Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Hi team, you mentioned operational efficiencies at various points through the presentation. Could you provide more color on where these have been achieved and if these initiatives may impact the speed of possible ramp as operating conditions improve? A: Paul House, CEO: We achieved a net $16 million improvement in OpEx through synergies from the Devico acquisition, organizational redesign savings, early-stage digital transformation investments, and saved legal fees from the Globaltech claims resolution. We are well-positioned and scalable, expecting incremental margins to drop through as the top line increases without compromising margins.
Q: R&D expense was down about 20% year on year, but it looks like you've capitalized more. Could you elaborate on total R&D spend during the first half and how much has been capitalized? A: Linda Lim, CFO: Total R&D spend for the half was around $19 million, with $14 million expensed and $5 million capitalized. Compared to the prior period, $18 million was spent in 1H '24, with $17 million expensed. The increase in capitalized R&D is due to client-facing software product development, with overall R&D spend up to 9% of revenue from 7.5% in the prior period.
Q: Can you explain the confidence in FY26 revenues returning to growth? Is it based on customer conversations as their budgets reset for the next 12 months? A: Paul House, CEO: Our confidence is based on declared budget increases, S&P data, and our global network's engagement with resource companies and drillers. The increased level of inquiries in some regions supports a positive outlook for FY26, despite persistent rising costs and geopolitical tensions.
Q: Could you provide some color around OpEx and CapEx expectations for 2H '25 and how we should think about your operating leverage profile into FY25? A: Linda Lim, CFO: OpEx run rate is around $85 million for the first half, expected to continue into the second half. CapEx additions were $17 million, with intangibles at $7 million, expected to continue with a slight increase due to next-generation technology investments. Operational leverage should see good incremental margin drop through for incremental dollars earned.
Q: Can you talk about the strategy for achieving higher revenue contribution from the IMT business unit in FY26 and beyond? A: Paul House, CEO: As we move into the mining production space, we benefit from common customer relationships and product foundations. The challenge is introducing new products into workflows, requiring customer engagement and problem-solving. We focus on customer engagement, problem identification, and product trials to validate solutions, maintaining momentum over the next 12-24 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.