Yet Another Value Podcast - Plural Investing's Chris Waller shares thesis on industrial roll-up compounder, TerraVest $TVK.TO

Episode Date: March 14, 2024

Chris Waller, Founder and CIO at Plural Investing, joins the podcast to discuss his thesis on TerraVest Industries Inc. (TSX: TVK), a manufacturer of home heating products, propane, anhydrous ammonia (“NH3”) and natural gas liquids (“NGL”) transport vehicles and storage vessels, energy processing equipment and fiberglass storage tanks. For more information about Plural Invest, please visit: https://www.pluralinvesting.com/ Plural Investing write up on TerraVest $TVK.TO: https://static1.squarespace.com/static/57eff176e58c621a298bfa61/t/65c1736ea99cbe30a72634d1/1707176815309/Plural+Investing+Report+on+Terravest+%282024.01.24%29.pdf Chapters: [0:00] Introduction + Episode sponsor: Tegus [1:54] What is TerraVest and why are they so interesting to Chris [4:51] Why is TerraVest underfollowed? [6:47] Why can their acquire at a discount and $TVK.TO's business model, overview, value proposition [14:21] Propane tank industry / location moat [19:44] How TerraVest pulls off the reduction in steel costs [22:27] Why hasn't Private Equity stepped in to roll up the propane tank industry? [25:48] How does TerraVest get labor cost down? [29:35] Tanker and Boiler businesses / recent Highland Tanks acquisition [35:13] Terminal value questions [40:49] Management, insider ownership and incentives [44:50] Valuation / Organic growth / How much accretive acquisitions to drive real performance here [51:29] Cyclicality[54:27] Capital allocation [57:40] $TVK.TO bear case [1:00:46] Final thoughts Today's episode is sponsored by: Tegus This episode is brought to you by Tegus, the future of investment research. From the beginning, Tegus has been committed to creating efficiencies in the research process by making it easy to access the content that investors need to get to differentiated insights. Today, they’re taking it one step further by bundling qualitative content, quantitative data, and better automation and technology together in the same platform. Instead of piecing together data from fragmented sources, just log in to Tegus to get expert research, company- and industry-specific metrics and KPIs, SEC filings, and more, all under the same license cost. You can even take your work offline with an Excel Add-in that updates almost any model with the latest financial data — keeping all your custom formatting intact. Tegus is the fastest way to learn about a public or private company and the only platform you’ll need for fundamental research. To try it free today, visit Tegus.com/value

This episode is sponsored by TIGIS, the future of investment research. From the beginning, TIGIS has been committed to creating efficiencies in the research process by making it easy to access the content that investors need to get differentiated insights. Today, they're taking it one step further by bundling qualitative content, quantitative data, and better automation and technology together in the same platform. Instead of piecing together data from fragmented sources, just log into TIGIS to get expert research, company and industry specific metrics and KPI's, SEC filings, and more, all under the same

license costs. You can even take a look at your work offline with an Excel add-in that updates almost any model with the latest financial data, keeping all your custom formatting intact. TIGIS is the fastest way to learn about a public or private company and the only platform you'll need for fundamental research. To try it for free today, visit tigis.com slash value. That's Tegus.com All right. Hello and welcome to Yet Another Value Podcast. I'm your host, Andrew Walker, also the founder of Yet Another Value Blog. If you liked this podcast, it would mean a lot if you could rate, subscribe, review it, wherever you're watching or listening to it. With me today, I'm happy to have on for the first time, Chris Waller. Chris is the founder and CIO at Plural Invest. Chris, how's it going? I'm good. Thank you. Thanks for having me on the podcast. And thanks for everyone who's listening in or watching. You know, nobody ever thinks the listeners aside for me. I like that. It's a nice way to get the listeners on your side. side before we start.

Before we get started, quick disclaimer to remind everyone that nothing on this podcast is investing in advice. That's always true, but particularly true today because we're going to be talking about a not nano cap, but smaller cap Canadian company. So people should just remember foreign companies come with extra risk, extra everything to consider. So just remember, not investing advice. Please consult financial advisor, all that.

Okay, disclaimer out the way, Chris, the company we're going to talk about here is TerraVest. This company has been an incredible compounder, and I know you think there is more to go. So I'll just pause there and I'll ask you, what is TerraVest and why are they so interesting? Yeah. Well, TerraVest, the ticker TVK, listed on the Toronto Stock Exchange, has a market cap in Canadian dollars of about a billion dollars, in US dollars about 750. Trades on, I think, 14 times EV to free cash flow. And I think is like, to grow earnings at a double-digit rate going forwards. But as you mentioned, it's done really well over time.

It's delivered shareholder returns of about 30% per annum for the last decade, and I think can continue to deliver attractive returns going forwards. I think what's interesting about this company is that the five most senior members of management all earn relatively low-based salaries, and they have the vast majority of their net worth in the stock. And although they're all experienced, many of them are still fairly young. CEO, Dustin Haw, is just 40 years old. And I think he's got a long runway to keep compounding at these good returns. And the company follows a roll-up strategy of acquiring, restructuring,

and then operating businesses that are generally mom-and-pops across the storage tank and pressure vessel industries, also cast iron boilers and furnaces, and a little bit of oil and gas equipment. So I think it acquies these businesses, typically at around 11 times net income. The restructuring takes it down to seven times, and that's really where management spend most of their time on, and I think where they create the most value. So I think they've got a long runway to keep doing that, and that's why I think the stock is still interesting. It has run up a little just even in the last few months, but I think actually their earnings were so impressive that on a multiple basis, I think is almost as cheap as when I sort of first discovered the stock. So I think that

this is a company that doesn't really speak to sell side at all. They don't hold quarterly calls or give investor presentations. And they're really just focused on executing. And as a result, it's still largely undiscovered amongst institutional investors. And I think that basically, as they continue to execute, the stock gets more discovered, liquidity improves. The stock should continue to do well over time. So three things that I want to add there. First, I should have let off with this. Pluralinvesting.com.

If people want to go, Chris did a very detailed, was it 50 pages? I can't remember exactly how long. I think it's 35, yeah. Around 35, 50, you know. But Chris had a very detailed write-up on it that you can find on his website, plural investing.com. There'll also be a link in the show notes. So please go check that out if you want to.

