Mitchell Services Limited · ASX:MSV
Mitchell Services — Wilsons Rapid Insights Conference 2019
24 slides from Mitchell Services's conference presentation, Nov 21, 2019
Slide 1: Wilsons Rapid Insights Conference
For personal use only WILSONS RAPID INSIGHTS CONFERENCE 21 November 2019 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER For personal use only This 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, whic
Slide 3: Mitchell Services Market Profile
MITCHELL SERVICES MARKET PROFILE For personal use only ASX Information Major Shareholders ASX Stock Symbol MSV Mitchell Group 20.4% Shares Issued 1,742,382,681 Washington H Soul Pattinson 9.9% Share Price (at 18/11/2019) A$0.064 CVC Limited 6.1% Market Capitalisation A$111.5m Board of Directors Seni
Slide 4: FY19 Business Overview
FY19 BUSINESS OVERVIEW For personal use only Revenue of $120.2m EBITDA of $24.1m Net Debt of $8.2m ↑ 65% from FY18 ↑ 286% from FY18 54% reduction from June 2018 Zero Lost Special Strong balance sheet Time Injuries dividend provides flexibility in FY19 with 400+ employees declared in FY19 4 www.mitch
Slide 5: Impact of Increased Utilisation on Revenue
IMPACT OF INCREASED UTILISATION ON REVENUE For personal use only Annual Average Operating Rig Count vs Revenue • Average operating $120.21m revenue per rig continued to increase due to improved productivity, pricing and drilling mix $72.70m • Mitchell Services anticipates further Average increases i
Slide 6: High Quality Revenue Streams
HIGH QUALITY REVENUE STREAMS For personal use only 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 93.4% 89.7% 91.8% • Approximately
Slide 7: Stages of the Cycle
STAGES OF THE CYCLE For personal use only 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
Slide 8: FY20 Q1 Overview
FY20 Q1 OVERVIEW For personal use only Strong FY20 Q1 performance Rig Count 70 60 Revenue EBITDA 50 $33.5m $6.2m 40 30 20 10 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Year to 30 Sep 2018 Year to 30 Sep 2019 EBITDA to operating Operating Cash Flow cash conversion rate $5.7m 92% 2500 Shifts Work
Slide 9: Deepcore Acquisition Summary
DEEPCORE ACQUISITION SUMMARY For personal use only The acquisition of Deepcore Holdings Pty Ltd (“Deepcore Drilling”) will make Mitchell Services Deepcore Drilling is Limited (“MSV”) one of the largest and most diversified pure play drilling services companies in Australia a compelling acquisition
Slide 10: Deepcore Acquisition Summary
DEEPCORE ACQUISITION SUMMARY For personal use only Deepcore Drilling Overview • Leading provider of specialist underground and surface drilling • 32 rigs to service Eastern Australia with strong exposure to gold and to Victoria Transaction Summary • MSV to acquire 100% equity of Deepcore Drilling (e
Slide 11: Deepcore Acquisition Summary
DEEPCORE ACQUISITION SUMMARY) For personal use only Deepcore Drilling • At acquisition completion, Deepcore Drilling vendors will own approximately 12.5% of Shareholding post-acquisition MSV shares • Consideration shares will be escrowed for periods of between 6 and 12 months • Scott Tumbridge will
Slide 12: Deepcore Acquisition Summary
DEEPCORE ACQUISITION SUMMARY For personal use only Conditions Precedent • Acquisition subject to customary conditions precedent including no material adverse change to Deepcore Drilling or MSV, required change of control consents and MSV obtaining necessary funding to complete the transaction Financ
Slide 13: Deepcore Acquisition Summary
DEEPCORE ACQUISITION SUMMARY For personal use only Pro forma financials demonstrate strong financial position post-acquisition Pro forma Revenue Pro forma EBITDA Per Pro forma Net Profit Share $190m $14.2m 1.84c $120m 1.38c $9.0m MSV FY19 Post-Acquisition MSV MSV FY19 Post-Acquisition MSV MSV FY19 P
Slide 14: Deepcore Drilling Overview
