After a COVID-19 production update released before trade this morning, the Tubi Ltd (ASX:2BE) share price soared more than 250% in early trade.
Tubi announces production turnaround
Despite the disruptions of the coronavirus pandemic, Tubi's company update announced that it's seen a significant production turnaround.
During Q4 and Q4 FY20 the company achieved a 55% increase in production volume. Tubi increased its production volume through a 85% increase in month-on-month volume from April to May and a further 51% increase in volume from May to June.
Tubi attributed the turnaround in production volume to its mobile technology and ability to produce onsite, long-length piping. The company outlined its production strategy in its March investor presentation and results are currently in line with this thanks to its recent volume increase.
Tubi also confirmed its existing production orders at its Florida plant through July and August. The company's Chief Executive Officer, Marcello Russo stated that "Significant orders from key strategic clients are increasing, resulting in greater product diversity and volumes."
In addition, Russo reassured investors that, "With the third manufacturing plant commissioned and operating, Tubi is well positioned to service these growing orders through covid-19."
What does Tubi do?
Tubi is an Australian-based manufacturer of specialised, large-diameter high-density polyethylene (HDPE) piping. The company uses its piping for water, irrigation, oil and gas, mining, and infrastructure. Tubi's competitive advantage comes from the company's mobile production plants which allow a reduction in manufacturing and transportation costs.
Tubi currently has 3 production plants operating in the US, with 2 plants in Florida and 1 in Texas. The company's Florida operations were classified as an essential service and continued operations during the COVID-19 pandemic.
In addition to mobile plants, Tubi also boasts lower costs and faster installation than its competitors. Tubi's key drivers include efficient production, economies of scales, spread price and substantial cost savings to clients. The company holds its own sales team and has first rights to over 15 projects.
Foolish takeaway
At the time of writing, the Tubi share price is trading 100% higher at around 15 cents. The company opened the day at 9 cents and hit an intraday high of 33 cents.
