This article first appeared on GuruFocus .
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Revenue:$2.475 billion, a slight increase of 2.3% on the prior corresponding period (PCP).
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EBITDA:$163.4 million, an increase of 11.8% (up $17.3 million) on the prior year.
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EBITDA Margin:Improved by 60 basis points to 6.6%.
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Adjusted Earnings:$81.1 million, up 18.4% on last year.
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Adjusted Earnings Per Share (EPS):13.1 cents per share, a 17% increase on PCP.
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Statutory Net Profit After Tax:$56.9 million.
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Operating Cash Flow (OCF):$186 million, with an exceptional EBITDA to OCF conversion rate of 114%.
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Net Cash Position:$81 million at year-end, an improvement of $7.1 million from June 2025.
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Dividend:Final fully franked dividend of 3.5 cents per share, bringing the full-year dividend to 6.5 cents per share, an increase of 18% on the prior year.
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Utilities Segment Revenue:$1.05 billion, up 4.2% on PCP.
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Utilities Segment EBITDA:$60.7 million, up 33.9% on last year.
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Utilities Segment EBITDA Margin:5.8%, up 130 basis points on PCP, with a second-half exit rate of 6%.
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Telecommunications Segment Revenue:$1.06 billion, down 9% on last year.
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Telecommunications Segment EBITDA:Down $12.8 million on PCP.
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Asset and Facilities Segment Revenue:$367 million, including $88 million from the new defence contract.
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Asset and Facilities Segment EBITDA:$24.8 million, up $7.6 million from the prior year.
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Work in Hand:$8.2 billion (initial terms), or $14.2 billion including extension options, reflecting five times revenue coverage.
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Contract Secured:$3.2 billion of multi-year contracted works secured during FY26, with a retention rate of 93%.
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Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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EBITDA margin improved by 60 basis points to 6.6%, with utilities up 130 basis points to 5.8% and a 6% exit rate in H2, ahead of target.
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Exceptional cash flow performance with 114% EBITDA to ACFIT conversion, strengthening net cash position to $81 million.
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Successful entry into defence sector with first contracts, contributing positively to earnings within five months of mobilisation.
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Strong contract retention rate of 93% and robust order book of $14.2 billion including extension options, providing revenue visibility.
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EPS increased 17% to 13.1 cents, and full-year dividend raised 18% to 6.5 cents per share.
Negative Points
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Telco revenue declined 9% due to program transitions and slower ramp-up of NBN fibre upgrades, with EBITDA down $12.8 million.
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Safety performance lag indicators worsened slightly due to new contract mobilisations, with increased recordable incidents and lost time injuries.
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Utilities revenue growth was partially offset by disciplined bidding controls, leading to some expiring contracts not being renewed.
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Statutory NPAT of $56.9 million was impacted by $21 million in ERP transformation costs and amortisation of customer intangibles.
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Management noted future margin improvements in utilities will be more gradual, and telco margins are unlikely to return to a 9% handle in FY27.
Q & A Highlights
Q: Regarding utilities, with a 6% margin in the second half and expectations for gradual improvement, is there a ceiling margin for this segment? Also, with $88 million in revenue from the defense contract in FY26, what EBITDA margin was delivered, and has the better-than-expected performance reshaped your thinking on defense margins? A: Linda Kow (CFO) stated there is no ceiling for utilities margins, as the mix of commercial models (cost-plus alliance, schedule of rates, and smaller projects) can drive further improvement, though the pace will be more gradual. For defense, the contract made a positive contribution in its first five months, exceeding the expected breakeven outcome. While the margin did not reach the mid-single-digit target, it was close, and the company sees a bias for upside in defense margins as operations bed down and additional earnings opportunities emerge.
Q: Can you provide color on the top-line trajectory for the telco segment and whether the 8.7% second-half margin is sustainable going forward? A: Leigh Mackender (MD) confirmed the telco segment is targeting revenue growth in FY27, albeit at a lower level than utilities or defense, driven by incremental work like intercity fibre. The team is also targeting a slight improvement in EBITDA margin, replicating the ~20 basis point uplift seen in FY26, though a return to a 9% handle is not expected in the near term.
