Acrow Limited (59Y.F) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Acrow IH FY '24 Results Call. [Operator Instructions]. I would now like to hand the conference over to Mr. Steven Boland, CEO. Please go ahead.

Thanks very much, and thanks, folks, for joining us this morning as we walk through our investor presentation through our first half '24 results, joined by Andrew Crowther, the CFO; and Matt Caporella, our COO, who will talk about the particular parts of the business via the presentation. So I think this is our last 6 months, again, another indication of the dramatic transformation the business has undertaken over the last 5 or 6 years, which really has accelerated, especially over the last couple of years. In this first half, the clear highlight was the acquisition of Scaffold in Mackay and Weston. I'll talk further about that a little bit later on. Great organic growth initiatives generating significant improvements in the states such as South Australia, Western Australia, and Victoria. Our contracts, high contracts long continue to be going north. And I think more importantly for us now really looking to the future is the strength of the pipeline that's at unprecedented levels, especially off the back of our initiatives in Jumpform screens. We're getting cracking with our product development work, and Matt will talk a bit about that later in the presentation. We're maintaining that return on equity of over 30%, which is obviously a great result. And we are pleased to be reiterating our FY '24 earnings guidance. And I'll give a retort about that guidance toward the end of the presentation. The overview of the business, competitive advantages have been in place for some time. They remain very strong, and the thing that continues to drive the continued success of this business. We've now drove a significant business in industrial, energy, pulp and paper, mining, et cetera, to complement our civil infrastructure focus and also Jumpforms and screens are clearly products that are primarily in the commercial residential high-rise markets, and we're seeing some really good great shoots in some of the markets for that particular market. And we now have 3 depots across the country. And those depots are all required for the volume of work that we're undertaking. In terms of the highlights, as I mentioned, the first half, the MI Scaffold acquisition was the main highlight, great business based in Mackay and Weston, a leading provider of industrial services to mostly the sectors around Mackay, but they do go fairly out of Mackay, and I'll talk about a couple of the contracts they won recently, they take them a bit away from Mackay. But they're a great business, great management, and a very strong customer reputation. I mentioned again, they higher contracts in pipeline or 18% in secured high contracts in the first half year-on-year, and that pipeline is up 39%. We're making real roads now in the screens business, Jumpforms and screens, we're putting those 2 things together because they are products that are tendered together on most of the jobs we're looking at, at the moment. We won 10 recent jump ball wins, 7 of those include the screw contracts, including our first-ever screen contract in Western Australia. Yes. I think in terms of the Jumpform market, it's really at the cusp of becoming something quite lucrative for Acrow and sorting the guy that runs that part of their business last week and he said that we're fast becoming the #2 provider in the market nationally, which is pretty good considering we were in the business 18 months ago. We did win or will secure the $56 million minimum Snowy-2 contract for the provision of labor that's not at that level yet. So that's something over the next few years, we'll see probably double on its current volume. We've also just secured a very 6-plucratis, an important formwork package on that project. I mentioned organic growth, and I'll talk more about WAS shortly. And I think in terms of the market civil infrastructure projects, fair to say we're going through a transition period there at the moment. We are a couple of the larger projects like Bruce Highway, Melbourne Metro, primarily those 2, Cross River Rail, Brisbane West Gate at the moment to a lesser degree, but they're coming more to their conclusion. And very pleased to say that we are securing some significant or very confident securing some significant new packages on the projects that are coming in replacement by Masela, Matt will talk about that further. In terms of our safety results, again, we continue to improve here. We had one lost time injury in the half. As I say all the time, it's one too many. But it is good to see that we are maintaining our position is not improving it there, considering we are now more heavily exposed to the industrial scaffold labor market. In terms of the key financial metrics, again, pleased to say everything is going in the right direction, even up 28% EBITDA 53%. I'm actually in these certain results, I'm most pleased with the NPAT results because there's a couple of factors there, the MPA EPS results because there's a couple of factors there that might -- well, definitely we're going to make it difficult at some point, Andrew and I are looking to go -- well, I'm not sure we're actually going to get growth in NPAT given that we're now paying full totals in tax. So it's about a $5 million impact is I think the right number, Andrew. It's about $5 million impact on tax half-to-half now that we are paying a full tax rate. And there was a significant expense for the acquisition of MI Scaffold, the one-off expenses in terms of legals and consultants, et cetera, that was into a couple of million dollars is in that area. So for us to be able to improve our underlying NPAT by 33%, a statutory impact by 17%, and the EPS by 24% in certainly given the tax factor, I think, is a really, really, really good result. And very pleased to be announcing a dividend payment for the first half of $0.285 per share, which is the highest that we've ever paid and up 68% on the same time last year. Return on equity is maintained. That's great. If we can keep that over 30% over time, that's going to be a phenomenal result. So I'm pleased to say that that's continuing the trend of the last financial year. I mentioned up 18% in high contracts and 39% in pipeline. And it's the Jumpform screen. That's the big move up there. So we've got 90% of the pipeline is for work. There's $34 million for the Jumpform work in that pipeline at the moment. And there's a very, very significant opportunities that are getting very close to us on delivering on in that space. And on Page 12, we'll continue to show that because it just does give our shareholders and the market guidance to a degree of, if you see us continue in more high revenue contracts, you'll continue to see our high revenue in total increase over time and these 2 sets of numbers strongly indicate that. I'll hand over to Matt now. We'll give you an update on engineering before we go into more of the segmental [ roadmap ].

