- Delivers 12.8% Adjusted EBITDA
Growth in Q4; and Year over Year Adjusted EBITDA Growth for Fiscal
2020 -
LUNENBURG, NS, Feb. 24, 2021
/CNW/ - High Liner Foods Incorporated (TSX: HLF) ("High Liner
Foods" or "the Company"), a leading North American value-added
frozen seafood company, today reported financial results for the
fifty-three weeks ended January 2, 2021.
"We could not be more proud of our performance in Q4 and
throughout Fiscal 2020," said Rod
Hepponstall, President and CEO of High Liner Foods. "While
prioritizing the health and safety of our employees and supporting
our customers through the pandemic, we delivered record annual
EBITDA margin as a percentage of sales, despite the challenges
presented by COVID-19."
"With a strong balance sheet, improved cash flow and a
considerably improved leverage ratio, achieving our long term
target of 3 times, we are well equipped to invest in our business
and build upon our leadership in branded value-added seafood in
North America."
"Looking ahead, we are well positioned for further profitability
and revenue growth in 2021 and we remain steadfast in our
commitment to the health and safety of our employees and support
for customers as we collectively continue to navigate through the
pandemic."
Key financial results, reported in U.S. dollars ("USD"), for the
fourteen weeks ended January 2, 2021, or the fourth quarter of
2020, are as follows (unless otherwise noted, all comparisons are
relative to the fourth quarter of 2019):
- Gross profit as a percentage of sales increased to 21.9%
compared to 20.1% and gross profit decreased by $1.0 million, or 2.2%, to $43.5 million compared to $44.5 million;
- Adjusted EBITDA1 as a percentage of sales increased
to 10.7% compared to 8.5% and Adjusted EBITDA increased by
$2.4 million, or 12.8%, to
$21.2 million compared to
$18.8 million;
- Net income increased by $10.4
million, or 346.7%, to $7.4
million compared to a net loss of $3.0 million and diluted earnings per share
("EPS") increased to $0.21 compared
to a loss per share of $0.09; and
- Sales volume decreased by 0.1 million pounds, or 0.2%, to 59.6
million pounds compared to 59.7 million pounds and sales decreased
by $23.2 million, or 10.5%, to
$198.4 million compared to
$221.6 million, reflecting the impact
of COVID-19.
1 Please refer to High Liner Foods'
Management's Discussion and Analysis ("MD&A") for the fourteen
and fifty-three weeks ended January 2, 2021 for definitions of
the non-IFRS financial measures used by the Company, including
"Adjusted EBITDA", "Adjusted Net Income", "Adjusted Diluted EPS"
and "Net Debt".
|
Key financial results, reported in USD, for the fifty-three
weeks ended January 2, 2021, or Fiscal 2020, are as follows
(unless otherwise noted, all comparisons are relative to Fiscal
2019):
- Gross profit as a percentage of sales increased to 21.5%
compared to 19.7% and gross profit decreased by $8.0 million, or 4.3%, to $177.9 million compared to $185.9 million;
- Adjusted EBITDA1 as a percentage of sales increased
to 10.6% compared to 9.1% and Adjusted EBITDA increased by
$2.7 million, or 3.2%, to
$88.0 million compared to
$85.3 million;
- Net income increased in by $18.5
million, or 179.6%, to $28.8
million compared to $10.3
million and diluted earnings per share ("EPS") increased to
$0.83 per share compared to
$0.30 per share;
- Adjusted Net Income1 increased by $6.1 million, or 21.0%, to $35.2 million compared to $29.1 million and Adjusted Diluted
EPS1 increased to $1.02
per share compared to $0.85 per
share;
- Net Debt1 to rolling twelve-month Adjusted EBITDA
improved to 3.0x at January 2, 2021
compared to 3.3x at September 26,
2020 and 4.1x at the end of Fiscal 2019; and
- Sales volume decreased by 17.9 million pounds, or 6.9%, to
240.9 million pounds compared to 258.8 million pounds and sales
decreased by $114.7 million, or
12.2%, to $827.5 million compared to
$942.2 million.
Q4 Operational Update
High Liner Foods' retail sales volume continued to be strong due
to the increased demand related to COVID-19, partially offset by
lost business in the fourth quarter of Fiscal 2019 that continued
to impact volume year-over-year. The decline in sales volume was
also partially offset by the additional week in the fourth quarter
of Fiscal 2020, new business and new product sales. High Liner
Foods continues to satisfy strong retail demand for its products
with high case fill rates.
The Company's foodservice business was negatively impacted by
restrictions imposed during the second wave of COVID-19 across
North America. High Liner Foods
was able to mitigate this negative impact as a result of tailoring
its foodservice offering to better suit operators during the
COVID-19 environment. The Company also continues to benefit
from the diversity of its foodservice business through this period
with institutional foodservice customers, like health care
facilities, providing stable demand.
