Imdex Limited

Welcome to IMDEX Limited FY26 results presentation. Following the formal presentation, there will be a Q&A session for investors and analysts. Participants can ask both text and live audio questions during today's call. To ask a text question, select the messaging icon, type your question in the box towards the top of the screen and press the send button. To ask a live audio question, press the request to speak button at the top of the broadcast window. The broadcast will be replaced by the audio question screen. Use the dial-in number and access pin provided to ask your question via the phone. Alternatively, for those on a home or personal network, you can ask your questions via the web by pressing Join Queue. If prompted, select Allow in the pop-up to grant access to your microphone. If you have any issues using the platform, dial-in details can also be found on the homepage under Asking Audio Questions. Text questions can be submitted at any time, and the audio queue is now open. I will now hand over to IMDEX Managing Director and CEO, Paul House.

Thank you, and welcome everyone to IMDEX's FY26 full year results presentation. Today, I am joined by Linda Lim, our Chief Financial Officer, Sean Southwell, our Chief of Exploration and Production, and Michelle Carey, our Chief of Digital Earth Knowledge. Linda and I will take you through the presentation, and at the conclusion of our prepared remarks, Sean and Michelle will also be available for any questions. FY26 was the strongest financial year in Index's history. We delivered record revenue, record earnings, strong cash generation, and made significant progress in building a larger and more diversified earnings engine through both organic growth and targeted acquisitions. Throughout this call, we will refer to the FY26 results presentation released to the ASX this morning. Our agenda on slide three outlines the focus areas for today. We'll begin with an overview of the FY26 results. Linda will take you through the financial performance in more detail. And I will then return to discuss the industry macros, our FY27 outlook, our FY27 priorities, and the index longer-term growth strategy. Bringing your attention to slide 5. At Index, our purpose is to efficiently and sustainably unlock the Earth's value by enabling customers to find, define and optimise the subsurface environment with confidence and with speed. The image on the right hand side of the slide attempts to illustrate just how we do that. We help customers capture high quality rock data in real time or near real time. We analyze that data to generate key insights at scale, and we turn those insights into faster, more confident decisions for our customers. What we can show you in today's results is that FY26 and the investments that we have made have accelerated our ability to support customers through this life cycle. Turn to slide six and our FY26 financial highlights. I'll draw your attention to a couple of key messages. Record revenue, record EBITDA normalised and record impact normalised. Revenue increased 21% to $520 million and growth was broad-based across all regions, driven by both exploration activity and market share gains, the latter of which accounts for just over half of the revenue growth in the period. Of particular note is the quality of the revenue growth, which is characterised by three things, and they are an increasing customer adoption of next-generation technologies, an active demand for technologies that deliver demonstrable lifts in productivity, and the continued growth of our integrated physical and digital solutions. Finally, revenue growth converted into margin expansion. Our EBITDA normalized increased 29% to $163 million, with margin expanding to just over 31%. That demonstrates the operating leverage embedded in the index business model. This is a strong result against the market backdrop of rising costs and some significant FX headwinds. Turning now to slide 7, and I'd like to highlight the strength of our balance sheet, plus our disciplined approach to capital management. Cash conversion was strong at 83%, reflecting working capital management discipline while continuing to support growth across the business. Net debt increased $199 million following the completion of five acquisitions during FY26, with leverage sitting at 1.3 times at the end of the reporting period. This is comfortably within our target range and leaves index with capacity to continue investing when such opportunities present. We have a proven ability to use our strong cash conversion to de-lever, having paid off the debt from the Devico acquisition in under three years. Finally, the Board has declared a final fully franked dividend of 1.75 cents per share, taking the full year dividend to 3.4 cents per share, an increase of 36%, and once again, aiming to deliver superior return to shareholders. Overall, I would like investors to see that our strong cash generation allows us to continue investing through the exploration cycle, strengthen our technology leadership, and expand our digital platform offering directly in line with customer demand. Slide 8 demonstrates how Index has evolved from a leading drill site technology business into a more integrated physical to digital platform. Index's two growth engines, drill