- Stronger Performance Continues to Drive Growth in Sales and Earnings -
LUNENBURG, NS, Nov. 13 /CNW/ - High Liner Foods Incorporated (TSX:HLF)
today reported its financial results for the thirteen week period ended
September 29, 2007. (All amounts are reported in Canadian dollars.)Financial and operational highlights for the third quarter of fiscal 2007
include:
- Sales of $63.6 million, an increase of 7.4% when adjusted for the
effect of the stronger Canadian dollar;
- Sales growth at Canadian Operations of 11.6% in dollars (7.1% in
pounds);
- Operating EBITDA(1) for the quarter increased to $3.9 million from
$2.5 million for the third quarter of fiscal 2006;
- Net income from continuing operations of $1.8 million, or $0.15 per
share (after deducting dividends on preference shares), compared with
$0.6 million, or $0.03 per share, for the third quarter of fiscal
2006;
- Net income of $1.9 million, or $0.16 per share, compared with
$0.8 million, or $0.05 per share, for the third quarter of fiscal
2006; and
- An agreement to purchase FPI's Manufacturing and Marketing Group,
with the transaction expected to close during the fourth quarter of
2007."Our third quarter results were marked by continued growth in sales and
profitability," said Henry Demone, President and Chief Executive Officer, High
Liner Foods Inc. "Our stronger top line was driven largely by the ongoing
success in both our retail and food service businesses at our Canadian
Operations. At our U.S. Operations, while Fisher Boy® sales grew for the
fourth consecutive quarter, sales volumes of High Liner® branded products
were down from the same period last year. The decrease was mainly attributable
to our largest customer reducing purchases following the larger than average
purchases it made in the first quarter. Additionally, on both sides of the
border, strategic initiatives including our diligent efforts to implement
price increases have been effective in partially offsetting the higher cost
environment we operate in."----------------------------
(1) Earnings before interest, taxes, depreciation and amortization,
litigation costs, other income and non-operating transactions as
disclosed on the consolidated statements of income. EBITDA is not a
recognized measure under Canadian generally accepted accounting
principles (GAAP), however, management believes that it is a useful
performance measure as it approximates cash generated from
operations, before capital expenditures and changes in working
capital and excludes unusual items. Operating EBITDA also assists
comparison among companies as it eliminates the differences in
earnings due to how a company is financed. Foreign exchange
gains/losses are now included in Operating EBITDA and prior years
have been restated to reflect this change.
(2) As measured in volume (pounds)
Financial Results
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(Amounts in thousands of Canadian $ except per share amounts)
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Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks ended Weeks ended Weeks ended Weeks ended
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
2007 2006 2007 2006
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Sales $ 63,642 $ 60,743 207,179 196,068
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Operating EBITDA 3,853 2,454 11,602 10,079
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Net income from
continuing
operations 1,835 624 5,337 3,882
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Net income (loss)
from discontinued
operations; net
of income tax 82 224 372 (861)
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Net income 1,917 848 5,709 3,021
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Basic earnings per
Common Share:
Net income from
continuing
operations $ 0.15 $ 0.03 $ 0.43 $ 0.29
Net income (loss)
from discontinued
operations $ 0.01 $ 0.02 $ 0.03 $ (0.08)
Net income $ 0.16 $ 0.05 $ 0.46 $ 0.21
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-------------------------------------------------------------------------Financial Results for the Quarter
When adjusted for the stronger Canadian dollar, sales for the third
quarter of fiscal 2007 increased 7.4%, with the higher Canadian dollar
reducing the value of reported U.S. sales by approximately $1.6 million. Sales
before adjustment for the stronger Canadian dollar increased 4.8% to
$63.6 million. The increase was primarily the result of continued strength in
both the retail and food service channels in Canada, while the fourth
consecutive quarter of growth in Fisher Boy® sales in the U.S. also
contributed to the increase.
