- Record year resulting from successful integration plan -
LUNENBURG, NS, Feb. 25 /CNW/ - High Liner Foods Incorporated (TSX:HLF;
HLF.A), a leading North American value-added frozen seafood company, today
reported financial results for the fourteen week period and fiscal year ended
January 3, 2009. All amounts are reported in Canadian dollars.Financial and operational highlights for the fourth quarter include:
- Sales of $177.4 million, including growth of 84.3% in Canadian
operations and growth of 293.7% in U.S. operations;
- Adjusted EBITDA(1) of $9.2 million, an increase of 166.2% compared to
the fourth quarter of 2007; and
- Net income of $4.0 million, or fully diluted earnings per share of
$0.22, excluding one-time after-tax integration costs of $1.7 million
($0.09 per share).
Financial and operational highlights for the fiscal year include:
- Annual sales of $616.0 million, an increase of 123.7% compared to
fiscal 2007;
- Adjusted EBITDA of $37.9 million, an increase of 151.9% compared to
fiscal 2007;
- Net income of $18.3 million, or fully diluted earnings per share of
$1.00, excluding one-time after-tax integration costs of $4.1 million,
($0.23 per share);
- Successful completion of the integration of the FPI businesses and the
achievement of planned synergies; and
- Net interest bearing debt reduced to 39.5% of total capitalization
compared with 45.0% at the fiscal year end of 2007."Our strong results in fiscal 2008 reflect a full year of contributions
from the acquired FPI businesses and their successful integration into our
operations," said Henry Demone, President and Chief Executive Officer, High
Liner Foods Inc. "We had a very strong fourth quarter with growth across all
sales channels. As expected, we saw a lift in sales in our retail businesses.
Perhaps more consumers are eating at home in light of the economy, but we are
also executing our business plan with discipline. We also had strong results
from both our U.S. and Canadian food service businesses."
Financial Results
Financial results for the fourth quarter and fiscal year ended January 3,
2009 are affected by the inclusion of one additional week compared to the
corresponding periods in fiscal 2007, due to the Company's floating year end.-------------------------------------------------------------------------
(Amounts in thousands of Canadian $ except per share amounts)
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Fourteen Thirteen Fifty-Three Fifty-Two
Weeks ended Weeks ended Weeks ended Weeks ended
January 3, December 29, January 3, December 29,
2009 2007 2009 2007
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Sales 177,441 68,212 615,993 275,391
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Adjusted EBITDA 9,188 3,452 37,917 15,054
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Net income from continuing
operations 2,376 1,580 14,192 6,917
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Net income (loss) from
discontinued operations;
net of income tax - - - 372
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Net income 2,376 1,580 14,192 7,289
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Net income excluding
one-time integration
costs 4,036 2,201 18,292 8,171
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Basic earnings per
Common Share:
Net income 0.13 0.12 0.88 0.58
Net income excluding
one-time integration
costs 0.22 0.18 1.15 0.67
Diluted earnings per
Common Share:
Net income 0.13 0.12 0.77 0.57
Net income excluding
one-time integration
costs 0.22 0.17 1.00 0.66
-------------------------------------------------------------------------Sales increased 160.1% to $177.4 million for the fourth quarter and
increased 123.7% to $616.0 million for the fiscal year compared to the
corresponding periods in fiscal 2007. The higher sales were primarily due to
the acquisition of FPI's Manufacturing and Marketing Group (the "Acquisition")
late in the fourth quarter of fiscal 2007.
Excluding the Acquisition, sales increased 33.1% for the quarter and
increased 2.5% for the year. When adjusted for the weaker Canadian dollar,
sales for the quarter, excluding the Acquisition, increased 23.5%, with the
lower average Canadian dollar increasing the value of reported U.S. sales by
approximately $6.0 million. Currency valuations decreased the value of
reported U.S. sales by approximately $1.0 million for the fiscal year.
