Pinned straw:
2nd September 2025: NRW Acquires Fredon Industries plus NRW - Fredon Industries Acquisition Presentation
The market liked it:
They hit a new 10 year high today (intraday) of $4.18/share before closing up "only" +6.3% @ $4.04.
They've only been up above that $4.18 level only once in their history, way back in April 2012, so more than 13 years ago, and only for a couple of days; they then followed that high with a fall right down to 5 cents/share in early February 2016, when that big mining boom went bust and NRW almost went broke due to having bought a LOT of debt due to having bought a heap of mining and earthmoving equipment instead of leasing it, thinking that the good times would just keep on rolling on.
They ain't the same company now - they are much better - they've learned from their past mistakes and they now have more diversified revenue, more annual recurring revenue (ARR), a much stronger balance sheet, over half a billion dollars of liquidity - see my NRW (NWH) valuation update for the details of that - as shared by NRW last month in their FY25 full year report and their outlook plus guidance for FY26, they have better risk management, and they are just a much bigger and much better company; And their M&A track record has been a good one in recent years, and so far I can't see too much wrong with this acquisition either.
They're keeping the old management in place and incentivising them to perform, and the skill sets they are acquiring through this business are complimentary to what NRW can already do. It makes good sense all around, as I see it.
Sources: That lot above is all taken from their announcement today - to view their presentation, click on the image below.
Disclosure: Holding. All good. I like this one.
Hi @Bear77
Interesting write-up in last night's AFR about NRW's acquisition of Fredon - mainly from perspective of Fundies & typical thinking.
Interesting commentary around the really cyclical nature of the mining services business (as per your point of them playing it wrong last time & owning too much idled equipment), as well as around the potential opportunity Fredon might bring in terms of diversifying their work book (by industry, geography, client type).
Jury seems to be out regarding it being a great move in short-term - but the potential cross-sell opportunity could be significant - and obviously the upside potential NRW probably sees as well as diversification benefits.
I wish I'd taken up your tip earlier to get on board on its last big pull-back - and having been burned on mining services contractors in the past - I'm wary of paying up for these businesses when all is going well. But if I was in your position & holding from much lower entry point - I think I'd be quite comfortable to keep riding the train & see how things play out from here. All going well could be considerable further upside ahead - but of course never completely without risk in cyclical businesses.
Cheers
Randy
Chanticleer
‘It’s data centres, battery storage, AI’: Vibe deal pops shares 10pc
This ASX200 staple’s latest move sounds like the sort of thing fund managers would normally hate. But the company is unique and this deal is, too.
Sep 2, 2025 – 6.11pm
WA-based contractor NRW Holdings is an ASX200 staple. It makes most of its money building and maintaining mine site and civil infrastructure, riding the ups and downs on the mining cycle, and its customers include Rio Tinto and BHP.
Good business? Yep. Fund managers like it and consider long-time chief executive Jules Pemberton as a disciplined operator, although they too trade its shares to play the mining and mining capex cycle, which can make for a volatile ride. If there’s a knock, it’s governance – NRW is shooting for an eighth straight strike to its remuneration report, an extraordinary feat.
NRW’s got itself a $200 million deal after nearly 12 months of talks. David Rowe
Nevertheless, the thing’s on fire; NRW stock is up 77 per cent since US President Donald Trump’s “liberation day” tariff announcements in April, bumped along by its FY25 result and on Tuesday by its biggest ever acquisition.
NRW is buying electrical and tech contractor Fredon, a Sydney-based business that we’ve written up as an IPO contender just about every year for the past five years, for up to $200 million. It will pay $122 million upfront, up to $60 million earn-out and $18 million deferred cash in two years.
First impression? “It’s a step-out,” as one fund manager put it. NRW is bolting Fredon on as a fourth pillar alongside its civil ($823.7 million revenue in FY25), mining ($1.54 billion) and minerals, energy and technologies ($932 million) units, the latter of which does materials handling and maintenance work. Fredon recorded $840 million revenue at a slim 4.6 per cent EBIT margin in FY25.
What about synergies? Hard to quantify.
Overlap in clients and core markets? Not massive.
New opportunity? Not really – Fredon’s been for sale for years (as we’ve written) and you’d have to assume a few suitors took a look.
Which makes it sound like the sort of deal fund managers would normally hate.
But as you may be picking up, NRW’s unique and this deal is, too.
It can break a few rules but the price is good (5.2 times EBIT), it looks to be 10 per cent to 15 per cent earnings accretive, and NRW’s done well buying businesses in the past decade (Golding, Primero, BGC Contracting, RCR’s mining assets).
And last, but not least, Fredon is smack-bang in a hot sector.
As Pemberton told analysts and investors on Tuesday: “It’s data centres, it’s electrification, it’s new buildings, it’s battery storage, it’s all of the things: automation, AI, everything that’s coming towards us.”
