Conference call highlightsVery detailed conference call with lots of good questions around POLB, expansion of Orca (Bear Creek), the process of winning a contract, their strategy with POLB, expectations for the rest of this year, next year and beyond. Lots of details on how things are going with potential contracts, joint mention with Cemex, why sales fluctuate from quarter to quarter, how logistics is just as important as pricing, how their product is cost competitive when the developer understands how an inferior product would require extra additives to match Orca's quality, how using Orca aggregate can increase the available rental space by over 20% vs lower quality aggregate, etc. Highly recommend you listen to the call more than once.
Herb and Ken seemed very optimistic about the future and the number of opportunities available to Polaris in the next few years. Execution will be key. They ruled out, for the near term, San Diego and Eagle Rock. No sales yet for POLB (both Ken and Herb hosted the conference call from LA, as they are meeting with customers this afternoon), but Herb assures that this will change soon; the same contractor who they worked with for the Salesforce building is involved in the the large public works project that Herb mentioned in the call in LA and they are quite confident that they will supply ther aggregate for this project out of Long Beach. The project has been delayed due to a last minute issue so it may not get awared until the new year.
The quarry production itself is firing on all cylinders; productivity is up.
This is not an easy business to operate and good things don't happen quickly. Their May 2015 presentation shows a path from $8 million EBITA on volume of 4 million tons (where they are now), to $ 30 million EBITA on 6 million ton, in 4 years. If you almost triple EBITA, you know what happens to the share price.
Anyone who claims this management is not on the ball doesn't really understand the complexity of the business and may be too impatient to hold the stock. This ship is being captained by a very capable team. Patience, patience, patience.