Good analysis of $TVK.TO Q3 by @JibbyCap! Points I would add are (1) TVK sold some equity instruments possibly to fund part of the buyback and (2) the weak compressed gas segment should be less dilutive to margins starting 2027 when utilization picks up with defense contracts.
$TVK.TO Q3 thoughts
General:
* No news on the Pellerin situation, so that overhang remains. I think it would have been appropriate to at least acknowledge the situation.
* Financials look (really) good. The bright spots are working capital (esp as this is an inventory building quarter) and cost management.
* Strong growth in the HVAC segment from data center orders (see pic: 61% YoY, 14% QoQ)
* mCapex was quite high compared to last year's Q3. This should be seen in light of the company's increased Service segment assets, where most maintenance work happens in Q3. It's also possible that the newly acquired Service assets were given a more thorough refurb the first time around, resulting in one-time increases.
M&A/Reinvestment:
* Colter was C$39mn worth of assets, quite a bit larger than I had expected (C$35mn paid + C$4mn gain on bargain purchase).
* If I'm not mistaken, they are implying that they did one small acquisition that was not meaningful but also not announced up until now. That acquisition + B&R + Jet Peinture combined was C$28mn in total (purchase cost).
* Post Q they also bought SPV for C$23mn and bought back C$30mn worth of shares. Add C$9mn growth capex, and total capital deployment in the past 4 months was C$125mn -- seems good to me.
* The buybacks were done at C$117/sh right after the insider tipping crash. Interestingly, it seems that they have not purchased any more shares afterward, even though the share price remained at that level for a while. Maybe the automatic purchase plan kicked in when the share price went down, and mgmt later asked to halt it?
Conclusion:
* Good quarter, capital deployment continues, no update on the Pellerin situation.
* It isn't easy to figure out run-rate earnings, as the segments each have their own seasonal/cyclical differences. The constant M&A doesn't help either. Given the low capital intensity and the excellent operational management, I have in the past suggested they could do 8-10% stabilized FCF margins. This obv depends on leverage and honestly I have found the co harder to value over time, but assuming 8% margin for now puts the multiple at 16.5x.
Some other thoughts:
* This whole drama with Pellerin has me reconsidering my position (which is still substantial). The insider tipping allegations were not something that could be predicted and IMO don't matter that much for the company in the long-term. However, by owning something at a premium multiple I was exposing myself to such risks.
* Put differently, when TVK was trading at a <10x multiple, these allegations would not have mattered that much. At >20x the market was pricing in the expectation that mgmt wouldn't screw up. The margin of safety wasn't there anymore.
* For me the thesis changed over time from 'cheap + long runway + excellent mgmt' to just 'long runway + excellent mgmt'. I got too comfortable and stopped being disciplined with regard to valuation.
* For the record, I totally disagree with the "it's just a tank company lol" sentiment I see on here sometimes. For a multitude of reasons their niches are especially suitable for serial acquisition, and D. Haw is spectacular. A premium multiple is warranted, but when it got that multiple it should have been a cue for me to get out. Quoting Klarman:
"Selling, in particular, can be a challenge: many investors are tempted to become more optimistic when a security is performing well. This temptation must be resisted: tax considerations aside, when a security reaches full valuation, there is no longer a reason to own it."
Right now I still don't know what to do with the position. It's arguably cheap again and I haven't found a new idea to which I can allocate the significant % weight I have in TVK. If I do find something or the stock runs up a lot, I might sell.
Markus Endl retweeted
$DBO.TO Worth noting that in addition to Spiderman having the biggest opening in history, it did so without any IMAX screens due to Odyssey exclusivity. Good chance that means D-BOX actually over-indexed during a record period for the industry.
Markus Endl retweeted
OH WOW, I wrote about Sanki Services $6044.JP almost a year ago and back then I suspected a potential acquisition by Shin Maint $6086.JP. Instead they just announced a Merger!!!
Kinda hilarious because I recently asked Founder of Shin Maint about Sanki and he was saying "oh we're just buying because we thought the stock was cheap"
Operationally at least this makes sense to me, the 2 leading maintenance consolidators just became one. - but I still need to go through the numbers.
Out with a new idea for my paid peeps! This time we’re going to talk about a HVAC maintenance biz trading at 10x P/E which can potentially CAGR earnings by 25%+
Often times this is the type of biz investors would jump on, but not in Japan. I was surprised to learn that this industry is highly fragmented, and there are only a handful of players ‘at scale’ and even then they only represent a small share of the market. With the aging demographics, I think the market is ripe for further consolidation and the bigger players to win out in the LT.
It has some hairs for sure. It screens poorly and doesn’t look interesting at first sight. which is exactly why I like the set up. Also noticed that the financial data vendors got the valuation multiples wrong until recently which might mean investors might’ve ‘passed’ because it looked expensive.
In reality the company is currently not priced for much growth despite giving some aggressive targets for the coming years. I think the market is wrong. They’ve recently won a large contract and there’s strong margin opportunity as they improve their contract terms. This includes potential price increases for maintenance contracts which I think investors are underestimating.
