- Results reflect continued strength of Canadian business and
improvements in U.S. operations -
LUNENBURG, NS, Feb. 21 /CNW/ - High Liner Foods Incorporated (TSX:HLF)
today reported improved financial results for the thirteen week period and
fiscal year ended December 30, 2006. (All amounts are reported in Canadian
dollars.)Financial and operational highlights for the fourth quarter include:
- Sales of $65.7 million, an increase of 5.5% when adjusted for the
effect of the stronger Canadian dollar;
- Operating EBITDA(1) of $3.5 million compared to an operating loss of
$0.4 million for the same period in 2005;
- Net income from continuing operations of $1.2 million, or $0.09 per
share, compared to a net loss of $1.5 million, or $0.16 per share for
the same period in 2005;
- More than a 10% increase in sales of High Liner® brand products in
the U.S.;
- Launch in Canada of High Liner QuickSteam™ seasoning-rubbed
fillets, featuring innovative microwave steam cooking packaging;
- Increased entry into the natural and organic foods market with the
launch of six all natural, no-additive products to a new U.S.
customer.
Financial and operational highlights for the fiscal year include:
- Sales of $261.7 million, an increase of 7.5% when adjusted for the
effect of the stronger Canadian dollar;
- Operating EBITDA of $13.6 million compared to $10.0 million in 2005;
- Net income from continuing operations of $5.1 million, or $0.38 per
share, compared to $3.9 million, or $0.26 per share, in 2005;
- Launch of 40 new products in 2006."Our financial results for the quarter and the year reflect the continued
strength of our Canadian business, and improvements in our U.S. business,
despite an operating environment of increasing input costs, including
historically high raw seafood costs," said Henry Demone, President and Chief
Executive Officer, High Liner Foods Inc. "Our retail and food service
divisions both contributed to strong results in Canada as we are successfully
delivering innovative value-added seafood products that meet consumers'
evolving preferences. In the U.S., we have a significant opportunity to
leverage the High Liner brand and our success with premium products that we
have achieved in Canada. To this end, in 2006, we initiated a number of
improvements in our U.S. operations, including the appointment of a new U.S.
President, the sale of our pasta business, the launch of a number of
valued-added seafood products, and rebranding our Fisher Boy products under
the High Liner name. While we recognize that there is a lot of work to be done
in this regard, we are encouraged by our progress thus far."Financial Results
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(Amounts in thousands of Canadian $ except per share amounts)
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Thirteen Thirteen Fifty-two Fifty-two
Weeks ended Weeks ended Weeks ended Weeks ended
December December December December
30, 2006 31, 2005 30, 2006 31, 2005
Restated Restated
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Sales $ 65,657 $ 63,006 $ 261,725 $ 250,203
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Operating EBITDA 3,489 (408) 13,568 10,035
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Net income (loss)
from continuing
operations $ 1,241 $ (1,480) $ 5,123 $ 3,854
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Net income (loss)
from discontinued
operations; net of
income tax $ 68 $ (43,064) $ (793) $ (44,323)
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Net income $ 1,309 $ (44,544) $ 4,330 $ (40,469)
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Basic earnings per
Common Share:
Net income (loss)
from continuing
operations $ 0.09 $ (0.16) $ 0.38 $ 0.26
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Net income (loss)
from discontinued
operations $ 0.01 $ (4.12) $ (0.08) $ (4.19)
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Net income $ 0.10 $ (4.28) $ 0.30 $ (3.93)
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-------------------------------------------------------------------------Financial Results for the Quarter
When adjusted for the stronger Canadian dollar, sales for the fourth
quarter of fiscal 2006 increased 5.5%, with the higher Canadian dollar
reducing the value of reported U.S. sales by approximately $0.8 million. Sales
before adjustment for the stronger Canadian dollar increased 4.2% to $65.7
million from $63.0 million for the fourth quarter of fiscal 2005. The increase
was attributable to strong sales in Canadian retail and food service divisions
and higher sales of High Liner® brand products in the U.S.