NRW chief executive Jules Pemberton. Bohdan Warchomij
It’s the vibe! What’s not to love? You’d be flat out to find a better bunch of tailwinds for a business in FY25 (data centres for old people, maybe?). Geographically, three-quarters of its pipeline is work in NSW, Queensland and Victoria, and only 10 per cent in NRW’s Western Australia heartland.
The deal turns NRW into a more diversified business with more sticky government contracts, more work in east coast markets, more revenue (25 per cent bigger at the revenue line) and a fatter pipeline of new contracts (two-thirds of which are government work). It will have a $20.3 billion pipeline of new work, including $7.6 billion of active tenders, 11,500 staff and is expected to complete by the end of this month.
NRW could really make it sing if it can start selling Fredon’s electrical, mechanical, infrastructure and technology services (done by 2500 technicians) to its resource-heavy client base. That’s the longer-term opportunity – for now, it is about bedding down a fourth division.
So despite an acquisition that may normally raise a few red flags, NRW shares closed up 6.3 per cent on Tuesday. Sell-side analysts were pretty upbeat on the call; you can tell pretty quickly what their fund manager clients are thinking by the questions they ask. Spiky questions mean clients are going nuts.
Pemberton told them NRW first looked at Fredon in 2023 and picked it up again in October last year. “Really, it’s been the last 12 months that we’ve been talking,” he told investors. “These things take time.”
Anthony Macdonald is a Chanticleer columnist. He is a former Street Talk co-editor and has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies. Connect with Anthony on Twitter. Email Anthony at [email protected]
Yes, that's a fair call @Randy - I am not buying more NRW (NWH) up here either - buying them when sentiment is negative and they've been sold down is the go, although, as you point out, they operate in mining which is a cyclical industry, so you have to take a bit of a macro view also as to whether there's further downside when their SP is in a strong downtrend, like they were this calendar year from January to early April. While they still derive the majority of their revenue from mining, I do like their effort to diversify into other industries, with civil E&C being the obvious one that most mining contractors also go into, but NRW have gone beyond the very obvious in terms of diversification, and that's a good thing.
However, in terms of being a mining contractor, it's worth looking at the industries in which NRW operate, which are now gold, iron ore, and metallurgical (met) coal, and their one remaining iron ore contract (@ Karara) is due to complete in the current FY (FY26). Their other one, for the OneSteel administrators, has wrapped up already, which is why it isn't included in their "current work" table below:
So once they complete their contract at Karara - their exposure to metals and minerals will be confined to gold and met coal, unless they announce more contract wins in other areas.
They do have $2.9 Billion worth of active tenders in Mining Services (contract mining) as shown above, which was taken from the following slide from their full year results presentation on August 21st:
So, it pays to note that NRW have previously had a number of mining contracts in gold mining - so their current one at Evolution Mining's Castle Hill open pit (part of EVN's Mungari gold operations near Kalgoorlie in WA) is not their first. However, as a goldbug myself, I was fairly stoked when they won that contract - see here: https://mining.com.au/nrw-wins-360-million-contract-with-evolution-mining/
WRITTEN BY Aaliyah Rogan, 9th October 2024.
Major contract part of NRW’s Evolution
Mining services firm NRW Holdings (ASX:NWH) has been awarded a $360 million contract by an Evolution Mining (ASX:EVN) subsidiary for surface mining at the Castle Hill gold deposit in Western Australia.
Beginning in November 2024, the contract is expected to be completed by mid-2030 and will average about 150 personnel on site.
NRW Holdings, which has a market capitalisation of $1.62 billion, will carry out load and haul operations, as well as site construction that supports facilities.
Drilling and blasting will also be undertaken by NRW’s privately held subsidiary Action Drill & Blast.
CEO Jules Pemberton says NRW has a long history as a provider of mining services to clients and looks forward to a successful partnership with Evolution.
NRW adds that Castle Hill is ideally situated to allow the company to engage with local businesses and further develop local community partnerships established by the Mungari Operations.
Castle Hill lies in the heart of the Goldfields region, 50km northwest of Kalgoorlie and 40km north of Coolgardie.
Evolution Mining is a global gold miner that operates across six mines, five of which are wholly owned in New South Wales, Queensland, Western Australia, and Canada.
NRW Holdings is a diversified contract services provider to the resources and infrastructure sectors in Australia.
--- ends ---
Source: https://mining.com.au/nrw-wins-360-million-contract-with-evolution-mining/
As far as their latest acquisition, they have a track record of buying well in recent years, and I don't see this as any sort of departure from that pathway. This one is completely on brand for NRW and I like it.
Discl: Holding. Not increasing at over $4 share, however down around $3 and below, yep, I'd top up.