- Third quarter sales and adjusted EBITDA1 were
$133.7 million and$30.9 million respectively, versus$175.2 million and$34.5 million in the prior year, due to the global impact of COVID-19. - Year-to-date sales and adjusted EBITDA1 were
$340.0 million and$62.9 million respectively versus$449.2 million and$84.8 million in the prior year, due to the global impact of COVID-19. - Gross margin and adjusted EBITDA as a percentage of sales were 22.0% and 23.1% respectively in the third quarter compared to 21.6% and 19.7% in 2019.
- Leverage1 increased modestly to 5.0x compared to 4.9x in the third quarter of 2019 due to management's prudent cash preservation measures.
Clearwater entered into an arrangement agreement, subject to conditions including shareholder approval, with a Mi'kmaqFirst Nations Coalition and Premium Brands Holdings Corporation to acquire all of the issued and outstanding common shares of Clearwater for$8.25 per share.- Subsequent to the end of the third quarter,
Clearwater sold two of its eight offshore lobster licences to Membertou First Nations for proceeds of$25 million , diversifying access to the fishery and strengthening the business relationship betweenClearwater andMembertou .
Third Quarter and Year-to-date Results
"The impact of COVID-19 has been complex for our customers, our supply chain partners and our company in 2020. We are proud of our ability to remain in continuous operation at sea, on land and around the globe, a testament to our employees' character and teamwork which resulted in strong third quarter margin realization and cashflow. Our customer relationships and demonstrated agility in responding to shifts in consumer demand have been successful in partially mitigating the impacts of COVID-19 on our business" said
Sales for third quarter and year-to-date 2020 were
Adjusted EBITDA for third quarter and year-to-date 2020 were
Average foreign exchange rates realized on sales had a net positive impact of
Cash from operations and free cash flow increased
Liquidity, Debt and Leverage
Rigorous and disciplined cash preservation measures were implemented in 2020 to preserve liquidity. These included accessing government support programs and operational adjustments to several species that significantly improved cash flows while having minimal impact on species profitability. The quality of receivables remains high reflecting the strength of our customer base which enabled us to leverage the COVID-19 support of our credit insurance partners.
Leverage for the third quarter of 2020 was 5.0x compared to 4.9x for the same period of 2019. Disciplined working capital management largely offset the impact of lower COVID-19 demand resulting in lower net debt at the third quarter of 2020 compared to 2019.
Dividends
On
Seasonality
OUTLOOK
Traditional retail and on-line consumer demand are benefiting whereas food service customers and their supply chains continue to experience interruptions.
Demand improved in the third quarter as government relaxed measures allowing certain markets and channels to reopen. For the balance of 2020, our focus will move to ensuring adequate supply of certain species, mix and formats to fulfill growing customer demand through the peak holiday periods in
As a business,
- 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.
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,
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 Customers -
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 -
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 | 39 weeks ended | |||||||
In 000's of Canadian dollars | 2020 | 2019 | 2020 | 2019 | ||||
Profitability | ||||||||
Sales | $ | 133,716 | $ | 175,200 | $ | 340,025 | $ | 449,159 |
Sales growth (decline) | (23.7%) | 6.7% | (24.3%) | 3.9% | ||||
Gross margin | $ | 29,464 | $ | 37,767 | $ | 64,006 | $ | 90,907 |
Gross margin (as a % of sales) | 22.0% | 21.6% | 18.8% | 20.2% | ||||
Adjusted EBITDA1,2 | $ | 30,909 | $ | 34,490 | $ | 62,878 | $ | 84,771 |
Adjusted EBITDA1,2 (as a % of sales) | 23.1% | 19.7% | 18.5% | 18.9% | ||||
Adjusted EBITDA attributable to shareholders1,2 | $ | 27,970 | $ | 29,405 | $ | 54,187 | $ | 71,952 |
Adjusted EBITDA attributable to shareholders1,2 (as a % of sales) | 20.9% | 16.8% | 15.9% | 16.0% | ||||
Earnings (loss) attributable to shareholders | $ | 12,482 | $ | 7,804 | $ | (11,431) | $ | 24,092 |
Basic earnings (loss) per share | $ | 0.19 | $ | 0.12 | $ | (0.18) | $ | 0.37 |
Diluted earnings (loss) per share | $ | 0.18 | $ | 0.12 | $ | (0.18) | $ | 0.37 |
Adjusted earnings (loss) attributable to shareholders1,2 | $ | 8,502 | $ | 7,280 | $ | 1,120 | $ | 12,334 |
Adjusted earnings (loss) per share | $ | 0.13 | $ | 0.11 | $ | 0.02 | $ | 0.19 |
Cash Flows and Leverage | ||||||||
Cash from (used in) operating activities | $ | 42,878 | $ | 22,727 | $ | 39,982 | $ | (591) |
Cash from (used in) financing activities | (33,214) | (33,775) | (23,396) | (12,998) | ||||
Cash from (used in) investing activities | (1,358) | 1,801 | (20,719) | (11,635) | ||||
Free cash flows1 | $ | 38,262 | $ | 18,258 | $ | 9,590 | $ | (25,144) |
Leverage1,3 | 5.0x | 4.9x | 5.0x | 4.9x | ||||
Returns | ||||||||
Return on assets1,4 | 7.2% | 8.9% | 7.2% | 8.9% | ||||
Total assets | 701,678 | 736,463 | 701,678 | 736,463 |
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 months rolling adjusted earnings before interest and taxes to total average quarterly assets. |
For those readers who would like to understand the calculation of adjusted earnings and adjusted earnings attributable to shareholders please refer to the reconciliation of adjusted earnings within the non-IFRS measures, definitions and reconciliations section of the Management Discussion and Analysis.
Financial Statements and Management's Discussion and Analysis Documents
For a detailed analysis of
COMMENTARY REGARDING FORWARD-LOOKING STATEMENTS
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
No regulatory authority has approved or disapproved the adequacy or accuracy of this news release.
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1 – Refer to discussion on non-IFRS measures within the Management Discussion and Analysis |
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