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over competitors. MRS Public Advantage vs. the 5 other competitor Private Company
Unifire, through its parent MRS, is the only prime vendor in this space which is publicly owned. This provides certain advantages over its competitors, such as easy access to capital markets for financing, and having more stringent and transparent reporting requirements that are viewed more favourably by US federal entities. Its status as a public company also likely played a key role in how MRS was able to secure its current credit facility scalable up to $100+ million USD.
The ability to more readily access equity financing in the future will allow the company to run a leaner balance sheet in the long term, and reduce its dependence on its credit facility (finance itself) and the associated costs. This can ultimately translate to better margins, and in turn allow the company to bid more competitively on contracts.
In comparison, the other 5 prime vendors do not share this luxury and appear more likely to be reliant on debt financing for growth and to fund discretionary dividends. As private entities, detailed information is not readily available, but there is still enough to give a snapshot of how some of these companies are operating. For example, a publicly available Rating Action from Moody’s Investor Service from July 2018 on an ADS $240 million USD term loan, noted that at the time ADS debt/EBITDA was approximately 4.7x (based on pro forma materials provided). The note further commented that meaningful debt repayment beyond minimum requirements was not likely given it is anticipated the company will use excess cash to fund discretionary dividends.
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