2014 INTRAFISH SEAFOOD INVESTOR FORUM Paul Jewer, CFO May 20, 2014 | New York
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. Certain material factors or assumptions were applied in drawing the conclusions as reflected in the forward-looking information. Additional information about these material factors or assumptions is contained in High Liner Foods’ Annual available on SEDAR (www.sedar.com) and the Investor Information section of High Liner Foods’ website (www.highlinerfoods.com). 2
Presentation Currency CAD presentation: • High Liner Foods is traded on the Toronto Stock Exchange and references to stock price, dividends and market cap are presented in CAD USD presentation: • Beginning with the 2012 annual report, the Company began to present its financial statements in USD • 2010, 2011 and 2012 are fully converted and restated under IFRS rules to USD; previous years Canadian GAAP statements are converted from CAD at the annual period-end and average USD/ CAD exchange rates and remain as originally reported in Canadian GAAP 3
Co m pany Overview
TSX Listings Data TSX symbol 1 HLF Recent price 2 CAD$44.35 52-week range 2 CAD$29.51 - $49.80 Shares outstanding ~15.33M Total market cap ~CAD$680M 1 Public company since the 1960’s; listed on TSX in 1971 Quarterly dividend 3 CAD$0.21 per share 2 Source: TSX May 16 th , 2014 3 Effective May 8 th , 2014 Current yield 3 ~1.9% HLF Three Year Share Price History 2 5
High Liner Foods Corporate History 1945 1999 2013 1899 2011 1986 2007 National Name 2010 American WC Smith Icelandic Sea Fisher Boy change to FPI Viking Pride founded USA acquisition acquisition 1 acquisition Products High Liner Seafoods (salt fish) acquisition 2 acquisition 3 created Foods 2003/04 2014 1926 1982 1992 High Liner High Liner Commodore Northern Today’s sells its brand private label Cod High Liner fishing created acquisition moratorium Foods assets 1 Acquired FPI’s North American marketing & manufacturing businesses 2 In 2005, Icelandic & Samband of Iceland merged 3 Acquired on October 1 st , 2013 (see Slide 22) 6
Business Overview Geography Branding Channel Product Form 26% 30% 31% 39% 61% 70% 69% 74% USA (incl. Mexico) HFL Brands Foodservice Value-added Canada Other Retail Other * The charts above reflect the Company’s business profile based on sales and on a proforma basis including American Pride • We are the North American leader in value-added frozen seafood • In Canada, #1 market position in retail and largest foodservice player • In the U.S., estimated #2 in retail value-added (including private label) on a volume basis and the leading supplier of value-added products in foodservice • Our vision is to be the leading supplier of frozen seafood in North Am erica 7
Advantaged Business Model with Market Breadth Broadest Market Market Leading Diversified Global Frozen Food Logistics Innovative Product Reach in Industry Brands Procurement Expertise Development • 2X the size of largest • Strong global • Logistics expertise competitor in retail procurement built allows timely & food service on long-term delivery of raw channels (100% relationships with materials and ACV) in Canada network of quality finished goods suppliers from over 20 • Largest grocery- countries to all key chain supplier of • Broad procurement customers private label value- activities in North added seafood in America and strong • Seamless logistics U.S. and Canada footprint in Asia process approach tailored to be cost- • The largest food • Geographically effective and service suppliers of diverse procurement customer oriented value-added territory mitigates seafood in U.S. changes in the cost • Scheduled of raw materials deliveries to major • Estimated #2 customers on supplier of seafood • State-of-the-art regular basis by volume in U.S. web-based IT system retail channel to manage logistics including private and quality for label and niche overseas suppliers brands 8
