Mining services firm SRG Global (ASX:SRG) is expecting to hit the upper end of its earnings guidance thanks to new contract wins and strong cashflow in the 2024 financial year.
The Western Australia-based company was anticipating earnings before interest, taxes, depreciation and amortisation (EBITDA) to fall within $98 to $99 million.
SRG has an EBITDA to cash conversion rate of over 115%. The cash conversion ratio (CCR) compares a company’s operating cash flow with its profitability. A CCR above 1x demonstrates a business is able to convert the majority of its earnings to cash.
In the 2024 financial year, SRG has transitioned to a net cash position of $17.8 million from a net debt position of $17 million in the 2023 financial year.
Managing Director David Macgeorge says the company’s FY24 financial and cash performance is clear evidence of the strength and diversity of the business which has provided both protection and opportunity in the diverse sectors and geographies it operates.
“The company has record work in hand of $2 billion and is well positioned for long-term sustainable growth with circa 70% annuity-style earnings and positive exposure to broader macro-economic growth drivers in a diverse range of sectors,” he says.
“The company is well funded to continue to drive further growth and we expect FY25 EBITDA to be circa 10% higher than FY24 EBITDA.”
While demand for mining services has been subdued over the past five years, according to industry researcher IBISWorld, industry revenue is expected to rise over the next five years at an annualised 3.2% to $17.4 billion.
SRG Global will report its full year audited results on 20 August 2024.
The company, which has a market capitalisation of $464 million, provides services across the mining sector including drilling, equipment hire, maintenance services, large-scale shutdowns and mine site infrastructure.
Write to Angela East at Mining.com.au
Images: SRG Global
