- Marked Improvements in U.S. Operations in the First Quarter and Launch
of 8 New Products -
LUNENBURG, NS, May 11 /CNW/ - High Liner Foods Incorporated (TSX:HLF)
today reported its financial results for the thirteen week period ended March
31, 2007. (All amounts are reported in Canadian dollars.)
Financial and operational highlights for the first quarter of fiscal 2007
include:- Sales of $81.3 million, an increase of 4.7% compared to the first
quarter of fiscal 2006;
- Net income from continuing operations of $3.0 million, or $0.26 per
share, compared to $3.1 million, or $0.27 per share for the first
quarter of fiscal 2006;
- An 18% increase in sales of High Liner® brand products in the U.S.,
including more than a 100% increase in sales of these products to
traditional grocery stores;
- Launch of eight new products; and
- A 29% reduction in inventories."Our U.S. business continued to demonstrate improvement in the first
quarter, highlighted by 18% growth in sales of High Liner® brand products as
we introduced new value-added frozen seafood products and expanded
distribution," said Henry Demone, President and Chief Executive Officer, High
Liner Foods Inc. "Our Canadian business continues to perform well. Canadian
sales for the first quarter, however, were flat compared to last year as lower
sales volumes offset the contributions to growth from new product
introductions over the past twelve months, as consumers adjust to last
October's price increases. On a consolidated basis, profitability did not keep
pace with sales, as lower distribution costs and higher selling prices were
more than offset by higher input costs. Especially noteworthy for the quarter
was the reduction in our inventories by 29% compared to the end of first
quarter of 2006, the result of the initiative we began last year to reduce
inventories to optimal levels. We look forward to building on a solid first
quarter as we continue to focus on providing North American consumers with
innovative value-added seafood products that meet consumers' evolving
preferences."Financial Results
-------------------------------------------------------------------------
(Amounts in thousands of Canadian $ except per share amounts)
-------------------------------------------------------------------------
Thirteen Weeks ended Thirteen Weeks ended
March 31, April 1,
2007 2006
Restated - See Note Below
-------------------------------------------------------------------------
Sales $ 81,335 $ 77,692
-------------------------------------------------------------------------
Operating EBITDA 5,346 5,600
-------------------------------------------------------------------------
Net income from
continuing
operations $ 3,017 $ 3,082
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net loss from
discontinued
operations; net of
income tax $ (17) $ (504)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income $ 3,000 $ 2,578
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic earnings per
Common Share:
Net income from
continuing
operations $ 0.26 $ 0.27
-------------------------------------------------------------------------
Net income (loss)
from discontinued
operations $ - $ (0.05)
-------------------------------------------------------------------------
Net income $ 0.26 $ 0.22
-------------------------------------------------------------------------
Note: Comparative results for fiscal 2006 have been restated to reflect
the requirement to account for the Company's Italian Foods operations as
discontinued operations following its disposition in July, 2006.Financial Results for the Quarter
Sales for the first quarter of fiscal 2007 increased 4.7% to
$81.3 million from $77.7 million for the first quarter of fiscal 2006. The
increase was primarily attributable to growth in sales of High Liner® brand
products in the U.S.
Operating EBITDA for the first quarter was $5.3 million compared with
$5.6 million for the same period last year. Net income from continuing
operations for the quarter was $3.0 million, or $0.26 per share, compared with
$3.1 million, or $0.27 per share, for the corresponding period of 2006 due to
higher preferred dividend costs and a larger number of shares outstanding in
2007.
Operational Highlights for the Quarter
Canada
Canadian retail sales for the first quarter of fiscal 2007 decreased
6.6%(1) compared with the first quarter of fiscal 2006 as the contribution to
sales volumes from new product introductions was offset by lower sales volumes
resulting from price increases implemented on most retail products in October
of 2006. Price increases typically have the effect of reducing sales volumes
temporarily following implementation. Sales volumes of Signature™ products
decreased 12.1%(1) as they were particularly affected by price increases due
to their higher price points. Sales of raw fillets decreased 0.2%(1), also the
result of the price increases.
Canadian food service sales for the quarter decreased 2.6%(1) compared to
the same period last year. The decrease was the result of the price increases
implemented on food service products in 2006, as well as the inability to
procure Atlantic Cod tails and Patagonian hake, and the timing of new product
launches.
United States
U.S. sales of High Liner® brand products for the first quarter of
fiscal 2007 increased 5.4%(1) (18% on a dollar basis in U.S. dollars) compared
to the first quarter of fiscal 2006 with the growth being generated by the
traditional grocery store channel. Sales volume of High Liner® brand
products in the traditional grocery store channel more than doubled, primarily
due to increased distribution of family-sized products that are based on the
Company's successful Signature™ products in Canada. Sales volume of High
Liner® brand seafood products in the U.S. club store channel decreased
6.3%(1) as the impact of price increases on cod sales and supply constraints
on cod, more than offset higher sales of tilapia products.
