AGM 2024

May 14, 2024

Good morning, everyone. My name is James Bishop. I'm Executive Vice President, General Counsel, and Corporate Secretary of High Liner Foods Incorporated. Welcome to our annual general meeting and thank you for joining us today. Before our chair calls the meeting to order, I would like to remind everyone that similar to previous years, our annual general meeting is being broadcast live over the Internet, allowing those with Internet access to view and listen to the meeting online, and allowing registered shareholders with a control number to participate online. We are also pleased to be able to offer a toll-free conference call number as a way for those shareholders without Internet access to listen to the webcast and ask questions. For those unable to join us this morning, the recorded proceedings will be available on our corporate website at www.highlinerfoods.com. Before we begin, please note that our presentations this morning include forward-looking statements with respect to High Liner Foods, which are subject to important risks and uncertainties and based on information and assumptions believed to be reasonable at the time they were made. Actual results or events could differ materially from those described in the forward-looking statements. Please take a moment to review our full position regarding forward-looking statements displayed on the slide. The company reports its consolidated financial information in U.S. dollars, and the results to be discussed today are stated in U.S. dollars unless otherwise noted. The common shares of High Liner Foods trade on the Toronto Stock Exchange and are quoted in Canadian dollars. Investors are reminded for purposes of calculating financial ratios, including dividend payout and share price-to-earnings ratios, they should take into consideration that the company's share price and dividend rate are reported in Canadian dollars, while its earnings and financial statements are reported in US dollars. The company reports its financial results in accordance with International Financial Reporting Standards or IFRS, but we also use measures that are not defined under IFRS, including Adjusted EBITDA. Management believes that these non-IFRS measures provide useful information to both management and investors in measuring the financial performance and financial condition of the company. These measures do not have any standardized meaning as prescribed by IFRS, and therefore may not be comparable to similarly titled measures presented by other publicly traded companies. Thank you for your attention. I would now like to call upon our Chair, Mr. Robert Pace, to open the meeting. Good morning, everyone. I'm Robert Pace, Chair of the Board of Directors. Welcome to the 2024 annual general meeting of High Liner Foods Incorporated. Thank you, James, for your introduction. On behalf of the board of directors, we welcome you to your first AGM as Executive Vice President, General Counsel, and Corporate Secretary. I'm joined today by Paul Jewer, our President and CEO, and Deepak Bhandari, our interim Chief Financial Officer, and the rest of the executive team. I would also like to welcome my fellow board members this morning and offer a special welcome to Pamela Kohn, who is standing for election today and will bring the benefit of her diverse experience to the board. Before calling the meeting to order, I'd like to share some brief remarks on our journey here today, and more importantly, the exciting vision that Paul and the executive leadership team have for our future. First, I wanna take the opportunity to congratulate Paul on his recent appointment as President and CEO, and reinforce the confidence the board of directors has in Paul and the entire management team as they continue to execute against our branded and value-added strategy to ensure we are competitively positioned in a dynamic market, creating value for all stakeholders. Paul has the breadth and depth of experience the company needs for this next chapter in our history and has my full support as he brings his vision to life. High Liner Foods is celebrating the 125th anniversary this year. As I reflect on the company's journey, it's amazing to consider where we came from and where we are today. Shortly after the company was first incorporated in December 1899, 11 shareholders, including 7 members of the Lunenburg, Smith family, founded W.C. Smith & Company. At the time, the company's mission was to provision fishing vessels with every conceivable supply from cooking spices to fishing lines and big tubs. For over a century, the company has repeatedly adapted and responded to consumer demands, and in 1964 opened the world's largest, most modern seafood processing plant based in Lunenburg. Each and every decade, the company faced episodes of adversity and responded with resilience, innovation, and determination. In the early 1980s, the Atlantic fishery was in a crisis because of the extremely high interest rates and energy costs, coupled with price competition and declining U.S. markets. Under the leadership of David Hennigar, the company was able to work with the Canadian government to restructure the sector and stabilize the company. Several years later, during the 1992 Northern Cod Moratorium, when it emerged as one of the biggest challenges to the company which it had ever faced, in order to survive, the company, led by Henry Demone, had to completely