Operating EBITDA for the quarter increased to $3.9 million from
$2.5 million for the same period last year. Price increases, new products
launched subsequent to the third quarter of last year, lower trade spend by
our U.S. Operations, and lower corporate costs and other items contributed to
the higher operating EBITDA for the quarter. While more than offsetting input
cost increases of $1.4 million for the quarter, price increases have not kept
pace with escalating input costs over the past three years. Operating EBITDA
was dampened by additional fixed marketing costs of $0.2 million and
additional incentives of $0.7 million expensed in the quarter.
Net income from continuing operations for the quarter was $1.8 million,
or $0.15 per share (after deducting dividends on preference shares), compared
with $0.6 million, or $0.03 per share, for the same quarter last year.
Financial Results for the Nine-Month Period
Sales for the first nine months of fiscal 2007 increased 5.7% to
$207.2 million from $196.1 million for the same period last year. The increase
was attributable to growth in both the Company's Canadian and U.S. operations
compared to the first nine months of fiscal 2006. The year-over-year
appreciation in the Canadian dollar reduced the value of U.S. dollar
denominated sales by approximately $1.5 million for the nine-month period.
Operating EBITDA for the first nine months of fiscal 2007 increased to
$11.6 million from $10.1 million for the corresponding period of fiscal 2006
as price increases, the contribution from sales of new products, and lower
freight and storage costs offset higher input costs, additional fixed
marketing costs, additional incentives, and other items.
Net income from continuing operations for the first nine months of fiscal
2007 was $5.3 million, or $0.43 per share, compared to $3.9 million, or
$0.29 per share, for the corresponding period of 2006.
Seafood raw material costs continue to increase due to increased demand
and limited supply in world markets. This increased cost is partially offset
in our Canadian operations by a strong Canadian dollar but result in
significant cost increases in our U.S. operations. Other commodity input costs
are also increasing.
Operational Highlights for the Quarter
Canada
Canadian retail sales volume for the third quarter increased 6.3%(2)
compared with the third quarter of fiscal 2006, marking the second consecutive
quarter of growth following a reduction in sales volume attributable to price
increases implemented on most retail products in October of 2006. Sales of raw
fillets increased 23.0%(2), countering the decrease posted in the second
quarter, and Signature sales decreased 8.7%(2).
Canadian food service sales volume for the third quarter increased
2.5%(2) compared to the third quarter of last year, with higher sales for most
species and to most customers. The increase follows the double-digit growth
achieved earlier this year in the second quarter.
United States
U.S. sales volume of High Liner® brand products for the quarter
decreased 14.4%(2) (3.9% on a U.S. dollar basis) compared to the third quarter
of fiscal 2006, primarily as a result of a more than 70% decrease in sales to
the traditional grocery store channel. The decrease was attributable to the
Company's largest customer purchasing less in the third quarter, as it had
done in the second quarter, following above average purchases in the first
quarter to prepare for Lent. On a year-to-date basis sales with this customer
are up from last year. Sales volume of High Liner® brand seafood products in
the U.S. club store channel decreased 5.9%(2) as price increases earlier in
2007 and supply constraints resulted in a reduction in cod sales. The
reduction in cod sales was partially offset by higher sales of value added
tilapia products.
Fisher Boy® sales volume grew for the fourth consecutive quarter,
increasing 8.2%(2) (7.9% in U.S. dollars) compared to the third quarter of
fiscal 2006. Initiatives to improve sales continued to provide benefits, with
current customers carrying a wider breadth of products within the Fisher
Boy® line.
Sales volume of private label seafood products in the U.S. decreased
8.9%(2) (3.8% in U.S. dollars) compared to the third quarter of 2006. The
reduction of sales volume was primarily attributable to a price increase
earlier in the year, however, promotions by competitors' branded products also
impacted volume in the private label business.
Dividends
High Liner Foods paid a regular quarterly dividend of $0.05 per common
share on September 15, 2007 to shareholders of record on September 1, 2007.
