Thank you for standing by, and welcome to the Mader Group half year results. If you'd like to ask a question via the webcast, please enter it into the ask a question box and click submit. I'd now like to hand the conference over to Mr. Justin Nuich, Executive Director and Chief Executive Officer. Please go ahead.
Thanks for that, Darcy. Good morning, everyone, and welcome to Mader Group's first half financial results presentation. With me today, I've got our CFO, Paul Hegarty, and our General Manager of Marketing and Investor Relations, Natasha Marti. We're really pleased with our performance this year to date. I think it speaks to the depth of the talent that we have across our entire team, and without them, we wouldn't be here today, diversifying globally, exceeding guidance, and launching multiple organic startups in new markets. Thank you to all of our team in the field and in the office for your dedication and efforts throughout what has been an exceptional half year to date. I'll just begin by giving you a brief overview of who we are as a business before we jump into the financial results.
We're a global provider of specialist technical services across multiple industries. Having started in 2005 with Luke Mader conducting field service out of his vehicle in the Kimberley region of Western Australia, we now operate across the globe. During the half year, we exceeded 2,500 employees globally, which was a big milestone for us. With over 1,000 field service vehicles, we have collectively supported over 335 customers in over 500 different locations around the world. As you can see on this slide, we really have become a truly diversified global services business across multiple industries and multiple geographies. Looking at the graph below, you can see that through the years, we've continued to deliver compounding growth as we replicate our proven business model in new industries and large addressable markets.
With our latest ventures, Mader Canada and Mader Energy, now added into the mix, our growth strategy is delivering to plan. We're now providing technical services across a range of industries, including heavy mobile equipment, fixed infrastructure, transport and logistics, power generation and marine, and the energy sector. As you can see, just over half of our business consists of specialist heavy duty diesel mechanics. We also have a diverse range of other qualified trades, auto and high voltage electricians, light vehicle and road transport mechanics to name a few. Although there are options for everyone, you'll notice that our specialized workforce consists predominantly of tradespeople between the ages of 25 and 35. I think this really speaks to our company culture and the type of lifestyle we're proud to offer our employees.
At the core of our employment offering is our ability to provide global career pathways for our workforce at all stages of their life. We invest in our people heavily, building careers that offer massive opportunities, including site and location variety, roster flexibility and equipment flexibility. We also have developed the Global Pathways program, which gives our workforce the opportunity to work around the globe while remaining a Mader employee. This unparalleled program has expanded significantly over the past year and is a key pillar in our ability to attract and retain the best technicians. You'll hear a little more about this initiative later on.
As always, safety is a core focus for the business, and we're really pleased that our TRIFR has continued to improve significantly over this half year, reporting a record low of 3.23 injuries per million man-hours worked. The improved figure is a testament to the operational leadership, safety systems, technology, and processes the whole business has worked so hard to implement. Digital connectivity and safety-focused technology is a key focus for the business, and we're improving safety through the continual enhancement of our in-vehicle monitoring system across our global fleet. Our work is never done in this space, however, and there's always room for improvement, so we'll continue to strive hard towards our goal of zero harm with further investment in safety. Moving on to slide four. Moving into the operational review.
The highlights for the first half FY 2023 include AUD 280.3 million in revenue, which is an increase of 51% from the first half FY 2022. We increased EBITDA, delivering AUD 33.8 million, which was an increase of 60% on the prior corresponding period. Our net debt increased to AUD 50.9 million, representative of the company's continued investment and increased working capital in line with growth rates as we expand. We continue to deliver fantastic results for our shareholders, realizing compounding returns and positive growth outlook for the rest of FY 2023, with demand for our products remaining strong around the globe. Moving into the segment performance. In Australia, we delivered AUD 218.5 million in revenue, an increase of 36% versus PCP.
Demand for our two key growth drivers, infrastructure maintenance and ancillary, both experienced impressive growths, increasing 92% and 104% respectively. We also have 159 apprentices active in training programs across the business through our tailored Mader Trade Upgrade initiative and traditional apprenticeship programs. I'll just touch quickly on the Rest of the World segment before talking about North America. We did experience a 21% decline in revenue for the Rest of the World segment over the first half, having operated in five countries across Africa, Asia, and Oceania over the half year. It's proven more difficult to re-enter post-COVID, but we consider it still a very important pillar of our employment offering to our workforce, and we'll continue to invest in this pillar.
