Slide 1: Half Year Results Presentation
HALF YEAR RESULTS PRESENTATION December 2021 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 Holders ASX Stock Symbol MSV Mitchell Group 18.4% Shares Issued 224,948,905 Dream Challenge Pty Ltd 7.2% Share Price (at 23/02/2022) A$0.38 Market Capitalisation A$85.48m Washington H Soul Pattinson 6.0% Board of Directors Executive Management T
Slide 4: 1H22 Financial Highlights
1H22 FINANCIAL HIGHLIGHTS Revenue of $103m EBITDA of $17.5m Net Debt of $22.2m ↑ 3% from 1H21 ↑ 41%from 1H21 ↑ 12% reduction from June 21 Based on the size of the fleet Revenue guidance FY22 post implementation of the EBITDA guidance FY22 growth strategy (expected 30 $200m-$220m $40m-$44m June 22) t
Slide 5: Operational Update
OPERATIONAL UPDATE • Multiple contract wins and re-wins predominantly with Tier 1 global miners • Whilst none of these contracts were material in their own right we expect operating rig count to be approximately 85 rigs by June 30 • COVID-19 and wet weather impacted the business in H1 and risks rema
Slide 6: Organic Growth Strategy Update
ORGANIC GROWTH STRATEGY UPDATE • Implementation now well underway • Recently exercised option to acquire all 12 state of the art LF160 drill rigs (underpinned by increasing levels of demand for drilling services) • 5 rigs delivered to date • 9 of the 12 rigs already assigned to customer contracts wi
Slide 7: MSV's Demonstrated Ability to Deliver Growth
MSV’S DEMONSTRATED ABILITY TO DELIVER GROWTH Annual Average Operating Rig Count vs Revenue $200-$220m $191.4m $175.56m Forecast Average Operating Rig $120.21m Count Average Operating Rig 74 Count Average Operating Rig 71.6 Count $72.69m Average 67.7 Operating Rig Count Forecast Operating Rig $40.30m
Slide 8: Revenue Quality and Diversity
REVENUE QUALITY AND DIVERSITY 1H22 Revenue by State and Commodity Revenue by Client and Drilling Type Surface Underground 30.1% 44.2% 45.2% 50.5% 49.2% 68.1% 62.0% 5.6% 48.5% 55.7% 54.7% 15.1% 31.9% 38.0% QLD NSW WA VIC 1H18 1H19 1H20 1H21 1H22 Tier 1 Clients 3.6% 7.4% Other Clients 32.9% 86.9% 80.4
Slide 9: Profit and Loss
PROFIT AND LOSS Improving EBITDA and NPAT performance Profit & Loss • EBITDA increased 41% on corresponding period 1H22 1H21 Change $000's $000's % benefiting from certain non-regular adjustments: o $2.0m reversal of the FY21 impairment loss on trade Revenue 102,895 100,035 3% receivables EBITDA 17,
Slide 10: Balance Sheet
BALANCE SHEET Strengthened balance sheet to support execution of organic growth strategy 31-Dec-21 30-Jun-21 Change $000’s $000’s % • Successful completion of $10.5m equity raise Balance Sheet Summary in September 21 has strengthened balance Current assets 47,416 44,272 7% sheet compared to June 21
Slide 11: Cash Flow
CASH FLOW Strong operating cash flows and Cash Conversion Ratio Operating Cash Flow Summary 1H22 1H21 $000's $000's Receipts from customers 110,643 104,196 Payments to suppliers / employees (97,112) (85,333) Cash generated from operations 13,531 18,863 Interest & other financing costs (874) (916) In
Slide 12: Debt Profile Overview
DEBT PROFILE OVERVIEW Seek to significantly drop leverage post organic growth strategy Facility 31 Dec 21 30 June 21 Movement $000’s $000’s $000’s Revolving equipment finance 17,100 11,248 (5,852) Other equipment finance 6,159 7,429 1,270 Corporate/Acquisition loan 9,333 10,932 1,599 $10m overdraft/
Slide 13: Capital Expenditure
CAPITAL EXPENDITURE Organic growth strategy well underway and on track Growth Capex • Growth Capex mainly relates to acquisition of LF160 $14m $12m surface rigs and related support equipment pursuant to $10m the organic growth strategy $8m 2nd Half $6m • With 5 rigs delivered to date, a further 7 ri
Slide 14: Industry Update
INDUSTRY UPDATE Strongest demand levels since 2008 off positive fundamentals and commodity prices Global government stimulus and infrastructure spend Reducing grades and reserves Growing demand for future facing minerals Australia viewed as a high quality, low risk jurisdiction to invest I
Slide 15: Significant Barriers to Entry
SIGNIFICANT BARRIERS TO ENTRY Access to funding for new mining services providers is challenging given limited lender appetite to the mining services sector Complex and highly regulated industry Increasing lead time in relation to the supply of rigs, ancillary equipment and consumables Signi
Slide 16: Capital Management
CAPITAL MANAGEMENT • The material organic growth strategy is well underway with the 12th rig expected to be delivered in June 22 • Following completion of the organic growth strategy, peak gross debt is expected to be in the range of $40m-$45m • Post implementation, the business will limit further c
Slide 17: Outlook
OUTLOOK • Pipeline of identified opportunities remains strong as does the demand for drilling services particularly from Tier 1 clients • Mitchell Services expects to generate full year FY22 revenue and EBITDA of $200m-$220m and $40m-$44m respectively • Average operating rig count for FY22 is expect
Slide 18: Summary
SUMMARY • Mitchell Services has a diversified revenue stream by different drilling types and commodities. • Mitchell Services has a high quality client base with a majority of work related to mine site resource definition, development and production. • The 1H22 half year performance was impressive g
Slide 19: Appendix A: Definitions
APPENDIX A Definitions Capex Capital expenditure The ratio of A to B; where A is the reported cash flows from operating activities (excluding interest and income tax paid) and B is the Cash Conversion Ratio reported EBITDA Earnings before interest, tax, depreciation and amortisation; calculated as N