The Imdex Limited (ASX: IMD) share price has fallen 2.01% at the time of writing to $1.46, following the release of its half-year earnings for the 6 months to December 2019.
Imdex is a provider of drilling fluid products, data solutions and geo-analytics services to exploration, development and production companies in the minerals and oil and gas sectors worldwide.
What did Imdex announce?
Imdex reported a strong half-yearly revenue of $127.9 million, up 2% on 1H19, and underlying earnings before interest, tax, depreciation and amortisation of $28.1 million, up 12% on 1H19.
It reported a robust balance sheet with a strong net cash position of $25.5 million, up 24% on the prior corresponding period. The company achieved a working capital investment ratio of 30 cents for every incremental dollar of revenue. A similar ratio is expected for the full year.
Paul House's appointment as CEO, following Bernie Ridgeway's retirement, will be effective from 1 July 2020.
Dividends policy
The company's directors declared a 1H20 fully-franked interim dividend of 1 cent per share, up 25% on 1H19, which represents a 21% payout ratio. Dividend record and payment dates have been set at 10 and 24 March 2020, respectively.
Imdex commented that it is committed to a sustainable dividend policy, while also continuing to invest in new technologies that have the potential to deliver substantial long-term growth for shareholders.
New drilling and mining technologies update
Imdex reported that it is on track to commercialise new drilling productivity and drill and blast technologies in the second half year of FY20 and it has achieved certification for Information Security Management standard ISO/IEC 27001:2013.
Its IMDEXHUB-IQ-connected technologies have grown significantly, up 53% on the prior corresponding period, and it has strengthened the quality of its rental fleet, with average monthly rental rate up 12.7% on 1H19.
Demand for IMDEX's cloud-connected sensors and drilling optimisation products continued to increase and the company won mandates for new work based on its ability to provide integrated end-to-end solutions.
On a regional basis, Imdex's strongest revenue growth during 1H20 was achieved in Asia Pacific. The Americas was impacted by client consolidation within the mining sector and industrial unrest in South America. Activity within this region is expected to increase. Europe and Africa experienced steady growth.
Acquisition of Flexidrill
Imdex exercised its option to acquire Flexidrill and its drilling productivity technologies, COREVIBE and MAGHAMMER, on 15 December 2019. The transaction was completed on 6 January 2020, following an initial payment of NZ$3 million. Flexidrill has been renamed IMDEX Technology New Zealand.
Imdex noted that successful client trials with COREVIBE were undertaken throughout 1H20. The company has a full pipeline of client trials and management is confident of converting trials into active rentals.
Outlook
Imdex noted a positive start to drilling activity in 2H20, and stated that it had generated its highest January revenue so far.
