Their outlook shows how strong the services industry is for energy and mining at the moment.

Outlook

• Significant number of prospects across broad range of commodity markets

• Australian iron ore industry expected to remain buoyant

• High global demand for battery metals driving significant investment

• Favourable conditions in oil and gas sector

• Australia’s transition to clean energy to provide wind and hydrogen opportunities

• Strong demand for maintenance services across all sectors

• Labour shortage remains most significant challenge

• Strategic approach to new work opportunities

• Focus on employee retention, attraction, training and development

• New wave of major construction projects in the pipeline

• Delays in timing of project awards and commencement

• Anticipating decrease in FY23 engineering construction revenue before ramp up in FY24

• Forecasting 5-10 per cent reduction in Group revenue for FY23

• Strong balance sheet to support service and market diversification

17-Oct-2022: Mono's have released their Annual Report today - which you can view here: https://www.monadelphous.com.au/media/5840751/221017-2022-annual-report.pdf

They have also announced that 30-year veteran Executive Chairman John Rubino is retiring, as is Peter Dempsey who has been a Non-Executive Director of MND since May 2003, so for over 19 years.

Following Mr Rubino’s retirement (these changes are all effective from the date of MND's AGM, which is Tuesday 22nd November), Rob Velletri, MND's Managing Director, will take on the role of Executive Chairman of the Board of Monadelphous Group Limited. Rob joined Monadelphous in 1989 as Group General Manager after having commenced his career at Alcoa. He was appointed to the Monadelphous Board on 26 August 1992, assuming the role of Managing Director on 30 May 2003. Rob is a mechanical engineer with more than 40 years’ experience in the construction and engineering services industry and is a member of the Institution of Engineers Australia. 

Under his guidance as Managing Director over the past 19 years, Monadelphous has become one of the most respected engineering services providers in Australia. The Board unanimously supports Mr Velletri’s appointment to the role of Executive Chairman noting his thorough knowledge of the industry, the Company and its stakeholders, his demonstrated commitment and dedication to Monadelphous and the significant and valuable contribution he has made to Monadelphous for in excess of 30 years.

Mr Zoran Bebic will take on the role of Managing Director of Monadelphous Group Limited at the conclusion of the 2022 AGM. Zoran is a highly experienced senior executive, having worked at Monadelphous for almost 30 years across a broad range of operational, financial and management roles. He is a Fellow Certified Practicing Accountant and holds a Bachelor of Business with a Double Major in Accounting and Finance. He commenced his career with Monadelphous in 1993 and has held various corporate and operational roles over that time. In 2009, Zoran was appointed to the position of Chief Financial Officer and Company Secretary, and since 2014 has been the Executive General Manager of the Company’s Maintenance and Industrial Services division.

During Zoran’s time at the helm of Maintenance and Industrial Services, the division has become a leader in the planning, management and execution of multidisciplinary maintenance services, sustaining works and turnarounds to the resources and energy sector. Through this period, the division has almost doubled sales revenue to over $1 billion per annum and strategically broadened its scope of services, geographies and customer markets.

The Board unanimously believes that Zoran’s personal attributes, Company and industry experience, financial acumen and deep understanding of the markets in which the Company operates makes him the ideal candidate to take on the role of Managing Director, working closely with Mr Velletri.

--- end of excerpt ---

You can read the full announcement here: MND-Board-Changes.PDF

This is typical of Mono's - which is one of my favourite companies - they have succession plans in place and they promote from within, so people who have been with them for decades already and know the business inside out are the ones who step up as roles are vacated, and the two guys that are leaving are retiring rather than going elsewhere.

John Rubino still owns over 1 million MND shares, currently worth over $14m (1,022,653 shares @ $13.95/share - being today's closing price = $14.26m), and he has sold some along the journey as well.

Rob Velletri owns over 2 million MND shares plus 525,000 options. Zoran Bebic will be lodging an initial director's interest notice around the time of next month's AGM, when he officially takes on the MD role, but as their current Executive General Manager of Mono's MIS (Maintenance and Industrial Services) division, since 2014, MIS being their largest division now by revenue, and their fastest growing division, I'm sure he's got a few thousand MND shares already.

MND have two divisions, Engineering Construction, and Maintenance and Industrial Services (MIS), with MIS now having eclipsed EC in terms of revenue and earnings.