Thanks, Steve. So with the engineering department and product development, obviously, we've previously mentioned, the engineering team has definitely evolved over the last 5 to 6 years from primarily a bit of drafting service into a really highly skilled engineering team. So there has been quite a bit of growth from 15 engineers in 2018. So we're up to 50 engineers now across the business in all the departments. And this is primarily now driven by Jumpform's Acrowdeck new product development. And also now we're also investing in [indiscernible] engineers and growing our talent internally as well. So we've got [indiscernible] engineers in the business that are working at [ Sonia ] and working in the business. The next part of the evolution of the engineering team now really is embracing technology and upskilling the engineers into 3D drafting and engineering skills. So in the next 12 months, we really plan on delivering most of our projects in 3D rather than 2D. And this is really going to set us further apart from our competition and really differentiate our engineering services a lot more as well. Regarding the product development team. So we've mentioned this before that our product development team is a completely separate team that are industrial designers. They're not actually formwork engineers. So over the last 12 months, they've been working really hard and these dividends are now paying off. So we've actually now we've got products in the market that have been really well received. So the big one for us at the moment is Acrowdeck. So we now have confirmed Acrowdeck projects in South Australia, Victoria, New South Wales, and Queensland. So it's continuing now and we're seeing the rewards of investing over the last 12 months in product development. One of the relative things at the moment that we're doing is the synergies now across the product groups and in sales and engineering fees, especially in the commercial forecaster we've got multiple systems that can go on to a project. So we've now added the graphic on Slide 16, where you can actually see a complete building in all the different systems that we can offer to formworkers and builders now and basically be a one-stop shop. The really good example of this now is 70% of Jumpform projects that we have had screen contracts with them as well. The 3 Jumpform projects that we've actually done in WA have had screen jobs on those. So that's the first for us. We haven't had screens in WA in the company's history either. The [ Eris ] Screen project now goes out with a Jumpform code and vice versa. So our pipeline now, as Steve mentioned, is 34 million after December, we've only released 7 active months of really quoting and speaking the Jumpform system into the market. And we're now completing projects where we've got the sole supplier. So we're delivering Jumpform, [indiscernible], Acrowdeck. And we're also supplying directly to some builders now where they're transitioning away from primarily relying on a subcontractor to direct procurement. So it's supplying directly to builders and now we can offer them every product as well. Overall, though, the product development team now has a pretty clear road map, and they're filling in the gap basically of existing products, but they're also working on new products in the next 12 months, we'll probably bring out another couple of products as a plan, still within the core competencies of where we are now. But yes, it's busy and working on a low staff. At the moment, just to cover some of our marketing sales projects and give an update on where a few of them are at the moment. So hydro. The next stage of the tenders are really starting to flow through now and work is really starting to ramp up. As Steve mentioned, we have secured a sale for $1 million of staffing the powerhouse, which is really good for the engineering team because they offered a solution there. It was all a proprietary solution. We lean towards originally a fabricated steel offer. So that's really good where the engineering team is comfortable with the proposal that basically [indiscernible] at the shelf. And we continue to, as Steve said with the labor contract there. Melbourne Metro, it's probably our marquee project in the country at the moment. It is probably about 50% complete on the audits. So we're probably aiming -- it is winding down a little bit. We were saying probably mid-June, July at this point, but it's actually going to extend the up to the end of 2024 with some stuff at the moment, but yes, it's continuing. But that's really flowing through too now. And especially our expertise on that project has been noticed and is now flowing through to Northeast Link. So we're working on a lot of projects on Northeast having weekly meetings across several opportunities, and we have hoped to know coming soon. Cross River Rail, so we had equipment on all 4 stations there providing solutions. That's been really good, especially in Queensland, showcasing a lot of our systems. We still progress on Arden Street with our Jumpform, and that will continue through to probably 2025 at this stage with the Jumpform Arden Street. Sydney Gateway is complete now. So anyone in Sydney, you can now access the domestic terminal from the new roads. That's been a really good project and really showcased a lot of our systems in the Sydney market that haven't had that before. So Dash, Portal panels, especially our soldiers on a very visible infrastructure projects in Sydney. Flagship project in Sydney at the moment would be our M1 project. So that's going to the new Western Sydney Airport. We've got a lot of systems on that with a sulfur supplier to the principal contractor, [indiscernible]. So yes, a lot of our systems are out there now at the moment. And then the other big one at the moment in Queensland is Cremornector, which is taken on from the Bruce Highway project for us. And that's a really complex project over water for a lot of it. And we've put our [indiscernible], and it's really showcasing our engineering capabilities across a lot of these really complex infrastructure projects. Thanks, Steve.

