Good day. My name is Allen Chan from Bridge Street Capital Partners, and today we have Mitchell Services to talk about their third-quarter quarterly.

With us, we have Nathan Mitchell, Chairman, Andrew Elf, CEO, and Greg Tinkler, CFO, to run through the result. As usual, there'll be Q&A at the end.

You can put in your questions in the box below and I'll address as they come up. This is being recorded, there will be recording available later.

Over to you, guys. Thank you.

Thanks very much for the introduction, Allen. Thanks for having us, and thanks, everyone, for dialling in and for your interest.

As usual, just a few quick points on the quarterly, given it's a quarterly, not a half year, and then we'll jump into the questions. Obviously we've got Nathan with us today, which is good as well.

Look, obviously another strong quarter, particularly given it was Q3, coming out of Christmas, a short February, and then obviously during the wet season and the fire season down in Victoria as well. Greg will talk to the numbers shortly, but pleasing results, and again the sort of positive results that we've seen in the first half have well and truly continued into the third quarter.

April month to date is looking good too, 70 days to go until the end of the financial year or thereabouts. Again, similar things to the first half, good weather, good execution from the team, good continuity with projects, and really mobilisations and demobilisations, nothing material impacting numbers there.

Really just a good business-as-usual quarter coming out of Christmas, as I said, which has delivered some good numbers. Credit to the team for all of that.

I think just a couple of points. Fuel and contracts, we've spoken to a few people, but fuel is generally provided by our clients, therefore we don't wear the increase in the cost, or where we do provide it, we actually charge cost with a mark-up percentage.

Yes, we still have an exposure of increasing costs through the supply chain, etc., but fuel is managed commercially, which is a good thing. The demand for rigs is still strong.

We haven't seen any changes in demand or reduction in demand or people cancelling or changing projects as a result of what's happening overseas. Really from what we're seeing, it's business as usual.

As I mentioned, it's a good April so far. Look, I'll just hand over to Greg to go through some financials, and then I'll briefly touch on capital management and Loup, and then we'll open up for questions.

Thanks, Andrew, and good morning, everyone. I think just in terms of some of the high-level highlights of this quarter, obviously very strong from a quarter-to-date perspective, but having a look at the year-to-date numbers, particularly EBITDA and EBIT, year-to-date EBITDA of $32 million and year-to-date EBIT of $15 million, both representing an exponential improvement this time last year.

Incidentally, both of those numbers actually greater than the entire FY 2025 result. Very pleasing that the business sort of finds itself back at those FY 2023, FY 2024 levels.

From a balance sheet perspective as well, very pleasing to know that the balance sheet remains exceptionally strong, with net debt practically zero, and that's despite the $8.5 million worth of outflows from the dividend at the back end of March. Then maybe just having a quick look at working capital and cash flow conversion, acknowledge that the cash flow conversion in Q3 slightly softer than in previous quarters, and we've provided that table there just to talk to the reasons there.

Positive working capital movements in both inventory and trade payables. You can see that additional working capital investment largely a result of trade and other receivables, and that is not a function of any underlying concerns with aging.

It's really just a function of the month-to-month increases in revenue that the business has experienced with $12 million in December increasing to $18 million in March. In periods where the revenue increase is so steep, you do get a temporary working capital lag there, but we expect that to normalize in Q4.

I might hand over back to you, Andrew.

Thanks, Greg. Look, just on the capital management side of things, we've said it before, but we'll keep saying it, obviously, we've sort of got those four pillars that we focus on, sort of debt, growth, dividends, and buybacks, and we'll move between those as the market dictates or as opportunities dictate.

Obviously, Nathan can talk more to that when we get some questions. I think it's fair to say that in recent times you can see the debt's now in a good position, it's a clean balance sheet, and the board's obviously focused on some harvesting in more recent times.

Again, I think given the result in Q3, good start to April, hopefully we get to the end of the year in a good position, and the board then has, again, some flexibility in regards to what they want to do with capital allocation. That is a very positive story there, and I think moving forward, it looks pretty good, too.

Really the focus for us, use the rigs we've got. Obviously, there's a certain number of rigs running.

We've got more in the shed. They're good rigs.

Use those rigs that we've got and keep running a good business as we have been. In regards to Loup, that business continues to move forward, the momentum continues to build, we're doing more consulting work, the project we've got with our second client is on track to start in Q4.

