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

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

Thank you very much, and thanks, everybody, for joining us this morning as we present another great year of growth for Acrow. I'm joined today by Matt Caporella, our Chief Operating Officer, and Andrew Crowther, our Chief Financial Officer. And each of those gentlemen will talk about their particular areas. So I'm going to run through the investor presentation that was released last night. So firstly, headline numbers for the year, 28% improvement in revenue and 40% improvement in EBITDA year-on-year. Also, profit before tax was up 39%, and that's a very important number. Just I'll talk a bit about the fact that we're now a full total taxpayer is a fairly significant item for us in the year that now has normalized a lot of things in the business. In terms of general growth in the business, I think I'm really proud of how we've diversified our revenue and profit streams over the last couple of years and this was more evident in the last 12 months than any other period, with our Industrial Services business now representing 33% of group revenue and heading upwards on a fairly significant trajectory. That's a combination of both some very successful acquisitions that were made during the year and organic growth from the existing Acrow business. New products such as Jumpforms and Acrowdeck that are now coming into our fleet that's providing fantastic cross-selling organic growth opportunities, against fresh revenue streams. A continued strong product development pipeline run by Matt and his team. In terms of the general market, we've had a record number of contracts or record volume of contracts secured in dollar terms this year. The pipeline is at the strongest point that we've ever seen it. And despite now paying full tax rate of 30% versus 8% in the prior corresponding period, underlying NPAT grew by 8% and statutory NPAT also grew by about that same number over that period. Six weeks into the new financial year, we're guiding towards 20% circa revenue growth year-on-year and double-digit EBITDA growth. I stress again, we're 6 months into the new financial year, and further updates will be provided as they become available. The business is -- continues to leverage very strongly on its competitive advantages, in terms of engineering expertise, product range, geographic footprint and quality of people. I will go into more detail clearly about the growth in Industrial Services. It's opened up some additional lines of revenue and branches for us over the last year as we go through the rest of the presentation. Journey so far from listing in April '18 to where we are today and sort of the milestones over the period of that journey of over 6.5 years now, Natform acquired in August '18 and Uni-span acquired in October '19. Jumpform's first contract was in October '22. They are all formwork related. So with the screens purchases from Heinrich, they're all part of the formwork growth story. And then the MI Scaffold acquisition and the Benchmark acquisition over the last year have really taken us to a new level now in our Industrial Services business. So the highlights of the year, firstly, the 2 acquisitions are to move with the standout highlights that we've done extremely well. We paid well for the businesses, we don't overpay for our acquisitions, low 4s or under in terms of multiples on EBITDA. We've now consolidated the Benchmark business pretty much into a combination of MI Scaffold and Acrow, so that the Townsville branch of Benchmark is now being run by the MI Scaffold team led by our manager in Mackay. So that's -- they've been able to go to Townsville, Mackay and Gladstone. Footprint there in Central to Northeast Queensland -- sorry, Central and North Queensland. And then the Southeast Queensland business of Benchmark has been consolidated in with the Acrow Southeast Queensland business. Both of those businesses are going extremely well. The organic growth primarily in WA and SA, and you'll see this is some of the numbers we present later on, very strong now been primarily driven off Jumpform and Screens growth. As I did mention, we've had a hire contract secured up 17% year-on-year and the pipeline, up 33%. The pipeline number continues to grow. It's now hitting over $200 million in our pipeline. 16 contracts have now been secured in Jumpform. So this is quite a large activity, really when you consider we started something from absolute scratch. We've sort of got ourselves in a position there where we're probably the #2 provider of Jumpforms in the country and making real dents into the #1 position there. We've now got a full service in Screens with the acquisition of the premium screens system that we bought this time last year and we continue to be pretty much the formwork -- go to formwork company for major infrastructure projects across the country. In terms of our safety results, incredibly proud of this. As you can see, we only had 1 lost time injury in the year despite a significant increase in the number of hours worked in the business with the advent of MI and Benchmark. Going to the business overview and the metrics, revenue up 28%, EBITDA up 40%. I mean, I want to make again the point, so it's really clear to people that we are paying an additional $10 million in tax or accounting for an additional $10 million of tax in these results because we've now got no tax losses left. So those who have been following our story closely, when we listed, we had upwards of $50 million of tax losses. We expected that a long lot -- a lot longer than it did, the business has outperformed our expectations in terms of profit. Those tax losses in the last financial year are now gone. So even despite that, our NPAT, both statutory and underlying, was up by 9% and 8%, respectively. EPS was flat. We did issue more shares over the course of the year, primarily off the back of the capital raise that was part of the MI acquisition. But to maintain the EPS flat despite about a $0.02 difference in the value of that -- of that the tax paid, again, I think that's an outstanding result. And I'm very pleased that we're announcing $a 0.03 dividend, fully franked, for the second half of the year, bringing to a $0.059 -- well, actually $0.0585 is the actual dividend for the full year. Track record, you can see again and again, I want to point out here, because you might look at the return on equity and go, oh, it's reduced, but there's $10 million of additional tax factored into that number now, that obviously reduces that. I mean, we're running at 27% return on equity as a full total taxpayer. Again, I think that's a pretty outstanding -- outstanding result, continue to grow revenue, continue to grow EBITDA, continue to pay higher dividends. In terms of the hire wins and the pipeline, as I mentioned, 17% up year-on-year and $189 million is what we finished the year. The pipeline is now over $200 million as we sit 6 weeks into the new financial year. Some of the highlights where we had a cracking month in June, as an example, we did $12.3 million as our biggest single ever month of securing work. Part of that included the biggest screens contract we've ever won, which was $2.5 million with Royal Formwork, who are formwork servicing Meriton. That job won't start until the second half of this financial year. But that's using the premium screens system. We wouldn't have been able to win a job of that size without the premium screens system. Mentioned the pipeline at the Jumpform, Screens and Industrial was kicking this up over that $200 million, some really substantial Industrial Services wins across the course of the year in Acrow, in MI and also in the newly acquired Benchmark business. So Visy Tumut's contract has been renewed for an additional 5 years. Our Ampol contract for the upgrade of their facility at Lytton was originally circa $5 million. It's now going to be more like $13 million and that will kick in, in the second half of the year. The Benchmark business won the Sun Metals Zinc Refinery maintenance contract in Townsville just at the time we were acquiring that business. And the MI Mackay based business won contracts at the Kidston Hydro Project and also the Abbott Point Coal Terminal just after we purchased the business. So that was some of the [ highest ] industrial is continuing to go from strength to strength. And 7 of our Jumpform projects have got screen hire attached to them. And again secured hire contracts, this Page 13 just again represents the linear nature of contract you win 1 year, translating into hire revenue the next and there's no reason why that won't continuously go forward. I'll now pass over to Matt Caporella. Matt will talk us through some of the engineering developments across the year, and I think especially focusing on the really important product development program we've now undertaken in Acrow.

Thanks, Steve. So we're still on our journey and we've basically evolved now into a full service engineering solutions provider. So the team is now 50 people strong. Our biggest strength here is the team is Australia-based and we're in every state. So we've got designers in all our offices and they're now extremely strong customer focus with those engineers. So we're getting in front of the clients. There's 2 main points in the engineering team now we're really focusing on. The first one really is learning and development. So we've got a really good structure now in place where we're teaching young guys straight out of uni or during uni, teaching them to our high standards internally and bringing those guys through the business. So we've had a very strong success rate now across the business. We've got 6 of those cadets have now actually retained full time positions in the business, 2 of them are now senior managers. We've got 4 cadets this year graduating into full time roles and we've just got another 4 cadets starting. So we partnered up with UTS and QUT and really got a good flow now with the next growth of our engineers in the business coming through as young people. The other part of it now is we're really embracing technology in the business and the engineering side. So we started on a journey of moving all our 2D draft into 3D modelling. This, by Q3 '25 now, I think 90% of our designs will be all done in 3D. So the biggest benefits of this now is we're sort of going above and beyond what our client's expectations are. So you can foresee clashes and issues on site before you even get there. The designs are a lot clearer. You can see exactly what you're getting. You can incorporate every single element into the designs. But what this really does is it does set us apart from our competition and really add value to