Yet Another Value Podcast - BONUS EPISODE: Jonathan Cukierwar from Sohra Peak Capital Partners LIVE in VEGAS

Episode Date: May 21, 2023

BONUS EPISODE with Jonathan Cukierwar, Principal of the General Partner at Sohra Peak Capital Partners - this interview was recorded live at the Planet MicroCap Showcase: VEGAS 2023. Topics covered: investing in global MicroCap stocks, building relationships with management with teams based in another country, Q&A from the audience, plus an overview and Q&A on Duratec $DUR.AX. For more information about Jonathan Cukierwar and Sohra Peak Capital Partners, please visit: https://www.sohrapeakcapital.com/ Chapters: [0:00] Introduction [1:16] Jonathan Cukierwar's background and launch of Sohra Peak Capital Partners [2:57] Discovery process when looking at international MicroCap ideas [6:03] Building relationships with management teams in a different country and traveling to visit the companies [8:47] Q&A with audience: currency risks, international databases for looking at data on global stocks, regulatory risk and more! [19:30] Overview and Q&A on Duratec $DUR.AX

The following is a bonus podcast. It's an interview I did at Planet MicroCap in Las Vegas at the end of April. I had an absolute blast at Planet MicroCap. I had an absolute blast during this interview. And if you're interested, the next Planet MicroCap conference will be September 6th through 7th up in Vancouver. So please give this podcast and listen. And if you like this podcast, if you want to go learn more about microcaps,

look into Planet MicroCripe, September 6th and September 7th in Vancouver. Up next, and I said this earlier during Andrew's first session, this, again, is my favorite financial podcast out there. It's called Yet Another Value Podcast, and we're doing a really fun, another live session right now. So I'd like to introduce hosts of Yet Another Value Podcast, Andrew Walker, as well as his guest, Jonathan Sukhi-A-War. Guys, take it away.

We'll just start off the way I do every podcast. quick disclaimers to remind everyone that nothing we're going to talk about on stage is investing advice. I'm worried that some of the members of the audience might consider giving investing advice given the high noons I saw getting drinking earlier. But we'll, that's not investing advice either. Anyway, John, how's it going? Have you up here? Yeah, it's going great. Thanks for having me here, Andrew. Perfect. So I think what we're going to do is we're going to start off doing a little background, and then we'll go to Q&A, and then I know there's a stock you want to talk about, which is generally all we talk about on yet another value podcast. So we'll

talk about the stock at the end. But yeah, maybe we could just start, if you can go into kind of, you recently launched your fund just a few years ago, go into your background. What made you start the fund? How is everything going with that? Yeah, absolutely. So I'm from New York, and I started my fund in 2021 a couple of years ago. And before that, I'd spent my time at a couple of different investment funds, value-oriented funds in Manhattan. And the first one was Robadi and company run by Bob Robotti. He's a prominent value investor in the value investment community. And, you know, as skillful as he is, he's also a terrific guy.

incredible culture. In fact, there's some of my former colleagues, some of my best friends, they're in the crowd right now. And, you know, when I want to go join him, I knew how good of an investor he would be and just the community that he's built there, which is also very beneficial from an investment standpoint, has just been excellent. And before that, I was at Citigroup doing internal M&A, and I just wanted to find a seat with a great investor, right? The name didn't really matter to me. Is there somebody who was a good investor with a long track record? And, you know, somehow I found my way. to working with Bob. So that was excellent. And after that, the other fund I worked for

was called Phoenician Capital, a long-only fund in Manhattan. And they also have a value-oriented strategy. I spend a few years there, and that's run by a fund manager who also has a terrific record when I joined. And by the time I left, I was a highly valued member of the team, small investment committee there. And yeah, and then I left in early 2021, and I launched my phone shortly thereafter. Yeah, no, you know, when I was introducing, I said, just launched it was like, oh, it was a couple years ago where I remember we were grabbing coffee and you were

saying you were about to launch. So, look, your fund does mainly microcaps all across the world. Like, I know you and I have talked several times about a micro slash small cap up in Canada. The stock we might talk about later today if we have time to talk about is going to be a microcap in Australia. I know we've talked about

