Clearwater Reports Continued Growth

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION 
IN THE UNITED STATES/ 
HALIFAX, Nov. 1, 2013 /CNW/ - (TSX: CLR): 


    --  Clearwater reports 12% growth in both sales and adjusted EBITDA
        in third quarter of 2013.
    --  Year to date sales growth of 7.9% and adjusted EBITDA growth of
        6.2%. 
    --  Results included twelve month rolling adjusted EBITDA of $75.6
        million and free cash flows of $25.2 million for 2013 versus
        $69.5 million and a net use of cash of $5.3 million in the
        prior period, respectively.
    --  Management maintains strong and positive full year outlook
        consistent with long term growth targets including sales growth
        greater than 5%; adjusted EBITDA margins greater than 18%; and
        return on assets greater than 12%

Third quarter results

Clearwater reported sales of $114.0 million and adjusted EBITDA(1) of $28.9 
million for the third quarter of 2013 versus 2012 comparative figures of 
$101.6 million and $25.7 million. Free cash flows(1) were $11.4 million 
versus $13.0 million in the third quarter of 2012. Margins improved 3.7 
percentage points from 24.0% in 2012 to 27.7% for 2013.

Adjusted EBITDA for the third quarter of 2013 increased $3.2 million, or 
12.3%, as compared with the third quarter of 2012 due to a strong and growing 
market demand that improved sales prices for the majority of species. 
Margins were partially offset by higher clam and scallop harvest costs.

Free cash flow from operations improved in the third quarter of 2013 as a 
result of strong sales prices and volumes which contributed to improved 
margins. Demand remains strong for all species positively impacting 
margins. This was offset by higher capital expenditures from scheduled 
refits and vessel conversions, and the timing of payments to minority interest 
partners. Refer to the Management discussion and analysis for further 
information on free cash flow.

Year-to-date results

Clearwater reported sales of $277.6 million and adjusted EBITDA(1) of $56.8 
million for the 39 weeks year to date versus 2012 comparative figures of 
$257.4 million and $53.4 million. Year-to-date use of cash was $12.6 million 
versus $20.5 million in 2012. Gross margins improved 1.3 percentage points, 
to 22.2% as compared with the same period in 2012.

Adjusted EBITDA for 2013 increased 6.2% due to a strong and growing market 
demand that improved sales prices for scallops, lobster and snow crab. 
Margins were partially offset by higher clam, scallop and shrimp harvest costs.

In 2013 the use of cash improved by $7.9 million to $12.6 million as a result 
of improved margins and lower interest expense and the timing of dividend 
payments received from a joint venture.

Seasonality

Clearwater's business experiences a seasonal pattern in which sales, margins 
and adjusted EBITDA are lower in the first half of the year while investments 
in capital expenditures and working capital are higher resulting in lower free 
cash flows in the first half of the year and higher free cash flows in the 
second half of the year.

Results for the 2013 third quarter and year-to-date period are consistent with 
Management's expectations and position the business to deliver on its annual 
targets for 2013.

When considering and seeking to understand seasonality, it is useful to look 
at rolling twelve month results. Rolling twelve month results include sales 
growth of 7.5% to $370.6 million, adjusted EBITDA growth of 8.7% to $75.6 
million and growth in free cash flows of $30.5 million to $25.2 million.

Outlook

Global demand for seafood is outstripping supply, creating favorable market 
dynamics for vertically integrated producers such as Clearwater which have 
strong resource access.

Demand has been driven by growing worldwide population, shifting consumer 
tastes towards healthier diets, and rising purchasing power of middle class 
consumers in emerging economies.

The supply of wild seafood is limited and is expected to continue to lag 
behind the growing global demand. This supply-demand imbalance has created a 
market place in which purchasers of seafood are increasingly willing to pay a 
premium to suppliers that can provide consistent quality and food safety, wide 
diversity and reliable delivery of premium, wild, sustainably harvested 
seafood.

Clearwater, like other vertically integrated seafood companies, is well 
positioned to take advantage of this opportunity because of its licenses, 
premium product quality, diversity of species, global sales footprint, and 
year-round harvest and delivery capability.

Ian Smith, Chief Executive Officer, commented, "Management is pleased with the 
progress made in the third quarter and year-to-date periods and expects the 
Company to hit its annual targets for 2013."

Mr. Smith continued "Market demand for our products is strong and has 
contributed to improvements in revenue and free cash flow. As we continue to 
invest in our business and increase our access to supply, we expect to 
continue to deliver sustainable and profitable growth in 2014 and beyond."  