Zoran Bebic, MND's current Maintenance and Industrial Services (MIS) Division Executive General Manager, will become their new Group Managing Director from the the 22nd November (MND's AGM).

https://www.linkedin.com/in/zoran-bebic/?originalSubdomain=au

221017-2022-annual-report.pdf (monadelphous.com.au)

Disclosure: I hold MND shares IRL and here on SM. One of my favourite companies, however up around $14, not one of the ones with the most obvious upside from here, so I've reduced my exposure and instead increased my exposure to companies that are more undervalued by the market. I'm happy with the Board changes announced today.

03-June-2022, 10:40am SA time, 11:10am Sydney time. Mono's are on the move again:

MND have always been a core holding of mine, a consistent fully franked dividend payer, and a company that continues to find new markets and make money. Because of their high exposure to large scale construction in the resources sectors (mining plus energy sectors), their revenue and profits can be quite lumpy from year to year. However they have developed a large infrastructure business that has a good amount of recurring revenue. They also have a number of JVs including one with Zem Energy called Zenviron - see here: Renewables (monadelphous.com.au)

I have noticed that since Labor have won the recent Australian Federal election, and the Greens have increased their presence in both the upper and lower houses, AND a number of "Teal Independents" have won seats as well (many of whom have campaigned on the need to urgently address climate change), a number of so-called "green stocks" have had a little uptick on their charts which could be the start of a positive rerating by the market. People having a nibble perhaps.

I do not for a minute think that MND is thought of as a "green stock", as their Zenviron JV represents a very small part of their overall revenue, but I think it might be A factor. Other factors include the need for further expenditure to increase the supply of gas for energy to Australia's east coast, and higher commodities (metals) prices which may result in further expenditure by miners. Another factor is that MND are well positioned to participate in increased infrastructure spending in Australia by state and federal governments. And of course, it might just be that the market is finally realising that Mono's is no longer just a construction company that only does one-off contracts; they have now become a company with diversified revenue from multiple divisions, including a decent amount of recurring revenue from multi-year infrastructure operations & maintenance (and sometimes also management) contracts.

Further Reading:

Water and Irrigation (monadelphous.com.au)

Maintenance and Industrial Services (monadelphous.com.au)

Facilities maintenance (monadelphous.com.au)

Disclosure: I hold MND here, as well as in all of my main real life portfolios. It has always been a core position of mine since I started investing around 25 years ago. I tend to load up on MND when they are sold down, and trim my positions when they are flying. They're not flying yet, but they are on their way back up.

16-Apr-2021:  Settlement of Claim

Engineering company Monadelphous Group Limited (ASX:MND) refers to its announcement dated 3 August 2020 in which it notified the market that Rio Tinto had filed a Writ of Summons against one of Monadelphous’ wholly owned subsidiaries in respect of a fire incident which occurred at Rio Tinto's iron ore processing facility at Cape Lambert, Western Australia, in January 2019.

Monadelphous is pleased to announce that a confidential out-of-court settlement has now been reached in this matter, with the settlement being covered by the proceeds of insurance. The parties consider the matter has now been concluded.

Monadelphous highly values its long-term business relationship with Rio Tinto, is pleased that this matter has been resolved amicably, and is looking forward to continuing to work closely with this very important customer into the future.

--- ends ---

[I hold MND shares.] 

Nice to see a bit of a pop in their SP today.  Plenty of ground left to regain however.  This claim was always going to be settled.  The market is funny like that.  Overreactions in both directions to news that is just really part of the ordinary course of business for companies.  This has cost MND nothing.  The entire settlement was covered by their insurance.  Back when the dispute was announced there were some people claiming that this could bring MND down, or that they would lose RIO as a key client.  No, and No.  They were doing shutdown work that included cutting and welding.  There was a fire.  There was a claim.  The claim was settled, and the entire cost was covered by Mono's insurance.  A company like Monadelphous does not place itself in a position where an incident like that could have a material effect on their ongoing viability.  They just don't.  It's what they do, and they are very good at it.  In fact, at what they do, here in Australia, they are the best. 

I continue to make plenty of money by holding MND shares, topping up when they are sold down, particularly below $10, and trimming the position when they look overpriced, like above $19/share a few years back (late 2017 and a few times in 2019), and in the past six months I have also sold some when they went above $14.  I'm not buying or selling here however, they're around the middle of their recent trading range - or a little below the middle, but not cheap enough to be topping up again.

