The Australian share market climbed higher on its first day back this week. However, not every S&P/ASX 300 Index (ASX: XKO) share received a warm embrace by investors on Monday.
At the closing bell, the benchmark consisting of the country's top 300 companies is 0.58% ahead of its previous close. Yet, one company in the elite club saw its share price descend 15.83% today.
The unnerving performance for this particular ASX 300 share follows the release of the company's FY23 full-year results.
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Earnings slump takes a toll on this ASX 300 share
Bucking the trend among ASX shares, Imdex Limited (ASX: IMD) had a sour start to the week. Shares in the mining products and technology company finished trading at $1.515 this afternoon, collapsing 15.83% from its prior closing price of $1.80 on Friday.
Here's a quick summary of the figures that drove the move:
- Group revenue up 20% to a record $411.4 million
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 1.4% to $100.5 million
- Net profit after tax (NPAT) down 21.7% to $35 million
- Final fully franked dividend up 10.5% to 2.1 cents per share
- Net debt position of $64.9 million versus net cash of $24.2 million on 30 June 2022
The above results include four months of contributions from the recently acquired Devico business.
What happened during FY23?
The 12 months ending 30 June 2023 were dominated by merger and acquisition at Imdex. In January 2023, the company announced two investments in complementary businesses to broaden its industry offerings.
On 13 January, Imdex revealed it had taken a 40% interest in drilling analytics software provider Krux Analytics. Hoping to enhance its analysis capabilities, Imdex dished out $6.42 million in cash to acquire the stake in the Calgary-based software company.
Less than a week later, Imdex announced the sizeable acquisition of Devico for an enterprise value of A$324 million. Based in Norway, the mining technology company caught the eye of Imdex with its leadership positioning in Europe and directional drilling technologies in general.
The Imdex share price has struggled in 2023 thus far. As depicted above, the ASX 300 share has seen its price steadily decline following the announcement of its acquisitions.
It's worth mentioning the deals have resulted in Imdex diluting existing shareholders by undertaking a large capital raise. At the same time, the company has reached a net debt position on its balance sheet.
What's next for Imdex?
Imdex refrained from providing any detailed guidance for FY24. Instead, it vaguely described the recent operating environment, stating:
Demand for IMDEX's integrated product offering continues to be steady. While exploration activity is expected to contract 20% throughout calendar 2023, IMDEX rock knowledge sensors on hire at 1 July 2023 were down 8% on the pcp. Today, sensors on hire are up 5% from 1 July 2023.
Additionally, it was noted that the "underlying long-term drivers for the industry remain robust". While S&P expects a 20% contraction in exploration activity in 2023, growth is forecast to resume in 2024.
The Imdex share price is down 30.36% year-to-date. For context, the ASX 300 share market index is 1.59% higher year to date.
