LUNENBURG, NS, Nov. 4, 2015 /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 and thirty-nine weeks ended October 3, 2015. All amounts are reported in U.S. dollars ("USD") unless otherwise noted.

High Liner Foods' common shares trade on the Toronto Stock Exchange and are quoted in Canadian dollars ("CAD"), and closed yesterday at CAD$13.05.¹ The Company reports its financial results in USD and the average USD/CAD exchange rate was 1.3110 and 1.2612 for the thirteen and thirty-nine weeks ended October 3, 2015, respectively (1.0877 and 1.0936 for the thirteen and thirty-nine weeks ended September 27, 2014, respectively).

Due to the conversion of the Company's Canadian operations from CAD to USD for reporting purposes, to the extent the Canadian dollar continues to weaken against the U.S. dollar, the Company's USD-reported financial results will be unfavorably impacted. Also, investors are reminded for purposes of calculating financial ratios, including dividend payout and share price-to-earnings ratios, to take into consideration the Company's share price and dividend rate are reported in CAD and its earnings and financial position are reported in USD.

Today, the Board of Directors of the Company approved a quarterly dividend of CAD$0.12 per share on the Company's common shares payable on September 15, 2015 to holders of record on September 1, 2015.

Financial and operational highlights for the thirteen weeks ended October 3, 2015, or third quarter of 2015, include (all comparisons are relative to the third quarter of 2014, unless otherwise noted):

• Sales as reported decreased by $6.5 million, or 2.6%, to $240.1 million compared to $246.6 million;
• Sales in domestic currency increased by $7.0 million, or 2.8%, to $260.3 million compared to $253.3 million;
• Adjusted EBITDA² decreased by $1.9 million, or 10.1%, to $17.1 million compared to $19.0 million;
• Adjusted EBITDA in domestic currency decreased by $0.9 million, or 4.8%, to $18.5 million compared to $19.4 million;
• Reported net income decreased by $1.5 million, or 19.8%, to $6.1 million (diluted earnings per share ("EPS") of $0.19) compared to $7.6 million (diluted EPS of $0.24);
• Adjusted Net Income² decreased by $1.3 million, or 15.6%, to $7.1 million (Adjusted Diluted EPS² of $0.23) compared to $8.4 million (Adjusted Diluted EPS of $0.27); and
• Net interest-bearing debt to Adjusted EBITDA, calculated on a rolling twelve-month basis, improved to 3.9x at the end of the third quarter compared to 4.4x at the end of Fiscal 2014 and 4.2x at the end of the second quarter of 2015.

Financial and operational highlights for the thirty-nine weeks ended October 3, 2015, or first three quarters of 2015, include (all comparisons are relative to the first three quarters of 2014, unless otherwise noted):

• Sales as reported decreased by $8.1 million, or 1.0%, to $776.6 million compared to $784.7 million;
• Sales in domestic currency increased by $23.0 million, or 2.9%, to $828.9 million compared to $805.9 million;
• Adjusted EBITDA decreased by $2.4 million, or 3.9%, to $60.5 million compared to $62.9 million;
• Adjusted EBITDA in domestic currency decreased by $0.3 million, or 0.5%, to $64.1 million compared to $64.4 million;
• Reported net income decreased by $2.1 million, or 8.5%, to $22.6 million (diluted earnings per share ("EPS") of $0.72) compared to $24.7 million (diluted EPS of $0.79); and
• Adjusted Net Income decreased by $2.3 million, or 7.9%, to $27.4 million (Adjusted Diluted EPS of $0.87) compared to $29.7 million (Adjusted Diluted EPS of $0.95).

"The organization continues to focus on improving sales volume and in the third quarter, increased promotional activity, while negatively impacting margin, did help to improve the year-over-year sales volume trends compared to the those experienced in the second quarter," stated Keith Decker, President and CEO. "As expected, we have not yet realized the benefit of raw material cost savings, so previous raw material cost increases, along with the weaker Canadian dollar, continue to have a negative impact on financial performance in 2015 compared to last year. However, Adjusted EBITDA, on a domestic dollar basis, was relatively flat in the third quarter compared to last year, reflecting the achievement of cost savings and efficiencies in certain areas of our business. Also, free cash flow from operating activities increased by $43.5 million in the third quarter compared to the prior year and was used to pay down debt and lower our debt-to-EBITDA ratio to 3.9x."

Financial Results

The financial results for the thirteen and thirty-nine weeks ended October 3, 2015 and September 27, 2014 are summarized in the following table:

Sales volume decreased for the third quarter of 2015 by 1.7 million pounds, or 2.4%, to 67.4 million pounds, compared to 69.1 million pounds in the same period last year primarily reflecting lower volumes from our U.S. operations, partially offset by the Atlantic Trading Acquisition and higher volumes in our Canadian operations.

Sales decreased for the third quarter of 2015 by $6.5 million, or 2.6%, to $240.1 million, compared to $246.6 million for the same period in 2014. Approximately 70% of the Company's operations, including sales, are denominated in USD. The weaker Canadian dollar in the third quarter of 2015 compared to the same quarter in 2014 decreased the value of reported USD sales of the Company's CAD-denominated operations approximately $13.3 million relative to the conversion impact last year.

