High Liner Foods Reports Strong First Quarter Results And Announces Second Dividend Increase For The Year
- Growth in U.S. drives first quarter performance -
High Liner Foods Incorporated, a leading North American value-added frozen seafood company, today reported financial results for the thirteen-week period ended April 2, 2011. All amounts are reported in Canadian dollars, reports www.megafishnet.com with reference to High Liner Foods.
Financial and operational highlights for the first quarter include (all comparisons are relative to the first quarter of 2010, unless otherwise noted):
- Sales increased by 7.3% to $177.1 million
- Sales volume increased by 11.8% to 57.0 million pounds
- Adjusted EBITDA(1) increased by 23.1% to $18.1 million, or 10.2% of sales
- Net income increased by 25.3% to $9.7 million, or diluted earnings per share ("EPS") of $0.63, from $7.8 million, or diluted EPS of $0.42
- Completed the integration of Viking Seafoods, Inc. on April 4, 2011.
"We are extremely pleased to report strong growth in sales, Adjusted EBITDA, and net income during the first quarter, largely driven by our U.S. operations, which recorded a 22.8% increase in domestic currency sales," said Henry Demone, president and CEO, High Liner Foods Incorporated. "We were able to achieve impressive sales growth despite the stronger Canadian dollar. We experienced substantial growth in U.S. sales with the launch of new products and expanded distribution for our brands, which helped offset price-driven competitive challenges in our Canadian retail operations. Notwithstanding the weaker Canadian retail results, we are delighted that we significantly improved profitability with double-digit growth rates in Adjusted EBITDA in both Canadian and U.S. markets."
"We are also happy to announce that, on April 4, we successfully completed the integration of Viking Seafoods into our operations with no negative impacts on our customers. This was the first full quarter of Viking Seafoods within High Liner, and we are pleased with its contribution to our results," added Mr. Demone.
More than half of the Company's operations, assets, and liabilities, are denominated in U.S. dollars or impacted by the Canadian/U.S. exchange rate. As such, foreign currency fluctuations affect the reported values of individual lines on the Company's balance sheet and income statement.
The Company adopted International Financial Reporting Standards (IFRS) for fiscal year 2011, with restatement of fiscal 2010 comparative periods. The first quarter of 2011 was High Liner's first period reporting under IFRS. While there were many changes in numbers relating to financial results and financial position, the Company's adoption of IFRS did not result in material changes to EBITDA and net income. However, the book value of shareholders' equity increased by $6.1 million to $163.2 million on our transition to IFRS on January 3, 2010.
Sales for the quarter increased to $177.1 million from $165.1 million for the same period a year ago. The 7.3% sales growth was achieved notwithstanding the $5.3 million negative impact of a stronger Canadian dollar, as sales generated by our U.S. operations were translated at a lower U.S. dollar value. Sales in domestic currency, which exclude the impact of currency translation, were $178.8 million compared with $161.5 million for the first quarter of 2010. Viking accounted for sales of $11.8 million. Total sales volume increased by 11.8% to 57.0 million pounds, with sales from the Viking Seafoods acquisition accounting for 9.4% of the increase.
Adjusted EBITDA for the quarter increased by 23.1% to $18.1 million, or 10.2% of sales, from $14.7 million, or 8.9% of sales, for the first quarter last year. In domestic currency, Adjusted EBITDA increased by 27.3% to $18.3 million. The improvement resulted from higher overall sales volumes, plant efficiencies, new product introductions, and lower seafood and other input costs.
Net income for the quarter increased by 25.3% to $9.7 million, or diluted EPS of $0.63, from $7.8 million, or diluted EPS of $0.42, for the first quarter of 2010. The retraction of 3.2 million non-voting shares during the second quarter of 2010 accounted for approximately $0.08 of the increase in diluted EPS. Adjusted net income(2), which excludes after-tax non-recurring business acquisition and integration expenses, was $9.9 million, or diluted EPS(3) of $0.64.
The Board of Directors of the Company approved a quarterly dividend of $0.10 per Common and Non-Voting Equity Share payable on June 15, 2011 to shareholders of record on June 1, 2011. This represents an 11.1% increase from the $0.09 quarterly dividend paid on March 15, 2011 and the second dividend increase for the year.
"Our strong start to 2011 is very encouraging and supports our optimism for the remainder of the year," said Mr. Demone. "We saw significant improvements in our U.S. sales and volumes during the first quarter and we expect to continue our advertising campaign, expand distribution, and launch new and innovative products. Similarly, we look forward to sustained growth in our U.S. food service operations, as Viking contributes to our results, and new products such as "Fire Roasters(TM)" continue to receive strong market response. In Canada, we have begun to address the largely price-driven challenges we faced in our retail operations through strategies that include increased promotions and the launch of new value-pack commodity products. On the other hand, our Canadian food service sales volume increased by 6.6%, which indicates improving economic conditions with more people dining out."
"Although our profitability during the first quarter improved in both the U.S. and Canada due to increased volumes and cost-reduction strategies, we expect that we will be facing some margin pressures in the near term as we are seeing increasing prices for ingredients and other inputs. We have seen price relief on two of our major species. Nevertheless, there continues to be upward pressure on many seafood commodities. We are continuing our initiatives to improve operating efficiencies and further increase sales volumes to help soften the impact of rising costs," concluded Mr. Demone.