Annual Targets for 2013

Management set the following annual targets for 2013:
    --  sales growth - 5% or greater,
    --  adjusted EBITDA margins - 18% or greater,
    --  return on assets - 12% or higher

Key Performance Indicators                                    

In 000's of Canadian dollars

(unless otherwise indicated)                                  
                                 September 28, September 29,

Rolling 12 months ended                   2013          2012     Target

Profitability                                                 

Adjusted EBITDA                         75,568        69,546  
                                                              

Adjusted EBITDA                          20.4%         20.2%      18.0%

(as a % of sales)                                            Or Greater
                                                              

Sales                                  370,604       344,630  

Sales growth                              7.5%          4.6%       5.0%
                                                              

Financial Performance                                         

Free cash flows                         25,199       (5,317)  
                                                              

Leverage (adjusted EBITDA                  3.1           3.6        3.0
multiple)
                                                               Or lower
                                                              

Returns                                                       

Return on assets                         12.5%         11.9%        12%
                                                             Or Greater

Note: Refer to definitions
within the Management Discussion
and Analysis                                                  



Management remains focused on six key initiatives to create shareholder value.

  1. Sustainably growing adjusted EBITDA and sales - Clearwater has
     experienced continued growth in rolling twelve month adjusted
     EBITDA and sales by controlling costs and improving productivity,
     product mix and prices.
     Clearwater will continue to lever its vertical integration to
     maximize value per pound in existing segments and to capture a
     growing share of the seafood value chain through the introduction
     of value-added new products in certain core species.
     Management expects that the trend of earnings growth to continue
     in 2013 despite lower available supply of inventories to start the
     year and difficult weather conditions for harvesting in the first
     half of the year.  During the summer months Clearwater realized
     improved harvesting conditions and this combined with strong
     demand, is leading to stronger sales, margins and adjusted EBITDA
     in the second half of 2013 enabling Clearwater to continue the
     trend of growth in 2013.
     In June 2013 the Company announced the planned investment in a
     third vessel for its' clam business.
     This investment is estimated at $45 million. A vessel with
     suitable size hull and power configuration has been sourced and a
     yard is being commissioned to commence vessel conversion  in the
     first quarter of 2014.  Management expects to complete conversion
     work over a period of 18 months and enter the new vessel into
     service in 2015.
     This investment will drive growth in Clearwater's clam business by
     expanding access to clam supply by approximately 60% by 2017, at
     which time Clearwater expects to earn incremental contribution
     margins of approximately $8 million per year.

  2. Generating strong free cash flows- Clearwater is focused on
     increasing free cash flows through generating strong cash
     earnings, managing its working capital and carefully planning and
     managing its capital expenditure program.  Seasonality results in
     lower free cash flows higher debt balances and higher leverage in
     the first half of the year and higher free cash flows, lower debt
     balances and lower leverage levels in the second half of the year.
     In addition certain large investments in longer term assets, for
     example vessel conversion/acquisitions, are funded with long term
     capital such as amoritizing term loans.  As a result Clearwater
     does not deduct such capital expenditures in the determination of
     free cash flows but rather deducts the related debt payments.
     Free cash flow for the rolling 12 month period ending September
     28, 2013 increased by $30.5 million to $25.2 million as compared
     to the same period in 2012 as a result of improvements in cash
     flows from operations.  Improvements were a result of strong
     demand for the majority of species contributing to higher prices
     and sales volumes.  In addition lower interest costs and a
     reduction in the use of working capital contributed to the
     improvement in free cash flow.

  3. Improving the capital structure - During the second quarter of
     2013 Clearwater successfully completed a refinancing of
     substantially all of its senior debt facilities. The new capital
     structure provides financing for $45 million investment in a new
     vessel for the Company's clam harvesting operations, reduces the
     overall cost of debt and annual interest costs by 1.75 percentage
     points to 4.75% or approximately $2.6 million per year, further
     enhances liquidity through the use of a revolving debt facility
     that is not limited by a borrowing base and provides full
     availability through the fiscal period of the full amount of the
     $75 million facility and allowed for the early redemption of 7.25%
     convertible debentures.
     As of September 28, 2013 leverage decreased to 3.1x adjusted
     EBITDA from 3.6x as of September 29, 2012.
     Although this financing and the previously mentioned investment in
     a third clam vessel will result in an increase in total leverage
     for the next 2 years, management remains committed to a long-term
     leverage goal of 3x or lower.

  4. Focused management of foreign exchange - Clearwater has a focused
     and targeted foreign exchange hedging program to reduce the impact
     of short-term volatility in exchange rates on earnings. This,
     combined with stronger processes for price management reduces the
     impact of exchange rate volatility on the business.  Clearwater
     has approximately 73% of its estimated US Dollar, Euro and Yen
     exposures for 2013 hedged at rates of 0.986, 1.25 and 0.013
     respectively and approximately 33% of its estimated US Dollar,
     Euro and Yen exposures for 2014 hedged at rates of 0.984, 1.37 and
     0.011 respectively.

  5. Building world class leadership, management, sales and marketing
     capabilities - Clearwater has begun implementing best in class
     programs for key account management, new product development,
     sales and operations planning, recruitment and compensation
     practices.  In addition, over the past two years Clearwater has
     added a number of new people to its senior management team and
     its' Board of Directors and is implementing a more robust ERP
     system to provide enhanced business information to support
     management decision making.