MND are a quality company with quality management.  If you back really good management, you usually do well.

It's a cyclic business and I'm getting back on the bike - in a small way.

The standout point in their recent results was that engineering and construction revenue was up 68%. Their EPS for the half was 33c when it was 38c for the full year last year. pe/e on epsttm is now 27, but the forward p/e (assuming 60c for fully year) is 19.

MND are a more diversified company now because they had to be to survive the mining services crash. They diversified into multi-year maintenance contracts and have joint venture businesses in other sectors such as renewables and civil engineering.

Their report pointed to a strong outlook

• re iron ore. "Ongoing capital and operating expenditure required to sustain the high levels of production in this sector will drive strong and steady demand for engineering construction and maintenance services."
• "The long-term outlook for the renewable energy sector is positive with a pipeline of new wind farm projects expected to come to market in the next few years, particularlyas electrical grid access improvesin NSW and Victoria."
• Demand for maintenance services is expected to grow steadily on the back of aging assets and customers deferring non-essential work in prior periods.
• In the more immediate term,resource sectoractivity in Western Australia is expected to remain strongin the second half of this financial year, resultingin increasedpressure forthedemandofskilledlabour.

This commentary supports my broader view that there is going to be a lot of infrastrure built in the coming years. The Govt are going to spend on infrastructre and I think the cashed up miners will too because they have cash and have publicly stated that are adapting to climate change. FMG are putting aside 10% of their profits each year ($8B this year) into a clean energy fund in order to produce green steel - steel produced from their iron ore using renewable energy. They are investing in hydrogen. Have a look at Andrew Forrest delivering Boyer Lecture. https://iview.abc.net.au/show/boyer-lecture-andrew-forrest

23-Feb-2021:  Monadelphous Reports 2021 Half Year Results   plus   2021 Half Year Results Presentation   and   Half Year Accounts   plus   Appendix 4D Half Year Report

At this point, MND have not updated their own website with these announcements, however when they do, you should be able to access them all from here:  https://www.monadelphous.com.au/investors/asx-announcements/

MONADELPHOUS REPORTS 2021 HALF YEAR RESULTS

Performance Highlights

• Revenue: $947.8 million*, up 19% on 2H20 and 11% on pcp
• Net profit after tax (NPAT): $31.6 million
• Interim dividend: 24cps, fully franked
• Secured $360 million of new contracts and extensions
• High level of activity in iron ore sector
• Substantial improvement in safety performance
• Strategic focus on people initiatives in tightening labour market

Engineering company Monadelphous Group Ltd (ASX: MND) today announced revenue of $947.8 million* for the period ended 31 December 2020.

The result was up 18.7% on the second half of the 2020 financial year as the industry steadily recovered from the initial impact of COVID-19, and was an increase of 11.2% on the same period last year.

The Engineering Construction division reported revenue of $460.3 million, a 68% increase on the prior corresponding period, with work progressing strongly on a significant number of resource construction projects which had experienced COVID-19 related delays in the first half of the 2020 calendar year.

The Maintenance and Industrial Services division reported revenue of $491.5 million, down 15.9% on the prior corresponding period (pcp). Maintenance activity levels early in the period were lower than usual as the industry steadily regained momentum after the initial impact of the pandemic, as well as from the effects of reduced levels of demand within the oil and gas sector.

Net profit after tax for the period was $31.6 million, with the Board of Directors declaring an interim dividend of 24 cents per share fully franked.

Despite the unique challenges brought about by COVID-19, Monadelphous continued to win new work, during the period securing approximately $360 million of new contracts and contract extensions, most notably in the iron ore sector. A large volume of project developments in execution phase together with the resumption of work scopes which were deferred earlier in 2020 and a strong appetite from customers to maximise production has seen activity levels in the iron ore sector ramp up significantly.

The Company’s 12-month total recordable injury frequency rate (TRIFR) substantially improved during the period to 3.12 incidents per million hours, representing a decrease of 16.1 per cent. This improvement was supported by the implementation of a significant number of health and safety initiatives, including a number of systems improvements and activities to reinforce line-of-fire fatal risk controls.