Adjusted EBITDA increased 166.2% to $9.2 million for the quarter and
increased 151.9% to $37.9 million for the year. The increases are due to the
added sales volume and resulting higher profits attributable to the
Acquisition. The integration reduced selling, general and administrative
expenses from 14.5% of sales to 10.6% as synergies were realized from
combining sales forces and corporate costs were leveraged over the larger
business.
Excluding one-time integration costs, net income for the quarter was $4.0
million, or diluted earnings per share ("EPS") of $0.22, compared to $2.2
million, or diluted EPS of $0.17, for the fourth quarter of 2007. For the
year, net income excluding one-time integration costs was $18.3 million, or
diluted EPS of $1.00, compared to $8.2 million, or diluted EPS of $0.66, for
fiscal 2007. The financing of the Acquisition resulted in changes in
depreciation and amortization, interest expense and average shares
outstanding.
Operational Highlights for the Fourth Quarter
Canada
For the quarter, sales in Canadian operations increased 84.3% to $80.2
million from $43.5 million for the fourth quarter of fiscal 2007. The
Acquisition contributed sales of $32.0 million and was primarily responsible
for a 73.8%(2) increase in sales volume for the Canadian operations in the
quarter.
Excluding the Acquisition, sales at the Canadian operations were up 15.3%
in dollars and 11.3%(2) by volume for the quarter, due to the extra week
included in the fourth quarter of 2008, price increases, and strong retail
demand.
United States
The Company's U.S. operations had sales of $97.2 million for the quarter,
an increase of 293.9% from the fourth quarter of 2007. The Acquisition
contributed sales of $62.0 million in sales to the U.S. operations during the
quarter. Sales volume(2) more than doubled compared with the fourth quarter of
2007.
Excluding the Acquisition, the U.S. operations' sales in Canadian dollars
increased 68.8%, or 21.3% in U.S. dollars. U.S. retail sales benefited from an
extra week of sales, price increases and from strong value-priced offerings,
including Fisher Boy® and private label products. Excluding the Acquisition,
sales volume was up 7.0%(2).
Dividends
The Company paid its twenty-first consecutive quarterly dividend on
December 15, 2008 to shareholders of record on December 1, 2008. Effective
with this payment the dividend was increased by 13.6% to $0.0625 per Common
Share and per Non-Voting Equity Share.
On February 25, 2009, the Board of Directors approved a quarterly
dividend of $0.0625 per Common Share and per Non-Voting Equity Share payable
on March 15, 2009 to holders of record on March 1, 2009.
Liquidity
The Company has in place a $120 million committed revolving credit
facility with The Royal Bank of Canada and CIT Business Credit Canada Inc, as
agents, maturing in December, 2010. At the end of the quarter borrowings under
this facility were $40.6 million, with over $50 million available for
borrowing based on margin calculations, which is more than sufficient to cover
the Company's expected working capital requirements for the next 12 months.
Subsequent to the end of the quarter, on January 16, 2009, the Bank of
Montreal assumed the position previously held by Landsbanki Islands hf in this
syndicated credit facility.
The Company has operations in the United States, and monetary assets and
liabilities in Canada, that are denominated in U.S. dollars. Consequently,
assets and liabilities of the consolidated company change as exchange rates
fluctuate. At January 3, 2009 the Canadian/US dollar exchange rate was 1.2107,
compared to $0.9785 on December 29, 2007. The weakening Canadian dollar has
increased the carrying value of items such as accounts receivable, inventory,
fixed assets, and accounts payable. This is particularly noticeable for
inventory, which increased by approximately $18 million at the end of fiscal
2008 due to foreign exchange alone.
Outlook
"Our strong performance in 2008 positions us to weather the challenging
economic environment in 2009," said Mr. Demone. "During these volatile times
we will leverage our strong brands and market position in each of our sales
channels to further grow our business. We will be prudent in controlling
expenses. We have a solid balance sheet, a diversified go-to-market strategy,
and have the scale to effectively manage our costs and invest in our future.
