High Liner Foods Reports Higher Third Quarter Results

- Growth in the U.S. and Canada Continues -

LUNENBURG, NS, Nov. 9, 2011 /CNW/ - High Liner Foods Incorporated (TSX: HLF; HLF.A), a leading North American value-added frozen seafood company, today reported financial results for the thirteen-week period ended October 1, 2011.  All amounts are reported in Canadian dollars.

Financial and operational highlights for the third quarter include (all comparisons are relative to the third quarter of 2010, unless otherwise noted):

  • Sales increased by 12.1% to $161.7 million
  • Sales volume increased by 10.9% to 47.8 million pounds
  • Adjusted EBITDA1 increased by 2.8% to $12.9 million, or 8.0% of sales
  • Net income increased by 9.4% to $6.7 million, or diluted earnings per share ("EPS") of $0.44, from $6.1 million, or diluted EPS of $0.40

"The momentum from our solid performance during the first half of the year has carried into the third quarter of 2011, which bodes well for another strong year for High Liner Foods," said Henry Demone, President and CEO, High Liner Foods Incorporated.  "Our U.S. operations were strong across both the retail and food service channels, with the positive addition from the Viking acquisition complementing core organic growth.  Sales volume and revenue growth in our Canadian operations was positive overall continuing the strong year-to-date results in food service and the turnaround in retail seen in the second quarter. Our new product innovations, cost-reduction strategies, recovery of stock option expense, and the positive effect of the stronger Canadian dollar on our cost of sales, helped to drive our strong results into the second half of 2011."

Financial Results

More than half of the Company's operations, assets, and liabilities, are denominated in U.S. dollars or are impacted by the Canadian/U.S. 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
unless otherwise noted)
weeks ended
Oct 1, 2011
weeks ended
Oct 2, 2010
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Oct 1, 2011
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Oct 2, 2010
Sales in million pounds           47.8     43.1     149.5     133.6
Sales in domestic currency           $163,296     $141,542     $498,085     $435,858
Foreign exchange impact           $(1,579)     $2,671     $(5,975)     $8,082
Sales in Canadian dollars           $161,717     $144,213     $492,110     $443,940
Adjusted EBITDA1           $12,863     $12,512     $41,318     $36,794
Net income           $6,695     $6,122     $21,200     $18,299
Adjusted net income 2           $7,005     $6,163     $21,812     $18,230
Average Shares Outstanding
          15,312     15,304     15,358     16,534
EPS (Diluted)           $0.44     $0.40     $1.38     $1.11
Adjusted EPS (Diluted)3           $0.46     $0.40     $1.44     $1.11

Sales for the quarter increased to $161.7 million from $144.2 million for the same period a year ago; the 12.1% increase in sales was achieved despite the negative impact of a stronger Canadian dollar, which decreased the value of reported sales by $4.2 million or 3.3%.  Sales in domestic currency, which exclude the impact of currency translation, were $163.3 million compared with $141.5 million for the third quarter of 2010.  The strong growth in sales was a result of an increase in High Liner's pre-Viking business as well as from the Viking acquisition, which accounted for sales of $8.6 million.  Total sales volume increased by 10.9% to 47.8 million pounds, with the Viking contribution accounting for 7.8% of the increase.

Adjusted EBITDA for the third quarter was $12.9 million, compared with $12.5 million for the same period in 2010. This increase was the result of higher sales volumes, partially offset by higher seafood and other input costs. We utilized the less costly inventory we had on hand at the end of March in the second quarter and are now selling product at current prices. In domestic currency, Adjusted EBITDA increased by 4.9% to $12.9 million, or 7.9% of sales.  A recovery in stock option expense of $0.7 million due to softening in our stock prices during the third quarter increased EPS by approximately $0.05.

Net income for the quarter increased by 9.4% to $6.7 million, or diluted EPS of $0.44, from $6.1 million, or diluted EPS of $0.40, for the third quarter of 2010.  Diluted EPS increased by $0.04 due to stronger earnings partly due to a lower stock option expense. Adjusted net income2, which excludes after-tax non-recurring business acquisition and integration expenses, was $7.0 million, or diluted EPS3 of $0.46.


Today, the Board of Directors of the Company approved a quarterly dividend of $0.10 per Common and Non-Voting Equity Share payable on December 15, 2011 to shareholders of record on December 1, 2011.


"We remain on track to meet expectations for the year, given the continuation of positive results into the third quarter," said Mr. Demone.  "Strength occurred in both U.S. and Canadian operations; Viking proved incrementally positive to U.S. operations alongside strength in the pre-Viking business while sales revenue and volume in Canadian operations also increased.  The expanded distribution supported by earlier efforts in advertising and marketing had a sustained positive effect on sales.  Additionally, the response from consumers and the market to our new products, including Fire Roasters™, has been encouraging, demonstrating High Liner's ability in product innovation."

"Higher raw material costs from the prior quarter resulted in higher cost of inventory for sale in the third quarter.  Although seafood costs have remained high reducing our results, we do not expect to see an additional material increase to the end of the year.  The economic landscape in the U.S. and Canada has been supportive to our business during the third quarter and we expect this to continue through the remainder of 2011.  We look to continued sales expansion and distribution growth with an ongoing focus on cost-reduction initiatives as we strive to deliver strong financial results," added Mr. Demone.

Financial Statements

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 Third 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

Conference Call to Discuss Third Quarter Results

The Company will host a conference call on Thursday, November 10, 2011, at 10:30 a.m. ET (11:30 a.m. AT) to discuss its third 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 Thursday, November 17, 2011 at midnight.  To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 15918482.

A live audio webcast of the conference call will also 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 on the Company's 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®, Fisher Boy®, Mirabel®, Sea Cuisine™ and Royal Sea® labels, and are available in most grocery and club stores.  The Company also sells its High Liner®, FPI®, Mirabel®, and Viking™ 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. 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,  raw material and other input costs, anticipated overall annual financial performance, and economic conditions for the balance of the 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 promotions and 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; acceptance of new products in the marketplace; increase in sales volume due to advertising and promotions.  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.

For further information about the Company, please visit our website at www.highlinerfoods.com or send an e-mail to investor@highlinerfoods.com.


1 Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, excluding business acquisition, integration and other expenses and gains/losses on asset disposals, as included in the consolidated statements of income.
2 Adjusted net income is net income excluding business acquisition, integration, and other expenses, net of income tax.
3 Adjusted EPS is adjusted net income, as defined, divided by the average diluted number of shares.