INVESTOR PRESENTATION August 2016 DISCLAIMER: Certain statements - - PowerPoint PPT Presentation

INVESTOR PRESENTATION

August 2016

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DISCLAIMER:

• Certain statements made in this presentation are forward-looking and are subject to important risks,

uncertainties and assumptions concerning future conditions that may ultimately prove to be inaccurate and may differ materially from actual future events or results. Actual results or events may differ materially from those predicted. Certain material factors or assumptions were applied in drawing the conclusions as reflected in the forward-looking information. Additional information about these material factors or assumptions is contained in High Liner Foods’ Annual Report available on SEDAR (www.sedar.com) and the Investor Center section of High Liner Foods’ website (www.highlinerfoods.com).

PRESENTATION CURRENCY:

• High Liner Foods (“the Company”) began reporting its financial statements in USD in 2012, however

its common shares trade on the TSX and are quoted in CAD and therefore any references in this presentation to share price, dividends and market cap are in CAD.

NON-IFRS MEASURES:

• Certain non-IFRS financial measures and ratios are used when discussing the Company’s financial

performance that do not have a standardized meaning prescribed by IFRS, but which management believes provide useful information to both management and investors in measuring the financial performance and condition of the Company.

COMPANY OVERVIEW

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COMPANY OVERVIEW

TSX LISTINGS DATA

1 Public company since the 1960’s; listed on TSX in 1971 2 Source: TSX August 12, 2016 3 Effective: June 15, 2016

TSX symbol1 HLF Recent price2 CAD$19.95 52-week range2 CAD$10.10 - $20.31 Shares outstanding ~30.9M Total market cap2 ~CAD$616M Annual dividend3 CAD$0.52 per share Current yield3 ~2.6% HLF Three Year Share Price History2

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COMPANY OVERVIEW

VISION MISSION VALUES

To be the leading supplier

• f frozen seafood in North

America To radically simplify selecting, preparing and enjoying seafood at its best Customer-focused Innovative Responsible VISIONS, MISSION AND VALUES

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COMPANY OVERVIEW

INDUSTRY DRIVERS An aging, health-conscious population Health benefits tied to eating fish 45+ years of age account for half of seafood consumption

• Fisheries recovering around the world largely due to the sustainability efforts over the last

ten years

• Growth from aquaculture species
• Long-term demand growth still greater than supply

Long-term growth influenced by strong North American demographics

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COMPANY OVERVIEW

HIGH LINER FOODS CORPORATE HISTORY

1899

WC Smith founded (salt fish)

1945

National Sea Products created

1999

Name change to High Liner Foods

1926

High Liner brand created

1986

Fisher Boy acquisition

2007

FPI acquisition1 2010

Viking

acquisition

2011

Icelandic USA acquisition2

2013

American Pride Seafoods acquisition3

2014

Atlantic Trading Company acquisition4

1982

Commodore private label acquisition

1992

Northern Cod moratorium

2003/04

High Liner sells its fishing assets

2016 Today’s High Liner Foods

1 Acquired FPI’s North American marketing & manufacturing businesses 2 In 2005, Icelandic & Samband of Iceland merged 3 Acquired October 1st, 2013 4 Acquired October 7th, 2014

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COMPANY OVERVIEW

BUSINESS OVERVIEW

73% 27%

Geography

USA (incl. Mexico) Canada 79% 21%

Branding

HLF Brands Other 63% 37%

Channel

Foodservice Retail 66% 34%

Product Form

Value-added Other * The charts above reflect the Company’s business profile based on 2015 sales

• The North American leader in value-added frozen seafood
• In Canada, #1 market position in retail and largest foodservice supplier
• In the U.S., estimated #2 in retail value-added (including private label) on a volume basis and the leading

supplier of value-added products in foodservice

• Vision is to be the leading supplier of frozen seafood in North America

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COMPANY OVERVIEW

ADVANCED BUSINESS MODEL WITH MARKET BREADTH

Broadest Market Reach in Industry Market Leading Brands Diversified Global Procurement Frozen Food Logistics Expertise Innovative Product Development

2X the size of largest competitor in retail & food service channels (100% ACV) in Canada Largest grocery-chain supplier of private label value-added seafood in U.S. and Canada The largest food service suppliers of value-added seafood in U.S. Estimated #2 supplier

• f seafood by volume

in U.S. retail channel including private label and niche brands Strong global procurement built on long-term relationships with network of quality suppliers Full-time procurement and quality assurance personnel oversee procurement activities in Asia Geographically diverse procurement territory mitigates changes in the cost of raw materials State-of-the-art web- based IT system to manage logistics and quality for overseas suppliers Logistics expertise allows timely delivery

