Clearwater reports 2009 year-to-date and second quarter results stronger than 2008


    HALIFAX, Aug. 11 /CNW/ - (TSX:CLR.UN, CLR.DB, CLR.DB.A):

    - Earnings before interest, taxes, depreciation and amortization
      ("EBITDA"), excluding foreign exchange losses and one time and unusual
      adjustments, increased by 30% or $3.6 million year-to-date over 2008 to
      $15.3 million.  EBITDA increased by 39% or $1.9 million over the second
      quarter of 2008 to $6.7 million.
    - Sales increased year-to-date by 12% or $14.8 million over 2008 to
      $141.1 million.  Sales increased by 1% in Q2 2009 or $0.9 million to
      $70 million.
    - Gross profit margins increased by 41% or $5.9 million year-to-date over
      2008 to $20.4 million.  Gross profit margins in the second quarter were
      up 6.4% or $0.5 million over the second quarter of 2008.
    - Management successfully completes refinancing of maturing debt

    Today, Clearwater Seafoods Limited Partnership ("Clearwater") reported
its year-to-date and second quarter 2009 results
    Clearwater reported a 12% year-to-date increase in sales to $141.1
million and a 41% increase in gross margins to $20.4 million, improvements of
$14.8 million and $5.9 million over the respective periods in 2008.  With the
launch of the new clam vessel and the finalization of a new shrimp joint
venture, both of which occurred in the second quarter of 2008, Clearwater's
operating results have continued to show improvement. These and other positive
factors such as an improved foreign exchange environment for exporters
resulted in a 30% increase in EBITDA before foreign exchange losses and one
time and unusual adjustments, in 2009
    Clearwater reported a 1% increase in sales to $70 million and gross
margins of $9.3 million for the second quarter of 2009, improvements of
$943,000 in sales and $0.5 million in margins over the respective periods in
    Clearwater reported normalized EBITDA of $15.3 million year-to-date 2009
versus $11.7 million in the same period of 2008 Clearwater reported normalized
EBITDA of $6.7 million in the second quarter of 2009 versus $4.7 million in
the same period of 2008 (for calculation of normalized EBITDA refer to the
Definitions and Reconciliations section of the 2009 second quarter MD&A).  The
improvements for both periods are a result of higher sales and gross profits
as the business returns to more normal operations.
    Year-to-date, the business experienced overall higher margins as a
percentage of sales despite higher costs in the first quarter of 2009 as it
sold down inventories harvested in 2008 when fuel costs were higher.  In
addition, challenging weather conditions in late 2008 and early 2009 impacted
catch rates and the related catching costs per pound. However, late in the
first quarter of 2009 weather conditions began to improve and we saw a
corresponding improvement in catch rates and harvesting costs per pound.  In
addition, fuel costs remain substantially lower than the costs in 2008. 
Should these factors persist, they will result in lower harvest costs going
forward in 2009.
    During the quarter Clearwater successfully completed the refinancing of
its maturing debt facilities. The refinancing consists of a new $60 million
revolving debt facility with a three-year term fully underwritten by GE
Capital in Canada and a new three year, $59.5 million term loan underwritten
by GE Capital, Export Development Canada, The Business Development Bank of
Canada, and the Province of Nova Scotia, through the Industrial Expansion
Fund. The proceeds were used to repay maturing term debt facilities.
    During the course of the refinancing Clearwater and Glitnir Banki hf
reached an agreement to resolve its dispute concerning any potential liability
associated with foreign exchange derivative contracts entered into with
Glitnir. Under the agreement all outstanding derivative contracts were closed
and the potential liability under these contracts was capped at $13.97 million
represented by two notes with any payments due the later of September 15th,
2012 and 30 days after the final court ruling. Clearwater has agreed to
commence litigation on its position that these contracts are null and void and
there is no liability under the contracts. If Clearwater is successful, there
is a minimum settlement of $2.9 million represented by a note secured by a
subordinated charge on all of Clearwater's assets. Both notes will accrue
interest at Libor plus 7% until such time as they are settled.
    During the quarter Clearwater continued to generate cash by disposing of
non-core quotas from which it was not earning an adequate return on its
capital employed.  In the second quarter Clearwater sold $8 million of
non-core groundfish quotas and used the proceeds to reduce its outstanding
indebtedness, reducing the amounts to be refinanced in June.
    The refinancing of its term debt facilities and the sale of these
non-core quotas are all part of Clearwater's focused strategy for maintaining
liquidity which includes tightly managing its working capital, limiting
capital spending, liquidating under performing assets and selling non-core
assets which do not achieve an adequate return on capital, limiting
distributions and maximizing the amount of cash on hand.
    Looking forward to the second half of 2009, Clearwater believes that with
the improvements to the clam, shrimp and lobster fleets and the possibility of
continued lower fuel costs it will be able to operate without disruption to
grow and to generate positive cash flows and profit margins, subject to any
impact of weakened economic conditions in North America, Europe and Asia. 
Clearwater believes that as a food company the business will respond well in
the current recessionary period.
    Over the next several years Clearwater will be focused on reducing its
leverage.  This will come from a combination of improved earnings levels and
from using the positive cash flow of the business to reduce debt.
    Colin MacDonald, Chairman and Chief Executive Officer, commented, "We are
pleased to report these strong results despite the challenging worldwide
economic conditions. Our solid results speak to the success of all our
business units and in particular our outstanding and dedicated workforce which
continues to seek and find ways to drive innovation in our harvesting, our
processing and in building strong relationships with our customers."

    Colin MacDonald
    Chairman and Chief Executive Officer
    Clearwater Seafoods Limited Partnership
    August 11, 2009

    Financial Statements and Management's Discussion and Analysis Documents

    For an analysis of Clearwater and Clearwater Seafoods Income Fund's
second quarter results, please see the Management's Discussion and Analysis
and the 2009 second quarter financial statements.  These documents can be
found in the disclosure documents filed by Clearwater Seafoods Income Fund
with the securities regulatory authorities available at or on
its website at (

    Key Financial Figures ($000's except unit amounts)

    Clearwater                13 weeks ended                  26 weeks ended
                     July 4,        June 28,         July 4,        June 28,
                        2009            2009            2009            2009
                                (as restated)                   (as restated)
    Sales            $70,176         $69,233        $141,188        $126,348
    Net earnings
     (loss)          $11,018         $11,334         $28,894        ($10,435)
    Basic earnings
     (loss) per unit   $0.20           $0.21           $0.51          ($0.20)
     EBITDA 1         $6,655          $4,777         $15,300         $11,740

     at period-end
     Units        51,126,912      51,126,912      51,126,912      51,126,912
    Fully diluted 62,323,941      62,323,941      62,323,941      62,323,941

     1. Please see the Management's Discussion and Analysis for a
        reconciliation of these amounts to the financial statements.

    The Fund does not consolidate the results of Clearwater's operations but
rather accounts for the investment using the equity method.  Due to the
limited amount of information that this would provide on the underlying
operations of Clearwater, the financial highlights of Clearwater are included

    About Clearwater

    Clearwater is recognized for its consistent quality, wide diversity and
reliable delivery of premium seafood, including scallops, lobster, clams,
coldwater shrimp, crab and ground fish.
    Since its founding in 1976, Clearwater has invested in science, people,
technology, resource ownership and resource management to preserve and grow
its seafood resource. This commitment has allowed it to remain a leader in the
global seafood market.
    %SEDAR: 00018023E

For further information:

For further information: Robert Wight, Chief Financial Officer,
Clearwater, (902) 457-2369; Tyrone Cotie, Director of Corporate Finance and
Investor Relations, Clearwater, (902) 457-8181

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