Imdex Limited (ASX:IMD) CEO Paul House discusses the company's financial update, outlook and strategy, and provides an introduction to its technology, which improves the productivity of drill rigs, data collection and analysis.
Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me from Imdex (ASX:IMD) is CEO Paul House. Paul, welcome to FNN.
Paul House: Thanks very much, Rachael. Thanks for having me. It's great to be here.
Rachael Jones: It's good to see you. Now, first up, Paul, could we start with an introduction to the company?
Paul House: Sure. Well, Imdex is a global mining tech company. It's been around for about 30 years. We specialise in designing and building patented IP-protected tools that help geologists and drillers understand their drilling process and the ore body that they're drilling through, and we operate in every major mining operation around the world.
Rachael Jones: Thanks, Paul. And before we talk about the business in more detail, what impact has COVID-19 had on the business?
Paul House: Well, the initial response phase in April that rippled around the world was certainly material. But since that time, we've seen a really strong growth month on month, every month since April, right through to the current day, as people are finding new ways to safely mobilise personnel and keep key economic drivers within any given economy running, such as mining, where you tend to be remote and well-contained type operations. And, certainly, that has been driving the growth in our business since that initial COVID response phase.
Rachael Jones: Now let's talk about your products and services. Can you tell us about your instruments, first up?
Paul House: Yeah, certainly. So, Imdex spends about $25 million a year in R&D. We have a portfolio of technologies that we use that fall into three real categories. The first is drilling optimisation tools that help drillers drill most cost effectively and on target. The second is our rock knowledge sensor products, where we design tools to measure the ore body and collect a lot of rock measurements so they know what they're drilling through. And the third is our data and analytics software platforms.
So, all those things work together to give a complete knowledge around the resource and ensure that drillers know where to drill, when to drill, when to stop drilling and how to change direction mid-stride. The real opportunity is to provide high-quality data in real time so that they can make decisions further upstream in the mining value chain than they do today.
Rachael Jones: And what can you tell me about the fluids?
Paul House: It’s one of the original products in the Imdex product suite. It's critically important for the efficient drilling process, and we continue to invest in R&D in our fluids business, and partnering that with very advanced sensors and drilling optimisation products. So it's really a smart fluids business as we see it today. We are the largest mineral fluids business in the world and have close to 40 per cent market share, and it's continuing to grow as we put optimal solutions in to meet our clients' needs.
Rachael Jones: And Paul, at the heart of your suite is your cloud-based software. How does that complement your products?
Paul House: So our IMDEXHUB-IQ cloud platform is critical. It is the backbone that ensures that any data that you gather from any sensing tools or drilling process is captured with a high degree of quality. You can build all your QA routines into that workflow. It's secure chain of custody. It's ISO 27001 compliant, which is critical for handling confidential and high-risk data, and it enables that data to be provided in real time. And you can really substantially improve the decision-making process around an ore body. During this COVID response phase, we've seen a growth in IMDEXHUB-IQ tenancies by 70 per cent, simply because the need to make decisions when you're unable to travel has really escalated.
Rachael Jones: Now let's talk about financials and strategy. How did the company perform in financial year 2020, and what is the outlook for financial year 2021?
Paul House: Right, so Imdex produced a record nine months through to the end of March. And then of course, in the fourth quarter, the impact of COVID had an impact on our business as everyone else's. As I said earlier, we've rebounded out of that initial April, the impact of COVID-19, and growth in FY21 is back on track.
The critical point I would make about Imdex's growth is that we commit to growing above any other proxy for the market. And so the S&P global expiration spend has had a compound annual growth of about four and a half per cent for the last four years, whereas Imdex's growth has been about 13 per cent over the same period. In FY21, 22 and beyond, we expect a combination of general market growth from the increased demand and the underlying fundamentals of our industry, plus our strategy with increased products coming into our portfolio and increased ability to play further downstream in the mining value chain, which more than doubles the addressable market that Imdex has the ability to go and service. So, for us that's pretty exciting, That combination of underlying fundamentals and a really strong portfolio sets us up very well for the next three to five years.
Rachael Jones: Excellent. Paul House, thanks so much for the introduction today.
Paul House: Thanks, Rachael.