- Continued growth in Canadian retail and U.S. Fisher Boy® sales -
LUNENBURG, NS, Feb. 19 /CNW/ - High Liner Foods Incorporated (TSX:HLF)
today reported improved financial results for the thirteen week period and
fiscal year ended December 29, 2007. (All amounts are reported in Canadian
dollars). For comparative purposes versus the prior year, unless otherwise
noted, amounts specified in the financial narrative below do not include the
impact of High Liner's acquisition of the Manufacturing and Marketing Group
("M&M Group") of Fishery Products International, Limited. Since the fiscal
year ended December 29, 2007 would include only four business days of
contributions since closing the acquisition on December 20, 2007, management
believes the most accurate description of performance in 2007 would not
reflect this transaction. The Company's audited financial statements however,
do include the impact of the acquisition.
Financial and operational highlights for the fourth quarter include:- Sales of $62.7 million, a decrease of 1.1% when adjusted for the
effect of the stronger Canadian dollar;
- Growth in Canadian retail sales of 8.4% in dollars (1.5% in pounds);
- Growth in Fisher Boy® sales of 8.5% in U.S. dollars (8.1% in
pounds);
- Operating EBITDA(1) of $2.9 million compared with $3.5 million for
the same period in 2006;
- Net income from continuing operations (including the Acquisition) of
$1.6 million, or $0.12 per share, compared with $1.2 million, or
$0.09 per share for the same period in 2006;
- One time after tax acquisition costs of $0.6 million ($0.06 per
shares) included as expense for the quarter;
- Completion of the acquisition of FPI's M&M Group on December 20,
2007.
Financial and operational highlights for the fiscal year include:
- Sales of $269.9 million, an increase of 4.5% when adjusted for the
effect of the stronger Canadian dollar;
- Operating EBITDA of $14.5 million compared to $13.6 million in 2006;
- Net income from continuing operations (including the Acquisition) of
$6.9 million, or $0.55 per share, compared to $5.1 million, or $0.38
per share, in 2006;
- One time after tax acquisition costs of $ 0.9 million ($0.08 per
share) included as expense for the year.
------------------------------------
(1) Earnings before interest, taxes, depreciation and amortization,
litigation costs, other income and non-operating transactions as
disclosed on the consolidated statements of income. EBITDA is not a
recognized measure under Canadian generally accepted accounting
principles (GAAP), however, management believes that it is a useful
performance measure as it approximates cash generated from
operations, before capital expenditures and changes in working
capital and excludes unusual items. Operating EBITDA also assists
comparison among companies as it eliminates the differences in
earnings due to how a company is financed. Foreign exchange
gains/losses are now included in Operating EBITDA and prior years
have been restated to reflect this change.
"We achieved solid growth in sales and profitability, and completed our
acquisition of FPI's M&M Group near the end of 2007. This has been an
important year in High Liner's long history of success," said Henry Demone,
President and Chief Executive Officer, High Liner Foods Inc. "Our Canadian
retail and our U.S. Fisher Boy® sales continued to post strong growth in the
fourth quarter, as they had throughout the year, although slower sales in
other segments somewhat slowed our top line."
Mr. Demone continued: "The addition of FPI's M&M Group significantly
strengthened and expanded our North American presence. Today we are pleased to
say that High Liner is the largest seafood company in Canada and a leading
North American supplier to all key sales channels. The acquisition provides
High Liner with an established strong competitive position in the large U.S.
food service market and strengthens our U.S. retail business."
Financial Results (as per 2007 financial statements, including the
Acquisition)
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(Amounts in thousands of Canadian $ except per share amounts)
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Thirteen Thirteen Fifty-two Fifty-two
Weeks ended Weeks ended Weeks ended Weeks ended
December 29, December 30, December 29, December 30,
2007 2006 2007 2006
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Sales $ 68,212 $ 65,657 $ 275,391 $ 261,725
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Operating EBITDA 3,452 3,489 15,054 13,568
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Net income from
continuing
operations 1,580 1,241 6,917 5,123
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Net income (loss)
from discontinued
operations; net
of income tax 0 68 372 (793)
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Net income $ 1,580 $ 1,309 $ 7,289 $ 4,330
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Basic earnings per
Common Share:
Net income from
continuing
operations $ 0.12 $ 0.09 $ 0.55 $ 0.38
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Net income (loss)
from discontinued
operations $ 0.00 $ 0.01 $ 0.03 $ (0.08)
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Net income $ 0.12 $ 0.10 $ 0.58 $ 0.30
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-------------------------------------------------------------------------Financial Results for the Quarter
When adjusted for the stronger Canadian dollar, sales for the fourth
quarter of fiscal 2007 decreased 1.1%, with the higher Canadian dollar
reducing the value of reported U.S. sales by approximately $2.1 million. Sales
before adjustment for the stronger Canadian dollar decreased 4.5% to
$62.7 million from $65.7 million for the fourth quarter of fiscal 2006.
