This article first appeared on GuruFocus .
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Revenue:AUD207 million, up 5% on FY25.
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EBITDA:AUD42.8 million, up 67%.
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EBITDA Margin:20.7%, up from 13% in FY25.
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Net Profit After Tax (NPAT):AUD15.2 million, up from AUD0.5 million in FY25.
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Earnings Per Share (EPS):AUD0.072.
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Operating Cash Flow:AUD37.5 million, more than double the prior year.
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Free Cash Flow:AUD16.1 million, or AUD0.076 per share.
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Return on Invested Capital (ROIC):25.2%, up from 2% in FY25.
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Net Cash Position:AUD3.5 million net cash as of 30 June 2026, versus net debt of AUD8 million a year earlier.
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Final Dividend:AUD0.06 per share fully franked, with a payout ratio of approximately 85%.
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Capital Expenditure:AUD21 million, largely restricted to essential maintenance.
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Rig Count:65 rigs at the end of FY26, with an average of 62 rigs deployed out of 90.
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Release Date: August 24, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue grew 5% to AUD207 million, with EBITDA up 67% to AUD42.8 million, demonstrating strong operating leverage.
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Net profit after tax surged to AUD15.2 million from AUD0.5 million, a 30-fold increase year-over-year.
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Return on invested capital improved dramatically to 25.2% from 2%, well above the historical average of 8%.
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The company achieved a net cash position of AUD3.5 million, a significant improvement from net debt of AUD8 million, with no floating rate exposure.
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Operating cash flow more than doubled to AUD37.5 million, with free cash flow exceeding reported profit, supporting a fully franked dividend of AUD0.06 per share.
Negative Points
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EBITDA margin of 20.7% may be difficult to sustain, with management suggesting a potential 1-2 basis point decline due to future mobilization costs and weather disruptions.
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Wage pressures remain a key risk, with a 4.7% increase implemented at lower levels and potential for further rises, which could impact margins.
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The coal sector is slowing down, and while the company has pivoted to metalliferous mining, this transition has led to contract losses and uncertainty.
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Loop technology, while progressing, is still in early stages and faces delays due to slow adoption of decarbonization policies, limiting near-term earnings contribution.
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Capital expenditure is expected to increase if large multi-rig opportunities in the tender pipeline are secured, potentially impacting cash returns to shareholders.
Q & A Highlights
Q: What drove the step-change in FY26 financial performance, and how sustainable is the 20% EBITDA margin? A: Nathan Mitchell (Executive Chairman) and Gregory Switala (CFO) explained that FY25 investments in new contracts, particularly in new jurisdictions, converted to business-as-usual operations in FY26, eliminating upfront mobilization costs. This operating leverage allowed 5% revenue growth to translate into 67% EBITDA growth. While 20% is the target margin, Greg noted that FY26 was unusually free of wet weather disruptions and mobilization costs. He advised that modeling a slightly lower margin (a basis point or two) may be prudent, as factors like weather and ramp-up costs for new contracts could re-emerge.
Q: What is the outlook for the rig count, and are there risks of rigs coming off contract in the next 6-12 months? A: Nathan Mitchell acknowledged that rigs come and go in a contracting business, but the company's feeling is that they will gain more rigs than they lose. Greg Switala added that the average rig count in FY26 was 62, exiting at 65, and currently sitting at 68. He confirmed that the company expects rig counts to continue to increase in FY27, with a combination of existing customers requesting additional rigs and a strong tender pipeline.
Q: Can shareholders expect a similar AUD0.06 dividend next year, and what are the thoughts on share buybacks and M&A? A: Nathan Mitchell stated that no decisions have been made on capital returns for next year, as the company evaluates all levers based on market conditions. He noted the company is "very picky" about M&A opportunities and is always looking, but nothing is imminent. Regarding buybacks, Greg Switala explained that an off-market buyback (which is a reverse capital raise) would box the board into a corner, whereas an on-market buyback offers flexibility to be ratcheted up or down as growth opportunities present themselves.
Q: What is the outlook for CapEx, and will it increase significantly as idle rigs are brought up to speed for deployment? A: Greg Switala indicated that if the business only requires day-to-day maintenance CapEx, a similar level to FY26 (AUD21 million) should be expected. However, there are significant multi-rig, multi-year opportunities in the tender pipeline. If successful, these would require accelerated growth CapEx, which would be funded through debt. The final number is a "moving beast" subject to which growth opportunities the company wins.
Q: What are the catalysts needed for Loop to become a major earnings contributor? A: Nathan Mitchell stated that the technology is working and is a world-first, which is a success in itself. The main hurdle is the coal industry's attitude toward decarbonization and carbon taxes. He noted that the safeguard mechanism will kick in within 12-18 months, forcing companies to spend. The company's position is to finalize and prove the technology works, and then see what demand emerges once companies are compelled to act.
Q: How are wage pressures shaping up in FY27, and what is the risk to the business? A: Greg Switala identified labor availability and wage pressures as one of the highest risks in the business. Currently, it is manageable, with a Fair Work increase of about 4.7% implemented at lower levels. The company is still able to attract and retain staff, but it "won't take much" for wages to move. He emphasized the need to ensure customer contracts are flexible enough to adjust for wage pressures.
Q: What areas of M&A might be considered strategically optimal, and is the company looking to rebalance away from gold? A: Nathan Mitchell said the company is open to all three suggestions: M&A, rebalancing away from gold, and non-drill acquisitions. He noted the company is now 60% gold and expects coal to come back at some stage, while copper is the next big opportunity. The company is looking for "one plus one equals three" opportunitiesbusinesses that sit alongside and vertically integrate up and down to grow the bottom line.
Q: What is the current franking credit balance, and can the company continue to pay fully franked dividends? A: Greg Switala confirmed that franking credits currently allow for fully franked dividends of about AUD8 million in addition to the dividend just declared. Having utilized all legacy tax losses, the company is now in a tax-paying position, meaning the franking balance will continue to increase. All future NPAT will add to the franking balance, allowing future dividends to be fully franked, unlike some partially franked dividends in the past.
Q: What is the potential CapEx for the Loop business, and can similar work be deployed? A: Greg Switala explained that the Sumitomo investment (AUD1.5 million for 6.5%, with commitments for more) will fund Loop's CapEx requirements in the short to medium term. The current investment should be enough for rigs two, three, and four. Beyond that, Loop should be able to stand on its own two feet and invest in CapEx itself. The business model suggests similar rigs can be deployed.
Q: How much opportunity is there to put additional rigs into existing jobs versus new contracts? A: Nathan Mitchell stated that the potential to add five to ten additional rigs is from the pipeline, and many will likely go into existing contracts with existing clients, which signals good customer relationships. However, these rigs have yet to be committed, and the final deployment will depend on how things play out over the next few months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