the designs. And in turn, we actually can charge more for our engineering services. On the product development side of the business now. So we've had really great success with the Acrowdeck and the Powershore 150, which we'll talk about a little bit further down in the presentation. But this is now sort of really bedded into the business that the plan is we sort of bring 2 -- 1 product -- 1 main product into the business this year and then a couple of incremental items. So we really focus on 3 key areas for the product development. The first one, we're developing products with multiple use cases. So this really drives up utilization and we're really focusing on continued year-on-year returns. So not just bringing in a product for 1 year as it continue higher in the market. And then they can suit different applications. So you might use a product on a Jumpform, that can also be used on a bridge. So there's -- yes, we can just move it around and use it in different parts. We weren't really focusing on owning the IP and controlling the supply chain. So everything we bring out now is registered designs, patented and then we own the IP. So we can go to any manufacturer and develop, get the products manufactured to our specification. And then we focus on cross-selling. So that is especially evident now in the Jumpforms and the screens. And the big product that we're going to launch this year that's sort of due within the next 4 weeks. We're going to -- look we're bringing into the market a product called platforms, loading platforms. These are the -- like a loading platform that goes on a multi-story building that you basically put construction equipment on. So they could go hand-in-hand with Jumpforms and screens. And it will just sort of be a value add to it, offering a one stop shop. So the biggest benefit of the platforms really is we've designed this platform that it's actually universal, so you can actually adjust the width. So everyone else on the market has a fixed platform. So you sort of got to have a range of platforms that might not be utilized. Our product is basically adjustable. So if there's a demand for 1 width, you can adjust it to a certain width. So that's just going to drive utilization. It's going to help with transport to site. You don't have wide loads, and it's all galvanized. So reducing what we've been saying before, everything we bring out now is galvanized. It's reducing maintenance and increasing longevity. That's probably the main stuff on the [indiscernible].

Thank you, Matt. I'll walk through the 3 segments of the business and how they performed over the last year. And firstly, the overarching business, as you can see, EBITDA from $74 million -- to $74.6 million, up from $53 million. I mean, look, the thing that I'm always looking for here is how much that we are passing through from the growth in our contribution margin to EBITDA. This year that was 73% of the contribution growth. So for a $29 million uplift in contribution, we only needed to employ an additional $7.7 million in operating costs to service that. We normally sort of look for about a 2/3 pass through. So this year was outstanding in that regard. $19 million up in revenue in Formwork, $31 million in Industrial, which is a combination of the acquisitions and the organic growth. Commercial Scaffold, as we've been saying for some time, it moves up and it moves down. It did move down this year, as it -- it's now settled at a level well above where it was a couple of years ago. So what we're seeing is going to the new year, that's sort of flattened out now, but it's flattened out at a level that's far above where it previously was. Good margins, clearly, contribution margin remained constant, and an EBITDA margin of just under 35% in the business. And the growth in the business as Page 19 represents $20.8 million of the contribution growth comes from hire, which we always want to see. And then $7.1 million came out of Industrial Services labor hire, which is relevant to the acquisitions, as well as growth within the existing Acrow business. I would say, I mean, our Industrial Services labor hire margin is sort of low-20% in an industry where a lot of our competitors run at below 10%. Specific to Formwork, yes, this again is a diversification of revenue streams now. So you can see on that Page 20 that we're up $19 million in revenue and $18.7 million in contribution margin. If you go to the next page, which is the States, I mean, there's stories to be told here. So clearly, we're the market leader in Queensland. We continue to be the market leader in Queensland. The activity levels in Queensland have dropped off in the last sort of 6 months and a bit at the moment as well. But I don't think -- if you read the papers, it shouldn't be a surprise to you. The Queensland commercial sector especially has been under a lot of pressure with both some government uncertainty, especially around the Olympic Games projects, and then some pretty horrendous behavior from the CFMEU in Queensland. I mean, we hear about that in New South Wales and Victoria, but to be honest, from our experience, it's far worse in Queensland than it is in New South Wales and Victoria. So there's been a lack of confidence in the commercial sector there. I mean, there's some huge projects in Queensland, there's a pipeline of work. The largest I've seen in my 11 years with