  6. Communicating underlying asset values - Clearwater has an
     industry-leading portfolio of quotas that provide strong security
     of underlying value to lenders and investors.  In 2012 an
     independent appraisal placed a value on these quotas of $453
     million.  Clearwater obtained further independent support for the
     value in these licenses in the third quarter of 2012 when the
     Arctic surf clam fishery received the Marine Stewardship Council
     (MSC) certification. These species join the Clearwater family of
     MSC-certified sustainable seafood offerings including Canadian sea
     scallops, Argentine scallops, Canadian coldwater shrimp and
     Eastern Canadian offshore lobster. Clearwater now boasts a total
     of seven species certified sustainable by the MSC, completing the
     certification of all its core products, and giving the Company the
     widest selection of MSC-certified species of any seafood harvester
     worldwide.


Management believes that it has the correct strategies and focus to provide 
sustainable competitive advantage and long-term growth. These strategies 
include: 
1. Expanding access to supply;
  2. Targeting profitable and growing markets, channels and customers;
  3. Innovating and positioning our products to deliver superior 
 customer satisfaction and value;
  4. Increasing margins by improving price realization and cost 
 management;
  5. Preserving the long-term sustainability of our resources; and
  6. Improving our organizational capability and capacity, talent, 


     diversity and engagement

Management also believes that it has the people, processes and financial 
resources to execute these strategies and create value for its shareholders. 
This includes the capacity to execute Clearwater's five year strategic plan. 
This plan, developed and initiated in 2012, has the stated aim to achieve 
$500.0 million in sales and $100.0 million in adjusted EBITDA by the end of 
2016 or earlier.

1 - Refer to definitions within the Management discussion and Analysis

2- Clearwater's business experiences a predictable seasonal pattern in which 
sales, margins and adjusted EBITDA are lower in the first half of the year 
while investments in capital expenditures and working capital are higher. This 
normally results in negative cash flows in the first half of the year. We 
refer to the negative cash flows as "a net use of cash" in this document.

Financial Statements and Management's Discussion and Analysis Documents

For a detailed analysis of Clearwater's 2013 third quarter results, please see 
Clearwater's third Quarter 2013 Report, which includes Management's Discussion 
and Analysis and the related financial statements. These documents can be 
found in the disclosure documents filed by the Corporation with the securities 
regulatory authorities available at www.sedar.com or on Clearwater's website 
at www.clearwater.ca.
                                                                                                 
                                                                            Rolling 12 months
                      13 weeks ended                  Year to date                ended
                September      September      September      September   September   September
                 28, 2013       29, 2012       28, 2013       29, 2012    28, 2013    29, 2012
                                                                                              

Sales        $    113,982   $    101,553   $    277,647   $    257,357   $ 370,604   $ 344,630

Earnings           27,224         17,618         15,596         12,186      26,114      28,576

Basic
Earnings per
share                0.48           0.30           0.19           0.13         N/A         N/A

Diluted
Earnings per
share(1)             0.47           0.27           0.19           0.13         N/A         N/A
                                                                                              

Adjusted
EBITDA( 2)   $     28,901   $     25,746   $     56,756   $     53,431   $  75,568   $  69,546
                                                                                              

Shares
outstanding,
at
period-end
( )            50,948,698     50,948,698     50,948,698     50,948,698         N/A         N/A

Weighted
average
shares on a
fully

diluted
basis          53,428,992     60,069,575     56,778,762     67,882,334         N/A         N/A

1. Diluted earnings per share for the 39 weeks ended September 28, 2013
   and September 29, 2012 was anti-dilutive.


2. Please see the Management's Discussion and Analysis for a 
reconciliation of adjusted EBITDA to the financial statements. 
COMMENTARY REGARDING FORWARD-LOOKING STATEMENTS 
This news release may contain "forward-looking information" as defined in 
applicable Canadian securities legislation. All statements other than 
statements of historical fact, included in this release, including, without 
limitation, statements regarding future plans and objectives of Clearwater, 
constitute forward-looking information that involve various known and unknown 
risks, uncertainties, and other factors outside management's control. 
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 including, but not limited to, total allowable catch levels, selling 
prices, weather, exchange rates, fuel and other input costs. There can be no 
assurance that such information will prove to be accurate and actual results 
and future events could differ materially from those anticipated in such 
forward-looking information. 
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, clams, coldwater shrimp, 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.
 

SOURCE  Clearwater Seafoods Incorporated 
Robert Wight, Chief Financial Officer, Clearwater, (902) 457-2369;  Tyrone 
Cotie, Treasurer, Clearwater, (902) 457-8181. 
To view this news release in HTML formatting, please use the following URL: 
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CO: Clearwater Seafoods Incorporated
ST: Nova Scotia
NI: FBR FOD FIN MAR ERN  
-0- Nov/01/2013 12:22 GMT
 
 
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