Q: Can you step through the target markets for M&A and whether you are open to transformative acquisitions or just bolt-ons like the recent RIE Group acquisition? A: Leigh Mackender (MD) noted the company has reviewed at least 12 different targets over the past 14 months, ranging in size. Key areas of interest include expanding power operations, industrial markets (oil, LNG, gas), and defense-related opportunities now that the annuity base is secured. The company remains disciplined and open to a range of opportunities that meet its strategic criteria.
Q: On the water business, the second half appears to have run at a rate of mid-$300 million. With the Yarra Valley Water contract commencing in October, does a ~$700 million run rate for next year seem plausible? A: Leigh Mackender (MD) confirmed the Yarra Valley Water contract is new incremental revenue that has not yet started, and the estimates provided are not out of line. The company has secured several other water and industrial contracts that will contribute to top-line growth in utilities in FY27.
Q: On defense margins, given the positive contribution in the first five months, should we assume you exited the period doing north of 5% margins on that contract? A: Leigh Mackender (MD) clarified that the positive contribution did not reach the mid-single-digit margin target, but it was not far off. The ramp-up profile, starting at 30% of work volumes and increasing incrementally, meant the margin was lower than the steady-state run rate. Linda Kow (CFO) added that mobilization costs were managed within the mobilization fee, which assisted the positive delivery in the second half.
Q: On the defense contract, are there milestones ahead to retest the size of the existing contract, and how should we think about opportunities to expand into other government-related assets? A: Leigh Mackender (MD) stated the company remains confident in the $240 million annual revenue run rate. The multidisciplinary team formed to pursue minor capital works and projects is targeting a small contribution from January, with opportunities not limited to the existing SA and NT regions but across Australia, including telecommunications and HV upgrades.
Q: On the SAS/ERP investment, is the spending level in FY27 similar to FY26, and does the maintenance CapEx guidance of 1.5% of revenue cover this? A: Linda Kow (CFO) indicated the SAS investment will be slightly higher in FY27 as the company enters the deployment phase. She reiterated the guidance of 1.5% of revenue for maintenance CapEx and IT investment, noting the accounting treatment of expensing the investment is frustrating but the quantum is covered by the guidance.
Q: On utilities, are there bigger tender opportunities similar to the Yarra Valley Water contract in the near-term pipeline? A: Leigh Mackender (MD) confirmed there are a couple of O&M opportunities in the pipeline, with a success rate of about 30%. While no major announcements are expected in the first half, the company is confident of securing some wins over the next 12 months.
Q: On the RIE Group acquisition, can you provide an update on the strategic benefits and how you see opportunities now that you own the business? A: Leigh Mackender (MD) highlighted RIE's strong client relationships with tier-one industrial asset owners and its capabilities in traditional generation assets, coal, gas, and oil/LNG. The company plans to leverage these relationships and its own balance sheet to secure additional station maintenance and shutdown work, with potential contracts ranging from $10 million to $30 million over the next 12-18 months.
Q: On work in hand, it was reported at $8.2 billion at the end of the period versus $9.2 billion in February. Can you help reconcile the movement? A: Leigh Mackender (MD) explained that work in hand is a point-in-time figure, drawn down by $1.3 billion of revenue in the second half. The company references extension options, which add another $6 billion, bringing total work in hand to $14.2 billion, representing five times revenue coverage. He expressed confidence in the level of secured work, with 85% of FY27 revenue already contracted.
Q: On defense, what are the key constraints for further growthis it labor, the pipeline of work, or something else? A: Leigh Mackender (MD) noted the defense sector has significant investment plans for infrastructure upgrades, which will drive incremental work. Linda Kow (CFO) added that the current constraint is the company itself, as it is still on the learning curve and building its understanding of the opportunity set. The company is standing up a multidisciplinary team and combining transport and defense operations to drive growth.
Q: Would it be fair to assume that the minor capital works opportunities in defense will be accretive to defense margins going forward? A: Leigh Mackender (MD) confirmed that minor capital works generally target higher margins due to
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
