High Liner Foods

Report
Intrafish Seafood
Investment Forum
May 22, 2013 New York
Kelly Nelson, EVP & CFO
Heather Keeler-Hurshman
Director of Investor Relations
1
Disclaimer
Certain statements made in this presentation are
forward-looking and are subject to important risks,
uncertainties and assumptions concerning future
conditions that may ultimately prove to be inaccurate and
may differ materially from actual future events or results.
Actual results or events may differ materially from those
predicted. Certain material factors or assumptions were
applied in drawing the conclusions as reflected in the
forward-looking information.
Additional information
about these material factors or assumptions is contained
in High Liner's annual MD&A and is available on SEDAR
(www.sedar.com).
2
Presentation Currencies
• HLF is traded on the Toronto Stock Exchange and
references to stock price and dividends are in
Canadian dollars.
• Effective with the company’s 2012 annual report
all financial statements are presented in USD.
– 2010, 2011 and 2012 are fully converted and
restated under IFRS rules to USD
– Previous years Canadian GAAP statements are
converted from Canadian dollars at the annual
period end & average USD/CAD exchange rates
and remain under Canadian GAAP.
3
Listings Data - CAD*
TSX:
Recent Price:
52-Week Range
$31.20
$18.82 - $39.00
Shares Outstanding
~15.1million
Quarterly Dividend1
$0.18
Current Yield1
2.3%
Total Market Cap
* Recent prices as at May 17, 2013
1
4
HLF
Based on the dividend rate effective June 1, 2013
$473 million
High Liner Foods Corporate History
(1)
(1) Icelandic Brand under license
5
Business Profile
Product Form
Branded
23%
36%
Value
Added
Other
Brands
Other
64%
77%
6
Business Profile
Geography
Retail / Food Service
35%
35%
Food
Service
Retail
USA *
Canada
65%
7
65%
Our Business Model
Broadest market reach in
industry
Market leading brands
Diversified global procurement
Frozen food logistics expertise
Innovative product development
8
Foodservice Overview
• Leading Foodservice Brands
– FPI, Icelandic, Maribel and Viking
• Strengths
–
–
–
–
Leading Innovation
Dominant Supplier Position
Diverse Product Line
Cover All segments – Chain Restaurants,
Food Services Distributors, Healthcare, and
Education
– Private Label
• Key Customers
– Sysco, US Foods, GFS, Reinhart, PFG
– Arby’s, Carl’s JR, Nestle, Omaha Steaks,
Schwann’s, MacDonald’s
9
Retail Overview
• Leading Brands
– Sea Cuisine, Fisher Boy, and High Liner
• Strengths
–
–
–
–
–
Sell to all retailers
Sell to every area of store
Recognized brands
Leading Innovation
Private Label
• Customers
– Grocery – Wal*mart, Target, Whole Foods,
Safeway, Kroger , Sobeys, Loblaw
– Club - Costco, Sam’s, BJ’s
10
Rationalized Production Capacity
•Reduced from 6 plants to 4
•Low cost manufacturing
footprint
11
Achieving Our Vision
Financial Highlights:
• Strong sales, adjusted EBITDA, and adjusted net income
• Creating value for shareholders – increased share price /dividends
Operational Highlights:
• Completed the acquisition of Icelandic USA in December 2011
• Completed integration of Icelandic USA in November 2012
• Closed two plants Dec 12/ Jan 13
Recognition for New Products:
• Voted Best New Product by Canadian Living (4 years in a row)
• Frozen Fish / Prepared Meal Category
• Pan Sear, Market Cuts, Flame Savours
12
Financial Review
13
Sales in US$000s
$943 mm
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$2006
14
2007
2008
2009
2010
2011
2012
EBITDA in US$000s
$91.7 mm
$110,000
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Standardized EBITDA
*Proforma includes additional $9 mm of synergies
Adjusted EBITDA (1) : Standardized EBITDA, excluding impairment of PPE, business acquisition and integration expenses, gains or
losses on disposal of assets, and the increase in cost of goods sold relating to inventory acquired from business acquisitions, above
its book value
Adjusted EBITDA (2) : Adjusted EBITDA (1) excluding stock-based compensation expense
15
Dividend History (Cdn$)
Annual Equity Dividends per Share
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$-
Current run rate $0.72
1/4
year
2003
16
2005
2007
2009
2011
2013 P
YTD 2012 – Strong Momentum
• Integration of Icelandic USA completed ahead of
schedule
• Now expecting annual ongoing synergies of at least
$18 million, the high end of original estimate of $16-$18
million
• Plant consolidation completed
• Strong sales, Adjusted EBITDA and
Adjusted EPS growth
• Canadian Retail operations turnaround continues
• 9.9% sales volume growth
• New Flame Savours product contributed to sales growth
17
Q1 2013Q1
- A2013
Challenging
Quarter Quarter
- A Challenging
Sales as Reported (in US$ millions)
• Decline in selling prices for commodity products
350
300
287.6private label sales
• Weak
250
• Soft U.S. restaurant sales and early Lent
200
150
100
50
0
275.2
• Production and distribution challenges with move
to Newport News
• On track for annual projected synergies
• Reduced
interest expense
and leverage ratio
Q1 2012
Q1 2013
18
Financial
– Challenging
Q1 2013
Q1Review
2013 - A
Quarter
EBITDA (in US$ millions)
$35 • Decline in selling prices for commodity products
$30
$25
• Weak private label sales
$20
• Soft U.S. restaurant sales and early Lent
$15
• Production and distribution challenges with move
$10
$5
$0
to Newport News
• On track for annual projected synergies
Q1 2012
Q1 2013
• Reduced interest expense and leverage ratio
Standardized EBITDA
Adjusted EBITDA : same definition as (1) except including non-cash stock compensation expense
(1) Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, excluding
impairment of property, plant and equipment, business acquisition and integration expenses, stock
compensation expense, gains or losses on disposal of assets, and the increase in cost of goods sold
relating to inventory acquired from business acquisitions, above its book value, as part of the fair value
19
requirements of purchase price accounting.