Last but certainly not least is our North American segment. Delivering $57.4 million in revenue, up 198% from the first half FY 2022. As I'm sure you can all agree, an excellent result. We finished the year having provided support across 25 states and provinces across the U.S. and Canada. The United States continues to perform well, and as the business unit matures, we'll focus on diversifying service offerings across different commodities and industries. Our Canadian business unit made substantial progress, reaching a milestone of circa 100 skilled technicians now mobilized into the region.
With significant unmet demand in the region, we can really see that this segment is gonna grow further, supported by Mader's Global Pathways program, as I mentioned earlier. To date, we have around 60 technicians still pipelined for deployment into North America from Australia in the coming months. The organic startup, Mader Energy, which is based in Fort Worth, Texas, is continuing to focus on developing customer relationships and enhancing its geographical footprint across a variety of shale formations. Incremental headcount growth in addition to multiple new customers will position the business unit well for the second half of this financial year. I'll now hand over to Paul for an overview of our financial results.
Thanks, Justin. Good morning to everyone that has joined us on the call. Thank you for taking the time out of your day to follow our story in what is a very busy result season, especially today. Onto the financial performance. Justin has already stolen some of my thunder on this slide, but we are very pleased with the results, so they are worth repeating. At the group level, we delivered AUD 280.3 million in revenue, up 51% versus the PCP. That result was delivered with very strong growth from our most mature segment in the group, Australia, which was up 36% on the PCP, which was very pleasing to see.
North America continued its compounding growth year-on-year, delivering 198% versus the PCP or 173% growth when excluding the impact of foreign exchange rates. Whichever one of those growth rates you consider, it was another solid half year of growth in a market that is still very much in its infancy for us. The Rest of World segment declined by 21% versus the PCP. This has proven more difficult to re-enter post-COVID, but we consider it an important pillar of our employment offering to our workforce and will continue to invest in it. Importantly, all of this revenue growth has been delivered with improved margins versus the PCP, with EBITDA and EBIT margins increasing. This is a testament to the team's dedicated focus on efficient operational delivery.
Of note is that the revenue contribution from North America has increased to 20%, up from 10% in the PCP. Given the strength of the Australian segment during the half year, to be able to deliver continued diversification into North America at an increasing rate is something we are all very pleased with. It also underscores our transition to a diversified services business. From a shareholder perspective, EPS was up 45%, our profit payout ratio closed at close to 30%, and our total dividend payments increased by 20% versus the PCP. Moving on to the financial position. As you can see, our asset base primarily consists of cash on hand, trade receivables, and property, plant, and equipment. We don't have contract positions or any intangibles to be concerned about, and therefore, we consider it a relatively simple balance sheet.
Our trade receivables position is largely with Tier 1 owner miners and large mining contractors, and we generally, touch wood, don't have any abnormal credit risk profiles in the debtor book. In fact, our DSO position improved during the half year period from June. Property, plant, and equipment increased year on year as we invested in growth. We added over 100 service vehicles to our fleet, and we now have over 1,000 service vehicles deployed across multiple continents. All CapEx deployed in the first half was growth CapEx, and a large portion of this expenditure will fund growth into the second half of FY 2023 and beyond. From a leverage perspective, we continue to view our business model as CapEx light, and we closed out the year with net leverage at around 0.75x , an increase from 0.6x on June 30.
One of the main reasons for this is our investment in working capital to support the growth, and I'll talk about that more on the next slide. The group's net debt position closed out the half year period at AUD 50.9 million, an increase of AUD 24.2 million from the net debt level on June 30 . This increase is attributed to growth in working capital requirements due to two things. The first is the continued growth in group revenue. The increased working capital requirements stem from the difference in timing between the group's payroll, which is every 14 days, and receipts from customers with a DSO of currently 65 days. This element of growth required an additional AUD 9.9 million to fund that timing difference.
Our new organic startups and the expansion of our Mader Maintenance Centre required an additional investment as these new revenue streams scaled significantly during the half year. Between Mader Canada, Mader Energy, and the expanded Mader Maintenance Centre, we invested AUD 8.8 million in working capital to support the growth in these business units, all of which were much smaller in scale at 30 June.
