# MAD - Mader Group



## System (28 August 2019)

The Mader Group provides specialised contract labour for maintenance of heavy mobile equipment in the resources industry from an in-house pool of skilled employees. The services provided include maintenance labour, feld support (on-site labour with support vehicles and tools), shutdown maintenance teams (for major overhauls), maintenance workshops, training of maintenance teams, and a range of other ancillary services.

The Mader Group generates the majority of its revenue by providing various types of contract labour services at an hourly rate per tradesperson provided. These payments are either made under service agreements, at previously agreed hourly rates or, in a minority of cases, on an ad hoc basis. 

It is anticipated that MAD will list on the ASX during September 2019.

https://www.madergroup.com.au


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## Parse (30 January 2021)

I'm going with MAD for my Feb stock pick. I have 3 reasons.
1. aus_trader mentioned it in the potential breakouts discussion and he seems good at understanding charts.
2. The 3 letter acronym for the company is quite mad 
3. Looks like nobody has noticed it much going by the amount of posts in this thread.
4. It's making money, good money and is securing new contract work. Also they had a bit of a change on the board recently that might (or might not) push things along. Guess more of that will come in Feb.

Wait, that's 4 reasons. Oh well, that will have to do.


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## Dona Ferentes (30 January 2021)

Parse said:


> I'm going with MAD for my Feb stock pick. I have 3 reasons.
> 1. aus_trader mentioned it in the potential breakouts discussion and he seems good at understanding charts.
> 2. The 3 letter acronym for the company is quite mad
> 3. Looks like nobody has noticed it much going by the amount of posts



(I hope that this incarnation has a better run than the earlier version *Maverick Drilling & Exploration.* Now there was a _promise high and deliver low_  outfit if ever there was one.)

The board and management seem competent and experienced.
Luke Mader : _Founder of Mader Group. Trade qualified with 20 years’ experience in the mining services industry. Cultivated a 1,400+ workforce after realising an underserviced ‘niche’ whilst working in marketing for a Caterpillar dealer network_

Growth opportunities:
_• Increasing forecast mining maintenance expenditure 
• Ongoing production growth in key commodities 
• An industry trend for equipment to be used longer before replacement 
• Significant capital investment in 2011 - 2012 has resulted in an aging mining equipment fleet for many mining companies_

Outlook
*Australia*

Targeting significant levels of unfilled customer demand throughout Western Australia as border restrictions continue to ease
Large addressable markets remain for ancillary maintenance services with continued scaling and a dedicated focus on fixed plant, port and rail maintenance
Strong recruitment environments in New South Wales and Queensland presents headcount growth opportunities
Labour mobility expected to improve as state border restrictions ease
*North America*

Strong growth trends expected to continue in a large remaining addressable market
Strategy to be operational in Canada by Q4 FY2021
*Rest of World*

Developing plans for bolt-on acquisitions that add strategic value to the Mader business
Continuing to assess ancillary service and related industry opportunities
Global travel restrictions have temporarily limited our Rest of World operations however demand remains strong and we expect that activity levels will normalise when international travel resumes
*Strategic Diversification*

Strong levels of customer demand throughout target regions. Continuing to assess risks to health and safety prior to entering new jurisdictions.


_Could be a new MND?_


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## basilio (30 January 2021)

Uh MAD  !! Remember it well. Another promising small cap that started well, jumped high and then fell in a heap.  Had as its premise picking up a lot of small old oil wells that still had some useful output but were not profitable enough for the big majors. It seemed like a good transparent little earner.

And then poof. Up in smoke. Hope the reincarnation  has a better future.


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## Tommy Shelby (23 February 2021)

I found this business doing a search for high ROE/low PE companies about a month ago. Good origin story with founder who saw a need and delivered with a consistent focus on the team/operators on the ground and is still involved.

High ROE with strong forecast growth in the US/Canada and local mining in Australia. Exposure to mining with a hedge against a downturn in commodity prices as miners need to keep producing and that requires maintenance.

Only concern/thought I had was the performance of this company verses an OEM like ANG who has complained of order delays up until lately where they've procured a large number of orders - highlighted in the forecast graph they provided in their update today below.

At what point does a miner switch to from OPEX to CAPEX in relation to fleet management? How big of an impact will it have on MAD? the majority of their trades are Heavy Diesel Mechanics so assume there will always be a need to quick reaction repairs in field.


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## Erlang (28 July 2021)

Tommy Shelby said:


> I found this business doing a search for high ROE/low PE companies about a month ago. Good origin story with founder who saw a need and delivered with a consistent focus on the team/operators on the ground and is still involved.




I found them the same way, actually.

