2014 INTRAFISH SEAFOOD INVESTOR FORUM Paul Jewer, CFO. May 20, 2014 New York

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1 2014 INTRAFISH SEAFOOD INVESTOR FORUM Paul Jewer, CFO May 20, 2014 New York

2 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 ( and the Investor Information section of High Liner Foods website ( 2

3 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: Presentation Currency 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

4 Company Overview

5 TSX Listings Data TSX symbol 1 HLF Recent price 2 CAD$ week range 2 CAD$ $49.80 Shares outstanding ~15.33M Total market cap ~CAD$680M Quarterly dividend 3 CAD$0.21 per share Current yield 3 ~1.9% 1 Public company since the 1960 s; listed on TSX in Source: TSX May 16 th, Effective May 8 th, 2014 HLF Three Year Share Price History 2 5

6 High Liner Foods Corporate History 1899 WC Smith founded (salt fish) 1945 National Sea Products created 1986 Fisher Boy acquisition 1999 Name change to High Liner Foods 2007 FPI acquisition Viking acquisition 2011 Icelandic USA acquisition American Pride Seafoods acquisition High Liner brand created 1982 Commodore private label acquisition 1992 Northern Cod moratorium 2003/04 High Liner sells its fishing assets 2014 Today s High Liner Foods 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

7 Business Overview Geography Branding Channel Product Form 30% 26% 31% 39% 70% 74% 69% 61% USA (incl. Mexico) Canada HFL Brands Other Foodservice Retail * The charts above reflect the Company s business profile based on sales and on a proforma basis including American Pride Value-added Other 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 America 7

8 Advantaged Business Model with Market Breadth Broadest Market Reach in Industry Market Leading Brands Diversified Global Procurement Frozen Food Logistics Expertise Innovative Product Development 2X the size of largest competitor in retail & food service channels (100% ACV) in Canada Largest grocerychain supplier of private label valueadded seafood in U.S. and Canada The largest food service suppliers of value-added seafood in U.S. Estimated #2 supplier of seafood by volume in U.S. retail channel including private label and niche brands Strong global procurement built on long-term relationships with network of quality suppliers Broad procurement activities in North America and strong footprint in Asia Geographically diverse procurement territory mitigates changes in the cost of raw materials State-of-the-art web-based IT system to manage logistics and quality for overseas suppliers Logistics expertise allows timely delivery of raw materials and finished goods from over 20 countries to all key customers Seamless logistics process approach tailored to be costeffective and customer oriented Scheduled deliveries to major customers on regular basis 8

9 Optimized Manufacturing Footprint New Bedford, MA (U.S.) Scallop Processing Capacity p.a.: 12m lbs Utilization: 67% New Bedford, MA (U.S.) Value-Added Capacity p.a.: 87m lbs Utilization: 61% Lunenburg, NS (Can) Capacity p.a.: 40m lbs Utilization: 81% Malden, MA (U.S.) (1) Capacity p.a.: 41m lbs Utilization: 32% (1) Leased facility Newport News, VA (U.S.) Capacity p.a.: 90m lbs Utilization: 77% Portsmouth, NH (U.S.) Capacity p.a.: 80m lbs Utilization: 83% Burin, NL (Canada) Danvers, MA (U.S.) HLF facility Closed facility Low-cost and efficient $18M in annual synergies related to Icelandic USA acquisition include cost savings from two plant closures: Burin, NF (late 2012) Danvers, MA (early 2013) Scallop and value-added processing facility acquired as part of American Pride acquisition in Q Aggregate production capacity of ~350M lbs per annum Ability to increase 25M lbs p.a. with minimal capital investment 9

10 Financial Review

11 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: Fiscal 2013 Highlights Completed Icelandic USA integration and related plant consolidation and relocation of U.S. food service distribution center in Q $18M in total annual synergies achieved related to the Icelandic USA acquisition 11

12 Sales History $1,200 $1,000 $947M USD millions $800 $600 $400 $200 $

13 Diluted EPS and ROE History Diluted Earnings per Share $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ % 25% 20% 15% 10% 5% Return on Equity $ % 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