Subsequent to quarter end, the Board of Directors approved its
seventeenth consecutive quarterly dividend in the amount of $0.05 per Common
Share payable on December 15, 2007 to shareholders of record on December 1,
2007.
The Company paid regular quarterly dividends on its Second Preference
Shares in the amount of $1.54 per share on September 30, 2007 for the period
of June 30, 2007 to September 29, 2007 compared to $1.51 for the corresponding
period last year.
Outlook
"We remain focused on the pursuit of our vision to become the leader in
value-added frozen seafood in North America," said Mr. Demone. "In support of
that vision we look forward to completing our acquisition of FPI's
Manufacturing and Marketing Group, which we expect to close during the fourth
quarter. This transaction will afford us significant opportunity to leverage
the combined potential of the businesses to maximize future growth.
Additionally, the acquisition will provide us the critical mass to more
effectively compete in an industry characterized with continued input cost
pressures and customers resistant to price increases."
Conference Call
High Liner Foods will host a conference call on Wednesday, November 14,
2007 at 10:30 a.m. ET (11:30 a.m. AT) to discuss its third quarter fiscal 2007
financial results. To access the conference call by telephone, dial
416-644-3414 or 1-800-733-7571. Please connect approximately ten minutes prior
to the beginning of the call to ensure participation. The conference call will
be archived for replay until Wednesday, November 21, 2007 at midnight. To
access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and
enter the reservation number 21249499 followed by the number sign.
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 90 days.Financial Statements
HIGH LINER FOODS INCORPORATED
As at September 29, 2007
(with comparative figures as at September 30, 2006 and December 30, 2006)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)
September 29, September 30, December 30,
2007 2006 2006
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ASSETS
Current:
Cash 107 475 240
Accounts receivable 26,695 29,256 31,221
Income tax receivable 100 94 161
Inventories 43,523 41,623 41,278
Prepaid expenses 3,694 2,877 3,495
Future income taxes 1,579 247 295
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Total current assets 75,698 74,572 76,690
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Property, plant and equipment 24,009 24,759 26,038
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Other:
Future income taxes 2,177 4,085 3,005
Other assets 1,349 270 1,084
Employee future benefits 6,668 6,499 6,360
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10,194 10,854 10,449
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109,901 110,185 113,177
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Bank loans 4,982 10,850 10,115
Accounts payable and
accrued liabilities 28,850 25,689 27,087
Income taxes payable 352 426 -
Current portion of capital
lease obligations 493 519 560
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Total current liabilities 34,677 37,484 37,762
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Long-term capital lease obligations 360 385 477
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Employee future benefits 3,944 3,766 3,702
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Shareholders' Equity:
Preference shares 20,000 20,000 20,000
Common shares 28,489 28,106 28,106
Contributed surplus 574 511 503
Retained earnings 39,356 35,710 36,204
Accumulated other
comprehensive income (17,499) - -
Foreign currency
translation account - (15,777) (13,577)
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70,920 68,550 71,236
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109,901 110,185 113,177
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HIGH LINER FOODS INCORPORATED
For the thirteen and thirty-nine weeks ended September 29, 2007
(with comparative figures for the thirteen and
thirty-nine weeks ended September 30, 2006)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)
Thirteen Weeks Thirty-Nine Weeks
2007 2006 2007 2006
(Restated) (Restated)
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Sales $ 63,642 60,743 $ 207,179 196,068
Cost of sales 51,408 50,115 166,016 159,202
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Gross profit 12,234 10,628 41,163 36,866
Selling, general
and administrative
expenses (8,291) (8,211) (29,153) (26,955)
Foreign exchange
(loss)/gain (90) 37 (408) 168
Depreciation and
amortization (739) (740) (2,262) (2,243)
Business acquisition
transaction costs (391) - (391) -
Other income/
(expense)/non-
operating
transactions (8) 5 (39) 176
Interest expense:
Short-term 32 (196) (37) (789)
Long-term (14) (10) (40) (51)