Again, those miners do have some fairly large bills coming, and it is cheaper to drill and drain than just to vent the gas and pay the tax. Again, we've said to people, it's a start-up, it's a new concept, it's early days, it's going to take time, but everything is progressing as we would expect.

All in all, pretty positive in that regard. Al, we'll hand back to you for some questions.

Thanks, Andrew. Thanks, Greg.

First one here from Glenn: "Do you have any contracts to set up now that will bring some of the spare rigs on, or how many rigs do you have available? I guess the question

is for you." It's the million-dollar question, and, again, every time we sit here and give people rig counts or numbers or what's going to happen, it always changes.

Look, all we can say is that the demand for rigs remains strong, the pipeline remains strong, commodity prices are good. We have had some good wins.

More rigs will go out, rig count will increase through the last quarter, Q4. Again, as to what we win and how many, it depends on what the clients decide to do.

I think the main point to answer that question is the momentum is with us and we're heading in the right direction.

Thank you. Maybe I might add to that, Andrew, obviously with Anglo and, I guess, the coal sector, I guess fair to say there's some sort of upside potential should they get their act together?

[laughs] Look, I think obviously Queensland has been a little bit different, or the East has been different to the West. The West iron ore sort of remained flat to strong, and so that gold market's quite big and picked up, and utilisation really picked up in the West, whereas in the East you've never seen a lower number of rigs running in coal as what you have right now.

A lot of those rigs that came out of coal have had to be soaked up in the minerals market. You're quite right.

If there's a normalisation in that coal market and an increase in demand, that will move the dial. Companies like Anglo that have had some challenges at various mine sites, if that normalises at a Grosvenor or Moranbah North, we still do have contracts on foot there with them.

There's opportunities to redeploy rigs into the coal market or existing coal clients as well.

Thank you. Now, we haven't touched on fuel, though I guess, first part of the question, have you seen any activity reduction, I guess, due to

No change. Business as usual.

No issues getting fuel. All good.

Will it change? Hopefully not.

At this stage, yeah, you wouldn't know there's anything going on other than what clients are getting charged for it from us or what they're paying for it to provide it to us.

Perfect. Thank you.

I guess this one's more like we're talking about the pipeline. Maybe you can give some colour on that, maybe a composition of gold, coal.

Is

there a number of tenders out there?

No worries, Al. Just touched on sort of minerals versus coal and, hopefully the coal market bouncing back a little bit presents an opportunity for us.

Obviously, if you just look at the East from a total available market perspective, there's not a gazillion new mines opening. You're sort of, to a degree, relying on that exploration market, which has seen some good equity raises and is certainly active.

Then some of the larger miners we work for. Certainly I think one big positive is that the larger miners have just started talking about increasing drilling budgets and activity, whereas today, even with the elevated commodity prices, metalliferous, gold, copper, etc., they really haven't been looking at increasing volumes.

To us, I think, again, commodity prices are strong in Aussie dollar terms. It's a good for the producers.

They're making good cash. We're working with those larger clients, they're talking about more metres.

Equity raisings have been strong in the smaller space, so, all in all, the pipeline is strong and demand was good. Obviously, we'll keep being disciplined with our pricing to maintain the returns we want, and ideally get a few more rigs out as we move forward.

Thanks, Andrew. Next question moves back into Loup.

"How long is the initial drilling program with client two in Loup, and what is the timeline for them to roll this out to all their mine sites?"

There's been probably 9 months of work with this client before we actually take a rig to site, and that includes all of your gas modelling, gas content, how you're going to design the holes, drain the gas, how you're going to flare the gas. We're doing all of that on-site as well, full turnkey solution for the client.

Then obviously, what are the data points and learnings and everything else that we're trying to get out of that project. You've probably had 9 months of work pre-drilling.

There's probably about 4 months of drilling on-site. Then after that, obviously gathering a whole lot of data.

I'd dare say the client will at least take 6 to 9 months, if not longer, to get the data, review the data, go through the organisation for any relevant approvals to then go, "Okay, this is something that we would like to embed into our operation." If you think about Loup, there's obviously multiple clients that we're talking to, which represent probably 80% of coal production in Australia.

Different clients are at different stages with that consulting process with potentially putting rigs on-site or not, and then potentially looking to embed that as business as usual into their operations. We're still a little while away from having a rig on someone's site permanently to drain that gas for environmental reasons, but I think slowly it's heading in the right direction.

Right. Thank you.

Next couple of questions from Karim. I think we've answered the first one on piped, but maybe is there any more update or colour for Grosvenor and Moranbah North outside of the waiting game?

