The effects of excellent management with a mediocre/good business.
The 3 main takeaways: 1. Occupancy rate 77%; 2. US cashflow neutral, but only 2 out of 21 floors have reached maturity; 3. Continued currency headwinds.
And yet operating cashflow is still $18m for six months. This means that management is managing costs tightly, and have not gone all out to chase volumes at the expense of margins. Having said that, it appears that they will soon go into blitzkrieg to get occupancy levels back up. Alf is not stupid, so my only take on this is that any increases in occupancy are high margins and will go straight to the bottom line.
Not many things need to go right for SRV at this point to get improving performance. If all things go right, I will expect a lollapalooza effect.
SRV Price at posting:
$3.71 Sentiment: LT Buy Disclosure: Held
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