High Liner Foods' manufacturing facilities continue to operate
at planned capacity and high efficiency rates to meet demand from
its retail and foodservice customers and consumers. The Company's
overall supply chain continued to be robust with no significant
issues related to production, transportation and warehousing
activities nor the procurement of raw materials and
ingredients.
Employee safety is High Liner Foods' top priority and as the
pandemic continues to evolve, the Company will implement any
further measures designed to protect the health and safety of its
employees and prevent disruption to the Company's supply chain and
operations.
Financial Results
For the purpose of presenting the Consolidated Financial
Statements in USD, CAD-denominated assets and liabilities in the
Parent's operations are converted using the exchange rate at the
reporting date, and revenue and expenses are converted at the
average exchange rate of the month in which the transaction occurs.
As such, foreign currency fluctuations affect the reported values
of individual lines on our balance sheet and income statement. When
the USD strengthens (weakening CAD), the reported USD values of the
Parent's CAD-denominated items decrease in the Consolidated
Financial Statements, and the opposite occurs when the USD weakens
(strengthening CAD).
Investors are reminded for purposes of calculating financial
ratios, including dividend payout and share price-to-earnings
ratios, to take into consideration that the Company's share price
and dividend rate are reported in CAD and its earnings, EPS and
financial statements are reported in USD.
The financial results for the fifty-three weeks ended
January 2, 2021 and fifty-two weeks ended December 28,
2019 are summarized in the following table:
|
|
Fourteen weeks
ended
|
|
Thirteen weeks
ended
|
|
Fifty-three weeks
ended
|
|
Fifty-two weeks
ended
|
(Amounts in 000s,
except per share amounts,
unless otherwise noted)
|
|
January 2,
2021
|
|
December
28, 2019
|
|
January 2,
2021
|
|
December 28,
2019
|
Sales volume
(millions of lbs)
|
|
59.6
|
|
|
59.7
|
|
|
240.9
|
|
|
258.8
|
|
Average foreign
exchange rate (USD/CAD)
|
|
1.3045
|
|
|
1.3206
|
|
|
1.3409
|
|
|
1.3273
|
|
Sales
|
|
$
|
198,415
|
|
|
$
|
221,625
|
|
|
$
|
827,453
|
|
|
$
|
942,224
|
|
Gross
profit
|
|
$
|
43,520
|
|
|
$
|
44,502
|
|
|
$
|
177,924
|
|
|
$
|
185,860
|
|
Gross profit as a
percentage of sales
|
|
21.9
|
%
|
|
20.1
|
%
|
|
21.5
|
%
|
|
19.7
|
%
|
Adjusted
EBITDA
|
|
$
|
21,185
|
|
|
$
|
18,771
|
|
|
$
|
88,045
|
|
|
$
|
85,324
|
|
Adjusted EBITDA as
a percentage of sales
|
|
10.7
|
%
|
|
8.5
|
%
|
|
10.6
|
%
|
|
9.1
|
%
|
Net income
(loss)
|
|
$
|
7,372
|
|
|
$
|
(3,019)
|
|
|
$
|
28,802
|
|
|
$
|
10,289
|
|
Diluted
EPS
|
|
$
|
0.21
|
|
|
$
|
(0.09)
|
|
|
$
|
0.83
|
|
|
$
|
0.30
|
|
Adjusted Net
Income
|
|
$
|
10,315
|
|
|
$
|
5,675
|
|
|
$
|
35,211
|
|
|
$
|
29,137
|
|
Adjusted Diluted
EPS
|
|
$
|
0.29
|
|
|
$
|
0.17
|
|
|
$
|
1.02
|
|
|
$
|
0.85
|
|
Diluted weighted
average number of shares
outstanding
|
|
34,375
|
|
|
33,796
|
|
|
34,519
|
|
|
34,195
|
|
Sales volume for the fourth quarter of 2020 decreased by 0.1
million pounds to 59.6 million pounds compared to 59.7 million
pounds in same period in 2019. In our foodservice business, sales
volume continued to be lower due to the impact of COVID-19 on our
foodservice customers. In our retail business, sales volume
continued to be higher due to the increased demand related to
COVID-19, partially offset by lost business in the fourth quarter
of Fiscal 2019 that continued to impact volume year-over-year. The
decline in sales volume was partially offset by the additional week
in the fourth quarter of Fiscal 2020, new business and new product
sales.
Sales in the fourth quarter of 2020 decreased by $23.2 million to $198.4
million compared to $221.6
million in the same period in 2019 due to the lower sales
volumes discussed above and changes in sales mix.
