The three-year delay greatly impacts the financials of equipment manufacturers (such as Gilbarco Veeder-Root owned by Fortive (FTV) and Wayne, owned by Dover Corp (DOV)) and distributors of petroleum equipment; it impacts how their customers - petroleum retailers (think: gas stations) consider spending. Manufacturers, distributors and companies that install this equipment had staffed up and added costs to meet this giant leap in demand. Now everything has changed.
Fluctuation in industry demand highlight the importance of a concept that renowned author, Nassim Nicholas Taleb, wrote about in Antifragile: Things that Gain from Disorder (Amazon link) in 2012. He writes:
"Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better"
Our portfolio company, Guardian Fueling Technologies (@guardianfueling), is a large beneficiary of the EMV demand. Management has focused on building a business model of resiliency as we look beyond the EMV cycle. Our goal is to reach Taleb's antifragile state so that we become stronger in times of stress.