Babylon Pump & Power (ASX:BPP) is “alert for potential acquisitions” after delivering $6.1 million in EBITDA in FY24, up 118% from $2.8 million in FY23 and a record since its 2018 float on the Australian Securities Exchange (ASX).
In delivering its FY24 financial results yesterday (22 August 2024), the speciality equipment rental and maintenance service provider says it has been a milestone year in which Babylon delivered continued improvements in business performance across its operations, supporting the group’s full-year net profit of $508,027.
Babylon says the trajectory of improved earnings and overall business growth continues to add new assets while driving organic growth in the rental segment and the company remains alert for potential acquisitions to build rental scale and expand capabilities in the mining service sector.
The company focuses on two niche areas – specialised equipment rental for the oil and gas and mining sectors – and diesel engine services, with a focus on repair and maintenance of large diesel engines.
Meanwhile, Babylon reports it continues advancing strategic initiatives which bolster EBITDA and operating cashflow while driving revenue growth.
During the year, Babylon also completed all deferred consideration payments for historical acquisitions, which will free $2.4 million of cash annually to accelerate growth initiatives.
Babylon has grown revenue at a compound annual growth rate of 30% since its 2018 float and as the activities of miners in the Pilbara continue to move deeper under the water table, it sees an ongoing need for the removal and responsible management of water. The company says this is driving a significant ongoing growth opportunity in its specialty equipment rental business.
Strategic initiatives in the maintenance segment has delivered 137% EBITDA growth during FY24. The maintenance segment outperformed expectations for the year, with the company noting high levels of repeat work and focus on margins delivering significant earnings growth.
“Maturing customer relationships are securing longer engagements with better visibility for project planning. Workforce stability over the year has supported higher activity levels in both the Mackay and Perth workshops,” Babylon reports.
“As profitability has continued to increase, the segment will continue to focus on a streamlined engine rebuilding model without distraction or risk of taking on components or works more general in nature.”
Consolidation of operational facilities in FY24 have reduced overheads and improved profitability. Babylon says asset utilisation within rental has also delivered 31% EBITDA growth in that segment.
Babylon has continued to see steady demand for specialty rental assets through the year and continues to cost effectively grow the rental fleet through efficient self-assembly and build of pumping assets to complement its purchases of new fleet.
Capital expenditure with OEM’s has been focused on more technologically advanced and unique assets such as hybrid power and evaporator units which carry a higher technological hurdle to manufacture and will help Babylon’s clients to meet their environmental obligations.
The company says test pumping activities have scope to grow with the current equipment base. Babylon is focused on maximising the capability and utilisation of its current fleet with new projects secured and scheduled for FY25.
Profitability in Babylon’s industrial services subsidiary, Pilbara Trucks T/as Ausblast, has improved as the business transitions away from a model dependent on providing services to a more rental focused offering. In addition, the business has been able to reduce operational risk and overheads.
Write to Adam Orlando at Mining.com.au
Images: Babylon
