Andrew Rowe, CEO of Mayfield Group (ASX:MYG), provides an overview of the company, discussing its divisions, expansion strategy, paint portfolio, dividend policy and outlook.
Paul Sanger: My call is Paul Sanger from Finance News Network. And I’m talking to Mayfield Group (ASX:MYG). Mayfield Group, which trades under the symbol ASX MYG with a market capitalization of €55 million, has a portfolio of complementary cutting-edge corporations including Mayfield Industries, Mayfield Services, ATI Australia and Power Parameters. Each company has an exclusive price proposition in the supply of electrical and telecommunications products and services.
Mayfield is one of Australia’s leading manufacturers of traditional and coverage systems, switchboards, kiosks, portable switchrooms and telecommunications systems for critical electrical infrastructure where defence and functionality are key requirements. I’m joined today by Mayfield Group CEO Andrew Rowe. Welcome, Andrew.
Andrew Rowe: Thank you, Paul.
Paul Sanger: Now, Andrew, this is the first time Mayfield is at the net. Can you give us a brief overview of your company?
Andrew Rowe: yes, thank you Paul, I’d be happy to do that. Since our beginnings in 1936 in South Australia, Mayfield has grown nationally to become a premium provider of electrical and telecommunications infrastructure. We have a variety of electrical products including switchboards, motor control centers, telecommunications appliances, and fully portable substations. Our national footprint starts with our main workplace in Adelaide and our main production facility founded in Edinburgh, just north of the city. We also have factories and production facilities in Perth, Brisbane, Sydney and Melbourne. Today, place Mayfield with an annual turnover of around $80 million and a final yield of 7%, which is very healthy. We’ve grown 20% a year for the last decade, which is fantastic. In 2020, we indexed with the opposite acquisition of the STEAM Group. And today, we are placed with a healthy balance sheet and no debt.
Paul Sanger: Now, Andrew, let’s talk a little bit more about the three that you operate. Starting with its core business, Mayfield Industries.
Andrew Rowe: Paul, Mayfield Industries is the center of the Mayfield Group. Its main products are switchboards, motor centers, kiosk substations, and portable switching rooms. And it’s probably the logo we’re best known for. Our intellectual assets come from a number of licensing agreements with European manufacturers, including Schneider and Leistung.
In terms of our production capacity, in 2019 we made the very important decision to move all our production from Malaysia. And now, through maximum production of our products at our facilities in Perth and Adelaide, we are able to deliver consistent quality and unrivalled source reliability compared to our peers. In addition to local production, we have a thriving relationship with WA Magellan Power, which allows us to manufacture a diversity of AC and DC power equipment.
Again, this is helping us to produce locally and further expand our product base. Some flagship projects would be Torrens Island, Collie and the Sydney Big Battery.
And as a component of our decarbonization initiative, we’re investing heavily in our battery technologies. Later this year, we will market our first battery-powered electric garage system, or BESS for short. And that, along with one hundred kilowatts of battery combined with two hundred kilowatts of rooftop solar, will help us become a net-0 manufacturer from our iconic factory in South Australia.
Paul Sanger: Let’s move on to ATI Australia. Let’s talk a little bit more about this case.
Andrew Rowe: Yes. Thank you, Paul. ATI Australia was founded in 1992 as a microwave virtual telecommunications specialist and was acquired through Mayfield Group in 2021. At the core of its business are virtual wireless telecommunications for remote and regional spaces where other communication is not accessible. But at the heart of their work they also ensure the quality and reliability of their electrical systems, because remote communications mean nothing in the event of a power outage. And through this progression of electrical systems, they’ve created a very clever logo. Their key markets are governments, defence utilities, mining companies, and anywhere remote communications are needed.
On top of this, they merged with a company called Power Parameters in 2022. Power Parameters specializes in the supply, service, and maintenance of high-end force quality tracking equipment, necessary to maintain highly complex and complex electrical systems, as desired. know that it has a reliable and quality power supply, and that it is a great fit for the ATI brand.
Paul Sanger: Thank you, Andrew. And then, let’s talk about Mayfield Services.
Andrew Rowe: Yes, Mayfield Services is a developing component of our business, so I’m very excited to communicate that. It has been around for a decade and is a national team of technicians and craftsmen who specialize in asset management, maintenance and service of electrical installations, wind farms, solar installations and battery systems. As I said, this is a developing domain of our business and complements what we do in the electric power and telecommunications space. The vision is to make sure that we can be offered a complete product that not only sells quality electrical infrastructure and communications infrastructure, but also has the equipment to repair, maintain, monitor, and make it reliable so that our end users can rest assured that a Mayfield product will be there forever. And I think this is very important again, as Australia becomes electrified and increasingly reliant on its power grids.
Paul Sanger: And look, in the future, Andrew, how are you going to grow?Will it be organic, M?