14 Dividend History Annual Dividend per Share ($CAD) $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 $0.82 * $ year CAGR (2003 to 2013): 31% *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

15 Financial Review Q Sales (USD millions) $350 $300 $250 $200 $275.2 $302.6 Q1 sales in domestic currency were $310.1M in 2014 and $275.8 M in 2013 $150 $100 American Pride sales were $41.4M in Q $50 $0 Q Q Excluding American Pride American Pride 15

16 Financial Review Q EBITDA (USD millions) $30 $25 $21.3M $27.2M Strong operational performance in Q1 through the busy Lenten period $20 $15 $10 $6.0M improvement in Adjusted EBITDA reflects challenges encountered by our U.S. operations in 2013 are largely resolved $5 $- Q Q Standardized EBITDA Partially Adjusted EBITDA Adjusted EBITDA American Pride contributed $41.4M in sales and $2.2M in Adjusted EBITDA 16

17 Financial Review Q Diluted EPS (USD) $1.00 $0.88 $0.80 $0.60 $0.63 $0.40 $0.20 $0.00 Q Q Diluted EPS Partially Adjusted EPS Adjusted EPS 17

18 Deleveraging Net interest-bearing debt / Adjusted EBITDA ratio 5.00x 4.4x 4.00x 3.00x 3.4x 3.2x 3.9x 3.8x <3.0x 2.00x 1.00x 0.00x Dec 31/11 Pro Forma Icelandic Dec 29/12 Sep 28/13 Pre-American Pride Acquisition Dec 28/13 Mar 29/14 Target 18

19 Favourable amendments to the Company s debt facilities Term Loan and asset based loan (ABL) announced late April Term Loan and ABL: Debt Amendments Q Increased capacity and flexibility for acquisitions, investments, distributions, capital expenditures and operational matters Extended terms (Term Loan from Dec 2017 to Apr 2021 and ABL from Dec 2016 to Apr 2019) Reduced interest costs Additionally, Term Loan facility increased from $250M to $300M and a number of covenants on this facility were improved or removed 19

20 Vision & Growth Strategy 20

21 Steady Course Following years of strong growth, High Liner Foods remains on a steady course to achieve its vision to be the leading supplier of frozen seafood in North America 21

22 Industry Drivers Long-term growth influenced by strong North American demographics An aging, health-conscious population 45+ years of age account for half of seafood consumption Health benefits tied to eating fish Fisheries recovering around the world largely due to the sustainability efforts over the last ten years Growth from aquaculture species Long-term demand growth still greater than supply 22

23 Profitable growth Organic growth, acquisitions and supply chain optimization Supply chain optimization Optimize our systems in procurement and purchasing, inventory management, product rationalization, and shipping and warehousing Succession planning 2014 Strategic Goals With a significant number of retirements expected in the next ten years, focus is required to both develop and hire talent to elevate the organization when retirement vacancies occur and to build the human capacity and expertise necessary to support our growth strategy and ensure the successful integration of acquired companies $150M Adjusted EBITDA by 2016 (pro forma basis) 23

24 Innovation We are a recognized leader in our industry for introducing new and innovative products and we will continue to focus on developing innovative product offerings that both increase the overall demand for frozen seafood products and grow our market share Industry consolidation Growth Strategy Seafood category is highly fragmented due to global supply chain and high number of species Substantial growth over the next several years must come from acquisitions that continue to consolidate the frozen seafood industry Four acquisitions since 2007 have significantly consolidated the U.S. food service channel and High Liner Foods has built a reputation as a successful consolidator with the ability to achieve meaningful synergies through integration of its acquisitions 24

25 Competitively Advantaged North American Platform Investment Rationale Strong Customer & Vendor Relationships Market Leader in North American Value-Added Seafood Market Unique Global Sourcing Network and Expertise Proven & Experienced Management Team Attractive Financial Profile and Strong Free Cash Flow Generation 25

26 QUESTIONS?