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#Trading Update
Last edited 2 months ago

21-May-2020:  Trading Update & Dividend Date

FY20 Performance on track, Interim Dividend to be paid 9th June 2020  

Leading Australian Resources and Infrastructure contractor NRW Holdings Limited (ASX: NWH) is pleased to provide an update on performance to the end of April 2020.


  • Our People – processes have been implemented across our operations to minimise risks associated with Covid-19 as outlined in our ASX announcement of the 26th March.
  • Our Clients – we continue to work closely with our clients to minimise risk and deal with all challenges faced through the pandemic including the impact around border closures and managing our interstate workforce.
  • Our Suppliers – there have been no material impacts on our supply chain with respect to ongoing projects, mining and drill and blast operations.
  • Currently we have seen no material change to planned activities in any of the four business divisions; Civil, Mining, Drill and Blast and Mining Technologies.

Financial Performance (unaudited 10 months to April 2020)

  • Record Revenue of $1.6B(*1); the result, for only 10 months, represents a record revenue for the group compared to any previous full financial year.
  • EBITDA(*2) of $177M; pre adoption of AASB16.
  • Continued strong earnings generation with normalised earnings, EBITA(*3) of $107M.  
  • Significant improvement in net debt  (cash less interest bearing debt) at 30th April 2020 to $115M.
  • A much lower AASB 16 debt of circa $60M expected to be reported as at June 30th.  Further reviews of equipment rental agreements are expected to reduce the liability recognised in the half year accounts to $122M.  

Business Commentary

  • Integration of BGC Contracting progressing well: all project teams now reporting through the NRW business structure.
  • Key milestone on the BGC Contracting W2B Pacific Highway contract now under the leadership of the Golding business achieved March 31st recognised by the client and consistent with expectations.
  • RCR Mining Technologies (RCRMT) working with DIAB Engineering secured a $17M fabrication package for Newmont’s Tanami Expansion 2 Project to manufacture the Head Frame and Skyshaft steelwork.
  • NRW Contracting (formerly BGC Contracting) and WBHO infrastructure shortlisted as one of two bidders by the WA government to tender the $215M Mitchell Freeway north extension. This follows on from the recently advised shortlisting of the Southwest Connex Alliance on the $852M Bunbury Outer Ring Road project announced on the 18th March 2020.
  • Tunnel boring of the twin 8km tunnels on the Forrestfield Airport Link completed in April, a major milestone for the project which NRW is working on in Joint Venture with Salini Impregilo.


  • *1 Includes revenue from associates
  • *2 EBITDA is earnings before interest, tax, depreciation, amortisation, transaction costs pre adoption of AASB16: compares to $94.6M at 30th December 2019 
  • *3 EBITA is earnings before interest, tax, amortisation of acquisition intangibles and excludes one off transaction costs; compares to $62.1M in the first 6 months of FY20.

Commenting on the performance of the business Jules Pemberton, NRW’s Chief Executive Officer and Managing Director said:

“I am incredibly proud of the manner in which our people have worked through the challenges of the last few months. We have had to make significant changes to the way we work but have been able to safely do that whilst supporting our clients to meet project objectives and day-to-day operational requirements.

The award by Newmont to RCRMT provides an opportunity to bring both RCRMT and DIAB Engineering (acquired as part of the BGC Contracting transaction), together to deliver this important project. The ability to deliver this work from our regional facilities, in Bunbury, Geraldton and our Welshpool facility, to a major Australian project reflects the growing capability of NRW in the Australian manufacturing sector to provide specialised capital equipment for mining clients.  

Bidding activity is high and following the BGC acquisition the pipeline continues to improve given the likely acceleration of public infrastructure projects. NRW is very well placed to address a growing list of opportunities through both its Golding business on the east coast and the significantly enhanced construction business in the west.

With respect to the outlook for FY20 we remain on track to meet our revenue guidance of $2 billion."

Interim Dividend

The company announced on the 26th March 2020 its intention to defer the interim dividend pending a review by the board to be held in August 2020. Given the continued strong performance of the business the directors have brought forward that review and have resolved to pay the interim dividend of 2.5 cents per share on the 9th June 2020.


--- click on link above for more ---

Disclosure:  I hold NWH shares.

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#Trading Update
Added 4 months ago

26-Mar-2020:  6:27pm:  Trading Update and Dividend Deferral

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#FY20 H1 Outlook
Added 5 months ago

20-Feb-2020:  I have posted links and a summary of NRW Holdings (ASX:NWH's) H1 Results for FY2020 in a separate straw.  This straw contains their outlook statement:


The acquisition of BGC Contracting represents another significant milestone in the development of NRW and after the highly successful acquisitions of Golding Group and RCR Mining Technologies, delivers a further step change in scale and diversity for NRW’s business in Australia. 

