STRONG THIRD QUARTER FOR CANADIAN SEAFOOD COMPANY CLEARWATER

Strong third quarter for Canadian Seafood company Clearwater.

The results are:

• Third quarter sales and adjusted EBITDA were $164.2 million and $30.7 million versus $163.6 million and $32.8 million in the prior year.
• Year to date sales and adjusted EBITDA were $432.4 million and $80.3 million versus $446.3 million and $80.1 million in the prior year.
• Strong year to date cash generation as cash from operations and free cash flow were $30.7 million and $12.6 million, an increase of $15.2 million and $43.2 million versus the prior year.
• On August 10, 2018, the Department of Fisheries and Oceans announced their decision to cancel the process to issue a fourth clam licence and confirmed that the remaining 25 percent of the clam quota would be issued to Clearwater for 2018 and 2019.
• On November 7, 2018 the Board of Directors approved and declared a dividend of $0.05 per share payable on December 3, 2018 to shareholders of record as of November 19, 2018.

Third Quarter and year to date results

Cash generated from operations increased $15.2 million for the first three quarters of 2018 to $30.7 million driven by working capital improvements of $10.2 million. Free cash flow increased $43.2 million to $12.6 million as capital expenditures declined following the completion of our fleet renewal program in 2017.

Adjusted EBITDA was $30.7 million for the third quarter and $80.3 million year to date, versus $32.8 million and $80.1 million in the prior year, respectively. As a percentage of sales adjusted EBITDA increased to 18.6% year to date versus 18.0% in the prior year. This reflects strong sales mix, cost efficiencies and favourable net foreign exchange.

Year to date strong prices and increased landings for FAS shrimp and favourable sales mix for clams were offset by lower available supply and competitive conditions for scallop associated with increased US supply as compared to the same period in 2017.  FAS shrimp volumes are significantly higher than the prior year reflecting the timing of landings and improved harvesting conditions.  Expanded distribution channels in China increased sales for clams, reducing inventory from peak levels.

Gross margin as a percentage of sales for the third quarter of 2018 improved to 20.3% versus 17.0% in the prior year.  Gross margin as a percentage of sales year to date improved to 18.6% versus 18.1% in the prior year.

Average foreign exchange rates positively impacted year to date sales by $7.6 million versus the same period of the prior year.