Chrysos Corporation Limited (C79) Earnings Call Transcript & Summary

Hello, and welcome to the Chrysos Corporation Full Year 2026 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Dirk Treasure, Managing Director and CEO. You may begin.

Thank you very much, and good morning, shareholders. Thank you all for joining us today for our FY '26 results presentation. As usual, I'm joined by our CFO, Brett Coventry as well as by our CEO, Tim Boland. FY '26 was another strong year for Chrysos. We delivered at the upper end of our guidance, processed record sample volumes, expanded our contracted fleet and strengthens the operating platform that supports our next stage of growth. I'll begin with the highlights and the progress we've made in expanding Foton Asset globally. Brett will then take you through the financial results before I return to cover our growth opportunity and the outlook for FY '27. Slide 4, please, operator. FY '26 has been another year of strong adoption of our photon assay technology, and we continue to demonstrate our ability to grow revenue faster than cost at scale. Revenue increased 33% to $88.1 million, and EBITDA increased 68% to $27.2 million, with the EBITDA margin expanding from 24% in FY '25 to 31% this year. We continue to generate cash flow with $17.9 million net inflow for the year, supporting our ongoing growth. Operationally, we finished the year with 46 deployed units with the addition of 7 units and the decommissioning of 1 unit during the year. Despite deploying less units than we had targeted for FY '26, our fleet processed 11.3 million samples during the year, which is an increase of 67% over FY '25. Our growth is well supported by the growing fleet, but also by materially higher utilization of that fleet. An important achievement of FY '26 was our growth in contracts, both a number of leases, but also in the quality of those leases. We signed 24 new lease agreements during the year and a further 4 post period, taking our total contracted units to 87. These new leases provide the foundation for a more aggressive deployment program in FY '27 and and I'm pleased to announce that we are currently deploying 6 units concurrently with some of those to pass site acceptance testing imminently. Next slide, please, operator. This chart captures the acceleration we've seen in photon assay adoption. Quarterly salable volumes have continued to set records. Monthly throughput moved above 1 million samples in March and has remained above that level each month since with a further record of more than 1.1 million samples achieved in July. That volume growth increased AAC to 29% of FY '26 revenue compared with 15% in FY '25. I MP continues to provide the contracted base and higher customer activity flows through as additional revenue. The current gold market is supportive, but the most important point is the continued conversion of customer workflows to photon assay and the increasing use of our deployed capacity. Slide 6, please, operator. Sample growth is now running ahead of fleet growth. Over the last 2 years, quarterly volume has increased from around 1.3 million samples to more than 3.1 million. Over the same period, hub laboratory utilization increased from 41% in FY '25 and to 59% in FY '26. APAC is the most mature region at 79% utilization. The Americas and EMEA also improved and still have meaningful capacity available to support further growth. We're also increasing capacity within the existing fleet. Software and operating upgrades are delivering a 10% to 20% improvement in throughput with minimal capital costs. Several of our units are now repeatedly operating above nameplate capacity. This allows us to grow revenue and unit returns without relying only on new deployments. Slide 7, please, operator. We deployed 7 units during FY '26 and decommissioned 1 unit, taking the fleet to 46 units across 34 active sites at year-end. Those deployments broadened our customer and geographic base. Three units were deployed with ALS across Australia and Canada. Our first South American unit was deployed with Bureau Veritas in Chile. A new Canadian hub has been established with MSA. We deployed to the Nordman gold mine with Intertek and we completed our first next-generation XN unit with SGS in Perth. Contracting was particularly strong. We signed 24 lease agreements during the year and 4 more after year-end, taking the contracted fleet to 87 units. We are expanding our relationships with each of the major laboratories while building a stronger direct to mine pipeline with Newmont's Allied Gold, Acrux, Alcan, Pantoro and other miners. We're focused now on manufacturing, deploying and bringing those contracted units online. Slide 8, please, operator. Our sales strategy remains deliberately two-pronged. Hub and spoke laboratories provide broad access to local miners and explorers. Our laboratory partners market PhotonAssay into those regions, while our sales and technical teams work with miners to increase adoption and move more sample types onto the units. Direct to mine deployments create deeper customer relationships and give us access to samples across exploration, mining and processing. They also established a strong reference point for adoption across our miner's broader portfolio. The 2 channels reinforce each other. The laboratories broader market access, minestrone deployments demonstrate the operational value and higher utilization in both instances, improved unit economics and supports further adoption. Over to you, Brett.