Acrow. And now that, again, following the stories, you see what the federal government has now done in terms of reporting an administrator and to that our friends at that union, already there is discussions going on in Queensland about confidence returning. I mean, the way this translates is that developers and builders are not going to start a project to some degree, if they think that they're then going to have losing every second or third day with industrial action on their sites. And that's been going on for some time in Queensland now. So despite that, we still did $41 million of revenue. Certainly, we didn't reduce market share, if anything, we gained it. And then you can see, New South Wales, we've been talking the story of getting the market share gains in New South Wales for this year. Again, that's evidently doubled -- doubled the formwork revenues New South Wales over 2 years. Victoria is -- the story of Victoria, which is clearly a great story in that year. It's all about major project focus. So we've become the go to guys for major projects and that resulted in a great result this year. And that's, whilst I don't expect that revenue to be the same this year, we won't be that far off now that we've again become the premium supplier to the Northeast Link and very early days at the moment with the Suburban Rail Loop. The story in South Australia and West Australia is about organic growth, it's not about market activity in those states, it's about new products to new markets. And you can see we've enjoyed tremendous growth in both of those markets over the last couple of years off the back of new products to new markets. In terms of marquee projects, we continue to do incredibly well out of Sydney Metro West, Cross River Rail, West Gate Tunnel, Snowy Hydro, including our labor contract there, Coomera Connector is still in the [indiscernible], Metro Tunnel, Victoria. I mean, there's not a major infrastructure project in the country that we don't have a major hold on. In terms of the other things in formwork, so Matt talked about Acrowdeck. I mean, we're bringing a brand new product to market here. We've been doing it over the last 12 months. $800,000 of high revenue in the second half and $2 million of sales of product, incredibly well accepted this product. We are allocating capital here that's getting better than the 40% return on investment into opening up a new channel for revenue. It should continue that diversification story. It's the same with the Jumpform business. Andrew will talk a little bit about this shortly. But the majority of our capital this year is being spent on areas that are opening up new revenue streams. We're not hardly spending any capital at all on existing parts of the business. This is all about creating more revenue streams and profit streams from Acrow. So Jumpform, we've got 24 systems wins across 16 projects. People are using -- they are using the system in our repeat customers. We've already got $6 million of committed revenue for this year. We expect to do probably close to double that across the course of the year in revenue for Jumpforms, heading towards the target that we've given ourselves getting to a $20 million business. So we'll be well on the way to that by the end of this financial year. And you can see across every state, now Victoria is the outlier. We're desperately keen to win a project in Victoria to get the market to understand that, but strong acceptance in WA, New South Wales and Queensland. In our screens business, our biggest ever year revenue is $16 million. We've now got a complimentary system between the existing old Acrow screens, the premium screens we have, there's pretty much a project that we can't -- in the country now that we can't do with the back of either of our screen systems. We're now utilizing the premium screen system which was just Queensland based. Out of Queensland, we've got our first New South Wales project and I think it'll be the first of many. So you can see, we are the market leader in New South Wales with 33 projects across the year, growing in Queensland. We need to do more in Victoria and it's great to be in WA now and expect to see far more in WA. Industrial Services. So clearly we're up significantly in revenue, which is -- major contributor of that is the 2 acquisitions. Same in contribution margin. The contribution dollar value of $27.5 million, and margin of 38.2%. But it's not just about those acquisitions. The organic growth from the Acrow business probably contributes around 30-odd percent of the growth in both revenue and contribution margin. We're extremely pleased with the acquisitions they've got. They are performing beyond our expectations. We've now got, as I said, you can see the recent contract wins. The other thing to mention here is the Snowy contract that we have that's operating at the moment at circa $600,000 a month is going to double by January. And we are currently evaluating additional M&A opportunities both in New South Wales and Western Australia. We are keen to grow this business to sort of a minimum $150 million revenue business over the next 18 months to 2 years and we certainly have a trajectory and a pathway to be able to get to that kind of growth. I mentioned MI and Benchmark. I mean, again, yes, we bought businesses that were doing on average $42.5 million and $9.2 -- in revenue and $9.2 million. They