site technologies and digital earth knowledge, connects the full data value chain from originating high quality subsurface data at the drill site through to digital workflows, software analytics, and decision intelligence. Often, our customers are not looking for more data, they are looking for more data insights, and that is where our integrated platform, which improves decision intelligence for both resource companies and drillers, continues to differentiate IMDEX. Turning now to slide 9, as I have often said, strong results are the direct outworking of strong strategic execution. Our deliberate focus on technology leadership and our relentless match fit discipline across the operation is key to these results this year. First, we continue to capture more value from customer activity. Share of wallet increased to a record $2.40 to $100 of global exploration spend, up from $2.20 in FY25. Second, customers are adopting more of the index offering. Integrated on-site services revenue increased 20%. and the average number of global sites using integrated solutions increased 42%. Third, we continued to strengthen the platform itself. The acquisition of Earth Science Analytics, Datarock, ALT, Mount Sophras Instruments and Prax has created an expanded and truly leading collection of physical and digital technologies. Overall, FY26 has demonstrated that index has more ways to deliver value for customers than ever before. Turning to slide 10 and our sustainability highlights. Our strong growth during FY26 has meant that we have crossed the threshold under AASBES2 to become a Tier 1 reporting company. We've made substantial strides towards compliance and I'm delighted to share a selection of highlights. We completed our climate risk assessment and scenario analysis. We strengthened our governance framework. and we continue to improve our emissions data capture. These are all important foundations as we prepare for mandatory climate reporting. Furthermore, we invested heavily in the link between sustainability and productivity for our customers. Many of our technologies directly help customers improve their productivity and reduce waste, whether that is to improve drilling performance or substantial water savings. Finally, some tangible examples within our own operations. our Balcata headquarters and our Californian R&D facility are both now predominantly powered by solar. Subsequent to year ends, we launched an industry-leading 24-week parental leave policy, recognising the importance of this to our index workforce. Our strategy around sustainability is of importance to our employees first and foremost, and I'm delighted with the engagement on these projects by our workforce all around the world. The onward delivery of those benefits to both customers and shareholders is being actively led by our index people. I'll now hand over to Linda, who will take you through the FY26 financial performance in more detail.

Thank you, Paul. I will now build upon Paul's highlights by going a little deeper into our financial performance. Slide 12 demonstrates the record year for index, strong underlying growth. continued market share gains and increasing adoption of higher value solutions. Results for the year are normalised for the integration and transaction related costs associated with the five acquisitions completed during the year. It also includes a $3 million impairment on a development asset. This write-off is a direct outworking of our discipline capital management. where we ruthlessly review all projects and redirect capital for the strongest returns. In addition to those highlighted by Paul earlier, there are three performance highlights to speak of. First, record MPAT normalized of $59 million reflects another year where earnings growth outpaced revenue growth. Second, MPAT-A normalized increased to $70 million, providing a useful measure of the earnings capacity of the enlarged index platform. And third, EPS Normalised increased 37% to 11.5 cents per share, demonstrating that growth in revenue, margins and earnings is translating into superior returns to shareholders. Turning to slide 13, as Paul mentioned, Earlier, revenue increased 21% to $520 million. Continuing indexes track record of growing well ahead of underlying exploration activity. Over five years, revenue has grown to a 15% CAGR against exploration budget growth of 6%. This year, we've introduced a revised revenue disclosure that better reflects how customers engage with our digital platforms. The key point is the growth in platform revenue, from 33% of group revenue in FY21 to 47% in FY26. That shift is a deliberate outcome of our fleet connectivity strategy over many years, which began with IMDEX Hub IQ. Our equipment, sales and services revenue grew 11%, also outperforming underlying exploration market activity. supported by continued strength in product sales and a 20% growth in integrated on-site services. Overall, our revenue mix continues to strengthen. Moving to slide 14, this slide demonstrates the diversification of indexes' revenue growth, with an increase in contribution from higher value platform-enabled revenue streams. Platform-enabled hardware rentals continue to grow as customers adopt more connected technologies, reflecting the benefits of our long-term fleet digitisation