Clearwater reports strong fourth quarter and annual 2011 results

Tue, 13 Mar 2012


HALIFAX, March 13, 2012 /CNW/ – (TSX: CLR, CLR.DB.B, CLR.DB.A):

Clearwater has continued to grow EBITDA year over year since 2008. This positive earnings momentum is expected to continue during 2012.

Strong fourth quarter sales, gross margins and EBITDA
Sales grew by 4.0% to $87.1 million
EBITDA was stable at $15.5 million
Gross margin expanded from 21.4% to 22.8%
Strong annual sales, gross margins and EBITDA
Sales grew by 5.5% to $332.8 million
EBITDA grew by 18.9% to $60.3 million
Gross margins expanded from 18.6% to 20.9%
Continued improvement in leverage – ratio of total debt to EBITDA (leverage) improved to 3.85 in the fourth quarter of 2011 from 4.43 at December 31, 2010, continuing a trend of significant improvement since December 31, 2008.

Management focused on value creation initiatives.
Today, Clearwater Seafoods Incorporated (“Clearwater”) reported its results for the fourth quarter of 2011.

Clearwater reported 2011 fourth quarter EBITDA of $15.5 million on sales of $87.1 million versus 2010 comparative figures of $15.51 million and $83.81 million representing stability in EBITDA and sales growth of 4.0%.

For the year 2011, Clearwater reported EBITDA of $60.3 million on sales of $332.8 million versus 2010 comparative figures of $50.71 million and $315.51 million representing EBITDA growth of 18.9% and sales growth of 5.5%.

The stability in fourth quarter and 18.9% growth in annual 2011 EBITDA came as a result of improved sales prices and a shift to higher margin species, partially offset by lower sales volumes, higher harvesting costs per pound and a strong Canadian dollar. Clearwater experienced lower volumes in 2011 due mostly to the timing of offshore coldwater shrimp landings.

1 – Refer to consolidation of entity previously proportionately consolidated within the critical accounting policy section in the MD&A for changes to the 2010 comparatives.


Ian Smith, Chief Executive Officer, commented, “Management is excited by the fourth quarter and annual results for 2011 as well as the increasing global consumer and customer demand for our premium, wild, sustainably harvested seafood. We will continue to execute with excellence against our overall business strategy as well as key cost-saving and productivity initiatives.

Furthermore, market demand for our products continues to be strong across all major segments and we have every expectation that our earnings momentum will continue through fiscal 2012.”

Management’s commitment to creating shareholder value

There are seven key initiatives that management is pursuing to continue to create value for the shareholders. They include:

Growing EBITDA sustainably – Clearwater has demonstrated its ability to consistently grow EBITDA in a sustainable manner over the past three years increasing EBITDA from $34.0 million in fiscal year 2008 to $60.3 million in 2011. Management expects that our earnings momentum will continue through 2012.

Focusing on generating strong free cash flows – Clearwater’s management is focused on generating free cash flows. They plan to accomplish this through generating strong cash earnings, working capital management, selling non-core assets and carefully planning and managing Clearwater’s capital expenditure program.

Improving leverage and committing to leverage targets – Clearwater has reduced its leverage as a multiple of EBITDA below 4 over the past three years from 6.71 as of December 31, 2008 to 3.85 at December 31, 2011 and has committed to further reductions to achieve a target of 3.0 by December 31, 2014 by increasing earnings and using its free cash flow to reduce debt. Management believes that lower leverage will position the business positively with debt rating agencies and lenders and ultimately allow Clearwater to lower its cost of debt.

Improving the capital structure – In the fourth quarter 2011 management completed the conversion of the public entity from a trust to a corporate structure, making the structure more efficient and transparent for both investors and lenders. In addition, in early January 2012 Clearwater settled ongoing disputes with Glitnir for $14.5 million, removing uncertainty by bringing closure to potentially lengthy legal proceeding and resulting in a gain of $12.4 million.

Focused management of foreign exchange – Over the past year Clearwater has implemented a focused and targeted foreign exchange hedging program to reduce the impact of volatility in exchange rates on earnings. This, combined with stronger processes for price management has reduced the impact of exchange rate volatility on the business.

