• Revenue: $1.05 billion for the half year, a 4.2% increase from the prior period.
• Maintenance and Industrial Services Revenue: $645.1 million, down 9% from the prior period.
• Engineering Construction Revenue: $405.4 million, up 33.7% from the prior period.
• Net Profit After Tax: $42.5 million, a 41.3% increase from the prior period.
• Earnings Per Share: $0.433.
• Interim Dividend: $0.33 per share, fully franked.
• Cash Balance: $272.5 million.
• Cash Flow from Operations: $93.1 million, with a cash flow conversion rate of 145%.
• EBITDA: $79.8 million, a 30% increase from the prior period.
• EBITDA Margin: Increased from 6.08% to 7.59%.
• New Contracts and Extensions: Approximately $1.7 billion secured since the beginning of the 2025 financial year.
• Workforce: Totaled just under 7,300, with a key talent retention rate of around 95%.

• Warning! GuruFocus has detected 8 Warning Signs with ASX:MND.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Monadelphous Group Ltd (ASX:MND) recorded a revenue of $1.05 billion for the half year, marking a 4.2% increase compared to the previous period.
• The Engineering Construction division saw a significant revenue increase of 33.7% year-over-year, reaching $405.4 million.
• Net profit after tax rose by 41.3% to $42.5 million, aided by a $7 million after-tax variance in non-operating items.
• The company secured approximately $1.7 billion in new contracts and extensions across various sectors, including energy, iron ore, and renewable energy.
• Monadelphous Group Ltd (ASX:MND) ended the half year with a strong cash balance of $272.5 million, supported by a cash flow conversion rate of 145%.

Negative Points

• The Maintenance and Industrial Services division experienced a revenue decline of around 9% compared to the prior period.
• There were delays in the award of some projects, particularly in the sustainment capital opportunities within the iron ore sector.
• The skilled labor shortage remains a challenge, affecting the resources and energy sectors.
• Inflationary pressures, particularly in wage growth, continue to impact the business, although they have moderated.
• The renewable energy sector faces challenges related to project economics and government support, affecting the outlook.

Q & A Highlights

Q: Can you provide some color around meaningful opportunities up for grabs in the near term? A: We see a program of larger sustainment capital opportunities, particularly in iron ore with BHP, Rio Tinto, and FMG. In the oil and gas sector, opportunities include Shell Crux, Santos Barossa, Arrow work in the Surat Basin, and Chevron's Barrow Island upgrades.

Q: Are you expecting a sequential improvement in operating margins in the second half versus the first half? A: The expectation of improved operating margins is in comparison to the prior full year, not sequentially half on half.

Q: What drove the sizable uplift in other income, and how are you thinking about CapEx levels going forward? A: The uplift in other income was due to insurance proceeds. CapEx is expected to align with the long-term average of about 2% of revenue, despite lower spending in the first half.

Q: What were the key drivers of the year-on-year operating margin expansion? A: The business mix was more weighted towards Engineering Construction (EC) revenue. Additionally, major projects were well in train, and operational performance across the business contributed to the margin improvement.

Q: Are you seeing any delays in project awards, particularly in iron ore? A: We have seen some delays in project awards, but the broader pipeline remains solid, and our current order book is strong.

Q: How are you addressing skilled labor shortages in the resources and energy sectors? A: While labor availability has improved slightly, the challenge remains in the quality of skilled labor. We continue to enhance workforce capability through focused employee attraction, retention, and development initiatives.

Q: Can you comment on the renewable energy prospects given current challenges in the sector? A: The outlook remains positive, particularly in wind and battery energy storage projects. We are also seeing renewable opportunities in our traditional core markets.

Q: How are inflation pressures impacting your business, and are there any indirect impacts from tariffs? A: Inflationary pressures have moderated, particularly in supply chain impacts. We are still assessing potential indirect impacts from tariffs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.