Niterra 3Q24 Write-Up: Thesis Confirming

Consolidated Revenue: 4.4% y/y

EBIT Margin (0.73%) y/y

Automotive Revenue: 3.6% y/y

Ceramics Revenue: 11.6% y/y

Niterra printed third quarter earnings on January 31, 2025 and the market reacted positively. Consolidated revenue is up 4.4% y/y. This is all organic growth given that the Toshiba acquisition hasn't hit the financials yet. This release is thesis confirming in that margins have remained high for the core business and ceramics revenue is beginning to show major signs of improvement. I'm hoping to continue seeing the ceramics fundamentals improve. The position now represents 14% of my total portfolio, which I believe reflects my belief in the holding.

While I still love Niterra, I think my initial passion for the idea blinded me from the ways that this could work against me. I still hold a similar conviction in the stock, but I think the long-term thesis could be harmed in the short-term if the Yen reverses and if Ceramics continues to weight negatively on fundamentals.

Next quarter will be very interesting, as we will get to see how the Toshiba acquisition was financed. The stock is down now on tariff concerns, which gave me another opportunity to buy. I'll begin working on a model for this idea so I can ground my assumptions in some numbers.