Clearwater Reports First Quarter 2020 Results

Fri, 15 May 2020

HALIFAX, May 15, 2020 /CNW/ – (TSX: CLR):

  • First quarter sales and adjusted EBITDA1 were $100.3 million and $13.0 million respectively versus $120.1 million and $20.0 million in the prior year, largely due to the impact of COVID-19, primarily in Asia.
  • Gross margin and adjusted EBITDA as a percentage of sales were 16.1% and 13.0% respectively in 2020 compared to 17.9% and 16.7% in 2019.
  • Leverage1 decreased to 4.6x compared to 4.7x in the first quarter of 2019.
  • Return on assets1 increased to 8.8% in 2020 compared to 7.7% in 2019.
  • To support liquidity during the COVID-19 pandemic, the Board of Directors have temporarily suspended dividends and Clearwater successfully closed an amendment to its senior secured credit facility on May 13, 2020.
  • The Company is moving forward with the formal strategic process to identify, review and evaluate a broad range of potential strategic alternatives.

First Quarter Results

"I am truly proud, humbled by and grateful to our Clearwater employees who are leading with courage, integrity, responsibility and with their hearts. Through our Clearwater Cares program our employees are helping their neighbors and supporting frontline healthcare, emergency service providers and food banks in their communities. They are doing this on their own time and while working tirelessly to support a safe and reliable global food supply under extraordinary conditions" said Ian Smith, Chief Executive Officer of Clearwater. "We started 2020 with great momentum but, unfortunately, Clearwater was directly impacted in the first quarter as our Chinese customers faced the brunt of COVID-19 just before the start of Chinese New Year festivities. By early March, the impact of the global pandemic was being felt in all our markets across the globe with tragic human and challenging economic consequences. As a company, we took immediate and effective action to ensure the health and safety of our employees in our plants, offices and vessels by implementing stringent health and safety protocols. We moved quickly to align our operations to the rapidly changing market conditions while safeguarding our ability to harvest, process and reliably deliver food safely to our customers around the world. Concurrently, we cut all non-essential spending and capital expenditures to preserve cash for the remainder of the year and successfully secured an amendment to our credit facilities. We have taken these necessary steps with focus and discipline and are now well-positioned to weather the current economic conditions and take advantage of future growth opportunities as global seafood demand recovers."

Sales for the first quarter decreased to $100.3 million as compared to $120.1 million in the same period of 2019 and adjusted EBITDA was $13.0 million as compared to $20.0 million.  Volume for several species, primarily in Asia, were adversely impacted by lower demand resulting from COVID-19.  Traditional retail and on-line consumer demand is thriving in this difficult market, whereas foodservice customers and their supply chain have been seriously affected by the social distancing measures that began to be implemented globally in the first quarter. 

The key species affected in the first quarter were lobster, clam, scallop, and langoustines. Lower demand was partially offset by lower harvesting costs for clam and premium sized scallops.  Certain species, including FAS shrimp and whelk were not significantly impacted.  Margins will continue to benefit from a revitalized fleet resulting in lower costs and higher value for certain harvested species, improvements in procurement strategies and continuous improvement programs to manage costs. Clearwater also expects to benefit from strong catch rates and lower fuel costs for the remainder of 2020.

Average foreign exchange rates realized on sales for the first quarter of 2020 had a net positive impact to sales of $0.7 million as compared to the same period in 2019.

Cash from operations was $4.0 million in the first quarter of 2020 as compared to $12.3 million for the same period of 2019. Free cash flow was ($9.8) million as compared to $4.6 million in the first quarter of 2019, primarily due to lower cash earnings, investments in working capital and capital expenditures. The measures that Clearwater has implemented will ensure continued generation of cash to support ongoing operations and mandatory capital expenditures.