microcaps in Poland. So you're all across the globe. Talk to me about kind of the hunting process for finding caps across the Grove because it's difficult. Like I try to look. It's really hard. You pull up an internet, you know, you go over to England and you try and find something. It's really tough to just start flipping through them because different accountings, you don't know the businesses, you're not as familiar with them. Yeah, that's a great question, Andrew. And I think to some people who kind of stay close to the United States, at least from my experience, it all

seems the same internationally. However, I do think that there's a lot of dichotomy when you look at the nations outside of the U.S. I mainly stick to developed countries, right? You know, you have Canada, you know, much of Europe, Western Europe and some countries in Eastern Europe. You have Australia. You have certain other select countries that, you know, they have, they're very developed nations and they have high integrity of capital markets. And so in most respects, right, you know, you're not investing somewhere that your capital just might be at risk for reasons completely out of the company's control, like a huge geopolitical risk.

So, and then when you're looking there, right, you know, different countries have different, you know, different regimes and they have different central bank policy. So there's some things to take into consideration. But I mean, the way I really approach it is I have my fundamental metrics, right, no matter where the companies are. And I pull up a screen and I convert it into Microsoft Excel and I sort of just kind of a to Z but filtering with the metrics that are important to me.

And from there, you just kind of come across companies, depending on no matter what the countries are. And what I have found is that outside of the U.S., the odds of finding something that is inefficiently priced goes up significantly. Because in a lot of these countries, right, just the investment professional community is not nearly as mature as in the United States, at least in my view. And you also have, you know, venture capital markets are not nearly as sophisticated there either. So you have microcap and small cap companies that are public that can be very high quality

that, you know, just there's simply no venture capital community to support them. So that's sort of their only avenue. So anyway, and then from there, you know, you kick off the investment process, of course. No, that's great. But a few questions just going internationally. Do you require English financials to invest, or will you invest in something on just like a kind of numbers screen that has something in a language that maybe you're not 100% with? I require the company to speak English, you know, IR management. A non-starter for me is if something hits the fan and you need to get on the phone and they don't even speak English,

then you know, you're, you know, a paddle without a creek. And then, you know, preferably the financials to be in English. But truthfully, there are tools now online that you can translate you know, documents into English that are pretty advanced and, you know, keeping the format of the PDFs that, if you have a management that speaks, you know, fluent English and documents that could be translated, I'm actually okay with that. Cool. And then this was a big topic of the first talk we did, but just curious, building relationships with management teams internationally. Like, you know, it's always difficult to build a relationship with management team because ultimately they're trying to sell you something,

like how do you develop trust with them over time and everything? But I think that gets a little bit extenuated when you're building a relationship with someone who is in a different market, different cultures. They have different ways of interacting with shareholders. They might view you differently as a foreigner. So can you talk about some of your experiences with building a relationship with management teams in a different country? Yeah, that's a great question. And I think generally that that is always a risk, right? You know, there are certain cultures out there that if we're not attuned to dealing with that culture, yeah, that, you know, people have certain biases that you need to be attuned to. I've also found that human nature is pretty, a lot of human nature is very

universal. And so if you've, you know, spent a lot of time in the microcaps space, you know, you're dealing with, you know, there's more of the Wild West sometimes. You know, you do kind of need to have a good grasp on reading management and assessing management, you know, whether they're bad players or honest people. And I think that translates to, you know, a lot around the world. Like, look, if you're sending across from somebody from Poland or Australia or Canada, I think you'll get a good sense if, you know, they're very honest. ethical person. As far as building the relationships, I mean, I think that's also a big plus, just the fact that, you know, you're starting a microcaps, right, where there's easier

access to management. And, I mean, I've had experiences where I've been, you know, according to them, you know, one of the very first, you know, investment professionals outside of their own country or even period to come and, you know, try to spend serious time, take serious interest. And the benefit is, right, you know, instead of getting, you know, hoping for a 30-minute call every quarter update, you can literally fly to their headquarters and spend four or five hours with them, and they'll walk you through everything. improves the quality of your diligence, and it just helps you get through, you know, all the priority questions that you need to get.

So I think that's definitely a help. Do you do in-person visits with most of the international companies that you invest in? Not all of them, but a handful of them I have, yeah. Okay, perfect. What does a typical visit look like? Are you going to the country, like, you know, I know you've done one in Poland? Are you going to the country, going to multiple stores and multiple sites in Poland, or are you just kind of going to the headquarters and meeting with the management team?