And there's all sorts of ways to get in touch with Chris there. so that's number one number two i just want to dive in i'll save number three for later number two i do want to dive into what you said this is relatively undiscovered and i thought it was interesting i posted a few hours ago on twitter hey chris waller coming on to talk about terra vass what what do you want and it got probably not surprisingly you know if i said hey chris is coming on to talk about invidia i would have people coming out the wazoo to ask about it uh because this is kind of under followed i didn't have a lot of people but i did have a few people slide into the dms and be like this is an incredible compounding business.

Like, you know, so I'm not surprised it's underfollowed. I want to ask kind of two questions on that. A, A, let's start with A. Do you think part of the reason the opportunity exists is because, you know, this is a harder company to diligence. They just published their MD&A. They just published their financials. It was tougher for me to do my podcast prep because there's no earnings presentations.

There's no conference calls. There's no, you know, investor presentations. Do you think that's part of the reason this is a business? exist? Yes, I definitely think so. And I mean, if you look at it at first glance, and this was the same for me, there does look also to be some fossil fuel exposure. There's really very little information online. So it does take quite a bit of digging to sort of realize that actually that exposure is not as strong. There's a lot of infrastructure type characteristics to this business. And just these industries in general, you know, storage tanks, boilers and furrow

These are not the most exciting industries, and there's not a lot of research out there looking at these industries from an economics perspective. And so you do sort of have to do your own research, and I think that's definitely part of why this opportunity exists. But once you've sort of done the work, these are actually fairly simple industries. So I do think it's just sort of a matter of time as people get to know the company more and sort of figure out what's happening here. So we're going to dive into the specific segments in a second, but I do just want to ask, like, look, as we mentioned, this is a compounder. And it's kind of funny, whether you're looking on a one year time frame, a two year, a five year, a 10 year, or 15 year, like, the answer is the stock's done about 30% annualized no matter what time frame you look at. I just want to ask, the reason they're doing it is because they're going and the business is storage tanks for propane. These are not crazy business. They're literally making the storage tanks for propane. And we'll talk about all the other things with it. But. You know, if I told you, hey, I'm going to go do a roll-up of storage tanks for propane, I think your answer would probably be, okay, cool, like, that might be a good lifestyle business, but a billion dollar roll-up doing 30% annualized compound.

Like, it's just kind of surprising to me. So I just want to start there. Long-time listeners to know, I always have trouble with something where you're like, hey, the secret sauce is we're going to go out and we're going to, whether it's mom and pops or, you know, private equities, we're going to go out and we're going to acquire something at a discount and create a lot of money. value. I always struggle with that mentally. So I just want to, why can they acquire at a discount? Yeah, I think a lot of these businesses, by the nature of how small they are,

you generally have a founder who is retiring. And so that's typically the situation they find themselves in. They're generally buying from also less economic sellers. For example, if a real estate company takes over a storage tank operation because maybe that operation went out of business or was going out of business and the real estate business took that over. There are different scenarios where they're generally buying from less economic sellers, and so they do get that advantage on the purchase. I think one of the important things with roll-ups is they have to, you know, how do they really create value?

And I think in this case, there's quite a big sort of secret source here, which is just in terms of steel costs. So depending on what type of storage tank you look at, steel could. be half the cost of that tank. And when you're a mom and pop, you don't get the bulk discounts that TerraVs gets. And quite often you're buying from a distributor. And so effectively on day one, TerraVest can go in and cut that cost anywhere between 10 and 30 percent. And that's a really material saving that just sort of happens instantly. So I think that's a kind of very simple way they can create value on day one. And I think that sort of separates them.

Can I pause you there? So people, and again, you should go read Chris's research report on TeraVS because it's really detailed. It's really interesting. So this is one of the top things I had on my questions. On page 11, if you're reading along with me, you've got the, you know, if the mom and pop is selling a 60,000 gallon propane tank, you've got what they would sell it for and the economics of that.

And then you've got what TeraVest would sell it for. And I'll let you walk through the individual pieces of it. But the long and short is you think a mom and pop would sell. that gas tank for about 70,000 in gross profit. And then you think what TerraVest buys them and kind of spruces up, they'd be getting about $125,000 in gross profit. So that's more than a 50% improvement in gross. I mean, it's almost a double in gross profit improvement.

So I want to walk. You started mentioning this deal, which is a big one, but maybe you could just walk through each of the line items that they, how they change, how they improve. And you and I can have a discussion, maybe like start at the top with price and we'll discuss and then go down. Yeah. Yeah, so this, a 60,000 gallon propane tank is a particularly large one. So this isn't something you would find next to your home. It's something you would find next to an oil well where propane is produced as a byproduct or at a major distribution center by a company like Amerigas. So you would have trucks that show up. They would then take propane from this tank and then go and deliver it to people's homes. So on average, I think that a typical mom-and-pop will sell it for about $350,000 Canadian dollars.

TerraVest can often charge a bit of a premium to that, and that is because of the speed of delivery. If you are in mom-and-pop and you receive an order, you need to then go and procure the steel, and there's typically a wait time, which depending on industry conditions, can be several weeks or even over 10 weeks. Now, if you are an oil and gas customer and you need this to begin drilling, that time really matters because you're losing weeks on all of your production. TerraVest, by the nature of its size, is able to invest more in its inventories, and so they have that steel ready to go, and effectively they can deliver much quicker as a result of that. So, certain customers, they get to charge a premium.

So this was one of the most interesting angles that you put in it, right? Because it does make total sense to me. Like, you've got this one thing. You know, people used to talk about the ferry dust where you've got one thing that was 1% of the cost, but like 99% of the output. And this is obviously not the ferry dust, but it is critical. If you don't have the tank, you cannot drill. And if you have to wait 10 weeks, like, and you're holding up a multi-million dollar drilling

program, yeah, you'd pay 17,000 extra bucks to get it. But I guess my question here is, you mentioned the mom and pops couldn't do this. And I just wanted to push back with why? because I understand steel, you know, about $150,000 of steel is going into one of these. So it is a big inventory investment. But isn't that presupposing that these lines are sitting empty until they get the actual order that they're doing? Like, aren't they busy and they're flowing it and they're kind of ordering in advance, right? Where they know, like, hey, this week we're completely full.