Liquidity, Debt and Leverage

The Company’s cash balance as at April 4, 2020 was $56.4 million with access to an additional $91.3 million through our undrawn, committed revolving credit facility.  Leverage for the first quarter of 2020 was 4.6x compared to 4.7x for the same period of 2019.  Leverage is based on trailing twelve-month adjusted EBITDA and has improved due to higher annualized adjusted EBITDA attributable to shareholders. Higher 2019 sales volume, revenue and margin expansion associated with strong harvesting conditions across multiple species was partially offset by an increase in debt in the first quarter of 2020.  Net debt at the end of the quarter was $426.6 million

Clearwater has strong access to liquidity and funding. Discipline and focus on cashflows from operations, working capital and capital expenditures will maintain liquidity for seasonal operations. 


On May 15, 2020, the Board of Directors suspended dividends for the balance of 2020 given the uncertainty related to the duration and impact of COVID-19. The dividend reinvestment program is also suspended.

The Board reviews Clearwater’s dividends on a regular basis to ensure the dividend level remains consistent with Clearwater’s dividend policy.


Clearwater’s business experiences a predictable seasonal pattern in which sales, margins and adjusted EBITDA are lower in the first half of the year and higher in the second half.  Investments in capital expenditures and working capital are typically higher in the first half of the year and lower in the second half. This normally results in lower cash flows, higher debt balances and higher leverage in the first half of the year and higher cash flows, lower debt balances and lower leverage in the second half. 


As a vertically integrated seafood company, the impact to Clearwater of COVID-19 is complex.  Customers, supply chain partners, operational protocols and employees are impacted. 

Traditional retail and on-line consumer demand are benefiting whereas foodservice customers and their supply chains are experiencing interruption as a result of the social distancing measures implemented globally.  As a business, Clearwater is considered an essential service in food production and continues to deliver seafood to customers globally.

Demand is expected to improve as governments begin to relax measures to control the spread of COVID-19. In the near term, we have responded to these circumstances by placing extra focus and attention on the expansion of global distribution, new packaging formats and increased promotional activity through channels and customers experiencing heightened demand (such as retail and e-commerce). Concurrently, efforts to prepare for the recovery of Clearwater sales in food service are ongoing.

Clearwater has taken immediate action in response to COVID-19 to ensure employee safety and security and business continuity including:

  • Health screening protocols;
  • Securing personal protective equipment for employees throughout our global supply chain;
  • Implementing social distancing and enhanced cleaning protocols in our processing plants and on harvesting vessels;
  • Supporting our essential workers with thank-you pay and adapting travel to and from harvest ports to maintain labour mobility; and
  • Successfully transitioning approximately 98% of our office, sales and administrative staff to working remotely and in continued close coordination across three continents and 17 time zones.

Clearwater has strong access to liquidity and funding. Cashflow from operations and working capital will maintain liquidity for seasonal operations.  Leverage is expected to increase in the near term as a direct impact of COVID-19.

While the short-term impact of COVID-19 has introduced additional forward-looking uncertainty, as a vertically integrated seafood company, with proprietary licences, advanced and year-round harvesting and processing capabilities, premium product quality, diversity of species, global sales and distribution footprint and an experienced, dedicated workforce, Clearwater is well-positioned to take advantage of future growth opportunities as global seafood demand recovers.

Clearwater’s core strategies are built around these strengths, remain highly relevant and our long-term growth outlook beyond 2020 remains very positive.

Core Strategies

Expanding Access to Supply – Expanding access to supply of core species and other complementary, high demand, premium, wild and sustainably-harvested seafood through improved utilization and productivity of core licences as well as acquisitions, partnerships, joint ventures and commercial agreements.

Target Profitable and Growing Markets, Channels and CustomersClearwater targets growing markets, consumers, channels, and customers on the basis of size, profitability and demand for eco-label seafood. Our focus is to win in key channels and with customers that are winning with consumers.

Innovate and Position Products to Deliver Superior Customer Satisfaction and Value – We continue to work with customers on new products and formats as we innovate and position our premium seafood to deliver superior satisfaction and value that is differentiated by relevant dimensions such as taste, quality, safety, sustainability, wellness, convenience and fair labour practices.