These factors have resulted in an increase in the level of working capital required to support the continued revenue growth of the group. Mader secured long term finance facilities in the United States in addition to increasing existing facilities in Australia during the quarter and half year. These facilities limit increases, in addition to the regimented deployment of working and growth capital, provides Mader with the confidence to marginally increase leverage in line with growth in revenue and earnings. That's all from me. I'll hand back to you, Justin.
Thanks, Paul. We'll move on to slide nine and have a look at our geographical footprint. As you can see, a large portion of our group revenue continues to come from our Australian business segment. We continue to experience strong macroeconomic conditions, and it's great to see that year-on-year we've increased the revenue generated in an addressable market that we've operated in for close to two decades. We've got a very loyal customer base that we'll continue to support with a range of new service lines and our core mechanical offerings, which are still experiencing a high demand. In North America, we have seen an increase in revenue to $57.4 million in North America, which is now making up around 20% of our group revenue base.
This increase is predominantly due to the expansion of our services and customer base and associated headcount across North America. The Rest of the World, as we mentioned before, did experience a decline, but we'll continue to invest in this as we move forward. Our Global Pathways Program connects skilled technicians with incredible opportunities around the world. A significant number of Mader employees have signed up to overseas adventures to expand their skills and expertise. Work to support two-way transfers between North America and Australia are underway, with transfers from Australia to Canada already commenced. It's a very exciting tool for the business, and it's allowing us to access international talent pools and some of the best technicians worldwide. Heading over to the growth opportunities and addressable market slide. This really shows the exciting opportunities we have in front of us as a business.
As you can see, our current sites engaged in North America is relatively small, with around 75 sites engaged out of over 300 operating sites. This is a huge addressable market for the group with massive opportunity for expansion. The United States energy market is another enormous addressable market for us and the world's largest shale gas producing region. As a business, we seek to improve the strength of our revenue base with a dedicated focus on geographic service line and sector diversification in existing and new markets. Our global expansion strategy is based on establishing multiple growth drivers across diverse industries that are in differing stages of maturity. This allows the business to grow on a compounding base as new talent pools are accessed and recruited from using the group's culture-led business model. Now the slide you've all been waiting for.
We are pleased to announce that the current market conditions have provided us with the confidence to upgrade again our FY 2023 guidance of revenue of at least AUD 580 million and an NPAT of at least AUD 37 million. Our competing annual growth rate is around 30%, we are diligently working to further refine our service offerings to deliver future compounding growth and impressive returns for our shareholders. It's a very exciting time in the journey of Mader. For current and prospective investors, Mader presents a robust investment opportunity with many prospects ahead. We have clear targets and a disciplined approach to operational service delivery. This is an outstanding effort since the listing on the Australian Stock Exchange in October 2019. Pardon me.
Thank you to everyone who has supported us from day one and for those of you who have jumped on board along the way. On behalf of the entire Mader Group, I would like to extend our sincerest gratitude to our team, our shareholders, our customers and suppliers. Thank you very much and we'd be happy to take some questions at this time.
Okay. Thanks, Justin. We've got a few questions rolling through. We'll start with organic startups. Questions from Frank. Good morning, Frank. Thanks for joining us on the call. Just a comment around the contribution of the organic startups, if positive or negative, how they're tracking, and how it compares with last year.
Yeah, good one. Hey, Frank, thanks for joining us. Look, I guess the organic startups, we've had a fair few, I guess. I suppose mostly of note would be Energy in the U.S. and Canada. We found both of those have really broken even in about the first six months to nine months, and thereafter contributing positive at that impact line. Canada, we've certainly seen grow a lot quicker than Energy, but Energy's really taken a foothold and starting to really get after it now. Yeah, we're sort of... We like to see these things break even sort of first year, but, you know, really push for that sort of six months to nine months mark, Frank.
From Jono. Good morning, Jono. Thanks again for joining us and for your support. A couple of questions from Jono, actually. Similar theme, North American EBITDA margins through the half. Canada's become profitable, as you talked about. Not at the full levels that we wanted to see, but it did break even in June and now turning a profit. I think as both those Mader Canada and Mader Energy service lines reach their run rate, they'll contribute, you know, at or as at expectations. What about Canada margins? What are we seeing in the first six months of true post-break even margin levels?