DEEPCORE DRILLING OVERVIEW For personal use only Overview FY20 Revenue by Commodity FY20 Revenue by Drilling Type FY20 Revenue by Geography 5% 10% 17% 17% 37% Gold QLD Surface Copper VIC Underground Other NSW 63% 78% 73% • Founded in 2005, Deepcore Drilling provides surface, underground and speciali
Slide 15: Acquisition Strategic Rationale
ACQUISITION STRATEGIC RATIONALE For personal use only The acquisition will make MSV one of the largest and most diversified pure play drilling services companies in Australia Stronger Product Offerings • Adds: geotechnical / infrastructure • Adds: further mobile underground capacity • Adds: surface
Slide 16: Acquisition Strategic Rationale (Cont)
ACQUISITION STRATEGIC RATIONALE (CONT) For personal use only MSV FY19 Actual Revenue by Pro forma Revenue by Commodity: $120m Commodity: $190m 4.4% 2.8% 5.7% 5.5% 14.3% Deepcore Drilling FY20 Forecast Revenue: $70m 37.5% 13.6% 39.5% 62.0% 14.8% Gold Copper Coking Coal Lead/Zinc/Silver Other Gold Cop
Slide 17: Acquisition Strategic Rationale (Cont)
ACQUISITION STRATEGIC RATIONALE (CONT) For personal use only MSV FY19 Actual Revenue by Pro forma Revenue by Drilling Type: $120m Drilling Type: $190m 1.2% 0.8% Deepcore Drilling FY20 Forecast Revenue: $70m 43.7% 48.6% 55.1% 50.7% Surface Underground Non-Drilling Surface Underground Non-Drilling Mai
Slide 18: Acquisition Strategic Rationale (Cont)
ACQUISITION STRATEGIC RATIONALE (CONT) For personal use only Increase in revenue diversity by geography MSV FY19 Actual Revenue by Pro forma Revenue by Geography: $120m Geography: $190m 2.4% 1.5% 7.8% 8.6% Deepcore Drilling FY20 Forecast Revenue: $70m 9.2% 14.5% 54.0% 26.6% 75.3% QLD VIC SA WA NSW Q
Slide 19: Acquisition Strategic Rationale (Cont)
ACQUISITION STRATEGIC RATIONALE (CONT) For personal use only Tier 1 client base increase in size and diversity MSV FY19 Actual Revenue by Pro forma Revenue by Client Type: $120m Client Type: $190m 8.2% 13.5% Deepcore Drilling FY20 Forecast Revenue: $70m 91.8% 86.5% Tier 1 Clients Other Clients Tier
Slide 20: Acquisition Strategic Rationale (Cont)
ACQUISITION STRATEGIC RATIONALE (CONT) For personal use only Current brands Future brand strategy Mitchell Services Mitchell Services Radco Technologies Radco Technologies Deepcore Drilling Leverage of brands to maintain strong nimble relationships with customers and employees while taking advantage
Slide 21: Acquisition Strategic Rationale (Cont)
ACQUISITION STRATEGIC RATIONALE (CONT) For personal use only Existing Roles CEO New Roles General General General General General General CEO CFO & General Manager: Manager: Manager: Integration Manager: Manager: Manager: Deepcore Company Counsel1 People & Commercial Assets & Manager3 Surface Un
Slide 22: Financial Impact of Acquisition
FINANCIAL IMPACT OF ACQUISITION For personal use only Pro forma Profit & Loss MSV Deepcore MSV Post- New MSV Pro forma EBITDA ($M) $40m FY19 FY20 Forecast Acquisition $000's $000's $000's $30m Revenue 120,205 69,916 190,121 $20m EBITDA 24,112 12,573 36,685 $10m EBITDA % 20.1% 18.0% 19.3% - EBIT 13,8
Slide 23: Financial Impact of Acquisition (Cont)
FINANCIAL IMPACT OF ACQUISITION (CONT) For personal use only Pro forma Capitalisation • MSV to utilise strong balance sheet and fund the $15 million cash consideration through debt. • This will bring consolidated net debt to $40.7 million representing approximately 1.1 x EBITDA on a pro forma basis.
Slide 24: Summary
SUMMARY For personal use only • Mitchell Services’ vision is to be Australia’s leading provider of drilling services to the global exploration, mining and energy industries • The acquisition of Deepcore Drilling will further diversify revenue by drilling type, commodity and geography • Mitchell Serv
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