I like how clear the plan is for management when you hear them talk about it. Disinvesting is done. Large production capex is done with expanding capacity. All of this while maintaining more cash then debt.
They’ve been wanting a US cable company that is buy-American compliant; now that’s done too. And at very attractive multiples.
Quarterly results and short-term guidance killed the Amercable momentum, but, as you mentioned, management could be way off their published 2025-2030 plan and investors would still earn decent return.
It’s an opinion, but think their is a very interesting upside with limited downside risk at this point.
To quote Howard Marks: « Price Matters More Than Quality. The key is the price you pay. You can buy the best company in the world, but if you overpay, it's still a risky investment. On the other hand, a lower-quality asset can be a great investment if you get it at the right price »
While their products may not be rocket science (except the wires/cables they supply for space), many of the products they manufacture have legal standards and/or requires certification.
You can’t just build whatever tank to hold oil underground in a city. Same for cables in a nuclear facility…
Hey, just a minor note because this is a mistake I see investors make all the time - you shouldn't include share count reduction in a DCF or reverse DCF. Reducing the share count is a use of the FCF, so counting the FCF used to buy shares but then also reducing the share count such that FCF per share in the future is higher is effectively double counting. Let me know if you need any further explanation (or if I have misunderstood how you've modelled it!)
Spoolable pipes : main competitor is Flexsteel which is owned by Cactus Wellhead. Under WHD ticker on NYSE
Underground composite tanks. MATR is the leader in North America for retail underground gas tanks with 60% market shares with one credible competitor: NOV (but they mostly cater to oilfields). Under NOV ticker on NYSE
Source: from transcripts of MATR's presentations / investors day
Yeah, I haven't fully gotten there yet, just at the framework for understanding the drivers. Hoping to crowdsource it a bit since I have a full-time job and kids etc. In the meantime the position is not big, reflecting my current lack of knowledge.
Thanks for this. I've done some work on this, & keen to do more. Lots to like, but I lack conviction as it all feels a bit. new. But definitely keeping on my watchlist & will keep reading.
Great write-up!
Thanks Andy.
Great write-up.
I really like MATR at the current valuation.
I like how clear the plan is for management when you hear them talk about it. Disinvesting is done. Large production capex is done with expanding capacity. All of this while maintaining more cash then debt.
They’ve been wanting a US cable company that is buy-American compliant; now that’s done too. And at very attractive multiples.
Quarterly results and short-term guidance killed the Amercable momentum, but, as you mentioned, management could be way off their published 2025-2030 plan and investors would still earn decent return.
It’s an opinion, but think their is a very interesting upside with limited downside risk at this point.
To quote Howard Marks: « Price Matters More Than Quality. The key is the price you pay. You can buy the best company in the world, but if you overpay, it's still a risky investment. On the other hand, a lower-quality asset can be a great investment if you get it at the right price »
Agree! Was the same set-up with TVK. Paying only for the company as-is, no growth or improvement priced in.
Agree.
One last point:
While their products may not be rocket science (except the wires/cables they supply for space), many of the products they manufacture have legal standards and/or requires certification.
You can’t just build whatever tank to hold oil underground in a city. Same for cables in a nuclear facility…
already said many times, but great write up BECAUSE it's simple.
Hey, just a minor note because this is a mistake I see investors make all the time - you shouldn't include share count reduction in a DCF or reverse DCF. Reducing the share count is a use of the FCF, so counting the FCF used to buy shares but then also reducing the share count such that FCF per share in the future is higher is effectively double counting. Let me know if you need any further explanation (or if I have misunderstood how you've modelled it!)
Youre right, thank you for pointing that out. Appreciate it.
Who are the peers in each division? Trying to gauge what the right multiple would be in a SOP?
I'll share my notes for the composite segments:
Spoolable pipes : main competitor is Flexsteel which is owned by Cactus Wellhead. Under WHD ticker on NYSE
Underground composite tanks. MATR is the leader in North America for retail underground gas tanks with 60% market shares with one credible competitor: NOV (but they mostly cater to oilfields). Under NOV ticker on NYSE
Source: from transcripts of MATR's presentations / investors day
Yeah, I haven't fully gotten there yet, just at the framework for understanding the drivers. Hoping to crowdsource it a bit since I have a full-time job and kids etc. In the meantime the position is not big, reflecting my current lack of knowledge.
Great writeup, thanks!
Thanks for reading! I'm interested to learn more.
Thanks for this. I've done some work on this, & keen to do more. Lots to like, but I lack conviction as it all feels a bit. new. But definitely keeping on my watchlist & will keep reading.
Totally agree! I'm reading too. Let me know if you learn anything that could bring conviction up.