We need to start next week so we can start taking orders. Does that make sense? Yeah, I mean, it's a good question. for whatever reason, when I spoke to people in the industry, they sort of said, this is the last, this is one of the last things that the oil and gas producer orders. And I asked that exact question, well, why don't they plan in advance in order, you know, 10 weeks in advance if that's when they're going to need it? But for whatever reason, this is just sort of one of those kind of afterthoughts. And so that speed matters. And the other thing is they may not

be ordering just one tank. So, you know, although it's $150,000 of steel for one tank, you know, a producer could be ordering 10 of these at the same time. And so if you're a really small sort of family business, having a million dollars or several million dollars of steel just sitting there is quite a big expense for you. And if you don't get the orders, that becomes quite a cash flow problem. This episode is sponsored by TIGIS, the future of investment research. From the beginning, TIGIS has been committed to creating efficiencies in the research process by making it easy to access the content that investors need to get differentiated insights. Today, they're taking it one step further by bundling

qualitative content, quantitative data, and better automation and technology together in the same platform. Instead of piecing together data from fragment and sources, just log into TIGIS to get expert research, company and industry specific metrics and KPIs, SEC filings, and more, all under the same license costs. You can even take a look at your work offline with an Excel add-in that updates on almost any model with the latest financial data, keeping all your custom formatting intact. TIGIS is the fastest way to learn about a public or private company and the only platform you'll need for fundamental research. To try it for free today, visit tigis.com slash value.

That's T-E-G-U-S dot com slash value. Let me ask a silly question, and we'll talk about propane people are worried about the terminal value and everything later, but I do just want to, you know, a 60,000 gallon. on propane tank. I do think of like there was a huge oil boom in 2012 to 2014. And it's not like a propane tank has had incredible technological revolutions from 2012. Like, it's a lot of steel and you make it in a cylinder and you put propane in there. So why isn't it the case? Obviously, the stuff starts rusting, but why isn't it the case that every propane tank that kind of ever needs to be built has already been built and we're even, why aren't we just putting like a super

replacement level and just sprucing the old propane tanks up and being like, hey, Chris, your project from 20 years ago is done. I'm going to buy your propane tank, bring it over here, and we don't even need to build a new one and move steel. Yeah. I mean, this is not a growing industry or is certainly not a rapidly growing industry. And as you say, the propane tanks basically last for a really long time. You can repaint them. You can sort of refurbish them. But what changes is sort of regulation. So a lot of these tanks that Terevest are making are going on the back of trucks.

So effectively, the larger the tank on the truck, the more efficiently they can transport that propane. When you see an action movie and you see like, you know, they're having the shootout on the highway and the truck flips over and explodes, that's one of the propane takes that these guys. Right, exactly.

Do I think about that correctly? Yeah. And effectively what's happened is that as the technology of these trucks has evolved, regulation has allowed larger and larger tanks. And so over time, all these truck manufacturers replace these propane tanks with ever larger tanks, even though the old ones still viable. So there's quite a lot of replacement from that perspective.

Also, if you're drilling in one location and you have a propane tank and it's installed in that location, it's not necessarily easy to just sort of rip it out. after a few years and install it in another location that you're drilling. And then if you go to the sort of smallest customers, which would be people at home who maybe have a propane tank to heat their home, there are different tanks for every propane retailer. So if you're with Amerigas, they will come and put a propane tank there. And if you decide tomorrow to switch to, you know, feral gas or someone else, they will

change the tank, even though the previous tank is probably just. just as suitable. And that's for insurance reasons. And each company also likes to have its own tanks. So there are all these reasons why there is still a significant demand for propane tanks, even though the industry overall is not a growing industry. I guess, so in my head, I was mainly thinking about, I think the tanks on the back of the trailer on the trucks is bobtails, I think is what they call up. I remember quickly. In my head, I was really thinking about the big industrial and then the residential ones. And, you know, the big, these are big, big tanks for the industrial.

And I thought that was over 50% of the business, at least in Canada. I guess where I was kind of driving is, is there also, you know, with the cement manufacturers, the eggs, there's location mode, right? You build one and you can't send cement more than about 100 miles because it's just so heavy and so darn expensive to transport. Obviously, bobtails are probably cheaper to transport because you just hook them up to the back of a truck, but like a 60,000 gallon industrial tank, the shipping cost is actually going to be pretty high there. So I was wondering if their locations had like either some type of location

moat or maybe if not that there's actually location mode just in, hey, nobody wants to go use an old industrial tank from West Alberta because once you start shipping that to Halgary, like the shipping costs actually overwhelms the cost of just building a brand new one. Right. Yeah, no, to your point. These are heavy items, and in the case of an oil well, you know, that that's been installed into that location. It's not easy just to rip it out and transport it a long distance. So that is definitely a significant factor.

There's also just, I think, a sort of safety factor is that if you are the procurement manager for a certain location, I think it'd be very hard to justify, you know, taking a tank from a completely different location, moving it over. You know, if a tank leaks, that's a huge problem. There's a huge safety issue. And so, I mean, even actually at the smaller retail level, you would have thought that these propane retailers would recycle the tanks within their customer base

because those are smaller tanks. But actually, that doesn't always happen. Quite often, they actually just order new tanks for new customers so that customers are not getting an old tank. So what happens to the old tanks? It's either at retail or industrial. Scrap? I think a lot of them are scrapped.

There's not much of a refurbishment business. You know, there's a little bit of an ongoing business. But generally speaking, particularly at the retail level, I think they're generally scrapped. I think I looked at a propane retail distributor years and years ago. And from memory, that's like ringing a bell that that's correct. But I can't even remember the name of it. So I might be mistaken.

Let's go down. So the most surprising piece, so we started at press. Right? And I think you just made the argument for why in your model, you think they can charge 5% more on price. And that's largely because, hey, you buy from us. You get it in 10 weeks. You buy it from them. You get in 20 weeks. Time is money. 10 weeks. Worth it. Let's go to the next one. This was the most surprise to me. Steel, which in your model, you've got steel is about 55% of the cost of goods. For a mom and pop, you've got it. I'll just round $150,000 of the $350,000 in cost would be steel costs. And the TerraVest model, you think it would go down to about $130,000.

And so they've cut it about $20,000 worth of steel costs, and they increased the price by about $20,000. So that alone is the majority margin. I was kind of surprised that a company, because steel is, I think literally in economic textbooks, when people start talking about commodities, steel is like the number one, right? Your seal is my steel as long as it's kind of metallurgically the same. So I was surprised by the huge reduction in steel costs. Can you kind of walk through how terrorists bolt that off? Yeah.

