Flat earnings for Clearwater, company predicts growth in second half of 2019

Published on
August 8, 2019

Clearwater’s report on its second-quarter results indicate that the company experienced relatively flat earnings over the same period in 2018, with slight increases in sales. 

The company reported an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of CAD 30.25 million (USD 22.7 million, EUR 20.3 million) in the 13 weeks ending on 29 June, compared to an adjusted EBITDA of CAD 30.5 million (USD 22.9 million, EUR 20.5 million) over the same period in 2018. Despite the falling earnings, the company saw a sales growth of 3.9 percent, earning CAD 153,874,000 (USD 115.7 million, EUR 103.2 million) in 2019 verse CAD 148,142,000 (USD 111.4 million, EUR 99.4 million) in 2018. 

The company's growth in sales to Asia was also a highlight of Clearwater’s report. Asia represented 43 percent of year-to-date sales in 2019, compared to 39 percent in the same period in 2018. 

The company also announced that for the first time, it is entering into the Canadian sea cucumber fishery. 

“Clearwater has leveraged its industry-leading and well-established sales capability, extensive distribution network, geographic proximity to the resource and technical expertise in value-added processing,” the company’s report said. “Canadian sea cucumber is an abundant resource and we expect this new species to provide an attractive source of long-term incremental sales and profit.”

The fishery is an in-shore fishery, and according to Clearwater CEO Ian Smith, it presented an opportunity for the company.

“One of the major geographic fishing areas is in very close proximity to one of our existing facilities,” he said. “We were waiting for the opportunity to enter this business.”

Sea cucumber is a popular dish in many Asian countries, one of the target markets for the new products. In recent years, China has suffered significant die-offs in the farmed industry. 

Smith also pointed out that exports of lobster to China have increased, and have likely benefitted from tariffs China has placed on U.S. products. 

“I think they were on a trajectory to increase anyway,” he said. “But there’s no doubt that inside of those increases is some shift of sales from the U.S. market to the Canadian market.”

Clearwater also reported that it has secured full access to the total allowable catch of the Eastern Canada Arctic surf clam fishery, which totals 38,000 metric tons. In 2018, part of that quota was awarded to the Five Nations Clam Company, a collaboration of five First Nations from Quebec, Nova Scotia, Prince Edward Island, New Brunswick, and Newfoundland and Labrador. The decision was intended to give an opportunity to a First Nations-owned company. 

However, that decision was reversed later in the year, and since then Clearwater has retained 100 percent of the surf clam quota. 

In the meantime, Clearwater announced it has entered into a voluntary agreement with 14 Indigenous communities in the area, “providing long-term stable access to the Arctic surf clam resource” for the next 50 years. 

“The agreement anticipates a number of potential scenarios the government could take,” Christine Penney, vice president of sustainability and public affairs at Clearwater, said. “We feel the agreement we’ve struck with the first nations is very strong.”

The new agreement, Penney said, “utilizes Clearwater’s long-term business for the benefit of First Nations.”

“We feel quite confident that we’re likely to be successful in any process coming up,” she said. 

Clearwater also highlighted core strategies moving through 2019 and beyond: 

  • Expanding access to supply, through improved utilization and productivity of core licenses 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.
  • Increase margins by improving price realization and cost management. 
  • Pursue and preserve the long-term sustainability of resources on land and sea.
  • Build organizational capability, capacity, and engagement. 

The company predicts that the second half of 2019 will see both top- and bottom-line growth due to the seasonality of purchasing patterns, as many of the company’s shellfish-based products are purchased in larger number during later months as the holidays approach. 

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