• f raw materials and

finished goods from

• ver 20 countries to

all key customers Seamless logistics process approach tailored to be cost- effective and customer oriented Scheduled deliveries to major customers

• n regular basis

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COMPANY OVERVIEW

MANUFACTURING FOOTPRINT

• Continuous assessment of

manufacturing capabilities vs. current and future requirements to ensure low- cost and efficient operations

• Value-added fish operations at New

Bedford facility ceased in mid-July 2016 to eliminate excess manufacturing capacity, with expected annual pre-tax savings of ~ $7.0M

• On August 16, 2016, entered into a

purchase and sale agreement to sell the scallop business and the New Bedford facility (deal to close in Q3 2016)

Lunenburg, NS (Can) Capacity p.a.: 50M lbs Utilization: 65% Portsmouth, NH (U.S.) Capacity p.a.: 84M lbs Utilization: 71% New Bedford, MA (U.S.) Scallop Processing Capacity p.a.: 12M lbs Utilization: 41% New Bedford, MA (U.S.) Value-Added Fish Processing Capacity p.a.: 87M lbs Utilization: 50% Newport News, VA (U.S.) Capacity p.a.: 94M lbs Utilization: 64%

Aggregate production capacity of ~327M lbs per annum (228M lbs excluding the New Bedford facility), with the ability to increase 12M lbs p.a. with minimal capital investment

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COMPANY OVERVIEW

LEADER IN SUSTAINABILITY

• Committed to sourcing all our seafood from “certified sustainable or responsible” fisheries and aquaculture
• In cooperation with NGOs, industry partners and other like-minded businesses, we have assumed a leadership

role in substantial fishery and aquaculture improvements around the world

• Recognized as a global leader in driving best practice improvements in wild fisheries and aquaculture
• In late 2015, High Liner Foods ranked top seafood company in North American and one of the top ten worldwide in

a comprehensive benchmark report by SeafoodIntelligence.com that examined seafood companies’ sustainability reporting and transparency

• In early 2015, High Liner Foods and Bill DiMento, VP of Quality Assurance, Sustainability and Government Affairs,

awarded “Grand Champion Award” by SeaWeb, an award SeaWeb created to recognize outstanding contribution across all four of the key areas of global sustainability that it looks to recognize parties for: leadership, vision, innovation and advocacy

• Continued focus on improved sustainability across our supply chain beyond the seafood we source and other

areas of corporate social responsibility.

2016 PERFORMANCE HIGHLIGHTS

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2016 PERFORMANCE

STRATEGIC GOALS

The current year’s strategic goals set a strategic direction consistent with the prior year, which is to grow our business, operate it as efficiently as possible and ensure that we have the right talent: 1) Organic sales growth – primary focus in 2016

• Strive for commercial excellence
• Innovation

2) Operating efficiency and cost management

• Annual operating cost savings of at least $20M on a run rate basis by the end of 2016

(full benefit to be realized in 2017)

• “High Liner Foods Operating System” – creating a culture of operational excellence

3) Talent management

• Acquiring, developing and retaining the best talent are critical to the success of the

business

• Active development of future leaders

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2016 PERFORMANCE

YTD HIGHLIGHTS (COMPARED TO YTD Q2 2015)

• Sales volume:
• Q1 decreased by 1.3.M lbs (1.5%) - impact of shorter promotional period associated with

Lent in 2016 and lower demand for traditional breaded and battered frozen seafood products

• Q2 increased by 1.0M lbs (1.6%) – higher sales volume from our U.S. foodservice

business

• Sales decreased by $21.4 (4.0%) - price decreases (related to lower raw material costs),

change in product mix, the impact of a weaker Canadian dollar on the conversion of our CAD- denominated operations to the USD presentation currency and lower YTD sales volume

• Adjusted EBITDA as a percentage of sales increased 110 basis points to 9.2% reflecting lower

raw material costs and higher supply chain optimization savings

• Strong free cash flow from operations used to lower debt and improve debt-to-Adjusted

EBITDA ratio to 3.4x (compared to 4.0x at the end of Fiscal 2015)

• On August 16, entered into purchase and sale agreement with Blue Harvest Fisheries, whereby

Blue Harvest will acquire the assets of our scallop business, along with our facility in New Bedford (deal expected to close in Q3 2016)

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2016 PERFORMANCE

Q2 YTD SALES (USD MILLIONS)

$536.6 $515.2 $0

$100 $200 $300 $400 $500 $600 2015 2016

• Pounds sold decreased 0.2% to 150.5M
• Sales in domestic currency were $555.4M compared to $568.7M
• Weaker CAD decreased reported USD sales by $8.9M relative to the conversion impact last year
• Lower sales volume, price decreases and a change in product mix

2016 PERFORMANCE

Q2 YTD EBITDA (USD MILLIONS)