They just released their quarterly results. Looks like they're growing, despite the pandemic. 








			https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02399874-6A1042715?access_token=83ff96335c2d45a094df02a206a39ff4


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## Tommy Shelby (28 July 2021)

Good to see that margins are improving and costs aren't blowing out - though I imagine the beauty of their business is that they can increases prices quite quickly if wages increase dramatically. Good thing about the company is that it has low CAPEX for expansions - labour and training are the main potential constraints on growth which they seem proactive in addressing.

I like that they're starting to work with OEMs providing onsite works and repairs which will ad another source of work.

Significant expansion in the US should be also good for growth over the medium term.


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## Dona Ferentes (24 August 2021)

*FY21 HIGHLIGHTS:*
 ▪ Record revenue of $304.3m delivered, up 11.2% from $273.5m in FY20.
▪ EBITDA of $35.7m delivered, up 8.2% from $33.0m in FY20.
▪ NPAT of $19.3m delivered, up 10.5% from $17.5m in FY20.
▪ 3.4m hours of specialised equipment maintenance delivered to over 240 customers across 370 sites, up from 2.7m hours in FY20.
▪ Net debt of $23.9m, equating to net leverage of ~0.7x.
▪ A final full franked dividend of 1.5 cents per share, taking the total dividend relating to FY21 to 3.0 cents per share.

*FY22 OUTLOOK: *
▪ Continued growth in activity levels across the global mining industry underpin a positive outlook for the business in all markets and geographies in FY22.
▪ Expecting strong growth in FY22, with forecast revenue of between $355m to $365m delivering a forecast NPAT of between $23m to $25m.



> _"High demand for our services and enhanced internal systems contributed to our performance, as we delivered flexible, fit for purpose and cost-effective maintenance solutions to our customers across seven countries. _






> _"We placed a dedicated focus on expanding our ancillary and infrastructure maintenance divisions, delivering strong growth across both service lines. We also introduced several new services, including specialist drill and excavator services, power generation support, marine vessel support and professional support roles for maintenance planning and scheduling. _


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## Dona Ferentes (27 September 2021)

solid buying since the Results ... from $1.00 before release to $1.55 today.


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## Erlang (25 October 2021)

Yes. Still going, despite its ASX ticker.


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## Erlang (26 October 2021)




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## Tommy Shelby (6 November 2021)

It's punched to $2.20 on Friday - the val is starting to make me scratch my head at $440m


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## Erlang (6 November 2021)

It seems to be growing almost too quickly. But then again the company managed to make money in a world with lockdowns and closed borders, which is quite impressive given the company relies upon the movement of its workers.


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## Tommy Shelby (10 January 2022)

I sold out half of the position at $2.3/share - it's been trading sideways since with no real direction.


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## Dona Ferentes (11 January 2022)

Tommy Shelby said:


> I sold out half of the position at $2.3/share - it's been trading sideways since with no real direction.



good call. now sub $2.00 ... in the blink of an eye


Erlang said:


> It seems to be growing almost too quickly.



I looked at it, thought when it was cheaper that there might be some SP upside as it closed the gap to its more established peers, those trading in the 20's, but didn't chase at the time. (probably thought the others were overpriced?)


Erlang said:


> .. the company managed to make money in a world with lockdowns and closed borders, .. given the company relies upon the movement of its workers.



But by now, the longer this drags on, all costs would be going up, hitting the bottom line. HR management must be a nightmare.


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## Tommy Shelby (12 January 2022)

I've got a bad habit of selling out winners too early so have been trying to calm my itchy trigger finger but the last week has me questioning my strategy.

The metrics were quite low, that said I was surprised at the speed of the re-rating of the stock.

The hardest part would be finding good hires which Mader seem to have been quite good at. Retention would be a bitch for sure. There is minimal CAPEX in terms of equipment to manage growth for their model.


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## Erlang (12 January 2022)

All valid points. As I suggested previously, the price was shooting up rather quickly. They did nothing for the first half of 2021, and then shot up in the second half (more than doubling in price), which is basically the opposite to what the ASX did in general, sliding sideways for the last six months.

So I was expecting a correction, though maybe not a 14 percent drop in one day. 

That said, I think I'll just wait another month or so until reporting season to see how their profits and international expansion are progressing.