Yeah. Good, good question, Jono. I guess with Canada, we always thought it would be somewhere between sort of U.S. margins and Australian margins. What we've seen so far to date is that they are closer to those U.S. margins than Australian margins. We are seeing very good margin from our Canadian business. You know, we are only a year in, so, you know, hard to sort of say if that's gonna be sustained long term. You know, all indications at this point are pointing in a very positive direction, Jono.
Another question from Jono. Strategic acquisition opportunities. Talk to us about what we're thinking there?
Yeah. Good, good question as well. I guess for a company that talks about strategic acquisitions a lot, we don't very do too many. Yeah, we are constantly looking, you know, there's not a, you know, there's probably a dozen sort of acquisition opportunities that we are looking at, at any one time. As we look to go into these new markets and new areas and new industries, we definitely have M&A as part of our focus. You know, that said, we do have to sort of weigh that up against what it would cost to buy something and pay multiples for it versus build it ourself with our own sort of culture-led business model and all the rest of it.
Look, so far it has made sense to go organic. You know, that said, you know, M&A is always on the table and will continue to be considered as we, as we look to our, to our next set of opportunities.
Thanks, Justin. Another one from Jono. Infrastructure maintenance, and how that looks, or how that unfolded in the first half and how it looks moving forward. Do you wanna talk broadly about that?
No worries. Look, infrastructure maintenance again, you know, we work on a lot of, you know, mining operations and sort of civil areas, most of which have got some form of crushing or processing plant attached to it. You know, of those 500 locations, you know, there would probably be at least 400 of them with some sort of fixed infrastructure component to it. Similar skills shortages, you know, addressable sort of recruiting market outside of, you know, diesel mechanics and core business type opportunities. Look, we saw that grow at nearly 100%, you know, half on half or PCP.
You know, hard to say expecting that again, but it's, you know, it is continuing to deliver quite well with infrastructure maintenance and, you know, we see that addressable market even just in Australia as, you know, an absolute mammoth for us, you know, before we even take that sort of offshore as well.
Awesome. Thanks. Couple of questions here. One from Matt from Maven. Morning, Matt. Another one from Raymond at CCZ. Maybe just talk through the headcount breakdown between Australia, U.S.A. and Canada. In that U.S.A. one, would they be grouped between energy and the minerals business?
Yeah, no worries. I guess the headcount, I mean, total headcount is up over 2,500 at the moment. If we look at North America, you know, it'd be sort of breaking 300, maybe a little over 300. We came up over 100 in Canada in the first half. Yeah, as we said in the presentation there's another 60 already pipelined for the next few months that have, you know, just finalizing visas before they jump on planes to go and support that part of the business. You know, the USA side of things is close to sort of 200 at the moment.
You know, we continue to see that addressable market there in North America and, you know, we'll continue feeding that from sort of multiple angles being sort of our Global Pathways Program from Australia and other places, as well as internal recruitment inside Canada and the U.S.
Thanks. A question from another one from Matt from Maven. I'll take this so you can have a break. This one was around the EBIT margin improving, NPAT margin slightly down, and what caused that. It wasn't the employee incentive scheme, Matt. It was really around the quantum of borrowing and the incremental cost of funds increase on the PCP. Debt levels are a bit higher and as everyone knows, interest rates are a bit higher in the last sort of six months or so. That's really what's contributed to that NPAT decline is the interest bill on that.
Question from Frank, focus back on the Mader Maintenance Centre. Comment on the impact of H1 FY 2023, how that facility, sort of ramped up to nameplate. Then how will it look in the second half? You know, was it two months worth of facility in the, in the first half versus six months in the second half? You know, just generally, how's that looking? What does that look like for revenue going forward, revenue capacity, etcetera?
Yeah, good question, Frank. I guess there was a couple of things with the Mader Maintenance Centre last year. One was sort of winding down an old center to start up with a new center. I guess a bit of the disruption that sort of, you know, like moving house, you gotta pack up all your boxes and take them down the road to the new place. We've successfully done that. Really that facility started really hitting its straps sort of, you know, October, November as we started winding down. A lot of the sort of project startup work was completed.
You know, December was a great month and, you know, the team had done a great job getting some BD work done there. You know, as we stand there today, that workshop is, you know, it'd be hard to swing a cat there and not hit anything in that, in that facility. It, it is really firing. There's a, there's a great pipeline of work. You know, we can see the capacity of that facility versus the last one is probably about three times. You know, I guess the onus is on us to continue to keep that full and continue to keep the work pumping out, which is happening at the moment. We expect to see a really good second half of the year in that Mader Maintenance facility.