Operating EBITDA for the fourth quarter improved to $3.5 million compared
with an operating loss of $0.4 million for the same period in 2005. The
difference is attributable to price increases implemented in 2006, which
offset higher costs of raw seafood, as well as higher marketing costs in the
fourth quarter of 2005 in connection with the launch of products under the
High Liner brand in the U.S. Net income from continuing operations for the
quarter was $1.2 million, or $0.09 per share, compared with a loss of $1.5
million, or $0.16 per share, for the corresponding period of 2005.
Discontinued operations in 2005 included a non-recurring non-cash pre-tax
charge of $41.2 million related to the write down of goodwill, and
non-recurring costs of $1.3 million before taxes related to the change in
co-packers for Italian Village products.
Financial Results for Fiscal 2006
When adjusted for the stronger Canadian dollar, sales for fiscal 2006
increased 7.5% with the higher Canadian dollar reducing the value of reported
U.S. sales by approximately $7.2 million. Sales before adjustment for the
stronger Canadian dollar increased 4.6% to $261.7 million from $250.2 million
for fiscal 2005. The increase is the result of increased selling prices,
stronger retail and food service sales in Canada, as well as higher sales of
High Liner brand products in the U.S.
Operating EBITDA for the year was $13.6 million compared with $10.0
million for fiscal 2005. The improvement was primarily the result of the
successful implementation of price increases in 2006, which offset higher
seafood costs for the year, as well as the contribution from new product
launches. Net income from continuing operations for the year was $5.1 million,
or $0.38 per share, compared to $3.9 million, or $0.26 per share, in fiscal
2005.
Operational Highlights for the Fourth Quarter
Canada
Canadian retail sales volume for the fourth quarter of fiscal 2006
decreased 1.5%(2) compared to the fourth quarter of fiscal 2005. Price
increases during the year contributed to a 5.7% increase in sales in dollars,
while sales also benefited from new products launched earlier in the year.
Sales of Signature™ products increased 22.1%(2) in the quarter, the result
of strong consumer marketing programs, good support from our customers and new
products launched in early 2006. Sales of raw fillets increased 12.1%(2), due
to continued growth of wild salmon and tilapia fillets. During the quarter we
launched High Liner QuickSteam™ seasoning rubbed fillets, which are premium
quality fillets of salmon and basa with light seasoning.
Canadian food service sales for the quarter increased 11.4%(2) compared
to the same period the year before, due to higher sales of most species to
most customers, strong contributions from new products, and price increases.
United States
U.S. sales volume of High Liner brand products for the quarter increased
2.5%(2), with strong tilapia sales more than offsetting weaker sales of cod,
following price increases implemented on most club store products in the first
quarter. Importantly, a change in the High Liner product mix to include more
premium items, and price increases, led to more than a 10% sales increase in
Canadian dollars. The change in product mix was more significant in the club
store channel, as the Company has had increased success introducing premium
products to this channel.
Fisher Boy® sales for the quarter increased 0.2%(2), representing the
first period of growth for the brand in over two years. The U.S. business is
focused on the continued execution of its turnaround strategy for the brand.
Sales volume of private label seafood products in the U.S., which consist
almost entirely of battered and breaded products, decreased 10.4%, in line
with the continued decline in the category.
Share Repurchase
As of December 30, 2006, 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 which expires on May 11, 2007.
The bid permits the Company to purchase up to 510,000 common shares,
representing just under 5.0% of common shares outstanding. For fiscal 2006,
the Company repurchased 8,000 common shares under the current and previous
issuer bids.
Dividends
High Liner Foods paid a quarterly dividend on its Common Shares of $0.05
per share on December 15, 2006 to shareholders of record on December 1, 2006.
In 2006, the Company paid dividends on its Second Preference Shares in
the amount of $1.2 million, compared to $1.0 million in 2005. Dividends
fluctuate in relationship to prime bank rates.
On February 21, 2007, the Board of Directors approved a quarterly
dividend in the amount of $0.05 per Common Share payable on March 15, 2007 to
shareholders of record on March 1, 2007.
Subject to cash flow, it is the Company's intention to declare quarterly
dividends on its common shares in fiscal 2007.
