High Liner Foods 2018 RBC Capital Markets’ Consumer & Retail Conference May 30, 2018 Rod Hepponstall, President & CEO Paul Jewer, EVP & CFO Heather Keeler-Hurshman, VP Investor Relations
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 F oods’ Annual Report available on SEDAR (www.sedar.com) and in the Investor Center section at High Liner F oods’ website (www.highlinerfoods.com). 2
Presentation Notes Presentation Currency High Liner Foods (“the Company”) reports its financial statements in USD, however, its common shares are listed on the Toronto Stock Exchange (“TSX”) and are quoted in CAD. References in this presentation to share price, dividends and market capitalization are also in CAD. Non-IFRS Measures This document includes certain non-IFRS financial measures which the Company uses as supplemental indicators of its operating performance and financial position, as well as for internal planning purposes. These non-IFRS measures do not have any standardized meaning as prescribed by IFRS, and therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. Non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the Company’s MD&A. 3
High Liner Foods Canadian public company since the 1960’s, TSX -listed in 1971 Current price CAD$10.62* Shares outstanding ~33.4 million * Market capitalization ~CAD$355 million * 52-week range CAD$10.31 - $19.95* Annual dividend CAD$0.58 per share** Current yield ~5.5% * Source: TSX May 25, 2018 ** Effective December 15, 2017 4
Company Overview & Strategy
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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 increasing focus on eating healthier • Industry focus has primarily been on supply of seafood and not on increasing consumer demand • Versatility – 100+ commercial species and multiple eating formats make for endless possibilities when it comes to preparing and enjoying seafood • Seafood industry in North America is highly-fragmented 7
Investment Thesis Why High Liner Foods? • North American leader in value-added frozen seafood, with almost 120 years of seafood expertise • Broad market reach and market-leading brands • Customer-focused, innovative and responsible • Global seafood procurement and frozen food logistics expertise • Consolidated manufacturing footprint • Strong free cash flow from operations support dividends and market consolidation • Track record of growth through acquisitions and adaptability 8
Business Overview Focused on the frozen seafood market in North America Geography Branding Channel Product Form 24% 26% 39% 44% 56% 61% 76% 74% US (incl. Mexico) HLF Brands Other Value-added Other Foodservice Retail Canada Based on 2017 actual sales (in USD) • The North American leader in value-added frozen seafood • In Canada, #1 market position in retail and largest foodservice supplier • In the US, estimated #2 in retail value-added (including private label) on a volume basis and the leading supplier of value-added products in foodservice 9
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 can be confident in serving quality, delicious seafood 10
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 of our culture • Adopted Innovation Engineering in 2016 to help align innovation strategy across all departments 11
Organic Growth Strategy Focused on species diversification to aquaculture species experiencing stronger growth rates in North America 11.8% 25.0% 5.8% Cod Shrimp 9.0% Salmon Alaskan pollock Haddock 14.2% 19.6% Tilapia Other 14.6% Based on 2017 sales (in USD) • Procure 30+ species of seafood from 20+ different countries 12
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) Lower demand for traditional breaded and Capacity p.a.: 50M LBS battered products reduces plant efficiency • Current manufacturing footprint: aggregate production capacity of ~219 million LBS Newport News, VA (US) • Ideal capacity ~ 85% to 90% to allow for Portsmouth, NH (US) Capacity p.a.: 88M LBS Capacity p.a.: 81M LBS seasonal demand surge 13
Corporate Social Responsibility The Company produced its first CSR report 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 aquaculture 14
Role of Acquisitions Acquisitions made in support our organic growth strategy • The Company’s last two acquisitions were to expedite species diversification to include more Atlantic salmon and warm water shrimp, two aquaculture species experiencing the greatest growth rates in the marketplace – Rubicon Resources, an importer and distributor of frozen shrimp products in the U.S. private-label retail market, was acquired May 30, 2017 for $100.6 million reflecting pre-acquisition annual sales of $234 million and pro forma EBITDA of $16 million – Atlantic Trading, an importer and distributor of frozen Atlantic salmon products in the U.S. private-label retail market, was acquired November 7, 2014 for $17.9 million reflecting pre-acquisition annual sales of between $75 million and $80 million 15
Q1 2018 Financial Review
Q1 2018 Sales Sales in LBS and USD $350 180 $319.2 $300 $275.7 150 Sales in USD (millions) $250 Sales in LBS (millions) 120 $200 90 88.1 83.2 $150 60 $100 30 $50 Sales in USD Sales LBS $0 0 2017 2018 • Sales volume increased 4.9 million LBS (5.9%) to 88.1 million LBS – Excluding Rubicon (+7.9 million LBS), sales volume decreased 3.0 million LBS (3.6%) due to lower sales in our U.S. retail and foodservice businesses • Sales revenue increased $43.5 million (15.8%) to $319.2 million – Excluding Rubicon (+$42.1 million) and FX on the conversion of our CAD-denominated operations to USD, sales decreased $1.3 million (0.4%) due to product mix and lower sales volume, partially offset by price increases related to raw material cost increases 17
Q1 2018 EBITDA Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) $24.2 $25 20% $22.3 $20 Standardized EBITDA* EBITDA as a % of Sales 15% EBITDA (millions) Adjusted EBITDA* $15 Adjusted EBITDA as a % of 10% Sales $10 8.1% 7.6% * Please refer to the Company’s MD&A 5% for the 13 weeks ended March 31, 2018 $5 for definitions of the non-IFRS financial measures “Standardized EBITDA” and “Adjusted EBITDA” $0 0% 2017 2018 • Adjusted EBITDA increased $1.9 million (8.5%) to $24.2 million and decreased 50 basis points as a percentage of sales – Excluding Rubicon (+$1.1 million) and FX on the conversion of our CAD-denominated operations to USD, Adjusted EBITDA increased $1.2 million (5.2%) due to the impact of price increases, lower corporate administrative and U.S. sales and marketing expenses, partially offset by lower sales volume, plant inefficiencies and increased distribution costs in our U.S. business – Excluding Rubicon, Adjusted EBITDA was 8.4% of sales in Q1 2018 18
Q1 2018 Earnings Per Share (EPS) $0.40 $0.35 $0.32 $0.30 Reported Diluted EPS Adjusted Diluted EPS* EPS $0.20 * Please refer to the Company’s MD&A for the 13 weeks ended March 31, $0.10 2018 for definitions of the non-IFRS financial measure “Adjusted Diluted EPS” $0.00 2017 2018 • Diluted Adjusted EPS decreased $0.03 (8.6%) to $0.32 – Adjusted net income decreased $0.1 million (0.9%) to $10.7 million reflecting increased depreciation and amortization expense and finance costs, partially offset by increased Adjusted EBITDA – The decrease in Adjusted Diluted EPS also reflects an increase in the weighted average number of shares outstanding as a result of 2.4 million shares being issued as part of the Rubicon acquisition to its previous owners 19
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