Andrew Rowe: Paul, it’s going to be a mix of both. Organically, I look at what we’re doing in South Australia. We have the right amenities and stick to a procedure of lean techniques and a more modern complex production to make South Australia the most productive edition of itself. In the west, to meet demand. My goal is to replicate what we have in South Australia and expand and rebuild our facilities in WA, which are fundamentally based on the expansion of the mining sector and the infrastructure sector in the west.
Again I talked about the services. It’s another biological drive. We are seeing significant demand for this type of service and I am looking to expand this service nationally. Now, biologically, to increase profits beyond about $100 million, I’m looking into a full diversity of M&A activities. Of course, I can’t comment too much on that, however, it’s whatever is on my agenda. And what I’m looking for is anything that’s at the center of the electric sector. infrastructure and telecommunications.
It’s our heart. Something with a technology base, anything with intellectual property, ideally, will have to have the right culture to work with the Mayfield team. Because if culture is rarely very present, acquisition may not work. And it will also expand our geographic base, specifically on the East Coast, where we are a bit short in terms of troops on the ground.
Paul Sanger: I understand you. And let’s move on to the paint pipeline, how is it going heading into 2024?
Andrew Rowe: Extremely healthy. Usually, in a production company, your forecast is only about three months. Our long-term vision today extends to the year 2025 and beyond with our portfolio of work. When I joined the company in October, our work-in-progress amounted to approximately 30 million. Today, our ongoing cadres number about 85 million, which is unprecedented. So yes, healthy. This call is largely due to decarbonization and electrification.
Paul Sanger: I hear you loud and clear. And tell me, what sectors is your consumer list made up of?
Andrew Rowe: Yes. Typically, our consumers are what I would call end users. So, those are mining corporations, utility companies, which are major transmission and distribution corporations, ElectroNets, etc. , water and power corporations, of course. Wherever they concentrate on quality electricity products. So, our clientele, the same old suspects in the mining sector, Rio Tinto, BHP, Fortescue, Roy Hill, Glencore. And we are also doing a lot of paints in the critical minerals sector, with Pilbara Minerals now being one of our key consumers.
Again, as I discussed with Energy, Santos and APA are key customers. We are doing a task in defense about which I cannot communicate. And also, in essential services. We do a lot of work with knowledge centres, with councils, with fire departments, with Victoria Police, to name a few. So, a very, very varied combination. But again, very much aimed at end users who need a reliable person and physically. powerful electrical product, as well as the one that accompanies it.
Paul Sanger: And just to emphasize this point, Andrew, this is a pretty impressive assortment of Tier 1 consumers that are notoriously Mayfield facilities and products, right?
Andrew Rowe: Yes, we’re unwavering with them and we’ve found that they’re very unwavering with us. So we’ve found that our visitor base is pretty static, and as more consumers come in, we realize that our unwavering ratings are pretty high.
Paul Sanger: Excellent. You announced a dividend for the first time. What will be the dividend policy going forward?
Andrew Rowe: Yes, shareholders were very pleased when we announced our first dividend in December 2022. We seek to achieve this dividend flow by paying full dividends and interim dividends every six months. So far, we paid our first interim dividend in December. We then paid a full annual dividend of about 1. 7 cents and I just issued an interim dividend of 1 cent this year. We plan to pay dividends at approximately 33% of the impact. And since we have a giant armada of postal credits, this dividend stream will most likely continue for the foreseeable future.
Paul Sanger: And it’s wonderful to see that as your company has grown impressively, your shareholders have rewarded you with those dividends. It’s wonderful to see. That doesn’t happen in the world of small-caps, so it sets you apart from the rest, I would say.
Andrew Rowe: yes, it’s a very smart time to be at Mayfield and the long term looks very bright for us.
Paul Sanger: Andrew, to wrap up today, can you talk to us about your short and medium term for the rest of 2024?
Andrew Rowe: yes, I’m glad Paul. Me did. It boils down to three key categories or projects of what I seek to achieve. With Mayfield Industries, which is the engine room, we have a higher point of activity and higher demand, so I need to take a look at our production processes in South Australia. Are they working as successfully as they should and can they be better?And then it’s the expansion of the WA facility that can meet the demand we’re seeing from the West.
With our service group, I will focus more on the service they provide in the market. I’m looking to expand on that and learn more about the market about what we offer, how we can help our electrical products, and our communications. products sold and how we will provide facilities that are incorporated with our sold products. And then, as I mentioned earlier, I’m also looking at full diversity of mergers and acquisitions. Basically, it will strengthen our service, our supply, our product, and our presence on the East Coast.
Paul Sanger: Andrew Rowe, thank you so much for your time today.
Andrew Rowe: Thank you, Paul. It’s a thrill to be here.
Ends
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