Fisher Boy® sales grew for the second consecutive quarter, increasing
7.8%(1) compared to the same quarter last year. The increase was the result of
favourable trade promotions by the Company's largest customer, as well as the
initial success of initiatives to improve sales, including new product
introductions. During the quarter, the Company began including the High
Liner® logo alongside the Fisher Boy logo on Fisher Boy packaging as part of
its strategy to transition to the High Liner® brand.
Sales volume of private label seafood products in the U.S. increased
6.5%(1), the result of the successful introduction of new products and
increased business with the Company's two largest customers.
Share Repurchase
As of March 31, 2007, High Liner had purchased 3,000 of its common shares
at an average price of $8.71 per share under its current normal course issuer
bid, which commenced on May 12, 2006 and expires today. The bid permitted the
Company to purchase up to 510,000 common shares, representing just fewer than
5.0% of common shares outstanding. No additional shares were purchased under
this bid between April 1, 2007 and today. A blackout period has been in effect
since August 2006 that prevented us from purchasing shares.
Dividends
High Liner Foods paid a quarterly dividend on its Common Shares of $0.05
per share on March 15, 2007 to shareholders of record on March 1, 2007.
On May 11, 2007, the Board of Directors approved a quarterly dividend in
the amount of $0.05 per Common Share payable on June 15, 2007 to shareholders
of record on June 1, 2007.
The Company paid regular quarterly dividends on its Second Preference
Shares in the amount of $1.48 per share on March 31, 2007 for the period of
December 31, 2006 to March 30, 2007 versus $1.38 last year.
Outlook
"The implementation last year of our plan to turn around our U.S.
business is beginning to have a positive impact on our overall performance,"
said Mr. Demone. "There is still work to be done, however, and we look forward
to building on this initial momentum throughout the year as we strengthen the
High Liner brand® in the U.S. by introducing additional value-added premium
seafood products to our established customer base. We are also expanding our
distribution in both the traditional grocery store and club store channels,
and continuing the transition of our Fisher Boy products to our High Liner®
brand. We continue to expect strong performance from our Canadian operations
this year as sales volumes across all areas of this business should return to
their long-term growth trends. We do expect, however, to continue to be
challenged by rising input costs and will continually evaluate our ability to
implement price increases as required."
Conference Call
High Liner Foods will host a conference call on Monday, May 14, 2007 at
10:30 a.m. ET (11:30 a.m. AT) to discuss its first quarter fiscal 2007
financial results. To access the conference call by telephone, dial
416-644-3414 or 1-800-733-7560. Please connect approximately ten minutes prior
to the beginning of the call to ensure participation. The conference call will
be archived for replay until Thursday, March 1, 2007 at midnight. To access
the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter
the reservation number 21226546 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.HIGH LINER FOODS INCORPORATED
As at March 31, 2007
(with comparative figures as at April 1, 2006 and December 30, 2006)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)
March 31, April 1, December
2007 2006 30, 2006
-------------------------------------------------------------------------
ASSETS
Current:
Cash 309 346 240
Accounts receivable 35,293 35,192 31,221
Income tax receivable 80 65 161
Inventories 43,158 60,740 41,278
Prepaid expenses 3,957 3,364 3,495
Future income taxes 272 564 295
-------------------------------------------------------------------------
Total current assets 83,069 100,271 76,690
-------------------------------------------------------------------------
Property, plant and equipment 25,398 26,814 26,038
-------------------------------------------------------------------------
Other:
Future income taxes 2,849 3,746 3,005
Other assets 137 854 1,084
Employee future benefits 6,477 5,803 6,360
-------------------------------------------------------------------------
9,463 10,403 10,449
-------------------------------------------------------------------------
117,930 137,488 113,177
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Bank loans 14,222 33,495 10,115
Accounts payable and accrued
liabilities 25,125 28,758 27,087
Income taxes payable 111 198 -
Current portion of capital lease
obligations 576 574 560
-------------------------------------------------------------------------
Total current liabilities 40,034 63,025 37,762
-------------------------------------------------------------------------
Long-term capital lease obligations 514 598 477
-------------------------------------------------------------------------
Employee future benefits 3,760 3,389 3,702
-------------------------------------------------------------------------
Shareholders' Equity:
Preference shares 20,000 20,000 20,000
Common shares 28,489 28,016 28,106
Contributed surplus 541 494 503
Retained earnings 38,294 36,895 36,204
Accumulated other comprehensive
income (13,702) - -
Foreign currency translation account - (14,929) (13,577)
-------------------------------------------------------------------------
73,622 70,476 71,236
-------------------------------------------------------------------------
117,930 137,488 113,177
-------------------------------------------------------------------------
-------------------------------------------------------------------------
HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended March 31, 2007
(with comparative figures for the thirteen weeks ended April 1, 2006)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)
Thirteen Weeks
2007 2006
(Restated -
Note 3)
-------------------------------------------------------------------------
Sales $ 81,335 77,692
Cost of sales 64,569 62,206
