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Just over a year ago, the team at
Mission Ready Solutions Inc. (TSX-V:MRS, OTC:MSNVF, Forum) was presented with an opportunity.
The technology company was steadily advancing its core business of manufacturing personal protective equipment, but management identified a way to elevate the Company beyond the limitations of a niche product business.
That opportunity would transform Mission Ready. It would see the Company shift from its manufacturing base and turn it into a government contracting solutions provider, and in doing so, fuel growth exponentially: The acquisition of defense manufacturer and distributor
Unifire, Inc.
In an interview with Stockhouse Editorial, Mission Ready’s COO Marcus Treiber explains that after mulling the decision over, everyone on the team knew it was the right move.
“We had a good company, we were going in the right direction, but it was slow and steady growth in a very small product category. The acquisition of Unifire took a very small category and opened it up to be a drastically wide funnel. We're still manufacturing and we're still in the technology space. But we really saw an opportunity to strap two rockets to the side of the car that we were driving and light them on fire. And those rockets were Unifire.”
What elevated the Unifire opportunity were the privileged contracts that came with it. Unifire is able to perform on 11 government contracts valued at US $11 billion, including one of the most well-known contracts in the defense industry: the US Defense Logistics Agency’s Tailored Logistics Support
Special Operations Equipment program (TLS SOE).
Only six companies worldwide are authorized under the US $4 billion TLS SOE contract, and Unifire is one of them.
On April 23, Mission Ready closed the acquisition and Unifire was officially brought into the fold. Since that critical pivot, the Company has completely shifted its growth trajectory. Treiber says that they’ve blown away every single goal and objective that was set in the past and earned more than CAD $60 million in awards since April.
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(Image via Mission Ready Solutions. Click image to enlarge) The key is how well the new branch of the Company synergises with its existing operations. Mission Ready already manufactures many products itself, including ballistic body armor, protective carriers, and accessories. In addition, Unifire has a manufacturing unit for high performance rescue equipment, including rescue saws, drills, and search cameras.
More importantly, however, is the fact that Mission Ready is no longer limited by its in-house product portfolio. In addition to leveraging Unifire’s contracts and connections to boost the Company’s in-house product sales, it is now able to offer over 1.5 million products sold by Unifire’s extensive vendor network. While Mission Ready cannot sell their manufactured products across all of Unifire’s currently held contracts, it can sell them across the majority.
And Unifire’s clients make very big purchases. Through the TLS SOE Program – currently operating under a US $4 billion bridge contract – the US Military, Federal Agencies, and other authorized customers request multi-million dollar orders through the Defense Logistics Agency for specialized equipment, which is then bid on by the six competing vendors.
Winning bids aren’t chosen solely by dollar value. The government also places a high value on past performance and vendor participation. Vendors are expected to maintain on-time deliveries and responses to requested quotes above 90%. Unifire’s last reported rates were 98% and 96.75%, respectively.
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(Image via Mission Ready Solutions. Click image to enlarge) So if the TLS SOE contract is so valuable, wouldn’t everyone want to get in on the action? According to Treiber, that’s exactly the case. Once the cap of US $4 billion is met across combined sales, the government can simply raise it further, so hundreds of companies vie for the guaranteed opportunity.
In the last iteration of the contract, Treiber estimates that up to 800 companies in the US applied. By the end of the process, only Unifire and five other companies were awarded the contract, and to date, no incumbent has ever lost their position.
In his interview with Stockhouse Editorial, Treiber reiterated just how valuable the Unifire acquisition was for Mission Ready through that contract alone. Once you factor in the additional clients, vendors, and opportunities that come along with it, you understand his excitement.
“These contracts only come open about once every five years. This next iteration won't come open for another ten years. If we had just applied for the contract, I guarantee we wouldn't have made it. By buying UNIFIRE, we bought privileged access to specific contracts here in the US, and now we work with hundreds of vendors that provide goods not only to the Department of Defense but all over the federal space inside the US. From a pair of socks to an unmanned drone defeat system, we do it all.”
The current TLS SOE contract has already been extremely beneficial for Mission Ready’s growth, greatly increasing both revenues and opportunities for more business. The next iteration of the contract, however, will make it seem miniscule. That’s because
it will be a ten-year contract with a ceiling of US $33 billion. With no set timeline for the proceedings, Treiber estimates that the next iteration will be awarded in the year 2020. But some ongoing complications with one of the largest competitors on the contract might instead cause the current contract to be extended temporarily.
According to Treiber, a majority of the companies on the TSL SOE contract earn between US $250 – $350 million in sales per year, but the largest can pull in well over US $2 billion. However,
on Aug. 20, one of the competitors was found by the Department of Justice to have falsely claimed small-business status and settled for US $20 million.
This was the second time a competitor on the TLS SOE contract has settled a claim from the government, which signals a once-in-a-lifetime opportunity for other competitors, including Mission Ready. As a verified small business, the Company can focus on capturing bids that larger competitors won’t qualify for and standing out as a reputable vendor on competing bids.
Already, the Company has a unique distinction compared to the competition.
Mission Ready is the only public company on the TLS SOE contract, with the same being true for most of the 11 other contracts it has access to.
What that means for investors wanting to participate in a profitable and guaranteed market space is that Mission Ready is essentially the only dog in the hunt. More importantly, however, it means that it can explosively grow past the competition.
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(Image via Mission Ready Solutions. Click image to enlarge) The team isn’t waiting around to get started. In order to make sure Unifire operates as efficiently as possible, management developed a full roadmap for growth. That includes the recent hirings of
John Stone as President of Unifire and
Alvin Church as VP of Operations in August. Both are military and industry veterans alike, with Stone helping ADS grow from less than US $1 million in annual sales in 1999 to more than US $1.3 billion in 2010.
Another aspect of Mission Ready’s growth plan is significantly ramping up its positioning in the industry. Here, the Company has a multi-pronged approach: Significantly expand its sales force and customer relations team by 47 people over the next 12 months, establish a presence in and around Washington DC, and actively participate in industry events.
One thing is clear: the team at Mission Ready knows what it needs to do. In anticipation of the funds needed to scale, the Company secured a US $20 million purchase order credit facility scalable to US $100+ million in the short term.
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(Image via Mission Ready Solutions. Click image to enlarge) As the growth strategy for Mission Ready gets underway, Treiber believes that blue skies are ahead. The Company already has the Unifire opportunity, the experienced personnel, and the integrated structure.
And the team certainly isn’t lacking in ambition. In his interview with Stockhouse Editorial, Treiber was confident that the writing is on the wall: Mission Ready is primed to be in the upper echelons of the defense industry.
“If I'm going to describe Mission Ready to anybody, I'm going to describe it as a group of seasoned executives in the US and in Canada that saw a golden opportunity to completely pivot and transform the company. An opportunity to really get fully immersed in the distribution market here in the US for goods needed by the federal government day in and day out. We're the only public company [on the contract] that allows people to invest with us and trust us to grow the business. We're THE company that is really positioned to explosively grow.”