High Liner Foods reports third quarter financial results
- Results track well against strongest period of last year; dividend increased -
LUNENBURG, NS,
Third quarter highlights:
- Higher sales in both Canadian retail and food service operations;
- Adjusted EBITDA(1) of $10.4 million;
- Net income of $5.1 million, or fully diluted earnings per share of
$0.28;
- Overall sales decreased 3.8% to $143.7 million;
- Net interest bearing debt decreased to 32.8% of total capitalization
compared to 39.5% at the end of last year and 39.1% at the end of the
third quarter a year ago;
- Dividend declared for the fourth quarter of $0.075 cents per common
and non-voting equity share; increased from $0.07 in the previous
quarter.
"I am pleased with our performance, which was pretty well on par with our strongest quarter last year, pre-recession," said Henry Demone President and Chief Executive Officer. "Our sales volume was lower, though not surprising given our price increases earlier in the year and the weakened economy. The current recession did not affect High Liner in 2008 until after the third quarter. During the third quarter of this year, temporary supply constraints on tilapia and lower sales of higher priced crab and lobster also reduced sales. Overall, our performance has been strong during what has been a difficult period for the economy. For the year-to-date, our sales are up 9.1% and our net income improved 35.0% compared to the same period last year."
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(1) Adjusted earnings before interest, taxes, depreciation and
amortization, business acquisition costs, other income and non-
operating transactions as disclosed on the consolidated statements of
income. Management believes that EBITDA is a useful performance
measure as it approximates cash generated from operations, before
capital expenditures and changes in working capital and excludes
unusual items. EBITDA also assists comparison among companies as it
eliminates the differences in earnings due to how a company is
financed. The calculation of Adjusted EBITDA follows the general
principles and guidance for reporting EBITDA issued by the Canadian
Institute of Chartered Accountants.
Third Quarter Financial Results
Third quarter sales decreased 3.8% to
Adjusted EBITDA for the quarter was
Net income for the quarter was
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(Amounts in thousands of Canadian $ except per share amounts)
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Thirty- Thirty-
Thirteen Thirteen nine nine
weeks ended weeks ended weeks ended weeks ended
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
2009 2008 2009 2008
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Sales $143,709 $149,354 $478,359 $438,552
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Adjusted EBITDA $10,359 $10,926 $32,534 $28,729
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Net income $5,129 $5,442 $15,949 $11,816
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Adjusted net income(1) $5,129 $5,974 $16,515 $14,312
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Diluted earnings per
Common Share:
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Net income $0.28 $0.29 $0.87 $0.64
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Adjusted net income(1) $0.28 $0.32 $0.90 $0.79
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(1) Net income excluding one-time integration costs and non-operating
items.
Operational Highlights for the Third Quarter
Sales for Canadian operations increased 4.3% to
After posting volume increases in the past several quarters (and while still up for the year-to-date), Canadian food service sales pounds for the quarter decreased 3.9% compared to the strong third quarter a year ago when the economic downturn had yet to impact the business. Sales of higher priced, but lower margin, crab and lobster contributed the most to this shortfall.
Retail sales pounds for the quarter decreased 7.7% as a result of price increases implemented in the first quarter of 2009 to offset higher Alaskan Pollock and salmon cost increases in Canadian dollars. Promotional spending increased at the end of the quarter to drive more demand in the fourth quarter.
Sales for the Company's U.S. operations decreased 15.4% to US$63.9 million. Sales volume was down 8.0% to 23.8 million pounds compared to 25.9 million the third quarter of 2008.
U.S. retail sales pounds for the quarter decreased 12.9%, dampened by price increases implemented during the first quarter to offset Alaskan Pollock cost increases, and lower supplies of tilapia during the quarter.
Sales in pounds for U.S. food service operations declined 3.1% in the quarter due to fewer people eating away from home during a weakened economy. Sales of higher priced, but lower margin, crab and lobster contributed the most to this shortfall. The decrease in volume is also more pronounced at national family and casual dining restaurants, while most other channels within the U.S. food service business saw an increase in sales pounds.