transform its business model, including the disposition of a 66-vessel fleet, and become a pure food processor and marketer. In response to this incredible challenge, management successfully steered the company through a period of significant change. Following the moratorium, management contemplated ways to grow our business in the seafood industry, relying on our strengths which still exist today, including strong relationships with retail and food service customers throughout North America, expertise in production and distribution of frozen products, and superior product development. It is this unique ability to play to the company's strength and adjust and reimagine the business that has served the company for well over 125 years. In the face of the global headwinds that persisted throughout 2023, and continue today, the company continues to demonstrate resilience. These strengths will guide us through these near-term challenges and position the business for continued success. The board continues to guide management in responding to the challenges and opportunities in the market today, while at the same time taking a broader view of how the industry is evolving. During the past fiscal year, this approach helped the company effectively navigate the complexities of the operating environment in which inflationary impacts took a toll and the industry managed elevated levels of inventory. While these market conditions impacted our annual 2023 Adjusted EBITDA, our cumulative total shareholder return of 10.6% since 2019 continues to outperform the S&P and TSX composite index for food products, which delivered a 3% loss during that same timeframe. We've also generated value for shareholders through the fourth increase to our dividend, representing an increase of over 200% over the last four years, and have repurchased over 600,000 shares through our Normal Course Issuer Bid since June 2023. Our long-term perspective on our business is also evident in our approach to the environmental, social, and governance factors as we drive continuous improvement across the business to mitigate our environmental footprint, ensuring we make a meaningful impact on the people in the communities we work with and adhere to the highest standards of corporate governance. Along with my fellow directors who serve on the numerous board committees, including corporate governance and audit, we are driving towards the ambitious targets of a 30% reduction in Scope 1 and 2 greenhouse gas emissions and a 50% reduction in food waste by 2030. Among many other ESG achievements last year, we reduced emissions by 3% compared to 2021, and food waste by 13% compared to 2018, while also embedding further controls and processes within our supply chain to strengthen our zero tolerance approach to human rights abuses anywhere in the High Liner Foods seafood supply chain. Our purpose-driven approach to our business helps reinforce our position as a trusted partner to our stakeholders, and I believe strengthens our ability to create long-term sustainable value for years to come. This will guide our approach in the year ahead as we support management in driving improved performance and taking the necessary steps to ensure that we remain competitively positioned for decades to come. In conclusion, I want to extend my appreciation to my fellow members of the board of directors and our shareholders for your continued support and confidence in High Liner Foods as we continue on this journey together. With that, I will now turn to the business of today's meeting, starting with procedural guidelines. Many of our shareholders have cast their votes electronically in advance of the meeting. If you've already cast your vote or submitted your completed proxy form, there is no need for you to vote again unless you wish to change your vote. Voting for today's meeting will take place through the virtual online platform. Only registered shareholders who held shares in their name as of March 25, 2024, the record date of this meeting, or their valid appointed proxy holder will be eligible to vote or ask questions at this meeting by logging into the webcast. The link can be found on our website at highlinerfoods.com. Where registered shareholders can use their 13-digit control number to access the meeting. When we are ready to present the first item of business for voting, you will see voting options appear on your screen. The polls will open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until the conclusion of discussion on each resolution prior to casting your vote. Please ensure you scroll down on your screen to be able to see and vote on all resolutions. Once discussion on all items of business have concluded, I'll give you an additional minute to enter your votes and then declare voting closed on all resolutions. The precise vote counts for each resolution will be made public via a news release when available following the meeting. If you are a shareholder participating on the toll-free conference call line, I would like to remind you that you will not be able to vote using this line. Voting can only be done through the virtual online platform. Questions for the meeting will be accepted through the virtual platform and telephone. To submit a question, please click the messaging icon that appears at the top of your screen. If you are participating through the toll-free conference call line, shareholders will be