High Liner Foods reports second quarter growth in sales and earnings



    
           - 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(R) 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(R), Fisher Boy(R), Mirabel(R), Royal Sea(R), and Sea Cuisine(TM)
labels, and are available in most grocery and club stores. The Company also
sells its High Liner(R), FPI(R) and Mirabel(R) 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@highlinerfoods.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




For further information:

For further information: Kelly Nelson, Vice President Corporate Services
& Chief Financial Officer, High Liner Foods Incorporated, Tel: (902) 634-6200,
investor@highlinerfoods.com; Trevor Heisler, Investor Relations, The Equicom
Group Inc., Tel: (416) 815-0700 ext.270, theisler@equicomgroup.com


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