High Liner Foods reports second quarter results
- Growth continues driven by U.S. operations and improvement in Canada -
LUNENBURG, NS, Aug. 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 July 2, 2011. All amounts are reported in Canadian dollars.
Financial and operational highlights for the second quarter include (all comparisons are relative to the second quarter of 2010, unless otherwise noted):
- Sales increased by 13.9% to $153.3 million
- Sales volume increased by 12.7% to 44.5 million pounds
- Adjusted EBITDA1 increased by 8.0% to $10.3 million, or 6.7% of sales
- Net income increased by 8.2% to $4.8 million, or diluted earnings per share ("EPS") of $0.31, from $4.4 million, or diluted EPS of $0.28
"High Liner's second quarter performance continued to be solid, driven primarily by our U.S. operations and the positive addition in December 2010 of Viking Seafoods to our results," said Henry Demone, president and CEO, High Liner Foods Incorporated. "While Viking added 7.6% to the total growth in our sales volume, our base business also accounted for 5.1%. In particular, we are pleased to note a 5.5% improvement in sales in our Canadian operations, after several quarters of decline. The continued success of our new product introductions and cost-reduction strategies helped to offset the effect of the stronger Canadian dollar, providing the backbone to another strong quarter."
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 amounts, unless otherwise noted) | Thirteen weeks ended July 2, 2011 | Thirteen weeks ended July 3, 2010 | Twenty-six weeks ended July 2, 2011 | Twenty-six weeks ended July 3, 2010 |
|
Sales in million pounds |
44.5 | 39.5 | 101.5 | 90.5 |
|
Sales in domestic currency |
$155,955 | $132,789 | $334,788 | $294,316 |
|
Foreign exchange impact |
$(2,670) | $1,825 | $(4,395) | $5,411 |
|
Sales in Canadian dollars |
$153,285 | $134,614 | $330,393 | $299,727 |
| Adjusted EBITDA1 | $10,316 | $9,552 | $28,455 | $24,282 |
| Net income | $4,776 | $4,414 | $14,505 | $12,177 |
| Adjusted net income 2 | $4,913 | $4,304 | $14,807 | $12,067 |
| Average Shares Outstanding (Diluted) | 15,339 | 15,894 | 15,381 | 17,149 |
| EPS (Diluted) | $0.31 | $0.28 | $0.94 | $0.71 |
| Adjusted EPS (Diluted)3 | $0.32 | $0.27 | $0.96 | $0.70 |
Sales for the quarter increased to $153.3 million from $134.6 million for the same period a year ago; the 13.9% increase in sales was achieved despite the negative impact of a stronger Canadian dollar, which decreased the value of reported sales by $4.5 million or 3.5%. Sales in domestic currency, which exclude the impact of currency translation, were $156.0 million compared with $132.8 million for the second quarter of 2010. The strong growth in sales was a result of an increase in High Liner's base business as well as from the Viking acquisition, which accounted for sales of $8.2 million. Total sales volume increased by 12.7% to 44.5 million pounds, with the Viking contribution accounting for 7.6% of the increase.
Adjusted EBITDA for the second quarter was $10.3 million, compared with $9.6 million for the same period in 2010, increasing as a result of higher sales volumes offset by higher seafood and other input costs. In domestic currency, Adjusted EBITDA increased by 10.6% to $10.5 million, or 6.7% of sales. Higher stock option expense of $0.5 million in the second quarter of 2011 reduced EPS by approximately $0.03.
Net income for the quarter increased by 8.2% to $4.8 million, or diluted EPS of $0.31, from $4.4 million, or diluted EPS of $0.28, for the second quarter of 2010. Diluted EPS increased by approximately $0.02 due to stronger earnings and by another $0.02 due to the retraction of 3.2 million non-voting shares in the second quarter of 2010. Adjusted net income2, which excludes after-tax non-recurring business acquisition and integration expenses, was $4.9 million, or diluted EPS3 of $0.32.
Dividends
Today, the Board of Directors of the Company approved a quarterly dividend of $0.10 per Common and Non-Voting Equity Share payable on September 15, 2011 to shareholders of record on September 1, 2011.
Outlook
"The strength from prior periods has continued into the second quarter of 2011, and we remain optimistic about our growth prospects for the remainder of the year," said Mr. Demone. "The organic growth experienced from the launch of new product lines is very encouraging, as these products have resonated well with consumers and the market; specifically, the success of our FireRoasters™ product in the U.S. market is a testament to our experience in product innovation. We will look to maintain our emphasis on advertising, with the purpose of raising brand awareness, as this program has had positive results on sales of our branded products. Higher raw material costs, which prevailed in early 2011, appear to have reached a plateau and we do not expect further price increases on an aggregate basis for the balance of 2011."
"While we are encouraged by the year-over-year improvement in sales in our Canadian operations, we continue to review initiatives to improve the trend in the Canadian retail market. In the U.S., the Viking acquisition has been fully integrated into our business, and we are pleased that the addition is meeting our high expectations. Overall, the improvement in the U.S. and Canadian economies has provided support to our business and the outlook for 2011 appears positive. We remain focused on expanding our growth in sales while continuing to identify and implement cost-reduction initiatives to produce continued strong future results," concluded 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 Second 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
http://www.highlinerfoods.com/en/home/investorinformation/quarterlyreports.aspx.
Conference Call to Discuss Second Quarter Results
The Company will host a conference call on Wednesday, August 10, 2011, at 9:00 a.m. ET (10:00 a.m. AT) to discuss its second 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 Wednesday, August 17, 2011 at midnight. To access the archived conference call, dial 1-800-642-1687 and enter the reservation number 81817025.
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® and Sea Cuisine™ 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, planned growth prospects, launch of new products, promotion and advertising levels, raw material and other input costs, anticipated financial performance, and our market position. 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.