And actually, it's interesting because if you speak to the company, this is sort of the first thing they'll list as a kind of competitive advantage. And there are sort of two sources for that. I mean, the first one is just they don't need a distributor. They go direct to the steel mill. And a lot of these mom and pops don't do that. So that's a significant distribution cost. They can just cut.

Is that just because of pure scale? like you and I, if we were making a few, we just literally, the steel manager wouldn't even pick up the phone call versus Terry Vest because they've rolled up a billion dollar company. This is really all about, it is about scale. And by the way, this is true not just of steel, it's true of valves and other parts. They do the same type of procurement because of their scale. They go direct and they get a bulk discount. And actually, even with steel, they do get a discount.

And so, you know, in this example, I've put, I think, a 15% reduction, but it varies a lot depending on, effectively, how professional the company they acquired was. But, but yes, and it's interesting because when you speak to the founders of the companies who ultimately sold their businesses to TerraVest, this is generally always the thing that they point out as the biggest kind of improvement that was made after TerraVest bought the company. And it's something they're quite appreciative of. It's not about kind of reducing staff members or anything like that. It helps their business. And it's actually quite straightforward. They have a terabest level account with the steel mill. And so it's very easy for them just to add or reduce that order and then distribute it out to their subsidiary businesses.

Let me just push back one piece on steel. Everything you said there makes sense. going direct, cutting out kind of the middleman makes complete sense to me. I guess the one other thing is, look, these guys have compounded at 30% per year. And as I said, like Constellation Software was another one that we just did a podcast on. When you compound 30% per year and at this point, they're a billion dollar company. Like that attracts really big eyes. And as we said earlier, it's not like propane tanks is the most complicated thing in the world.

I guess my pushback here would be, hey, cool, they've got this. why every private equity company wants through roll-ups, right? Everyone wants to do roll-ups. Why haven't other private equity company stepped in and like, hey, TeraVest model, let's do a $500 million check and let's go on a spree because they've proven and we can just invest into this and create a competitor and like, you know, markets are really competitive. I guess we'll talk about that later, but markets are really competitive.

And I just see we're buying legacy old school and using our size to bring still costs down. Like it feels like the solution to that is other people move in and copy. that because it's not exactly a unknown unknown. Well, it's interesting because TerraVest is actually in a lot of small industries, even though there are a lot of similarities. So, for example, in storage tanks, they're not just doing propane pressure vessels. And actually, even within propane, usually there's a different manufacturer that makes the really large tank that goes next to an oil well versus the trucks, even within trucks,

There are different sizes, and there are usually different manufacturers for each size, and then the retail side. So all of those typically would be seen as different industries. And then you've got ammonia storage, heating oil storage. You've got uses for agriculture. They're now moving into water tanks. So it's really a lot of kind of small industries that are put together. And there is that geographic concentration. So TerraVest, for example, in Western Canada, I think in some of these markets has about 60% market share.

But it really matters that TerraVest has rolled up that local market. But that local market is very small by itself. And there isn't too much of an advantage if you go beyond that. And so I think the skill for the sort of reason why major private equity firms don't come in is just because each of these markets individually, is quite small, even though there's this kind of commonality. And the other thing is, Terabest does compete with private equity for the larger acquisitions, but actually that market is getting less competitive.

Now, just with higher interest rates, it's a bit more difficult for these private equity firms to put that amount of debt on the businesses. And so actually, I think TerraVest is more optimistic today in terms of its ability to compete on acquisitions. than it has been in many years. Awesome. Let's keep walking down the income statement of the sample acquisition you did.

So the next is shipping, and guess what? Shipping, you don't really get discounts on shipping. Maybe if you're like sending Amazon through UPS, you can get a little bit, but you don't include any shipping. Next item is labor. And this was another interesting one to me. You've got that the mom and pop, $70,000 in labor versus post acquisition. Again, let's round $60,000 in labor.

at TerraVos. And this is one just in my experience, it's kind of coin flip, right, where a lot of mom and pops, you know, they'll say, hey, we've had these guys for 30 years where they're never looking to optimize cut costs because it's like kind of a big family. And they realize they're running with a little bit of dough around them, but that's part of the charm. But on the other hand, you know, everybody knows you scale up to a certain point and eventually there are disinergies, right? Because the mom and pop, it's their bottom line. So they make sure that the business is profit when they kind of watch it closer than, you know, Terabest, it's the managers, the managers understudies understudies kind of managing this thing. And maybe he's not as

careful as, hey, instead of hiring a janitorial staff, we get, we get our employees to buy in and like clean up on their own and stuff. So I could have seen it going either way. You've got it cutting down by $10,000, which again is a lot on a $350,000 tank or whatever it is. So just wanted to ask you, how do they get the labor cost down? Yeah, I think this is where you can see some of the actually operating skill of the TerraVest management team, because you're right, there are definitely risks to this. And I think this is maybe one of the things people tend to underappreciate. This is not just a roll-up in the sense of buying companies. They're actually good operators. And so first of all, they have a kind of decentralized model. They go through

the P&L and they set objectives for every one of these operating subsidiaries. But after, after making some of those initial changes, they generally let those local management teams manage the business. So they don't interfere too much unless it comes to these kind of major items like steel, for example. When it comes to labor costs, there are really a couple things that they do. I mean, first of all, they share resources. So some of these companies have multiple plants that are probably underutilized, and they do sometimes consolidate those facilities. In other cases they can consolidate it with another company that they've purchased. So that just improves utilization significantly. So that's one thing that they do, and they do get involved in directly.

