New Purchase – ZCL Composites Inc.

Hello everybody hope you are all doing great. Today I made a purchase and would like to share it with you. The newest stock to my portfolio is:

ZCL is North America’s largest manufacturer and supplier of environmentally friendly fibreglass reinforced plastic (“FRP”) underground storage tanks. We also provide custom engineered aboveground FRP and dual-laminate composite storage tanks, piping and lining systems, and related products and accessories where corrosion resistance is a high priority. ZCL has five plants in Canada, six in the US and one in The Netherlands.

The Company has three product groups, Petroleum Products, Water Products and Corrosion Products, and continues to leverage off the strong brand identities of ZCL, Xerxes, Parabeam, ZCL Dualam and ZCL Troy. The Petroleum and Water Products groups are components of the Underground Fluid Containment (“Underground”) operating segment, use a similar production process, and use the brand identities of ZCL, Xerxes, and Parabeam. Corrosion Products are included in the Aboveground Fluid Containment (“Aboveground”) operating segment and use the brand identities of ZCL Corrosion, ZCL Dualam and ZCL Troy.

Underground Fluid Containment (Petroleum Products)

ZCL is the leading provider of underground fuel storage tanks for the downstream retail and commercial markets in both Canada and the US. The Company also supplies tanks for pipelines (midstream petroleum markets) and for oil and gas exploration companies (upstream petroleum markets). The vast majority of tanks supplied to these markets are double wall tanks, with single wall and triple wall models also available. In addition, ZCL operates internationally through technology licensing agreements.

As an alternative to the replacement of underground storage tanks, ZCL also provides the Phoenix System®. This unique Underwriters Laboratories (“UL”) and Underwriters Laboratories of Canada (“ULC”) listed tank system allows in-situ upgrades of steel or fibreglass tanks to either a secondary containment system or a fully self-supporting double wall tank. It is an effective alternative to tank replacement.

A key component of both ZCL’s double wall tank and the Phoenix System® is Parabeam®, a three-dimensional glass fabric that is manufactured and distributed from the Company’s facility in The Netherlands.

Water Products

ZCL’s lightweight, watertight and easily installed fibreglass tanks are an ideal alternative to the concrete products that have traditionally dominated this market.

Applications for ZCL’s underground FRP storage tanks in the Water Products market include onsite wastewater treatment systems, fire protection systems, potable water storage, rainwater collection, large diameter wet wells and lift stations, grease interceptors and storm water detention systems.

Aboveground Fluid Containment ( Corrosion Products)

ZCL manufactures custom designed and engineered aboveground tanks, piping and related products and accessories for industrial projects where corrosion and abrasion resistance is high priority. ZCL’s capabilities include the manufacture and installation of custom engineered FRP and dual-laminate composite products for use in the power generation, chemical, chloralkali, pulp and paper, agriculture, mining and Oil Sands industries.

(Source for above information ZCL Composites 2015 Annual Report)

2016 First Quarter Highlights

  • Revenues up 12%
  • Net income up 104%
  • Gross Margins doubling to 18%
  • EBITDA up 46%
  • Increased dividend 60%
  • Paid special dividend of $0.50

Majority of the revenues was generated by the Underground segment including both the Downstream Petroleum and the Water Products groups, which are benefiting from the low energy prices.

Revenue Per Product Group


Revenue Per Geography


Dividends

ZCL Composites Inc. started paying a dividend in 2012 $0.01 per share, since then they have increased it every year. In that time frame the dividend increased 9 times. This year the dividend was increased 60% to $0.08, also there was also a special dividend where the company paid out $0.50 per share in April.

Stock Purchase Details

As mentioned above today I purchased 127 shares @ $9.00 a share with a trading cost of $9.99 for a total cost of $1152.99. This purchase will provide me dividend income of $20.32 for the remainder of the year if the dividend remains the same. The stock was purchased in my TFSA account.

So what do you guys think? I would love to hear your opinions.

Thanks for reading.

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7 thoughts on “New Purchase – ZCL Composites Inc.

  1. I have to admit – I've never heard of them. Their results look strong, and a growing dividend is always nice. I'm hesitant to get back into anything that relies too much on oil…but perhaps with its other segments this could be decent…hmmm

    Like

  2. I had heard of this company in the past and I know they have a strong div growth record… it never really got around to researching it. Thanks for profiling — looks like a very interesting company.

    R2R

    Liked by 1 person

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