Optimized Manufacturing Footprint Lunenburg, NS (Can) Capacity p.a.: 40m lbs • Low-cost and efficient Utilization: 81% • $18M in annual synergies Portsmouth, NH (U.S.) related to Icelandic USA Malden, MA (U.S.) (1) Capacity p.a.: 80m lbs acquisition include cost Capacity p.a.: 41m lbs Utilization: 83% Utilization: 32% savings from two plant (1) Leased facility closures: Burin, NF (late 2012) Danvers, MA (early 2013) Burin, NL (Canada) New Bedford, MA (U.S.) Scallop Processing Danvers, MA (U.S.) • Scallop and value-added Capacity p.a.: 12m lbs Newport News, VA (U.S.) Utilization: 67% processing facility acquired Capacity p.a.: 90m lbs New Bedford, MA (U.S.) as part of American Pride Utilization: 77% Value-Added acquisition in Q4 2013 HLF facility Capacity p.a.: 87m lbs Utilization: 61% Closed facility Aggregate production capacity of ~350M lbs per annum Ability to increase 25M lbs p.a. with minimal capital investment 9
Financial Review
Fiscal 2013 Highlights Strategic: • Acquired American Pride Seafoods (“American Pride”) on October 1st • Achieved 99% of our strategic goal to sustainably source all of our seafood Financial: • Created value for shareholders – increased share price and dividends • Reported record sales and net earnings (although lower than expected) • Debt amendments in Feb 2013 resulted in significant interest savings • Significant deleveraging in Q1 – Q3 (prior to the American Pride acquisition) Operational: • Completed Icelandic USA integration and related plant consolidation and relocation of U.S. food service distribution center in Q1 2013 • $18M in total annual synergies achieved related to the Icelandic USA acquisition 11
Sales History $1,200 $947M $1,000 $800 USD millions $600 $400 $200 $- 2006 2007 2008 2009 2010 2011 2012 2013 12
Diluted EPS and ROE History $3.00 30% $2.65 $2.50 25% Diluted Earnings per Share Return on Equity $2.00 20% $1.50 15% $1.00 10% $0.50 5% $0.00 0% 2006 2007 2008 2009 2010 2011 2012 2013 Diluted EPS Partially Adjusted Diluted EPS Adusted Diluted EPS Return on Equity Diluted EPS is net income as reported divided by the average diluted number of shares Partially Adjusted Diluted EPS is based on Adjusted Net Income (1) except including non-cash stock compensation expense Adjusted Diluted is based on Adjusted Net Income (1) (1) Adjusted Net Income is net income as reported excluding the after-tax impact of: business acquisition, integration and other expenses; impairment of property, plant and equipment related to plant closures; additional depreciation on property to be disposed of as part of an acquisition; increased cost of goods sold relating to purchase price allocation to inventory acquired over its book value; non-cash expense from revaluing an embedded derivative associated with the long-term debt LIBOR floor and marking-to-market an interest rate swap related to the embedded derivative; the write-off or write down of deferred financing charges on the re-pricing of our term loan; withholding tax related to intercompany dividends; and stock compensation expense. 13
Dividend History $0.82 * $0.90 Annual Dividend per Share ($CAD) $0.80 $0.70 $0.70 10-year CAGR (2003 to 2013): 31% $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 *Assumes Q3 and Q4 dividend at same rate approved for Q2 of CAD$0.21 Common shares up to September 15, 2007; Common and non-voting shares from Dec 15, 2007 to Dec 17, 2012; Common shares from December 18, 2012 to present 14
Financial Review – Q1 2014 Sales (USD millions) $350 $302.6 $275.2 $300 • Q1 sales in domestic currency were $310.1M $250 in 2014 and $275.8 M in $200 2013 • American Pride sales $150 were $41.4M in Q1 2014 $100 $50 $0 Q1 2013 Q1 2014 Excluding American Pride American Pride 15
Financial Review – Q1 2014 EBITDA (USD millions) $30 $27.2M • Strong operational $25 performance in Q1 through $21.3M the busy Lenten period $20 • $6.0M improvement in Adjusted EBITDA reflects $15 challenges encountered by our U.S. operations in 2013 $10 are largely resolved • American Pride contributed $5 $41.4M in sales and $2.2M in Adjusted EBITDA $- Q1 2013 Q1 2014 Standardized EBITDA Partially Adjusted EBITDA Adjusted EBITDA 16
Financial Review – Q1 2014 Diluted EPS (USD) $1.00 $0.88 $0.80 $0.63 $0.60 $0.40 $0.20 $0.00 Q1 2013 Q1 2014 Diluted EPS Partially Adjusted EPS Adjusted EPS 17
Deleveraging Net interest-bearing debt / Adjusted EBITDA ratio 5.00x 4.4x 3.9x 3.8x 4.00x 3.4x 3.2x <3.0x 3.00x 2.00x 1.00x 0.00x Dec 31/11 Dec 29/12 Sep 28/13 Dec 28/13 Mar 29/14 Target Pro Forma Pre-American Icelandic Pride Acquisition 18
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