Cooke Omega bonds traded up after the fish products and aquaculture company reported year-over-year EBITDA and revenue spikes for 3Q19, according to two sources familiar with the matter.
The USD 330m 8.5% senior unsecured notes due 2022 last traded yesterday at 98.75 to yield 8.971%, up from pre-earnings levels of 97 to yield 9.632% on 1 November, according to MarketAxess.
Cooke booked USD 99.2m of revenue for 3Q19, up roughly 7% from USD 92.9m in 3Q18, driven by an increase in production volumes, the sources continued. EBITDA jumped 35% year-over-year to USD 24m, compared to USD 17.9m in 3Q18. The company’s production totaled 86.783 tons in 3Q19, up 6% year-over-year. Cooke also credited the uptick to a larger fish catch, which totaled 738,623 for the quarter, up 7.5% year on year.
Revenues for the animal nutrition segment increased 10% on the year, offset by a slight decrease in the human nutrition segment, according to the sources.
The positive earnings report combined with trading momentum could incentivize management to explore refinancing options, noted one of the sources. In addition to the 2022 notes, the balance sheet carries an ABL revolver due 2023 with USD 24m drawn. As of 30 September, the company’s liquidity consisted of USD 42.7m of availability on the revolver and USD 12m of cash, both sources said.
Cooke as of 3Q19 was levered around 4.8x based on USD 349.4m of total debt and USD 73m of LTM EBITDA, the sources continued. On an LTM basis, the company generated roughly USD 15m (4.3% of total debt) of free cash flow, based on USD 73m of EBITDA, USD 29m of capex and USD 29m of interest expense.
Cooke announced earlier this year that it is considering the strategic sale of its human nutrition segment, as reported, but management in the recent earnings report didn’t provide an update on the sale process, the sources said.
Cooke did not respond to a request for comment.