Thanks, Dirk. Slide 10, please, operator. Revenue for the year was $88.1 million, up 33% on FY '25 66.1 million. That growth continues to be driven by the expanding deployed fleet and materially higher utilization of profit, reflecting ongoing global adoption of photon assay and the elevated industry activity. Looking at the regions, APAC was a larger contributor to FY '26 growth, up 70% to $39 million. driven by 3 new units and $11.4 million increase in additional assay charges. The Americas were up 28% to $23.4 million, as the installed base scaled and EMEA was up 4% to $25.8 million, consolidating 2 years of substantial growth. International revenue rose 14% to $49.2 million and now represents 56% of group revenue. More than half our revenue comes from outside APAC, which validates the global rollout strategy. Group revenue has almost doubled since FY '24 from $45.4 million to $88.1 million on an increasingly diversified geographic base. Next slide, please. This continues to be 1 of the most important graphs in the deck because it shows the forecast of underlying revenue generated by minimum monthly assay payments. MMAP was up to $62.5 million for the year, up 12% on FY '25 and made up 71% of the revenue. It scales directly with the deployed unit base and gives us a contracted revenue floor. Additional assay charges were $25.5 million, up 153% on FY '25 is $10.1 million and now represent 29% of revenue against 15% last year. A growing contracted base with a combined increasing AAC contribution. Next slide, please. This year represents a clear step change in profitability. Revenue increased 33% to $88.1 million, while EBITDA increased 68% to $27.2 million with the EBITDA margin expanding from 24% to 31%. The -- the highlight for me is that revenue growth has materially outpaced expense growth. Operating expenses of $39.6 million grew just 18%, well below the 33% revenue increase and fell around 52% to 45% of revenue. That is a global platform that we've built now delivering leverage. Gross profit was at up 32% to $66.8 million with margins steady as soon as say costs broadly track revenue. [indiscernible] operating I say operating expenses of $29.3 million were up 36%, fleet maintenance of $11.4 million and direct operating labor of $9.9 million, reflecting our larger fleet and record activity levels. The direct costs held broadly stable at around 24% of revenue. Depreciation and amortization of $21.4 million increased in line with the expanding fleet, which you would expect as a capital investment translates into revenue-generating assets. Given the ongoing strong operation of our maturing fleet, we've taken the opportunity to reassess the useful life of our operating fleet and reassess that to be 15 years for the PhotonAssay units rather than the previous 10 Below EBITDA, we delivered a statutory net profit of. Next slide, please. we're spending a moment on currency because the reported numbers absorbed a real headwind. FY '26 guidance was set in August 2025 on constant currency assumptions with approximately 55% of group revenue exposed to non-AUD currencies. On those August 2025 assumptions, the results equate to approximately $91 million of revenue and $30.2 million of EBITDA. So we absorbed around $3 million revenue and EBITDA headwinds. Even after absorbing that, we delivered at the upper end of both guidance ranges with revenue of $88.1 million against the $80 million to $90 million guidance and EBITDA of $27.2 million against the $20 million to $27 million of guidance. Underlying performance was ahead of guidance, and we actively manage the exposure through the year. Next slide, please. This slide is the unit economics under ester growth. We've sustained gross profit margins between 70% and 80% across FY '24 through to FY '26 and margins held firm even as direct employee costs absorbed short-term incentives at full achievement and versus particularly -- sorry, versus partial achievements in prior years. Cost control continues to be supported by the hub strategy and bringing more maintenance in-house, which reduces our reliance on third parties. Revenue per unit remains underpinned by MMAP, with an FY '26 MMAP exit rate of $65.9 million and the additional SA charges per unit more than doubled over the year on broader industry activity and growing adoption. The 5 units installed in May and June of FY '25 ramped up through the year, and several previously underperforming units are now at or above their committed MMAP volumes, which opens up further AAC upside. Next slide, please. With that growth, our cash flow continues to improve, reflecting higher EBITDA and better cash conversion. Operating cash flow was $17.9 million for the year, up 103% on FY '25 $8.8 million. The working capital outflow more than halved from 29.8% to 14.5%. We invested $36.3 million in growth capital expenditure on the global fleet expansion, which is the core driver of future recurring revenue. with total capital expenditure of $41 million, including $0.6 million of sustaining CapEx and around $4.1 million on R&D. Overall, we are seeing a growing unit base translate into increased cash generation. Next slide, please. The Crisis balance sheet remains strong and well positioned to support continued growth. Net assets of $197 million, broadly unchanged from the previous year. We also finished the year with total assets of $306.5 million and $25.9 million cash. The main movement in our noncurrent assets, which increased to $228.2 million as we continue to expand our PhotonAssay fleet. Let's move to the next slide and talk about the increased debt facility. During the period, we refinanced our corporate facilities with a new 3-year $200 million syndicated facility provided by 3 domestic finances. This is a deliberate shift away from the asset-based financing to a corporate style structure, giving us far greater operational flexibility, improved pricing and better covenant package. Proceeds were drawn to extinguish the existing asset-based facility, but it did overall add $105 million in funding headroom. And I'd note that reflects the lenders' confidence in our customer base and our long-term contracted revenue. The $140 million undrawn supports manufacturing and global deployment of PhotonAssay units through FY '27 and beyond and underpins our return to target manufacturing cadence of 18 units a year. Over to you, Dirk.