I think Moranbah North is sort of returning to more normal operations as we speak. That's just really getting going again now, which is fantastic to see.

I know a lot of hard work from Anglo and their teams and everyone to get that going, which is great. Certainly it's the client's intention to open Grosvenor again as well.

I think initial indications are sort of early next year.

A lot of work Going to get a strong skim cap, regular, thanks, can I

I'll keep going, Al. I think initial indications from the client are potentially sort of sometime early next year for Grosvenor, but a lot of work being undertaken on-site between now and then to get back to that spot.

I certainly think positive for Anglo, and they're working hard out there, which is great.

Looks like you might be on mute, Al.

Apologies, guys. Sorry about that.

Not sure the interference there. Following Karim there, I think we spoke about coal prices and demand.

Anything to further add to that other than potential upside, really?

No, I think they're just starting to talk to us a little bit more now. I think pretty much it was pens down, phones down, don't ring us.

I think now they're taking meetings and phone calls and price is up a little bit and there's a few conversations happening. We're certainly, by no means, off to the races in coal again, but green shoots, early days, which is good.

Brilliant. Thanks, Andrew.

Next question, "What opportunities do you see with the proposed Yancoal acquisition of Kestrel assets?"

No large upside. I think at Kestrel we've got a contract there, it's got good a way to run, business as usual.

Obviously, Yancoal, they got a number of mines in New South Wales. We've sort of tendered on some work on and off over the years there and haven't been successful for one reason or another.

I think really it's just business as usual, but no material upside, no material downside, just business as usual.

Thank you. Question from Mark: "What's the outlook for CapEx in Q4 and FY 2027 given rig acquisition and the maintenance requirements on large rigs?"

I might take that one. I think the year-to-date CapEx number for FY 2026 sort of sitting at $13.5 million.

I think the final FY 2026 number probably somewhere in the order of 20, maybe a tick under. That increase in the fourth quarter is really maintenance CapEx-driven, but in relation to getting rigs ready for either jobs that the business has already won, or just given the strength of the pipeline in terms of what could potentially be rolled out.

There'll be a little bit of an accelerated maintenance CapEx in the fourth quarter leading to a CapEx number of about 20. Then in terms of '27, I'd dare say that'll then probably drop back to sort of normalized levels, which has been high teens in the past, subject of course to demand levels, but based on where we are right now, I think that's probably a reasonable number.

Great. Thanks, Greg.

Next one from Christopher: "The business has now delivered EBITDA margins above 20% for 3 consecutive quarters, having only achieved that twice in the prior 20 quarters. How much of the current margin structure do you think attribute to permanent operational changes, and is this a chain that you think is embedded with the business?"

Look,

easiest way to answer that is the way we look to run the business is quite simple: 30% gross margin, 10% overheads, 20% EBITDA. That's generally then when we price things, you're going to price it like that, plus/minus, depending on complexity or length of contract or who it is and all these other sort of things.

That's really what we're trying to aim for. It is nice when we get it.

You do need things to go your way, too. I think if you look back over time at some of the things that have occurred in the business that have been outside of management's control, be it fires, floods, and client events, changing scopes.

Obviously, mobilisations and demobilisations is a function of some things, too. That does impact things, but I think, pleasingly, what you've really seen this year is just a good, clean run.

That no clients have materially changed programs unexpectedly. At the same time, granted, there hasn't been a material win with a huge number of rigs and a big mobilisation, but there hasn't been any bad weather events or other things.

I think just good, clean operations. We've always said to people, the best way to think about this business is anything 20-plus is very, very, very good.

Certainly, it's not like it's going to race off into the mid-to-high 20s. Low 20s is very, very good, but ordinarily high teens is probably where you would generally sit.

To be where we are, especially that percentage through the first quarter, pretty happy.

Thank you. Another question from Karim, this one's for you, Nathan: "Can you provide your latest thoughts on capital allocation today and which buckets do you find most attractive?"

Sure. Thanks, Allen.

Firstly, again, I think the team's done an excellent job on another quarter, and I think that last question was excellent. I think you can see that we obviously went through the hump, we've spoken about this before, when the Anglo sort of shut down, we've had to redirect all the assets into the mineral industry.

I think that hump is well and truly behind us, and you can see this continuity of work now going forward, continuity of returns. Based on the capital management, as Andrew said, we've still got 70 days to go till the end of the year, but things are looking great, which is good.

It's exactly where we want them to be. Obviously, we talked about it before and the four pillars.