How many bays compared to the old facility versus the new facility?
Yeah. The sort of major jobs you could fit three, you know, maybe four at a stretch in the, in the old facility. You know, this one here, if you, if you stack them in quite tightly, you know, you could have probably 10 plus jobs, 10, 11 jobs going at any one time and actually starting to do some out in the yard where it makes sense as well. Yeah, a significant increase in capacity.
Thank you. Question now from Ari from Barrenjoey. Thanks for joining us this morning, Ari. I will let you answer this question 'cause I'm not allowed to. Guidance implied at least 40% year-on-year growth in the second half, but in the first half we did 45%. you know, given the momentum, is there anything that would stop us factoring in at least the same level of growth?
Yeah, good question, Ari. Look, you know, obviously there's lots of things that can happen, but, you know, we don't want. We would rather sort of underpromise and overdeliver and not that we think that's a major underpromise. You know, we did start this year at a AUD 510 million revenue target, you know, which a lot of people thought that was pretty optimistic and, you know, to be here today saying AUD 580 million. Yeah, we're pretty happy we can deliver on that and deliver on it well. You know, I don't wanna get sort of too overconfident and let people down.
Fair enough. Thanks for not throwing me under the bus on that one. Another question from Ari. How many months of revenue visibility do we have at the moment and, looking forward?
I mean, that can change day on day, Ari, but, you know, when I look at our rosters across the board, you know, we would have a couple of months that are really, you know, solidly booked out. That is sort of the nature of our business, you know, that tap on, tap off, type maintenance that we provide. You know, is in many cases supposed to be quite reactive but, you know, we're even seeing a lot of our reactive stores booked out for months in advance, which is, you know, as positive as it gets.
Thank you. We've got 1,000 service vehicles or a little over 1,000 service vehicles at first half. How many vehicles do you expect we'll have at the end of FY 2023?
Probably close to another 100 coming in there now, Ari. You know, a lot of the bottleneck is really around the sort of bodies and accessories. We've actually got those chassis secured, you know, really just waiting on the flow through of the bodies and accessories to happen before those can go to work. You know, that isn't constraining our growth at the moment, but we expect to see the next 100 roll through in the next six months.
Thanks, Justin. Another one from Ari. I'll take this one. North American EBITDA margins at 19.2%. It's down from 20% in FY 2022. Is it the new baseline? We don't think so. We, we are seeing Canada margins tracking closer to U.S. margins. If that doesn't unfold the way it will, then yes, North American margins will come backwards. So far, the early days are, it's tracking quite well. We had a number of startups in the first half running. You know, whilst Canada and Energy turned a profit in June, you know, they didn't reach full nameplate capacity as the rest of the rest of the North American business for the entire duration of the first half. That, that weighed on margins.
We also invested in our people as well. We spent a lot of time investing and training the next generation of our North American team. That was not a large expense, but an expense nonetheless, versus the PCP, which, you know, will pay dividends in the future for sure. Moving on to some other questions here. Jason Palmer from Taylor Collison. Morning, Jason. Probably for you, Justin, we'll start with this one. How can you talk about how you are resourcing dedicated management resources across some of the early stage growth divisions?
Good question. I guess with a lot of that and to Paul's point there, you know, investing in our people, and this happens from, you know, from tradesperson level to team leader to coordinator to manager. You know, a lot of the reason why we continue to go organic with our growth is the homegrown talent we sort of see from out in the field that comes through, you know, into the office, into coordination and management lines. We've got very detailed and dedicated training programs that we run these people through, as well as, you know, working under, you know, 10-year veterans in the business to really deeply understand the business model and how it works.
You know, when those people are ready, we can pluck them out, so to speak, you know, put them into a different addressable market. You know, they can follow the script and, you know, which is why we can sort of see this compounding growth across sort of multiple service lines and industries. You know, we're constantly, you know, laser focused on that next generation of sort of coordination management, general managers within the business. You know, and that will really keep us sort of growing at the rate that we've that we've seen.
