Earnings call transcript: Mitchell Services posts FY2026 profit surge, shares rise

Mitchell Services reported a significant profit surge in FY2026, with revenue up 5% to AUD 207 million and EBITDA increasing 67% to AUD 42.8 million. The Australian drilling contractor benefited from improved operating leverage and a shift away from coal work. Net profit after tax reached AUD 15.2 million, while free cash flow hit AUD 16.1 million.

The stock rose 3.77% to $0.55, nearing the top of its 52-week range. Management attributed the success to fading startup and mobilization costs tied to new contracts, a strategic shift in customers and commodities, and a growing fleet of 68 rigs. InvestingPro's Financial Health score rates the stock as "Great" with a 3.31 out of 5 rating, highlighting its profitability and cash generation.

Management emphasized the company's strong operating leverage, with a 67% rise in EBITDA despite a 5% revenue increase. The business now earns more from each additional rig and contract. Management expects rig counts to continue rising in FY2027, driven by existing customers requesting more rigs and a robust tender pipeline. Gross debt is projected to hit zero by 2029. The company's strong cash generation and flexible balance sheet were also highlighted.