Specialist resources services provider Babylon Pump & Power Limited (ASX: BPP) has reported an improvement in net cash from operating activities over the previous quarter with positive operating cashflow of $0.2 million for Q1FY22. This net cash inflow was on the back of cash receipts from customers of $7.2 million for the period.
In addition to these receipts, Babylon has receivables of $3.7 million from a blue-chip client base including BHP, Alcoa and South 32.
Revenue for the quarter is estimated at a record of $7.3 million, which is a 38% increase on the previous quarter’s revenue of $5.3 million.
The Company holds $5.1 million of cash and undrawn debt facilities at the end of September to fund continued growth.
Operations Update
During the quarter, Babylon successfully bolstered its executive management, workshop leadership and business processes to position the company for continued long-term growth.
Babylon has appointed Mr Craig Batterham as National General Manager and Laurie Phillips as Project Manager, whom have both contributed directly to the positive quarterly result.
Mr Phillips has over 25 years’ experience in the mining, energy and industrial sectors most recently as General Manager of Equipment Solutions at BTP, one of Australia’s largest suppliers of heavy mobile mining equipment. Prior to this, Mr Phillips served as Business Development Manager for TSX-listed remote workforce facilities provider Black Diamond Group and was General Manager of Australian and Indonesia-focussed power and water services group Resource Equipment Limited.
Craig Batterham has a similarly strong history with major resources players, working as an Operations Director for rental equipment and maintenance group Worx Equipment and prior to this as Asset Operations Manager for mining services giant Thiess.
The company’s new Perth workshop, currently under development and slated to be in operation in 2022, will provide extra capacity and capability for future projects to underpin continued company growth.
Babylon continues to pursue its business model which is focussed on three complementary areas in high demand in the resources sector:
- Rental of specialty equipment;
- Maintenance and rebuild services for large diesel driven equipment; and
- Speciality services including high pressure water and abrasive blasting and ancillary services to the resources sector via Ausblast
Specialty Rental
Babylon delivered strong rental results in Q1 FY22. Excluding cross hire revenue, where the Company hires non-company owned equipment to pass through to client with a small mark- up, Q1FY22 was a record revenue quarter. Rental revenue growth in the oil & gas sector will increase in Q2FY22 as more equipment mobilises to Barrow Island. New rental projects in the gold, nickel and iron ore sectors have also contributed to the positive result. Significant opportunities have been quoted for the remainder of the financial year in WA and QLD.
Diesel Maintenance
Demand for the company’s diesel maintenance services continues to grow, with a deepening revenue base from our current customers in bauxite, iron and coal sector as well as new clients providing further diversity within these sectors.
The company’s focus in previous quarters on building its service exchange program has provided positive results in the reporting quarter. Additionally, Babylon has secured client commitments for service exchange engines in upcoming periods.
Specialty Services
As budgeted, Ausblast has seen an uplift in work as well as a significant increase in quoting and client engagement in Q1FY22. Client commitments for Q2FY22 will increase Ausblast’s contribution to the Company as it continues to meet an accelerating budget. During the reporting period, works were completed for clients in lithium, iron and oil & gas sectors.
