High Liner Foods December 2009 Investor Presentation


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Investor presentation for High Liner Foods. Used during retail and institutional investor meetings in Toronto on December 2 & 3, 2009.

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High Liner Foods December 2009 Investor Presentation

  1. 1. adding value to seafood INVESTOR PRESENTATION December 2009
  2. 2. 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 events may differ materially from those predicted.  
  3. 3. Listings Data 1 1 as at October 30, 2009 2 based on dividend rate effective December 1, 2009 4.3% 4.0% Current Yield 2 $0.075 $0.075 Quarterly Dividend 2 ~5.1 million ~13.3 million Shares Outstanding $4.00 to $7.25 $5.51 to $8.25 52-Week Range $7.00 $7.59 Recent Price: HLF.A HLF TSX: $137 million Total Market Cap:
  4. 4. About High Liner Foods <ul><li>Retail & food service markets </li></ul><ul><li>Branded & private label products </li></ul>One of North America’s largest value-added frozen seafood companies A respected name in seafood for more than 100 years
  5. 5. Our Vision <ul><ul><li>High Liner will be the leader in value-added frozen seafood in North America  </li></ul></ul>
  6. 6. 2008: A Year of Achievement <ul><li>Top strategic goal for fiscal 2008: </li></ul><ul><li>Successfully integrate the FPI business into High Liner Foods </li></ul>Significant growth in sales and earnings Achieved synergies of $12M Simplified capital structure
  7. 7. Leading Market Positions 2X the size of largest competitor in both retail & food service channels One of the largest food service suppliers of value-added seafood Largest grocery-chain supplier of private label processed seafood
  8. 8. Leading North American Supplier Our size strengthens our ability to negotiate price increases to offset higher costs <ul><li>Strong customer relationships with every major grocery retailer & food service company </li></ul><ul><li>Ability to act as category manager </li></ul><ul><li>Distribution to every major customer on a regular basis </li></ul>
  9. 9. Core Competencies Competitive advantage procuring raw materials and finished goods <ul><li>Ensures quality, certainty of supply and competitive costs </li></ul><ul><li>Significant strength in groundfish and shellfish </li></ul>Diversified worldwide procurement
  10. 10. Core Competencies <ul><li>Expertise in frozen food logistics </li></ul><ul><li>Excellent case fill rates and on-time/order fill precision </li></ul><ul><li>Ability to act as a full category manager </li></ul><ul><li>Opportunities for lower cost of shipping </li></ul><ul><li>Track record of product innovation </li></ul><ul><li>Responsive to demands of customers, consumers and food service operators </li></ul><ul><li>New species – new recipes – creative packaging </li></ul>
  11. 11. Financial Review
  12. 12. Fiscal Year 2008 <ul><li>Sales ($ millions) </li></ul>+ 124% $275.4 $616.0
  13. 13. Fiscal Year 2008 Adjusted EBITDA, Net Income excluding one-time integration costs & non-operating items ($ millions) Fully Diluted EPS excluding one-time integration costs & non-operating items ($) $37.9 $18.3 $0.61 $1.00
  14. 14. Year-to-Date* Fiscal 2009 + 9.1% Cdn $ 1.2% Domestic $ FX Canada USA in USD Sales ($ millions) $438.6 $478.4 * For the 39 weeks ended Oct. 3, 2009
  15. 15. Year-to-Date* Fiscal 2009 Net income and EPS a lso exclude non-operating items $0.79 $0.90 $32.5 $16.5 Adjusted EBITDA, Net Income excluding one-time integration costs & non-operating items ($ millions) Fully Diluted EPS excluding one-time integration costs & non-operating items ($) * For the 39 weeks ended Oct. 3, 2009
  16. 16. Performance Against Targets Rolling 4 quarters ended October 3, 2009 3.00x 1.9x Debt to EBITDA 6.0% 5.1% EBIT as % sales 15.0% 14.3% ROAM 10.0% 13.9% ROE Target Actual
  17. 17. Capital Structure <ul><li>Impacted by currency translation of US$ debt and U.S. operations to Canadian $ </li></ul><ul><li>Higher seafood costs increased the value of working capital </li></ul>32.8% 39.5% October 3, 2009 January 3, 2009 Net debt as a % of total capitalization
  18. 18. Increased Dividends 4 th 50 % 30 ¢ per common & non-voting equity share (annualized) dividend increase in last 6 quarters increase in annualized rate since Q2 of last year
  19. 19. Outlook & Growth Strategy
  20. 20. Our Outlook <ul><li>Consumer staple </li></ul><ul><li>Diversified product offering </li></ul><ul><ul><li>Value-priced & premium products </li></ul></ul><ul><li>Solid business model </li></ul><ul><li>Strong balance sheet </li></ul>High Liner is a recession resistant business
  21. 21. Our Outlook <ul><li>Leveling off of some seafood & other input costs </li></ul><ul><li>Continued volatility in currency </li></ul><ul><li>Remain diligent in controlling costs </li></ul><ul><li>Leverage strengths to increase profits </li></ul><ul><li>Ensure our products maintain the highest standards of food safety </li></ul>
  22. 22. <ul><li>Retail (eat at home) </li></ul><ul><li>More Canadian and U.S. consumers eating at home in light of the economy </li></ul><ul><li>Benefiting from our strong value-priced offerings </li></ul><ul><ul><li>Fisher Boy ® and private label </li></ul></ul>
  23. 23. <ul><li>Food Service (away from home) </li></ul><ul><li>Increased strength in Canada and the U.S. following the FPI acquisition </li></ul><ul><li>Education and health care segments are recession resistant </li></ul>
  24. 24. Our Outlook Growth influenced by strong demographics: North America has an aging, health-conscious population <ul><li>45+ years of age account for half of seafood consumption </li></ul><ul><li>Health benefits tied to eating fish </li></ul><ul><li>Opportunity to drive greater consumption within 35-44 age group </li></ul>
  25. 25. <ul><ul><li>Total Market* </li></ul></ul>Our Outlook % of total population % share of total seafood servings Source: NPD Group CREST research, August 2007 * Total Canada
  26. 26. Growth Strategy <ul><ul><li>Organic growth </li></ul></ul><ul><ul><li>Develop new products </li></ul></ul><ul><ul><ul><li>Innovative value added products </li></ul></ul></ul><ul><ul><ul><li>High-quality, innovatively packaged raw products </li></ul></ul></ul><ul><ul><li>Introduce new species from aquaculture </li></ul></ul><ul><ul><li>Expand distribution of existing products </li></ul></ul>Drive continued growth by leveraging our core High Liner and FPI brands
  27. 27. Growth Strategy <ul><ul><li>Acquisitions </li></ul></ul><ul><ul><li>Seek acquisitions that will expand our product portfolio & strengthen our market leadership </li></ul></ul><ul><ul><li>Strict acquisition criteria </li></ul></ul><ul><ul><li>Must be complementary to frozen seafood </li></ul></ul><ul><ul><li>Should be synergistic </li></ul></ul><ul><ul><li>Must leverage our existing: </li></ul></ul><ul><ul><ul><li>Leading brands </li></ul></ul></ul><ul><ul><ul><li>Strong customer relationships </li></ul></ul></ul><ul><ul><ul><li>Marketing & logistics expertise </li></ul></ul></ul><ul><ul><ul><li>Product development expertise </li></ul></ul></ul>