Clearwater posts big 1Q sales increase

Clearwater Seafoods Ltd. on Friday posted gross margins of CAD 11.1 million (USD 9.4 million, EUR 7 million) in the first quarter of 2009, up from CAD 4.6 million (USD 3.9 million, EUR 2.9 million) in the same period last year.

The Bedford, Nova Scotia, company also recorded sales of CAD 71 million (USD 60.4 million, EUR 44.6 million), up from CAD 13.9 million (USD 11.8 million, EUR 8.7 million) in 2008.

Clearwater attributes its encouraging first-quarter results to a favorable exchange rate for Canadian exporters, which resulted in a 24 percent increase in sales; a 70 percent increase in gross margins; and a 34 percent increase in EBITDA (earnings before interest, taxes, depreciation and amortization).

The launch of a new clam vessel and the completion of a new shrimp joint venture, both of which occurred in the second quarter of 2008, also helped boost the company's bottom line.

"Clearwater remains highly confident that it will complete its debt refinancing and this, combined with the improving operations, will enable Clearwater to maintain strong liquidity to operate the business," said Clearwater Chairman and CEO Colin MacDonald.

"The credit markets remain volatile and challenging. Therefore, while management expects to be successful in refinancing this debt, there is no guarantee that it will be able to do so in the current markets," he added. "Clearwater anticipates that its new debt covenants will include restrictions on future distributions, restrictions on capital expenditures as well as some agreed reductions in principal."

However, MacDonald remains optimistic about the future.

"Over the next several years, Clearwater will be focused on reducing its leverage," he said. "This will come from a combination of improved earnings levels, which will improve trailing EBITDA levels, and from using the positive cash flow of the business to reduce debt. Clearwater believes that over time this approach will provide for a lower cost of capital by restoring access to a greater variety of debt sources."

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