Clearwater reports first quarter 2010 results

May 14, 2010 16:20

- Clearwater reported first quarter sales of $62.7 million, EBITDA of
$6.3 million and rolling four quarter EBITDA of $37.5 million

 - Strong sales volumes, price increases and lower costs partially offset
the impact of lower exchanges rates on sales and EBITDA.

- Clearwater reduced its net debt by $10.7 million to $194.6 million
versus $205.3 million at December 31, 2009.

Clearwater Seafoods Limited Partnership ("Clearwater") reported its results for the first quarter of 2010. Clearwater reported first quarter EBITDA of $6.3 million on sales of $62.7 million and rolling four quarter EBITDA of $37.5 million. During the first quarter of 2010 strong sales volumes and selling prices as well as lower costs helped to partially offset the $8.9 million impact of a strong Canadian dollar compared to the same period in 2009, reports with reference to Clearwater.

 In the first quarter of 2009 exceptionally favourable exchange rates resulted in first quarter and rolling four quarter EBITDA of $9.4 million and $39.6 million, respectively. Strong demand for its products allowed Clearwater to implement price increases in scallops and clams in the first quarter of 2010 and management expect to implement further increases in the second quarter. Lower procurement costs in the second quarter of 2010 should continue to provide an opportunity for improved results in 2010.

Several trends have negatively impacted year over year results, including a strong Canadian dollar relative to key foreign currencies and soft market conditions for live lobster, which reduced demand throughout the fourth quarter of 2009 and the first quarter of 2010. Management and the Board are focused on reducing debt levels and leverage. During the first quarter of 2010, Clearwater reduced its net debt by $10.7 million to $194.6 million versus $205.3 million at December 31, 2009.

Clearwater's strategy for maintaining liquidity and reducing leverage includes carefully managing its working capital and capital expenditures and liquidating assets which do not achieve an adequate return on capital. Over the next several years Clearwater will continue to focus on reducing its leverage by focusing on improving earnings levels and using the positive cash flow of the business to reduce debt. This should enable Clearwater to lower interest costs over time. In December 2010 Clearwater Seafoods Income Fund has $45 million of convertible debentures that come due. These funds were invested by the Fund in Class C Units issued by Clearwater with similar terms and conditions, including maturity in December 2010. Clearwater also has approximately 1.3 billion in ISK denominated bonds (including CPI and accrued interest) that come due in September 2010 (approximately Canadian $10.5 million). Clearwater is currently investigating refinancing alternatives and is confident that the debentures and bonds will be refinanced before respective maturity dates. Looking forward to the balance of 2010, Clearwater's management believes that there is potential to build on the 2009 results with improvements in earnings and cash flows. This is of course subject to any impact of weakened economic conditions in Asia, North America and Europe and a measure of stability in exchange rates. In addition, Clearwater expects continued soft market conditions in the first half of 2010 but expects that its efforts to improve results and reduce costs will show in the second half of 2010. Clearwater also believes that overall, as a food company, the business will continue to respond well in the current recessionary period as it has in 2009.

On March 29, 2010 Clearwater announced that its Canadian sea scallops have officially joined Clearwater's growing list of Marine Stewardship Council ("MSC") certified offerings, along with the earlier certified Argentine scallops and Canadian coldwater shrimp. The MSC is the world's leading certification and ecolabelling program for sustainable seafood. This third MSC certification of a Clearwater product is a significant achievement and milestone, which further demonstrates Clearwater's commitment to its brand promise of providing sustainable seafood excellence and value proposition to its customers.

On April 23, 2010 Clearwater announced the appointment of Ian Smith as Chief Executive Officer of Clearwater. Ian will assume the office on May 17, 2010. Ian has over 21 years experience in the food and consumer products industry, including senior leadership positions at Campbell Soup Company in the United States, China and Canada and, prior to that, with Colgate-Palmolive. Ian's proven track record, his diverse range of global experience in both marketing and sales and his demonstrated ability for business development both in North America and internationally will be a tremendous asset to Clearwater. Colin MacDonald, Chairman and Chief Executive Officer, commented, "I am very pleased with the results for the first quarter of 2010 and am looking to continue to build on them."

Colin MacDonald Chairman and Chief Executive Officer
Clearwater Seafoods Limited Partnership

May 14, 2010 Financial Statements and Management's Discussion and Analysis Documents For an analysis of Clearwater and Clearwater Seafoods Income Fund's 2010 first quarter results, please see the Management's Discussion and Analysis and the financial statements. These documents can be found in the disclosure documents filed by Clearwater Seafoods Income Fund with the securities regulatory authorities available at or at its website (

Key Financial Figures ($000's except unit amounts)
-------------------------- -------------------------------------------------------------------------
Clearwater 13 weeks ended
April 3, 2010 April 4, 2009
-------------------------------------------------------------------------- Sales $62,661 $71,012
Net earnings (loss) ( 6,247) 16,600 Basic earnings (loss) per unit ($0.12) $0.32
--------------------------------------------------------------------------- EBITDA(1) $6,315 $9,356 Units outstanding at period-end
Limited Partnership Units 51,126,912 51,126,912
Fully diluted 62,323,941 62,323,941

1. Please see the Management's Discussion and Analysis for a
reconciliation of these amounts to the financial statements. The Fund does not consolidate the results of Clearwater's operations but rather accounts for the investment using the equity method. Due to the limited amount of information that this would provide on the underlying operations of Clearwater, the financial highlights of Clearwater are included above. About Clearwater Clearwater is recognized for its consistent quality, wide diversity and reliable delivery of premium seafood, including scallops, lobster, clams, coldwater shrimp, crab and groundfish. Since its founding in 1976, Clearwater has invested in science, people, technology, resource ownership and resource management to preserve and grow its seafood resource. This commitment has allowed it to remain a leader in the global seafood market.

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