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Income from
continuing
operations before
income taxes 2,733 1,513 8,833 7,172
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Income taxes:
Current (679) (1,167) (3,102) (2,507)
Future (219) 278 (394) (783)
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Total income taxes
from continuing
operations (898) (889) (3,496) (3,290)
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Net income from
continuing
operations 1,835 624 5,337 3,882
Net income/(loss)
from discontinued
operations; net
of income tax 82 224 372 (861)
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Net income 1,917 848 5,709 3,021
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PER SHARE
INFORMATION
Earnings per
Common Share
Basic from
continuing
operations 0.15 0.03 0.43 0.29
Basic from
discontinued
operations 0.01 0.02 0.03 (0.08)
Basic 0.16 0.05 0.46 0.21
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Diluted from
continuing
operations 0.15 0.03 0.43 0.29
Diluted from
discontinued
operations - 0.02 0.03 (0.08)
Diluted 0.15 0.05 0.46 0.21
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Average shares
outstanding for
the period
Basic 10,373,638 10,312,971 10,355,711 10,301,558
Diluted 10,452,592 10,374,493 10,441,586 10,366,072
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HIGH LINER FOODS INCORPORATED
For the thirteen and thirty-nine weeks ended September 29, 2007
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)
Thirty-Nine
Thirteen Weeks Weeks
2007 2007
-------------------------------------------------------------------------
Net income for the period 1,917 5,709
--------------- -------------
Other comprehensive income, net of
future income taxes
Unrealized foreign exchange losses on
translation of self-sustaining foreign
operations (net of nil income taxes) (947) (2,418)
--------------- -------------
Net loss on derivative financial
instruments designated as cash flow
hedges (net of $0.5 million and
$1.2 million income tax recovery for
the thirteen and thirty-nine weeks ended
September 29, 2007, respectively) (941) (2,174)
Net loss on derivatives designated as cash
flow hedges in prior periods transferred
to net income in the current period (net
of $0.2 million and $0.1 million income tax
recovery for the thirteen and thirty-nine
weeks ended September 29, 2007, respectively) 461 222
--------------- -------------
Change in gains and losses on derivatives
designated as cash flow hedges (480) (1,952)
--------------- -------------
Other comprehensive income (1,427) (4,370)
--------------- -------------
Comprehensive income 490 1,339
--------------- -------------
--------------- -------------
HIGH LINER FOODS INCORPORATED
For the thirteen and thirty-nine weeks ended September 29, 2007
(with comparative figures for the thirteen and
thirty-nine weeks ended September 30, 2006)
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks Thirty-Nine Weeks
2007 2006 2007 2006
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Balance, beginning
of period as
previously reported 38,265 35,680 36,204 35,075
Adjustment relating
to financial
instruments - - (98) -
----------------------------------------------------
Balance, beginning
of period as
restated 38,265 35,680 36,106 35,075
Net income for
the period 1,917 848 5,709 3,021
Dividends:
Common Shares (518) (516) (1,553) (1,512)
Second Preference
Shares (308) (302) (906) (874)
----------------------------------------------------
Balance, end of
period 39,356 35,710 39,356 35,710
----------------------------------------------------
----------------------------------------------------About High Liner Foods Incorporated
High Liner Foods Incorporated is one of North America's largest
processors and marketers of prepared, value-added frozen seafood. High Liner's
branded products are sold throughout the United States, Canada and Mexico
under the High Liner® and Fisher Boy® labels and available in most grocery
and club stores. The Company also sells its High Liner® food service
products to restaurants and institutions. The Company is also 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 symbol HLF on the Toronto Stock Exchange.
This document contains forward-looking statements, including sales,
earnings, marketing, and profitability comments for 2007 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 Toronto Stock Exchange, a thorough discussion of the risk
factors that can cause anticipated outcomes to differ from actual outcomes. We
disclaim any intention or obligation to update or revise forward-looking
statements.
For further information about the Company, please visit our Internet site
at www.highlinerfoods.com or send e-mail to investor@highlinerfoods.com.
%SEDAR: 00001789E
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