Operating EBITDA for the fourth quarter decreased to $2.9 million
compared with $3.5 million for the same period in 2006. Net income from
continuing operations for the quarter including the acquisition was
$1.6 million, or $0.12 per share, compared with $1.2 million, or $0.09 per
share, for the corresponding period of 2006.
Financial Results for Fiscal 2007
When adjusted for the stronger Canadian dollar, sales for fiscal 2007
increased 4.5% with the higher Canadian dollar reducing the value of reported
U.S. sales by approximately $3.6 million. Sales before adjustment for the
stronger Canadian dollar increased 3.1% to $269.9 million from $261.7 million
for fiscal 2006. The increase was the result of successful new products as
well as price increases implemented during the year and late in 2006, strong
sales in Canadian retail and food service channels, and from improved sales of
Fisher Boy® in the United States. Sales volume in pounds increased 0.1%.
Operating EBITDA from continuing operations in 2007 increased 7.2% to
$14.5 million from $13.6 million in 2006 as a result of price increases, which
offset higher seafood raw material and other costs incurred in 2006 and 2007.
Net income from continuing operations for the year including the acquisition
was $6.9 million, or $0.55 per share, compared to $5.1 million, or $0.38 per
share, in fiscal 2006.
Operational Highlights for the Fourth Quarter
Canada
Retail sales volume for the quarter increased 1.5% compared with the
fourth quarter of fiscal 2006. In dollars, Canadian retails sales increased
8.4% primarily as a result of price increases implemented on most retail
products in October of 2006.
Food service sales volume for the quarter decreased 6.7% compared to the
fourth quarter of last year. The decrease in volume was partially offset by
price increases earlier in the year, with sales for the quarter decreasing
2.1% in dollars compared to the fourth quarter of 2006.
United States
Sales volume for the High Liner® brand decreased by 37.8% as a result
of price increases earlier in the year, a reduction in cod sales, and lost
distribution for cod at one of its U.S. Club Store customers. The customer
decided to split its business between two other suppliers and High Liner as
part of a test, which began in the fourth quarter. In dollars, sales decreased
by 26.9% as a result of a change in the product mix particularly in club
stores, including tilapia loins, to higher value items and price increases.
Private label seafood sales volume decreased 0.7% in the same period,
which is in line with the decrease in the category for the period. Also,
promotional activity from branded competitors continued to impact U.S. private
label sales during the quarter.
Fisher Boy® sales volume for the quarter increased 8.1% compared to the
corresponding quarter last year, marking the fifth consecutive quarter of
growth for the brand, with current customers carrying a wider variety of
products within the Fisher Boy line.
Capital Structure
As part of the purchase price for the Acquisition, 3,000,000 common
shares and 1,200,000 of a new class of Series A Preference Shares were issued
to the Vendor. Subsequent to year end, the Company called all of its
outstanding Second Preference Shares for mandatory redemption on February 20,
2008, with the majority of the holders of these shares having since subscribed
for 798,620 Series A Preference Shares. Including the 1,200,000 Series A
shares issued in the Acquisition, effective February 20, 2008 there will be
1,998,620 Series A Preference Shares outstanding.
The Series A Preference Shares will be convertible into a new class of
Non-Voting Equity Shares of the Company at a rate of 2.5 Non-Voting Equity
Shares for each Series A Preference Share subsequent to the Company's Annual
Meeting in May 2008. The conversion would result in 4,996,550 Non-voting
Common Shares outstanding. The Non-Voting Equity Shares are expected to be
created at the Annual Meeting and High Liner intends to list the Non-Voting
Equity Shares on the TSX shortly thereafter, subject to receipt of all
required approvals. If for some reason the Non-Voting Equity Shares are not
created and listed within 90 days after the Annual Meeting, the Series A
Preference Shares will be either convertible to Common Shares at the same
conversion rate or redeemable for cash based on the market value of the Common
Shares at that time at the Company's option.
Dividends
In 2007, the Company paid dividends on its Second Preference Shares in
the amount of $1.2 million, unchanged from 2006. Dividends fluctuate in
relationship to prime bank rates. Dividends will be paid on the Second
Preference Shares accrued to the date of redemption on February 20, 2008 in
the amount of $0.2 million.
In 2006 and 2007 the Company paid quarterly dividends of $0.05 on its
Common Shares. On February 18, 2008, the Board of Directors approved a
quarterly dividend in the amount of $0.05 per Common Share payable on
March 15, 2008 to shareholders of record on March 1, 2008. Further, on the
same date the Directors also approved a quarterly dividend of $0.125 per share
on the new Series A Preference Shares payable on March 15, 2008 to holders of
record on March 1, 2008.
Outlook
"With our acquisition of FPI's M&M Group complete, we have the
opportunity in 2008 to continue to improve performance," said Mr. Demone.