Valuation wise, it’s just cheap from several perspectives: 1 ) absolute terms, despite being one of the few which has scale. 2) It trades at a discount to peers despite growing faster. (margin improvements should narrow the gap) 3) Not only that but I see strategic buyers of their shares in the open market, a competitor, which gives credence to the quality of the asset. In short even if they achieve a fraction of what they set out, I think they’ll do ok. Having spoken to the company, I’m encouraged that they are actively trying to improve their IR, which should help appeal to a wider audience.
Happy hunting!!!
Markus Endl retweeted
Most investors think conviction means buying with confidence.
The harder part is what comes after — doing nothing while the market spends 12–18 months disagreeing with you.
$TVK.TO — up ~160% since my initial buy at ~C$50 in early 2024. Built to a top holding as Dustin Haw executed the serial acquirer playbook with discipline. Now grinding below the 200MA for the first time in years. 6–9 months of dead money. Every instinct says do something.
But EnTrans — $TVK.TO’s largest acquisition — is a cyclical business. Tank trailer weakness doesn’t last forever — next two earnings the key test. If the compounding machine underneath is intact, the staircase always resumes.
I believe real conviction lives in the waiting, not the buying.
$SPG.DE Solid Q1 2026. Further debt repayment and net leverage of 1.5x now at the lower end of the target range. The company could use its future free cash flow for buybacks which could boost the stock price meaningfully given the low free float. Disc.: long
Markus Endl retweeted
$DBO.TO
Cinemark's revenue grew 19% YoY to $ 643m. $311 m of that was admissions revenue and DBOX seats grew their share of that 150bps to 5%(!!). Suggests royalties this quarter from just the CNK network alone will be on par with, if not succeed, total royalties YoY. CNK also added 86 DBOX auditoriums in the Q.
I find it notable that CNK is specifically highlighting metrics around DBOX performance in its press releases, while lumping all other PLFs together in a broader category.
$DBO.TO Q1 box office finishing up strong, now comping +23% YoY, and the best Q1 post-COVID. System count up mid-teens from the prior year. So that should translate to ~40% YoY royalty growth for DBOX's fiscal Q4 even after fx headwinds, and assuming no mix shift - i.e. ~$3m of royalties for the period vs $2.2m last year. A very good outcome for what has been the weakest quarter seasonally. 👀
Markus Endl retweeted
Outstanding FY26 Results for Shin Maint $6086.T
Once again forecasts are surpassed across the board, double digits are achieved in every metric.
Trades at:
8x LTM EV/EBIT
9x LTM EV/FCF
16x LTM MC/NI
Holds over 5% of market share, and owns 9% of its closest competitor.
Markus Endl retweeted
One of the biggest reasons investors get excited about serial acquirers:
They solve the reinvestment problem.
In most businesses, good reinvestment opportunities are limited. You fund the core projects, maybe expand capacity, invest in product… and after that, the incremental dollar usually earns a lower return.
And cash starts to pile up.
Owners either return the cash to shareholders… or start stretching into lower-quality projects just to put the money to work.
Serial acquirers work differently.
Instead of relying only on internal projects, they build a repeatable machine to acquire businesses that meet strict return thresholds.
Do it well, and you create a long runway to keep deploying capital.
The cash doesn’t sit on the balance sheet.
It gets recycled into the next acquisition. And the next one.
In the best cases, the model allows you to reinvest close to 100% of free cash flow at high rates of returns for many years, even decades.
Excellent analysis by @JibbyCap regarding the favorable tailwinds for Terravest’s subsidiaries. Furthermore, defense contracts are beginning to scale and are expected to reach full capacity in 2026.
TerraVest $TVK.TO share price has been flat for about a year now. That shouldn't come as a surprise, as the valuation ran up a lot from '23-'25.
That said, I've been feeling pretty good about the underlying business lately. There are a lot of drivers pushing in the right direction right now:
* LNG production in Canada continues to ramp. This was already positive, but now even more so d/t the Hormuz situation resulting in an LNG supply crunch. This is good for BC nat gas production -> good for TVK's PE segment.
* Crude oil is up and might stay there for a while. Good for PE, and especially Services. (Although there is a slightly counter-cyclical effect here for propane, as higher crude oil prices result in higher propane prices, which reduces demand.)
* Propane is now in a stronger position domestically as the 'electrify everything' trend has died off. In addition, a harsh winter plus an already existing desire for fleet renewal should provide a positive backdrop for compressed gas.
* US trucking rates are increasing -> positive for trailer demand.
* C-store buildout, data center buildout -> positive for HT/composites.
* The NA chemical sector appears to be inflecting a little bit. This is now being supercharged by the war in Iran, as global competitors are having a rough time sourcing cheap feedstock from the Middle East. Not saying 'the cycle has turned', but at the moment it seems like a hopeful time to be selling chemical containment equipment in North America, where feedstock is cheap and plentiful.
