Clearwater Seafoods reported flat sales in the third quarter of 2018, with strong prices and increased landings of shrimp being offset by a smaller haul of clams and competitive conditions in the scallop market.
Clearwater’s third-quarter sales totaled CAD 164.2 million (USD 124.5 million, EUR 109.7 million), up slightly from CAD 163.6 million (USD 124 million, EUR 109.3 million) in Q3 2017. However, its year-to-date sales, at CAD 432.4 million (USD 327.8 million, EUR 288.8 million), remain below last year’s total of CAD 446.3 million (USD 338.3 million, EUR 298 million) so far in 2018.
In its Q3 earnings report, the Bedford, Nova Scotia, Canada-based company said it will benefit from the Canadian government’s reversal of its decision to redistribute 25 percent of the Arctic surf clam quota – of which Clearwater currently owns 100 percent – to a First Nations-backed operation. The process was marred by allegations of impropriety in how the process was handled, and in September, the government said it would restart the process, with the quota set to be redistributed in time for the 2020 season.
“This decision enabled Clearwater to avoid adjustments in our operations and workforce, keeping our people working in 2018 and 2019 and allowing economic benefits from this quota to remain in coastal communities where these year- round jobs are vital,” the company said in its Q3 report.
Clearwater said fishing 100 percent of the Arctic surf clam quota in 2017 netted it sales of CAD 109.2 million (USD 82.8 million, EUR 72.9 million). In its quarterly report, Clearwater expressed its intent to form a partnership with a First Nations fishing firm “to enhance access and promote Indigenous reconciliation, effective 2020.”
“Clearwater intends to participate in the new process in partnership with Indigenous communities,” it said. “Clearwater believes that it is best positioned to provide meaningful and tangible benefits to Indigenous partners given our assets and experience in this unique and capital-intensive fishery.”
In 2019, the company said it is expecting “meaningful and balanced growth” across all its sales regions, led by the Asia-Pacific region. It is predicting higher prices for its products and a favorable sales environment for higher-value species.
“Clam sales are expected to benefit from expanded distribution channels in China, particularly in Tier II and Tier III cities, favorable product mix, and the introduction of new clam products and formats, leveraging our existing licenses, as we continue to plan for success and long-term shareholder value creation in our clam business,” the company said.
For the third quarter, Clearwater’s earnings before interest, tax, depreciation and amortization (EBITDA) reached CAD 30.7 million (USD 23.3 million, EUR 20.5 million), down slightly from CAD 32.8 million (USD 24.9 million, EUR 21.9 million) it reported in the same quarter last year. Year-to-date earnings for the company totaled CAD 80.3 million (USD 60.9 million, EUR 53.6 million) at the end of the third quarter, compared to CAD 80.1 (USD 60.7 million, EUR 53.5 million) last year.
The company reported a strong sales mix, increased cost efficiencies, and favorable foreign exchange rates helped it achieve a higher percentage of sales-adjusted EBITDA, which rose from 18 percent in Q3 2017 to 18.6 percent in Q3 2018. The company’s competition of its fleet renewal program also opened up additional cash flow for Clearwater. It said it would use the cash to pay down debt and reduce its leverage.
Photo courtesy of Clearwater Seafoods