Gross profit in the fourth quarter of 2020 decreased by
$1.0 million to $43.5 million compared to $44.5 million in the same period in 2019 and
gross profit as a percentage of sales increased by 180 basis points
to 21.9% compared to 20.1%. Gross profit reflects the lower sales
volume discussed above, partially offset by favorable changes in
product mix reflected in the improved gross profit as a percentage
of sales and reduced labour costs due to the estimated wage
subsidies for which the Company was eligible during the fourth
quarter.
Adjusted EBITDA in the fourth quarter of 2020 increased by
$2.4 million to $21.2 million compared to $18.8 million in the same period in 2019 and
Adjusted EBITDA as a percentage of sales increased by 220 basis
points to 10.7% compared to 8.5%. The increase in Adjusted EBITDA
reflects a decrease in net SG&A expenses, partially offset by
the decrease in gross profit discussed previously.
Reported net income (loss) in the fourth quarter of 2020
increased by $10.4 million to net
income of $7.4 million (diluted EPS
of $0.21) compared to a loss of
$3.0 million (diluted loss per share
of $0.09) in the same period in 2019.
The increase in net income reflects the increase in Adjusted EBITDA
discussed previously, a decrease in business acquisition,
integration and other expense and a decrease in finance costs
primarily due to the recognition in the fourth quarter of 2019 of a
loss on the modification of debt related to the debt refinancing
completed in October 2019. This was
partially offset by an increase in share-based compensation expense
and an increase in income tax expense.
Reported net income in the fourth quarter of 2020 included an
expense of $1.0 million related to
certain non-routine expenses classified as "business acquisition,
integration and other expense compared to an expense of
$2.6 million in the same period in
2019. Excluding the impact of these non-routine items or other
non-cash expenses, share-based compensation and the loss on
modification of debt, Adjusted Net Income in the fourth quarter of
2020 increased by $4.6 million or
80.7% to $10.3 million compared to
$5.7 million in 2019.
Correspondingly, Adjusted Diluted EPS increased by $0.12 to $0.29
compared to 0.17 in 2019.
Net cash flows provided by operating activities in the fourth
quarter of 2020 increased by $46.4
million to an inflow of $22.3
million compared to an outflow of $24.1 million in the same period in 2019
primarily reflecting favorable changes in net non-cash working
capital and higher cash flows from operations, partially offset by
higher income taxes paid. The favorable changes in net non-cash
working capital are the result of favorable changes in accounts
receivable, inventories and accounts payable and accrued
liabilities.
Net Debt decreased by $78.6
million to $268.0 million at
January 2, 2021 compared to $346.6
million at December 28, 2019, reflecting repayments of
long-term debt during Fiscal 2020, a decrease in current bank loans
and a higher cash balance as at January 2, 2021 as compared to
December 28, 2019. This was partially offset by higher lease
liabilities in 2020 as compared to 2019.
Net Debt to Adjusted EBITDA improved to 3.0x at January 2,
2021 compared to 4.1x at the end of Fiscal 2019. In the absence of
any major acquisitions or unplanned capital expenditures in 2021,
we expect this ratio will further improve by the end of Fiscal
2021.
Outlook
As the Company executes on its strategy and drives continuous
improvement and increased investment in its operations, High Liner
Foods is confident that it will be able to deliver the third
consecutive year of Adjusted EBITDA growth in 2021.
The Company anticipates that its Fiscal 2021 capital
expenditures will be approximately $20.0
million, an increase over the average capital investment in
the business over the past three years as the Company sought to
conserve cash and strengthen its financial position.
"I am excited about the opportunity in front of us and am
confident that High Liner Foods has the capabilities and capacity
to grow revenue as we continue to drive profitability. As we invest
in our business to drive growth of our higher margin, branded
value-added products, we will remain disciplined in our approach to
overall capital allocation," said Rod
Hepponstall, President and CEO of High Liner Foods. "We are
focused on investing in our plants and related technology that will
enhance efficiency and strengthen how we go to market."
The Company believes that it is well positioned to continue to
navigate the challenges presented by COVID-19 to its foodservice
business and that the Company's resilient supply chain and
compelling product offering positions High Liner Foods to
capitalize on the resurgence in foodservice as COVID-19 related
restrictions are lifted.
Furthermore, the Company remains confident in its liquidity
position as a result of its prudent cash management and early
refinancing of debt in late 2019. The Company does not have any
impending debt maturities and will continue to utilize its
$150.0 million working capital credit
facility if required. The Company currently has no borrowings on
this facility.
Dividend
Today, the Company's Board of Directors approved a quarterly
dividend of CAD$0.070 per share on
the Company's common shares, payable on March 15, 2021 to
holders of record on March 3, 2021.
