Year-to-date Clearwater reported sales of $257.5 million and EBITDA of $52.6 million versus 2011 comparative figures of $245.6 million and $44.8 million representing growth rates of 4.8 per cent in sales and 17.4 per cent in EBITDA.
Growth in sales and EBITDA came as a result of higher sales volumes, particularly of coldwater shrimp, as well as higher sales prices for most species. The impact of the growth in sales on EBITDA was partially offset by a shift to lower margin species and higher procurement costs in certain species.
Free cash flows grew in the third quarter of 2012 to $12.6 million versus $4.8 million in 2011. Year-to-date free cash flows were an investment of $20.7 million versus $11.3 million in 2011 due to seasonality in working capital and capital expenditure investments. Clearwater expects that strong earnings and further reductions in working capital during the fourth quarter of 2012 will result in positive free cash flow for 2012.
Free cash flows were used to reduce debt during the quarter. This, combined with higher EBITDA has resulted in an improvement in leverage from 4.1 at the end of the second quarter of 2012 to 3.7 at the end of the third quarter. Clearwater expects that strong free cash flows in the fourth quarter of 2012 will enable it to reduce leverage further and closer to our goal of 3.0 times.
Global demand for seafood is outstripping supply, creating favorable market dynamics for vertically integrated producers such as Clearwater with strong resource access.
Demand has been driven by growing worldwide population, shifting consumer tastes towards healthier diets, and rising purchasing power of middle class consumers in emerging economies.
The supply of wild seafood is limited and is expected to lag behind the growing global demand. This supply-demand imbalance has created a market place in which purchasers of seafood are increasingly willing to pay a premium to suppliers that can provide consistent quality and food safety, wide diversity and reliable delivery of premium, wild, sustainably harvested seafood.
Clearwater, like other vertically integrated seafood companies, is well positioned to take advantage of this opportunity because of its licenses, premium product quality, diversity of species, global sales footprint, and year-round harvest and delivery capability.
Clearwater expects strong earnings in the fourth quarter of 2012 due to seasonally higher sales during the fourth quarter.
Ian Smith, Chief Executive Officer, commented: "In the quarter the company had the highest revenues and EBITDA in its history. Management is satisfied with the progress made towards both our 2012 and longer term financial targets and we have every expectation that our momentum will continue through the balance of fiscal 2012 and into 2013."