Thank you, Matt. So I'll just walk through the various segment reports for the 6 months. So on Page 19, the group results. So we cracked $100 million of revenue, which is a bit of a milestone for our heart stated 3 years ago, we were doing $100 million per year. The main things that stand out in the overall result is that our contribution margin has gone to 63.5%, which is a strong indication of how much of the growth has come out of higher, which was $14 million of the ground -- sorry, $11 million for growth is in high. So again, it's actually 2 growth high. But the 2 real standout points here is, again, the scale benefit. We've spoken in the past that of our sales contribution dollar growth, we want to maintain about 2/3 of that rolling through to the EBITDA line. In the 6 months, it was actually 78%. So yes, we have to continue to invest in additional yard expenses and additional overheads in terms of staffing costs to cater for our growth to be able to pass through to 78% is very good, and that contributes to a 34.8% EBITDA margin for the half. So overall, I mean, you can see growth in forward, growth in industrial, I'm now talking a bit more detail about those. Sales contribution bridge, that this $12 million was the growth of higher revenue 6 months to 6 months, so that's 76% of the growth of sales contribution has come out higher, which is also always the most important factor for us in terms of profitability. So going to the Formwork division, $61 million, up from $47 million, so 30% increase in total revenue in the form of provision for this 6 months. With our expectations around both Jumpform and Acrowdeck, we're heading toward a business that should be pushing in the next year or so toward $150 million in forward revenue. So clearly, double 120, I think we've actually got some runway in the next 24 months to get that to $150 million of forward revenue. The product sales figure, I'll just talk about it quickly about one particular point here, which does come up from time around our higher sales because it's frankly a very misunderstood part of our business. So there are 2 things that are driving the growth in excise sales. Number one is we've got significant discipline in the business now around loss on hire. So some of these big markets, single projects like Bruce Highway, Melbourne Metro have a lot of gear on those jobs. And frankly, they don't have a lot of, in some cases, control over the gear being returned properly to us in a usable state. So we are very disciplined now. So we had a significant charge to the Bruce Highway project in the first 6 months for the replacement of gear that they didn't return to us after the job concluded, and we have significant negotiations now with Metro within top [ Berries ] Metro packages, where, again, they're either not going to return the net or the always going to return the state we can't use. So we're very disciplined on this. That's part of a significant part of the gross call sales, that's actually a replacement of equipment that's in our fleet that doesn't get returned when a project completes. The other thing that's significant now in this area is, as Matt and his team are really cranking up their product development work and bringing new products into the market, we're taking every opportunity we can to sell secondhand redundant equipment that will be replaced by our own equipment. Our own equipment is superior to the previous year's repeated suppliers that we would provide getting you from. And if we can get that gear moved out of their fleet and replaced by our own equipment that makes a lot of sense in the world. So there are a couple of things that are going on in that particular space. We're not reducing our fleet. In some cases, there are some redundant products that doesn't get replaced. But by and large, we're taking the opportunity to replace secondhand equipment and a new equipment price and bringing in our own equipment we know is going to last a lot longer and be well regarding the market. The contribution margin was 72.7% is obviously strong. In terms of the pipeline, there's a few things going here at the moment. So the first thing is civil is probably, I would call it, flattish, which is at a very high level, but it's probably flattish, but there is a transition going on between some of those major projects that Matt talked about previously being replaced by some others, and I'll go in a bit more detail about that shortly. The Jumpform market looks tremendous for us, and this is obviously a very strong part of our pipeline. And Queen's interesting at the moment. So one of the barometers for us about future revenue opportunities really is what's going on in our engineer in the part. So about 4 or 5 months ago, National Engineering [indiscernible] and pretty essentially in the commercial area. And actually, our results over until December, January, and into February period in Queensland Commercial primarily. We're a little soft. But since we've come back after the Christmas break, you tell me to complete the reverse, that we've never seen so much work in the pipeline of work and then the work being required to be done by engineers for projects that are going to start sort of from April 1 is at a level has never seen before. So I think Queensland is obviously is a strong part of our business. Some of the formwork numbers right