Thank you, Brett. And Slide 19, please, operator. We're now engaged with 80% of the world's top 20 gold producers. During FY '26, Northern Star became the first mining customer to use PhotonAssay as its primary analytical technique across all of its major sites that sits within those top 20. It is an important demonstration of portfolio-wide adoption and 1 that we're working hard to repeat with our other mining customers. We established our first operating presence in South America with Bureau Veritas in Chile, deployed the first XN unit with STS and Perth and continue to build the Newmont relationship under the master services agreement signed last year. Each of these milestones is useful on its own. Together, they show that PhotonAssays moving from individual deployments toward broader acceptance globally across both miners and laboratories. Slide 20, please operator. Our objective remains to become the world's leading provider of innovative assay services and technologies, starting with the conversion of major gold mining projects to PhotonAssays. The addressable market is approximately 610 sites made up of around 200 hub laboratory opportunities and 410 direct mine site opportunities. We currently operate 46 units across 34 active sites, representing around 8% market share by deployed units. That leaves substantial room to grow within customers we already serve as well as through new customers and new regions. Our lease model supports our growth by reducing the customers upfront investment, aligning our revenue to sample activity and providing long-term contracted earnings with utilization upside. Slide 21, please, operator. Our opportunity is global and widely distributed, which is why the network we have built is important. PhotonAssay now has a presence in every target region and are supported by major global laboratory partners. Our first deployment with Bureau Veritas in Chile has established the South American beachhead with a further contract signed with BV Peru and another for Mexico since year-end. We do not need to build a large stand-alone footprint in every market. Strategic hubs, established partners and the global service capability allow us to serve the market while retaining operating synergies and strong unit margins. Our next phase is to deepen those regional positions and convert the contracted pipeline into an increasingly dense operating network. Slide 22, please, operator. Gold remains our core market and our primary focus. But the same platform can support additional elements and applications. We already provide commercial analysis for gold, silver and copper. Non-gold volumes increased 83% over the last 18 months, demonstrating that customers are beginning to use PhotonAssay for these alternative analysis. Near-term development is focused on improving customer outcomes at operating mines, supported by concurrent voice to analysis and solution analysis, and we continue to develop additional applications enabled by tuning the energy output of the linac. Our strategy extends our installed platform and has the potential to increase revenue per sample, broaden sample volumes and deepen the value we deliver to our customers. Slide 23, please Operator. There are 3 drivers behind our multiyear outlook. First, fleet growth. The contracted book and deployment pipeline support a material increase in the installed base over the next 3 years. And during that period, we intend to double our deployed units. Second, resilient demand. Customer activity remains elevated, while the structural conversion to PhotonAssay and expansion into additional applications support continued sample growth; third, lower earnings volatility. And an increasing share of our volume is linked to mine production rather than exploration and MMAP continues to provide a contracted revenue for. Over time, a larger fleet, maturing utilization and production-linked volumes create a durable earnings base as Christoph scales. Through to Slide 25, please, operator. FY '26 has reduced a number of the execution risks that previously set in front of growth in front of our growth plans. We enter FY '27 with 87 contracted units units already deploying and stronger visibility over the deployment pipeline. The existing fleet is also mature. We've achieved record saleable volumes 4 consecutive months above 1 million samples and more recently, 1.1 million samples during July, and we've demonstrated that we can lift throughput through software and operating improvements. Finally, the platform supporting that growth is stronger. Manufacturing cadence is now back to 18 units per year. Funding capacity has increased, the next generation of PhotonAssay is progressing and our global deployment capability has expanded. That provides a stronger base for FY '27 than that with which we entered FY '26. Slide 26, please, operator. This slide provides a snapshot of where the fleet sits today, both for deployed units, but also those that are pre-deployment. Since our May trading update, we've manufactured 5 more units, deployed a further 2 and signed 4 additional contracts. We now have 59 manufactured units, 46 deployed units and 87 contracted units. 9 units are available across preshipping and awaiting installation with a further 6 currently being deployed. One Ghanaian unit of Bassi has been demobilized and has been redeployed to Morocco. The important change is the movement of units towards site and installation. We have the funding, manufacturing capability and contracted demand. The focus for FY '27 is to deploy against that demand while maintaining discipline around costs. Slide 27, please operator. We're pleased to provide our FY '27 guidance. For revenue, our guidance range is from $108 million to $118 million, an uplift of 28% at the midpoint. For EBITDA, our guidance ranges from $35 million to $42 million which is an uplift of 42% at the midpoint. As we did last year, we provided guidance at constant currency, and this slide outlines the currency assumptions used. Slide 28, please, operator. To summarize, FY '26 was a strong year for Crystals. Revenue increased 33% to $88.1 million, and EBITDA increased 68% to $27.2 million. We finished the year with 46 deployed units signed 24 new lease agreements and processed record sample volumes up 67%. We also strengthened the balance sheet and funding position to support a return to our target manufacturing cadence of 18 units per year. Most importantly, the business is becoming more mature. Growth is broadening across customers and regions. Utilization is contributing more meaningfully and our contracted pipeline provides better visibility into future deployments. We remain focused on execution, building units, deploying them efficiently, supporting our customers and converting the significant market opportunity that's in front of us. Slide 30, please, operator. Thank you for your time today. We're pleased with the progress that we've made during FY '26 and confident in the platform that we've built for FY '27 and beyond. Brett and I will now take questions.