Okay. Thank you. Another one here from Jason, at Taylor Collison. Probably more broadly about our Global Pathways Program from Aus into Canada with 60 in the pipeline. Talk to timeframes around refocusing on building out this pipeline over the rest of this calendar year. You know, probably more broadly, how the business is leveraging global talent.
Yeah. I mean, I guess post-COVID, Jason, we've seen, you know, obviously the avenues to be able to travel internationally have freed up. I guess the Global Pathways initiative was something that we've had on the sort of back burner for quite some time, but, you know, unfortunately unable to execute through COVID. Yeah, that said that has opened up now. You know, the first 100 From Australia were, you know, I guess through a couple of big campaigns. About 50% of that was internal, Mader folk that wanted the opportunity to go overseas, and the other 50% was, you know, both from within Australia, but external to the group, you know, adding to that net headcount growth.
You know, that was really an open cut, sort of large ultra class project. You know, now as we move into underground, again, that sort of opens up for another talent pool that we can move into. you know, moving into energy and that as well. you know, again, there's some different service lines that we can also leverage that Global Pathways talent pool as well. And that is also a two-way street. The intent is as we sort of move through this year that, you know, we'll be finding, you know, Americans, Canadians and others to, you know, that want the opportunity to come and work down under with the teams down here. You know, again, contributing to that headcount growth and again, providing our international personnel opportunities to work around the world as well.
Thanks, Justin. One more question from Jason from Taylor Collison. I'll grab this one. Business spent AUD 24 million in CapEx in the first half. How do we think about that going forward? The first half was a large spend in the Australian segment from a CapEx perspective. We brought forward or secured supply, I should say, for the Australian Hilux and Land Cruiser fleet, which was difficult to obtain in the first half. We're seeing supply shore up a little bit. Big as the first half. We're still guiding the market to a CapEx of AUD 35 million-AUD 37 million around that mark for FY 2023 in total.
Question here from Tony Shields, one of our shareholders. We probably need to take a step back and talk about infrastructure maintenance. Like, you know, what is the genesis of this division? Why is it such a bright future for us? You know, wouldn't this be a brownfield area and we're taking business of other contractors? You know, maybe talk about our value proposition there.
Yeah, no worries. Yeah, thanks for the question, Tony. You know, I think infrastructure maintenance, you know, same as sort of our core business in mobile equipment, Tony. I mean, you know, we still see a serious skills shortage. You know, the way we think we can contribute to this is really, again, that culture-led business. You know, we have a lot of options for people. We have, you know, we pay people well. We give them sort of local and global opportunities and multiple sites. Again, we've got the ability to attract and retain the best people in the business. You know, really focusing on that quality piece, you know, really in line with the traditional business model.
You know, we can go in there and put hit teams into sites that can, you know, get in there, work safely, diagnose, do great work and impress customers. You know, we see that as a bright future because of, I guess how many customers we do already work with. You know, we've got vendor numbers. We currently supply, you know, a great service in the mobile space. To be able to supply that same business model, you know, with a trusted vendor is what that, you know, that sales pitch really is for those folks. You know, to be able to move on to those, you know, 400 odd sites with process plants in the infrastructure space, you know, it just shows how big that addressable market is. You know, we'd probably be at 30- 40 as we stand today.
Thanks, Justin. All right, switching over to questions from Oli Porter, from Moelis Australia. Thanks for joining the call, Oli. First question from Oli. Great growth in Australia in the first half. What's driving the Australian growth and what does that look like for the second half?
Yeah. Thanks, Oli. I guess we've, we've seen growth really across all stores within Australia. The core business is growing well, even the likes of the Pilbara, which is our most mature store in the business. You know, across to Metro, you know, the workshop ramping up and others. Yeah, also these diverse service lines. You know, we're starting Well, we're starting to see rail grow into a reasonable size. You know, the ancillary trades are growing into a, you know, a significant store as is infrastructure maintenance. You know, this is that compounding effect that we talk about.
You know, we can continue to grow and feed people into these different industries and service lines where we're not sort of cannibalizing ourselves for the, for the same sort of diesel mechanic labor, so to speak. You know, when you look at that, you know, as these stores become, you know, 50 to 100 to 200 to 500 people, all competing on top of each other, you know, that's the runway we see ahead of us there, as well as the traditional business still, you know, growing really nicely in its own right.
