Mr. Rod Hepponstall reports

HIGH LINER FOODS REPORTS IMPROVED OPERATING RESULTS FOR THE FIRST QUARTER OF 2023

High Liner Foods Inc. has released its financial results for the 13 weeks ended April 1, 2023.

"Q1 2023 was another strong quarter for High Liner Foods marking eight consecutive quarters of Adjusted EBITDA growth," said President and CEO Rod Hepponstall. "Our foodservice business continues to perform particularly well. We are leveraging the diversification of our business, along with our branded and value-added offering and a data-driven approach, to inspire greater seafood consumption and to support our customers by offering consumers assurances of quality and value, in a time of economic challenges."

Key financial results, reported in U.S. dollars ("USD"), for the thirteen weeks ended April 1, 2023, or the first quarter of 2023, are as follows (unless otherwise noted, all comparisons are relative to the first quarter of 2022):

• Sales increased by $34.5 million, or 11.7%, to $329.2 million compared to $294.7 million and sales volume increased by 3.6 million pounds, or 4.9%, to 77.0 million pounds compared to 73.4 million pounds;
• Gross profit increased by $6.4 million, or 10.3%, to $68.4 million compared to $62.0 million and gross profit as a percentage of sales decreased to 20.8% compared to 21.0%;
• Adjusted EBITDA(1) increased by $2.9 million, or 10.2%, to $31.2 million compared to $28.3 million and Adjusted EBITDA as a Percentage of Sales decreased to 9.5% compared to 9.6%;
• Net income decreased by $0.7 million, or 4.8%, to $13.9 million compared to $14.6 million and diluted earnings per share ("EPS") decreased to $0.40 per share, compared to $0.42 per share;
• Adjusted Net Income(1) increased by $1.3 million, or 8.6%, to $16.4 million compared to $15.1 million and Adjusted Diluted EPS(1) increased to $0.48 per share compared to $0.43 per share; and
• Net Debt(1) to Rolling Twelve-Month Adjusted EBITDA(1) was 3.6x at April 1, 2023 compared to 3.7x at the end of Fiscal 2022 and 3.2x at April 2, 2022. This ratio increased during Fiscal 2022 due to increased investment in inventory.

Q1 Operational Update

The Company continued to deliver strong operational performance in the first quarter. High Liner Foods leveraged its branded and value-added offering to provide foodservice customers with operational efficiencies and menu innovation, which remain priorities in the current market. In the Company's retail business, the impact of changing consumer behaviour because of inflationary and recessionary pressures became more pronounced across the entire grocery sector, impacting overall sales volume during the Lenten period and first quarter.

"The value and choice we offer consumers to shop across our portfolio of brands and products has meant that, after many quarters of inflationary and recessionary pressures on the consumer, we are only now seeing economic conditions have a more significant impact on our retail performance. This is not unexpected, and our retail business is performing in line with the category overall. To mitigate the impact, we will continue to invest in our brands and work closely with our customers to ensure we are offering the right value at the right time."

"We continued to grow our foodservice business and are very encouraged by the progress we are making in our targeted growth channel and species, anchored by the stability of our institutional customers across healthcare and education. We continue to win market share in priority areas such as casual dining, QSR and fast growing popular species such as shrimp. Once again, the diversification of our business is a source of stability and enables us to be resilient in the face of economic headwinds," said Mr. Hepponstall.

The Company's integrated and diversified global supply chain continues to perform well. Global supply constraints and delays are easing across the industry and High Liner Foods remains focused on efficient management of inventory and maintaining excellent service levels in support of its customers.

Financial Results

For the purpose of presenting the Consolidated Financial Statements in USD, CAD-denominated assets and liabilities in the Company's operations are converted using the exchange rate at the reporting date, and revenue and expenses are converted at the average exchange rate of the month in which the transaction occurs. As such, foreign currency fluctuations affect the reported values of individual lines on our balance sheet and income statement. When the USD strengthens (weakening CAD), the reported USD values of the Parent's CAD-denominated items decrease in the Consolidated Financial Statements, and the opposite occurs when the USD weakens (strengthening CAD).

Investors are reminded for purposes of calculating financial ratios, including dividend payout and share price-to-earnings ratios, to take into consideration that the Company's share price and dividend rate are reported in CAD and its earnings, EPS and financial statements are reported in USD.

The financial results in USD for the thirteen weeks ended April 1, 2023 and April 2, 2022 are summarized in the following table:

Sales volume for the thirteen weeks ended April 1, 2023, or the first quarter of 2023, increased by 3.6 million pounds, or 4.9%, to 77.0 million pounds compared to 73.4 million pounds in the thirteen weeks ended April 2, 2022, or the first quarter of 2022. In our foodservice business, sales volume was higher due to increased sales in newer product lines, new business, an increase in our contract manufacturing business and improved customer service levels. The Company achieved strong service levels during the first quarter of 2023, as compared to the first quarter of 2022 due to the increased investment in working capital in the latter part of Fiscal 2022 to mitigate the impact of the global supply chain challenges. This was partially offset by lower sales volume in our retail business during the Lenten period primarily due to consumers becoming more price-conscious, resulting in softer demand for protein, including seafood products as consumers switched to lower cost meal solutions.

Sales in the first quarter of 2023 increased by $34.5 million, or 11.7%, to $329.2 million compared to $294.7 million in the same period in 2022, reflecting higher sales volumes mentioned above and pricing actions implemented during Fiscal 2022 and the first quarter of 2023 to mitigate inflationary increases on input costs. The weaker Canadian dollar in the first quarter of 2023 compared to the same quarter of 2022 decreased the value of reported USD sales from our CAD-denominated operations by approximately $4.4 million relative to the conversion impact last year.