[Operator Instructions] Your first question come from Josh Kannourakis with Barrenjoey.

First question, just on guidance as we do usually. Can you just run through what the expectations are versus sort of current operating conditions for guidance? And what you're assuming for, for example, AAC into next year as well? Just some of the operational sort of metrics that you're thinking about that gets you at the middle and the top and the bottom of the range?

I think the way we've thought about, obviously, we have a deployment cadence that we're thinking of, and that's -- as we've spoken about, you can see where we're starting with the 6 units currently deploying, how we see them rolling out over the year. And that's the first thing. Obviously, that's going to plan is how we've thought about the guidance. And then the industry is staying roughly in line with its current operating. Obviously, we've done the last 5 months in a row over 1 million samples. So not seeing any alteration that obviously neither increase or decrease, but that would put us at the midpoint, obviously, then making assumptions around if the industry continues to grow, and you can see in our debt utilization across our fleet where there's opportunity for that, but also if a decline, that would take us top or bottom. And then there will obviously deployments if they go faster or slower is the key flex factors in that all at that constant currency. Do you want to add any to that?

That's great. And so also, you did mention some of the upgrades and as you said, you've got some of the units that are tracking above nameplate capacity. Could you talk us through, are there many of the existing units that are running at capacity that are going through upgrades or expected to go through certain upgrades that could increase that capacity over this year as well over '27.

Yes. Look, -- great question. So we've obviously focused in the last 12 months upgrading the units that are running up towards capacity. So when you see Australia sitting there up at 80-odd percent utilization. You can imagine that we're spending a fair bit of time getting those units upgraded to get that extra 10%, 15% through those units. A fair amount of the fleet is now upgraded. We're probably talking about half of the fleet is upgraded with those software upgrades. So there's a bit of room to go. But yes, that gives you a bit of an indication of where we are at the moment.

