bly seeing in the context of shareholder value, page-15

mbeard:

Your point that management should maybe stop buying so many drill rigs, and rather pay off debt, is well made.

Trouble is, No Capex = No Growth which is the main problem I have with these sorts of business; they are not scalable. The existing asset base can’t increase earnings for you; you need to add capital.
Unlike BLY, in shareholder value creating companies, earnings growth is not linearly proportional to fixed capital; earnings growth is exponentially proportional to fixed capital.

What worries me about investing in a company like this is that when demand for your products stall, you end up being the owner of a whole lot of fixed assets with the attendant fixed cost base chewing into profits quicker than most people expect.

Regards

Cam