AGM 2022

May 11, 2022

Good morning, everyone. I am Tim Rorabeck, Executive Vice President, Corporate Affairs & General Counsel of High Liner Foods Incorporated. Welcome to our annual general meeting for shareholders, and thank you for joining us today. Before our chairman 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 shareholders with a control number to participate online. We are also pleased to have offered a toll-free conference number as a way for those shareholders without Internet access to hear the webcast and ask questions. For those unable to join us this morning, the recorded proceedings will be available on the Internet together with our results for the first quarter of 2022 at highlinerfoods.com. Before we begin, I need to remind you of our position with respect to any forward-looking statements that may be made during our presentation to you here this morning. Please take a moment to review these statements displayed on this slide. The company reports consolidated financial information in U.S. dollars, and the results to be discussed here today are stated in U.S. dollars unless otherwise noted. The common shares of High Liner Foods trade on the Toronto Stock Exchange are quoted in Canadian dollars. Investors are reminded for purposes of calculating financial ratios, including dividend payout and share price to earnings ratios, you should take into consideration that company share price and dividend rates are reported in Canadian dollars while earnings and financial statements are reported in U.S. dollars. The company also reports its financial results in accordance with International Financial Reporting Standards or IFRS, but we also use these measures that are not defined under IFRS. Management believes that these non-IFRS measures are important to understand current results and the future income potential of the company. Thank you for your attention. I would now like to call upon our Chairman, Robert Pace, to open the meeting. Good morning, ladies and gentlemen. My name is Robert Pace. I'm Chairman of the board of directors. Welcome to the 2022 annual general meeting of High Liner Foods Incorporated. Every year, we look forward to meeting with our shareholders. By using our virtual platform, it allows us to be accessible online to all of our shareholders regardless of physical location. Every registered shareholder has the ability to participate, to ask questions, and vote. It is also accessible through a North American toll-free conference call number at 1-888-301-8688 for shareholders to also listen to and ask questions. During fiscal 2021, the High Liner Foods team remained focused on safe, reliable operations, leveraging the company's diversified global supply chain to deliver a steady supply of frozen seafood to customers and consumers across North America. I am proud of the company's performance over the past year. We were able to mitigate much of the impact of pandemic related challenges on our business, deliver year-over-year Adjusted EBITDA organic growth, and advance towards our goal of becoming the North American leader in value-added seafood. As a result of the company's solid performance last year, the board increased its quarterly dividend by $0.03 in the fourth quarter. Our ability to increase the return of capital to shareholders indicates how well our team has been able to navigate ongoing market challenges while continuing to drive profitability. We will continue to carefully consider capital allocation in the year ahead to continue to support the dividend while investing in our business to fuel growth and continue to reduce debt. Overall, 2021 was a successful year for High Liner Foods. On behalf of our board and the entire company, thank you to all of our employees, especially our frontline teams in Lunenburg, Portsmouth, Newport News, and T-Rise. Moving now into today's meeting. I will act as chairman of the meeting. With me today are Rod Heppenstall, our President and CEO, Paul Jewer, Executive Vice President and CFO, and Tim Rorabeck, Executive Vice President, Corporate Affairs, and General Counsel. I will also like to acknowledge that the other members of our company's board of directors are also joining today's annual general meeting remotely. I'll begin today's meeting by outlining how voting and questions will be addressed utilizing this virtual platform. Many of our shareholders have cast their votes electronically in advance of the meeting. Voting today will only be done online through a poll via the virtual platform. Only registered voters who held their shares in their name as of March 21, 2022, the record date of this meeting or their valid appointed proxy voter will be eligible to vote or ask questions at this meeting by logging into the webcast, which links can be found on our website at highlinerfoods.com, using their 13-digit control number. When we are ready to present the first item of business for voting, you will see voting options appear on your screen. If you have voted in advance of the meeting, you do not need to do anything further. If you are a shareholder participating on this 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. When submitting the question, please identify your name and note if your question relates to a motion being considered as part of the formal business of the meeting or whether it is general in nature. 