Mesabi Trust :MSB-US: Earnings Analysis: Q3, 2018 By the Numbers : December 12, 2017

Mesabi Trust reports financial results for the quarter ended October 31, 2017.

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.


  • Summary numbers: Revenues of USD 12.19 million, Net Earnings of USD 11.96 million.
  • Gross margins widened from 93.19% to 98.14% compared to the same period last year, operating (EBITDA) margins now 98.14% from 93.19%.
  • Year-on-year change in operating cash flow of 836.45% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • 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):

2017-10-31 2017-07-31 2017-04-30 2017-01-31 2016-10-31
Relevant Numbers (Quarterly)
Revenues (mil) 12.19 13.35 3.66 4.68 3.44
Revenue Growth (%YOY) 254.13 411.74 217693.51 53.7 31.32
Earnings (mil) 11.96 13.11 3.36 4.41 3.21
Earnings Growth (%YOY) 272.93 441.85 881.33 61.55 33.56
Net Margin (%) 98.14 98.2 91.93 94.29 93.19
EPS 0.91 1 0.26 0.34 0.24
Return on Equity (%) 62.48 110.59 40.61 49.52 48.03
Return on Assets (%) 195.57 315.96 96.29 151.99 147.2

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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 254.13% 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 -8.71% and earnings by -8.77% 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 93.19% to 98.14% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 93.19% to 98.14% compared to the same period last year. For comparison, gross margins were 98.20% and EBITDA margins were 98.20% 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

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

MSB-US’s change in operating cash flow of 836.45% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 93.19% to 98.14% and (2) one-time items. The company’s pretax margins are now 98.14% compared to 93.19% 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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