With the skilled labour market expected to tighten further from heightening levels of demand and unpredictable interstate border restrictions, the Company progressed a range of key talent retention, management and attraction initiatives.

While the global economic outlook in the wake of COVID-19 remains uncertain, the resources sector is expected to provide a steady flow of opportunities for Monadelphous over coming years, with the outlook for Australian iron ore investment particularly solid. Ongoing capital and operating expenditure required to sustain the high levels of production in this sector will drive strong and steady demand for engineering construction and maintenance services.

Developments in other resource sectors including lithium, gold, copper and nickel are also expected to provide ongoing prospects, and the long-term outlook for the renewable energy sector is positive.

Monadelphous Managing Director Rob Velletri said the Company had achieved a solid first half result during a very difficult period, and with its reputation as a leader in its markets, and its longstanding commitment to the delivery of safe, reliable and cost competitive service solutions, the Company is well placed to capitalise on opportunities and deal with the challenges ahead.

Note: 1 (*) Revenue includes Monadelphous’ share of joint venture revenue.

--- end of excerpt ---

--- click on the links at the top for more ---

[I hold MND in all of my main portfolios, and have done for more than a decade except for brief periods when they looked rediculously overpriced, which they certainly are not down here.]

Filmed on August 26, 2020:  https://www.livewiremarkets.com/wires/buy-hold-sell-4-outstanding-results-and-2-shockers

In this episode of Buy Hold Sell, Henry Jennings from Marcus Today and James Gerrish of Market Matters cast their eyes over the recent reporting season and share their views on some of the standout results.

They reveal the companies they graded as a massive fail and why, as well as those that surprised on the upside. They were also asked to pick a result that they thought was outstanding but the market may have overlooked.

MND was the first company that Henry Jennings chose to discuss in terms of companies that surprised on the upside.  He was asked by LivewireMarkets' Vishal Teckchandani:  "Let's flip it around to the A-Team.  Which report surprised you the most on the upside, Henry?"

Henry's response starts from the 3:20 minute mark.

James Gerrish added, "Yeah, we hold that stock.  And I've got to agree with Henry.  You look at Fortescue's announcement yesterday, and they're talking about the amount they're going to spend on new mine development, the amount of money they're putting in the ground.  So, it's a stock we've got in the portfolio."

[I hold MND.]

03-Aug-2020:  RIO to serve writ on MND:  Notification of filing of Writ of Summons

This concerns a fire incident which occurred on 10 January 2019 at Rio Tinto's iron ore processing facility at Cape Lambert, Western Australia, and although the writ does not specify any damages, Rio Tinto has separately informed MEA (Monadelphous Engineering Associates) that its claim is for A$493m in loss and damage. This amount comprises A$35m in material damage costs associated with the re-construction of the Sinter Fines processing facility, and A$458m for a temporary operating solution and business interruption losses arising from the alleged inability to process iron ore during the period of reconstruction of the facility.

The writ has not yet been served on MEA. Rio Tinto has invited discussions to occur prior to service of the writ, which MEA and its insurers intend to pursue.

MEA had been performing maintenance shutdown services prior to the fire commencing, and Rio Tinto has alleged that MEA was in breach of the maintenance contract, thereby causing the fire.

MEA denies Rio Tinto's allegations and claimed losses (which MEA considers have not been substantiated). Further, the contract between Rio Tinto and MEA, which governed the maintenance work performed by MEA, contains exclusions and limitations of liability which will be relied upon by MEA in defence of the claim.

MEA has public liability insurance in place with a total limit of $150m which provides cover for property damage claims and associated losses. Monadelphous is unaware of any reason why the insurance policies would not respond to indemnify MEA for liability it may have to Rio Tinto.

Along with its insurers and their legal representatives, MEA intends to fully defend Rio Tinto’s legal action.

Monadelphous highly values its long-term business relationship with Rio Tinto, and is proud of its track record providing maintenance and construction solutions to this very important customer for over two decades. The Company remains committed to working with Rio Tinto to seek a satisfactory outcome in this matter.

--- click on the link above for the full announcement ---

[I hold MND shares]

This should provide a nice buying opportunity in MND today I would expect.  I'll probably be topping up my positions.

01-Jun-2020:  https://www.australianmining.com.au/news/monadelphous-revels-in-150m-contract-win/