- Overall strength in both U.S. and Canada; Icelandic USA integration ahead of schedule -
LUNENBURG, NS, May 10, 2012 /CNW/ - High Liner Foods Incorporated (TSX: HLF; HLF.A), the leading North American value-added frozen seafood company, today reported financial results for the thirteen-week period ended March 31, 2012. All amounts are reported in Canadian dollars.
Financial and operational highlights for the first quarter include (all comparisons are relative to the first quarter of 2011, unless otherwise noted):
- Sales increased by 62.4% to $287.7 million from $177.1 million;
- Adjusted EBITDA1 increased by 72.0% to $31.5 million from $18.3 million;
- Reported net income of $1.8 million, or diluted earnings per share ("EPS") of $0.12, compared with $9.7 million, or diluted EPS of $0.63, in the first quarter of 2011;
- Adjusted Net Income2 increased by 38.8% to $13.9 million, diluted EPS of $0.90, from $10.0 million, diluted EPS of $0.65, in the first quarter of 2011;
- The integration of Icelandic USA is ahead of plan.
"We are pleased to report strong first quarter operating results and that we delivered a 25.0% return on equity," said Henry Demone, president and CEO. "Our robust results were attributable to both the addition of Icelandic USA and the strength of our pre-Icelandic USA businesses. On a pro forma basis, assuming Icelandic USA had been part of our operations for the same period in 2011, our U.S. operations experienced solid growth of 9.5% on sales and 13.7% on Adjusted EBITDA. In addition, after a challenging Canadian retail market in 2011, we are pleased to say that our marketing initiatives and new product launches have yielded results, as we recorded a 10.5% increase in total Canadian dollar sales and an 18.7% growth in retail sales volume."
"In January, we introduced 'Flame Savours' in Canada - thick, premium fillets seared over an open flame for a delicious fire-roasted flavour - and the market response has been very favourable. In the U.S., this product is marketed as 'FireRoasters.'"
"We have made significant progress and are ahead of schedule in integrating Icelandic USA into our operations. So far, we have integrated our broker network, reorganized staffing, streamlined the procurement process, repositioned our brands, and announced the consolidation of our supply chain that will result in the closure of two plants. The successful completion of this integration will help solidify our leadership position in food service value-added frozen seafood in North America," added Mr. Demone.
Nearly 70% of the Company's operations, assets, and liabilities, are denominated in U.S. dollars or are impacted by the Canadian/U.S. dollar exchange rate. As such, foreign currency fluctuations affect the reported values of individual lines on the Company's balance sheet and income statement.
|(In thousands except per share amounts, unless otherwise noted)|| Thirteen weeks ended
March 31, 2012
| Thirteen weeks ended
April 2, 2011
|Sales in million pounds||86.8||56.8|
|Sales in domestic currency||$287,618||$178,833|
|Foreign exchange impact||$81||($1,725)|
|Sales in Canadian dollars||$287,699||$177,108|
|Adjusted net income||$13,863||$9,986|
|Adjusted EPS (Diluted)3||$0.90||$0.65|
|Average Shares Outstanding (Diluted)||15,389||15,423|
Sales for the first quarter increased to $287.7 million from $177.1 million for the same period a year ago. The 62.4% increase in sales was achieved as a result of the Icelandic USA acquisition and strong organic sales growth from our pre-Icelandic USA business. This was the first period that Icelandic USA, acquired in December 2011, had a full-quarter contribution. Icelandic USA contributed $97.2 million in sales. The weaker Canadian dollar resulted in an increase in the value of reported sales by $1.8 million, or 1.6%. Sales in domestic currency, which excludes the impact of currency translation, were $287.6 million compared with $178.8 million for the first quarter of 2011. Total sales volume increased by 52.6% to 86.8 million pounds, with Icelandic USA accounting for 53.5% of the increase and offsetting the 0.9% decline in pre-Icelandic USA volume. For comparison purposes, assuming that Icelandic USA had been part of High Liner's U.S. operations in the first quarter of 2011, U.S. sales increased by 9.5% to US$210.0 million and U.S. sales volume increased by 1.6% to 67.9 million pounds.
Adjusted EBITDA for the first quarter increased by 72.0% to $31.5 million, or 11.0% of sales, from $18.3 million, or 10.4% of sales, for the same period in 2011. Adjusted EBITDA excludes business acquisition and integration expenses, and other non-operating transactions. Beginning with the first quarter results, the definition of Adjusted EBITDA has been revised to also exclude stock-based compensation expense; as such, Adjusted EBITDA for prior periods has been restated to conform to this new definition. The significant increase in Adjusted EBITDA was due to higher sales volumes largely from the addition of Icelandic USA and higher selling prices, partially offset by higher seafood and other input costs. For comparison purposes, assuming that Icelandic USA had been part of High Liner's U.S. operations in the first quarter of 2011, Adjusted EBITDA from our U.S. operations increased by 13.7% to US$23.9 million in the first quarter of 2012 from US$21.0 million for the same period last year.