In 2009 and beyond, we will be unwavering in the pursuit of our vision and
uncompromising in our focus on exceptional product quality."
The Company has implemented price increases effective in the first
quarter of 2009 to offset cost increases experienced in late 2008 and expected
in 2009 on two key species and due to a weakened Canadian dollar. High Liner's
talented people, leading brands, worldwide procurement and strength in all key
markets in North America combine to provide High Liner with the opportunity to
continue to grow and to maintain its strong position, despite the uncertain
economic outlook and Canadian dollar volatility.
Conference Call
High Liner Foods will host a conference call on Thursday, February 26,
2009 at 2:30 p.m. ET (3:30 p.m. AT) to discuss its 2008 financial results,
including results for the fourth quarter. A live audio webcast of the
conference call will be available at www.highlinerfoods.com. To access the
conference call by telephone, dial 416-644-3417 or 1-800-732-9303. Please
connect approximately ten minutes prior to the beginning of the call to ensure
participation. The conference call will be archived for replay until Thursday,
March 5, 2009 at midnight. To access the archived conference call, dial
416-640-1917 or 1-877-289-8525 and enter the reservation number 21295379
followed by the number sign.
Financial Statements
For convenience, this press release includes the Company's Fiscal Fourth
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 January 3, 2009
(with comparative figures as at December 29, 2007)
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
January 3, December 29,
2009 2007
-------------------------------------------------------------------------
ASSETS
Current:
Cash $ 7,032 7,064
Accounts receivable 63,873 68,662
Income tax receivable 45 2,414
Inventories 146,863 110,521
Prepaid expenses 1,782 1,712
Future income taxes 1,533 1,302
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Total current assets 221,128 191,675
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Property, plant and equipment 59,016 57,515
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Other:
Future income taxes 833 1,677
Other assets 133 66
Employee future benefits 3,477 6,759
Intangible assets 24,065 -
Goodwill 30,767 -
Intangible assets and goodwill - 42,762
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59,275 51,264
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339,419 300,454
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Bank loans 39,931 61,280
Accounts payable and accrued liabilities 73,611 51,068
Income taxes payable 2,443 437
Current portion of capital lease obligations 458 603
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Total current liabilities 116,443 113,388
-------------------------------------------------------------------------
Long-term debt 63,939 51,709
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Long-term capital lease obligations 513 259
-------------------------------------------------------------------------
Other long-term liabilities 2,112 -
-------------------------------------------------------------------------
Employee future benefits 563 4,227
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Shareholders' Equity:
Preference shares - 50,270
Common shares 109,787 58,800
Contributed surplus 364 490
Retained earnings 49,897 40,112
Accumulated other comprehensive income (4,199) (18,801)
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155,849 130,871
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339,419 300,454
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HIGH LINER FOODS INCORPORATED
For the fourteen and fifty-three weeks ended January 3, 2009
(with comparative figures for the thirteen and fifty-two weeks ended
December 29, 2007)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of Canadian dollars, except per share amounts)
Fifty- Fifty-
Fourteen Thirteen three two
Weeks Weeks Weeks Weeks
2008 2007 2008 2007
------------------------------------------------- -----------------------
Sales $ 177,441 $ 68,212 $ 615,993 $ 275,391
Cost of sales 139,142 50,688 481,382 203,259
Distribution expenses 9,926 5,096 37,041 20,211
------------------------------------------------- -----------------------
Gross profit 28,373 12,428 97,570 51,921
Commission income (137) 33 625 33
Selling, general and
administrative expenses (20,066) (10,073) (65,513) (39,809)
Foreign exchange (loss)
