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2008-03-28 15:35:31 CET 2008-03-28 15:36:31 CET REGLAMENTUOJAMA INFORMACIJA Clearwater Finance Inc. - Ársreikningur- Clearwater Reports Annual 2007 ResultsAttention Business/Financial Editors CLEARWATER REPORTS ANNUAL 2007 RESULTS /Not for release over US newswire services/ HALIFAX, March 28/CNW/ - (TSX:CLR.UN): Sales for 2007 were $302.7 million with a gross profit of $65.9 million compared to $315.7 million and $87.3 million respectively in 2006. 2007 distributable cash generated was $13.1 million, $18.4 million less than distributions paid. Trustees continue work on strategic review. Expectations for 2008 include an improved market for scallops and higher clam earnings with the delivery of the converted Arctic Endurance. Clearwater Seafoods Income Fund (the “Fund”) today reported fourth quarter and annual 2007 results that demonstrate improved earnings for the second half of 2007 compared to the first half of the year. The quarterly and annual results, however, were lower than the strong 2006 results due to a number of factors including vessel disruptions and foreign exchange. The results for the second half of 2007 demonstrated a continued improvement in profit margin over the first half of the year, however distributable cash was weaker than 2006 and managements expectations for 2007. A number of factors had significant impacts on Clearwater's 2007 performance. First, the significant depreciation of the US dollar during the year and especially in the last two quarters, negatively impacted margins by $18.1 million when current effective rates are compared to those of 2006. The fluctuating exchange rates also resulted in realized foreign exchange income of $0.9 million in 2007 on Clearwater's economic hedging program, a reduction of $12.1 million compared to 2006. While the Fund maintains a currency management program to mitigate the risk of exchange fluctuations, during the year foreign exchange had a $30.2 million impact on sales and distributable cash when compared to 2006. More than 80% of Clearwater's sales are denominated in currencies other than the Canadian dollar, whereas the majority of its expenses and all of its cash distributions are in Canadian dollars. As a result, foreign exchange fluctuations can have a material impact on Clearwater's financial results and the amount of cash available for distribution to unit holders. Second, Clearwater's ability to harvest clams was limited by the loss of two clam vessels, the Atlantic Pursuit in December 2006 and the Seahunter in July of 2007. There was also the need to perform maintenance on the vessels in operation throughout the year. Clearwater is currently investing approximately $16 million to convert a vessel from its shrimp fleet into a clam vessel, with delivery expected in the second quarter of 2008. Once the vessel becomes operational in the third quarter of 2008, this investment in new harvesting capacity will result in growth in sales volumes and greater harvesting efficiencies, which will serve to boost the profitability of the clam business. The re-assignment of the vessel from the shrimp fleet is not expected to have any material impact on the shrimp business, as Clearwater anticipates that the quota will be included in a new joint venture. And third, the scallop market in 2007 was weaker than anticipated. Clearwater was able to partially mitigate the impacts of the softer market by increasing its sales volumes by 18%, however the margins did not reflect this increased volume. The scallop market rebounded in the second half of the year as compared to the first half with increased sales volumes, however its growth was slower than had been expected and there was no increase in selling prices when converted to Canadian dollars. Nevertheless, Clearwater was able to decrease its level of inventory, as the volume of scallops sold in the fourth quarter increased significantly compared to the earlier quarters of 2007. The factors listed above led to distributable cash generated in 2007 of $13.1 million, versus distributions declared of $31.5 million, an $18.4 million shortfall. On January 21, 2008 the Trustees of the Fund decided to suspended monthly distributions due to the financial results. “The Trustees will continue to monitor the distribution policy with distributions to be determined quarterly and paid in arrears after considering the traditional criteria in determining the distribution policy.” said Tom Traves, Chairman of the Trustees. Strategic Review “The Trustees recognize the importance of ensuring the Fund offers the best return for our investors. As a result, in the third quarter of 2007 we initiated a strategic review to examine various opportunities that might exist to improve unit holder value, from strategic partnerships to alternative structures for the company. We are continuing to work together with our financial advisor, BMO Nesbitt Burns, to determine the opportunities available to Clearwater given the Company's 2007 performance and the Canadian government income trust legislation that will impose a tax on all income trusts beginning in 2011. There is, of course, no certainty that any transactions or fundamental changes to Clearwater's business will result from this strategic review. However, the Trustees and Directors felt that such a detailed review was warranted given the challenges the Company faced in 2007. Regardless of the direction in which this review may take us, our primary goal will remain, as always, to maximize unit holder value,” stated Tom Traves. Summary In summary, Clearwater's 