Another interesting company we met last week is Swiss Water Decaffeinated Coffee, which we introduce in this one.

GDP was largely flat for a second consecutive month in August, falling short of expectations for a 0.2% increase…

… as growth in goods was offset by weakness in services. At the sector level, results were mixed…

… with contractions in wholesale trade and public administration weighing on strength in retail trade and manufacturing.

The pickup in retail was broad-based, with all categories up outside of fuel…

… while the opposite was true in wholesale, with the auto and food/beverage subsectors driving over half of the decline…

... which looks set to reverse in September, but not enough to pull the headline number into positive territory - with early estimates calling for a 0.1% GDP decline. That translates to Q3 growth of 0.3% or 1.2% annualized, below the BoC’s 2% estimate.

Swiss Water Decaffeinated Coffee (SWP) is the largest chemical-free decaffeinated coffee producer, a category that’s benefitting from overall market tailwinds and a shift away from methylene chloride production - contributing to revenue growth and margin expansion…

… in conjunction with commodity prices and operating efficiencies from higher capacity utilization. With its heavy capital program in the rearview…

… that margin growth could continue, with a $6M investment in 2027 set to add an incremental 15% to production capacity and pay itself back in under two years.

Combined with upside from Asian market expansion and the potential addition of caffeine capture as a new line of business ($3-5M of run-rate EBITDA), SWP’s current valuation could prove conservative.

Methanex (MX) ripped 14% on a big Q3 beat, as the Middle East conflict’s impact on methanol pricing continues to benefit the company as the world’s largest supplier…

… which drove 50% Y/Y revenue growth…

… and an expectation for an even bigger fourth quarter if current conditions persist.

This pricing flow through has resulted in strong EBITDA and FCF generation…

… enabling accelerated debt reduction…

… and driving normalization in the multiple, which sits just under its five-year average as investors weigh the durability of MX’s recent outperformance.

Black Diamond (BDI) finished up 7% on record Q3 results, which beat big on the back of 52% Y/Y revenue growth…

… driven mainly by Workforce Solutions, which more than doubled thanks to last year’s $165M Royal Camp acquisition as well as gains in sales and non-rental revenue.

That flowed through to EBITDA, which also hit a new record despite some near-term margin pressure due to sales mix and higher MSS costs ahead of deployments…

… which should rebound along with WFS utilization rates, as demand converts to revenue through 2027…

… to support the huge Canadian project pipeline that has driven a multiple re-rate in workforce accommodation names over the past two years.

TMX Group (X) closed up 5% after another strong quarter of double-digit revenue growth, which accelerated relative to the prior three prints…

… thanks to a 26% increase in GSIA segment revenue, with contribution from the company’s $683M RAFI acquisition boosting results out of VettaFi…

… and its Cboe Australia deal lifting Datalinx results. With GSIA running at higher margins than TMX’s total business, the top line beat flowed through to EPS…

… and to cash generation, which should help the company return to sub-2.5x leverage within two years after closing its Cboe Canada and $2.3B MEMX deals.

That process should keep a lid on M&A for now, but it could pull the equity lever for the right opportunity - with the stock trading above its long-term average valuation.

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