Mesabi Trust :MSB-US: Earnings Analysis: Q3, 2017 By the Numbers : December 16, 2016

Mesabi Trust reports financial results for the quarter ended October 31, 2016.

We analyze the earnings along side the following peers of Mesabi Trust – Applied Industrial Technologies, Inc. (AIT-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 3.44 million, Net Earnings of USD 3.21 million.
  • Gross margins widened from 91.63% to 93.19% compared to the same period last year, operating (EBITDA) margins now 93.19% from 91.63%.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016-10-31 2016-07-31 2016-04-30 2016-01-31 2015-10-31
Relevant Numbers (Quarterly)
Revenues (mil) 3.44 2.61 0 3.05 2.62
Revenue Growth (%YOY) 31.32 -4.6 -99.87 -74.14 -66.65
Earnings (mil) 3.21 2.42 -0.43 2.73 2.4
Earnings Growth (%YOY) 33.56 -2.55 -145.76 -76.32 -67.61
Net Margin (%) 93.19 92.74 -25625.49 89.7 91.63
EPS 0.24 0.18 -0.03 0.21 0.18
Return on Equity (%) 192.13 165.97 -23.06 137.49 168.23
Return on Assets (%) 147.2 111.66 -18.4 130.01 158.5

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Market Share Versus Profits

Revenues History
Earnings History

MSB-US‘s change in revenue this period compared to the same period last year of 31.32% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MSB-US is holding onto its market share. Also, for comparison purposes, revenues changed by 31.92% and earnings by 32.55% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 91.63% to 93.19% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 91.63% to 93.19% compared to the same period last year. For comparison, gross margins were 92.74% and EBITDA margins were 92.74% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 91.63% to 93.19% and (2) one-time items. The company’s pretax margins are now 93.19% compared to 91.63% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Mesabi Trust operates as a royalty trust. It holds interest in Peter Mitchell iron mine located near Babbitt, Minnesota at the Eastern end of the Mesabi iron range. The company was founded on July 18, 1961 and is headquartered in New York, NY.

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