High Liner Foods Incorporated · TSX:HLF
High Liner Foods — Investor Presentation (June 2017)
30 slides from High Liner Foods's investor presentation, June 2017
Slide 1: High Liner Foods Investor Presentation
HIGH LINER FOODS INVESTOR PRESENTATION June 2017 Keith Decker, President & CEO Paul Jewer, Executive VP & CFO Heather Keeler-Hurshman, VP IR
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 even
Slide 3: Presentation Notes
PRESENTATION NOTES Presentation Currency High Liner Foods (“the Company”) began reporting its financial statements in USD in 2012, however its common shares trade on the TSX and are quoted in CAD and therefore any references in this presentation to share price, dividends and market cap are in CAD. I
Slide 4: High Liner Foods
HIGH LINER FOODS Canadian public company since the 1960’s, TSX-listed in 1971 Ticker symbol Current price(1) CAD$19.54 Shares outstanding(1)(2) ~33.3 million Market capitalization(1) ~CAD$651 million 52-week range(1) CAD$17.01 - $27.62 Annual dividend(3) CAD$0.56 per share Current yield ~2.9% (1) So
Slide 5: Company Overview & Strategy
COMPANY OVERVIEW & STRATEGY
Slide 6: Tasting Seafood for a Better Life
TASTING SEAFOOD FORA BETTER LIFE With the customer at the center of all we do, we are on a mission to drive seafood consumption by providing innovative solutions to a world looking for healthy, easy to prepare, delicious seafood options.
Slide 7: Investment Thesis: Why Seafood?
INVESTMENT THESIS Why Seafood? • Healthy protein – for humans and the planet • North Americans, on average, consume substantially less seafood than suggested in recommended dietary guidelines • Long-term growth influenced by North America’s demographics – a growing and aging population, with an incr
Slide 8: Investment Thesis: Why High Liner Foods?
INVESTMENT THESIS Why High Liner Foods? • North American leader in value-added frozen seafood, with 115+ years of seafood expertise • Broad market reach and market-leading brands • Customer-focused, innovative and responsible • Global seafood procurement and frozen food logistics expertise • Consoli
Slide 9: Business Overview
BUSINESS OVERVIEW Focused on the frozen seafood market in North America Geography Branding Channel Product Form 22% 41% 50% 50% 50% 50% 59% 78% US (incl. Mexico) Canada HLF Brands Other Foodservice Retail Value-added Other Based on 2016 sales (in USD) and shown on a proforma basis to include the imp
Slide 10: Seafood Is Complex
SEAFOOD IS COMPLEX We simplify the seafood category for our customers • Global supply chain with 100+ commercial species • People believe preparing seafood is difficult and time consuming • By leveraging the full extent of our seafood expertise, from procurement through to preparation, our customers
Slide 11: Organic Growth Strategy
ORGANIC GROWTH STRATEGY Customer-focused, innovative seafood solutions • Product development efforts are focused on what today’s seafood consumer wants when selecting seafood products and appealing to Millennials in a more meaningful way • Innovation must be a core competency and an ingrained part o
Slide 12: Organic Growth Strategy: Species Diversification
ORGANIC GROWTH STRATEGY Focused on species diversification to aquaculture species experiencing stronger growth rates in North America 7% 7% 24% Alaska Pollock Cod 8% Shrimp Other Salmon Haddock 16% Tilapia 21% 17% Based on 2016 sales (in Lbs) and shown on a proforma basis to include the impact of ac
Slide 13: Organic Growth Strategy: Commercial Excellence
ORGANIC GROWTH STRATEGY Commercial excellence also a key factor for organic sales growth • Working more closely with customers to gain better insight into how to leverage the full extent of our seafood expertise to help our customers win in seafood • Demonstrations by our highly trained chefs that f
Slide 14: Consolidated Operations
CONSOLIDATED OPERATIONS Three value-added seafood manufacturing facilities in North America • New Bedford facility closed in Q3 2016 marking the last significant initiative planned as part of a multi-year supply chain optimization project Lunenburg, NS (Can) which removed $20+ million in annual cost