Increase Margins by Improving Price Realization and Cost Management – Leverage the scarcity of seafood supply and increasing global demand, in addition to continuing to invest in, innovate and adopt state-of-the-art technology, systems and processes.

Pursue and Preserve the Long-Term Sustainability of Resources on Land and Sea – As a leading global supplier of wild-harvested seafood, sustainability remains at the core of our business and our mission. Investing in the long-term health and the responsible harvesting of the oceans and its bounty is every harvester’s responsibility and the only proven way to ensure access to a reliable, stable, renewable, and long-term supply of seafood. Sustainability is not just good business, like innovation it’s in our DNA.

Build Organizational Capability, Capacity and Engagement – We attract, train, and retain the best talent to build business system and process excellence company-wide.

Key Performance Indicators and Financial Measures

13 weeks ended

April 4

March 30

In 000’s of Canadian dollars









Sales growth (decline)



Gross margin





Gross margin (as a % of sales)



Adjusted EBITDA1,2





Adjusted EBITDA1,2 (as a % of sales)



Adjusted EBITDA attributable to shareholders1,2





Adjusted EBITDA attributable to shareholders1,2 (as a % of sales)



Earnings (loss) attributable to shareholders





Basic earnings (loss) per share





Diluted earnings (loss) per share





Adjusted earnings (loss) attributable to shareholders1,2





Adjusted earnings (loss) attributable to shareholders1 per share





Cash Flows and Leverage

Cash from (used in) operating activities





Cash from (used in) financing activities





Cash from (used in) investing activities





Free cash flows1









Return on assets1,4



Total assets



1 Refer to discussion on non-IFRS measures, definitions and reconciliations within the Management Discussion and Analysis.

2 Adjusted earnings before interest, tax, depreciation and amortization.

3 Leverage is calculated as twelve month rolling adjusted EBITDA attributable to shareholders to net debt and differs from the calculation of leverage for covenant purposes.

4 Return on assets is calculated as twelve month rolling adjusted earnings before interest and taxes to total average quarterly assets.


This news release contains "forward-looking information" as defined in applicable Canadian securities legislation, including but not limited to, statements regarding future plans and objectives of Clearwater.  Forward-looking information typically, but not always, contains statements with words such as "anticipate", "does not anticipate", "believe", "estimate", "forecast", "intend", "expect", "does not expect", "may", "will", "should", "plan", or other similar terms that are predictive in nature.

Forward-looking information is based on a number of factors and assumptions which have been used to develop such information, but which may prove to be incorrect due to various known and unknown risks, uncertainties, and other factors outside of managements’ control. Examples may include, but are not limited to, total allowable catch levels, resource supply, selling prices, weather, exchange rates, fuel and other input costs as well as impacts of the COVID-19 pandemic and the resulting economic downturn. 

For additional information with respect to risk factors applicable to Clearwater, reference should be made to Clearwater’s continuous disclosure materials filed from time to time with securities regulators, including, but not limited to, Clearwater’s Annual Information Form. The forward-looking information contained in this release is made as of the date of this release and Clearwater does not undertake to update publicly or revise the forward-looking information contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

No regulatory authority has approved or disapproved the adequacy or accuracy of this news release.

About Clearwater

Clearwater is one of North America’s largest vertically integrated seafood companies and the largest holder of shellfish licenses and quotas in Canada. It is recognized globally for its superior quality, food safety, diversity of species and reliable worldwide delivery of premium wild, eco-certified seafood, including scallops, lobster, clam, coldwater shrimp, langoustine, whelk, crab and groundfish.

Since its founding in 1976, Clearwater has invested in science, people and technological innovation as well as resource ownership and management to sustain and grow its seafood resource. This commitment has allowed it to remain a leader in the global seafood market and in sustainable seafood excellence.


1 – Refer to discussion on non-IFRS measures within the Management Discussion and Analysis


SOURCE Clearwater Seafoods Incorporated

View the Clearwater website as

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