As we look forward through the continuously evolving NRW and the broader industry we operate in, we have built capability across a number of areas and improved our revenue visibility: 

  • We have made acquisitions which have assisted in improving our delivery capability;
  • Our geographic reach has expanded, furthering our ability to deliver projects Australia wide;
  • We have built on our sustainable revenue base with more annuity-style revenue in the order book;
  • We are maintaining consistent revenues in our urban business, “through the cycle”; and
  • We have achieved strong growth through a relatively capital light model in our Mining and Drill & Blast businesses, given these contracts are production-based and generally longer-term contracts.

Commenting on the results Jules Pemberton also noted; “Most importantly the acquisitions of RCRMT and now DIAB Engineering have set us on a highly strategic and important path of growth across fixed plant construction, product support and shutdown maintenance services critical to productive mining operations. We plan to grow this business strongly over the coming years as a combination of aging assets and the demand for maintenance services in Western Australia and Queensland is forecast to significantly grow from around $9 billion in annual spend to more than $12 billion in annual spend”.

“The traditional markets in which NRW operates continue to provide opportunities for growth, and we have secured a number of new contracts and contract extensions during the year, which places us in an excellent position to capitalise on the positive market conditions. BGC Contracting has a long history of public infrastructure delivery in Western Australia. Securing work in the infrastructure sector under Alliance style contracts is another key strategic focus and will provide further diversification opportunities to the enlarged business from calendar year 2021”.

“Our strategy of growing and diversifying our revenues through organic growth or strategic acquisitions remains our long term strategy continuing our evolution and further developing the company as a multi-disciplined “through the cycle” services business”.

The tender pipeline, now at around $10 billion, remains strong. We remain confident of improving activity levels in resources and infrastructure for the next five years.  

With this growing pipeline of work, delivery capability is critical. The combined group currently has over 100 projects around Australia supported by a workforce of approximately 6,000 people.

Following the acquisition of BGC Contracting the order book at December 2019 increased to $3.8 billion.

The company previously advised revenue guidance of $1.5 billion for the current financial year. The company now expects revenue to be circa $2.0 billion, most of which is already secured.  

--- ends ---

You have to love results delivered with a full year guidance UPgrade (full year revenue guidance previously $1.5 billion, now $2.0 billion).

I hold NWH (NRW Holdings) shares.

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#FY20 H1 Results
Added 5 months ago

20-Feb-2020:  NRW Half Year Results Press Release

Half Yearly Report and Accounts

NRW Half Year Results Presentation

"Record results; more to come"

Leading Australian Resources and Infrastructure contractor NRW Holdings Limited (ASX: NWH) is pleased to provide its results for the half year ending 31 December 2019.


  • Operations
    • Revenue(1) of $808.7 million, an increase of 55% compared to the prior comparative period (pcp)
    • Comparative EBITDA(2) of $94.6 million up 27% on pcp
    • NPATA(3) up 28% to $41.2 million
  • BGC Contracting
    • Completed acquisition of BGC Contracting (renamed NRW Contracting)
      • Cash payment funded through equity raised at a premium:  $116.4M
      • Net Debt assumed(4) (included $28.6M of cash):  $153.7M
      • Total consideration:  $270.1M
    • Value underpinned by a fleet of over 200 items of high quality mobile mining equipment and DIAB Engineering generating maintenance annuity style revenues
    • Integration progressing well with circa 50% of annual run rate savings already achieved of the  $15 million target
    • BGC Contracting awarded 65km of rail formation at Eliwana for Fortescue Metals Group ($138M); and additional works at Eliwana also awarded – Airstrip and Roads ($17M).
  • Strategic
    • Secured $70 million of new Civil contracts for BHP Mitsubishi Alliance (BMA) at Blackwater and Goonyella
    • RCRMT has secured $171 million of work under NRW ownership (to December 19) including the award of a design and construct equipment package for a crushing plant for FMG at their Cloudbreak mine site. Acquisition of DIAB Engineering to further strengthen our service offering
    • Awarded circa $70 million Iron Bridge package for FMG and Formosa Steel (February 2020)
    • Formed Alliance partnerships for large West Australian infrastructure projects.
  • Balance Sheet
    • Strong cash conversion resulting in cash holdings increasing to $122.5 million from $65.0 million at June 19
    • Net Debt increase due to assumption of BGC Contracting asset finance debt: Gearing increased to 37.8% - forecast to reduce to below 30% by financial year end
    • Interim Dividend declared of 2.5 cents fully franked (up 25% on pcp).