able to ask questions by pressing star one at any time during the meeting. An operator will speak to you and forward your question in written format through the virtual platform. When submitting a question, please identify your name and note if the question relates to the motion being considered as part of the formal business of the meeting, or whether it is general in nature. We will address questions directly related to a particular motion at the appropriate time of the meeting and save general questions following Paul's annual address to shareholders. Questions with common themes may be grouped together. James Bishop, our Corporate Secretary, will read questions aloud when requested, and either I or one of the members of the management team with me today will respond. Subject to the rules of conduct and time permitting, we'll make every effort to respond to your relevant questions during the question and answer period today. We will address any unanswered questions by email in a timely manner following the meeting. I will now call the meeting to order. Notice of this meeting has been duly given and a copy will be filed with the records of the meeting. I will ask James Bishop, Executive Vice President, General Counsel, and Corporate Secretary to act as Secretary of the meeting. TSX Trust Company, represented by Emma McKenzie and Nawali Zahn, will act as scrutineers. The scrutineers' report has been received, and it shows a quorum is present. To make the best use of our time, shareholders of the company have been asked to move and second motions of the meeting as described in the management information circular dated March 25, 2024, which accompanied the notice of meeting. I will take the notice of meeting as read. The first item of business is the consideration of the minutes of the annual general meeting of shareholders held on May 16, 2023. The minutes, of course, are available for inspection by shareholders by emailing investors@highlinerfoods.com. In order to expedite the business of this meeting, we'll dispense with reading them and take them as read and adopt. We will run through each of the items on the agenda in turn, responding to questions on that item of business while it is before the meeting. I now declare the polls open on all resolutions. The first item of business is the election of director. As stated in the 2024 management information circular accompanying the notice of this meeting, it is proposed that 12 persons be nominated as directors at this meeting to hold office until the next annual meeting or until their respective successors are elected or appointed. As mentioned, I've taken the liberty of asking certain shareholders to make the motions for the election of directors and other motions today. Could I please have a nomination for the election of directors? My name is Peggy Falkenham-Boutilier, and I am a shareholder of High Liner Foods. Mr. Chair, I nominate the following people as directors of the company to hold office until the 2025 annual general meeting or until their respective successors are elected or appointed, Scott Brison, Joan Chow, Robert Dexter, Andrew Hennigar, David Hennigar, Shelly Jamieson, Paul Jewer, Pamela Kohn, Jolene Mahody, Andy Miller, Robert Pace, Frank van Schaayk. Mr. Chair, I am Naomi Jewers, a shareholder of High Liner Foods, and I second the motion. James, were there any questions with respect to this motion? No, Mr. Chair, there are no questions with respect to this motion. Thank you. I declare the nominations closed. Please cast your votes. The second item of business is the appointment of auditors. Ernst & Young LLP, the current auditors of the company, is proposed as auditors of the company to hold office until the next annual general meeting of shareholders. My name is Naomi Jewers, and I'm a shareholder of High Liner Foods. Mr. Chair, I move that the firm of Ernst & Young LLP be appointed as auditors of the company until the close of the next annual general meeting and that the board of directors be authorized to fix their remuneration. Mr. Chair, I am Peggy Falkenhams Boutilier, a shareholder of High Liner Foods, and I second the motion. James, are there any questions with respect to this motion? No, Mr. Chair, there are no questions with respect to this motion. Thank you. I declare the motion closed. Please cast your votes. The third item of business deals with the advisory resolution to accept the company's approach to executive compensation as described in the 2024 management information circular. The board of directors recommends that shareholders vote for the resolution approving the advisory resolution. I will now ask for a motion. My name is Peggy Falkenham-Boutilier, a shareholder of High Liner Foods. I move that, on an advisory basis and not to diminish the role and responsibilities of the board of directors, the shareholders accept the approach to executive compensation disclosed in the 2024 management information circular delivered in advance of this annual general meeting of shareholders. Mr. Chair, I am Naomi Jewers, a shareholder of High Liner Foods, and I second the motion. James, were there any questions with respect to this motion? No, Mr. Chair, there are no questions with respect to this motion. Thank you, James. I declare the motion closed. Please cast your votes. For those of you who have not voted on all the resolutions, please do so now as I will close the polls in one