CANADA: High Liner Foods net earnings up on lower financing costs

By Katy Askew | 21 February 2014

High Liner sees mixed FY

High Liner sees mixed FY

High Liner Foods has booked an increase in full-year earnings thanks to "significantly lower" financing and one-time costs.

The company, which has expanded its presence in the North American seafood market through a series of M&A deals including the 2012 acquisition of Icelandic Group's US operations, saw net income surge to C$31.3m (US$28m) in fiscal 2013, up from $2.2m in the prior year.

During the first quarter of 2013 High Liner renegotiated its loan agreements, resulting in a drop in interest payments. The bottom line was also bolstered by the lapping of one-time acquisition costs associated with the Icelandicdeal. Adjusted net income was up 8.4%, the company added.

However, adjusted EBITDA totalled $85.3m, compared with $91.7m in 2012. The company said it faced production challenges after the closure of its plant in Danvers in Massachusetts in the first quarter of 2013.

Excluding the acquisition of American Pride, which was completed last October, sales at the seafood firm dipped to $903.6, down from $942.6m in 2012. However, American Pride contributed $39.7m in sales during the final quarter of the year, meaning that total sales gained 0.5% in the full-year period.

Show the press release

High Liner Foods Reports Operating Results for the Fourth Quarter and Full-Year of 2013

  • Company reports record sales and earnings for fiscal 2013 (reported in USD); Board of Directors recommending a two-for-one stock split for shareholder approval at upcoming AGM -

LUNENBURG, NS, Feb. 19, 2014 /CNW/ - High Liner Foods Incorporated (TSX: HLF) ("High Liner Foods" or "the Company"), the leading North American value-added frozen seafood company, today reported financial results for the thirteen-week period and fiscal year ended December 28, 2013. All amounts are reported in U.S. dollars ("USD") unless otherwise noted.

Financial and operational highlights for the fourth quarter of 2013 include (all comparisons are relative to the fourth quarter of 2012, unless otherwise noted):

American Pride Seafoods was acquired on October 1, 2013 (the "American Pride Acquisition"); Sales increased by 14.9% to $250.7 million from $218.3 million (the American Pride Acquisition added $39.7 million in sales); Reported net income increased by $11.5 million to $8.8 million (or diluted earnings per share ("EPS") of $0.56), compared with a net loss of $2.7 million (diluted EPS of $(0.17)); Adjusted Net Income1 increased by $1.3 million to $11.9 million (Adjusted Diluted EPS1 of $0.76) from $10.6 million (Adjusted Diluted EPS of $0.68); and Adjusted EBITDA1 was $22.7 million, compared with $22.1 million (the American Pride Acquisition added $1.5 million in Adjusted EBITDA). Financial and operational highlights for fiscal 2013 include (all comparisons are relative to fiscal year 2012, unless otherwise noted):

Sales increased by 0.5% to $947.3 million from $942.6 million (the American Pride Acquisition added $39.7 million in sales); Reported net income increased by $29.2 million to $31.4 million (or diluted EPS of $2.01), compared with $2.2 million (diluted EPS of $0.14); Adjusted Net Income increased by $3.2 million to $41.3 million (Adjusted Diluted EPS of $2.65) from $38.1 million (Adjusted Diluted EPS of $2.46); Adjusted EBITDA was $85.3 million, compared with $91.7 million; Adjusted Standardized Free Cash Flow was $28.1 million, compared with $66.3 million; Net interest-bearing debt to Adjusted EBITDA increased to 3.9x at the end of fiscal 2013, compared to 3.4x at the end of fiscal 2012; and Integration of Icelandic USA was completed in the first quarter of 2013 and American Pride was acquired on October 1, 2013. "Following years of exceptionally strong growth, we are pleased to report that in fiscal 2013, High Liner Foods achieved the highest sales and earnings in its history," announced Mr. Demone, CEO. "The acquisition of American Pride bolstered sales in the fourth quarter and contributed to a strong finish to the year, which overall, has been a successful year, but hasn't been without its challenges. Excluding American Pride, sales in the fourth quarter from our U.S. food service business and our U.S. and Canadian retail value-added private label businesses declined on a year-over-year basis. This was consistent with what we experienced in the first three quarters of the year, reflecting continued soft sales in the U.S. restaurant industry in 2013 and the trend in the seafood marketplace overall of decreased demand for retail value-added private label seafood products. We were successful in partially offsetting the sales declines in these market segments, with strong sales to club stores in the fourth quarter and continued growth in our retail Sea Cuisine product line in the U.S."

Mr. Demone added, "Adjusted Net Income increased by $3.2 million, or 8.4%, to $41.3 million in fiscal 2013, compared to fiscal 2012. On an overall basis, our seafood costs were lower in 2013 compared to last year, and as a result of amendments made to our term loan in the first quarter of 2013, interest costs were significantly lower in fiscal 2013 than in fiscal 2012. The increase in earnings year-over-year also reflects synergies realized from completing the integration of Icelandic USA, however the full impact of these synergies was partially offset by incremental operating and distribution costs incurred in the U.S. after our plant in Danvers, Massachusetts was closed in the first quarter of 2013. Our facilities experienced production challenges as they worked to integrate products into their production lines that had been previously manufactured by the Danvers plant. Resolving these issues has been a top priority since the first quarter of 2013 and plant throughputs have been consistently improving."

"In late 2010, we made an ambitious, but important, organizational commitment to source all of our seafood from certified sustainable or responsible fisheries and aquaculture, and we set a goal to accomplish this by the end of 2013. Earlier this month, we were extremely pleased to report that by the end of 2013, we'd accomplished 99% of this goal2 and we remain committed to achieving 100% going forward," explained Mr. Demone.

Original source: High Liner Foods

Sectors: Chilled foods, Financials, Frozen, Seafood

Companies: Icelandic Group, High Liner Foods

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