Yeah, if I make a trip, historically, I've wanted to make the most out of it, right? You know, I'll definitely set aside a day where I do meet with management. And, but, you know, before that, yeah, I'll spend, you know, want to spend maybe depending on how, what the task is, but let's say at least a few days with a hypothesis in mind, something I want to prove with the company, right, if it stores, right, like, you know, grocery stores, for example, or, you know, auto parts stores in Poland, I visited, you know, I went out and, you know, I kicked the tires, you know, no pun intended, and I, you know, was able to prove or disprove, you know, some hypotheses, and then you get to go to management themselves and say, hey, here's what I learned or didn't learn, and, you know, you can walk through it with. them. Perfect. Well, speaking of taking advantage of being in person, this is a live recording. I think the best part of that is being able to get Q&A and interaction with the audience. So with that, I think we'll open it up to Q&A. I had a question about how you think about currency risk. Yeah, currency risk is a great question, and it's something definitely to keep in mind. I mean, we look last year, right, you know, if you were invested in non-U.S.

denominated assets, you know, you lost significant value, anywhere from 5, 10% to, you know, 20% in some of these currencies. And the way to hedge that, you know, there's several ways you can do total return swaps. You can, you know, hedge the currency itself in multiple ways. The way I've sort of viewed it, really, and everybody has their own preference, is the cost of heading a currency consistently is better if you're interested in smoothing the returns, right, because it's expensive, right? You know, the banks, they look at the Ford models, and they apply a premium to it. If you have investors or an LP base that, you know,

typically institutions, let's say, who do care about, you know, volatile returns and they want to minimize volatility, it makes sense. However, in my view, right, if you look over the long term, at least for the hard currencies, right, that, you know, aren't supposed to rapidly depreciate, they historically do revert to the mean versus the U.S. dollar. And it's, I don't have a crystal ball.

I don't know if that's going to happen into infinity. But, like, you know, for instance, just if you leave it on, on-haged and are willing to live with the volatility. I think over time, your returns will be better than if you hedge it and pay the premiums. This is the old Buffett, tell my railroads not to hedge the price of energy, because ultimately, you'll just end up paying the fees at the hedging,

and you know, it kind of breaks even over time. Where are we going now? Yeah, I have a question. Thanks for your talk. Are there any centralized databases that you use to get financials and news and press releases from international companies, or is it just, you know,

specific to each country, and I'm curious if you have examples of that. Yeah, sure thing. So I used to use Capital IQ, and, you know, I never really used Bloomberg all that much, and, you know, you have just this screen of, you know, all these metrics of all these global companies, and actually when I launched my fun, out of exploring alternatives, I came across Tickr, T-I-K-R, and it's about 99% cheaper than Capital IQ, and it also has the same exact access to the data that a capital IQ has. And, you know, believe it or not, that's the database I typically use. You know, sometimes I'll have people, you know, friends in the industry, grab data from, you know, fax at CAPAQ, et cetera. But a lot of the times, you know, they have,

you know, let's say 14,000 companies and all the metrics and then it's off to the races from there. And yeah, every, you know, and then every country itself, as you pointed out, does have their own version of, you know, SEC filings, right? And, you know, you should definitely, before you go into any of these, you know, figure out where those databases are, access what You can because, you know, for instance, as Andrew was asking earlier, that is one way to be at a disadvantage if you're not a local investor that, you know, doesn't know the lay of the land if, you know, you don't have access to the local filing. So I think between all those things, you know, that's typically a big part of my primary research. Yeah, hey, I just was wondering how you think about, you know, regulation risk in some of the countries that, you know, obviously, like in the U.S., you know more about regulations and whatnot, but in maybe a foreign country, you know, it's hard to kind of know everything that's going on. that might impact your thesis or whatnot?

Yeah, that's a great question. So as far as regulatory risk goes, it's, you know, by industry is always different, of course. And if we're talking specifically, you know, to the companies, that's something that typically, in my experience, has come up when you're doing expert calls, when you're speaking to people in the industry, you know, competitor management teams, is just one of those things that, you know, typically will surface, right?

