Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record revenue of $774.5 million, a 27% increase compared to FY23.
- EBITDA up 32% to $99.2 million, showcasing improved margins.
- Net debt reduced by 27% to $31.2 million, indicating strong financial management.
- Declared a $0.078 per share fully franked dividend, a 34% increase from the previous year.
- Significant geographical and service line diversification, with operations in 7 countries and multiple industries.
Negative Points
- Uncertainty due to the upcoming US elections, potentially affecting investment decisions.
- Challenges in the oil sands industry in Canada, leading to cost-cutting pressures.
- Increased depreciation rates in North America due to harsh environmental conditions.
- Potential softer targets in key commodities like lithium, nickel, and iron ore.
- Dependence on Tier 1 miners and large mining contractors, which could pose credit risk.
Q & A Highlights
Q: Can you provide some context to the run rates and what's going into the guidance number?
A: (Justin Nuich, CEO) The guidance reflects a prudent approach to ensure deliverability, considering factors like lithium and nickel market fluctuations, softer iron ore targets, and the upcoming US elections. Despite these, we remain on track for our FY26 targets with a growth CapEx of $40 million to $45 million.
Q: Could you provide some comments on Canada versus USA in the context of North American growth in the second half?
A: (Justin Nuich, CEO) In the US, coal activity declined due to sites reaching end-of-life. In Canada, we diversified out of the oil sands due to cost-cutting pressures, reallocating resources to other regions. Both regions show strong growth potential for FY25, with some uncertainty due to the US elections.
Q: How should we think about guidance on a segment-by-segment basis, particularly for the USA and Canada?
A: (Paul Hegarty, CFO) Australia is expected to grow around 9-10%, North America around 25%, and the rest of the world at 10%. (Justin Nuich, CEO) Canada shows strong growth outside the oil sands, and the USA has good tailwinds, though growth may be slower until post-election.
Q: Can you give us some color on establishing a shutdown team in North America?
A: (Justin Nuich, CEO) We are expanding into major shutdowns for miners, similar to our operations in Australia. This is a natural progression as we grow our presence in North America.
Q: What is the medium-term outlook for the Rest of the World segment?
A: (Justin Nuich, CEO) We expect steady growth as demand for our services remains strong, particularly targeting Tier 1 miners in favorable regions for our workforce.
Q: Does ROM tonnes continue to provide a reasonable measure of possible growth?
A: (Justin Nuich, CEO) Yes, it does. We remain optimistic about growth in North America and the rest of the world, given the ongoing skill shortages and our business model's potential.
Q: Can you explain the shortfall of receipts from customers versus revenue in the second half?
A: (Paul Hegarty, CFO) The shortfall was primarily due to the growth in our workshop facility, which has longer lead times on parts. This has mostly normalized in FY25.
Q: Why did depreciation rates lift materially in North America?
A: (Paul Hegarty, CFO) We increased depreciation rates due to higher wear and tear on service vehicles in harsh environmental conditions, particularly in Canada. This conservative approach ensures our balance sheet accurately reflects asset values.
Q: Can you provide an update on the net cash target and pathway from here?
A: (Paul Hegarty, CFO) We are on track to achieve our net cash target in the medium term (2-3 years), driven by significant top-line growth, a CapEx-light business model, and strong free cash flow.
Q: Can you give us more color on CapEx in FY25?
A: (Justin Nuich, CEO) Most of our CapEx will be for growth, with some replacement of older fleet vehicles. We expect strong growth in Australia and North America, maintaining a similar CapEx rate as FY24.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