strategy. Software and platform advisory revenue is also well positioned for growth, supported by the expanded capabilities acquired during FY26. Integrated on-site services delivered another strong result, increasing 20% year-on-year as customers continue to adopt broader, full solution offerings across the drill site, driving share of wallet expansion. At the same time, our product sales business continues to perform strongly, benefiting from underlying exploration activity and the reach of our global sales and service network. Over time, we expect to continue to see this revenue profile evolve. Rentals and other has been and should continue to be progressively declining as customers continue to upgrade to new technologies and onsite integrated solutions. Imdex is growing through multiple complementary revenue streams. We are benefiting from closer engagement with customers to deliver our portfolio of technologies right across the mining value chain. Turning to slide 15. This slide demonstrates that the 21% revenue growth is primarily organic growth in the core business. Revenue increased from $431 million to $520 million. 17% of that growth was organic, driven by market share gains, technology adoption and growth across all regions. Acquisitions contributed $17 million, reflecting partial year contributions from businesses acquired during the financial year 2016. On a full-year equivalent basis, those acquisitions represent approximately $51 million of annualised revenue. As we enter FY27, we have both a stronger core business and a full-year contribution from high-quality additions to the platform. With that context, let me now move to slide 16 and show how that growth was delivered across our operating segments. Rather than walk through every segment, I'll draw your attention to a couple of highlights. Record revenue across all segments with all regions delivering growth above underlying market, exploration market activity. The DEK segment is disclosed for the first time, delivering across all DST regions and showing an 85% revenue increase in FY26 and a 32% 5-year CAGR from existing software products and the contributions from the new businesses. This demonstrates multiple growth levers working together. Turning to slide 17, this slide highlights the operating leverage in the MDEX business model. EBITDA normalized increased 29% to $163 million, ahead of revenue growth of 21%, with margin expanding from 29% in FY25 to 31%. Importantly, we delivered this while continuing to invest for future growth, demonstrating our ability to expand earnings, strengthen margins and scale the platform simultaneously. Turning to slide 18, we invested $43 million in R&D during FY26, reinforcing our commitment to invest through the cycle in technology, leadership and future growth. Our R&D program remains highly customer-led, focused on opportunities with clear commercial outcomes and strong demand. This investment continues to strengthen the platform and position IMDEX for long-term growth. Turning now to slide 19, capital expenditure increased to $69 million as we continued investing in the fleet of next-generation technologies to support revenue growth, a positive reflection of our customer demand. Turning now to slide 20, operating cash flow was strong at $126 million or $135 million on a normalised basis, demonstrating the strength of our cash generation across the business. Cash conversion of 83% reflects the quality of earnings and discipline execution while continuing to support growth. Strong cash generation remains a key advantage of the index business model. providing the flexibility to invest in growth and maintain a strong balance sheet. Moving to balance sheet on slide 21, index finished FY26 with a strong balance sheet. Leverage of 1.3 times and financial flexibility following a year of strategic investment and acquisition activity. Return on equity improved during the year and return on capital remained stable, demonstrating the quality of our capital allocation and sustainable earnings growth. Disciplined working capital management continues to support cash generation. For example, this is demonstrated through inventory investment for low revenue growth. Together, this positions us well to continue investing and creating long-term value. Moving to slide 22, this slide brings together the capital allocation principles we have discussed throughout the presentation. During FY26, the board reviewed and approved a refreshed capital management framework. that reflects the evolution of IMDEX into a larger and more diversified business. The key changes include clarifying our R&D investment target to circa 10% of revenue. This recognises the wider array of sensor technologies we now have and the increase in customer-led demand for AI-enabled GSIS products. Further, we have refined our target leverage range to support future growth opportunities. and updated the dividend policy to 25% to 35% of NPATA A normalized to better reflect the changing nature of our earnings following five acquisitions. Importantly, the fundamentals remain unchanged. This is some capital allocation, investment through the cycle, and a continued focus on creating long-term shareholder value. I'll now hand back to Paul to discuss the industry outlook and growth opportunities ahead.