High Liner Foods Incorporated · TSX:HLF
High Liner Foods — Investor Presentation (October 2012)
32 slides from High Liner Foods's investor presentation, October 2012
Slide 1: Investor Presentation
Investor Presentation October 2012 1
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: Listings Data
Listings Data* TSX: HLF HLF.A Recent Price: $24.00 $20.00 52-Week Range $13.20 - $12.00 - $24.10 $21.01 Shares Outstanding ~13.4 million ~1.8 million Quarterly Dividend1 $0.11 $0.11 Current Yield1 1.8% 2.2% Total Market Cap $356 million * Recent prices as at Sept. 27, 2012 1 Based on the dividend ra
Slide 4: Achieving Our Vision in 2011
Achieving Our Vision in 2011 Financial Highlights: • Strong sales, adjusted EBITDA, and adjusted net income • Creating value for shareholders Operational Highlights: • Completed the integration of Viking in April • Completed the acquisition of Icelandic in December • Production efficiencies Recognit
Slide 5: Our Business Model
Our Business Model ee Broadest market reach in industry Market leading brands Diversified global procurement Frozen food logistics expertise Innovative product development
Slide 6: The Icelandic USA Acquisition
The Icelandic USA Acquisition The Transaction: • Purchase price of US$232.7(1) million in cash • Icelandic USA LTM Sales $268 million; pro forma Adjusted EBITDA $29 million (2) • Expected to be immediately accretive to adjusted earnings(3) Synergies: • Ongoing annual synergies of $16-18 million • Pl
Slide 7: Platforms for Future Growth
Platforms for Future Growth Icelandic USA: • Leading provider of value-added seafood products and high-quality Icelandic fillets to U.S. food service and retail customers • Strong brand portfolio – unparalleled industry reputation for quality High-quality Assets: • 150,000 sq-ft plant in Newport New
Slide 8: Highly Complementary Business
Highly Complementary Business • Opportunity to create efficient, low-cost N.A. manufacturing footprint • Combined 6 N.A. production facilities to 4 NORTH AMERICA CHINA Lunenburg, NS (Can) Burin, NL (Can) Dalian, China Malden, MA (US) Danvers, MA (US) Portsmouth, NH (US) High Liner facility Newport N
Slide 9: Synergies from Combined Operations
Synergies from Combined Operations The Combined Operations: • Creates leading North American value-added seafood supplier • Leader in NA food service, Canadian branded retail, and NA retail private label • Strong number 2 in US retail by volume(1) • Shift in revenue mix creates strong U.S. growth pl
Slide 10: Financial Review
Financial Review 10
Slide 11: Fiscal 2011 in Review
Fiscal 2011 in Review Another year of strong performance Success attributed to: Year was •New products marked by strong Canadian dollar, •Integration of Viking significant •Production increase in stock efficiencies value, late-year acquisition 11
Slide 12: Sales in C$000s
Sales in C$000s $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $‐ 2006 2007 2008 2009 2010 2011 2011 pf Pro forma HLF + Icelandic Acq. for 2011 2011 saw a decrease in Cdn $ sales due to FX Domestic $ Sales reported Increase to CDN $ from Domestic $ due to
Slide 13: EBITDA in C$000s
EBITDA in C$000s $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2006 2007 2008 2009 2010* 2011* 2011 pf Standardized EBITDA Adjusted EBITDA (1) : Standardized EBITDA excluding business integration, acquisition, non‐ operating items and non‐cash inventory
Slide 14: Diluted EPS & Return on Equity (ROE)
Diluted EPS & Return on Equity (ROE) $2.00 20% $1.80 18% $1.60 16% $1.40 14% $1.20 12% $1.00 10% $0.80 8% $0.60 6% $0.40 4% $0.20 2% $0.00 0% 2006*" 2007*" 2008*" 2009* 2010** 2011*** ROE Diluted EPS is Net income divided by the average diluted number of shares Adjusted EPS (1) based on Net Income e
Slide 15: Financial Review 2011 Performance against Targets
Financial Review 2011 Performance against Targets Actual Target ROE 18.1% 14.0% ROAM 15.1% 15.0% EBIT as % sales 6.9% 6.0% PF Debt to Less than 4.4x EBITDA 3.00x ROE, ROAM and EBIT based on adjusted amounts, for acquisition costs, write downs and 15 stock‐compensation expenses
Slide 16: Synergies Decreasing Leverage
