"MCE has significant operating leverage and enough capacity in thesir manufacturing plant to deliver on a materially larger amount of contracts than how we are operating currently. If earnings improve and margins normalise returns to shareholders will be meaningful."Good summary; thanks
@Ahf1995,
The combination of operating leverage and increasing capacity utilisation is a powerful one.
You referenced capacity in their manufacturing plant.
The question which I'm desperately struggling to answer is how fully utilised the factory is at the moment. And the rider to that, namely, if it was to be fully utilised, what levels of Revenue would ensue?
I know that during the past global oil industry investment boom this company generated Revenue averaging over $150m pa for the period between 2011 and 2015 (peaked at a whopping $175m in FY2011).
(Noting that the profit margins at that $150m Revenue level will now be a bit lower than the 2011-2015 levels because of the subsequent sale and leaseback of the factory.)
But I'm not sure to what extent the operational setup is still the same as it was a decade ago, and therefore whether $150m Revenue is attainable.
Do you have any sense of how much of the factory's capacity is still free, and where the Revenue line might land at, say, levels of 80%, 90% or 100% capacity utilisation?
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(20min delay)