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 nearly 90% to AUD 1.9 million, supported by strong operating cash flow and all expiring key contracts re-won.

• Revenue declined 2.6% to AUD 236.8 million, while EBITDA was stable at AUD 40.4 million, reflecting lower rig utilisation.

• Over 90% of revenue comes from global major miners, with gold accounting for about 40% of the book; no exposure to lithium or nickel.

• A national safety award was received, reflecting a strong safety culture.

Financial highlights

• EBITDA for FY24 was AUD 40.4 million, down 1.9% year-over-year due to decreased utilisation.

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

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

• CapEx totaled AUD 17 million, mainly for equipment, funded by strong cash flow and hire purchase facilities.

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

Outlook and guidance

• FY25 strategy focuses on optimising long-term growth, capital allocation, buybacks, dividends, and profitable contracts.

• 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.

• Anticipates a busy FY25 with a large tender pipeline and entry into decarbonisation services via a new joint venture.