January 2023 - Updated in October 2024
Summary
Introduction
Mader is a leading contracting company that specializes in mobile and fixed plant equipment maintenance and support. They offer a one-stop shop of services to keep equipment powering 24/7. Mader was originally providing mechanical assistance to Australian mining clients but tends to diversify its activities across geographies and industries (US, Canada, electrical, rail, truck, marine, oil & gas, ancillary…).
Mader Group was created in 2005 by Luke Mader, a former mechanic on the field in the Australian mining region. He worked for an OEM (Caterpillar) until he realized that only the OEMs were providing maintenance to miners and that some issues were not taken care of. They decided to take the company public in 2019 to scale the business.
Summary investment thesis
Mader’s top strength lies in its faculty to provide timely and prime maintenance directly on the ground. The simplicity of the business model and their ability to replicate it across geographies and ranges of services is the key factor in their development and future growth. The decentralized corporate organization acts as a backbone to their expansion and their people-centric culture as a strong barrier to entry.
Opportunities and risks
+ Sticky business
+ Strong competitive advantages: less costly and quicker repair than competitors/OEMs
+ The agility of the group thanks to the culture, the way the organization is built => decision making and capital allocation skills
+ Future growth prospects: addressable market is very large and they are willing to diversify from their core business (mine maintenance)
+ 59% of the capital is owned by employees
- Cyclicality of the business
- The key to everything at Mader is people. However, it is still hard to retain them (30% staff turnover). If upcoming recession there might be some inflationary pressure that erodes margins
- The price advantage/discount (20-30%) they offer to their client might not be sustainable on the long term and while they see new entrants entering the markets