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IMPROVING RESULTS FOR HIGH LINER FOODS

IMPROVING RESULTS FOR HIGH LINER FOODS

Improving results for High Liner Foods. High Liner Foods Incorporated, a leading North American value-added frozen seafood company, has reported improving financial results for the thirteen and thirty-nine weeks ended October 2, 2021.

“Our financial performance this quarter reflects the strong underlying fundamentals of our business and the proactive action we have taken on pricing, purchasing and portfolio mix,” said Rod Hepponstall, President and CEO of High Liner Foods. “We grew net sales and made further profitability gains as we worked hard to fully satisfy demand for our products, especially our branded, valued-added seafood offerings. We were able to capitalise on the resurgence in foodservice, despite ongoing pandemic-related pressures, while sustaining retail performance versus the same period last year.”

The Company’s Board of Directors approved a quarterly dividend of CAD$0.10 per share on the Company’s common shares, payable on December 15, 2021 to holders of record on December 1, 2021.  The quarterly dividend of CAD$0.10 per share represents a 3.0 cents increase from the CAD$0.07 per share quarterly dividend paid during the third quarter of 2021 and reflects the Board’s continued confidence in the Company’s operations.

“The High Liner Foods team is doing an excellent job navigating ongoing market challenges, while continuing to drive profitability,” said Robert Pace, Chair of the Board of Directors. “The dividend increase announced today recognises this continued strong performance and cash flow position.

The 3.0 cents increase per share brings High Liner Foods closer to its target dividend payout ratio, while still allowing for investment in growth.”

Key financial results, reported in U.S. dollars (“USD”), for the thirteen weeks ended October 2, 2021, or the third quarter of 2021, are as follows (unless otherwise noted, all comparisons are relative to the third quarter of 2020):

  • Sales increased by $19.7 million, or 10.1%, to $214.3 million compared to $194.6 million and sales volume increased by 0.1 million pounds, or 0.2%, to 54.8 million pounds compared to 54.7 million pounds;
  • Gross profit as a percentage of sales increased to 22.4% compared to 20.0% and gross profit increased by $9.0 million, or 23.1%, to $47.9 million compared to $38.9 million;
  • Adjusted EBITDA[1] as a percentage of sales increased to 10.5% compared to 9.8% and Adjusted EBITDA increased by $3.3 million, or 17.3%, to $22.4 million compared to $19.1 million;
  • Two-year Compound Annual Growth Rate (“CAGR”)[2]for gross profit and Adjusted EBITDA was 6.2% and 16.8% respectively.
  • Net Debt1to rolling twelve-month Adjusted EBITDA improved to 2.8x at October 2, 2021 compared to 3.0x at the end of Fiscal 2020 and 3.3x at September 26, 2020;
  • Net income increased by $5.4 million, or 142.1%, to $9.2 million compared to $3.8 million and diluted earnings per share (“EPS”) increased to $0.26 per share compared to $0.11 per share; and
  • Adjusted Net Income1increased by $5.4 million, or 91.5%, to $11.3 million compared to $5.9 million and Adjusted Diluted EPS1 increased to $0.32 per share compared to $0.18 per share.

Overall, sales volumes remained relatively consistent year-over-year. Importantly, branded value-added volumes increased over the prior year in line with the Company’s strategy of branded value-added growth, while performance of the foodservice business continued to steadily improve.

Global supply chain challenges continued to impact operations and related sales in both the foodservice and retail businesses during the quarter. Specifically, shipping container availability and raw material supply impacted the Company’s ability to maximize volume sales during the quarter. Without the various steps taken to mitigate the impact of these supply challenges, the impact to the Company would have been more pronounced.

The Company continued to take appropriate pricing actions during the quarter to offset the additional costs incurred and manage the inflationary environment.  These pricing actions, along with the favourable brand product mix, resulted in a 10.1% increase in net sales versus a year ago.

High Liner Foods continues to take prudent and proactive measures designed to protect the health and safety of its employees and mitigate disruption to the Company’s supply chain and operations.

“We recognise that these continue to be very challenging times for our employees, customers and suppliers and their families. We are investing in the health and wellness of our team to ensure a supportive work environment that aligns with safety best practices and the evolving needs of the business,” said Mr. Hepponstall.

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