I guess if you're doing, you know, for instance, deep research on the, you know, on the auto parts industry, in Eastern Europe, you know, through enough research, you'll find out that there is, you know, there's a negotiation war going on between, you know, the distributors and the manufacturers and, you know, and then also the electric vehicle push and things like that. So I think with enough research, typically, you're able to get your head around it pretty good. Yeah, John. So are there any cool rules that you know about?

For example, I learned the other day that on the aim. in London, if you can bypass the state taxes if you hold aim stocks in a certain way for your kids. So are there anything like that you've come across in any of these countries? There's nothing in particular that comes to mind. Hey, John, I think, let me just rephrase the question. I think he was looking for regulatory loopholes that would let you evade taxes. So maybe you could just think about that again and see if you can answer that. I'll reiterate my answer.

there's nothing that comes to mind. Thank you very much for the question. How are you assessing inflation risk? I mean, obviously, it's getting a little bit more softening here, but on an international basis, there's still a lot of places where there's a lot of hyperinflation. How is that affecting your evaluations? Yeah, I think that's a very good question,

and that is something to think about, because inflation risk inherent in that is the valuations of the company, the evaluation of the index, right? And then there's the whole central bank of risk involved. So, of course, now more than over the last 15 years, you do have to worry about those things, right? For instance, like, you know, most of the countries I'm invested in are similar both to the U.S., right? Canada, UK, you know, Australia, inflation and core inflation are not too far apart from each other. UK is a bit higher, and the central banks are acting more or less similarly, you know, some a bit different than others.

But then, you know, you look at Poland, for instance, you have a very, like, it's a very topsy-turvy scenario right now. you have an inflation rate, a core inflation rate of 13%, a headline inflation rate of 18%, and a central bank rate of 6 and 3 quarters percent. And the president, who is in cahoots with the head of the central bank, has sort of said, we don't want to do anything to raise the essential bank rates until after the election in November. And then after that, you don't even know what's going to happen.

But then on the flip side, the market is trading at seven times earnings. It's at, you know, close to its all-time low in evaluation. And so when you have companies to say, okay, well, you know, You can live with the inflation risk rate. And for me personally, my two investments there are both consumer staples. And so they're able to pass along the inflation and pretty well to their customers.

But then you can look at the upside too and say, okay, you know, Brazil, for instance, is in a similar situation. If then when inflation does resolve itself and the central bank comes to their senses and then lowers rates, you know, taking a three, five year view, you can see a massive re-rate in the stock market multiples.

What are the mechanics of buying foreign listed stocks that are not dual listed in the US? you know how do you do it uh... it's pretty simple uh... thankfully interactive brokers is a great solution uh... they're both very you know affordable and uh... and a great provider in my view and uh... also you know every stock in in in my countries that i focus on you're able to buy it uh... fairly easily and i think of these days a lot of brokers also between them and

uh... you know their relationships uh... you're able to buy uh... some other securities i can't speak to uh... other brokers but i can't say for a fact interactive brokers uh... makes it pretty painless even brazil you haven't had trouble with on interactive Brazil has to be an ADR, there are mechanics. Okay, yeah, that was the specific one I was thinking, because I had a follow-up question that was along those same lines. I'll do one, and then we can, if any, audience members, I went.

So, just, you mentioned Poland a few times, and I'm familiar with a few Polish investment cases. I've looked at some of the video game companies pretty in-depth. I've looked at one of the supermarkets pretty in-depth. Just when you're looking at the international markets, I realize we're all total focus returns, but, you know, if I present you a Polish company trading at 10 times earnings or pick your IR, like, what kind of spreads you need versus, I know

we've talked about Canadian, Poland's more emerging than Canada versus a U.S. domestic stock. Like, what type of expected return do you need to step out to those more emerging or international markets? Yeah, look, well, expected return, I suppose, you know, there's several ways you could look at it. You can handicap it with, you know, what do you think inflation might be going forward, at least the forward rate curve between, you know, Poland and the U.S. But, I mean, at the end of the day, look, I'm looking for investments that you can, call a no-brainer, right?