Synergies Decreasing Leverage Debt/EBITDA Excess cash flow = as much as Icelandic EBITDA $50mm annually Contribution (1) Near term synergies 6.7x $12.1M Ongoing synergies ~ $16M – 18M 4.4x 3.7x 3.6x 3.0x Dec. 31 2011 Pro Forma Including Near Including Target Reported Icelandic Term Synergies $17mm R
Slide 17: Dividend History
Dividend History Annual Common/Non-Voting* Dividends per Share CAGR: 26.7% * Common shares up to September 15, 2007; Common and Non‐Voting shares from December 15, 2007 to present 17
Slide 18: Financial Review – YTD 2012 Sales
Financial Review – YTD 2012 US Sales Total Sales as Reported Pro forma (in $ millions) (in US$ millions) 600 600 505.3 506.7 500 500 400 400 334.8 330.4 334.8 346.3 300 300 200 53.4% 200 3.4% 100 100 0 0 H1 2011 H1 2012 H1 2011 H1 2012 Domestic $ Canadian $ 18
Slide 19: Financial Review – YTD 2012 Adjusted EBITDA
Financial Review – YTD 2012 USAdjusted US AdjustedEBITDA EBITDA Total Adjusted EBITDA ProForma Pro Forma (in $ millions) (inUS$ (in US$millions) millions) 60 60 50 48.1 50 40 40 34.3 30 29.2 30 30.1 20 64.6% 20 10 10 14.0% 0 0 H1 2011 H1 2012 H1 2011 H1 2012 19
Slide 20: EBITDA in C$000s
EBITDA in C$000s $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 H1 2011 H1 2012 Standardized EBITDA Adjusted EBITDA (1) : Standardized EBITDA excluding business acquisition, integration, other expenses (income), impairment of property, plant & equipment, and loss (gain) on disposal of assets Adj
Slide 21: Diluted EPS
Diluted EPS $1.40 1.27 $1.20 1.11 1.00 0.97 $1.00 0.94 $0.80 $0.60 $0.40 0.18 $0.20 $0.00 H1 2011 H1 2012 Diluted EPS is Net income divided by the average diluted number of shares Adjusted EPS (1) based on Net Income excluding business acquisition, integration, and other costs, impairment of propert
Slide 22: Financial Review – YTD 2012 Performance against Targets
Financial Review – YTD 2012 Performance against Targets Actual Target ROE 18.4% 18.0% ROAM 15.1% 15.0% EBIT as % sales 7.7% 8.0% Debt to EBITDA 4.1x 3.0x ROE, ROAM and Debt to EBITDA based on adjusted amounts, for acquisition costs, write‐downs and 22 stock‐compensation expenses ‐ these measures are
Slide 23: YTD 2012 – A Strong First Half
YTD 2012 – A Strong First Half • Ahead of schedule in integration of Icelandic USA • Expecting benefit from synergies a few months earlier • Now expecting at least half of $16-$18 million in ongoing annual synergies to be achieved in 2012 • Plant consolidation announced • Strong sales, EBITDA and EP
Slide 24: Outlook & Growth Strategy
Outlook & Growth Strategy 24
Slide 25: Our Vision
Our Vision ee The North American leader in value-added seafood
Slide 26: Industry Drivers
Industry Drivers Long-term growth influenced by strong demographics: North America • 45+ years of age account has an aging, for half of seafood health-conscious consumption population • Health benefits tied to eating fish 26
Slide 27: Industry Forces
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 2012 27
Slide 28: Areas of Strategic Focus #1: Profitable Growth
Areas of Strategic Focus #1: PROFITABLE GROWTH Achieve $150 million in EBITDA by 2015 • Integration of Icelandic • Synergies • Cost savings • Organic Growth • Leverage scale • Product innovation • Acquisitions •Expand product portfolio •Strengthen market leadership 28
Slide 29: Areas of Strategic Focus #2: Sustainability
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
Slide 30: Areas of Strategic Focus #3: System Improvements
Areas of Strategic Focus #3: SYSTEM IMPROVEMENTS • Update & optimize our Enterprise Resource Planning System • Global Specification Management System • Improve tracking across our supply chain 30
Slide 31: Investment Highlights
Investment Highlights • Track record of profitable growth • Successful acquisition experience in a consolidating industry • Largest value-added supplier in NA • Significant branded presence • Leader – No 1 supplier to many customers – In product development – In Seafood sustainability • Food is a st
Slide 32: The Business of High Liner
The Business of High Liner Canada, USA & Mexico 32
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