$43.4 $47.1 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 2015 2016 Standardized EBITDA* Adjusted EBITDA*

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• Adjusted EBITDA in domestic currency was $50.6M compared to $45.6M
• Increased as a percentage of sales from 9.2% compared to 8.1%
• Lower raw material prices, higher supply chain optimization savings, lower fuel prices and reduced marketing

costs in the U.S., partially offset by lower sales volume, impact of a weaker CAD and higher incentive expenses

* Please refer to Pages 23 for the definition of Standardized EBITDA and Adjusted EBITDA

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2016 PERFORMANCE

Q2 YTD DILUTED EPS (USD)

$0.65 $0.77

$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90

2015 2016

Diluted EPS Adjusted Diluted EPS* * Please refer to Pages 24 for the definition of Adjusted Diluted EPS

$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Annual Dividend paid per Share ($CAD)

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2016 PERFORMANCE

DIVIDEND HISTORY

13-year CAGR (2003 to 2016): 26%

*Assumes Q4 dividend at same rate approved for Q3 of CAD$0.13 $0.51*

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2016 PERFORMANCE

NET INTEREST-BEARING DEBT TO ADJUSTED EBITDA RATIO

Net interest-bearing debt / rolling 12 month Adjusted EBITDA

4.4x 3.2x 4.0x 4.4x 4.0x 3.4x 3.0x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x Dec 31/11 Pro forma Icelandic Acquisition Sep 28/13 Pre-American Pride Acquisition Sep 28/14 Pre-Atlantic Trading Acquisition Jan 3/15 Jan 2/16 Jul 2/16 Target

HISTORICAL PERFORMANCE HIGHLIGHTS

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HISTORICAL PERFORMANCE

FISCAL 2015 HIGHLIGHTS

Strategic:

• Organic growth challenges due to a number of external and internal factors
• Significant progress on supply chain optimization focused on improved efficiency and cost savings at both the

plant and entity level ($6M+ savings realized in 2015 related to these initiatives)

• Completed succession planning at the senior-most level of the Company

Financial (compared to Fiscal 2014):

• Lower revenue, Adjusted EBITDA and Adjusted Net Income reflecting lower sales volume (organic growth

challenges and one week less of sales), increased raw material costs not fully recovered through price increases and the significant decline in the USD/CAD exchange rate, partially offset by supply chain

• ptimization savings
• Significantly improved free cash flow used to reduce debt and improve debt-to-Adjusted EBITDA ratio to 4.0x at

the end of Fiscal 2015 (compared to 4.4x at the end of Fiscal 2014)

• Quarterly dividend increased in Q2 by 14.3% to CAD$0.12 per share (CAD$0.48 annualized)

Operational:

• Ceased operations in Q2 at our previously leased manufacturing facility in Malden, MA
• Restructuring and recruitment of new talent to key sales positions to address internal sales execution and

promotional challenges

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HISTORICAL PERFORMANCE

SALES

$- $200 $400 $600 $800 $1,000 $1,200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD millions

$1.0B

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HISTORICAL PERFORMANCE

EBITDA (Earnings before interest, taxes, depreciation and amortization)

$- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD millions

Standardized EBITDA: Earnings before interest, taxes, depreciation and amortization as reported in the Company’s annual audited financial statements. Adjusted EBITDA: Standardized EBITDA as defined above, adjusted to exclude: business acquisition, integration and other expenses including those related to the cessation of plant operations; gains or losses on disposal of assets; and share-based compensation expense.

$78.2M 2015 Highlights:

• Lower sales volume and

lower product margins (higher costs not fully recovered through prices, increased promotional spending, unfavourable shift in product mix in the U.S. and lower margin ATC sales), partially

• ffset by lower distribution

and SG&A expenses

• Weaker CAD also negatively

impacted EBITDA in USD

HISTORICAL PERFORMANCE

DILUTED EPS AND ROE

0% 5% 10% 15% 20% 25% 30% $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Return on Equity Diluted Earnings per Share Diluted EPS Adjusted Diluted EPS Return on Equity

$1.14

Diluted EPS is net income as reported divided by the average diluted number of shares. Adjusted Diluted EPS is Adjusted Net Income(1) divided by the average diluted number of shares.

(1) Adjusted Net Income is net income as reported excluding the after-tax impact of: business acquisition, integration and other non-routine costs, including those related to the

cessation of plant operations; accelerated amortization of deferred financing costs and other items resulting from debt refinancing and amendment activities; non-cash expense (income) related to marking-to-market an embedded derivative associated with the LIBOR floor included in long-term debt; non-cash expense (income) related to marking-to-market interest rate swaps not designated for hedge accounting; and share-based compensation expense. 24