/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
HALIFAX, March 28 /CNW/ - (TSX:CLR.UN):
- Sales for 2007 were $302.7 million with a gross profit of $65.9 million
compared to $315.7 million and $87.3 million respectively in 2006.
- 2007 distributable cash generated was $13.1 million, $18.4 million less
than distributions paid.
- Trustees continue work on strategic review.
- Expectations for 2008 include an improved market for scallops and
higher clam earnings with the delivery of the converted Arctic
Clearwater Seafoods Income Fund (the "Fund") today reported fourth quarter
and annual 2007 results that demonstrate improved earnings for the second half
of 2007 compared to the first half of the year. The quarterly and annual
results, however, were lower than the strong 2006 results due to a number of
factors including vessel disruptions and foreign exchange.
The results for the second half of 2007 demonstrated a continued
improvement in profit margin over the first half of the year, however
distributable cash was weaker than 2006 and management's expectations for
2007. A number of factors had significant impacts on Clearwater's 2007
- First, the significant depreciation of the U.S. dollar during the year
and especially in the last two quarters, negatively impacted margins by
$18.1 million when current effective rates are compared to those of
2006. The fluctuating exchange rates also resulted in realized foreign
exchange income of $0.9 million in 2007 on Clearwater's economic
hedging program, a reduction of $12.1 million compared to 2006. While
the Fund maintains a currency management program to mitigate the risk
of exchange fluctuations, during the year foreign exchange had a
$30.2 million impact on sales and distributable cash when compared to
More than 80% of Clearwater's sales are denominated in currencies other
than the Canadian dollar, whereas the majority of its expenses and all
of its cash distributions are in Canadian dollars. As a result, foreign
exchange fluctuations can have a material impact on Clearwater's
financial results and the amount of cash available for distribution to
- Second, Clearwater's ability to harvest clams was limited by the loss
of two clam vessels, the Atlantic Pursuit in December 2006 and the
Atlantic Seahunter in June of 2007. There was also the need to perform
maintenance on the vessels in operation throughout the year. Clearwater
is currently investing approximately $16 million to convert a vessel
from its shrimp fleet into a clam vessel, with delivery expected in the
second quarter of 2008. Once the vessel becomes operational in the
third quarter of 2008, this investment in new harvesting capacity will
result in growth in sales volumes and greater harvesting efficiencies,
which will serve to boost the profitability of the clam business. The
re-assignment of the vessel from the shrimp fleet is not expected to
have any material impact on the shrimp business, as Clearwater
anticipates that the quota will be included in a new joint venture.
- And third, the scallop market in 2007 was weaker than anticipated.
Clearwater was able to partially mitigate the impacts of the softer
market by increasing its sales volumes by 18%, however the margins did
not reflect this increased volume. The scallop market rebounded in the
second half of the year as compared to the first half with increased
sales volumes, however its growth was slower than had been expected and
there was no increase in selling prices when converted to Canadian
dollars. Nevertheless, Clearwater was able to decrease its level of
inventory, as the volume of scallops sold in the fourth quarter
increased significantly compared to the earlier quarters of 2007.
The factors listed above led to distributable cash generated in 2007 of
$13.1 million, versus distributions declared of $31.5 million, an
$18.4 million shortfall. On January 21, 2008, the Trustees of the Fund decided
to suspended monthly distributions due to the financial results. "The Trustees
will continue to monitor the distribution policy, with distributions to be
determined quarterly and paid in arrears after considering the traditional
criteria in determining the distribution policy" said Tom Traves, Chairman of
"The Trustees recognize the importance of ensuring the Fund offers the
best return for our investors. As a result, in the third quarter of 2007 we
initiated a strategic review to examine various opportunities that might exist
to improve unit holder value, from strategic partnerships to alternative
structures for the company. We are continuing to work together with our
financial advisor, BMO Nesbitt Burns, to determine the opportunities available
to Clearwater given the Company's 2007 performance and the Canadian government
income trust legislation that will impose a tax on all income trusts beginning
in 2011. There is, of course, no certainty that any transactions or
fundamental changes to Clearwater's business will result from this strategic
review. However, the Trustees and Directors felt that such a detailed review
was warranted given the challenges the Company faced in 2007. Regardless of
the direction in which this review may take us, our primary goal will remain,
as always, to maximize unit holder value," stated Tom Traves.