Gross profit in the first quarter of 2023 increased by $6.4 million to $68.4 million compared to $62.0 million in the same period in 2022 and gross profit as a percentage of sales decreased by 20 basis points to 20.8% compared to 21.0%. The increase in gross profit reflects the higher sales volume and pricing actions discussed previously, despite inflationary increases in input costs, as well as some improvement in operating efficiencies at our plants, partially offset by a change in product mix. The weaker Canadian dollar decreased the value of reported USD gross profit from our CAD-denominated operations by approximately in $0.8 million relative to the conversion impact last year.

Adjusted EBITDA in the first quarter of 2023 increased by $2.9 million to $31.2 million compared to $28.3 million in the same period in 2022 while Adjusted EBITDA as a percentage of sales decreased to 9.5% compared to 9.6%. The increase in Adjusted EBITDA is a result of the increase in gross profit partially offset by the increase in distribution and net SG&A expenses.

Reported net income in the first quarter of 2023 decreased by $0.7 million to net income of $13.9 million (diluted EPS of $0.40) compared to $14.6 million (diluted EPS of $0.42) in the same period in 2022. The decrease in net income reflects higher finance costs, higher share-based compensation expense, and higher business acquisition, integration and other expense, partially offset by the increase in Adjusted EBITDA, discussed previously and lower income taxes.

Reported net income in the first quarter of 2023 included certain non-routine expenses classified as "business acquisition, integration and other expense." Excluding the impact of these non-routine items or other non-cash expenses, and share-based compensation, Adjusted Net Income in the first quarter of 2023 increased by $1.3 million or 8.6%, to $16.4 million compared to $15.1 million in the same period in the prior year. Adjusted Diluted EPS increased $0.05 in the first quarter of 2023 to $0.48 as compared to $0.43 in the same period of the prior year.

Net cash flows provided by (used in) operating activities in the first quarter of 2023 increased by $32.6 million to an inflow of $12.9 million compared to an outflow of $19.7 million in the same period in 2022 due to favourable changes in non-cash working capital balances and higher cash flows provided by operations, partially offset by higher interest paid.

Net Debt decreased by $6.2 million to $379.3 million at April 1, 2023 as compared to $385.5 million at December 31, 2022, reflecting lower bank loans, lower long-term debt and lower lease liabilities as at April 1, 2023, as compared to December 31, 2022.

Net Debt to Rolling Twelve-Month Adjusted EBITDA was 3.6x at April 1, 2023 compared to 3.7x at the end of Fiscal 2022 and 3.2x at April 2, 2022. Net Debt to Rolling Twelve-Months Adjusted EBITDA increased during Fiscal 2022 primarily as a result of increased investment in seasonal working capital in Fiscal 2022 and inflation in raw materials. In the absence of any major acquisitions or unplanned capital expenditures in 2023, we expect this ratio to be in line with the Company's long-term target of 3.0x at the end of Fiscal 2023.

Outlook

"Inflationary and economic pressures are increasingly impacting consumer purchasing decisions related to dining outside the home and grocery purchases. While we are not immune to the potential negative impact on our business, we are well positioned to navigate evolving market conditions as a result of the diversification of our business, customers, and portfolio," said Rod Hepponstall.

"Looking ahead to the remainder of the year, I remain confident in the outlook for our business, our ability to navigate near-term recessionary challenges and our ability to deliver annual year over year Sales and Adjusted EBITDA growth. We are focused on making improvements in working capital, which through the course of the year, will allow us to generate significant cash flow from operations and create further value for all stakeholders."

The Company has a strong balance sheet and is well equipped to invest in organic growth, explore opportunities for transformative growth through potential M&A activities to build shareholder value and continue to grow the dividend over time.

Dividend

Today, the Company's Board of Directors approved a quarterly dividend of CAD$0.13 per share on the Company's common shares, payable on June 15, 2023 to holders of record on June 1, 2023. These dividends are considered "eligible dividends" for Canadian income tax purposes.

Conference Call

The Company will host a conference call on Wednesday, May 17, 2023, at 10:00 a.m. ET (11:00 a.m. AT) during which Rod Hepponstall, President & Chief Executive Officer, Paul Jewer, Executive Vice President & Chief Financial Officer and Anthony Rasetta, Chief Commercial Officer, will discuss the financial results for the first quarter of 2023. To access the conference call by telephone, dial 416-764-8659 or 1-888-664-6392. Please connect approximately 10 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay by telephone until Saturday, June 17, 2023 at midnight (ET). To access the archived conference call, dial 1-888-390-0541 and enter the replay entry code 162947#.

A live audio webcast of the conference call will be available on the company's website. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

The Company's Unaudited Condensed Interim Consolidated Financial Statements and MD&A as at and for the thirteen weeks ended April 1, 2023 were filed concurrently on SEDAR with this news release and are also available on the company's website.

About High Liner Foods Incorporated

High Liner Foods Incorporated is a leading North American processor and marketer of value-added frozen seafood. High Liner Foods' retail branded products are sold throughout the United States and Canada under the High Liner , Fisher Boy , Mirabel , Sea Cuisine , and Catch of the Day labels, and are available in most grocery and club stores. The Company also sells branded products to restaurants and institutions under the High Liner , Mirabel , Icelandic Seafood and FPI labels and is a major supplier of private label value-added seafood products to North American food retailers and foodservice distributors. High Liner Foods is a publicly traded Canadian company, trading under the symbol HLF on the Toronto Stock Exchange.

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