MAD - Mader Group

[System]

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

 

[Parse]

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.

 

[Dona Ferentes]

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?

 

[basilio]

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.

 

[Tommy Shelby]

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.

 

[Erlang]

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

 

[Tommy Shelby]

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.

 

[Dona Ferentes]

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.

 

[Dona Ferentes]

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

 

[Erlang]

Yes. Still going, despite its ASX ticker.

 

[Erlang]

 

[Tommy Shelby]

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

 

[Erlang]

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.

 

[Tommy Shelby]

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

 

[Dona Ferentes]

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

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?)

.. 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.

 

[Tommy Shelby]

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.

 

[Erlang]

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.

 

[Dona Ferentes]

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.

 

[Tommy Shelby]

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.

 

[Tommy Shelby]

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.