Corporate: Mitchell Services beats on earnings amid ‘continued improvements’ in resources sector
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Small-cap resources play Mitchell Services (ASX: MSV) — which provides drilling rigs to the mining and energy industries — has latched on to some solid market conditions to post solid Q4 earnings figures.
The company said full-year core earnings will now exceed initial guidance, following a lift in June quarter activity which saw average operating rigs climb 33 per cent to 54.7. Quarterly revenue came in at $30.981 million, a gain of 26 per cent.
Mitchell said the sharp rise in drilling rigs was partly due to seasonality, but also some recent contract wins and extensions, including BHP’s Olympic Dam project.
Shares in the company were up 4.6 per cent at 6.8 cents in morning trade.
The company also cited “continued improvements in general market conditions” as a reason for the lift.
Full-year core earnings are now expected to come in at $24.1m, from revenue of $120m.
Despite the pick-up in Q4 activity, Mitchell reported operating cash outflows of $357k for the quarter, which it attributed to a number of factors starting with an $800k tax bill in connection with its acquisition of Radco Drilling.
The company also cited additional working capital costs associated with the ramp-up of drilling operations, and a timing issue where June payments usually received at the end of the month weren’t processed until Monday July 1.
CEO Andrew Elf also remains optimistic about the recent contract win at the Kirkalocka gold operation run by Adaman Resources, which marked Mitchell’s entry into the market for drill and blast production services.
“The outlook across the business (and broader mining and resources industry) remains positive and I am grateful for your continued support,” Elf said.
Semiconductor company Revasum Inc (ASX: RVS) also provided an earnings update to the market, with revenue for the six months to June forecast at $US15.2m — at the lower end of the company’s guidance between $US15m-$US16.5m. The company also flagged that 9,742,195 shares are set to be released from escrow once half-year results are officially announced.
The company highlighted recent developments at its California manufacturing facility, where it’s close to completing the “world’s first single-wafer silicon carbide polisher”, with “indications of strong demand” from several leading manufacturers. Shares in RVS were unchanged at $1.26.
And shares in Silicon Valley-based semiconductor company 4DS Memory Limited (ASX: 4DS) fell more than eight per cent to 5.3 cents, after announcing a successful placement which raised $3.25m at five cents per share. The company will also look to raise up to $750k from retail investors via a share purchase plan.
The funds raised will go towards development costs for Interface Switching ReRAM technology for improved storage capabilities. 4DS’s latest 4C filing shows cash outflows totalled $1.26m in the June quarter, with $989k spent on research & development.