2007 gross profit was significantly impacted by a soft scallop market, sudden and considerable depreciation in the US dollar, and vessel disruptions in the clam business. The stronger earnings in the lobster and shrimp businesses helped mitigate the impacts of restricted harvesting capacity in the clam business and the negative impact from foreign exchange. “Clearwater has built its reputation over more than three decades on its ability to deliver a high quality product to its customers, regardless of what external challenges might come its way from time to time,” said Colin MacDonald, Chief Executive Officer of Clearwater. “Our performance in mitigating the impacts of these factors, and continuing to supply our customers despite them, shows that we are well-equipped to return our business to the level of performance we and our customers and investors expect. We have leading-edge technology, strong quota ownership, and the industry's most committed employees and we look forward to working to deliver continuing improvements in performance for 2008.” Outlook Clearwater weathered a very challenging year and experienced a number of negative external factors that impacted the business. Foreign exchange negatively impacted sales and earnings by approximately $30.2 million. The clam business was impacted by the loss of two vessels and the maintenance issues with maintaining two older vessels. Finally, we experienced a slower scallop market compared to the prior year. However, Clearwater remains well-positioned to build on our three decades as a Canadian leader in the global seafood business. Having suspended monthly distributions in January 2008 due to lower distributable cash generated in 2007 and the strategic review in progress, Clearwater will continue to monitor its financial position on a monthly basis. At the same time, the Trustees and special committee are committed to thoroughly examining all the options available, to maximize unit holder value and foster long-term growth, through the strategic review that we announced in the fourth quarter of 2007. We hold significant quotas in our key species, we have leading-edge, innovative harvesting and processing technologies and we are vertically integrated. Our business strategies to deliver long-term value are sound. Management continues to believe there is strong potential for growth in the clam business. With the delivery of the new clam vessel in 2008, combined with the ocean bottom mapping technology, the clam business will begin to realize the returns of these investments in 2008 and beyond. In addition, in 2008 we anticipate a higher Canadian scallop total allowable catch, improved profit in the lobster business and reduced overhead costs. All of this provides the opportunity for improved results in 2008. We have an outstanding and dedicated workforce, excellent quota positioning, global customer relationships that span decades and we look forward to taking up the opportunities that 2008 will bring. Colin MacDonald Chief Executive Officer Clearwater Seafoods Limited Partnership March 28, 2008 2007 Fourth Quarter Conference Call and Webcast Clearwater will review its fourth quarter financial results via conference call on Friday, March 28, 2007 at 4:00 p.m. Eastern Time (5:00 p.m. Atlantic). The call will be chaired by Colin MacDonald, Clearwater's Chief Executive Officer, and he will be joined by Robert Wight, the Chief Financial Officer. You can access the call by dialing 866-250-4877 or 416-646-3097. A replay will be available through April 28, 2008 at 877-289-8525 or 416-640-1917 using pass code 21250964 (pound key). To listen to the web cast of this event, please enter http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2194280 in your web browser. Financial Statements and Management's Discussion and Analysis Documents For an analysis of Clearwater and Clearwater Seafoods Income Fund's quarter and annual results, please see management's discussion and analysis and annual 2007 financial statements. These documents can be found in the disclosure documents filed by Clearwater Seafoods Income Fund with the securities regulatory authorities available at www.sedar.com or at its website (www.clearwater.ca). Financial Highlights and Significant Items Key Financial Figures: See attachment 1. Please refer to the Distributable Cash definition in the MD&A for detailed reconciliations of these amounts. The Fund receives distributions from Clearwater and in turn distributes them to its unitholders. As such, distributable cash for the Fund is equal to the distributions received and paid. 2. The Fund does not consolidate the results of Clearwater's operations but rather accounts for the investment using the equity method. Due to the limited amount of information that this would provide on the underlying operations of Clearwater, the financial highlights of Clearwater are included above. About Clearwater Clearwater is recognized for its consistent quality, wide diversity and reliable delivery of premium seafood, including scallops, lobster, clams, coldwater shrimp, crab and ground fish. Since it's founding in 1976, Clearwater has invested in science, people, technology, resource ownership and resource management to preserve and grow its seafood resource. This commitment has allowed it to remain a leader in the global seafood market. For further information: Robert Wight, Chief Financial Officer, Clearwater, (902) 457-2369; Tyrone Cotie, Director of Corporate Finance and Investor Relations, Clearwater, (902) 457-8181. |
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