(1) Statutory Revenue of $783.6 million plus revenue from associates of $25.1 million.

(2) Comparative EBITDA is earnings before interest, tax, depreciation, amortisation, transaction costs and pre-adoption of AASB16

(3) NPATA is Net earnings before amortisation of acquisition intangibles at normal tax rates

(4) Debt excludes additional lease obligations as a result of the adoption of AASB16  

Commenting on the results Jules Pemberton, NRW’s Chief Executive Officer and Managing Director, said:

“Despite the very positive calendar year 2019 the company has had, including the highly successful acquisitions of RCRMT and BGC Contracting, the events of the last six months remind us of the importance of ensuring the safety and wellbeing of our people. Sadly, we reported on 28 January that one of our employees in the recently acquired DIAB Engineering business sustained serious injuries on site and later tragically passed away in hospital. DIAB Engineering continue to provide support to the investigation into the incident, and to the family and their employees.

"Turning to the results, the first half performance shows another period of growth in both Revenue and Earnings across all parts of the business. The acquisition of BGC Contracting which completed in December will make a significant contribution to the second half performance and will support further business growth.

"The integration of BGC Contracting is currently our key focus across all business divisions and functions. We successfully managed the integration of the RCRMT business in the year which has delivered a standout performance since the acquisition in February 2019. We are aiming for similar results from the BGC Contracting business.

"The acquisition of BGC Contracting was very strongly supported by shareholders through the equity raise which completed at a premium, and the subsequent share purchase plan, which completed in January 2020. The structure of the transaction and very good cash conversion across the business has, in our view, strengthened the balance sheet and increased our access to equipment to support operations despite the increase in gearing."

[Continues...  Click on links above for more]

I have copied their outlook statement into a separate straw.

Disclosure:  I hold NWH shares.

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#Response to media article
Added 4 months ago

20-Mar-2020:  Response to media article

Yesterday I updated my commentary (reasons) around my valuation for NWH (NRW Holdings) and said that they were certainly worth a great deal more than the $1.14 that they were when I was typing that update.  They closed at $1.095, but I imagine they'll rise today.  I knew that they had debt, but very manageable debt levels for a company their size and in their position (within their industry). 

This morning they have released a "Response to media article" announcement (link above) which discusses why their debt is NOT going to bring them undone, and that the majority of it is related to equipment leases, with much of that equipment being able to be returned with no penalty (i.e. the leases can be cancelled at any time with very little notice, and are only applicable while NRW retains use of that equipment, and they retain the equipment only when it is being used to generate income for them).  This equipment is mostly earthmoving and mining equipment. 

NRW Holdings (NWH) have expanded rapidly in the past couple of years - since their near-death experience after the mining boom went bust - and they have learned from that.  One thing they do now that is different to the prior mining boom is that they don't just go out and buy equipment outright to service new contracts.  For the most part, they lease the equipment instead, so that when circumstances change, they can simply return the equipment, rather than being stuck with a lot of expensive machinery that is sitting idle and not earning them any money (during the down/lean years). 

The new AASB16 accounting guidelines mean that ALL current lease obligations (including equipment leases) need to be included in their current debt numbers, which was not previously the case (in FY19 and prior to that the numbers would have looked very different).  Today's announcement not only breaks their debt down and explains what it all is, but also gives you a repayment schedule for the next couple of years showing how quickly they are going to pay it off, and what contingencies are in place should circumstances go south on them.  

The final paragraph is, "NRW is continuing to support its clients and their projects. We have not experienced any material impact to our operations and equipment utilisation remains consistent with our activity expectations. We are working closely with clients to monitor the health and well being of site personnel and to ensure continuation of all operations and projects."

So business as usual for NWH (NRW Holdings) as I suggested yesterday should be the case.  I would like to see more companies release information like this that is so comprehensive with regard to their debt situation.  It would certainly help to ease speculation about which companies might be in danger of going under.

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#Company Presentations
Last edited 4 months ago

NWH Company Presentation at Diggers and Dealers, Kalgoorlie, August 2018

Click on that link above for a great company presentation on NRW Holdings (NWH) which includes some history, plus quite a lot of images and details of the projects they are working on currently across Australia.  

This was the presentation that their CEO & MD Jules Pemberton gave yesterday (August 7th) at the annual Diggers and Dealers Conference in Kalgoorlie.