Net income for the quarter was $1.8 million, diluted EPS of $0.12, compared with net income of $9.7 million, diluted EPS of $0.63, for the first quarter of 2011. Net income was primarily negatively impacted by the write down of assets as part of the announcement last week regarding supply chain consolidation and also by one-time integration costs related to the Icelandic USA acquisition expensed during the quarter. In addition, during the quarter, we recorded a reduction to a non-deductible one-time withholding tax of $0.4 million related to the inter-company dividends paid in connection with the financing of the Viking acquisition in the fourth quarter of 2010. Excluding these items, and excluding stock-based compensation expense, Adjusted net income increased by 38.8% to $13.9 million, or Adjusted diluted EPS of $0.90, from $10.0 million, or Adjusted diluted EPS of $0.65, in the previous year.
Today, the Board of Directors of the Company approved a quarterly dividend of $0.10 per Common and Non-Voting Equity Share payable on June 15, 2012 to shareholders of record on June 1, 2012.
"We are proud to announce that all business purchased from Icelandic USA has been retained and has contributed to a strong start to 2012," said Mr. Demone. "Our ongoing focus is clearly to continue our early success in integrating Icelandic USA. We are on track to realizing near-term synergies of approximately $12 million and ongoing annual synergies of $16-18 million from combining the operations."
"We expect the addition of Icelandic USA to further support the operating strength of our High Liner, FPI, and Viking businesses in the U.S. Both our food service and retail operations are poised for growth in the U.S. In Canada, we are expecting our first quarter momentum to continue throughout 2012. Our strategy to rejuvenate our Canadian retail business after a challenging 2011 has shown positive results. We expect to continue implementing these strategic initiatives, which includes marketing programs to drive volume in stores, to support the retail business and increase overall sales volume in Canada. In particular, the launch of the 'Flame Savours' product in Canadian retail during the first quarter has received very favourable market response. Also, as we mentioned last quarter, prices for several key raw materials have recently decreased but we do not expect to see cost improvements until the second half of 2012 due to inventory and contracts in place. As such, we expect second quarter raw material costs to remain higher than the comparable period in 2011. Additionally, our enhanced purchasing power, expanded distribution, and cost-reduction efforts should deliver further operating improvements this year," concluded Mr. Demone.
Supplemental Financial Information
This news release is not in any way a substitute for reading High Liner's financial statements, including notes to the financial statements, and Management's Discussion and Analysis. The Company's Fiscal First Quarter Interim Financial Statements, which includes the Statements of Financial Position, Income, Comprehensive Income, Changes in Shareholders' Equity, Cash Flows and notes, can be viewed in the Investor Information section of the High Liner Foods website at
High Liner will host a conference call on Friday, May 11, at 10:30 a.m. ET (11:30 a.m. AT) to discuss its first quarter financial results. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. 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 Friday, May 18, 2012 at midnight. To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 72848808.
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 the 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, Sea Cuisine and Royal Sea labels, and are available in most grocery and club stores. The Company also sells its products under the High Liner, FPI, Mirabel, Viking, Icelandic Seafood, Samband of Iceland, Seastar, and Seaside brands to restaurants and institutions, and is the 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. Forward-looking statements can generally be identified by the use of the conditional tense, the words "may", "should", "would", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective" or "continue" or the negative of these terms or variations of them or words and expressions of similar nature. Specific forward-looking statements in this document include, but are not limited to expectations with respect to: our market position; continued success in integrating Icelandic USA; realization of near term and on-going annual synergies from combining operations; continued operating strength in the US; growth in our food service and retail operations; continuation of first quarter momentum throughout 2012; continued implementation of strategic initiatives; cost improvements in the second half of 2012; second quarter raw material costs remaining higher than the comparable period in 2011; and our enhanced purchasing power, expanded distribution and cost reduction efforts delivering further operating improvements this year. These statements are based on a number of factors and assumptions including, but not limited to: availability, demand and prices of raw materials, energy and supplies; the condition of the Canadian and United States economies; product pricing; foreign exchange rates, especially the rate of exchange of the Canadian dollar to the U.S. dollar; our ability to attract and retain customers and our operating costs; timing of plant closures and the amount and timing of the related one-time cash expense; amount and timing of the write-down of plant and equipment; amount and timing of the annual ongoing reduction in operating costs resulting from the plant consolidation; and amount and timing of the capital expenditures in excess of normal requirements to allow the movement of production between plants; and timing and final number of layoffs from plant closures. 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 actual results may 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 discussion of the risk factors that can cause anticipated outcomes to differ from actual outcomes. Except as required under applicable securities legislation, we do not undertake to update forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, whether as a result of new information, future events or otherwise.
The Company reports its financial results in accordance with IFRS. Included in this media release are certain non-IFRS financial measures as supplemental indicators of operating performance. These non-IFRS measures are Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Share.
The Company believes these non-IFRS financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS.
1Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, excluding impairment of property, plant and equipment, business acquisition and integration expenses, stock compensation expense, gains or losses on disposal of assets, and the increase in cost of goods sold relating to inventory acquired from the Icelandic USA and Viking Acquisitions, above its historical cost, as part of the fair value requirements of purchase price accounting.
2Adjusted net income is net income excluding impairment of property, plant and equipment, business acquisition and integration expenses, stock compensation expense, the increase in cost of goods sold relating to inventory acquired from the Icelandic USA and Viking Acquisitions, and withholding tax related inter-company dividends.
3Adjusted EPS is Adjusted net income, as defined, divided by the average diluted number of shares.
For further information:
Executive Vice President,
Chief Financial Officer & Secretary
High Liner Foods Incorporated
Tel: (902) 634-6200
Tel: (416) 815-0700 ext.242