Clearwater reported sales and adjusted EBITDA1 of $140.2 million and $27.5 million for the second quarter of 2016 versus 2015 comparative figures of $116.7 million and $22.2 million, respectively, representing growth of 20 per cent in sales and 24 per cent in adjusted EBITDA.
The growth in sales revenues and adjusted EBITDA were due primarily to higher sales volumes, improved margins and favorable exchange rates.
Volume growth was primarily attributable to langoustine, whelk and clam. This was partially offset by lower scallop and shrimp volumes associated with the timing of landings late in the quarter. At the end of the quarter, inventories in all species were solid and support a strong sales outlook for the third and fourth quarters of 2016.
Sales and gross margin were positively impacted by strong market demand in all regions as well as higher selling prices in home currencies and higher average exchange rates, partially offset by higher procurement costs and sales mix.
Gross margin as a percentage of sales improved to 26.3 per cent versus 24.0 per cent in 2015 due to strong sales prices for the majority of species as well as a strengthening US dollar and Yen against the Canadian dollar which had a $5.6 million net positive impact on sales and margins.
Adjusted earnings attributable to shareholders for the second quarter of 2016 decreased $3.3 million to $1.4 million primarily as a result of higher interest expense due to an increase in loan facilities on October 30, 2015 related to the financing of the Macduff acquisition. This was partially offset by higher sales volumes, strong sales prices and higher average foreign exchange rates.
Refer to the Management Discussion and Analysis for a breakdown of the non-IFRS measure and the related earnings attributable to shareholders.
Operating cash flows were in line with seasonal expectations and reflect the timing of planned investments in working capital. Strong harvesting conditions in the first and second quarter of 2016 allowed Clearwater to invest in inventories and receivables and position the company well to achieve strong annual adjusted EBITDA and free cash flows in 2016. Free cash flows were ($37.1) million in the second quarter of 2016 as compared to ($36.7) million in the second quarter of 2015.
Ian Smith, Chief Executive Officer, commented: "Exceptional harvesting conditions – especially in May and June of the second quarter of the year, have positioned us well for a strong performance in the third and fourth quarters of 2016."
"We are also very pleased with the continued strong performance and results of Macduff post- acquisition as well as our recently expanded clam fleet.."
Mr Smith concluded: "In 2016 Clearwater celebrates its 40th anniversary and kicks off the next five year, 2016 to 2020 strategic plan. In it, we continue to focus on executing with excellence against our six core strategies and see many attractive opportunities for future growth."