at this moment in Queensland have come off a bit. But as we go into that last quarter into the new financial year, it looks like there's going to be a significant surge in growth again in the Queensland market. Revenue by state. We've added South Australia for the first time. And as you can see, it's a pretty good picture about how able to grow that. So every state government right direction, whilst WA is flat, there will be substantial second-half growth in WA as screens and Jumpform revenues start to kick in at a big level. South Australia is important because it's a very large civil infrastructure project not too far away in South Australia. I'll talk about in a second. And we've got a very strong market position in South Australia, and that becomes a great opportunity for us to further grow that South Australian business. So overall, you can see we doubled our national form of revenue over a 3-year period. And actually, at the moment, so every state is showing significant growth with WA, I'm sure you will see in the second half a significant growth. Industrial Services clean with the MI scaffold acquisition is very important too. So the first thing that I want to I guess, highlight there is the revenue growth of $9 million, about $6 million of that $9 million is 2 months' worth of MI. So outlook of that, irrespective of MI, we still had really good growth in our core industrial business. And then the contribution improvement of $2.7 million, around about $1 million of that or slightly over [indiscernible], so again, you can see our existing business grew irrespective of the acquisition of MI. We're run rating now on a yearly basis to summer up towards $80 million to $90 million of revenue per year. You won't see that in this year because you're only going to have 8 months of MI versus 12 months, and there's a significant pipeline of work that we've now won in the old Acrow industrial services business that starts to kick in towards the end of this financial year or heading up towards around about $90 million. Like for work, my aspiration is on $150 million industrial services business within the next 24 months. And that will require M&A activity as well as organic growth, and I'll talk about that as we go forward. But we definitely are seeing -- we like this business. We're making good margins, 37.6% contribution margin on this, if you measure this up against other businesses that are in this kind of industry, our margin is truly good for industrial services. MI Scaffold, we presented this a fair bit before. It is an excellent business. It is extremely well managed, blue chip customers, and it really is providing a really good springboard for us into future growth opportunities in all of the little country, but we're really at the moment, focused on some opportunities in North Moeenband. So we can use this as a tremor into further growth opportunities in that part of the world where the industrial sector is clearly probably the only behind Western Australia in terms of its growth opportunities and its strategy. Marcus [ serve ], again, we presented this when we bought the business. Marine and Ports are really important. The biggest contract is with BHP at the Coal One facility in Mackay. In Marine & Court, Infrastructure Energy Resources, Resources Industrial. There's been fundamentally no surprise since we bought this business. We're very pleased with the way it's rolling. Commercial scaffold continues to go far better than it had in the past. Rates are good and less showing any sign of tailing off, especially in New South Wales, we're actually doing very, very well at the moment with the dry higher market in New South also commercial scale. People and culture. So all of this is something we've talked about in timing for dual presentation, but our people are a diverse workforce. We really focus -- I'll talk about that in a second. One team on brand. I'm very proud of the people in that group, the people who actually are making a difference. They are very customer-orientated, we really are trying to do everything we can to become the employer of choice in this in particular industries and raising the bar in general for industry standards. We did rebrand Acrow in September '23, you see the new Acrow, which is now also the public company named as transition now to Acrow Limited from our Acrow Formwork Construction Services. The whole basis around the brand is that we're an Australian company. So we aspire to be the absolute key Australian formwork and industrial services business in a market that does have a lot of international competition. Probably the most important thing in this page for me is the learning and development part. Matt talked about the graduate program, which is now not only for engineers. It's also for administration and accounting personnel. Basically, the whole senior management team, which again, I've spoken many times is without a doubt the best team we work with over 30 years, have a professional development program that they're undertaking, and succession management and performance management is an absolutely embedded parts of the business. So it's an absolute priority that we're not just looking outside, but we're growing our own, both staff and engineering and administration stuff that we're growing our managers to being able to move the sutures. Thank you, Andrew.