You know, something that, and I mean, this is the beauty of microcaps, by the way. You know, everybody talks about the trade-off between, oh, I need to find something that's almost a cigar butt that's very cheap, you know, free casual yield, but maybe there's no growth, versus I need to find something that's growing a ton, but maybe, you know, it's already trading at a very rich valuation. It's not easy. It's really hard, but in my view, in my experience, you can find these stocks in microcapland across the world where it can be training for five times for casual and it can be growing

at 30-40 percent, and it exists for no other reason then, right? nobody's found it yet and it's pretty undiscovered. So, you know, I guess when you find a situation like that, if it's that compelling and, you know, for instance, like I have found, you know, like things with those profiles, then it's sort of okay, if you're expecting to return, you know, maybe 30, 40%, then yeah, I'm willing to live with, you know, a little bit of, you know,

differential in interest rate risk, for instance. One more and then we'll switch over to Duratechek. So you're at Robadi, which we've got some people here that's obviously a pretty decent sized firm. Then you were at a smaller fund. where you were part of the core team by the end. And now you've kind of launched a one-man band shop. What has the evolution been like as you've kind of gone to smaller and smaller things?

And how have you dealt with being a one-man band where you're not just responsible for the research or responsible for a lot of the operations, a lot of the marketing? Like what's that gone? Because I think a lot of the people who listen to these, either do that and think about those stresses all the time or thinking about doing that and might be interested. Yeah.

You know, it's funny. I went from a firm of, you know, Citigroup, 300,000 people to, you know, everybody is 30 people and, you know, three people and now one. So, you know, really wrote that down. But, yeah, look, in some ways, I've been keeping mental notes for the last 10 years, right? Look, since I was 19 years old in college and I discovered investing, this is all I've ever wanted to do. And, you know, it's the best part of the job is building something great here. And so for 10 years, I've been, you know, all these fund managers, I've been taking mental notes.

And that's really helped along the way, like when the time finally came, like, all these things, you know, come to the play. And as far as the other things as well, you know, it's also running a business. As you know, of course, too. It's running a business. And, you know, some people are better at running the business. business side than others. Or, you know, some people have different goals on the business side than others. I've always relished the entrepreneurial side of things. I've always had, you know, small businesses, you know, growing up, elementary school, middle school, high school, et cetera that, you know, I just enjoy doing. And so I kind of, you know, I don't find it as much of a nuisance maybe as some and I enjoy it. But, look, it is a lot of work, wearing all these hats, right? You want to focus on investing, but you have to deal with this and that and this and 20, 30 percent of your time, sometimes some weeks can be just divvied up, you know, that has nothing to do with, you know, finding the next hundred beggar. Yeah, I ask because it's of interest, it's something I think about a lot, and also we just went through tax season, and tax season probably is the worst season operationally for one-man bands.

Okay, so let's turn, I think we've got 10 or 15 minutes left. We wanted to talk about a company that will disclose you own. It's a small clap in Australia. Everybody should remember this isn't financial advice, but the company is Duratech. They're an asset remediation contractor. I'll turn it over to you, and I did a decent bit of work on them last week, so I can follow up with some questions like I normally would on the podcast if that works for you. Yeah, absolutely. I'll just give a quick overview and then, you know, feel free to hop in with questions. And so, yeah, so Duratech, as Andrew said, they're an asset remediation firm located in Australia and their operations are confined to Australia.

And so what that means exactly is they're a contractor. They have, you know, close to a thousand or so mechanics and engineers, and they remediate or repair, you know, true infrastructure assets, right? Think bridges, think roads, think wharves, ports, things that are in various industries. the defense industry, the mining industry, industrial industry, oil and gas, buildings and facade. So, you know, really big structures that are intended to last for, you know, called 50, 70, 80 years. But over time, they just have, you know, critical defects that need to be examined and need to be repaired. And so it's a very, you know, technical industry. Cool. So I think they're an asset remediation contractor. They're taking on and doing

maintenance, capex for businesses. And there's a few things about that thing. Like, as I researched it, the first thing that popped into my mind is engineering and procurement businesses, you know, basically serving as general contractor. Most investors have looked at one and gotten burnt by one that's had massive cost overruns. You know, they've got cost of completion accounting. And then one quarter, they come out and said, oh, we built bid for a business. We thought it would cost us $10 million. Turns out it costs us $25 million.