Sales in domestic currency increased in the third quarter of 2015 by $7.0 million, or 2.8%, to $260.3 million, compared to $253.3 million in 2014 reflecting the impact of price increases, net of increased promotional spending, and partially offset by lower overall sales volume. Significant price increases have been passed on to customers over the past year to recover increased costs, due in part to the weak Canadian dollar, and these price increases have in turn, had an adverse effect on sales volume.  Promotional spending was higher in the third quarter of 2015 compared to the same period last year to help improve sales volume trends.

Adjusted EBITDA decreased for the third quarter of 2015 by $1.9 million, or 10.1%, to $17.1 million compared to $19.0 million for the same period in 2014. The impact of converting our CAD-denominated operations and Corporate to USD, decreased the value of reported Adjusted EBITDA in USD by $1.4 million in third quarter of 2015 compared to $0.5 million in 2014, primarily due to the weaker Canadian dollar in 2015.

In domestic currency, Adjusted EBITDA decreased in the third quarter of 2015 by $0.9 million, or 4.8%, to $18.5 million compared to $19.4 million in 2014. This decrease was due to lower overall sales volume and lower gross profit margin as a percentage of sales, partially offset by lower Selling, General and Administrative ("SG&A") and distribution expenses. As a percentage of sales, Adjusted EBITDA in domestic currency was 7.1% in 2015 compared to 7.7% in 2014.

Net income decreased in the third quarter of 2015 by $1.5 million, or 19.2%, to $6.1 million ($0.19 per diluted share) compared to $7.6 million ($0.24 per diluted share) in the third quarter last year. The decrease in net income reflects lower Adjusted EBITDA as explained above and higher non-routine and one-time costs, partially offset by lower income tax expense.

Excluding the after-tax impact of certain items, including one-time acquisition, integration and other expenses, share-based compensation expense, items relating to debt refinancing and amendment activities, and certain other non-routine expenses, Adjusted Net Income was $7.1 million (Adjusted Diluted EPS of $0.23) in the third quarter of 2015 compared to $8.4 million (Adjusted Diluted EPS of $0.27) in the third quarter of 2014. 

Net cash flows provided by (used in) operating activities increased in the third quarter of 2015 by $43.5 million to $39.5 million compared to $(4.0) million in the same period last year, due to increased cash flows from changes in net non-cash working capital.

Outlook

Mr. Decker concluded, "Despite on-going challenges with demand, we will continue to focus on increasing sales volume in the remainder of 2015 to help achieve benefits related to our supply chain optimization initiatives and to improve earnings. These efforts will continue to be supported by increased promotional activities and will be further assisted to the extent we realize lower seafood raw material prices, which we expect to begin in late 2015 and into 2016."

Conference Call

The Company's Unaudited Condensed Interim Consolidated Financial Statements and MD&A as at and for the thirteen and thirty-nine weeks ended October 3, 2015 were filed concurrently on SEDAR with this news release and are also available at www.highlinerfoods.com.

The Company will host a conference call on Wednesday, November 4, 2015, at 3:30 p.m. ET (4:30 p.m. AT) during which Keith Decker, President and CEO and Paul Jewer, Executive VP & CFO will discuss the financial results for the third quarter of 2015. 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, November 11, 2015 at midnight (ET). To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 58315969.

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.

About High Liner Foods Incorporated

High Liner Foods Incorporated is the leading North American processor and marketer of value-added frozen seafood. High Liner Foods' retail branded products are sold throughout the United States, Canada and Mexico under the High Liner, Fisher Boy, Mirabel, Sea Cuisine, and effective October 7, 2014, C. Wirthy labels, and are available in most grocery and club stores. The Company also sells branded products to restaurants and institutions under the High Liner, Icelandic Seafood, FPI, Viking, Mirabel, Samband of Iceland and American Pride Seafood labels and is the 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.

This document contains forward-looking statements. Forward-looking statements can generally be identified by the use of the conditional tense, the words "may", "should", "will", believe", "plan", "expect", "goal", "remain" or "continue", or the negative of these terms or variations of them or words and expressions of similar nature. Specific forward-looking statements in this document include, but are not limited to expectations with respect to: anticipated financial performance; changes to sales volume, margins and input costs, including raw material prices; changes to American Pride's operations; achievement, and timing of achievement, of strategic goals and publicly stated financial targets, including to increase our market share, acquire and integrate other businesses and reduce our operating and supply chain costs; and our ability to develop new and innovative products that result in increased sales and market share. These statements are based on a number of factors and assumptions including, but not limited to: seafood availability, demand and pricing; product pricing, including the cost of raw materials, energy and supplies; operating costs; plant performance; the condition of the Canadian and U.S. economies; our ability to attract and retain customers; required level of bank loans and interest rates; income tax rates; and our ability to attract and retain experienced and skilled employees. The statements are not a guarantee of future performance.  By their nature, forward-looking statements involve uncertainties and risks that could result in the forecasts and targets not being achieved. Readers are cautioned not to place undue reliance on forward-looking statements, as actual results may 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 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 IFRS.  Included in this media release are certain non-IFRS financial measures as supplemental indicators of operating performance.  These non-IFRS measures are Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted Standardized Free Cash Flow.  Please refer to the Company's MD&A for the thirteen and thirty-nine weeks ended October 3, 2015 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 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.

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1} Source: TSX November 3, 2015.
² Please refer to High Liner Foods' MD&A for the thirteen and thirty-nine weeks ended October 3, 2015 for definitions of the non-IFRS financial measures used by the Company, including "Adjusted Net Income", "Adjusted Diluted EPS" and "Adjusted EBITDA".

SOURCE High Liner Foods Incorporated