Great. Thanks, Steve, and thank you, everyone, for joining us. So I'll through the EBITDA. So if we go down to the NPAT underlying it increased by 33% in the in 6 months from $12.2 million in the first half of '23 to $16.2 million. Now there's obviously a bit of movement between those. So firstly, depreciation increased by 33%, but that includes the impact of the 2 months of MI. And also the $17.3 million of CapEx we did in the 6 months and obviously the previous 6 months on that. So depreciation. Net interest increased by 24%. Now that was both volume and rate-related. The average debt from the previous corresponding period was $37 million, up to $52.8 million in the 6 months. The average interest was approximately 5.5% up to 7%. We're actually seeing interest starting to come down now, which is pleasing right now. So that gets us down a pretax profit, $13.4 million up to $22.5 million. Now obviously, the other major difference in this year's or 6 months' result is the tax. As Steve already mentioned, in the first 6 months last year, we still had our tax losses off the balance sheet, which we put on at the 30th of June '23. So these 6 months, we've got the accounting tax rate essentially at 3%. We don't have the accounting benefit file on tax losses. We still at the beginning of the year, had $5.5 million of tax losses on the sheet that we will use against tax payment cash. But from an accounting point of view, we're now fully back. So we take the effect [Audio Gap] significantly higher if we had like-for-like. In fact, probably we've been more like 68%. But ongoing, it's going to be a 3% tax rate. Now if we go down to the earnings per share, earnings per share up by 24% from 4.72% to 5.87%. And that includes the 8.8% to 25% tax impact of that. So that's a pretty good outcome. Now NPAT reported, as Steve said before, we were a little bit concerned the NPAT reported would be relatively flat, but we still had a 17% increase. And that also included the significant items related to the acquisition of MI, which was considerable. And we say there's a lot of cost around the rebranding. But the cost of that rebranding going forward will work its way in gold. We move over to the balance sheet. So from a balance sheet point of view, we had quite a large movement in assets, $60 million. A lot of that was obviously the MI Scaffold acquisition of over $26 million. We also have $17.3 million of capital expenditure. Now our gross debt moved from $51.7 or $19 million, net debt went up by $700 million. Now we're scaling that for a moment. So net debt went up by $17 million. If you think about it, we've got a $50 million debt to acquire MI, the other 50% came from equity, and we had $17 million of CapEx in the 6 months. So our debt went up by $700 million, which basically means that it recycled itself down. So that's a pretty good outcome from a debt perspective. Importantly, from a gearing and net debt to EBITDA, our net gearing went up by 2.7 million from $31 [Audio Gap] for the right opportunity to get up towards, say, 1.5%. Now this increase in the debt metrics, even though it's still very good. This is because we did do the acquisition of MI right towards the end of the 6 months, and we didn't get much EBITDA from it. So what our forecast is shown at the moment is that net debt to EBITDA will be well below 1 by June, depending on anything else that happens, and gearing will come back down towards where it was in June as well. Now from a cash flow from operations, we had $28 million cash flow from operations. That includes both given the cash flow statement, the normal cash flow from operations plus the sales of the sales that's higher. So from a conversion rate is 80%. So that was a little bit lower than the previous year, which was 84%. Now that was a one-off. There's a one-off within the receivables of some deferred sales we've done. That will then come -- we're seeing that will come back up to the conversion rate that was sort of after around 85% by the time we get to it. From a working capital perspective as well, we have the working capital during Q went up by $1 million, which is not unreasonable given the growth in our sales and sales. So it still stands around 23% sales revenue. We're still trying to get our ideal would be to get that down to 20%. From a cash flow perspective, you can see our net debt at the beginning of the period was $46.4 million. It finished 63.4%. Now the big obviously adjustment to this cash flow, there was a little bit of a mistake, I apologize. We had CapEx of $17.3 million, of which over $30 million was growth. So that's our decision to do that and $26.5 million on the acquisition of line. So when you put those together, there's almost $46 million of growth initiatives within that increase. So that is all in our decision. We did some analysis just what would happen if we cut that growth CapEx off. If we cut that growth CapEx off, it still did the staying business CapEx and we had the reduction in EBITDA to come from that, we basically be down to a net debt to EBITDA of 0 by the end of '26. So we still have a lot of cash coming through and pay dividends, we'd still be relatively profitable. We won't grow, but we'd be basically down to a very small debt number by '26. I might mention as well from a debt point of view, on the balance sheet, our debt days increased by 1 day and net debt is day from 57.2 EBITDA. Our bad debts during the periods that we had a $1 million expense, and that's about 1% of sales. So that could come down considerably from last year, which is 1.8%. If you remember, we had one big bad debt last year. So we're seeing the book improve. There is obviously some ruptions in the industry. But at this stage, the bookings are under control. Now other capital expenditures, we did $17.3 million of CapEx in the period, $13.9 million was growth. Of that, $10.5 million was essentially formwork and civil and the majority of that was the new Jumpform and Acrowdeck. Now it's worth pointing out that most of that Acrowdeck Jumpform, which is about $8.7 million for it. We didn't really get much income from that in the 6 months. That was bought in and a logic towards the end of the 6 months for the future growth. So that's the majority of that. Our estimated CapEx spent for the full 6 months is $26 million. So we're seeing another $8.7 million in the second 6 months. So very much the CapEx was right ended. And I think it's worth pointing out, we're still getting very good returns on point investment. So we're getting around 58% returns. And if you look at that from a payback perspective, on that growth, we're getting that growth paid back in 1.75 years. So basically, after 1 and 3, 4 years, we're getting economic cash back in. Moving over to funding and the quickie. Look, I won't stay on this too long, but we did some -- after we acquired MI this year, we did some restructuring of our debt. We combined all of our bank loans into one loan. And you can see that on the right side, there's $40.5 million in the [ Sensus ] bank loan. This is an amortizing revolving facility. So we can pay down excess cash and then draw it back our downward advertising level. Now from an equipment finance point of view, we went from 14.9% up to 21.5%. So our equipment finance is almost filled as of December. But as I said, this is very much a front-loaded CapEx year. So we'll get some headroom in that going forward. So at the end of the year, we had $15.4 million of debt capacity. We also had $1.4 million of cash. So we had total headroom in December of 16.8% gives us a lot of flexibility for the future. So just wrapping up with our -- obviously, the biggest opportunities and outlook statements for the next period of time. So firstly, construction activity forecast on Page 35, they're all going and in every state, actually every sector, they're going north -- and importantly for us in the major states of New South Wales Conan Victoria, they are significantly going out over the next decade. Now we're seeing, as I mentioned earlier, lean commercial as an example of it where it was very strong, probably 8 months to 12 months ago. It is soft at the minute. But by April, May, June, and into the next financial year. And if you're growing the Olympic Games developments plus the hospital program in Queensland, which is actually going to be very important for us. There are a couple of very large hospital projects that we're close to securing significant contracts on. We think that's going to have a significant uptick in that market as an example. In the civil infrastructure space, a couple of important ones to point out there. So you can see that we've highlighted 7 out of those 7, I want to hilltop. So Northeast Link is a massive road project that for us was extremely important as the successor to both West Gate and to Metro RAL. And we're highly confident of winning at the moment, upwards of $6 million worth of packages that we've actually teamed for, and we think we're in a very good position to secure. That will be revenue maybe towards the end of this financial year, but primarily into the next financial year. And judging by our previous efforts in this space. So we get on to a project at that level of we do our job probably it would be very hard at this lounge on future packages going forward. So that was critical for us and guys have done a fantastic job on those 2 significant projects. The other one is the Adelaide. Torrance to Dale's $15.4 billion road project. It's almost as big as North Eastlink. It's the biggest project in its nature in South Australia now. Again, given our market presence in South Australia, we've got a very good opportunity to secure significant revenue on that project as it kicks in. It's a while away yet, but it's the type of project that should be riding in our value. So I think as we go forward, we'll be seeing some good news coming out of that. Industrial Services, clearly, incurring revenue streams, long-term contracts, relationships, recurring work. The M&A activity, we mentioned obviously, MI Scaffold. We're targeting other acquisitions. We're very active in this space at the moment for North Queensland, Western Australia primarily at the moment, expanding into all states now. So we've got work now in Queensland, New South Haswestern Australia, South Australia, and Tasmania in industrial. Recent contract wins with obviously the Snowy contract, but also the Kidston Pumphydro project, which is an [indiscernible] $5-million project that they've won. And recently, in the Agro business, we won the Ampol redevelopment contract that will be 6, it could be significantly more than that. And importantly, even though it's a relatively small win that first project with higher only at the Chemical Lucian plant in Western Australia is strategically really, really important for the business to fund that contract to get ourselves moving in WA. In terms of organic growth, I mean, we just provided a chart there that's put together the show that we brought new products into those 2 markets over the last couple of years, but there's a bunch of other products that can still go in. I want to highlight a couple, and this is especially relevant to the road the Torrance project in South Australia. The Universal soldier system and the bridge crackers, we don't have an anilide at the moment are absolutely the products that go into that project. So there are new products that will add to the fleet in South Australia. So there are still significant opportunities to further organic growth just in those 2 states. Internal product development. Matt spoke a lot about this. I mean this is the future of the business. I want to talk about Acrowdeck for a second here. So there's a lot of work required to take a new product to market and to get the market to accept that product in a market that has got a lot of competition about it. So we've got about 11,000 square meters of Acrowdeck in Australia at the moment. Probably 6 months ago, I was shaking my head and talking about the management going -- we didn't execute some of this stuff moving because it was quite slow. In the space of that period, we've now probably got -- well, I think we do have, Matt. We've got projects that we have won that will almost 100% utilize that 11,000 square meters. And the biggest one of those is in New South Wales, where we have upwards of 60 out of square meters on one project alone. So that's really good news for the business that we get that product out and working for us. And then the next one, I think that we're really important is the universal [ Seljeseth Matan ] team is developing because it's a key product for significant infrastructure projects like Northeast Lake and West Torrance as we go forward. Screens and Jumpforms, going hand in hand. We are the market leader in screens. We've now got projects in every state. We bought the premium screens of Heidrick about 10 months ago. With Queensland Commercial being a little bit softish for a period, that revenue has also been a bit soft for the last couple of months, but we are very close to securing the biggest screens project we've ever won in the company's history in Queensland. And I'll be hoping that will happen sometime in the next few weeks using premium screens. In terms of Jumpforms, 10 projects secured, 7 also have screws with them. We're still on track for that $20 million of revenue within a couple of year period. As I mentioned earlier, we're gaining momentum. And if we go run the businesses, we're fast going to become #2 in the country in this space. In terms of the guidance, we have reiterated our guidance at this stage. But I want to make a couple of points strongly in relation to that. So the first thing in relation to that guidance is that if you look at the combination between MI and Acrow, we're forecasting at the moment at the midpoint of our guidance, about $1 million improvement in EBITDA in the existing Acrow business half-on-half. So we're certainly not looking at our business going backward 6 months to 6 months, looking at about $1 million improvement per half, but it is strongly slanted towards the last quarter. I think the last quarter will definitely be our most profitable quarter, which then takes us into the new financial year with quite a lot of wind behind our sales. So with this, obviously, we're up 38% in EBITDA and 31% of revenue. They're very strong numbers. But primarily, the Jumpform and Acrowdeck equipment that we purchased in the first half, really, we are getting decent revenue coming out of Jumpform at the moment. But the big pill coming into that last quarter will then take us into '24. So the guidance level at the moment at the midpoint does have its basis on about $1 million improvement in the core Acrow business 6 months to 6 months, plus the 4 6-month impact of MI Scaffold versus 2 months impact. That's pretty much it at the moment. I'm happy to hand over to any questions that the participants might have.