will exceed those numbers. As I mentioned earlier, we now integrated the Townsville business in with the MI management under our current manager [ Chris Adlington ]. And the SEQ business of benchmark has been amalgamated into Acrow Queensland. Commercial Scaffold, I won't go on, it is a great deal, except it's down because it's that kind of market. Two years ago, we were well below $22 million and well below the rates. It has definitely softened as it was always going to, but it's stabilizing now at a far better absolute average volume and rate than what the historical levels were. Going on to the important subject of people and culture. Matt mentioned the cadetship program before. It's absolutely vital that we breed our own people, not just in engineering now, but also across administration and sales functions. So it's a major focus of the business to have cadetship programs where we can bring young people into the business and hopefully once they've been fully qualified, they stay in the business. Complementing that is a very detailed now and highly focused learning and development, professional development program across all levels of the business. Big focus on our senior management team. So pretty much everybody in our senior management team reports to me has now had some external professional development opportunities. And I think that's an incredibly successful program and it's leading to a well-rounded group of people. And now we are implementing sales, training program for everybody that comes into the business and plus like a refresher course for our existing salespeople. We're trying to very much position ourselves now as The Acrow Way of doing business and that's the way we're focusing the sales training program. We've become the market leader by far in formwork and sales and hire in the country. We take a best of breed approach in terms of industry standards and one of the examples is the testing facility that Matt established a number of years ago. We're now looking to do the same in Industrial Services. And there's no reason why we can't have aspirations to be in the particular part of the industrial scaffolding market we focus become the Australian market leader. Now one of the things we'll be doing shortly is developing a training facility at Mackay -- adjacent to our MI Scaffold branch where the intention is that we can again breed our own scaffolders through that program and train them in the way that we want to do The Acrow Way of running an industrial scaffold operation. And innovation also becomes -- continues to become a very important part of the business. Matt talked about product development, et cetera, but it's not just that -- not just in product development, this REVIT Technology/Software for our engineering team. It's quite revolutionary in terms of the time saving that will be involved for both our sales guys and our engineers. And it's -- that's going to be -- yes, it shouldn't mean that our salespeople have got up to another 30% or 40% of their time that they can spend working with clients specifically without having to do some complicated sort of takeoffs of work. And then, obviously, we've relaunched Acrow brand in September of last year driving collaboration and connection between all the business units now. The emphasis on product development and that best of breed approach and we are now Acrow Limited, we're no longer Acrow Formwork and Scaffolding or Acrow Construction Services -- Formwork and Construction Services. We are Acrow Limited embracing a range of businesses all under that one banner. I'll now hand it over to Andrew and talk about the financial results.

Great. Thanks, Steve. Hi, everyone. I'll just take us down from EBITDA which Steve's already talked through down to NPAT reported. So as Steve said, NPAT increased from $53 million to $74 million or 40% increase. So below that we've got depreciations gone up by 36%, $5.5 million. So you can see in the balance sheet, our PPE has increased quite a lot this year on an average from [ $130 million ] to $151 million. And the depreciation rate slightly increased as well because of some of sort of more advanced products we've got. We've also had more yards. So our lease asset has also increased. So that's sort of the -- that's the main reason for our depreciation increase. We head down to net interest, and see interest has gone up by $3 million or 63%. Our average debt has increased from $40 million to $60 million, and likewise our lease liability has increased from $27 million to $30 million. And as you can imagine, our interest rate has gone up slightly as well, which explains our net interest increase. So pretax profit $33 million to $46 million, so almost a 40% increase. So even with -- it just shows you that our asset program is working very well. Now, Steve's already talked through the -- probably the most important one line item in our result is the tax expense. Up until basically last year, we had very, very high utilization of tax losses. Last year's tax -- effective underlying tax rate was 8%, this year it's circa 30%. So there's a $10 million impost there. But even with that, we've got 30 -- NPAT underlying from $30.5 million up to $33 million or still an 8% increase. Now, just if we actually had like-for-like, which obviously we didn't back then, if we had like-for-like tax last year, our underlying impact last