Slide 1: Half Year Results Presentation
HALF YEAR RESULTS PRESENTATION December 2019 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER This investor presentation has been prepared by Mitchell Services Limited (“the Company”). Information in this presentation is of a general nature only and should be read in conjunction with the Company’s other periodic and continuous disclosure announcements to the ASX, which are availab
Slide 3: Mitchell Services Market Profile
MITCHELL SERVICES MARKET PROFILE ASX Information Major Shareholders ASX Stock Symbol MSV Mitchell Group 17.9% Scott Tumbridge 7.2% Shares Issued 199,238,740 Other Directors & Management 3.4% Share Price (at 26/02/2020) A$0.60 Institutions 20.6% Market Capitalisation A$119.5m Other Shareholders 50.9%
Slide 4: Safety Update
SAFETY UPDATE • Finishing each day without harm is a core Mitchell Services value • Focus on training to attract, retain and further develop our own drillers as general market conditions continue to improve • Mitchell Services’ safety culture was recognised during the year with the following major a
Slide 5: 1H2020 Business Overview
1H2020 BUSINESS OVERVIEW Revenue guidance FY2020 EBITDA guidance FY2020 1.1cps special $170m-$180m $34m-$36m dividend determined, payable in July Revenue of $72.98m EBITDA of Deepcore Drilling ↑ 15% from 1H2019 $14m 1H2020 Acquisition completed and performing in line with expectations 5 www.mitchell
Slide 6: Operational Highlights
OPERATIONAL HIGHLIGHTS • Mitchell Services expects FY2020 EBITDA to be between $34m and $36m representing year on year growth of between 42% and 50% driven by seven months of Deepcore Drilling contribution and continued improvement in underlying business performance. • The increase in rig utilisatio
Slide 7: Impact of Increased Utilisation on Revenue
IMPACT OF INCREASED UTILISATION ON REVENUE • Revenue guidance FY2020 $170m- $180m • Mitchell Services $120.21m anticipates further 2nd Half increases in average operating rig count in 2nd Half FY2020/FY2021 $72.69m • 78 rigs operating as at 2nd Half 31 December 2019 $40.30m $32.97m 1st Half 2nd Half
Slide 8: Revenue Diversity
REVENUE DIVERSITY Diversity in revenue streams sets Mitchell Services apart from competitors Revenue by Commodity Revenue by Drilling Type 1H2020 50.0% 26.5% 14.7% 1H2020 50.5% 48.5% 1H2019 63.5% 11.2% 14.7% 1H2019 60.8% 38.0% 1H2018 52.9% 20.0% 13.2% 9.4% 1H2018 66.7% 31.9% Coking Coal Gold Copper
Slide 9: High Quality Revenue Streams
HIGH QUALITY REVENUE STREAMS Revenue by Client Type • Tier 1 Clients are large / multinational mining & energy companies • A significant majority of Mitchell Services revenue comes from Tier 1 Clients operating on long life, low cost mine sites 88.9% 91.3% 86.9% • Approximately 90% of revenue is at
Slide 10: Stages of the Cycle
STAGES OF THE CYCLE STAGE 1: UTILISATION INCREASES (THIS IS HAPPENING) • More rigs start working STAGE 2: PRODUCTIVITY IMPROVES AS UTILISED RIGS WORK MORE SHIFTS (THIS IS HAPPENING) • Seasonality impact reduces as rigs work through the wet season • More rigs work 24 hours a day 7 days a week versus
Slide 11: Deepcore Drilling Overview
DEEPCORE DRILLING OVERVIEW Overview FY2020 Revenue by Commodity FY2020 Revenue by Drilling Type • Founded in 2005, provides surface and 7.7% underground drilling services to the mining and infrastructure industries 13.6% 26.1% • Specialised deep hole directional diamond drilling 78.7% 73.9% • Specia
Slide 12: Deepcore Drilling Overview
DEEPCORE DRILLING OVERVIEW Unique selling proposition • Industry experts in deep hole directional diamond core drilling • Deepest directional diamond core drilling hole achieved from underground in Australia of 2,058.1m drilled at Stawell Gold Mine project in Victoria • Industry experts in acoustic
Slide 13: Profit and Loss
PROFIT AND LOSS Strong EBITDA performance continues Profit & Loss • MSV has delivered another strong EBITDA 1H2018 1H2019 1H2020 $000's $000's $000's performance with a 1H2020 EBITDA margin of 19% Revenue 33,215 63,291 72,983 EBITDA 2,678 14,229 14,140 EBIT (374) 8,458 7,063 • NPAT lower than pcp pr
Slide 14: Balance Sheet
BALANCE SHEET Strong balance sheet provides flexibility 31-Dec-19 30-Jun-19 Change $000’s $000’s % • Mitchell Services was able to utilise its strong balance sheet to complete the Deepcore Drilling Balance Sheet Summary acquisition in November 2019. Current assets 54,057 29,717 82% Non-current asset
Slide 15: Cash Flow
CASH FLOW Strong operating cash flows and Cash Conversion Ratio to continue Operating Cash Flow Summary 1H2018 1H2019 1H2020 Operating Cash Flow $000's $000's $000's $20m Receipts from customers 28,741 63,807 74,502 $15m Payments to suppliers / employees (30,174) (47,342) (59,624) Cash generated fro
Slide 16: Net Debt
NET DEBT Operating Leverage Ratio less than 1.5 x Net Debt Summary • A new $16m NAB acquisition loan provided on the 31-Dec-19 30-Jun-19 following summarised terms. $000's $000's - Expiry date 30 November 2022 - $3.2m minimum annual principle repayments Equipment finance 29,750 9,792 Acquisition loa
Slide 17: Capital Expenditure
CAPITAL EXPENDITURE Organic growth delivering strong returns Growth Capex $14.00m $12.00m • Growth capex in 1H20 was a function of contract wins, $10.00m extensions and scope increases including: $8.00m $6.00m - 5 year drill and blast contract award in Western 1st Half $4.00m 2nd Half 2nd Half Austr
Slide 18: Outlook
OUTLOOK Revenue ($M) • Pipeline of identified opportunities remains strong and $180m demand continues to increase for drilling services $160m $140m particularly from Tier 1 clients $120m 2nd Half – At current conversion rates, rigs required exceed $100m rigs available $80m 2nd Half $60m 2nd Half • M
Slide 19: Summary
SUMMARY • Mitchell Services’ vision is to be Australia’s leading provider of drilling services to the global exploration, mining and energy industries • Mitchell Services has a diversified revenue stream by different drilling types and commodities • Mitchell Services has a high quality client base w
Slide 20: Definitions
DEFINITIONS Acquisition Loan $16m loan provided by National Australia Bank secured by Mitchell Services Limited to fund Deepcore Drilling acquisition Capex Capital expenditure Cash Conversion Ratio The ratio of A to B; where A is the reported cash flows from operating activities and B is the reporte