minute. The polls are now closed. The last item of business is the submission of the financial statements of the company. The consolidated financial statements of the company for 2023, together with the auditor's report and the Management Discussion and Analysis, were mailed to shareholders of the company who had requested a copy. These documents, as well as the letter to shareholders, are available for download on our website at highlinerfoods.com in the investor center. There is no formal action or resolution required with regards to this item of business. I ask the secretary note these are having been submitted to the meeting. I would like to thank you all for taking the time to participate in the formal business of the company. Having confirmed with our scrutineers, based on the votes cast electronically in advance of the meeting and today, I declare the following results. The directors nominated in the 2024 management information circular were appointed by the shareholders. Scott Brison, Joan Chow, Robert Dexter, Andrew Hennigar, David Hennigar, Shelly Jamieson, Paul Jewer, Pamela Kohn, Jolene Mahody, Andy Miller, Robert Pace, Frank van Schaayk are duly elected directors of the company until the 2025 annual general meeting or until their respective successors are elected or appointed. Ladies and gentlemen, your board of directors. The appointment of Ernst & Young LLP as auditors with the remuneration to be fixed by their directors was approved, and the shareholders have voted to accept the approach to executive compensation disclosed in the 2024 management information circular delivered in advance of the meeting. A detailed report on the number of votes cast for and against the resolutions will be published as soon as available. James, are there any additional questions or other items of business to bring before this meeting? No, Mr. Chair, there are no further questions or items of business to bring before the meeting. Hearing none, that brings us to the close of the official business to be concluded at this meeting. I would ask for a motion to close the formal part of this meeting. My name is Naomi Jewers, and I am a shareholder of High Liner Foods. Mr. Chair, I move that we conclude the formal part of the 2024 annual general meeting of shareholders. Mr. Chair, I am Peggy Falkenham-Boutilier, a shareholder of High Liner Foods, and I second the motion. I declare the formal business of the meeting closed. We will now be pleased to hear from Paul Jewer, who will deliver this year's annual address to shareholders, followed by a question and answer period before closing the meeting. Paul, please go ahead. Hello, everyone. It is a pleasure to be here with you today. Thank you, Robert, for your kind words. I'm honored to have been appointed President and CEO and assume this responsibility with a tremendous amount of pride and excitement. As I lead the company through its 125th anniversary year, I am seized by a singular mandate to unlock our potential to benefit all our stakeholders. As Robert mentioned during his introductory remarks, given the headwinds we continue to face, our strong balance sheet gives us the financial resilience that is needed to navigate near-term challenges, as well as the strength and flexibility to capitalize on these dynamic conditions. We are well-positioned to seize opportunities and make strategic investments that will position us for the next generation of growth for High Liner Foods. We are extremely proud of the continued proactive actions taken in 2023 to mitigate the impact of challenging market conditions, including optimizing and diversifying our portfolio, launching new innovations, and expanding into new species, including Southern blue whiting, providing strategic customer-centric support for our customers and partners, delivering strategic and targeted promotions and innovations, leveraging insights from data and analytics, investing in high growth categories, and continuing to drive efficiencies across the organization. As Robert mentioned earlier this morning, this is not the first time that High Liner Foods has risen to the challenge and emerged stronger than ever. As many of you know, in 2021 and 2022, High Liner Foods demonstrated tremendous resilience in the face of a global supply chain crisis. The strength and diversification of our supply chain are robust and diverse global relationships. Our ability to scale and the financial health of our business were all key ingredients that enabled us to invest in inventory to satisfy demand and drive top line growth in 2023. I would like to take a few moments to speak a little bit about the 2023 results, specifically before turning attention to what the future holds. We exited fiscal 2023 with a very strong balance sheet supported by a record year of cash flow generation, in which cash flow increased by $255.5 million or 335.5% over the prior year. We worked aggressively to return to normalized inventory levels and use incremental cash flow to pay down debt exceeding our targeted leverage ratio. While it was disappointing to miss on Adjusted EBITDA growth after a run of year-over-year improvements, I am confident that this is a short-term contraction driven by market conditions. Looking ahead, our focus in 2024 is to ensure that we are nimble in response to market challenges and taking thoughtful and proactive actions to mitigate the impact of operational headwinds in our