Conference Call
The Company will host a conference call on Wednesday,
February 24, 2021, at 2:00 p.m.
ET (3:00 p.m. AT) during which
Rod Hepponstall, President &
Chief Executive Officer and Paul
Jewer, Executive Vice President & Chief Financial
Officer, will discuss the financial results for the fourth quarter
of 2020. To access the conference call by telephone, dial
647-427-7450 or 1-888-231-8191. Please connect approximately 10
minutes prior to the beginning of the call to ensure participation.
The conference call will be archived for replay by telephone until
Wednesday, March 3, 2021 at midnight (ET). To access the
archived conference call, dial 1-855-859-2056 and enter the
reservation number 3131226.
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.
The Company's Audited Consolidated Financial Statements and
MD&A as at and for the fifty-three weeks ended January 2, 2021 were filed concurrently on SEDAR
with this news release and are also available at
www.highlinerfoods.com.
About High Liner Foods Incorporated
High Liner Foods Incorporated is a leading North American
processor and marketer of value-added frozen seafood. High Liner
Foods' retail branded products are sold throughout the United States and Canada under the High Liner,
Fisher Boy, Mirabel, Sea Cuisine,
and Catch of the Day labels, and are available in
most grocery and club stores. The Company also sells branded
products to restaurants and institutions under the High
Liner, Mirabel, Icelandic
Seafood and FPI labels and is a major
supplier of private label value-added seafood products to North
American food retailers and foodservice distributors. High Liner
Foods is a publicly traded Canadian company, trading under the
symbol HLF on the Toronto Stock Exchange.
Forward-looking statements can generally be identified by the
use of the conditional tense, the words "may", "should", "would",
"could", "believe", "plan", "expect", "intend", "anticipate",
"estimate", "foresee", "objective", "goal", "remain" or "continue"
or the negative of these terms or variations of them or words and
expressions of similar nature. Actual results could differ
materially from the conclusion, forecast or projection stated in
such forward-looking information. As a result, we cannot guarantee
that any forward-looking statements will materialize. Assumptions,
expectations and estimates made in the preparation of
forward-looking statements and risks that could cause our actual
results to differ materially from our current expectations are
discussed in detail in the Company's materials filed with the
Canadian securities regulatory authorities from time to time,
including the Risk Factors section of our MD&A for the
fifty-three weeks ended January 2, 2021, the Risk Factors
section of our 2020 Annual Report and the Risk Factors section of
our 2020 Annual Information Form. The risks and uncertainties that
may affect the operations, performance, development and results of
High Liner Foods' business include, but are not limited to, the
following factors: compliance with food safety laws and
regulations; timely identification of and response to events that
could lead to a product recall; volatility in the CAD/USD exchange
rate; competitive developments including increases in overseas
seafood production and industry consolidation; availability and
price of seafood raw materials and finished goods and the impact of
geopolitical events (and related economic sanctions) on the same;
the impact of the U.S. Trade Representative's tariffs on certain
seafood products; costs of commodity products and other production
inputs, and the ability to pass cost increases on to customers;
successful integration of acquired operations; potential increases
in maintenance and operating costs; shifts in market demands for
seafood; performance of new products launched and existing products
in the market place; changes in laws and regulations, including
environmental, taxation and regulatory requirements; technology
changes with respect to production and other equipment and software
programs; enterprise resource planning system risk; adverse impacts
of cybersecurity attacks or breach of sensitive information;
supplier fulfillment of contractual agreements and obligations;
competitor reactions; High Liner Foods' ability to generate
adequate cash flow or to finance its future business requirements
through outside sources; credit risk associated with receivables
from customers; volatility associated with the funding status of
the Company's post-retirement pension benefits; adverse weather
conditions and natural disasters; the availability of adequate
levels of insurance; management retention and development; and the
potential impact of a pandemic outbreak of a contagious illness,
such as the 2019 coronavirus/COVID-19 pandemic, on general economic
and business conditions and therefore the Company's operations and
financial performance. Forward-looking information is based on
management's current estimates, expectations and assumptions, which
we believe are reasonable as of the current date. You should not
place undue importance on forward-looking information and should
not rely upon this information as of any other date. Except as
required under applicable securities laws, we do not undertake to
update these 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. 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
International Financial Reporting Standards ("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, Adjusted Diluted
EPS and Net Debt. Please refer to the Company's MD&A for the
fifty-three weeks ended January 2, 2021 for definitions of
non-IFRS financial measures used by the Company and reconciliation
of these non-IFRS measures to measures that are found in our
Audited Consolidated Financial Statements.
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.
SOURCE High Liner Foods Incorporated