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## Dona Ferentes (31 January 2022)

and a rebound,... $2.35 on a strong Quarterly

OVERVIEW: 
▪ Mader reports its fourth consecutive quarter of record revenue, delivering $94.1m, up 32% on the prior corresponding period. 
▪ Based on the continued growth in customer demand across the global mining industry Mader upgrades its FY22 guidance to revenue of at least $370m delivering a forecast NPAT of at least $24m.
▪ The Australian business generated $80.5m in revenue, up 26% vs PCP. This growth is attributed to strong commodity prices leading to increasing demand for services on the East Coast and sustained high demand across all key mining regions in Western Australia, South Australia and the Northern Territory. 
▪ North American operations expanded over the quarter to generate $10.6m in revenue, up 71% vs PCP (up 74% excluding foreign exchange movements). First revenue in Canada was secured through work scopes in Fort McMurray, Alberta. 
▪ Rest of World operations generated $3.0m for the quarter, up 100% vs PCP. Activity levels remain steady however growth is impacted by ongoing mobility and health restrictions. 
▪ Organic start-up, Mader Energy, launched to diversify revenue streams and target large addressable markets within the oil and gas industry across North America. The venture aims to accelerate Mader’s expansion in North America. 
▪ Mader recently completed the sale of its 25% equity interest in Western Plant Hire Holdings Limited (‘WPH’), generating post-tax cash inflows of ~$7m. The proceeds from the investment sale will be re-invested in growth capital.


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## Tommy Shelby (31 January 2022)

At $24m net profit metrics feel at fair value with a good outlook for growth and great cost control with revenue up 32% vs .5% margin decline.

I really like the focus on the actual business side of running the business and their people management. Like winning RISE Employer of the Year award and the apprenticeship program.

Great people are the essential ingredient for their business to be successful and they seem to be committed to looking after them.


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## Tommy Shelby (21 March 2022)

MAD share price on a tear again pushing to new highs. Still hold half the original position but obviously regret having sold down previously. 

The recent presentation talked about the launch into Canada which would be a sizable market in its own right. I follow their IG and sae that they are going on a tour around Australia looking for new light and diesel mechanics so clearly the push is for more skilled labour. 

In fact most of their IG posts are focused on new employee acquisition which shows their priorities.


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## Erlang (21 March 2022)

Not enough employees for all the work they have? Surely better than the other way around. 

IG? Instagram? That never occurred to me. 

I guess this one:









						Mader Group (@mader_group) • Instagram photos and videos
					

4,519 Followers, 667 Following, 634 Posts - See Instagram photos and videos from Mader Group (@mader_group)




					www.instagram.com


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## rnr (21 March 2022)

Erlang said:


> Not enough employees for all the work they have? Surely better than the other way around.
> 
> IG? Instagram? That never occurred to me.
> 
> ...



Hi @Erlang,

Have you considered the negative effect that having insufficient employees could/will have on profits.

One example that immediately comes to mind is that excessive delays may evoke onerous penalty clauses in a contract.

There will always be a knock-on effect. For example payroll costs could be considerably higher than budgeted as the Company will need to  entice employees to the company.

This may well have a negative impact on the share price.

Cheers, Rob


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## Erlang (21 March 2022)

Hi @rnr

Thanks for the remarks.

True. I had considered them not getting enough work due to a shortage of workers. But yes, penalty clauses are also a concern.

I don't know where they are need workers. My understanding is that, for example, they've only arrived in, say, Queensland relatively recently, so it would make sense they don't have enough workers there. And, as mentioned above, they have arrived even more recently in Canada.

But, for now, I am comfortable with waiting to see the results in terms of profits.


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## Erlang (27 April 2022)

Mader Group released their quarterly update.









> Record quarterly revenue of $98.1m, up 29% vs the prior corresponding period (‘PCP’) and up 4.3% vs Q2 FY22.


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## Dona Ferentes (27 July 2022)

_Closing on $3_


 Mader reports another record quarterly performance, with revenue of $118.8m, up 21% quarter on quarter and 38% vs the prior corresponding period. The strong performance is attributed to exceptional customer demand and a further expansion of service offerings across multiple industries.
The delivery of this quarterly revenue takes FY22 revenue to $402.1m (unaudited), exceeding previous market guidance of revenue of at least $370m and representing year on year revenue growth of 32%.
The Company reaffirms FY22 NPAT will exceed at least $24m and expects to release its audited NPAT results on 23 August 2022.
Revenue generated by the Australian business during the quarter was $99.5m, up 29%. Demand for core mechanical and ancillary service offerings remained strong.
The North American segment delivered $16.9m, up 149% on the PCP (143% on a constant currency basis) and 22% vs Q3 FY22. Market growth was largely driven through an increase in demand for core services across the United States.


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## Erlang (24 August 2022)

From yesterday's (23.08.22) announcements.


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## Tommy Shelby (25 October 2022)

MAD continuing to deliver increased performance with a lot of growth potential in the North American market. 

Quarterly update includes a profit upgrade which the market didn't seem to like that much which was curious. valuation is definitely at the high end but I think they've got a lot of growth potential and have really defined the business model/culture which I like.


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