Mitchell Services (MSV) H2 2024 earnings summary

Executive summary

• Profit after tax rose 21% year-over-year to AUD 9.2 million, with ROIC increasing to 16.5% from 12.3% and EPS up 26%.

• Record operating cash flow reached AUD 43.1 million, up 21% from FY23, with cash conversion ratio at 107%.

• Net debt reduced by 89% to AUD 1.9 million, with all expiring key contracts re-won and a strong client base among global major miners.

• Major contracts were re-won in 2024, and a decarbonization joint venture (Loke/Loop) was launched, targeting emissions reduction in mining.

• Safety performance recognized with a national award, reflecting a strong culture.

Financial highlights

• Revenue was AUD 236.8 million, down 3% from FY23, while EBITDA was AUD 40.4 million, slightly lower year-over-year due to decreased utilization.

• NPAT was AUD 9.2 million, up 21% from FY23, driven by lower depreciation and finance costs.

• Operating cash flow was AUD 43.1 million, up 21% from FY23, with a record cash conversion ratio of 107%.

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

• Total CapEx for FY24 was AUD 17 million, up 35% from FY23 and in line with expectations.

Outlook and guidance

• FY25 strategy focuses on disciplined capital allocation, continued buybacks, dividends, and long-term growth through new services and offshore opportunities.

• CapEx and depreciation expected to remain in line with FY24, subject to rig count and contract wins.

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

• Employee costs projected to remain flat per employee, with total costs dependent on rig count.

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