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. We will address questions directly related to a particular motion at the appropriate time of the meeting and save general questions after Rod has given his annual address to shareholders. Questions with common themes may be grouped together. Tim Rorabeck, our corporate secretary, will read questions aloud when requested, and either Rod or one of the members of the management team with me today will respond. Subject to the rules of conduct and time permitting, we will 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 copies will be filed with the records of the meeting. I will ask Tim Rorabeck, Executive Vice President, Corporate Affairs & General Counsel, to act as Secretary of the meeting. TSX Trust Company, represented by Cindy Parrott and Rory Branson, will act as scrutineers. The scrutineers report has now been received. It shows that there are present by proxy 269 common shareholders holding 68.5% of the common shares of High Liner Foods. A quorum is present, and I declare the meeting to be duly called and properly constituted for the transaction of such business as may properly come before it. To make the best use of our time, certain shareholders of the company have been asked to move and second motions of the meeting as described in the Management Information Circular dated March 21, 2022, which accompanies the Notice of Meeting. I will take the Notice of Meeting as read. The first item of business is consideration of the minutes of the Annual General Meeting of Shareholders held May 18, 2021. The minutes, of course, are available for inspection by emailing investors at highlinerfoods.com. In order to expedite the business of this meeting, we will dispense with reading them and take them as read and adopt. 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. Again, if you have already voted your proxy, there is no need to vote again as your vote will already have been registered. Once discussion on all items of business has concluded, I'll give you an additional minute to enter your votes and then declare voting closed on all resolutions. The precise vote count for each resolution will be made public via news release when available following the meeting. We will run through each of the items on the agenda, in turn, responding to questions on that item of business as filed before the meeting. I now declare the polls open on all resolutions. The first item of business is the election of directors. As stated in the 2022 Management Information Circular accompanying the notice of this meeting, it is proposed that eleven persons will 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 already 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 Falkingham Bouthillier, and I am a shareholder of High Liner Foods. Mr. Chairman, I nominate the following people as directors of the company to hold office until the 2023 Annual General Meeting or until their respective successors are elected or appointed. Scott Brison, Joan Chow, Robert P. Dexter, Andy J. Hennigar, David J. Hennigar, Rodney W. Hepponstall, Shelly Jamieson, Jolene Mahody, R. Andy Miller, Robert L. Pace, Frank van Schaayk. Mr. Chairman, I am Naomi Jewers, a shareholder of High Liner Foods, and I second the motion. Tim, were there any questions with respect to this motion? No, Robert, 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 am a shareholder of High Liner Foods. Mr. Chairman, 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. Chairman, I am Peggy Falkingham Bouthillier, a shareholder of High Liner Foods, and I second the motion. Jim, are there any questions with respect to this motion? No, Robert, 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 2022 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 Falkingham Bouthillier, 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 2022 Management Information Circular delivered in advance of this annual general meeting of shareholders. Mr. Chairman, I am Naomi Jewers, a shareholder of High Liner Foods, and I second the motion. Jim, are there any questions with respect to this motion? No, Robert, there are no questions with respect to this motion. Thank you. I declare the motion closed. Please cast your votes. For those of you who have not voted on all of the resolutions, please do so now as I will close the polls in one minute. I think we've all had time. The polls are now closed. The last item of business is the submission of the financial statements of the company. The annual report of the company, which contains the consolidated financial statements of the company for 2021, together with the auditor's report and the management discussion and analysis, was mailed to shareholders of the company who had expressed interest. The annual report is also available for download on our website at highlinerfoods.com in the investment center. There is no formal action or resolution required with regards to this item of business. I would like to thank all of you for taking the time to participate in the formal business of the company. Having conferred with our scrutineers based on votes cast electronically in advance of the meeting, and today I declare the following results. The directors nominated in the 2022 Management Information Circular were appointed by shareholders. Scott Brison, Joan Chow, Robert P. Dexter, Andy J. Hennigar, David J. Hennigar, Rod Heppenstall, Shelly Jamieson, Jolene Mahody, R. Andy Miller, Robert L. Pace, Frank van Schaayk, are duly elected directors of the company until the 2023 annual general meeting, or until their respective successors are elected or appointed. Ladies and gentlemen, your board of directors. Number 2, the appointment of Ernst & Young LLP as auditors with remuneration to be fixed by the directors was