[Operator Instructions]. The first question comes from [ Rupesh Karavaev, ] a private banker.

I just got a quick question regarding the dividend. I did raise this at the last time. The Acrow is doing brilliant, and I'm proud of what he's doing, but are still seeing that in terms of the dividends and raising equity doesn't make sense. Otherwise, the company is doing great because I noticed you've got $7 million in the bank, and you're going to pay out roughly $6 million in dividends. That will leave you only $1 million. So where is the growth going to come from, if you were to do any acquisitions?

Thanks for the question, and I'll let Andrew sort of talk more detail. But I think one of the major points around that is that how much we front-ended our capital expenditures. So Andrew's current cash flow forecast at 30 June, with that dividend being paid with a capital expenditure program that we've got for the second 6 months shows a significant uplift in cash and hand and debt reduction by that period. That's why we're talking about our debt-to-EBITDA, which is 1.2 in the half going to probably under [ 1 anteap Ex 0.89-ish ] by 30 years. And that's quite painted. I mean I've said many times before, I think mine are visible. You've got to be able to reward your shareholders as you've grown your business along the way. And that is the view of the board.

Yes. I think from us, that's a good point about the equity rate. But equity rates specifically in relation with strategic investments. So we don't pick that into payment or so, that was to buy the CMI business. We don't really look at cash as a number. We look at the net debt number because if we have excess cash, which can do by having low cash from drag and fixture interest.

[Operator Instructions]. Your next question comes from Tina Wilson from AME Capital.

So my first one is actually on the secured high revenue. I appreciate that it's up 18% PCP, but if my numbers are correct, it looks like you've actually gone a little bit backward from the last half, which is about, I think, $37.8 million. Just wondered if you could comment on the missing something there.

No, you're right. Thank you for the question again, but there is a different level of activity half-on-half each year. I mean if you have a look at every year we've run, we've gone up every 6 months now. We're already tracking into February ahead of where we were for the January and February period of the last 6 months. And as we expect to win some very significant Jumpform contracts then be is -- in terms of a contributor to the number, you can in a form or packages for the $100,000, $200,000 Jumpform contracts with 800. So we expect to see a lot more Jumpform in the second half than the first half. So you are right to point that out, but there is definitely a movement as you go through each financial year in terms of the second half securing more contracts than the first half.

Great. And my second question is actually on the pipeline. So I think you mentioned Jumpform is really where a lot of the opportunity is coming from. So I'm looking at my numbers, it looks like the increase in the pipeline from the last half is about $8.6 million of which EUR 8 million is from Jumpform. Is it fair to assume that -- I think you mentioned that the actual other core businesses is a little bit flat?