Got it. Okay. No, that's really helpful. And so do you think -- is there an expectation or the demand that the rest of those might be upgraded with those software and other upgrades across this year? Is that how we should expect

Yes, absolutely. Over time, we look to roll all of those upgrades across the entire fleet. But I would caution that, that doesn't necessarily mean that we expect all of our units to be running at 100% or 110% capacity cost a comfortable capacity for us is in that sort of 70% to 80%

Yes. Yes. No, that makes sense. Perfect. And then just another question as well. in terms of the D&A side of things, maybe Brett, could you just run through that? Because I guess there's a couple of implications of the DNA, like maybe you could run through how we should expect it are we reading that that's a $9 million reduction? Or is it $9 million reduction on what you would expect have otherwise been. So maybe just a little bit more color on that. And then in our models, a lot of us look at replacements linear accelerators, for example, after 10 years, things like that? Like should we be thinking about expanding that out to 15 years as the modeling has now suggested?

Yes. Thanks, Josh. So first of all, let's start with the depreciation piece, yes, that is the the $9 million depreciation is our expectation of savings on the existing fleet for next financial year. So there would be a reduction in the depreciation cost for next financial year of that $9 million across the fleet. So that's -- and then going forward, you have a useful life of 15 years for the assets we're deploying. And then as we think about those, the linear accelerator replacement, that would be thinking about that being around the 15 years. We're not seeing any signs of impairment or anything else at this point in time, but we're still getting towards our 10, 15 years. We're challenging that as we go through, but that's kind of where we're pushing that thought process out to, if at all.

Your next question comes from Joseph House with Bell Potter Securities.

Congrats on a strong update. Just 2 questions from me. Firstly, are there any learnings perhaps over the last 12 to 18 months around your deployment to help deliver a more consistent and improved cadence going forward?

I'd say that's a great question, Joe. That's yours.

Look, I think we're constantly learning. And you're at the mercy of what the contracted base looks like. So something that I commented on earlier in this update is -- it's not just the number of units that we have in our contracted pipeline. It's the strength of those contracts or counterparties. So as we've come through the 24 additional units and in the forecast period, -- those are all very, very strong contracts. At the same time, we are seeing ongoing deployment of the units that we already had signed up. So there's a couple of MSA units that have been deployed. There's also recently released by Paragon, one of our larger customers that haven't bored all of their units. They've just released a market that they're expecting the [ Quin ] to take on more units on to their mine sites. So those are the types of things that we see driving some of the historic contracts. But for the newer contracts, it really comes down to the strength of size and the strength of the counterparties. So we're pretty excited with how that book is starting to look I mean the addition of 9 ALS units last year, 3 SPS, 2VV, 1 Intertek, these are all the biggest names in the industry. So that should help us to get away from site readiness challenges. Also, the bigger that, that contracted book is, the more we're in a position where if a customer isn't ready for delivery, we can instead deploy that unit to an alternative location. So I think there's some learnings that we've had on the ground. But more importantly, it's just the strength and breadth of that contracted book.

Yes. And is there any color you can provide on leads for new lease agreements? I understand conditions are quite favorable on the ground with respect to exploration activity. Are you seeing that supporting discussions with, say, new and existing clients now to say compared to 6 months ago?

Yes. So we've always talked about our dual channel to market. So 1 being through laboratories and 1 being directly to the miners. And I think the pathway to the mine is largely noncyclical. So irrespective of kind of where we are in the mining cycle, we're out there pounding the pavement, we're talking to miners, we're converting miners over time. What we do see there is a cyclicality in the laboratory space. And to your point, right now, we're seeing increased sample volumes going through labs. We're seeing looking at building capacity around the world. Certainly, we want to be a part of that. And again, I come back to my comments before about the laboratory contracts that we've signed up in the last 12 months. One of the pieces in there that, again, we're quite excited about is the breadth at which, for example, ALS is rolling out Photon asset. So growing not just the number of units in regions that are already using photon assay, but growing us into regions that haven't had Foton so exposure before. So certainly, from our side, made the good times to continue with exploration. But the things that are really in our control are those mine site deployments, the ongoing development of applications for those miners and even being able to have those miners telling the story of their adoption to other miners. For those on the call who haven't seen it jump on Arlington jump on our website. We've just done a really exciting campaign with Oceana Gold, where we've interviewed a number of the operators at the mine site talking about their adoption. That complements what we've done previously with Ravenswood. And we also have Nevada Gold Mines, the biggest gold miner in the world talking at a conference in September, October as to their adoption of the technology. And then this ongoing halo effect really just allows us to continue to drive that adoption and continue to get new lease agreements signed.