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#Broker / Analyst views
Last edited 4 months ago

NRW Holdings Kicks Off With Iron Ore Win

Small Caps | Jul 19 2018

NRW Holdings has won the first of several earthmoving contracts expected from the re-investment in iron ore in Western Australia and brokers suggest the stock is a good way to play the cycle.

-South Flank smaller than works likely to be awarded by Rio Tinto, Fortescue Metals
-Revenue estimates for FY19 suggest growth of 40% on FY18
-Brokers more confident in NRW's ability to win further work in Pilbara


By Eva Brocklehurst

NRW Holdings ((NWH)) has been awarded a $176m contract to provide bulk earthworks and concreting at BHP Billiton's ((BHP)) South Flank iron ore project in Western Australia, kicking off a round of work awards expected over the next three years.

Work on South Flank is expected to start in September and run for 15 months. No material capital expenditure is expected as equipment will be internally sourced. UBS expects a 50:50 split in revenue across FY19 and FY20.

The broker's FY19 estimates of work in hand increase to $963m for revenue guidance of $1.1bn, implying 86% revenue coverage. UBS has set margin expectations for the civil division below industry targets, i.e. 4.2% versus 5%, which provides a level of confidence around the earnings profile.

The broker expects $3bn in civil works to be offered during FY19-21 from replacement and sustaining capital expenditure in Western Australian iron ore. South Flank is the first major iron ore project to award civil contracts but its civil works are materially smaller than the projects likely to be emanating from Rio Tinto ((RIO)) and Fortescue Metals ((FMG)).


UBS expects works for Rio Tinto's Koodaideri and Fortescue's Eliwana will be awarded towards the end of the first half of FY19. Collectively, the broker calculates the civil works for these projects which NRW Holdings can address are worth around $1.6bn.

The broker currently assumes an overall win rate of around 21% for the company. A 33-50% win rate would drive a 12-29% uplift to FY20 EPS estimates, all else being equal. UBS has a Buy rating and $1.90 target.



[Moelis and Citi ratings are in a separate straw due to the 2,500 character per straw restriction]

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#Company Presentations
Added 4 months ago
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#Broker / Analyst views
Last edited 5 months ago

The following is the final part of this article:

...which is included as a separate straw - due to the 2,500 character per straw limit.


Moelis upgrades estimates for operating earnings (EBITDA) for FY18 and FY19 by 2% and 9% respectively on the back of the win. The broker's revenue estimate of $1.11bn is in line with recent company guidance and represents revenue growth in excess of 40% over FY18.

Moelis considers the stock one of the better ways to play the upcoming reinvestment cycle in Western Australia and for gaining exposure to the potential for further contracts to be awarded over coming months from Fortescue Metals and Rio Tinto. Nevertheless, the broker considers the risk/reward balanced and moves to a Hold rating on valuation grounds, with a target of $1.87.

Citi maintains a Buy rating and $1.95 target, now more confident regarding the company's ability to capitalise on the increase in iron ore expenditure in the Pilbara. Citi increases FY19-20 estimates for net profit by 2-5%.


03-Feb-2019: Additional:  On December 31st, NWH announced it has been selected by FMG as the preferred Contractor to deliver the Stage 1 Earthworks, Roadworks and Drainage Works of Fortescue’s Eliwana Rail Project - worth around $57m - see here.  On January 24th (10 days ago), NWH announced that RIO had awarded them the $65m contract for the bulk earthworks at their new Koodaideri mine in WA's Pilbara - see here.  UBS refers (see my previous straw) to both of these projects, and estimates that the civil work that NWH can bid for could be worth up to $1.6 billion.  NWH already have a foot in the door on both projects, as well as at BHP's South Flank project where they are also doing the bulk earthworks.  Early involvement in these projects positions NWH well to be awarded further work.  Each of these 3 projects are worth billions.  BHP are investing up to $4.9 billion in South Flank.  Eliwana will cost FMG $1.3 to $1.7 billion.  RIO have confirmed they are going to spend $3.5 billion on Koodaideri - see here.

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#New Contract Awards
Last edited 7 months ago

03-Jul-19:  This one is not a new contract award, but instead a variation to an existing contract to provide additional trucking capability at Stanmore Coal's Isaac Plains East coal mining operation, which will result in additional revenue being paid to NRW by Stanmore (SMR). 