Financial
– Challenging
Q1 2013
Q1Review
2013 - A
Quarter
Diluted EPS
• Decline in selling prices for commodity products
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
• Weak private label sales
• Soft U.S. restaurant sales and early Lent
• Production and distribution challenges with move
to Newport News
• On
track for annual
projected synergies
Q1 2012
Q1 2013
• Reduced interest expense and leverage ratio
Diluted EPS is Net income divided by the average diluted number of shares
EPS, based on Adjusted Net Income(1) except including non-cash stock compensation expense
EPS, based on Adjusted Net Income, see note (1)
(1) Adjusted Net Income is net income excluding the after-tax impairment of property, plant and equipment, business acquisition and integration expenses,
stock compensation expense, the increase in cost of goods sold relating to inventory acquired from business acquisitions over its book value, non-cash
expense from revaluing an embedded derivative associated with the long-term debt LIBOR floor, marking to market an interest rate swap related to the 20
embedded derivative, the write-off of deferred financing charges on the re-pricing of the Term Loan and withholding tax related inter-company dividends.
Q1 2013
Challenging
QuarterQuarter
Q1- A
2013
- A Challenging
• Decline •in Decline
selling prices
for commodity
products products
in selling
prices for commodity
• Weak private
label
saleslabel sales
• Weak
private
• Soft U.S.• restaurant
sales and sales
early Lent
Soft U.S. restaurant
and early Lent
• Production
and distribution
challengeschallenges
with movewith move
• Production
and distribution
to NewporttoNews
Newport News
• On track• for
projected
synergiessynergies
On annual
track for
annual projected
• Reduced
interest expense
leverage
• Reduced
interest and
expense
and ratio
leverage ratio
21
2012 – Deleveraging
$40-50 mm free cash flow
8.0x
7.0x
6.7x
Dec 31/11
6.0x
5.0x
4.0x
Dec 31/11Proforma
Icelandic
4.4x
3.4x
Dec 31/12
3.7x
3.0x
2.0x
3.0x
Mar 31/13
PF Full Synergies
1.0x
Target <
0.0x
Debt to EBITDA
22
PF = Proforma for $9mm of Icelandic synergies + $2mm for Burin plant closure
2013 – Debt Amendments
Term Loan ($233 mm)
• Reduced rates 5.5% + 1.50 LIBOR floor to 3.5% + 1.25
LIBOR floor
• Less restrictive financial covenants
• More room for dividends
• More flexible for acquisitions
• ABL ($180 mm Working capital facility)
• Improved pricing grid
• More flexible for acquisitions
• Cost savings
• 2013 $4.7 cash, $6.2 total ($30 cents per share)
23
Outlook &
Growth Strategy
24
Our Vision
25
Industry Drivers
Long-term growth influenced by strong
North American demographics
An aging,
health-conscious
population
45+ years of age
account for half of
seafood consumption
Health benefits tied to
eating fish
26
Industry Forces
• Fisheries recovering around the world
• Growth from aquaculture species
• Demand growth still greater than supply
• Short-term cost declines but long-term
fundamentals signal increasing costs
• Seafood cost increasing less than
other proteins
• Positive outlook for 2013
27
Areas of Strategic Focus
#1: PROFITABLE GROWTH
• Icelandic Synergies
Supply Chain Cost savings
(Goal #3)
• Organic Growth
• Leverage scale
• Product innovation
• Acquisitions
• Expand product portfolio
• Strengthen market leadership
28
Achieve $150 million
in EBITDA
by 2015 (1)
(1) Run rate
Areas of Strategic Focus
#2: SUSTAINABILITY
Source all seafood from certifiable or
sustainable or responsible fisheries and
aquaculture farms by the end of 2013
29
Investment Rationale
30
Investor
Presentation
Questions?
31

similar documents