Thanks, mate. In your presentation, we talk about new regions around the world. Sorry, that's questions from Indy, from Bell Potter, I should have said. Good morning, Indy. We talk about new regions around the world and potentially diversifying into new regions. That's not just new regions, that's provinces and states and territories in the jurisdictions in which we operate. Any further color timing on this? What are your thoughts on that?
Yeah. Thanks, Indy. Look, I guess at the moment we've probably got our plate pretty full with our expansion into North America and a bunch of the new service lines that we're already getting involved in. I think to Tony's point before, you know, making sure that we've got, you know, really robust, management horsepower to go and drop into these, to these new opportunities. We, we've got a significant runway ahead of us in what we're already doing. There's a, there's a couple of sort of, startups we're looking at at the moment, but too early to sort of talk in more detail about those. Yeah, we've got, we've got significant runway ahead of us.
Thanks. Take a break. I'll take this next question from Matt at Maven Funds Management. Gross margin increased to 20.7%, up from 19.2% a year ago. Any one-off factors in that? Look, there are a multitude of factors there, Matt. Very hard to unpick at the granular level. You know, in the PCP, we still had that ugly word of COVID still firing up. You know, we didn't have as efficient utilization of labor as we do now as a result of COVID-19 and the costs associated with workforce mobility challenges.
We had two startups, which are now profitable, but not as profitable as we'd like them to be, as they scale. The Mader Maintenance Centre had a kind of tale of two halves really in that half year period. Tale of two quarters, really. There's a multitude of reasons. You know, we think that a gross margin, you know, north of 20% is sustainable as we move forward. Hopefully that answers that question. Question from Tim Cross, one of our favorite questions: wage inflation, how we manage it, how do we pass it on, how do we see that unfolding?
Thanks, Tim. Look, I don't think this is really a new thing for us and it's really sort of business as usual as we sort of move, you know, through our contract negotiations with various customers and, you know, as we said in the presentation, you know, 335 customers there and, you know, at any given day, you're involved in some sort of timing of a negotiated contract. Look, for us, it's really just keeping in front of that wage inflation, making sure our, you know, people are paid at the right market rates, as well as being able to recover with suitable margins. Yeah, that's really been business as usual for the last probably five to seven years, Tim, as we see it now.
Thank you. I'll take this one from Oli from MA Moelis Australia. Working capital in the first half to fund the growth makes sense, but how do we see that for the second half? It really will depend on how quickly Canada continues to grow. You know, we went from almost 0 to 100 technicians in the first half. We've got an additional 60 Australians pipelined to add to that 100 in the second half, all things going well, plus local recruitment. If Canada continues to scale, that'll require additional working cap. Energy's kind of stabilized, and I think that'll just build progressively over the second half. The Mader Maintenance Centre, that's kind of had a record revenue month in December, and we're starting to see that working cap normalize over the second half.
I think there still will be a small build in Canada, but it will depend on how quickly we ramp that division. Another question here from Raymond from CCZ Equities. North American growth opportunity, 3,160 sites, and we've got 60-plus customers. How do we expand the number of sites and our customer presence over there?
Yeah, great question. I think, we sort of said this on a number of the calls, I think the headcount growth from 200- 400 will be a whole lot easier than sort of 0- 200. The U.S.A. was very much a cold organic startup, that was Luke and his family and a couple of key managers going there, knocking on doors, introducing themselves, asking for the opportunity for some work. As it stands today, we're with a fair few customers. We're in all the major mining regions, seeing those big trucks getting around is great advertising for us.
You know, word of mouth between customers that have multiple sites is happening. You know, so the brand awareness and growth has been significant, particularly of late. We continue to see that sort of groundswell continue. Yeah, I think the growth rates that we've seen in the U.S. and North America, you know, at 200%, I mean, it's hard to sort of sit there and guarantee that, but we believe we'll continue to see really significant growth rates there given the groundswell that's happening at the moment.
Thanks, Justin. Switching gears a bit, question here from Nick from Perpetual. Morning, Nick. Thanks for joining the call. The Aussie business, how do we feel about that in terms of headcount? Are we headcount constrained? How are we addressing securing new talent?
Good question. I guess we're always headcount constrained in just about every area of our operation. Australia, very much so, headcount constrained just about across all stores. A lot of that is our own doing. You know, we are very quality focused on the people we bring into the business. You know, we could grow for growth's sake, but, you know, the dilution and the damage to the brand is would not be acceptable. You know, again, we really focus on making sure we get the right talent that meets our customers' needs, which, you know, again, sort of slows us up.
