Mitchell Services (MSV) H2 2024 earnings summary

Executive summary

• Full year profit after tax rose 21% to AUD 9.2 million, with ROIC increasing to 16.5% from 12.3% year-over-year, driven by lower D&A and finance costs.

• Net debt reduced by 89% to AUD 1.9 million, with strong operating cash flow and all expiring key contracts re-won.

• Operating cash flow reached a record AUD 43.1 million, with EBITDA to cash conversion well over 100%.

• Major contracts were re-won, new contracts secured, and a national safety award was received.

• Over 90% of revenue comes from global major miners, with gold accounting for about 40% of the book.

Financial highlights

• Revenue for FY24 was AUD 236.8 million, down 3% year-over-year, while EBITDA was AUD 40.4 million, slightly lower due to decreased utilization.

• Return on invested capital reached 16.5%, up from 12.3% in FY23.

• Net debt reduced by 90% to AUD 1.9 million at June, with the Deepcore acquisition facility fully repaid.

• CapEx totaled AUD 17 million, in line with expectations and up 35% from FY23.

• Dividend payout ratio reached 94% for FY24, above the 75% policy, considered a one-off.

Outlook and guidance

• Strategy for FY25 focuses on capital allocation, buybacks, dividends, profitable contracts, and long-term growth through new services and offshore opportunities.

• CapEx and depreciation for FY25 expected to be similar to FY24, but subject to rig count and pipeline.

• Dividend payout ratio expected to revert to 75% of NPAT.

• Employee costs projected to remain flat, barring new contract wins.

• Utilisation expected to soften due to external factors, but the strong balance sheet provides flexibility.