Great. And just maybe lastly, I know you spoke about getting that manufacturing cadence up to 18 units. Is there a time line on that ramp-up? Or -- and is it dependent on new lease agreements throughout FY '27

Yes. So it's probably more dependent on the lease agreement through FY '26. So the turnaround time to ramp up is around about 12 months. So you can kind of read the tea leaves here that sometime in the last 6 months, we put the foot on the accelerator building back towards that 18 units. You couple that with our strategy here of doubling the number of units deployed over the coming 3 years. So that gives you quite a nice cadence in that 15 or so per year and 1 extra that starts to, again, read the tales and you can build the models from that.

Your next question comes from Lindsay Bettiol with Goldman Sachs.

Okay. So a couple of maybe definitional questions. This like deployment, I call it, a time line you give us -- we've got 6 units installing and final waiting installing fiber waiting installation. So my reading on that, like, I know this want to be a perfect science. But -- should we assume something like the 6 to be deployed in roughly a quarter and the additional fiber waiting in station should be deployed in like 6 months, something like that? Is that like the best way to think about it that you're looking at maybe 11 deployments over the next 6 months? Or tell me where that thing is wrong.

It's a nice way to think about it. And again, I'm always cautious around guidance on the units. I mean, from our perspective, we want to deploy units as quickly as we can, as quickly as the customers are ready to deploy them. So the piece there that is in our control is the manufacturing of those units and transportation, et cetera, et cetera. We have a very firm definition of what we consider to be deploying, which is unchanged for the last sort of 5 years, which is really when we've got boots on the ground, we're bolting the units to the floor and we're putting these units together. And generally, it's taking us about 7 to 8 weeks to get a unit up and running. So the 6 that we've said are deploying should all be operating at most 8 weeks from now. As to the other ones that are the 9 that are sitting there is the pre ship, the shipping or the awaiting installation, really, what we're saying is we are ready to go, and then we're working with each of our customers on when their site is ready to start installation of those units. It's not really answering the question, but this is where we're trying to provide that sort of longer-term guidance to say we intend to double the fleet over the coming 3 years. and then really these 9 units that are sitting there, we aim to get out as quickly as possible, but we're not really providing a time line around it.

No, that's helpful. And I mean I got the 6 units a week out of you. So -- so then if I look beyond those initial 11, you've got another 4 that are either shipping or pre ships, but then it looks like it's 28-ish that have either been signed and not yet manufactured, but it all ties into your CapEx question. So it looks like your CapEx stepped down a lot in second half and the first half, presumably because you've been preordering for a lot of the stuff. Like how do we think about, one, your CapEx in the next, let's say, 12 months? And two, tying that into like the manufacturing fees, like how quick you going to look at the 6, are you going to manufacture 18 years as fast as you can? Or is there like enough in the pipeline that you'll probably slowly manufacture those, just those 2 questions, please.

So capital commitments, you can see in there increased to $114 million, which gives that visibility to the around $81 million get to 81, which is the unit #81 effectively has been ordered out to in long lead time items. And -- we've set out in the back of this deck as we have in previous decks, the spend profile of when we spend that money to have a unit deployed. I think -- we are looking at -- we have 87 contracts signed now, obviously, 81 ordered out to full units. And then we've got the long lead time pieces. As we deploy from here, obviously, we start to incur those further cash spend, we obviously got the commitments now, and that's the profile that we'd see going forward in terms of paying for those units as we deploy them. And you could think about them across -- obviously, we have some favorable terms as we ordered them. but we would pay for them across the time as we deploy them. Going forward, we've got significant lead time items ordered now to make sure that we are able to fill that doubling up the fleet over the next 3 years.