Yes. No, I think at the moment that the overall formwork market in general for us, when you call it flat, it's flat at a good level. It's at a level that's pretty bloody amazing really, but it is flat, but we expect to see that as I talk about Queensland Commercial was a prime example of that. Also what's going to go on with Northeast Link and is to come up with civil infrastructure projects. But we've said for me, and that's also representative of our capital expenditure profile. We've said and we said it again today at the last couple of presentations that we're spending less money now on gear for the civil infrastructure market because we think we've pretty much got enough gear to cable for that market at the moment that's at a really, really good level. But that's why we're focusing so much on Jumpform and also Acrowdeck, which are new products, new talents for revenue, new opportunities to grow another revenue stream. It doesn't rely on the civil infrastructure market.

Yes. Okay. Great. And the other thing is usually comment on your success rate on major projects. It was missing this presentation. I was wondering if you could comment on that.

On major market projects?

As in higher wings, normally, you said more than 50% winning tenders.

We are certainly not going down in forward secured contracts as a percentage of what we tender is still in the 60% to 70% range which is up well from where it used to be.

Yes. Great. And sorry, just last question. Very happy with some more color you provided on the product sale when major tenders come to the end. I was just wondering if say someone does doesn't return your machines or they track machines and you need to bring new machines. Is that a bit of a lag in terms of you need to purchase new machines and whether there's any time down in terms of replacing new machines, one major --

10 weeks maximum.

Your next question comes from Rushil Paiva from Ord Minnett.

Can I just quickly start on the formwork market. And I noted that you did say in your disclosures that Acrow's still winning market share in both Victoria and New South Wales, which has been underrepresented in the past. I'm just keen to understand if you're seeing much of a competitive response now that you have been consistently winning market share for quite a while now. So if you're able to comment on that?

No. That Northeast Link in Milan was a good barometer that [indiscernible] because clearly, we had such a presence on Melbourne Metro and West Gate. And Matt, correct me when going too much detail guys we worked with on that project and moved to Northeast Link.

Correct.

Right. Okay. And that was a strong factor rate they knew will be delivered on the previous project they worked on, and that will come to work with us again. Look, I'm not seeing any movement at all. I mean, there's some fascinating stuff going on. I probably shouldn't go into detail but our previous equipment supplier as an example, trying to get back into the Australian market and not having any success that we can really see anywhere. But no, look, we don't get complacent about this stuff, and that's why the product development work is so important. We've really got to make sure that we maintain the highest quality in what we do. I think, yes. Look, I think the general answer is we don't see an -- so Queensland, yes, Queensland commercial has been soft for a few months. So prices in Queensland commercial have come off a bit. But again, we expect that to go to complete level direction by sort of the April by June period.

Okay, fantastic. And just one last question just on Industrial Services. Are you able to provide a bit of an outlook in regard to the margin for the contribution margin that is for Industrial Services looking forward, just take into account the MI acquisition, bigger labor component.

It definitely will reduce as a percentage margin. It will reduce. So MI as a business runs at about 20%, that's 3% EBITDA margin. The contribution margin for those guys entrees is probably just other 30 first couple of months we've seen. So it will come off Russia. They have a bigger predominance of labor in their industrial services revenue, and we've got more high, we also got product sales that have new product sales. But look, they're making 20-odd-percent marginal melter just phenomenal, really. If you look at the size of the contracts they've got there to be 20% margin. We might look at competitors and they make an 8% or 9%, we're making 20%.

You have a follow-up question from Rupesh Karavaev, a private investor.

Sorry, I didn't know I was allowed to ask multiple questions at the same time. So my question is just regarding the directors giving some signal in terms of the strength of the company. I noticed I'm not seeing hardly anything from directors making purchases rather than just getting fulfillment rights and so on. Is there any possibility in the future to see that signal because I keep hearing and you're doing brilliant here in terms of the returns. I wish I put all my money in your company. But I think is there any reason why you're not putting extra money out of your personal into the business?

We've actually been in blackout consistently from basically November through to now.

Yes, that's the reporting of India when you're not allowed to trade. But other times, I think it will be really good support. So the way it's not just doing the talk, but you're actually working at the same time.

I think I could maybe answer a little bit of that. So the Chairman did actually buy some shares just around the time raised capital. So there was that. But we also are also going to take into account the quantum of what some of these directors, including Steve and Pete actually own at the moment. They've got a massive amount of the [indiscernible] comes the shares of the company. So you do have the balance of that site as well.

Thank you. There are no further questions at this time. I'll now hand back to Mr. Boland for closing remarks.

Okay. Thank you, and thank you, everybody, for your questions, and thank you for your attendance in the meeting and your continued support of our business. So we hope we will continue to have happy shareholders. And we'll be certainly doing everything we can to continue to improve our profitability every day, every 6 months, every 12 months. So thank you again for your attendance, and we look forward to talking to you again next time.

That does conclude our conference for today. Thank you for participating. You may now disconnect.