Australia’s Imdex will aim to continue to grow sales per rig, or customer site, via an expanded technology stack amid flat global mineral drilling market conditions that could continue for the next 12 months.
The company, which grew its FY24 revenue 8% year-on-year to A$445 million (circa-US$300 million) on the back of last year’s Devico acquisition, improved gross margins in its core sensors and fluids businesses in the latest year to underpin FY24 EBITDA of $131 million and an EBITDA margin of 29.4%.
CEO Paul House said the 8% revenue uplift compared with a 24% decline in worldwide exploration drilling activity, as measured by S&P drillhole data. He said total annual mineral exploration expenditure of circa-US$12 billion today compared with a peak of $21b back in 2012.
October-November annual exploration budget announcements by mining majors are expected to provide clarity on the outlook for 2025, but at this stage Imdex is guiding for “flat” market conditions on the evidence available: contractor activity and forecasts, capital raisings by exploration and development companies, commodity pricing, and the like.
“We’re happy with the conversations we’re having [with customers],” House said.
“We’re happy with what that outlook looks like.
“Of course we wait to see what actually happens in October and November.”
Also giving House cause to smile has been the smooth integration of Norway’s Devico bought for US$230 million last year. The business contributed $70 million of FY24 sales, up 14% yoy. Imdex said when it acquired Devico the target’s revenue had grown at 17% a year for the prior three years.
“Their technologies within our group have been essential to our outperformance,” House said.
“Within our core business we’ve expanded our survey technology stack, leading to a significant increase in the deployment of DeviGyros across our network. This success reflects both our market share gains and the enhancements we’ve made to our survey technology.
“Our new OMNIx gyros are now the fastest-growing sensors in our fleet and contributed to our sensor fleet ARPU [average revenue per unit] uplift of 7%.”
Imdex CFO Paul Evans said higher-margin sensors and software-as-a-service (SaaS) revenue now accounted for 64% of total revenue, up from 60% in FY23. Of the SaaS and sensors revenue, 28% is linked to the company’s cloud-based data hub, IMDEX HUB-IQ. Connected customers were reportedly up 10% yoy and Devico sensors were now integrated into the hub.
House said as well as the Devico integration, affiliated tech businesses Datarock and Krux had both doubled SaaS activity and were exhibiting impressive growth trajectories.
About 48% of Imdex’s top 250 global customers used more than three of the company’s products in a “solution-based approach” in FY24, up from 46% the previous year.
The company calculates that its revenue per $100 spent worldwide on mineral exploration has grown from $1.40 in 2018 to $2.10 last year.
“This growth reflects the opportunity that comes from bundling our individual technology offerings into integrated solutions,” House said.
He showed how a project using a suite of available integrated products could push the $2.10/$100 to more than $8.
“With our existing portfolio of products, and within the existing market, we have considerable headroom for growth,” Head said.
“In considering the size of this opportunity we are targeting initially an addressable market in excess of 1000 drill rigs.
“As our product portfolio grows, this potential revenue uplift grows. As the exploration market grows, so to our potential revenue grows further. Of course, key to unlocking this potential is the demonstration of real value to the customer of integrated solutions.”
Imdex had pared its net debt back to $35m at the end of FY24. Evans noted “our balance sheet and our business today are positioned to support further M&A, should an opportunity arise”.
On the mining production tech side of the business, Imdex had increased the number of sites using its bore hole stabiliser (BHS) down-hole formulation, built its presence in the underground survey market, and made “steady progress” with commercialisation of the BLAST DOG orebody characterisation system.
ASX-listed Imdex’s share price is down more than 4% in the past month, capitalising the company at about $1.05 billion.
