• EBITDA: $95 million for the first half of '25, in line with guidance.
• Construction Materials EBITDA: $45 million, representing 24% growth on the prior corresponding period.
• Capital Recycling Proceeds: $90.7 million, exceeding targets and above book value.
• Leverage Ratio: 2.2, at the lower end of the targeted range.
• Safety Indicator (LTIFR): Reduced to 3.1.
• FY25 EBITDA Guidance: $215 million to $245 million, inclusive of acquisitions.
• Revenue: Flat compared to the prior corresponding period.
• EBITDA Margin: 21%, flat with the prior period.
• Operating Cash Flow: Approximately $60 million with a cash flow conversion rate of 81%.
• Depreciation: Increased by $5.4 million to $27 million.
• Interim Dividend: $0.035 per share, fully franked.
• Total Assets: $1.6 billion, with $1.4 billion in total tangible assets.
• Return on Capital: 10%, down on the prior corresponding period.

• Warning! GuruFocus has detected 3 Warning Sign with ASX:MGH.

Release Date: February 19, 2025

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

Positive Points

• MAAS Group Holdings Ltd (ASX:MGH) reported a strong first half '25 EBITDA of $95 million, in line with guidance, driven by construction materials growth.
• The company successfully completed three acquisitions ahead of schedule, establishing new hubs in Canberra and Wollongong, which are expected to drive future growth.
• Capital recycling proceeds of $90.7 million exceeded targets and were above book value, demonstrating effective capital management.
• The company's leverage ratio is at the lower end of the targeted range, reflecting a strong capital position.
• Safety improvements were noted, with the lost time injury frequency rate reduced to 3.1, showcasing effective safety initiatives.

Negative Points

• The civil construction and hire segment faced project delays, impacting overall performance and contributing to a softer environment.
• The construction materials segment experienced a slight decrease in margins due to a higher contribution of lower-margin revenue.
• The residential real estate business saw a 38% decrease in EBITDA, driven by the absence of a significant sale that occurred in the prior period.
• The return on capital for the construction materials business decreased to 10% from 12% in the prior corresponding period.
• The company faced unexpected losses in two projects during the first half, negatively impacting results.

Q & A Highlights

Q: Can you provide more color on the demand for construction materials across different geographic regions and the competitive landscape? A: The market remains strong, particularly in Queensland, with significant growth in Rockhampton and Central Queensland. New South Wales shows moderate to upward trends, while Victoria is currently flat. Recent acquisitions, such as Aerolite, present strong market opportunities. The overall landscape is rational, with consolidation among multinationals and Australian businesses.

Q: Could you elaborate on the progress and future expectations for the Central West Orana RES and other renewable projects? A: There have been delays, with projects starting more than six months behind schedule. However, early works packages have commenced, and we expect momentum to build. The Central West Orana RES is a key enabler, and we anticipate increased activity in wind, solar, and battery projects.

Q: What is the current return on capital in the construction materials business, and how do you see it trending? A: The return on capital is currently at 10%, down from 12% in the previous period. We expect it to increase significantly over the next 2-3 years as newly acquired businesses mature. The second half typically sees higher contributions from asphalt and steel, which will naturally boost returns.

Q: How have project delays in civil construction impacted expected volumes from construction materials? A: The delays have affected volumes by approximately 10% to 15%, primarily impacting our New South Wales and Queensland operations. Quarry products, which are our main driver and highest margin, have been most affected.

Q: What is the expected asset utilization for the Civil Construction and Hire (CCH) segment in the second half of FY25? A: Asset utilization was 50% to 60% in the first half, down from 70% to 80% in FY24. We expect it to exceed 80% by the end of FY25. Delays in project starts have temporarily lowered utilization, but we anticipate improvement as projects commence.

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