And I think the second thing is just investment in equipment. So sort of, again, by the nature of TerraVS size, compared to mom and pop, they can make significant investments in production equipment to really automate some of these factories. In one case, they actually doubled the size of a factory. And so they can make those types of investments. That's great. And then I guess just lastly quickly, you've got this other line. I don't think it's a huge driver of this. We've talked about it. They do save a little bit there. But do you just want to quickly address other if there's anything there. Or you can say it's small enough. We can just round it away. Yeah. Well, it just, you know, I've laid out steel as a separate line, but obviously there are

other raw materials that go into producing a propane tank. And so they are saying, get similar procurement benefits with valves and other parts. And I think just maybe the last thing is just in terms of the mindset, as you sort of touched on, quite often these mom-and-pops, as they've told me, you know, it was a family business. I wasn't necessarily looking to make the last dollar. And so Terabest do different things like obviously be focused on the profitability of different product lines and really focusing on which product lines

make the most money incentivizing salespeople on profits, not on revenues, you know, things like that. So there are all these kind of little things that add up to make a decent difference. So we just walked through the tank line. And again, that was, they're literally almost doubling the gross margin there. In your model, you've got it up 79%. I just want to ask, I don't want to do this for every segment, but you do have the, and people should go read it. Page 17, you do walk through the boiler line and you find that kind of using your same thought process and everything, you find that you think the boiler line increases from pre-acquisition $300 to post-acquisition $364. So 20% boost in gross margins. Anybody would like a 20% boost. But I thought it was

interesting. In the boiler's line, you don't have them improving on price. You don't have them improving on materials. All the benefits are coming from a reduction in labor and the reduction in others. And I just wanted to ask, you know, look, the, the tanker line is great, but obviously with Tera Vest, like, you're hoping, and they're more business, but you're hoping they're going to be able to buy more, it's going to be roll up, they're going to keep, why is the secret sauce not as effective in, and again, I'm only choosing one, not as effective on the boiler side as it was on the tanker side. Yeah, I think when it comes to different types of storage tanks, particularly the larger ones, that tends to be where TerraVest adds the most value.

Because of the steel, like we talked about, and because of the importance of scale in procurement in general, when it comes to boilers, a boiler is not like a propane tank where half the cost is steel. So TerraVest is not able to achieve the same procurement benefits in boilers as it can in storage tanks. Where it is still successful is in shared resources, again, in terms of merging facilities, focusing on profits, all these different things are still applicable. But they just don't have that kind of procurement benefits. And actually, one thing I'll, sorry, go ahead. Just to push harder on that. Why don't they? Because, again, I only know from a little bit of

looking at the financials and from your model, but you've got materials at 58% of the cost of goods sold here, right? If memory serves, that's higher than what it was in tanker. So why aren't they getting the same benefits just on the materials by being able to do something here? Is it just because, hey, materials are so fragmented? You can't go to the steel plant and get it, or is there something else? Well, you know, one of their main companies they procure from is the Wild Packer Foundry, which is a foundry that primarily serves auto manufacturers. And so TeraVest, even though it's one of the four biggest, probably the third largest boiler manufacturer in the US, is actually a very small part of the business for the foundry. And so it doesn't have that scale.

I think the other thing is that typically what happens with these boiler conglomerates is that they have many brands. So TerraVs are sort of two or three key brands, but it actually has a lot more than that. And then each brand has different boilers and so on. So actually the parts that go into these products is nowhere near. as uniform as saying, you know, we're going to have roughly 50% of our cast in steel for all these different types of propane tanks. Yeah, I guess what just jumps up to me is like, again, propane tanks. I just think big legacy material industry, boilers, you know, it's just like all big steel iron, that type of thing. You plan it somewhere and you're storing it. And you would address it, you know, I just kind of, I look at them like, maybe they just found something so unique

on the tanker side, and then when you're applying it elsewhere, it's just not as good. So there's just not as much upside elsewhere. And yeah, the tankers were great, but as it expands into different markets and different niches, just not going to be a good. Actually, one thing I'll just add on that is I actually think they're showing something right now that's really interesting in terms of the runway, which is they just bought a company called Highland tanks, which operates tanks in all sorts of different industries. but one of them is water storage.

And that's a big market that TerraVest has really not been in in a big way up until this point. And they're achieving similar sort of synergies there. So that does show that there are all these different industries that make tanks of all different types and varieties. And I do think that there are a lot of adjacent industries that they can go into. So even in the sort of 55, 60 percent of revenues that I think is in storage tanks, they start. off primarily in eating oil, then they went into propane, then they added ammonia, and now they're adding sort of water storage. So I do think that there's quite a lot of industries they can go into.

No, that's great. Sorry, I was just, my, the kiddo is waking up from her nap, so the bopcha is going to check up. Let me water tanks. You mentioned the water tank second. Is the water tank, is it, you know, you're driving through a town and you see the big water tank up at the top of the town, everybody, you know, there's landmarks, everybody's familiar with it. Is that the water tank business or is it water tanks, you know, on-site, oil and gas, it takes a lot of water to, especially frack to frack. Is that where the water tank, like, kind of storing for oil and gas or industrial, or is it all three? It's mainly the second one. So it's mainly industrial clients. There are all sorts of different clients may need a water tank, but it's

generally an industrial business. It does include oil and gas. But, yeah, it's not the sort of, yeah, big oil, you know, big water tank you might see as you drive by it. I think there are two questions that people who are listening to are going to have, three questions, actually, that people who are listening are going to have? First, who knew that tanker economics could be so much fun? It's obviously going to be the first question. But the second question is, hey, these guys have alluded to a few times, propane storage, oil tank and water storage, like anything associated with oil, people are going to wonder,

have terminal value questions, right? Like, how long are people going to be drilling for oil? So I'll let you address the terminal value questions across the business first, and then I'll hit on the next one. Yeah, it's a good question. I mean, I think, you know, first of all, in terms of propane, I think there's a bit of a misconception that it is currently a declining industry. If you look at some of the data, the Department of Energy in the U.S. has put out, it's been propane usage over the last 20 years has actually been flat. And that's because it is primarily used by about 5% of households in the U.S. U.S. in very suburban locations where they're not building sort of natural gas piping. It's

just not economic to do that. And that's very unlikely to change anytime soon. And so I think that's why that business has been flat. Can I just quickly ask, you mentioned not building natural gas piping, completely hear that. Yeah, what about the big push to have electric stoves, electric heaters, that type of stuff? Does that cut into the propane market in the long term? In the long run, it could do. And it just, it depends on regulators and politicians and it differs by every state and so on. I think that people in the propane industry are frustrated because propane is actually a relatively clean gas, but that's not what you would necessarily think from the way the coverage is. I think people in the natural gas industry would join them. I think there are several people

who would join them in that frustration. So there's still a sort of debate going on at the political and regulatory level. But yes, absolutely. Although propane has not been a declining market to this point, it could be going forwards. The other thing to point out is that in Canada, actually Canada is the bigger market for Terabest when it comes to storage tanks. And actually in Canada, the political environment is much more favorable. You know, in Western Canada, where there's a lot of oil and gas drilling, that market has effectively been in a recession since oil prices fell in 2014. So if anything, there's more kind of upside possibility from that normalizing.

