Imdex (ASX:IMD) announces commercial contract for Blast Dog technology

Imdex Limited (ASX:IMD) CEO Paul House discusses FY22 financial and operational highlights, the first commercial contract for Blast Dog, growth opportunities and outlook.

Tim McGowen: We're talking today with Imdex (ASX:IMD). Now, if you don't know Imdex, ASX code IMD, market cap around $764 million. The company is a leading global mining technology company that enables drilling contractors and resource companies to safely find, define and mine orebodies with precision and at speed. We have with us today Paul House, who is the CEO. Paul, welcome back to the network.

Paul House: Thanks, Tim. A pleasure to be here.

Tim McGowen: Now, a first question for you, Paul. You recently released your full year results. What were some of the financial highlights?

Paul House: Yeah, we did, Tim. Look, I think FY22 was a particularly strong year for us. You know, right out of the gate, the headlines were record revenue, record EBIDA, record NPAT, record dividends, but probably the most attractive feature for us was the continued margin expansion. We grew our EBITDA margin up to 31 per cent, which is the third consecutive year we've done that. And really the feature of that is it highlights, I think, the efficiency of our business model, the leverage we get, recognising that we also continue to invest in our digital 2.0 and our IMT program. So, funding those and continuing to give margin back to shareholders I think was the real highlight from FY22.

Tim McGowen: And what were some of the highlights from an operational perspective?

Paul House: First and foremost, our people, our LTIFR rate improved, as did our overall HSE engagement rate. We use Gallup as an independent surveyor of our employee morale and engagement at any point in time, and that showed significant improvement. At a time when, around the world, active disengagement was on the rise, we bucked that trend, and I think that's very pleasing, to see our team aligned around our values and our aspirations, which is great. And our core sustainability score improved, again measured externally. And all of that meant that we could continue to deliver new products into the business, both through a couple of key investments and acquisitions we made with MinePortal and with Datarock, and then the continued release of a number of new products in our portfolio from the R&D we invest. But, overall, the silent hero has been our supply chain. We could not have achieved the revenue growth that we did if we couldn't get the product to the customer. And our supply chain teams have been working around the world under some duress and very successfully. So, for me, that operating highlight would be number one.

Tim McGowen: Just on that supply chain, how do you manage the logistics in what has been a really difficult environment?

Paul House: Well, with a fair bit of sweat, actually. So, we do have multiple manufacturing locations. We do have second- and third-level suppliers around the world. So, we've never been caught short, caught out in that sense. Probably the only area that we've had to work a little harder at is just the lead times for freight delivery. We've seen some lead times on key routes for us blow out from 25 days to 95 days. That simply meant we've had to have more inventory in the system for FY22 — but, pleasingly, we're already seeing those supply chain constrictions ease, and we're starting to see… We expect that that investment in working capital will unwind in FY23, which is a positive.

Tim McGowen: And, Paul, you've also announced your first commercial contract for Blast Dog technology. How does this support your growth strategy?

Paul House: Yeah, this is a great win for us, and it's been four or five years in the making. We've been very clear about we have a number of core capabilities in the tools we have to measure rock properties. And so the way we look at moving from mining exploration into mining production is it's the same asset owner, it's the same orebody, it's the same underlying technologies. It's just extending the use case of our tools into the production environment, which are nuanced. They require much faster decision-making. And so the Blast Dog project is the culmination of four or five years' worth of R&D and product development. And to see that rewarded with our first commercial contractor is fantastic. And, pleasingly, we have a number of other trials underway at the moment.

Tim McGowen: And in regards to that mining production, what opportunities are there to further grow the business?

Paul House: Well, mining production is obviously a very significant-size market, both in growth size and in the value that can be unlocked through better rock knowledge and better orebody knowledge. In addition to that, within the core business, we have three other levers that we are looking at for growth. The first is the continued success of our solution-selling program, whereby we optimise total portfolio solutions that we can deploy on any project. The second is continued R&D to bring more products into our portfolio. And the third is the use of some of our acquisition strategy to bring exciting new technologies into our portfolio. So, those are three growth levers within the core business that then continue to support our push already into the mining production space, which gives us a lot of headroom to grow.

Tim McGowen: There's a lot of headwinds out there at the moment in regards to the economy as well. So, what's the outlook look like for the next 12 months?

Paul House: Yeah, I think the macro headwinds are pretty vocal and well discussed in all capital markets around the world. Interestingly, the resource sector remains fairly well positioned. The underlying fundamentals have not changed. There is a looming supply gap to meet what we think is a very critical demand profile. Critical metals in particular. You're starting to see real substance underpinning government policy, consumer behaviour, finance strategies, and endpoint consumers, like motor vehicle companies, reaching through supply chains to secure offtake of critical metals. And so the amount of money going into those areas is very real. And so regardless of some of those macro economic uncertainties, we think that both for short-term and long-term outlook for the mining industry is very strong. And that's ultimately servicing this push towards net zero and decarbonisation, which I don't think will be knocked off its rails. I think the substance there is enduring.

Tim McGowen: And talking about those growth drivers, how is Imdex positioned to take advantage of those?

Paul House: I think our global footprint around the world is well understood. We operate in most mining jurisdictions around the world. We have a comprehensive portfolio of technologies. And so, if we continue to execute the strategy around our core portfolio and that push into mining production, we look forward to hopefully delivering that result through to shareholders in FY23 and beyond.

Tim McGowen: Paul House, always nice to talk to you. Thanks for your time.

Paul House: Thanks very much. Have a great day.

Source: Finance News Network