-------------------------------------------------------------------------
Gross profit 16,766 15,486
Selling, general and administrative expenses (11,409) (10,030)
Foreign exchange (loss)/gain (11) 144
Depreciation and amortization (776) (750)
Other expense/non-operating transactions (17) (10)
Interest expense
Short-term (92) (284)
Long-term (12) (20)
-------------------------------------------------------------------------
Income from continuing operations before
income taxes 4,449 4,536
-------------------------------------------------------------------------
Income taxes
Current (1,233) (576)
Future (199) (878)
-------------------------------------------------------------------------
Total income taxes from continuing operations (1,432) (1,454)
-------------------------------------------------------------------------
Net income from continuing operations 3,017 3,082
Net loss from discontinued operations; net
of income tax (17) (504)
-------------------------------------------------------------------------
Net income 3,000 2,578
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PER SHARE INFORMATION
Earnings per Common Share
Basic from continuing operations 0.26 0.27
Basic from discontinued operations - (0.05)
-------------------------------------------------------------------------
Basic 0.26 0.22
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Diluted from continuing operations 0.26 0.27
Diluted from discontinued operations - (0.05)
-------------------------------------------------------------------------
Diluted 0.26 0.22
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average shares outstanding for the period
Basic 10,319,858 10,288,290
Diluted 10,404,097 10,358,588
-------------------------------------------------------------------------
-------------------------------------------------------------------------
HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended March 31, 2007
(with comparative figures for the thirteen weeks ended April 1, 2006)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks
2007 2006
(Restated -
Note 3)
-------------------------------------------------------------------------
Cash provided by (used in) operations:
Net income from continuing operations for
the period 3,017 3,082
Charges (credits) to income not involving
cash from operations:
Depreciation and amortization 776 750
(Gain) loss on disposal of assets (5) 8
Stock compensation expense 148 -
Payments of employee future benefits
in excess of expense (55) (220)
Future income taxes 199 878
-------------------------------------------------------------------------
Cash flow from operations before changes in
non-cash working capital 4,080 4,498
Net change in non-cash working capital balances (8,356) (11,896)
Operating activities of discontinued operations (15) (503)
-------------------------------------------------------------------------
(4,291) (7,901)
-------------------------------------------------------------------------
Cash provided by (used in) financing activities:
Change in current bank loans 4,107 8,687
Repayment of long-term capital lease obligations (110) (118)
Dividends paid
Preference (296) (276)
Common (516) (482)
Repurchase of capital stock - (47)
Issue of equity shares 378 99
-------------------------------------------------------------------------
3,563 7,863
-------------------------------------------------------------------------
Cash provided by (used in) investing activities:
Purchase of property, plant and equipment (net of
investment tax credits) (49) (474)
Net expenditures on disposal of assets (22) (28)
Decrease in other receivables 703 325
Investing activities of discontinued operations 94 (22)
-------------------------------------------------------------------------
726 (199)
-------------------------------------------------------------------------
Impact of foreign exchange translation on cash 71 3
-------------------------------------------------------------------------
Increase (decrease) in cash during the period 69 (234)
Cash, beginning of period 240 580
-------------------------------------------------------------------------
Cash, end of period 309 346
-------------------------------------------------------------------------
-------------------------------------------------------------------------
HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended March 31, 2007
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks
2007
-------------------------------------------------------------------------
Net income for the period 3,000
---------------
Other comprehensive income, net of future income taxes
Unrealized losses of self-sustaining foreign operations
(net of nil income taxes) (186)
---------------
Net loss on derivative financial instruments designated
as cash flow hedges (net of $0.1 income tax recovery) (255)
Net loss on derivatives designated as cash flow hedges
in prior periods transferred to net income in the
current period (net of $0.1 income tax recovery) (132)
---------------
Change in gains and losses on derivatives designated
as cash flow hedges (387)
---------------
Other comprehensive income (573)
---------------
Comprehensive income 2,427
---------------
---------------
HIGH LINER FOODS INCORPORATED
For the thirteen weeks ended March 31, 2007
(with comparative figures for the thirteen weeks ended April 1, 2006)
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
(in thousands of Canadian dollars)
Thirteen Weeks
2007 2006
-------------------------------------------------------------------------
Balance, beginning of period as previously
reported 36,204 36,033
Adjustment relating to salaried vacation pay - (958)
Adjustment relating to financial instruments (98) -
-------------------------
Balance, beginning of period as restated 36,106 35,075
Net income for the period 3,000 2,578
Dividends
Common Shares (516) (482)
Second Preference Shares (296) (276)
-------------------------
Balance, end of period 38,294 36,895
-------------------------
-------------------------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.
--------------------------------------
(1) As measured in volume (pounds)
%SEDAR: 00001789E
Back