And we saw a little bit of that in the recent results. So I think that's on the propane side. I think actually when I looked at the company, I was a bit more worried about the cast iron boiler market in terms of the terminal value. I think it's definitely true that over time we are going to move to heat pumps and other forms of heating. The issue is this is already a replacement. replacement business. So roughly speaking in the US, there are about 350,000 orders of cast iron boilers

per year. And only about 5,000 of those are for new builds. So effectively, it is a replacement business. And let's say tomorrow, the DOE raised their minimum efficiency levels, and that effectively meant cast iron boilers could not be used for new builds. It would only take away about 1% of that market. And it is not actually straightforward to just rip out a boiler from someone's home and put in a heat pump because all the piping and the duck work and the way that area has been built has to change. So that's really a lot of work and quite expensive.

So realistically, the way this changeover happens is that new builds are no longer being built with boilers. And so as those new homes become a larger part of the market, that transition happens naturally. But that's something that takes place over many decades. To yes and your point, if I remember correctly, you're on the Upper West Side. Yes, I'm on the Upper West Side. I'm Upper East Side. In New York, for those who are.

We are for actually, you're Upper West Side, I'm Upper East Side. We're probably further apart than if you were like New Orleans and I was Austin or something. But no, just both of those living in New York City, like it really shows you, it's easy to forget, oh, if you banned boilers right now, a largely repressing business, like, the stock is so large and the replacement business is so large. It takes literally decades. Like, yes, you'd like to be selling into the new market, but it takes a really long time to replace that. And there's a lot of other industries, you know, this is not the same,

but I always think about this quote from gas stations in California. One guy said, look, it's a sunset industry. They're regulating us all away. But what a beautiful sunset it's going to be because all my competitors have gone out and nobody will come in and we can just write. You think about tobacco. obviously this is a little different than all those. But I do just think, like, there is such a long time frame.

And one of the nice things is if people question terminal value, nobody's coming in. So the replacement industry can be a good point. I should have mentioned that. I mean, that's exactly one of the reasons why there isn't a lot of new money coming into this industry, to your point on why doesn't private equity come up and come in and roll this up? I think the other point is that management are very aware here that this is not a growth industry. and, you know, whereas some management teams go out and chase growth and they spend their cash on things that they probably shouldn't be doing, you know, this management is kind of very, very aware of that. They paid sheet multiples. They take the cash out of the right businesses and reallocate it to the right businesses and make acquisitions. So they're, yeah, I'm, you know, comfortable. This is the management team that I would want managing a situation like this. Speaking of management, my next question was going to be valuation, but we can come back to it later.

The management team here, you mentioned how young the CEO is. You mentioned how much insider ownership there is, but the incentive structure is really interesting here. So you can talk about any and all of those, but I'd love to hit on all three of those points. Yeah, so the management team, there's a group of sort of five or six senior managers. I think all of them have the majority of their net worth in the stock. I think several of them have the vast majority of their net worth in the stock. And I think what's really interesting is that they're paid quite a low-based salary. And not only do they own stock, they have options going out to 2032,

where they can be rewarded extremely well, all of them, if the stock continues to compound. And it might be helpful if I just sort of give you the numbers because they're pretty significant. I was actually, that was going to be my follow-up. please hit us with the numbers because extremely well might not be fair how well these guys can do. So just to give, I'm just sort of making sure I get the numbers right. So, you know, if the stock compounds at 15% per annum until 2032, which, you know, depends what you think's reasonable, but I'm sure in their minds, they're thinking that that's possible. The executive

chairman would make about his shares and options would be worth about 500 million Canadian dollars. The CEO would have about 80 million. The CIO, who is really in charge of sourcing acquisitions, would have about 55 million, and two of the operating presidents would have 55 and 11 million, respectively. This is all pre-tax. This also excludes any additional options they are granted between now and then, and they're likely to be granted options between now and then. So you just have this situation of, you know, a very clear incentive for the

management team. I mean, that's a big number. And that's why I wanted you to say it. And it's a big number. But there is one big assumption there, right? If the stock compounds at 15% per year. Because I could say, I mean, honestly, I could choose just about any company. And it's not going to be quite this extreme, but just about any company with CEOs that have any type of stock option package. If I said, hey, the stock's going to compound at 15% for effectively the next 10 years, you'd say, hey, these guys are probably going to be pretty damn wealthy. So is that 15% assumption. Again, I know you think you can do it. Like, you're a value investor. We don't buy stocks unless we think they can kind of do that type of thing. But isn't that an aggressive

assumption to make there? It could be. You know, so definitely we could use a different assumption. But, you know, even if we said 8%, for example, you know, these would still be very meaningful numbers. And in the case of the CEO, I think this is the vast, you know, it wouldn't surprise me if this was over 75% of his net worth. So even at a 8% level, it would be like that. And I think it's also worth mentioning their actual, you know, base compensation. So in terms of salary, the CEO was paid 400,000, you know, just over 400,000 last year. And bear in mind we're talking about, you know, 80 million, potentially at a 15% return, you know, lower than that at a low return. So there's just such a

difference that I think is very clear what their incentives are. And also that they're a for the long term because these are going out to 2032. Nope. That's great. Yeah, that's fantastic. So I think we've mentioned the incentive piece. Again, it's low cash comp. It's high. You know what's really funny. Every now and then, I'll see people and be like, hey, low cash comp, they get a lot of stock options. They have a lot of stock ownership. And people be like, doesn't that align them against shareholders? I'll be like, what? No, this is what I would like to see. Yeah.

Yeah. It's just funny how I don't know where people. coming with that, but I could see how people would be like, they own too much of the company. It's like, okay, big brain. Let's talk valuation, right? So I just want to start, if we ignore future acquisitions, all that type of stuff, let's talk about the valuation as you and I are sitting here talking today. Right. Yeah, I think the company's trading on about 14 times free cash flow. Free cash flow is a little bit tricky to calculate with this company for a few reasons. First of all, by their nature of having acquired a significant number of businesses, the free cash flow tends to grow throughout the year.

They've just done two particularly big acquisitions. We've just had one quarter of those results. In fact, the biggest one of those highland tanks, we've only got two months of results. So you have to make a few adjustments for that. The other thing is that their CAPX tends to be lower than depreciation. So, you know, once you've made these adjustments, I think it's traded. on about 14 times what current free cash flow is. And having seen your write up, I'll just add, you know, some people when they say free cash flow,

they're using an unlevered, which is before taxes is the main thing and interest. I know you're talking about kind of a net operating profit. So that is after taxes, after everything, free cash flow. Yes, yes, exactly, trying to be after everything. So I guess I should ask this first, but let's talk just very quickly, organic growth after they do the acquisition, right? Because this is an acquisition model. They go, they buy, and they improve.

