NRW Holdings (ASX:NWH) share price soars 13% on FY21 earnings

The NRW Holdings Limited (ASX: NWH) share price is soaring after the company released its results for the financial year 2021 (FY21).

Right now, the NRW Holdings share price is trading at $1.88, 13.3% higher than its closing price yesterday.

NRW share price jumps on $2.3 billion revenue

Here’s how the diversified contracting service provider performed during FY21:

• $2.3 billion in revenue – 11.5% more than in FY20
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $266.7 million. That’s 6.7% higher than the prior comparable period
• 5-cent fully franked final dividend.

Of the company’s approximately $2.3 billion of revenue, its civil works segment brought in $726.5 million, mining brought in around $1.177 billion, and minerals, energy, and technologies earned $426.9 million.

NRW’s operating earnings before interest and tax came in at $120.6 million. That’s lower than it was in FY20, mainly due to high staff turnover, labour rate increases, and skill shortages in Western Australia’s Pilbara region.

NRW ended the period with $163.9 million of cash and $196.7 million of debt.

What happened in FY21 for NRW Holdings?

It was a busy financial year for NRW Holdings and its share price.

The company acquired Primero Group Ltd in March.

It also developed and installed pit crushing and conveying solutions to reduce its carbon emissions by at least 75% when compared to traditional mining and haul solutions.

Unfortunately, COVID-19 impacted the company’s staff retention, with staff turnover reaching record highs.  

Border restrictions still mean interstate worker numbers are far below pre-pandemic levels. NRW historically sees 30% of its workforce coming from Australia’s east coast.

What did management say?

NRW Holdings’ managing director and CEO Jules Pemberton commented on the results, saying:

The COVID-19 pandemic has had a significant impact on the business throughout the financial year…

Resource availability and labour cost pressures impacted WA Pilbara project completion costs and schedules. Both these issues were attributed to COVID-19 measures including border closures which limited the available workforce.

Most of those projects however were complete at 30 June 2021, other than resolution of claims and contract variations. Whilst these projects have had the most impact on our financial performance, it is important to note that large parts of our business have performed to expectations.

What’s next for NRW Holdings?

Here’s what may drive the NRW Holdings share price in FY22.

The company is forecasting its revenue for FY22 will be between $2.4 billion and $2.5 billion. $2 billion of its expected revenue is already either in NRW’s order book, supported by a letter of intent, or is expected to be reoccurring.

NRW anticipates its operating EBIT for FY22 will be between $145 million and $155 million.

Additionally, the company’s order book is expected to grow by $1 billion to $4.4 billion in FY22 after NRW received a letter of intent for the extension of mining services at Curragh.

Additionally, NRW is preparing its first sustainability report. It will be published in September.

NRW Holdings share price snapshot

The NRW share price has slipped 37% year to date. It is also 9% lower than it was this time last year.

The post NRW Holdings (ASX:NWH) share price soars 13% on FY21 earnings appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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