Conference call - quite bullishThe conference call was quite interesting. Larocque did make a very interesting parallel between the last upcyle as they should be quite similar coming out in both instances of a very prolonged downcycle. The slide on the presentation is right on to explain the cycle as they see it. The only difference : they were indebted at the start of the last cycle versus this time where they have a clean balance with competitors indebted. Their main competitor Boart is finalizing coming out of Chapter 11 with still some debt with a focus probably on consolidating their position and Foraco still has 90 million in debt and talking about dividends already. MDI is now the 800 pounds gorilla that has the capacity for growth be it internally by adding capacity and rigs or by doing some M&A with no competition. Sounds good to me having rational competitors which should lead even to rates going higher faster.
Note also that despite this super quarter, their utilisation rate is under 50%. This leaves them lots of room to grow when you consider the numbers. All the growth is with gold and copper has not kicked in yet.
Note the intervention of Sarah Heberle - Mill Road Capital Management at the end of the conference call that explains the bullish case for MDI. It is worth a listen or a read when she derives a potential of 180 millions per year of EBITDA by being quite conservative on her assumptions. We could get much higher with MDI entering the cycle in a much better shape than anybody else
Difficult not to be super bullish with MDI for the next years.
GLTA