In a world where few business gambles seem to pay off, Canada's Clearwater Seafoods has picked a winner with wild shrimp and scallops.
Barely getting by as an income trust only three years ago, the Halifax, Nova Scotia-based seafood harvester and seller is today a corporation trading above $5 per share as chief executive officer Ian Smith pushes harder in international markets to satisfy seemingly insatiable demand.
Clearwater on reported March 11 that it had rung up the highest annual revenue and adjusted EBITDA in its 10-year history as a public company. The $350-million top-line, $72-million earnings-before-deductions performance suggests Smith, a former senior executive with Campbell Soup who was recruited to lead Clearwater in 2010, has carved out a strong position for the company in what is now a largely favorable selling environment.
"Basically what they've been able to do is increase the price that they charge," said Beacon Securities analyst Michael Mills, noting most of the growth is coming from Asia. "It's a function of demand. What Clearwater has access to is a finite resource. There's only so much quota available on any given year. And these are all wild caught, sustainably certified fisheries now."
Clearwater, the largest holder of shellfish licences and quotas in Canada, is vertically integrated, with a fleet of fishing vessels supplying a logistics and distribution network in some 40 countries. It is targeting a minimum sales growth of 5% this year and a return on assets of 12% or higher perpetually, hoping to exceed those markers with new programs including the addition of supermarket sales in China. Debt has been reduced.
Smith, a marketing specialist, has turned to some innovative ideas to command that premium. As one example, he introduced branded lobsters to China. Outfitting Clearwater's crustaceans with a special sleeve over their claws, the company was able to differentiate its hard-shell product from others in a country where the sprouting middle class has a growing appetite for Western goods.
