This article first appeared on GuruFocus.
Revenue: Up 27% year-over-year, driven by growth in the Industrial Access division.
Industrial Access Revenue: $200 million, up 53% on the prior corresponding period, with growth roughly half organic and half from acquisitions.
EBITDA: Relatively flat year-over-year, with over one-third generated in the last quarter, which was the most profitable quarter in company history.
Underlying NPAT: Down 20% to $27.5 million, impacted by increased depreciation and interest costs.
Underlying Earnings Per Share (EPS): $0.886, down 20%.
Reported NPAT: Down 24% to $17.8 million.
Dividend: Final dividend of $0.142 per share, bringing the full-year dividend to $0.342, at the high end of the new dividend policy guidance.
Net Debt: Increased to $133 million, with net debt to EBITDA at 1.9 times.
Capital Expenditure: $36 million invested in FY26, with a budget of $30 million forecast for FY27.
Second Half Formwork Revenue: $66.7 million, the highest half-year result in company history, up from $53 million in the first half.
Hire Equipment Pipeline: Up 33% to $290 million.
FY27 Guidance: First half revenue of $195 million to $215 million and EBITDA of $50 million to $55 million; full-year EBITDA midpoint of $110 million.
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For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Industrial Access revenue grew 53% to $200 million, with half of the growth organic, and the division now contributes 60% of total revenue.
Second-half formwork revenue hit a record $66.7 million, up 26% from the first half, signaling a strong construction market recovery.
The hire equipment pipeline increased 33% to $290 million, providing strong visibility for future revenue.
Innovative products like the Column Climber Jumpform and Powershore 60 are gaining market traction, with the Column Climber being a first-of-its-kind in Australia.
FY27 guidance is robust, with revenue expected between $390 million and $450 million and EBITDA between $100 million and $120 million, driven by a strong start to the year.
Underlying NPAT declined 20% to $27.5 million due to flat EBITDA, higher depreciation, and increased interest costs.
EBITDA margin fell to 24% from 30% due to a shift in revenue mix toward the lower-margin Industrial Access division.
Bad debt expense increased by $1.5 million during the year, impacting profitability.
The company reduced its dividend payout ratio, which may disappoint income-focused investors despite being a strategic capital allocation decision.
Queensland formwork revenue declined due to market softness, although market share was maintained.
Q: Can you elaborate on the swing factors behind the FY27 guidance and at which point you anticipate updating the market?A: Steven Boland (CEO) stated that the major swing factors are product sales that are not budgeted for, particularly large bespoke formwork packages and product sales. The company is being conservative with guidance. July EBITDA was $3 million better than last year, and the first quarter is forecast to be $8 million better than the prior year. The first half has a strong degree of confidence, while the second half is based on expected run rates for construction divisions and the order book for industrial businesses. The key message is that FY27 is the year Acrow's EBITDA starts to lift again after three years of stagnation, with guidance at the $110 million midpoint, up $30 million on FY26.
Q: What is the current gearing on a run-rate basis following the capital raises and acquisitions?A: Steven Boland (CEO) confirmed that on a pro forma basis, net debt to EBITDA is 1.6 times, and net gearing will be down by about 5% to 35.6%. This reflects the receipt of the second tranche of the institutional placement and SPP funds, offset by the acquisition costs for Preston's SuperDeck and Ausgroup.
Q: Can you break down the key contributors to the 640 basis point decline in underlying EBITDA margins?A: Andrew Crowther (CFO) explained that the margin decline was primarily due to the revenue mix shift from 50/50 to 60/40 between Construction Services and Industrial Access. Construction Services has an EBITDA margin of 42%, while Industrial Access has an 18% margin. There was also a mix of more sales versus hire revenue during the year. Steven Boland (CEO) added that there was a $1.5 million increase in bad debts, but this was less than 1% of revenue and not material to the overall margin decline.
Q: What has gone better than expected to upgrade the FY27 guidance versus what was provided a few months ago?A: Steven Boland (CEO) stated that the start of the year has exceeded budget by over $1 million in both the first and second months. The company is forecast to be $8 million better for the first quarter compared to the prior year, which only includes one month of Ausgroup contribution (around $500,000 to $600,000 per month in EBITDA). The full-year forecast is $30 million better at the midpoint, demonstrating the momentum flowing into the new financial year.
Q: Does the FY27 guidance include any revenue from the Brisbane Olympics?A: Steven Boland (CEO) confirmed there is zero revenue in the FY27 forecast for Brisbane Olympics. While some work with BMD on civil works for the main stadium is expected, it won't be significant. The first big package depends on which consortium wins the main stadium contract, which will be announced in the next six to eight weeks. If the right consortium wins, Acrow will have a significant package of work, but that revenue won't be seen until the tail end of FY27 or into FY28.
Q: What is the ideal balance in terms of revenue mix between Industrial Access and Construction Services for FY27?A: Steven Boland (CEO) indicated the current forecast is back to a 50/50 split, moving from the 60/40 split in FY26. At the midpoint of guidance ($420 million revenue), this translates to $280 million from Industrial and $140 million from Construction. This reflects the strong growth expected in the Construction division as the market turns.
Q: How has interest in the Column Climber Jumpform product grown following its successful 10 jumps on the Meriton Cypress project?A: Matthew Caporella (COO) stated that three separate clients have toured the site to see the system, which is suited for towers over about 50 stories. There are several projects in the pipeline, and the company has been touring customers to the site with a lot of interest and inquiries generated through social media. The reception has been positive so far.
Q: What types of businesses or geographies are you interested in for M&A going into FY27?A: Steven Boland (CEO) stated the company is not actively looking at any M&A at the moment, having just completed two acquisitions. While some approaches have been made, the timing isn't right, and the focus is on bedding down the recent acquisitions. M&A remains part of the business strategy, but likely not this year. The company would love to get some industrial business in Western Australia, but nothing of interest has presented itself.
Q: Can you talk about Acrow's advantages for the Sydney Harbour Bridge contract expansion, given its existing position on-site?A: Matthew Caporella (COO) explained that Acrow is one of only three scaffold rope access providers on the bridge and has already done work on five or six of the 10 packages released. The company developed an innovative loading platform (HLD) that allows work to be done during the day without road closures, and the current scope is looking at covering the entire bridge. Steven Boland (CEO) added that Acrow is a well-regarded existing service provider with the capability to deliver all packages without needing subcontractors or JV partners, positioning it strongly for the $400 million to $600 million worth of work leading up to the bridge's centenary in 2032.
Q: If you miss the Brisbane Olympics stadium piece, does the size of the overall construction put you in a better position to pick up other work across the athlete village and other sections?A: Steven Boland (CEO) stated that the stadium is not the main game, and the company is in a position where one consortium's chosen formworker would likely work with Acrow if they win. The key is that the ancillary work around the Olympics provides the best returns. Acrow's strategy is to not overcapitalize into the cycle, targeting work with the best returns and leaving the last 25% to 30% for somebody else. The company will be smart about how it approaches this opportunity, ensuring it doesn't gear up for 100% of the work.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.