Slide 15: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY The Company’s first CSR report will be released in 2017 • Committed to sourcing all our seafood from “certified sustainable or responsible” fisheries and aquaculture • Recognized as a global leader in driving best practice improvements in wild fisheries and aquacultur
Slide 16: Role of Acquisitions
ROLE OF ACQUISITIONS Acquisition of Rubicon supports our organic growth strategy through expediting species diversification • Acquisition of Rubicon Resources, LLC completed on May 30, 2017 for $107 million • Primary business is the import and distribution of sustainably sourced frozen shrimp produc
Slide 17: Q1 2017 Financial Overview
Q1 2017 FINANCIAL OVERVIEW “ a “4 HIGH LINER FOODS
Slide 18: Q1 2017 Financial Results
Q1 2017 FINANCIAL RESULTS • Late Lent shifted sales benefit associated with Lenten period to April 2017 compared to full benefit being realized in Q1 2016 • Sales volume lower than expected due to production challenges that prevented manufacturing plants from fully serving surge demand in March rela
Slide 19: Sales
SALES Sales in LBS and USD 350 $291.4 300 $291.4 $275.7 $275.7 250 200 Millions 150 100 88.2 83.2 50 0 2016 2017 Sales revenue (USD) Sales pounds • Sales volume decreased by 5.0 million lbs, or 5.7%, to 83.2 million lbs • Lower sales volume in US retail and foodservice businesses reflects: continued
Slide 20: EBITDA
EBITDA Earnings before interest, taxes, depreciation and amortization $35 25% $30 $30.3 20% $25 $22.3 Millions USD 15% As a % of Sales $20 $15 10.4% 10% $10 8.1% 5% $5 $0 0% 2016 2017 Axis Title Standardized EBITDA Adjusted EBITDA Adjusted EBITDA as a % of sales • Lower sales volume, product mix cha
Slide 21: Debt Leverage Ratio
DEBT LEVERAGE RATIO Net Interest-Bearing Debt to Adjusted EBITDA Ratio 5.0x 4.4x 4.4x 4.0x 4.0x 4.0x 3.7x 3.2x 3.1x 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 Dec 31/16 Apr 1/17 Target Pro forma Pre-American Pre-Atlantic End of End of End of End of Icelandic Pride Tradi
Slide 22: Dividend History
DIVIDEND HISTORY $0.60 $0.560 $0.55 $0.520 14-year CAGR: 25% Annual Dividend Paid per Share ($CAD) $0.50 $0.45 $0.465 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* * Annual dividends to be paid in 2017 estimated at C
Slide 23: 2017 Outlook
2017 OUTLOOK • Trend of lower demand for traditional breaded and battered products is expected to continue in 2017, but optimistic that sales from new and improved product offerings can offset this decline by the end of 2017 • This improvement in sales trend and a return to typical plant production
Slide 24: Appendix
APPENDIX
Slide 25: High Liner Foods
HIGH LINER FOODS More than 115 years of seafood expertise • Six acquisitions made in the last ten years • North America’s frozen seafood market continues to be very fragmented
Slide 26: Year Sales History
10 Year Sales History Sales in LBS and USD 1,200 1,000 $1,001.5 $956.0 800 Millions 600 400 284.4 277.3 200 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Sales revenue (USD) Sales pounds * New Bedford scallop business sold September 7, 2016. 26
Slide 27: Year EBITDA History
10 Year EBITDA History Earnings before interest, taxes, depreciation and amortization $100 12.0% $90 $82.4 $78.2 10.0% $80 $70 8.6% 8.0% 7.8% As a % of Sales $60 USD Millions $50 6.0% $40 4.0% $30 $20 2.0% $10 $- 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Standard EBITDA Adjusted EBITDA
Slide 28: Diluted EPS and ROE History
10 Year Diluted EPS and ROE History $1.75 30% $1.50 25% Diluted Earnings Per Share $1.31 $1.25 $1.14 20% Return on Equity $1.00 17.7% 17.2% 15% $0.75 10% $0.50 5% $0.25 $0.00 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Diluted EPS Adjusted Diluted EPS Return on Equity Diluted EPS is net inc
Slide 29: Thank You!
THANK YOU! ~<a HIGH LINER FOODS
Slide 30: Great Tasting Seafood for a Better Life
GREAT TASTING SEAFOOD FOR A BETTER LIFE