approved. Finally, the shareholders have voted to accept the approach to executive compensation disclosed in the 2022 Management Information Circular delivered in advance of the 2022 annual general meeting of shareholders. A detailed report on the number of votes cast for and against the resolutions will be published as soon as available. Jim, are there any additional questions or items of business to bring before the meeting? No, Robert, there are no further questions or items of business to bring before the meeting. Again, hearing none, that brings us to the close of the official business to be conducted at this meeting. I would ask for a motion to close the formal part of the meeting. My name is Naomi Jewers, and I am a shareholder of High Liner Foods. Mr. Chairman, I move that we conclude the formal part of the 2022 annual general meeting of shareholders. Mr. Chairman, I am Peggy Boutilier, a shareholder of High Liner Foods, and I second the motion. Thank you. I declare the formal business of the meeting closed. We'll now be pleased to hear from Rod Heppenstall, who will be delivering this year's annual address to shareholders, followed by a question and answer period before closing the meeting. Rod, over to you. Hello, everyone, and thank you for joining us today. High Liner Foods is on path to becoming North American leader in value-added seafood, and our performance in 2021 helped advance us towards this goal. We strengthened our business foundation, rolled out successful product innovations, secured new business, and continued to tailor our product portfolio to the evolving and diverse needs of our customers and consumers. We achieved this while preserving the financial flexibility in our balance sheet, which is more important than ever in the current operating environment. I'm extremely grateful to our High Liner Foods team. Once again, our people went the extra mile to ensure the highest standards of food quality and safety while taking care of our customers and each other. Together, we gave back to those in the greatest need in our community and continued to advance our leadership in global seafood sustainability standards. We achieved this by rallying around our newly stated purpose: reimagining seafood to nourish life. We also invested in our business, further diversified our supply chain, and continued to shift our portfolio towards higher margin branded value-added products. As a result, we were able to mitigate much of the impact of the pandemic-related challenges on our business. I am proud to report that we delivered year-over-year adjusted EBIT growth for the third consecutive year, increasing our 2021 results by $2.4 million to $90.4 million. Among the financial highlights for 2021 as compared to fiscal 2020, net sales increased by $47.9 million to $875.4 million. Gross profit as a percentage of sales increased 120 basis points to 22.7%. We maintained our net debt to rolling twelve-month adjusted EBIT ratio at our long-term target of 3 times. Despite the challenges of the pandemic and the global supply chain, our business continues to move from strength to strength. While top line growth has inevitably been impacted, High Liner Foods today is much stronger than prior to the pandemic. For example, we have significantly improved our profitability, growing gross profit as a percentage of sales by 300 basis points since 2019. We also grew our Adjusted EBITDA by $5.1 million during that time frame as well. Our achievements in the face of constant and varied challenges related to the global supply chain and the ongoing pandemic speak to the resilience of our organization and the unwavering commitment of our people. While there is no doubt that the challenges facing our industry today remain vast and complex, I am confident that High Liner Foods and its people will continue to rise to the challenge, evolve and grow, just as we have done for more than 122 years. We believe there is significant runway for organic growth within our existing business, and in fiscal 2022, we will direct as much attention and resources as possible to realizing this value. As evident in our first quarter results, we are hard at work leveraging our trusted customer relationships, sharpening our sales execution, and capitalizing on our brand equity through targeted marketing. Aligned with the feedback from a comprehensive environmental, social, and governance stakeholder engagement program last year, we are continuing to ensure high standards of responsible seafood sourcing, advancing our environmental stewardship, and ensure best practices for corporate governance. Looking ahead, we will continue to invest in our business, drive continuous improvement and efficiency that will serve us well in the current inflationary environment. Above all else, we remain focused on living our purpose and meeting the evolving needs of our stakeholders in pursuit of long-term value and sustainability. Thank you for your ongoing support and confidence in our business. At this time, we would like to open the floor for any general business questions from shareholders. As a reminder, shareholders can submit questions in person, via the virtual online platform or through the toll-free conference call line. I will pause for a moment to allow questions to come through. Tim, are there any questions? No, Rod, there are no questions from our shareholders. Thank you, Tim. Before concluding today's meeting, I would like to remind listeners that our Q1 2022 conference call is later today at 2:00 P.M. Eastern. 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.