performance, while simultaneously taking a broader view of how the industry is evolving to ensure we are positioned for long-term industry leadership and success. We are confident in the long-term opportunity in the frozen seafood industry. Despite the dynamic nature of the industry today, the need for healthy, affordable, and sustainable sources of protein remains a constant, and there is considerable white space in the seafood category as compared to other proteins. The fundamentals of our business are strong, and our strategy remains relevant today as we leverage our branded and value-added portfolio to deliver efficiencies and menu simplification desired by operators, partnership and reliability demanded by our customers, and compelling value for the consumer. The diversification of our business and our global supply chain remain important competitive advantages that we will continue to leverage as we drive performance through consistent execution of our strategy in the year ahead. As we drive improvements to profitability, we are also considering potential transformational initiatives that will enable us to expand beyond current markets and species. The Norcod investment announced earlier this year is one example of how we are creating greater value for the business. We are looking at opportunities across the value chain and will continue to be patient to ensure we land on the right strategic opportunity that will accelerate our growth potential, deepen our capabilities, and strengthen our ability to create value over the long term. We continue to explore these potential future transformational initiatives and are casting a wide net for future opportunities. However, we will only proceed if the value creation potential exists. While organic growth remains a priority, we are also exploring additional growth opportunities across the value chain to create greater shareholder value. We will be patient as this process unfolds. We know that seafood is a better choice for people and the planet, and we recognize the importance of sustainable practices in ensuring the long-term health of our planet and the well-being of future generations. As Robert mentioned earlier, our environmental, social and governance goals are embedded into our operations and everything we do. We remain steadfast in our commitment to sustainability, and for 125 years we have operated as a responsible corporate citizen. As we reflect on the achievements of the past year, it is important not to lose sight of the journey ahead of us. The business landscape remains dynamic, presenting uncertainties and complexities that demand agility and adaptability. We recognize the importance of navigating these challenges while leveraging opportunities to drive sustainable growth and deliver value to our shareholders. We will accomplish this with a strong sense of financial discipline and strategic focus. Our journey as a company began 125 years ago in 1899, evolving from a seafood seller to a value-added processor and seller of seafood from around the world. As we look to the future, our next chapter must bring together both parts of our past to navigate what will undoubtedly be a very different future. In conclusion, the success of any company is driven by its culture, and our culture does not exist without our employees. We often share that our people are at the heart of everything we do, and we know the environment we offer truly sets us apart from others. Each and every day, we seize opportunities to celebrate and continue bringing our culture to life through our genuine care and commitment to invest, develop, empower, and actively engage all of our talented employees to thrive in our people first high-performance organization. I am so proud to be given the opportunity to serve as President and CEO and provide guidance and leadership to the company as we pursue our ambitious vision of changing the way we see food and celebrate our milestone 125th year as a company. On behalf of the executive leadership team, I must offer my gratitude and appreciation to all of our employees for their ongoing commitment, professionalism, and dedication to bringing our purpose to life. We are keenly aware of the potential for advancement, growth and development as a company. Armed with resilience and unwavering resolve and a dedication to excellence, we are primed to navigate the path forward and emerge even stronger than before. Thank you for your continued support. We remain dedicated to working on your behalf to unlock the significant upside potential we see in our business and the frozen seafood category. With that, I will move now to our question-and-answer period. At this time, we would now like to open the floor for any general business questions from shareholders. As a reminder, shareholders can submit a question in person using the virtual online platform or through the toll-free conference call line. I will pause for a moment to allow questions to come through. James, are there any questions? No, there are no questions from our shareholders today. Thank you, James. Before concluding today's meeting, I would like to remind listeners that our Q1 2024 conference call will be held tomorrow, Wednesday, May 15, 2024 at 10 A.M. Eastern Time. If you are interested in joining this call, you can find more information on our website at highlinerfoods.com. Please stay safe and well. Thank you and enjoy the rest of your day.