Dividends
The Company paid a
Today, the Board of Directors of the Company resolved to pay an increased quarterly dividend in the amount of
Outlook
"We remain focused on leveraging our market leading brands and our strengths in procurement, logistics and product innovation to continue to grow our business," said
Conference Call
The Company will host a conference call on
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 a leading North American processor and marketer of prepared, value-added frozen seafood. High Liner's branded products are sold throughout the
This document contains forward-looking statements, including sales, earnings, marketing, and profitability comments for 2009 and beyond. These statements contain words such as "anticipate", "expect", "could", "should", "may", "plans", "will", or similar expressions that are based on and arise out of our experience, our perception of trends, current conditions and expected future developments as well as other factors. 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 a number of important factors, as discussed herein and in our other continuous disclosure documents, could cause actual results to 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
For further information about the Company, please visit our Internet site at www.highlinerfoods.com or send an e-mail to investor@highlinerfoods.com.
Financial Statements
For convenience, this press release includes the Company's Fiscal Third Quarter Balance Sheets and Statements of Income, Statements of Comprehensive Income, Statements of Retained Earnings and Statements of Cash Flows.
HIGH LINER FOODS INCORPORATED
As at October 3, 2009
(with comparative figures as at September 27, 2008 and January 3, 2009)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)
October 3, September 27, January 3,
2009 2008 2009
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ASSETS
Current:
Cash 1,924 2,712 7,032
Accounts receivable 55,736 63,196 63,873
Income tax receivable - 1,732 45
Inventories 120,393 114,540 146,863
Prepaid expenses 1,974 1,926 1,782
Future income taxes 2,965 912 1,533
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Total current assets 182,992 185,018 221,128
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Property, plant and equipment 54,295 53,185 59,016
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Other:
Future income taxes 522 1,262 833
Other assets 139 66 133
Employee future benefits 4,315 7,316 3,477
Intangible assets 20,854 20,875 24,065
Goodwill 29,176 28,444 30,767
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55,006 57,963 59,275
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292,293 296,166 339,419
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Bank loans 19,985 39,719 39,931
Accounts payable and accrued
liabilities 52,990 51,328 73,611
Income taxes payable 1,615 771 2,443
Current portion of long-term debt 3,522 - -
Current portion of capital lease
obligations 440 474 458
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Total current liabilities 78,552 92,292 116,443
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Long-term debt 53,830 54,441 63,939
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Long-term capital lease obligations 527 510 513
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Other long-term liabilities 1,173 - 2,112
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Future income taxes 955 - -
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Employee future benefits 1,404 4,278 563
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Shareholders' Equity:
Preference shares - - -
Common shares 108,804 110,155 109,787
Contributed surplus 364 364 364
Retained earnings 62,267 48,633 49,897
Accumulated other comprehensive
loss (15,583) (14,507) (4,199)
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155,852 144,645 155,849
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292,293 296,166 339,419
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HIGH LINER FOODS INCORPORATED
For the thirteen and thirty-nine weeks ended October 3, 2009
(with comparative figures for the thirteen and thirty-nine weeks
ended September 27, 2008)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)
Thirteen Weeks Thirty-Nine Weeks
2009 2008 2009 2008
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Sales $ 143,709 $ 149,354 $ 478,359 $ 438,552
Cost of sales 114,179 116,533 378,109 342,240
Distribution expenses 7,560 9,135 24,791 27,115
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Gross profit 21,970 23,686 75,459 69,197
Selling, general and
administrative
expenses (13,604) (14,250) (48,136) (44,685)
Foreign exchange
gain (loss) 364 (98) 200 (387)
Business acquisition
costs - (722) (460) (3,017)
Amortization of
intangible assets (336) (308) (1,063) (906)
Loss on disposal of
assets and other
expense (112) (12) (452) (126)
Interest expense:
Short-term (366) (522) (1,327) (1,951)
Long-term (905) (860) (2,833) (2,601)
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Income before income
taxes 7,011 6,914 21,388 15,524
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Income taxes:
Current (1,113) (1,292) (2,342) (3,137)
Future (769) (180) (3,097) (571)
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Total income taxes (1,882) (1,472) (5,439) (3,708)
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Net income 5,129 5,442 15,949 11,816
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PER SHARE INFORMATION
Earnings per Common Share
