Slide 1: Half Year Results Financial Year 2023
HALF YEAR RESULTS FINANCIAL YEAR 2023 ASX:MSV
Slide 2: Disclaimer
2 DISCLAIMER This investor presentation has been prepared by Mitchell Services Limited (“the Company”). The information contained in this presentation does not take into account the investment Information in this presentation is of a general nature only and should be read in conjunction with objecti
Slide 3: Agenda
3 AGENDA 1. Market profile 2. 1H23 Business summary 3. Revenue and earnings growth 4. Overview 5. Operational update 6. Profit and loss 7. Balance sheet 8. Cash flow 9. Debt profile 10. Capital expenditure FY23 HALF YEAR RESULTS 11. Capital management update 12. Why invest in Mitchell Services
Slide 4: Market Profile
4 MARKET PROFILE ASX INFORMATION BOARD OF DIRECTORS ASX Stock Symbol MSV Nathan Mitchell Executive Chairman Shares on Issue (at 21/02/23) 220,839,049 Scott Tumbridge Non-Executive Director Share Price (at 21/02/23) A$0.36 Peter Miller Non-Executive Director Market Capitalisation A$79.50m Robert Doug
Slide 5: 1H23 Business Summary
5 1H23 BUSINESS SUMMARY RECORD REVENUE $120.2m 81 AVERAGE OPERATING RIGS CAPITAL INVESTMENT PROGRAM 17%FROM 1H22 13% COMPLETE WITH ALL 12 LF160 RIGS OPERATING FOR GLOBAL MAJOR MINERS FROM 1H22 CAPEX $8.8m GROSS DEBT $37.2m SHARE BUY BACK PAYMENTS $1.5m 51% 13% 100% FY23 HALF YEAR RESULTS FROM 1H22 F
Slide 6: Revenue and Earnings Growth
6 REVENUE AND EARNINGS GROWTH FY23 FY22 FY21 Expect material $213.4m increase FY23 in revenue FY22 $191.4m Expect material FY21 increase in earnings Average Average operating rig $120.2m $32.2m count operating rig 74.8 $32.2M count Average $25.9M $25.9m 71.6 FY23 HALF YEAR RESULTS operating rig coun
Slide 7: Overview
7 OVERVIEW ▪ High commodity prices driving continued strong demand for drilling services particularly in the steelmaking coal sector ▪ High levels of utilisation and inflation are providing the Company with an opportunity to reset pricing ▪ Company’s capital investment program is complete. All 12 LF
Slide 8: Operational Update
8 OPERATIONAL UPDATE Monthly Number of Rigs Operating ▪ Capital investment program to deliver MSV’s organic growth strategy now (over the past 24 months) complete 90 80 ▪ All 12 new LF160 drill rigs now operating for global mining majors 70 60 ▪ Multiple new and expanding contracts expected to be EB
Slide 9: Profit and Loss
9 PROFIT AND LOSS SOLID OPERATING PERFORMANCE EBITDA $20m $15m ▪ Solid operating performance drove continued material increases in revenue, operating rigs and shifts in 1H23 compared to previous $10m periods ▪ Increase in revenue did not translate into increase in EBITDA due to $5m overall inflation
Slide 10: Balance Sheet
10 BALANCE SHEET WELL POSITIONED TO CAPITALISE ON EXPANDING CONTRACT BASE 31-Dec-22 30-Jun-22 Change $000’s $000’s % ▪ The business is well funded to capitalise on strong Balance Sheet Summary market conditions and an expanding contract base Current assets 46,433 49,208 (6%) Non-current assets 87,66
Slide 11: Cash Flow
11 CASH FLOW CONSISTENT OPERATING CASH GENERATION OPERATING CASH FLOW SUMMARY ▪ 1H23 Cash Conversion Ratio largely in line with 1H22 levels 1H23 1H22 Change ▪ Temporarily increased working capital requirements (see $000's $000's % slide 10) have resulted in a Cash Conversion that is lower than histo
Slide 12: Debt Profile
12 DEBT PROFILE MSV REMAINS ON TRACK TO ACHIEVE ITS $15.0m NET DEBT TARGET BY THE END OF FY24 FACILITY ▪ 1H23 performance delivered a gross and net debt 31 Dec 22 30 Jun 22 Movement reduction of 13% and 5% respectively $000's $000's $000's ▪ Current blended average cost of debt is approximately Equi
Slide 13: Capital Expenditure
13 CAPITAL EXPENDITURE MATERIAL REDUCTION INTO FY23 YEAR ON YEAR CAPITAL EXPENDITURE $48m ▪ Operational teams have done an outstanding job to $44m deliver on the organic growth strategy and $40m commission all 12 rigs on time and on budget $36m ▪ The timing of the significant FY22 capex allows $32m
Slide 14: Capital Management Update
14 CAPITAL MANAGEMENT UPDATE The Company is committed to returning surplus cash to shareholders under a recently implemented capital management policy with the following summarised key terms. ▪ The Company will prioritise a portion of free cash flow to reduce leverage and has no present intention to
Slide 15: 1H23 Capital Management Performance
15 1H23 CAPITAL MANAGEMENT PERFORMANCE Prioritise leverage reduction Sensible capex limitation Payments to shareholders GROSS DEBT $37.2m CAPEX $8.8m SHARE BUYBACK PAYMENTS $1.5m 13% FROM 30 JUNE 22 51% FROM 1H22 100% FROM 1H22 FY23 HALF YEAR RESULTS
Slide 16: Why Invest in Mitchell Services?
16 WHY INVEST IN MITCHELL SERVICES? ▪ World class rig fleet ▪ Strong client base ▪ Revenue and earnings growth ▪ Focused capital management strategy over the next 2 years delivering: o Significant reduction in net debt to $15m by the end of FY24 o Expected cash flow to deliver dividends o Share buy-
Slide 17: Definitions
17 DEFINITIONS Capex Capital expenditure Cash Conversion 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 reported EBITDA Ratio Earnings before interest, tax, depreciation and amortisation; calculated as NPAT plus
Slide 18: Contact
CONTACT Andrew Elf Chief Executive Officer 112 Bluestone Circuit Seventeen Mile Rocks Qld 4073 PO Box 3250 Darra Qld 4076 P: 07 3722 7222 M: 0413 608 018 E: a.elf@mitchellservices.com.au