Outlook
"In 2007, we will continue to leverage our product development expertise,
our brand, and our long history of success in Canada as we move forward with
initiatives to strengthen our U.S. business," said Mr. Demone. "While
expecting continued strength in our Canadian operations, we will move forward
with short and long-term initiatives to improve our U.S. business, including
introducing additional value-added premium seafood products to our established
U.S. customer base, expanding our distribution, and strengthening our brand
presence, particularly by transitioning our Fisher Boy products to our High
Liner brand. While our profitability has benefited from the strengthening
Canadian dollar over the past several years, a potentially weaker Canadian
dollar in 2007 could dampen our profitability during the year. With the
expectation of higher input costs going forward, we will continue to monitor
these costs across our operations and evaluate our potential to implement
price increases as required. Following our success last year in reducing our
inventory levels to more optimized levels, we are well positioned to
appropriately manage working capital going forward. In addition, we are
progressing in a productivity analysis of our operations and expect that this
will identify significant opportunities to improve our operations, as we
endeavor to improve our bottom line."
Conference Call
High Liner Foods will host a conference call on Thursday, February 22,
2007 at 10:30 a.m. ET (11:30 a.m. AT) to discuss its fourth quarter fiscal
2006 financial results. To access the conference call by telephone, dial
416-644-3416 or 1-800-732-0232. 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 21216991 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
For convenience, this press release includes the Company's Fiscal Fourth
Quarter Balance Sheet, Statement of Income and Statement of Cash Flows.HIGH LINER FOODS INCORPORATED
CONSOLIDATED BALANCE SHEETS
As at December 30, 2006
(with comparative figures as at December 31, 2005)
(in thousands of Canadian dollars)
December 30, December 31,
2006 2005
(Restated)
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ASSETS
Current:
Cash 240 580
Accounts receivable 31,221 28,095
Income tax receivable 161 11
Inventories 41,278 52,670
Prepaid expenses 3,495 7,246
Future income taxes 295 546
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Total current assets 76,690 89,148
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Property, plant and equipment 26,038 26,952
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Other:
Future income taxes 3,005 4,642
Other receivables and sundry investments 1,084 1,179
Employee future benefits 6,360 5,332
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10,449 11,153
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113,177 127,253
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Bank loans 10,115 24,808
Accounts payable and accrued liabilities 27,087 29,407
Income taxes payable 0 159
Current portion of long-term liabilities 560 526
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Total current liabilities 37,762 54,900
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Long-term liabilities 477 633
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Employee future benefits 3,702 3,138
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Shareholders' Equity:
Preference shares 20,000 20,000
Common shares 28,106 27,963
Contributed surplus 503 494
Retained earnings 36,204 35,075
Foreign currency translation account (13,577) (14,950)
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71,236 68,582
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113,177 127,253
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HIGH LINER FOODS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
For the thirteen and fifty-two weeks ended December 30, 2006
(with comparative figures for the thirteen and
fifty-two weeks ended December 31, 2005)
(in thousands of Canadian dollars, except per share amounts)
Thirteen Weeks Fifty-Two Weeks
2006 2005 2006 2005
(Restated) (Restated)
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Sales 65,657 63,006 261,725 250,203
Cost of sales 53,212 52,499 212,414 201,966
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Gross profit 12,445 10,507 49,311 48,237
Selling, general
and administrative
expenses (9,215) (10,847) (36,170) (38,175)
Foreign exchange gain 259 (68) 427 (27)
Depreciation and
amortization (774) (789) (3,017) (3,061)
Other income (expense)
/ non-operating
transactions (400) (137) (224) 387
Interest expense
Short-term (45) (184) (834) (352)
Long-term (22) (14) (73) (67)
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Income from continuing
operations before
income taxes 2,248 (1,532) 9,420 6,942
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Income taxes
Current 25 (248) (2,482) (1,042)
Future (1,032) 300 (1,815) (2,046)
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Total income taxes
from continuing
operations (1,007) 52 (4,297) (3,088)
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Net income from
continuing operations 1,241 (1,480) 5,123 3,854
Net income (loss)
from discontinued
operations; net
of income tax 68 (43,064) (793) (44,323)
