High Liner Foods Incorporated · TSX:HLF
High Liner Foods — Q2 2016 Earnings Presentation
25 slides from High Liner Foods's earnings presentation, August 2016
Slide 1: Investor Presentation August 2016
INVESTOR PRESENTATION August 2016
Slide 2: Disclaimer
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 e
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: TSX Listings Data
COMPANY OVERVIEW TSX LISTINGS DATA TSX symbol1 HLF Recent price2 CAD$19.95 52-week range2 CAD$10.10 - $20.31 Shares outstanding ~30.9M Total market cap2 ~CAD$616M 1 Public company since the 1960’s; listed on TSX in 1971 2 Source: TSX August 12, 2016 Annual dividend3 CAD$0.52 per share 3 Effective: J
Slide 5: Vision, Mission and Values
COMPANY OVERVIEW VISIONS, MISSION AND VALUES VISION MISSION VALUES To be the leading supplier To radically simplify Customer-focused of frozen seafood in North selecting, preparing and Innovative America enjoying seafood at its Responsible best 5
Slide 6: Industry Drivers
COMPANY OVERVIEW INDUSTRY DRIVERS Long-term growth influenced by strong North American demographics Health benefits tied to eating fish An aging, health-conscious 45+ years of age population account for half of seafood consumption • Fisheries recovering around the world largely due to the sustainabi
Slide 7: High Liner Foods Corporate History
COMPANY OVERVIEW HIGH LINER FOODS CORPORATE HISTORY 1945 1999 2013 2014 1899 1986 2011 National Name 2007 2010 American Atlantic WC Smith Icelandic Sea Fisher Boy change to FPI Viking Pride Trading founded USA Products acquisition High Liner acquisition1 acquisition Seafoods Company (salt fish) crea
Slide 8: Business Overview
COMPANY OVERVIEW BUSINESS OVERVIEW Geography Branding Channel Product Form 21% 27% 34% 37% 63% 66% 73% 79% USA (incl. Mexico) HLF Brands Other Foodservice Retail Value-added Other Canada * The charts above reflect the Company’s business profile based on 2015 sales • The North American leader in valu
Slide 9: Advanced Business Model with Market Breadth
COMPANY OVERVIEW ADVANCED BUSINESS MODEL WITH MARKET BREADTH Broadest Market Market Leading Diversified Global Frozen Food Innovative Product Reach in Industry Brands Procurement Logistics Expertise Development 2X the size of largest Strong global Logistics expertise competitor in retail & procureme
Slide 10: Manufacturing Footprint
COMPANY OVERVIEW MANUFACTURING FOOTPRINT • Continuous assessment of Lunenburg, NS (Can) manufacturing capabilities vs. current Capacity p.a.: 50M lbs and future requirements to ensure low- Utilization: 65% cost and efficient operations Portsmouth, NH (U.S.) Capacity p.a.: 84M lbs • Value-added fish
Slide 11: Leader in Sustainability
COMPANY OVERVIEW LEADER IN SUSTAINABILITY • Committed to sourcing all our seafood from “certified sustainable or responsible” fisheries and aquaculture • In cooperation with NGOs, industry partners and other like-minded businesses, we have assumed a leadership role in substantial fishery and aquacul
Slide 12: 2016 Performance Highlights
2016 PERFORMANCE HIGHLIGHTS
Slide 13: Strategic Goals
2016 PERFORMANCE STRATEGIC GOALS The current year’s strategic goals set a strategic direction consistent with the prior year, which is to grow our business, operate it as efficiently as possible and ensure that we have the right talent: 1) Organic sales growth – primary focus in 2016 • Strive for co
Slide 14: YTD Highlights (Compared to YTD Q2 2015)
2016 PERFORMANCE YTD HIGHLIGHTS (COMPARED TO YTD Q2 2015) • Sales volume: • Q1 decreased by 1.3.M lbs (1.5%) - impact of shorter promotional period associated with Lent in 2016 and lower demand for traditional breaded and battered frozen seafood products • Q2 increased by 1.0M lbs (1.6%) – higher sa
Slide 15: Q2 YTD Sales
2016 PERFORMANCE Q2 YTD SALES (USD MILLIONS) $600 $536.6 $515.2 $500 $400 $300 $200 $100 $0 2015 2016 • Pounds sold decreased 0.2% to 150.5M • Sales in domestic currency were $555.4M compared to $568.7M • Weaker CAD decreased reported USD sales by $8.9M relative to the conversion impact last year •
Slide 16: Q2 YTD EBITDA
2016 PERFORMANCE Q2 YTD EBITDA (USD MILLIONS) $50 $47.1 $45 $43.4 $40 $35 $30 $25 $20 $15 $10 $5 $0 2015 2016 Standardized EBITDA* Adjusted EBITDA* • Adjusted EBITDA in domestic currency was $50.6M compared to $45.6M • Increased as a percentage of sales from 9.2% compared to 8.1% • Lower raw materia
Slide 17: Q2 YTD Diluted EPS
2016 PERFORMANCE Q2 YTD DILUTED EPS (USD) $0.90 $0.80 $0.77 $0.70 $0.65 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2015 2016 Diluted EPS Adjusted Diluted EPS* * Please refer to Pages 24 for the definition of Adjusted Diluted EPS 17
Slide 18: Dividend History
2016 PERFORMANCE DIVIDEND HISTORY $0.60 $0.51* Annual Dividend paid per Share ($CAD) $0.50 13-year CAGR (2003 to 2016): 26% $0.40 $0.30 $0.20 $0.10 $0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *Assumes Q4 dividend at same rate approved for Q3 of CAD$0.13 18
Slide 19: Net Interest-Bearing Debt to Adjusted EBITDA Ratio
2016 PERFORMANCE NET INTEREST-BEARING DEBT TO ADJUSTED EBITDA RATIO Net interest-bearing debt / rolling 12 month Adjusted EBITDA 5.0x 4.4x 4.4x 4.0x 4.0x 4.0x 3.4x 3.2x 3.0x 3.0x 2.0x 1.0x 0.0x Dec 31/11 Sep 28/13 Sep 28/14 Jan 3/15 Jan 2/16 Jul 2/16 Target Pro forma Pre-American Pre-Atlantic Icelan
Slide 20: Historical Performance Highlights
HISTORICAL PERFORMANCE HIGHLIGHTS 20
Slide 21: Fiscal 2015 Highlights
HISTORICAL PERFORMANCE FISCAL 2015 HIGHLIGHTS Strategic: • Organic growth challenges due to a number of external and internal factors • Significant progress on supply chain optimization focused on improved efficiency and cost savings at both the plant and entity level ($6M+ savings realized in 2015
Slide 22: Sales
HISTORICAL PERFORMANCE SALES $1,200 $1.0B $1,000 $800 USD millions $600 $400 $200 $- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 22
Slide 23: EBITDA
HISTORICAL PERFORMANCE EBITDA (Earnings before interest, taxes, depreciation and amortization) $100 $90 $78.2M $80 $70 2015 Highlights: • Lower sales volume and USD millions $60 lower product margins (higher $50 costs not fully recovered through prices, increased $40 promotional spending, unfavourab
Slide 24: Diluted EPS and ROE
HISTORICAL PERFORMANCE DILUTED EPS AND ROE $1.75 30% $1.50 25% Diluted Earnings per Share $1.25 $1.14 Return on Equity 20% $1.00 15% $0.75 10% $0.50 5% $0.25 $0.00 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Diluted EPS Adjusted Diluted EPS Return on Equity Diluted EPS is net income as repo
Slide 25: High Liner Foods
——za HIGH LINERFOODS