One of them is the debt reduction, well that is done, so that's out. Then the other two are obviously buyback, which we're quite happy with the share price today.

I think it ran to 54, it's back to 52, so that's been excellent. Leaves us with really growth and dividends, at this stage, let's see how things go, but we're pretty happy with how things are rolling at the moment.

We'll make a decision at the end of the year, but it's looking like, as per normal, we'll try and do what we did before, but that's up to the board decision, really, over the next couple of months. I think we're on track to have those decisions and have multiple opportunities, rather than decisions to make.

That's a far better position to be than in a negative.

Thanks, Nathan. Nathan question from Glenn: "Back on Loup.

With Loup clients, is there a discussion about using the gas rather than flaring?"

I think Nathan's would be a good one for you.

Sure. I think we're always looking at ways to try and utilise that gas.

I think that's something that's been key for us over the many, many years. It's not our gas, obviously, to take, but we're talking with our customers about what can be done with that gas.

Obviously, a lot of it's trapped gas, it's easy for the people in Australia to say, "Look, that's our gas, let's use it." When it's in the middle of nowhere, it's very difficult to actually harness.

We're always looking at opportunities for our customers, not just drilling. If we can add 1 plus 1 equals 3, as I've always said it, we will, at this stage, nothing's on the table, but, certainly, we're always looking at opportunities for that gas.

Thanks, Nathan. I think this one's probably mentioned, but maybe it's a case of putting numbers around Moranbah North, I guess, maybe want to frame it, what used to be and what could be, I think, from amount of rigs, if that makes sense.

Without talking to rig counts, if I just talk in sort of revenue terms, revenue with Anglo in this business used to be probably $40 to $50 million. This year, it's probably going to be 20.

It's probably halved, if not more, and that talks to Nathan's point about having to get rigs and find more work and pivot the business, which came at a cost of mob and demob. To my point before, if the client normalizes operations at both sites, if they go back to previous levels of activity, are those numbers possible?

Yes. Again, they've also got the assets for sale.

Will they get to that level of activity pre-sale? Don't know.

Nonetheless, regardless of what happens with the sale, who buys it, what they decide to do, if we're successful and with the new owners one day and things continue on, there was a lot of drilling that got done on those sites and they're great assets, and there'll be a lot of drilling to do there into the future. That's for sure.

Thanks, Andrew. This one's anonymous, but obviously goes back to your four pillars maybe here as optionality, but again: "Given the strong balance sheet, company has considered more aggressive or larger-scale off-market tender to buy back 15% or 20% of the shares on issue?

I guess that's for us to decide later on, but is that an option?"

I've never given that a thought, to be honest. Yeah.

No, not at this stage. No, that hasn't been something that's been on the radar.

Got it. Thank you.

Question from Isa: "Is the insurance proceeds included in the Q3 result or will it be in Q4?"

Yes, it is. In the second half, we sort of called out that there was that $1.5 million impairment and the fact that it would simply reverse in Q3 when the insurance process settled.

That has settled in Q3, and the Q3 results are inclusive of the $1.5 million that's now come back the other way. Right.

Thank you. Maybe I'll take this last question from Mark Summers: "Scott Tomlinson has been selling down.

Are you seeing any signs of institutional interest on your share register?"

Look, I wouldn't say he's been selling down. He's sold some shares.

If I go back in time, we had a capital raise, and Scott put up some proceeds for that from his super fund. He always said he would sell those shares at some stage, which he did.

All the shares he got through the transaction of Deepcore back in 2019, he has continued to hold and has not sold one of them. That's my view on that one.

As far as interest goes, yeah, there's a lot more interest in the stock, in the sector, in halo-type companies. We can't be AI'd out doing what we're doing, but certainly AI and robots could potentially help us a lot into the future.

There's been a lot more interest in the business. Obviously, better balance sheet, better profitability percentages, numbers, return on capital, some fantastic dividends potentially, more coming, too.

There's been a lot more interest from everyone.

Great. Thanks, Andrew.

That was the last question. If there's any further questions, I'll give you a quick minute to put one in.

I'll get the team to address it. That'll be it.

Guys, thank you again. Done, Nathan, Andrew, and Greg.

Apologies for that little blip there, but, yeah, this is being recorded. If there's any further questions, feel free to reach out to the team, and yeah, we'll talk soon.

Thanks, guys.

Thanks, everyone. Thanks, Alan.

Thanks, everyone. Thanks, Alan.