Building world class leadership, management, sales and marketing capabilities – Over the past year Clearwater has appointed two new positions, Chief Commercial Officer and Chief Talent Officer and the company has begun to implement best in class programs for key account management and new product development. Mr. Greg Morency, the Chief Commercial Officer, who has held senior leadership positions at Heinz, Unilever, International Paper and Tate & Lyle, is responsible for sales and marketing. Mr. David Rathbun, the Chief Talent Officer, is responsible for human resource strategy. Mr. Rathbun has held senior positions at Xwave, BellAliant and Maritime Life. Mr. Morency and Mr. Rathbun bring best in class practices to sales, marketing and human resource management.

Communicating the underlying asset values – Clearwater has an industry-leading portfolio of quotas that provide strong security of underlying value to lenders and investors. The fair market value for these quotas is much greater than the carrying value recorded in the financial statements. Furthermore, the company has and continues to make focused investments to maintain the value and improve the efficiency of its vessels and plant assets, both of which serve to support strong asset values. During 2011 Clearwater invested approximately $21.2 million in its plant and vessel upgrade program. In 2012 Clearwater plans to invest a further $20.3 million.
In 2011 management developed financial targets for these initiatives including:

Annual sales growth of 5% or greater
Annual EBITDA as a percentage of sales of 15% or greater
Return on assets of 12% or greater
Leverage (debt to EBITDA) of 3 times by December 31, 2014
The sales and EBITDA ratios are annual goals whereas the return on assets and leverage ratios will be accomplished over time. Management will provide quarterly updates on progress towards these goals throughout 2012.

Management believes that it has the correct strategies and focus to enable improved results and provide sustainable competitive advantage and long-term growth. These strategies include:

Expanding access to supply;
Targeting profitable and growing markets, channels and customers;
Innovating and positioning our products to deliver superior customer satisfaction and value;
Increasing margins by improving price realization and cost management;
Preserving the long-term sustainability of our resources; and
Improving our organizational capability and capacity, talent, diversity and engagement
Management also believes that it has the people, processes and financial resources to execute this strategy to create value for its shareholders.

Financial Statements and Management’s Discussion and Analysis Documents

For a detailed analysis of Clearwater’s 2011 fourth quarter and annual results, please see the 2011 Management’s Discussion and Analysis and the 2011 annual financial statements. These documents can be found in the disclosure documents filed by the Corporation with the securities regulatory authorities available at or at its website

The entity previously known as Clearwater Seafoods Income Fund was reorganized into a publicly traded corporation called “Clearwater Seafoods Incorporated” (“Clearwater”) on October 2, 2011. The related share structure of Clearwater was reorganized such that Clearwater Seafoods Incorporated now consolidates the results of its wholly owned subsidiary, Clearwater Seafoods Limited Partnership.

To provide appropriate comparative information to investors all information prior to the conversion date of October 2, 2011 has been adjusted to reflect the transfer of control using continuity of interest accounting. As a result, the 2011 annual financial statements were prepared on a consolidated basis for the current and comparative year as if the conversion had occurred on January 1, 2010.

Key Financial Figures (In 000 of Canadian dollars except share amounts)

Clearwater 13 weeks ended Year Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010

Sales 1 $87,140 $83,801 $332,785 $315,540
Net earnings (loss) 1 16,394 (4,968) 22,955 (15,278)

EBITDA 1 $15,470 $15,547 $60,284 $50,695

Shares outstanding, at period-end 2 50,948,698 51,126,912 50,948,698 51,126,912
Fully diluted 71,831,640 62,323,941 71,831,640 62,323,941

1. Please see the Management’s Discussion and Analysis for a reconciliation of these amounts to the financial stateme
2. Effective October 2, 2011 the units of the Fund were converted into shares of Clearwater Seafoods Incorporated on a 1 for 1 basis.
Note: In the table above comparative sales, net earnings (loss) and EBITDA for 2010 have been adjusted to reflect the full consolidation of an entity owned by Clearwater that was previously proportionately consolidated.


This news release may contain forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors outside management’s control including, but not limited to, total allowable catch levels, selling prices, weather, exchange rates, fuel and other input costs that could cause actual results to differ materially from those expressed in the forward-looking statements. Clearwater does not undertake any obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances other than as required under applicable securities laws.

About Clearwater

Clearwater is recognized for its consistent quality, wide diversity and reliable delivery of premium wild, eco-labelled seafood, including scallops, lobster, clams, coldwater shrimp, crab and groundfish.

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

View the Clearwater website as

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