We talked about how they're almost doubling gross profit in some of their businesses. What about their organic growth? Because everyone can listen. These are not sexy industries. We kind of mentioned them at replacement. What's the organic growth of the business, of the core business if we ignored acquisitions? Yeah, I think it's around 2%. Now, it does differ depending on the exact business.

So, you know, Terevest actually originally started with a lot more oil and gas. exposure, and I think that business is in more of a decline. The heating oil business is in a decline. And actually, some of the newer businesses they've acquired are still growing companies. But I think it nets out roughly at 2%. So it's low. That's perfect. So this is a, let's call it an inflation, a GDP grower at the core business. I guess my first push back to you on valuation will be 14 times free cash flow for kind of a lower, no-growth business. that would probably be about fair, actually, maybe even a little bit on the expensive side. So what you're really, you're really baking in continued accretive acquisitions.

And I think you will tell me the proof is in part. The proof is in the pudding, right? They have done this for years. The stocks compounded great. But I think I would push back on you and say, okay, cool. Like they grew from 10 million, 100 million to a billion on accretive acquisitions. You can do that. to grow from a billion to, you know, 20, 32, 15% compounded, I think that gets you to about

five or five-ish billion, if I'm doing the math in my head, correct? To grow from a billion to five billion on accretive acquisitions is a much different game, right? Because you have to either do bigger acquisitions, which are generally going to be more competitive, or you have to do a lot more of them, which it's just hard to keep doing, you know, little twos and threes that budge the needle. So I guess my pushback here would be how much. much do you need accretive acquisitions to drive real outperformance here? Because you definitely need it,

but how much do you need if that makes sense? I do think that is essential, to be honest. I think that this is a company where you're really backing the management team to continue to really allocate capital well. And so I do think that's important because you're right. If it was just a zero to two percent growth business at 14 times, that's not particularly cheap. I think historically, they've been able to grow earnings at around 25% per annum and their multiple hasn't expanded too much until recently. So of course they've got that track record, but as you pointed out, it's harder to go to a larger scale. I guess the only thing I can sort of really say to that is I do think there are still a lot of adjacent industries they can go into. And I would

encourage anyone who's sort of interested in this company, take a look at some of the trade magazines because you'll see the number of companies in this business, in this industry, or take a look at some of the trade shows because there are a very large number of companies in it. So I do still think there's a good runway for them to keep going. And I like the management team because they're very entrepreneurial. And what I've found is that typically when you have a really good management team like this, they tend to surprise you to the upside. They sort of think of things you would never have thought of. That would be really difficult to kind of put in a model.

And so I do think this is sort of why the company continues to do well, even though it doesn't look sort of optically really cheap at first glance. Look, I completely agree with you. It's a lesson I keep learning. When you buy bad businesses and or bad management teams, you're just surprised how often they can disappoint you. Whereas when you buy really good businesses with really good management teams, you know, like, like Amazon is the compounder of all compounders over the past 20 years. And there are a lot of people who bought in 2004 and they celebrate rightly so, right?

And they got AWS. And I always have this debate like, did they get lucky? Because you weren't underwriting AWS when you bought it in 2004. Did they get lucky? Or did they back maybe the best CEO in history and just think, hey, he's got this huge scale. all these resources, he's going to find a way to get new stuff. You know, Mark Zuckerberg, did Instagram, stroke of genius, WhatsApp, stroke of genius. When you bought Facebook, you weren't really underwriting any of those, but you bought one of the best CEOs of all time. So I think, you know, I've spoken to quite a number of people about the CEO, Dustin, and

the references are, you know, references typically do tend to be positive. But in this case, you know, they were, you know, really. positive, and I think this is definitely someone to bet on. And I would maybe even flip it around and say, at 14 times you're not overpaying, but you get the CEO and all the capital deployment, and in the next few years, there's a clear runway, you know, and then maybe beyond that, it gets harder, but, you know, you can reevaluate at that point. And I suspect they will keep surprising us. What about cyclicality just because, you know, 14 times, but we've had a lot of this business is coming from oil and gas.

and energy markets. And I don't think, it's not a surprise anyone listening. The past two and a half to three years have generally been pretty good for oil and gas energy markets. I think a listener might listen to say, okay, cool. I hear, I like that set up. I get a call it 7 to 8 percent free cash flow yield with the upside of good acquisitions going forward, but that 7 to 8 percent could become 4 percent or 5 percent real quickly if this

is really cyclical. What about the cyclicality here? Yeah. There is some cyclical here, but it is not as cyclical as. it initially appears. So a lot of the business is very much replacement-driven. So the cast iron boilers, that's a perfect example. You know, if your boiler stops working,

it's not really optional to replace it. You know, similarly, propane tanks, if your tanks start leaking, again, not optional to replace that. So a lot of this is just a replacement business. In terms of oil and gas, it's true that generally speaking, the last couple of years have definitely seen an upswing. They haven't for TerraVest until the latest quarter.

quarter, because they are selling parts more to sort of midstream producers, historically it's taken a year or two before a general kind of increase in oil prices and improvement in conditions has started to benefit them. So, for example, in 2014, when there was the oil price downturn, it wasn't really until 2015 or 16 that they started getting hit. And in the recent sort of rebound, it's not until the last quarter or so that they've really started to see the rebound. So I'm not too worried in that area. But yes, there is cyclicality. But the other thing as well is because a lot of this is about redeploying cash into buying more businesses, of course, in a cyclical downturn, you tend to get more distressed sellers, better prices and better

acquisitions. So I do think that's quite a natural hedge against that. This episode is sponsored by TIGIS, the future of investment research. From the beginning, TIGIS has been committed to creating efficiencies in the research process by making it easy to access the content that investors need to get differentiated insights. Today, they're taking it one step further by bundling qualitative content, quantitative data, and better automation and technology together in the same platform. Instead of piecing together data from fragmented sources, just log into TIGIS to get expert research, company and industry specific metrics and KPIs, SEC filings, and more, all under the same license costs. You can even take a look at your work offline with an Excel add-in that updates

almost any model with the latest financial data, keeping all your custom formatting intact. TIGIS is the fastest way to learn about a public or private company and the only platform you'll need for fundamental research. To try it for free today, visit tigis.com slash value. That's Tegus.com quickly capital allocation. Like one of the things I love is companies that are kind of insider-esque or outsider-esque, sorry, outsider-esque, which I think you could say this is outsider-esque. I love it when they're repurchase shares because then, you know, somebody who you respect on capital allocation is buying back shares. And I don't believe these guys, I'm just looking at the Q1 income city, I don't believe these guys are repurching shares. And they have a dividend policy.