We're bankrupt. Or, you know, even there's the sphere. We're all in Vegas. There's a sphere. MSG built it. They said it would be $1.2 billion at the time. It ended up being $2 billion. And that company's got a market cap today of like $500.

million. So they ran over by 800 million. So when you look at DuraTech, how do you get comfortable that you're not going to have this cost-overrun issue where one day you wake up and, oh, cool, the business is gone because they underbid a contract, inflation ran rampant, and they're done. Yeah, I think that's an excellent question. I'm very glad you asked that because I think aside from just the thing being so off the map, that is probably the most, the biggest misconception about the company because, look, it's classified and just doing a cursory glance, it reads as an ENC company, right, engineering and construction, and they have almost nothing to do with construction.

They are a maintenance firm. They do, like, maybe less than 5% of their business is just ad hoc construction. But for a good reason, construction firms have a horrible reputation, right? And there's several key reasons that, you know, Deerotech doesn't really have, you know, for one, cost overruns, right? You're doing a greenfield or brownfield project, meaning you're building it from scratch or, you know, rebuilding a whole asset, and maybe you order the wrong parts, or maybe you it's part of the building breaks and you have to redo it and then that's all on your

diamond out of your pocket because you promise your customer or your client you're going to build it for this much in this amount of time and so that's how disasters happen you know Duratech is purely maintenance right like you're repairing a bridge the bridge is already there unless like you do something colossally bad which they've never done in their decades of experience right like maybe you you know use the wrong blast on the concrete and it's a few you know $1,000 to do a new one little things like that so they've never had these you know in their you know 20 30 something years together these you know huge thing. So that's a big source of risk that's eliminated. And then a couple others are,

you know, the construction firms, in addition to being, having a lot of business risk, they also tend to participate in commodity heavy industries where there are boom bus cycles, right? The right of commodity wave and mining or oil and gas, but then when times are bad, all of a sudden there's no work to be done. You know, meanwhile maintenance will, it will suffer a bit, right, but not nearly as much as, you know, if you're actually riding the commodity wave itself. So that's a lot more stable. And then lastly, kind of bucking it together a mix of poor management incentives and also the concentration risk that tends to happen. A lot of these construction companies, like you mentioned, the reason they go bust, actually,

they're kind of the worst of the worst actors. You'll have a CEO who thinks, because of the nature of the business model, hey, I can double or triple my company's revenue in a year or two if I take on this massive construction project and if it goes, well, I'm going to get a huge bonus, right? They probably have no skin in the game. And then, you know, Greed gets the best of them. They don't do the right diligence. They partner with the wrong firms. And then the thing goes bust. and then the CEO finds a new job the next year, but, you know, shareholders get wiped out. You know, DuraTech, on the other hand, like, they've grown very impressive rate, 32% Kager growth rate organically over the last, like, 13 years.

But, like, they could have grown faster, but they've kept concentration risk at a very responsible rate so they can grow while also not putting the whole company in jeopardy, right? And, you know, the three executives each own 11% of the business. The rest of the top 60 senior managers own another 6%. So, you know, there's a lot of skin in the game, and they, they, they, kind of avoid a lot of these risks that give construction companies a bad name. The other question I had when I was researching this is, look, they're doing maintenance on big assets, you know, they just bought an oil and gas offshore maintenance. They're doing

maintenance on mining equipment, bridges, you mentioned all that. I look at that and I say, okay, cool, it seems reasonably priced. They've grown decently fast, but maintenance on a bridge, like, to me, that just screams commodity, right? They go and they say, hey, this bridge needs to get upgraded, we'll take four bids, and then we'll take the lowest bidder. And I think you've got a thesis that, no, this actually does have some characteristics of a company with a moat, so I just want you to dive into that. Yeah, sure. So I think there's a few layers there and I happen to dive in. You know, first of all, so, you know, while it is a commodity business to some extent, they are a higher quality player with a high reputation, and they're not the cheapest. They're, you know,

a premium price player. For instance, if you go to the, you know, you speak to people in the mining industry depending on the city they'll say hey yeah there's about three like premium players the most trusted there's Bonadelfis they're you know over a billion dollar company there's Duratech and there's one other right you go to different regions maybe different players but so they're they're not price to be the cheapest and you know and by the way having high quality mechanics and high quality engineers is generally the biggest bottleneck in the industry because there is a difference in quality in people so that

aside you know the business alone is great they do have this consulting business that just to touch on quickly men consult that really kind of puts them in the league of their own in the industry, right? And what men consulting does is it's a team of 25 or 30 PhDs, all owned by DuraTech, and they perform the diagnosis essentially, right? Let's say you have like, you know, a bridge that needs to be repaired or a port. They'll go over there and, you know, they'll do the full diagnosis and tell you exactly what's wrong. And the way they do this, they actually fly drones, right, and they capture every square range of the thing, you know, they spend days.