gain (847) 238 (1,234) (170)
Business acquisition
integration costs (1,862) (895) (4,879) (1,286)
Amortization of
intangibles assets (477) - (1,383) -
(Loss) gain on disposal
of assets and other
expense (360) 321 (486) 282
Interest expense:
Short-term (744) (127) (2,695) (173)
Long-term (1,167) (172) (3,768) (212)
------------------------------------------------- -----------------------
Income from continuing
operations before income
taxes 2,713 1,753 18,237 10,586
------------------------------------------------- -----------------------
Income taxes
Current 135 597 (3,002) (2,505)
Future (472) (770) (1,043) (1,164)
------------------------------------------------- -----------------------
Total income taxes from
continuing operations (337) (173) (4,045) (3,669)
------------------------------------------------- -----------------------
Net income from continuing
operations 2,376 1,580 14,192 6,917
Net income from
discontinued operations;
net of income tax - - - 372
------------------------------------------------- -----------------------
Net income 2,376 1,580 14,192 7,289
------------------------------------------------- -----------------------
------------------------------------------------- -----------------------
PER SHARE INFORMATION
Earnings per Common Share
Basic from continuing
operations 0.13 0.12 0.88 0.55
Basic from discontinued
operations - - - 0.03
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Basic, net income 0.13 0.12 0.88 0.58
------------------------------------------------- -----------------------
------------------------------------------------- -----------------------
Diluted from continuing
operations 0.13 0.12 0.77 0.54
Diluted from discontinued
operations - - - 0.03
------------------------------------------------- -----------------------
Diluted, net income 0.13 0.12 0.77 0.57
------------------------------------------------- -----------------------
------------------------------------------------- -----------------------
Average shares outstanding
for the period
Basic 18,521,005 10,705,988 15,059,296 10,443,281
Diluted 18,521,784 11,067,686 18,203,100 10,591,693
------------------------------------------------- -----------------------
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HIGH LINER FOODS INCORPORATED
For the fourteen and fifty-three weeks ended January 3, 2009
(with comparative figures for the thirteen and fifty-two weeks ended
December 29, 2007)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands of Canadian dollars)
Fifty- Fifty-
Fourteen Thirteen three two
Weeks Weeks Weeks Weeks
2008 2007 2008 2007
------------------------------------------------- -----------------------
Net income for the period 2,376 1,580 14,192 7,289
------------------------------------------------- -----------------------
Other comprehensive income,
net of future income taxes
Unrealized foreign
exchange gains (losses)
of self-sustained
foreign operations (net
of nil taxes in 2008
and 2007) 7,013 (1,094) 9,093 (3,512)
------------------------------------------------- -----------------------
Net gain (loss) on
derivative financial
instruments designated
as cash flow hedges
(net of $2.6 million
income tax expense and
a $3.6 million income
tax expense for the
fourteen and fifty-
three weeks in 2008;
$0.5 million and
$1.6 million tax
recovery for the thirteen
and fifty-two weeks in
2007, respectively) 4,785 (1,071) 7,045 (3,245)
Net loss (gain) on
derivatives designated as
cash flow hedges in prior
periods transferred to net
income in the current
period (net of $0.8
million and $0.8 million
income tax recovery for
the fourteen and fifty-
three weeks in 2008;
$0.5 million and $0.6
million of income tax
recovery for the thirteen
and fifty-two weeks in
2007) (1,490) 863 (1,536) 1,085
------------------------------------------------- -----------------------
Change in gains and losses
on derivatives designated
as cash flow hedges 3,295 (208) 5,509 (2,160)
------------------------------------------------- -----------------------
Other comprehensive income
(loss) 10,308 (1,302) 14,602 (5,672)
------------------------------------------------- -----------------------
Comprehensive income 12,684 278 28,794 1,617
------------------------------------------------- -----------------------
------------------------------------------------- -----------------------
HIGH LINER FOODS INCORPORATED
For the fourteen and fifty-three weeks ended January 3, 2009