In summary, Clearwater's 2007 gross profit was significantly impacted by a
soft scallop market, sudden and considerable depreciation in the U.S. dollar,
and vessel disruptions in the clam business. The stronger earnings in the
lobster and shrimp businesses helped mitigate the impacts of restricted
harvesting capacity in the clam business and the negative impact from foreign
"Clearwater has built its reputation over more than three decades on its
ability to deliver a high quality product to its customers, regardless of what
external challenges might come its way from time to time," said Colin
MacDonald, Chief Executive Officer of Clearwater. "Our performance in
mitigating the impacts of these factors, and continuing to supply our
customers despite them, shows that we are well-equipped to return our business
to the level of performance we and our customers and investors expect. We have
leading-edge technology, strong quota ownership, and the industry's most
committed employees and we look forward to working to deliver continuing
improvements in performance for 2008."
Clearwater weathered a very challenging year and experienced a number of
negative external factors that impacted the business. Foreign exchange
negatively impacted sales and earnings by approximately $30.2 million. The
clam business was impacted by the loss of two vessels and the maintenance
issues with maintaining two older vessels. Finally, we experienced a slower
scallop market compared to the prior year. However, Clearwater remains
well-positioned to build on our three decades as a Canadian leader in the
global seafood business.
Having suspended monthly distributions in January 2008, due to lower
distributable cash generated in 2007 and the strategic review in progress,
Clearwater will continue to monitor its financial position on a monthly basis.
At the same time, the Trustees and special committee are committed to
thoroughly examining all the options available, to maximize unitholder value
and foster long-term growth, through the strategic review that we announced in
the fourth quarter of 2007.
We hold significant quotas in our key species, we have leading-edge,
innovative harvesting and processing technologies and we are vertically
integrated. Our business strategies to deliver long-term value are sound.
Management continues to believe there is strong potential for growth in the
clam business. With the delivery of the new clam vessel in 2008, combined with
the ocean bottom mapping technology, the clam business will begin to realize
the returns of these investments in 2008 and beyond. In addition, in 2008 we
anticipate a higher Canadian scallop total allowable catch, improved profit in
the lobster business and reduced overhead costs. All of this provides the
opportunity for improved results in 2008.
We have an outstanding and dedicated workforce, excellent quota
positioning, global customer relationships that span decades and we look
forward to taking up the opportunities that 2008 will bring.
Chief Executive Officer
Clearwater Seafoods Limited Partnership
March 28, 2008
2007 Fourth Quarter Conference Call and Webcast
Clearwater will review its fourth quarter financial results via conference
call on Friday, March 28, 2007 at 4:00 p.m. Eastern Time (5:00 p.m. Atlantic).
The call will be chaired by Colin MacDonald, Clearwater's Chief Executive
Officer, and he will be joined by Robert Wight, the Chief Financial Officer.
You can access the call by dialing 866-250-4877 or 416-646-3097. A replay will
be available through April 28, 2008 at 877-289-8525 or 416-640-1917 using pass
code 21250964 (pound key). To listen to the web cast of this event, please
enter http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2194280 in your
Financial Statements and Management's Discussion and Analysis Documents
For an analysis of Clearwater and Clearwater Seafoods Income Fund's
quarter and annual results, please see management's discussion and analysis
and annual 2007 financial statements. These documents can be found in the
disclosure documents filed by Clearwater Seafoods Income Fund with the
securities regulatory authorities available at www.sedar.com or at its website
Financial Higlights and Significant Items
Key Financial Figures
13 weeks 13 weeks Year Year
ended ended ended ended
($000's except December December December December
unit amounts) 31, 2007 31, 2006 31, 2007 31, 2006
Sales $ 77,720 $ 84,136 $ 302,681 $ 315,736
(loss) $ (4,843) $ (18,715) $ 20,268 $ 1,834
unit $ (0.09) $ (0.35) $ 0.39 $ 0.03
activities $ 28,478 $ 4,855 $ 26,547 $ 44,612
cash(1) $ 12,598 $ 7,237 $ 13,084 $ 42,351
declared(1) $ 7,807 $ 7,919 $ 31,499 $ 15,837
Units 52,129,279 52,788,843 52,515,937 52,788,843
Fully diluted 63,849,233 56,863,003 62,376,244 56,848,058
1. Please refer to the Distributable Cash definition in the MD&A for
detailed reconciliations of these amounts. The Fund receives
distributions from Clearwater and in turn distributes them to its
unitholders. As such, distributable cash for the Fund is equal to the
distributions received and paid.
2. 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 above.
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 it's 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.
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