And then they all take the data back and they form a model, right? like imagine like a 3D software model. Now Duratech has built this in-house software model that's so granular. I wish I could show it up here. You know, I've seen videos and pictures where, you know, you can really zoom in on like, you know, under this bridge, on this concrete part.

There's this brown spot and this and this and they can tell you exactly how it needs to be repaired. And nobody else in the industry does this. There's a few other specialized houses, but there are peer play consultancy firms not owned by, you know, the remediators. And so, you know, they're in a league of their own versus their competitors because they can come in

to, you know, for instance, like BHP is a mining giant, right? They're a client and Duratech went in recently and, you know, they did all this work for them and they said, yeah, this work is so good, we're going to skip this whole next phase that we normally do, which would have taken us 12 months and cost us $1 million and we're just going to proceed. And, you know, they did the work with Duratech and, you know, Duratech has about an 80% win rate, you know, in these cases. And so this is an asset that nobody else really has and, you know, it's definitely, you know,

big synergies with each other there. When you said they're going to skip this next phase, I think what you're referring to, and tell me if I'm wrong, BHP skipped the RFP, basically. They just said your work was so good, we're just going to give you guys the maintenance contract for us. I think that and also typically, like, because no competitors really have like these sophisticated models, they'll come with something that, you know, let's say Duratex is like, you know, like a 4KT, 80-inch 4K TV, a competitor might come in with something that has the

granularity of 240P on like a 10-inch screen, and like, you know, you're supposed to be able to see something that's very granular. So those 12 months are spent with engineers who actually have to go around the site and, like, you know, fly out everything. But these models are so sophisticated, you can just skip that entire step. You know, we've talked about how I think everybody's obviously going to have to do their own due diligence, but I think you've presented a reasonable case why, how a lot of the issues that people might have when they think of this company are issues that are overcomeable or might not really be issues. Can you just talk to evaluation for a second? Yeah, absolutely. So the company right now, it trades at about roughly 10,

times earnings and they I mean the stock prices has run up quite a bit but they return it about 10 times earnings right now I believe there's a bit of non-catch charges that you could add back they'd appreciate their vehicles over five years but you know they have a useful life of 10 plus years but anyhow you know that aside when you look at the growth that you know still exists ahead of them right they operate in a 50 billion dollar industry as far as the revenue potential from remediation in all these industries and they capture about 1% of it right now. And so, you know, when you think about, look, they are, you know, a top

notch remediator that is still expanding and they have a terrific record of growth organically. They have men consulting, which, in addition to the 3D models, you know, they also have this laboratory petrography, which is the study of minerals and rocks under a microscope where they do 10 to 15% of the country's petrography, where so they have about 10 to 15% of all the assets that might need to be remediated in the future. They have insight. into that visibility that, you know, other people don't have, no other remediators have. So, and then they have, you know, the Department of Defense, they just tapped into that's 40 to 50 percent of the revenue. That is bulletproof, recession-proof revenue, because it's

the government, they have a budget that goes out 15 years. So if you spend some time with the company, you know, I guess I would advise you do, there's every reason to believe that I think they'll continue growing at, you know, strong double-digit rates, right? And, you know, mostly organically, if not all organically. And, you know, they have their own internal targets that are, you know, pretty ambitious. So, yeah, look. But as far as valuation, you know, if you're comfortable owning something around the ballpark of 10 times earnings and, you know, Mike Roe at, you know, I don't know if it's going to be 10, 20 or 30% on average, you know, or 40% on average for the next few years, you know, I'm pretty comfortable with it. Perfect. All right.

Well, John, I think we'll wrap it up there. Thanks for coming up here talking to everyone and looking forward to having you back on the podcast soon. Yeah. Thanks so much, Andrew. Thanks, everybody. A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast.

Please do your own work and consult a financial advisor. Thanks.