Basic, net income 0.28 0.35 0.87 0.79
Diluted, net income 0.28 0.29 0.87 0.64
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Average shares
outstanding for
the period
Basic 18,338,476 14,595,394 18,404,424 13,816,631
Diluted 18,355,358 18,510,665 18,412,967 18,094,365
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Depreciation (1,629) (1,588) (5,011) (4,604)
HIGH LINER FOODS INCORPORATED
For the thirteen and thirty-nine weeks ended October 3, 2009
(with comparative figures for the thirteen and thirty-nine weeks
ended September 27, 2008)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks Thirty-Nine Weeks
2009 2008 2009 2008
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Net income for the
period 5,129 5,442 15,949 11,816
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Other comprehensive
income, net of future
income taxes
Unrealized foreign
exchange (losses)
gains of self-
sustaining foreign
operations (net of
$0.4 million tax
expense and $0.5
million tax recovery
for the thirteen and
thirty-nine weeks in
2009; net of nil
taxes in 2008) (3,612) 813 (4,740) 2,080
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Net (loss) gain on
derivative financial
instruments designated
as cash flow hedges
(net of $1.0 million
income tax recovery
and a $1.8 million
income tax recovery
for the thirteen and
thirty-nine weeks in
2009; $0.2 million
tax expense and $1.0
million tax expense
for the thirteen and
thirty-nine weeks
in 2008) (2,264) 387 (4,473) 2,260
Net loss (gain) on
derivatives designated
as cash flow hedges in
prior periods
transferred to net
income in the current
period (net of $0.8
million and $1.3
million income tax
expense for the thirteen
and thirty-nine weeks
in 2009; $0.1 million
and $0.1 million of
income tax recovery
for the thirteen and
thirty-nine weeks
in 2008) 405 (304) (2,676) (46)
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Net (loss) gain on
derivatives designated
as cash flow hedges (1,859) 83 (7,149) 2,214
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Other comprehensive
(loss) income (5,471) 896 (11,889) 4,294
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Comprehensive (loss)
income (342) 6,338 4,060 16,110
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HIGH LINER FOODS INCORPORATED
For the thirteen and thirty-nine weeks ended October 3, 2009
(with comparative figures for the thirteen and thirty-nine weeks
ended September 27, 2008)
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks Thirty-Nine Weeks
2009 2008 2009 2008
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Balance, beginning of
period 58,421 44,330 49,897 40,112
Net income for the
period 5,129 5,442 15,949 11,816
Dividends:
Common shares (1,283) (745) (3,584) (2,087)
Series A preference
shares - (274) - (774)
Second preference
shares - - - (166)
Share issuance expenses - (120) 5 (268)
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Balance, end of period 62,267 48,633 62,267 48,633
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HIGH LINER FOODS INCORPORATED
For the thirteen and thirty-nine weeks ended October 3, 2009
(with comparative figures for the thirteen and thirty-nine weeks
ended September 27, 2008)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks Thirty-Nine Weeks
2009 2008 2009 2008
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Cash provided by (used
in) operations:
Net income for the
period 5,129 5,442 15,949 11,816
Charges (credits) to
income not involving
cash from operations:
Depreciation and
amortization 2,199 2,002 6,780 5,829
Loss (gain) on
disposal of assets 114 15 461 92
Stock compensation
(reversal) expense (17) (60) 38 (81)
Payments of employee
future benefits
less than expense
(in excess
of expense) 7 (17) 9 (558)
Unrealized foreign
exchange (gain)
loss (187) (170) 710 212
Future income taxes 769 180 3,097 571
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Cash flow from
operations before
changes in non-cash
working capital 8,014 7,392 27,044 17,881
Net change in non-
cash working
capital balances 5,722 2,587 (5,972) 4,061
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13,736 9,979 21,072 21,942
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Cash (used in) provided
by financing
activities:
Change in current
bank loans (12,136) (9,596) (16,777) (23,640)
Repayment of long-
term capital lease
obligations (116) (97) (326) (420)
Dividends paid:
Second Preference - - - (166)
Series A Preference - (274) - (774)
Common (1,283) (745) (3,584) (2,087)
Share issuance cost - (120) 5 (268)
Share repurchase (62) - (983) -
Preference share
redemption - - - (18)
Issue of equity
shares - 540 - 991
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(13,597) (10,292) (21,665) (26,382)
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Cash (used in) provided
by investing activities:
Purchase of property,
plant and equipment
(net of investment
tax credits) (2,065) (870) (4,158) (1,889)
Net proceeds
(expenditures) on
disposal of assets 1 4 12 (29)
Business acquisition
adjustment - (144) - 1,758
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(2,064) (1,010) (4,146) (160)
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Foreign exchange
impact on cash (300) 66 (369) 248
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Decrease in cash during
the period (2,225) (1,257) (5,108) (4,352)
Cash, beginning of
period 4,149 3,969 7,032 7,064
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Cash, end of period 1,924 2,712 1,924 2,712
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