"Successfully integrating the acquired FPI business into the High Liner
organization is clearly our number one strategic priority in 2008. The
acquisition complements our long-term growth objectives and enhances our
capabilities in procurement, product innovation and distribution. Not only can
the new High Liner offer a broader array of seafood products to an expanded
customer base, it supports our other priorities for 2008 - more effectively
managing costs in a challenging environment, while constantly improving
quality. Our challenging business environment is characterized by higher input
costs, which continue to rise and are not readily passed on to consumers. The
acquisition provides the critical mass to more effectively compete in this
environment. In addition to realizing synergies made possible by the
acquisition, we will be focused on maximizing efficiency and continuing our
efforts to optimize inventories throughout our operations. Our progress on
each of these fronts will drive future growth and further our vision to be the
leader in value-added frozen seafood in North America."
Conference Call
High Liner Foods will host a conference call on Tuesday, February 19,
2008 at 10:30 a.m. ET (11:30 a.m. AT) to discuss its fourth quarter fiscal
2007 financial results. To access the conference call by telephone, dial
416-644-3414 or 1-800-732-6179. Please connect approximately ten minutes prior
to the beginning of the call to ensure participation. The conference call will
be archived for replay until Tuesday, February 26, 2008 at midnight. To access
the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter
the reservation number 21261383 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 90 days.
Financial Statements
For convenience, this press release includes the Company's Fiscal Fourth
Quarter Balance Sheets and Statements of Income.HIGH LINER FOODS INCORPORATED
As at December 29, 2007, with comparative figures as at December 30, 2006
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
December 29, December 30,
2007 2006
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ASSETS
Current:
Cash $ 7,064 $ 240
Accounts receivable 68,662 31,221
Income tax receivable 2,414 161
Inventories 107,589 41,278
Prepaid expenses 4,644 3,495
Future income taxes 1,302 295
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Total current assets 191,675 76,690
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Property, plant and equipment 57,515 26,038
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Other:
Future income taxes 1,677 3,005
Other receivables and sundry investments 66 1,084
Employee future benefits 6,759 6,360
Intangible assets and goodwill 42,762 -
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51,264 10,449
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$ 300,454 $ 113,177
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Bank loans $ 61,280 $ 10,115
Accounts payable and accrued liabilities 51,068 27,087
Income taxes payable 437 -
Current portion of capital lease obligations 603 560
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Total current liabilities 113,388 37,762
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Long-term debt 51,709 -
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Long-term capital lease obligations 259 477
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Employee future benefits 4,227 3,702
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Shareholders' Equity:
Preference shares 50,270 20,000
Common shares 58,800 28,106
Contributed surplus 490 503
Retained earnings 40,112 36,204
Accumulated other comprehensive loss (18,801) (13,577)
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130,871 71,236
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$ 300,454 $ 113,177
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HIGH LINER FOODS INCORPORATED
For the thirteen and fifty-two weeks ended December 29, 2007
(with comparative figures for the thirteen and fifty-two weeks ended
December 30, 2006)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of Canadian dollars, except per share amounts)
Thirteen Weeks Fifty-two Weeks
2007 2006 2007 2006
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Sales $ 68,212 65,657 $ 275,391 261,725
Cost of sales 55,186 53,212 221,202 212,414
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Gross profit 13,026 12,445 54,189 49,311
Commission income 33 - 33 -
Selling, general
and administrative
expenses (9,845) (9,215) (38,998) (36,170)
Foreign exchange
gain (loss) 238 259 (170) 427
Business acquisition
transaction costs (895) - (1,286) -
Depreciation and
amortization (825) (774) (3,087) (3,017)
Interest expense:
Short-term (128) (45) (165) (834)
Long-term (172) (22) (212) (73)
Other expense (12) (46) (51) (48)
Non-operating
transactions 333 (354) 333 (176)
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Income from
continuing
operations before
income taxes 1,753 2,248 10,586 9,420
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Income taxes:
Current 597 25 (2,505) (2,482)
Future (770) (1,032) (1,164) (1,815)
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Total income taxes
from continuing
operations (173) (1,007) (3,669) (4,297)
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Net income from
continuing
operations 1,580 1,241 6,917 5,123
Net income/(loss)
from discontinued
operations; net
of income tax - 68 372 (793)
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Net income 1,580 1,309 7,289 4,330
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PER SHARE INFORMATION
Earnings per
Common Share
Basic from
continuing
operations 0.12 0.09 0.55 0.38
Basic from
discontinued
operations - 0.01 0.03 (0.08)
Basic 0.12 0.10 0.58 0.30
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Diluted from
continuing
operations 0.12 0.09 0.54 0.38
Diluted from
discontinued
operations - 0.01 0.03 (0.08)
Diluted 0.12 0.10 0.57 0.30
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Average shares
outstanding
for the period
Basic 10,705,988 10,319,364 10,443,281 10,306,009
Diluted 11,067,686 10,385,323 10,591,693 10,370,974
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-------------------------------------------------------------------------About High Liner Foods Incorporated
High Liner Foods Incorporated is one of North America's largest
processors and marketers 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® and Sea Cuisine™ labels, and
available in most grocery and club stores. The Company also sells its High
Liner® and FPI® 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 symbol HLF on the Toronto Stock Exchange.
This document contains forward-looking statements, including sales,
earnings, marketing, and profitability comments for 2008 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 e-mail to investor@highlinerfoodinc.com.
%SEDAR: 00001789E
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