Is MSB's recent revenue growth sustainable long-term?

**Mesabi Trust's (MSB) recent revenue growth may not be fully sustainable long-term.** Here's why: 1. **Volatility in Royalties**: The trust's revenue is heavily reliant on royalties from iron ore mining, which can be volatile due to factors such as operational decisions, economic conditions, and weather. The decline in iron ore shipments from Cliffs to Mesabi Trust from Q1 2024 to Q1 2025 is a clear indication of this volatility. 2. **Limited Control over Royalty Income**: As a royalty trust, Mesabi Trust does not have direct control over the royalty income it generates. It relies on the mining operations of others, which can lead to uncertainty in its revenue stream. This lack of control over the underlying business can limit the trust's ability to sustain long-term revenue growth. 3. **No Earnings Growth**: The most recent data available shows no growth in the trust's diluted EPS, which is a key indicator of profitability. The absence of earnings growth suggests that despite any revenue gains, the trust may not be improving its profitability, which is a critical aspect of long-term sustainability. |code|Ticker|Name|Date|Diluted EPS YoY|market_code| |---|---|---|---|---|---| |MSB|MSB.N|Mesabi Trust|2025 Q1|240.3846153846154|169| |MSB|MSB.N|Mesabi Trust|2025 Q2|-41.2201743106158|169| |MSB|MSB.N|Mesabi Trust|2025 Q3|1817.1162491971738|169| 4. **Negative Free Cash Flow**: The trust has reported negative free cash flow, with a significant portion of this being due to negative investing cash flow, which could indicate issues with capital management or ongoing investment requirements that are not being adequately addressed. Negative free cash flow can be a red flag for long-term sustainability, as it suggests the trust may be struggling to generate sufficient cash to support its operations and growth. |code|Ticker|Name|Date|Free Cash Flow|Investing Cash Flow|Operating Cash Flow|Financing Cash Flow|market_code| |---|---|---|---|---|---|---|---|---| |MSB|MSB.N|Mesabi Trust|2025 Q1|-4708987||2503929|-4854404|169| |MSB|MSB.N|Mesabi Trust|2025 Q2|8410356|0|3805959|-3804803|169| |MSB|MSB.N|Mesabi Trust|2025 Q3|1.3021223E7|0|7.8215023E7|-3936003|169| |MSB|MSB.N|Mesabi Trust|2025 Q4||0|9411185|-5116803|169| 5. **Market Conditions and Competition**: The iron ore market is inherently competitive and subject to market fluctuations. The trust's ability to sustain revenue growth will depend on its ability to adapt to these changes and maintain or increase its market share. However, the decline in shipments to Mesabi Trust by Cliffs suggests that market conditions may not be favorable to the trust's growth aspirations. In conclusion, while Mesabi Trust has shown some positive aspects in terms of revenue growth and dividend payments, the volatility in royalties, lack of earnings growth, and negative free cash flow suggest that the trust's recent revenue growth may not be fully sustainable in the long term. The trust will need to address these issues and improve its operational efficiency and market positioning to ensure sustained growth and profitability.