Cooke Omega posts 20% rise in EBITDA YoY

Cooke Omega Investments reported a 20% year-over-year increase in adjusted EBITDA for 3Q20, driven by revenue growth in its animal nutrition and human nutrition segments, according to two sources familiar with the situation. The stronger margins were primarily driven by price hikes and reduced manufacturing labor, buoyed in part by COVID-19 subsidies, the sources added. 

The privately-owned company catches and cultivates fish, including salmon and menhaden, as well as manufacturing fish meal and other nutritional products.

It generated USD 28.8m of adjusted EBITDA for the quarter ended 30 September, up from USD 24m in the same period last year and USD 24.8m sequentially. The adjusted EBITDA figure includes a USD 943,000 adjustment for COVID-19.

Meanwhile, Cooke’s top line increased 2.5% as revenues totaled USD 101.7m in 3Q20, compared to USD 99.2m in 3Q19. The company attributed the increase to an uptick in animal nutrition and human nutrition revenues, the sources said.

In human nutrition—a business Cooke Omega has previously looked to sell—revenues rose to USD 26.05m from USD 24.21m in 3Q19. The rise was primarily the result of an increase in the sale of coconut oils, nutraceuticals and dairy, offset by a decrease in the sale of marine oils. For the animal nutrition segment, revenues ticked up to USD 75.6m from USD 75m in 3Q19. 

The company reported a gross profit of USD 23.2m, or 22.9% as a percentage of revenues, for 3Q20, versus USD 21.1m, or 21.2% as a percentage of revenues in 3Q19. 

Gross profit moved up due to an increase in gross profit margin in the animal and human nutrition segments linked to price increases in coconut oils and reduced manufacturing labor, the sources said. 

Selling and administration expenses for the third quarter were USD 5m, down from USD 5.1m last year and USD 5.2m in 2Q20—also partly thanks to emergency government subsidies. Cooke received a total of USD 0.5m in Canada Emergency Wage Subsidy in the quarter with USD 0.3m in reduced manufacturing labor and USD 0.2m in reduced SG&A wage expense.

The company received the emergency Canadian subsidies through its parent, Cooke Aquaculture, which acquired the NYSE-listed Omega Protein back in 2017 to form Cooke Omega, the sources continued.

As of 30 September, liquidity totaled USD 87.5m through USD 8.6m of cash and USD 78.9m of revolver availability. The company is 3.35x levered through USD 96.8m of LTM EBITDA and USD 324.7m of total debt.

The issuer’s USD 300m 8.5% senior secured bonds due 2022, rated B3/B+, traded today at 103.5 to yield 5.988%, in line with recent trades at 103.25, according to MarketAxess. 

Cooke Omega did not respond to a request for comment.

2020 Debtwire

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