You know, that said, that is intentional and that is making sure our brand remains strong and making sure our customers continue to get what they need. I guess the upside to that is the, you know, the new service lines, divisions and industries are all new talent pools. You know, we are pretty good at recruiting and retaining people and if we can do that across multiple industries, again, that compounding headcount growth will, you know, will take effect.
Thanks, Justin. Question from Raymond from CCZ. Probably along that same theme, as our global headcount grows, we've reached, you know, exceeded 2,500 in the first half, is it becoming more competitive for employees to attain overseas opportunities within the group?
Is it becoming more attainable?
Yeah.
Yeah.
More attainable, yeah.
Absolutely. Yeah. I guess as, you know, a lot of this, Raymond, was, you know, I suppose a bit of a bit of a new project for us being Global Pathways. Yeah, we've now got a couple of dedicated project recruitment teams that are really focused on doing that, you know, across the world. You know, we continue to see that becoming more and more attainable for our people across, you know, all the multiple industries that we work in. You know, those first 100 were really diesel mechanics into Canada. Again, when you look at, you know, the rail divisions, the energy divisions, the infrastructure maintenance and ancillary trades, you know, again, that whole compounding effect can run across all of those. Yeah, we expect that to become, you know, much more attainable for more of our workforce.
Maybe just on Raymond's question, just to go back to that. You know, what is the selection process internally for us to send someone from Australia, whether they're an internal candidate or an external candidate, to put them on a plane and send them to Canada for two years?
Yeah, look, we go through quite a stringent, you know, process of, you know, analyzing, you know, skill set, cultural fit, and ability to, you know, go to another country and sort of work. Yeah, we really focus on our best and brightest within the business that want those opportunities. You know, if people aren't quite ready, we put development plans in place to give them the skills and experience that they need to work on the particular equipment that they're being brought over to work on. You know, early on it has been quite specific around some of that ultra class equipment that people need that experience on and, you know, obviously not everybody in our business has that.
You know, as we move into things like underground and road transport and others, you know, that'll open the field up to more and more people. Yeah, if they're not quite ready for it or they don't have the experience that that customer wants it, you know, they will get that development plan to, you know, to get those skills to be sort of considered in the next run.
Thanks, mate. Switching back to Jason from Taylor Collison, question here around, is there any sales globally? Oh, hold on a second. Any sales globally which include materials and parts, or is it just all labor?
The workshop Jason does, you know, we're not in the business of sort of building or selling parts. You know, certainly, the Mader Service Centre does. You know, in Canada there is an element of go into the into a couple of those projects as well.
Thanks, mate. Couple more questions before we run out of time. One more from Jason. Can you expand please on how we are diversifying your Canadian and U.S., U.S.A. minerals business from oil sands and the key customers respectively?
Yeah, absolutely. Yeah, look, I guess oil sands sort of almost, not so much fell into that, but I mean, that was really where we did the first lot of BD. Obviously, we're, you know, successful beyond our expectations as far as picking up work there. Yeah, we are working with a couple of customers there that are, you know, that are not only involved in oil sands, but in all parts of mining across Canada. We've already started expanding into different regions and territories. You know, the oil sands were sort of just the first port of call, I guess. You know, we're very aware that that is a quite a cyclic commodity up there in Canada. You know, we're gonna make sure that we're diversifying quickly and making sure we've got, you know, plenty of opportunities, should, you know, should something take a downturn.
Perfect. Thanks. We've got time for one more question, so we'll sneak that in. Another question from Ari from Barrenjoey. Thanks again, Ari. We've been adding circa 50 net employees per quarter. Should we assume a similar rate of net hiring for the second half?
It'd probably be safe to assume that Ari. Yeah. Again, as we sort of bring these different service lines and industries online, and grab a foothold, it's, you know, it's hard to sort of predict to a, you know, to a number. You know, we continue to see that getting better and better as we grow. Yeah, that would probably be a safe bet for the second half.
Excellent. Well, we've got no more questions in the queue, so we'll end it there.
Great. Thanks very much. Darcy, are you there to wrap that up, please?
Yes. thank you for joining today's conference. you may now disconnect.
Thanks, Darcy. Thanks everyone for joining us.