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Net income 1,309 (44,544) 4,330 (40,469)
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PER SHARE INFORMATION
Earnings per Common
Share
Basic from continuing
operations 0.09 (0.16) 0.38 0.26
Basic from
discontinued
operations 0.01 (4.12) (0.08) (4.19)
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Basic 0.10 (4.28) 0.30 (3.93)
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Diluted from
continuing
operations 0.09 (0.16) 0.38 0.26
Diluted from
discontinued
operations 0.01 (4.12) (0.08) (4.19)
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Diluted 0.10 (4.28) 0.30 (3.93)
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Average shares
outstanding for
the period
Basic 10,319,364 10,460,271 10,306,009 10,566,802
Diluted 10,385,323 10,460,271 10,370,974 10,566,802
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HIGH LINER FOODS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the thirteen and fifty-two weeks ended December 30, 2006
(with comparative figures for the thirteen and
fifty-two weeks ended December 31, 2005)
(in thousands of Canadian dollars)
Thirteen Weeks Fifty-Two Weeks
2006 2005 2006 2005
(Restated) (Restated)
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Cash provided by
(used in) operations:
Net income (loss)
from continuing
operations for
the period 1,241 (1,480) 5,123 3,854
Charges (credits)
to income not
involving cash
from operations:
Depreciation and
amortization 774 789 3,017 3,061
Loss (gain) on
disposal of assets 406 43 259 (315)
Stock compensation
expense (8) 33
Payments of employee
future benefits
in excess of expense 59 (727) (463) (1,666)
Future income taxes 1,032 (300) 1,815 2,046
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Cash flow from
operations before
changes in non-cash
working capital 3,504 (1,675) 9,784 6,980
Net change in non-cash
working capital
balances 1,717 (5,451) 10,719 (14,123)
Operating activities
of discontinued
operations 71 (694) (162) (2,175)
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5,292 (7,820) 20,341 (9,318)
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Cash provided by (used
in) financing
activities:
Change in current
bank loans (736) 7,641 (14,693) 17,487
Repayment of
long-term capital
lease obligations (104) (152) (444) (473)
Dividends paid
Preference (300) (266) (1,174) (1,036)
Common (515) (526) (2,027) (2,147)
Repurchase of
capital stock - (2,368) (73) (5,545)
Issue of equity shares - 65 192 1,025
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(1,655) 4,394 (18,219) 9,311
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Cash provided by (used
in) investing
activities:
Purchase of property,
plant and equipment
(net of investment
tax credits) (1,464) (1,265) (2,466) (3,423)
Net expenditures on
disposal of assets (1,028) 180 (1,073) (517)
Decrease in other
receivables (1,023) 858 73 948
Investing activities
of discontinued
operations 1 3,587 1,172 2,851
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(3,514) 3,360 (2,294) (141)
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Impact of foreign
exchange translation
on cash (358) 179 (168) 222
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Increase (decrease) in
cash during the period (235) 113 (340) 74
Cash, beginning of period 475 467 580 506
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Cash, end of period 240 580 240 580
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-------------------------------------------------------------------------Financial Notes
Comparative results for fiscal 2005 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.
In 2006 the Company recorded an accounting accrual for salaried vacation
pay. In prior periods, accruals for salaried vacation payable to employees
were not recorded, as in most cases and due to corporate policies, vacation
was taken in time and not paid in cash. However, since accrued vacation pay is
a liability, we have now recorded it in the financial statements. In
accordance with Section 1506 of the CICA Handbook, this change has been made
retroactively by restating the opening balances of assets, liabilities and
equity as of the beginning of fiscal 2005. The change did not affect the
Company's consolidated statements of earnings or cash flows for the 2005 and
2006 fiscal years, and does not impact earnings per share.
In 2006, the Company converted inter-company debt owed by its U.S.
subsidiary to the Canadian parent to equity. The conversion was made to
simplify the capital structure of the U.S. subsidiary and will remain as a
permanent investment in those operations. The conversion created a capital
loss and a tax recovery of $1.5 million for Canadian tax purposes. The
recovery was recorded in the foreign currency translation account on the
balance sheet as an offset against the losses from prior years that had been
accumulated in this account that relates to the U.S. subsidiary.
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) Earnings before interest, taxes, depreciation and amortization,
foreign exchange, 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.
(2) As measured in volume (pounds)%SEDAR: 00001789E
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