Mitchell Services (MSV) H2 2024 earnings summary

Executive summary

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

• Record operating cash flow reached AUD 43.1 million, up 21% from FY23, with EBITDA to cash conversion well over 100%.

• Net debt reduced by 89% to AUD 1.9 million, with the Deepcore acquisition facility fully repaid.

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

• A new decarbonization JV (Loke/Loop) was launched with Talisman, with the first rig purchased and CEO appointed.

Financial highlights

• Revenue declined 3% to AUD 236.8 million, while EBITDA was stable at AUD 40.4 million due to lower rig utilization.

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

• Net debt reduced by 90% to AUD 1.9 million at June, with gross debt at AUD 18 million and cash on hand AUD 16 million.

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

• Dividend payout ratio reached 94% for FY24, above the 75% policy, with a final unfranked dividend of 2.0c per share declared.

Outlook and guidance

• FY25 strategy focuses on capital allocation, buybacks, dividends, and profitable contracts, with a long-term debt ceiling of AUD 15 million.

• CapEx and depreciation for FY25 expected to be similar to FY24, 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.

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