TerraVest has operated in a hostile environment for most of its 'modern' history, usually due to low oil/gas prices or political hostility toward fossil fuels. (E.g. cancelled oil pipelines, drilling permit freezes, heat pumps being subsidized to replace propane heating, increasingly stringent gas/oil boiler efficiency requirements, etc etc etc.) Yet even then TVK thrived. And now it appears that many of those factors are inflecting.
Execution was wonderful when conditions were poor -- what will it be like when the demand backdrop flips?
Markus Endl retweeted
TerraVest $TVK.TO Q1 results: fun indeed
- Revenue +74% YoY
- aEBITDA +39%
- CAFD +34%
- Organic growth 9% (a little lower in reality, as this includes Wave and Aureus)
- Service/PE/CG all doing well
- Tarriff impact mostly felt on tank trailers
- First time mentioning their data center exposure: feeling strong demand in several of their portfolio companies
- Remember, all these figures are excluding the USD90mn KBK acquisition..
Discl: long
$TVK.TO Q1 25/26 report is out: newswire.ca/news-releases/te…
- Solid organic growth driven by PE and Service
- Strong cash generation through improved W/C efficiency
- Hiked outlook on strong data center demand, where TVK is benefitting through HT, Simplex and recently acquired KBK
Markus Endl retweeted
Good news. $DR sells another hospital, Oklahoma Spine for $46M. finance.yahoo.com/news/medic…
Agree with @Jibby on $TVK.TO forward returns. The thesis is simple:
- Revenue growth fueled by aggressive M&A.
- Margin expansion via realized synergies.
The macro tailwind? Boomers are finally done with perma-crisis mode" and handing over the baton. Still a generational opp.📈
$TVK.TO $TRRVF
Some interesting developments over at Fraction/GES these past couple months.
It seems like TerraVest is pulling the old "platform within a platform" trick again as GES has now put its various divisions into seperate entities:
- Fluid Treatment becomes Stimulate Energy Services through a strategic merger (Jan 8th); stimulatewell.ca; to be led by Stimulate CEO Joffre Jorgenson.
- Containment becomes Clipper Containment (this happened two months ago); clippercontainment.ca; led by Chris Kestell (Fraction)
- Heating done by LV (this had been obvious for a while).
- All of these segments have been removed from Fraction's website, leaving it to focus solely on water transfer.
IMO TerraVest just keeps getting better. Even though there are plenty of acquisition opportunities left in their current verticals, moves like these show how they can keep expanding their potential.
As for the stock, the valuation got a bit spicy last year, but we're around 20xFCF now which I think is where it should trade. IRR is not going to be 50% like in the past, but with a mgmt team like this it's just a safe way to earn a ~15-20% CAGR if not higher. The stock might gyrate but who cares, over the long term ROIIC dominates everything.
It's not >70% of the portfolio as it once was but I have held shares since 2019 and will continue to do so.
Markus Endl retweeted
Every market cycle has a style or approach that pays off disproportionately.
Value in the early 2000s, Growth in the 2010s, or Capital Light Compounders more recently, each era has its winners, and investors aligned with that approach, by accident or intentionally, often believe they have found the investing holy grail.
Then, performance begins to fade and investors wait, for years or even a career, for that style to return to favor. This can be even more pronounced in fund management, as once you’ve made a lot of money doing things a certain way there’s a resistance to change. Even small adjustments can be criticized as the dreaded "style drift” by consultants, and if combined with lagging performance, likely result in the loss of client confidence.
I’ve become cautious as owner-operator and founder-driven investment approaches have performed well and become popular. Many of these companies appear to be bid up to prices that already reflect the optionality embedded in the business models.
So what’s the solution? Backing great CEOs early.
The companies are less polished, the numbers are messy, and the potential earnings power isn’t obvious….yet. While this approach demands more confidence in your qualitative judgment and a willingness to invest without relying on numbers as a crutch, investing when the moat is being built can be immensely lucrative. At the end of the day, people are a company’s most reliable leading indicator.
These investments often fly under the radar of institutions, which are structurally limited in how they invest. Liquidity, size constraints, compliance restrictions, and career risk are all barriers. It’s hard to pitch a company with limited history or profits to an investment committee—no matter how good the operator is.
Getting in before them is the opportunity.
Markus Endl retweeted
Imagine when trucking market actually starts doing well
$TVK.TO Q4
-> organic growth +7% y/y, above medium term average
-> revenues including inorganic *soaring* as acquisition engine has been hot (+82% y/y)
-> EBITDA (+72%), CFAD (+66%) strong even against a tough industry backdrop
-> new water mgmt acquisition revealed!
Markus Endl retweeted
$TVK.TO just released Q4 earnings:
· Sales: Q4 +82% Q4 (7% organic) FY +50% overall (1% organic)
· Op. Cash Flow: Q4 +58%, FY +29%
· Adj. EBITDA: Q4 +72%, FY +40% (margin steady at ~20%)
· Net Income: Q4 +54%, FY +34%
· Cash available for Dist. (favorite KPI): Q4 +66%, FY +29%