January 3, 2014
Clearwater Seafoods invests US$42.2 million in a new vessel
Clearwater Seafoods chief executive officer Ian Smith said that the company is investing in its fleet over 2014, which is set to be a record capex year for the company.
The largest chunk is a CAD45 million (US$42.2 million) investment in a new vessel and on-board factory for the Canadian offshore clam fishery, said Smith. "We will take ownership of the vessel in early January."
Clearwater is to invest as much as CAD80 million (US$75 million) in capex in the year, according to a report from Beacon Securities analyst Michael Mills.
Aside from the investment in the clam vessel, the major single spends for the company consist of CAD15 million (US$14.1 million) for a late life refit of a shrimp vessel and CAD10 million (US$9.4 million) for a scallop vessel conversion for Argentina, said Mills.
For the scallop vessel, 15 meters have been added into the middle of Atlantic Leader, which is to be renamed Cape Sante and shifted from Canada to fish in Argentina.
In addition to the transfer, Clearwater is "looking to potentially sell another", the Atlantic Guardian, he said.
The new clam vessel is a significant driver of growth for 2015, said Mills, in the report in which he increased his 2014 estimates for the company.
"Management expects the addition of this vessel will increase clam capacity by 60%. Clams are the only quota where Clearwater has been under-fishing their total allowable catch," he said.
Clearwater is also in the process of developing markets for traditional lower value clam species – propeller and cockles, he said. "Arctic surf clams remain the prized clam resource, but Clearwater has the right to harvest all three species."
Beacon Securities is increasing its 2014 estimates on Clearwater, driven by continued pricing power and anticipated higher volumes from both clams and scallops. The brokerage has upped its 2014 sales forecast to CAD408.9 million (US$384 million), from US$398.2 million.
Mills has increased his forecast for adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to CAD84.1 million (US$79 million), from CAD82.5 million (US$77.5 million).
For 2015, the analyst has a sales target of CAD445.3 million (US$418 million), with CAD93.8 million (US$88 million) target for adjusted EBITDA.
The 2013 levels are expected to be at CAD379.2 million (US$356 million) and CAD77.3 million (US$72.6 million) for adjusted EBITDA.
Mills sees "a number" of growth catalysts in the next 18 months. He has Clearwater's shares rated on a buy, with a target price of CAD9.5 (US$8.9), up from CAD7.5 (US$7.04).
Mills is forecasting sales of CAD101.6 million (US$95.4 million) and EBITDA of US$20.5 million, both up 9% from one year ago.