This is as a direct result of Stanmore Coal buying a new 600-tonne class excavator which will increase overburden removal productivity rates and reduce average unit overburden costs.  The acquisition of the new excavator will maintain ROM (run-of-mine) coal volumes from Isaac Plains East in the short term and allow accelerated ramp-up of the Isaac Downs Project once the approvals are granted.  It all means more work for NRW as they provide all of the haulage (ore transport) there for SMC.

NRW's Announcement:  Isaac Plains East - Additional Capacity

SMR's Announcement:  SMR: Stanmore Coal investing in open cut efficiency


Disclosure:  I hold NRW (NWH) shares.

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#ASX Announcements
Last edited 7 months ago

04-June-2019:  NRW - Market Update

Gascoyne Resources Mining Contract and FY20 Outlook

NRW Holdings Limited (ASX: NWH) (“NRW” or “the Company”) notes the appointment of FTI Consulting as Voluntary Administrators to Gascoyne Resources Limited (ASX: GCY) and its related entities (“Gascoyne”).

NRW provides drill and blast and mining services (“contract mining”) to Gascoyne. NRW further notes the Administrators at this stage intend to continue operating Gascoyne on a ‘business as usual’ basis while recapitalisation options are explored.

NRW is supporting FTI Consulting during the review of recapitalisation options and will be paid for all the works undertaken in this period.

Prior to the announcement of FTI Consulting’s appointment, NRW was expecting earnings before interest, tax, depreciation and amortisation (EBITDA) for FY19 in the range $140 million to $145 million.

NRW’s assessment of the current exposure to the Gascoyne contract is circa $35 million representing working capital, a second ranking secured loan of $10 million and equity in Gascoyne of ~$4.3 million.  The resulting net cash movement in the second half of FY19 is estimated at circa $8 million, as most of the working capital (circa $17 million) and secured debt exposure ($10 million) was incurred in the first half of FY19.

FY20 Outlook

Following recent contract awards, the order book now includes $1.1 billion of work secured for FY20, (excluding any contribution from the Gascoyne contract).  In addition, the RCRMT and Urban businesses are expected to generate circa $200 million of revenue.  NRW expects to deliver full year revenues in FY20 of circa $1.5 billion.

Jules Pemberton, Managing Director and CEO commenting on the trading update said “Whilst we are clearly disappointed with the recent events at Gascoyne, we remain positive on the outlook for NRW.  In addition, with key resources, both workforce and equipment, currently in high demand we remain confident that our personnel and equipment at Gascoyne’s Dalgaranga Project can be easily redeployed in the event a recapitalisation is unsuccessful."

--- ends ---


Disclosure:  I am a NRW Holdings (NWH) shareholder.  I have been trimming my holdings up towards (and over) $3, but they dropped as low as $2.35 today, so back into my "buy zone".   I had previously removed them from my scorecard to lock in profits, and was unwilling to add them again at over $2.70, but down around $2.50 - and up to $2.60 - looks more palatable.  Hopefully they don't rise too much further before the close...

Their net exposure to GCY is relatively small.  This is but a minor hiccup in a great turnaround story about a contractor that has gone from near-death a couple of years ago (due to high debt) to strong growth and profitability (and a very strong balance sheet).  Most of their expenditure at Dalgaranga was in the 1st half, which has already been expensed (and reported on), and they continue to do the mining there while the adminsitrators are continuing to run GCY as a going concern (business as usual).  NRW will get paid for the work they are doing now (since the administrators were called in to run Gascoyne - as from yesterday) - which is guaranteed by the administrators.  However, there is a possibility that NRW will NOT get paid everything they are owed for work done prior to GCY going into Administration.  They may also have to write off their GCY shareholding (worth ~$4.3m at GCY's last traded price).  There is also the chance that they may not be repaid the secured $10m loan that they extended to GCY (during the first half of FY19), as the loan was a "second ranking" secured loan.  However - NRW estimate their total current exposure to GCY is around $35m, and the resulting expected cash movement in this current (2nd) half is only ~$8m.  NRW have already secured $1.1 billion worth of work for FY20 (excluding Dalgaranga - so without any work for GCY) - plus their RCRMT and the Urban business units are expected to generate an additional $200m.  They are now guiding for FY20 full year revenues of around $1.5 billion - without any work for GCY.  

Hopefully that puts this into some perspective.  It's bad news, but it's not terrible news.  It's a minor setback really.  I view it as an opportunity to pick up some more NRW (NWH) shares at lower prices.

Addition:  They closed at $2.51.  Good price to add them back onto my scorecard (x3).  Happy with that.

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#New Contract Awards
Last edited 8 months ago
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#To enter ASX200 May 3rd
Last edited 9 months ago
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