(with comparative figures for the thirteen and fifty-two weeks ended
December 29, 2007)
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in thousands of Canadian dollars)
Fifty- Fifty-
Fourteen Thirteen three two
Weeks Weeks Weeks Weeks
2008 2007 2008 2007
------------------------------------------------- -----------------------
Balance, beginning of
period 48,633 39,356 40,112 36,106
Net income for the period 2,376 1,580 14,192 7,289
Dividends:
Common shares (1,157) (520) (3,244) (2,073)
Series A preference shares - - (774) -
Second preference shares - (304) (166) (1,210)
Share issuance expenses 45 - (223) -
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Balance, end of period 49,897 40,112 49,897 40,112
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------------------------------------------------- -----------------------
HIGH LINER FOODS INCORPORATED
For the fourteen and fifty-three weeks ended January 3, 2009
(with comparative figures for the thirteen and fifty-two weeks ended
December 29, 2007)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
Fifty- Fifty-
Fourteen Thirteen three two
Weeks Weeks Weeks Weeks
2008 2007 2008 2007
------------------------------------------------- -----------------------
Cash provided by (used in)
operations:
Net income from
continuing operations
for the period 2,376 1,580 14,192 6,917
Charges (credits) to
income not involving
cash from operations:
Depreciation and
amortization 2,482 825 8,311 3,087
Loss on disposal of
assets 356 86 448 89
Stock compensation
expense - (114) (81) 135
Payments of employee
future benefits in
excess of expense 35 30 (523) 19
Unrealized foreign
exchange (gain) loss 263 144 475 (442)
Future income taxes 472 770 1,043 1,164
------------------------------------------------- -----------------------
Cash flow from operations
before changes in
non-cash working capital 5,984 3,321 23,865 10,969
Net change in non-cash
working capital balances 294 (339) 3,464 (1,416)
Operating activities of
discontinued operations - - - 375
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6,278 2,982 27,329 9,928
------------------------------------------------- -----------------------
Cash provided by (used in)
financing activities:
Net change in current
bank loans (5,614) 57,705 (29,254) 53,760
Issuance of long-term debt
related to acquisition - 53,625 - 53,625
Repayment of capital lease
obligations (99) (96) (519) (418)
Dividends paid:
Second Preference - (304) (166) (1,210)
Series A Preference - - (774) -
Common (1,157) (520) (3,244) (2,073)
Share issuance expenses (55) - (323) -
Repurchase of capital
stock (369) - (402) -
Issue of equity shares 2 41 993 419
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(7,292) 110,451 (33,689) 104,103
------------------------------------------------- -----------------------
Cash provided by (used in)
investing activities:
Purchase of property,
plant and equipment (net
of investment tax
credits) (2,782) (1,545) (4,671) (3,019)
Proceeds of unwound
foreign exchange
contracts 7,436 - 7,436 -
Net expenditures on
disposal of assets 4 27 (25) (17)
Use of investment tax
credits 462 (373) 1,368 1,516
Acquisition of business - (100,479) - (100,479)
Business acquisition
adjustment and costs 7 (2,903) 1,765 (4,246)
Change in other
receivables (67) (55) (67) (61)
Investing activities of
discontinued operations - 54 - 333
------------------------------------------------- -----------------------
5,060 (105,274) 5,806 (105,973)
------------------------------------------------- -----------------------
Foreign exchange impact on
cash 274 (1,202) 522 (1,234)
------------------------------------------------- -----------------------
Increase (decrease) in cash
during the period 4,046 8,159 (554) 8,058
Cash, beginning of period 2,712 107 7,064 240
------------------------------------------------- -----------------------
Cash, end of period 7,032 7,064 7,032 7,064
------------------------------------------------- -----------------------
------------------------------------------------- -----------------------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.-------------------------------------------------------------------------
(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 recently
issued general principles and guidance for reporting EBITDA issued by
the Canadian Institute of Chartered Accountants.
(2) As measured in volume (pounds)%SEDAR: 00001789E
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