And it's only 10%ish of free cash flow. So it's not a huge thing. But the combination just struck me as a little strange because we put the two separate, but if you're going to do a acquisition roll up strategy, it's always a little strange to have a dividend on the side because you generally want the cash going into these 30% plus annualized returns you're doing on acquisitions. Why pay a dividend? And then on the other side, like, you know, look, the stock has run.

It's done great. But I'd love to see like, hey, we think the stock's so cheap or, you know, buy an handover a fist and management owns plenty of stocks. so I don't need to see management insider buys, but I'd love to see the company kind of buying this year. So threw a lot out at you, again, I'll just toss it over to you. Yeah, no, I agree they shouldn't be paying a dividend. And I think it's a small dividend that they pay

because there's a board member who used to be CEO, and he was actually the founder of TerraVest, the company before it became this kind of vehicle. And he has a significant amount of stock, and he likes to have some income. I don't agree that it should come in the, form of a dividend. I think he'll be more tax efficient if he's sold a few shares every year, but that's essentially the reason why the dividend exists. And I think the CEO will say himself

that probably he's not going to fight over something kind of small like this. In terms of the buybacks, I do actually like their mentality with buybacks. They're quite open to it. They haven't done it in recent years. But there was a period a few years ago when they actually bought about a third of the stock back in a tender offer. So they're willing to be aggressive like that. That was in 2018, right? That was in 2017-ish? Yeah, okay. Yeah. So it's not in the last sort of three, four years, but they have shown they're willing to be aggressive if the stock's really cheap like that. And I think it's just they're seeing these acquisition opportunities. And so they're creating value that way and they're willing to invest in those.

But I think they're quite sort of open-minded and nimble. If the stock were to decline a lot for whatever reason, I think you'd absolutely see them buying stock. No disagreement and neither are huge deal breakers to me, especially like, you know, I've seen companies where they trade for six times EBITA and they go out and they're like acquisitions are great. It's like, hey, okay, cool, but you're buying competitors at eight times and you're hoping to synergize your way down to five times. Like there's a real opportunity cost we should be talking about you versus. buying your own stock versus buying peers, or, you know, it can get even worse. I've seen people want to buy Post-Snergy 7 in their stock trades for sales. Whereas here it's like, hey, we trade for 14 times free cash flow, not that that's a high

multiple, it's not a particularly low multiple, but we're going out and buying businesses and we think we're doing it at five times free cash flow. So I still think they've got done. Last question here, and then we can wrap this up because this has been a pretty comprehensive over here. You're just, what kills this business, right? So we've talked, I mean, I don't think the man for tankers are going anywhere. but it is always worth thinking like every time you invest in a company, there is existential risk.

And TerraVest, different management team, much different business. It did go bankrupt to remember correctly and kind of like the 05, 06 range under the previous executive team, obviously much different business then. But, you know, businesses can go bankrupt. So what is your biggest worry when you think about this business? Yeah, my biggest worry is around the CEO. I think that clearly this is a company where the management, are really important. The story is about management being excellent and redeploying capital

well. And if the CEO were to leave for whatever reason, that would really change my view on the stock. Although it's not only him, there is a team. I think the CEO has been absolutely critical. I do think at some stage, they will have to expand the team. If you look at the core group of people, we talked about being highly incentivized, it is a small team and they will need more people, they'll need more infrastructure. So I think there could be growing pains at some point. I think also, you know, it is a, there is some cyclicalcy, even though it's not as significant as I think most people believe. And, you know, that can definitely hurt them in a downturn. And because management don't sort of manage the stock in the sense that they just kind

of do a really good job, they're not giving quarterly calls, presentations, you could see a scenario where there's a little bit of an information vacuum in a downturn, and maybe management aren't sort of proactively addressing that. Personally, I think on a long-term investment horizon, you know, that would be a nice opportunity to pick up some more stock. But you could see a decline. You could also see that being exacerbated by the low liquidity of the stock. So I could envisage that at some point becoming a risk. But overall, I'm fairly comfortable primarily because this management team is very cost-focused. They're good at managing through downturns.

We've seen that in the oil and gas business, and TerraVest over a three-year business, a three-year period, has actually not seen a decline in EBIT up until this point. Not that it can never happen, but they've got a good record at managing downturns. And if I remember correctly, I'm trying to find it, but they're not that levered. So you would hope in a downturn,

Well, stock prices can do anything in a downturn, right? But you would hope in a downturn, and you mentioned this probably 30 minutes ago, because they're not that levered, they're actually like the buyers, right? Like the best deals you'll ever make are in a downturn. Your competitors are a little stressed out. earnings are down. You can acquire some jewels at really interest prices. And you would hope, given the sharehold alignment and the low multiple here,

that they would actually be buyer. So, yeah, in the short term, it would suck if the stock went from 56 to 40 or 30 or whatever. But in the long term, you think that the most value, gets created in that downturn. Cool. Anything else you want to say on TerraVos? No, nothing. Yeah, nothing else.

I mean, maybe just one point that we've already discussed is just the, I just think that good management surprise you. And it's something that myself as an investor, I've learned over time. And unfortunately, it works the other way, too, where bad managements can keep surprising you to the downside. And it's nice to be on the other side of that. And I do think that gives you a lot of comfort. But, you know, not necessarily 30% returns.

You know, certainly can't promise that. But it gives me more comfort on the downside, actually, that we've got the right people in charge here. And essentially sort of under most scenarios, whatever the industry throws at them, I feel comfortable that we've got the right people to manage through that. Fantastic. Cool. Well, Chris Waller, again, I will include a link to the website in the show notes.

Everyone should go read the write-up and just check the website out. but read the write-up alongside this. Hopefully alongside this podcast, but I'm saying that at the end, so you might not think that. But Chris, this has been great. Great work on this. And I'm looking forward to having you back on for a second appearance. Great.

Thanks, Andrew. A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.