,852) 58
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Net (loss) gain on derivatives designated
as cash flow hedges (2,448) 1,606
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Other comprehensive (loss) income (1,543) 3,337
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Comprehensive income 5,153 6,431
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HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended April 4, 2009
(with comparative figures for the thirteen weeks ended March 29, 2008)
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks
2009 2008
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Balance, beginning of period 49,897 40,112
Net income for the period 6,696 3,094
Dividends:
Common shares (1,154) (670)
Series A preference shares - (250)
Second preference shares - (166)
Share issuance expenses 5 (148)
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Balance, end of period 55,444 41,972
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HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended April 4, 2009
(with comparative figures for the thirteen weeks ended March 29, 2008)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks
2009 2008
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Cash provided by (used in) operations:
Net income from operations for the period 6,696 3,094
Charges (credits) to income not involving
cash from operations:
Depreciation and amortization 2,329 1,912
Loss on disposal of assets 153 78
Stock compensation expense 1 114
Payments of employee future benefits
(in excess of expense) less than expense (485) 1
Unrealized foreign exchange loss 137 700
Future income taxes 1,278 94
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Cash flow from operations before changes
in non-cash working capital 10,109 5,993
Net change in non-cash working capital balances (27,640) 2,809
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(17,531) 8,802
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Cash provided by (used in) financing activities:
Change in current bank loans 17,435 (16,194)
Repayment of long-term capital lease obligations (101) (126)
Dividends paid
Second Preference - (166)
Series A Preference - (250)
Common (1,154) (670)
Share issuance cost 6 (148)
Preference share redemption - (34)
Issue of equity shares - 203
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16,186 (17,385)
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Cash provided by (used in) investing activities:
Purchase of property, plant and equipment
(net of investment tax credits) (783) (500)
Net proceeds (expenditures) on disposal of assets 5 (21)
Use of investment tax credits - 259
Business acquisition adjustment - 1,907
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(778) 1,645
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Foreign exchange impact on cash 6 202
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Decrease in cash during the period (2,117) (6,736)
Cash, beginning of period 7,032 7,064
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Cash, end of period 4,915 328
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(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.
(2) Sales volume as measured in pounds.%SEDAR: 00001789E
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