Motley Fool; ASX 200 mining services share storms 27% higher on...

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ASX 200 mining services share storms 27% higher on record revenue result

Cathryn Goh | May 21, 2020 11:59am | More on: NWH

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The NRW Holdings Limited (ASX: NWH) share price has popped 27.88% this morning on the back of a positive trading update. The company announced record revenue and pushed forward its interim dividend decision, which had previously been deferred to August.

About NRW Holdings

NRW Holdings is a provider of diversified services to the mining, energy, civil infrastructure and urban development sectors throughout Australia.

The company delivers a wide range of services including civil expertise, contract mining, drill and blast, specialist maintenance, and industrial engineering.
With this, NRW supports more than 100 projects around Australia. Its client base comprises big ASX names like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Newcrest Mining Limited (ASX: NCM).

What did NRW Holdings announce?

This morning, NRW revealed its FY20 performance to the end of April remains strong despite the effects of COVID-19. Notably, it has seen no material change to planned activities in its 4 business divisions of civil, mining, drill and blast, and mining technologies.

In terms of financial performance, NRW reported revenue of $1.6 billion for the 10 months to April 2020. This represents record revenue compared to any previous full financial year. For reference, NRW posted $1.1 billion of revenue for FY19.

Meanwhile, earnings before interest, tax, depreciation and amortisation came in at $177 million. This was up 22.9% from FY19, as the company integrates last year’s $116 million BGC Contracting acquisition into its business.

Importantly, NRW also revealed an improvement in net debt, which stood at $115 million at the end of April 2020. This compares to the company’s $154 million net debt position at the end of last year. NRW expects to report much lower debt of around $60 million by the end of FY20 following reviews of equipment rental agreements.


Outlook and interim dividend

NRW noted it is on track to meet its FY20 revenue guidance of $2 billion for the full year. Commenting on the performance of the business, CEO Jules Pemberton said:
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.
Importantly for income investors, NRW has resolved to pay its interim dividend of 2.5 cents per share on 9 June 2020. In late March, the company announced its intention to defer this interim dividend, pending a review to be held in August.
However, given NRW’s continued strong performance, the review was brought forward.