year would have been circa $23.3 million. So we would have had a $9.7 million increase or a 40% increase. Moving down below NPAT underlying, we've got significant items. So we've got quite a large significant item amount this year, the $3.3 million. Look, about half of that was the acquisition [ DD ] because we had 2 relative small to medium acquisitions. So that was the acquisition costs, the due diligence costs, the legal costs and those sort of costs around that, that was just over half of it. We also had a few branch relocations. Now these are very, very expensive things to do. As you can imagine, you're moving all your gear and there's a lot of trucks that have to do that. So there was about $0.5 million of branch relocation in there. We also had rebranding costs, quite significant rebranding costs went through this year. That's sort of the majority of those significant items. Now the other thing that's new this year, we had amortization of intangibles. As part of the MI acquisition, we split up our intangibles between goodwill and we had 17 -- on top of that, we had $17 million of brand and customer relation or customer contract intangibles because these are under accounting standards, these ones have to be amortized. So these will be amortized over 12 years. And on a weighted basis this was 900,000 this year. So this is a non-cash item. Obviously, we paid cash up front. This is a non-cash item that goes through, and this will continue being in significant items below the line. And then under that we had share-based payments expenses, which is very similar to last year. Look, these are those things that could be -- we could have those in underlying, but we've kept them in significant items because that's for like-for-like, it's just easy to show. And then NPAT reported, it increased by $2 million, or 9%, from $23.5 million to $25 million. So EPS underlying increased -- oh, sorry, slight, was pretty much the same, $0.116 to $0.115. And getting back -- if it was a like-for-like, the EPS would have increased essentially by $0.02 if the tax had gone through. As Steve has already said, the dividends, because we're basically -- we're full tax paying now. DPS is now, the dividends are fully franked, and we declared -- we're declaring a $0.03 dividend, which on top of the dividend from the half year gets us to $0.0585, or approximately a [ 5.5% ] yield. Over to the balance sheet, you can see that our total assets have increased quite a lot from $218 million to $312 million. That was on the top of the MI acquisition of around $38 million of assets, the Benchmark acquisition, about $9.5 million. We've got goodwill on those acquisitions as well, about $12.5 million. And CapEx -- reported CapEx of around $30 million. That's the main increase. But importantly, if you have a look at our net debt, our net debt has increased by $22 million, or $46 million to $68 million. But our actual debt metrics have remained very steady. So our gross debt, 34% to 35%, and our net debt to EBITDA, 1 to 1.1. So pretty steady, and right where we like it. Below that is our net debt bridge. So we started at $46.4 million. We've got an underlying EBITDA of $74.6 million. We had working capital movements in the year. Working capital went up by $11 million. It's important to note that about $7 million of that related to some very large sales we did in June. So that really impacted our working capital right at the end. Without that, that impost would be quite low. Lease payments of [ $8.6 million ], approximately. You can see the tax paid. We paid tax this year of $7.6 million last year was significantly lower than that. That's probably going to be heading -- that's going to be the full tax payments next year. It's very hard to work out exactly what that'll be, but that'll probably be circa $14 million to $15 million of tax paid next year. We had finance cost of $6 million, maintenance $5 million. And then you can see the growth and acquisition capex. So this is where the majority of the cash that we received went this year. So we had growth CapEx of $25 million, MI acquisition of $26.5 million in cash, Benchmark of $5.8 million. Then we had the capital raises that covered a lot of that MI and also the DRP. So $15 million of capital raise for MI and we had a DRP underwrite of $7.6 million. And from a cash perspective, $14 million went out for dividends. And that got us to net debt of $68.6 million. Over the capital expenditure, as Steve said before, our overall CapEx for the year was $30 million. Now, that doesn't include the ex-hire replacement of CapEx, which is really the way we see that's a cost of sale in cost rather than CapEx. So we had approximately $25 million of growth CapEx. And the majority of that, by far, the majority of that was in the areas where we're moving towards now very little in normal civil infrastructure CapEx. We had just over $11 million in Jumpform. We had about $4 million in Acrowdeck which is the new product that we're setting out. And we had quite a large amount in the ring lock and in our Industrial Services area. So also our return on investment, we're still well above the 40% on the return on investment on the growth CapEx. And we won't invest in anything that doesn't achieve that growth. Over the funding and liquidity, during the year, you can see our debt -- as I said before, our debt went up. We had to restructure our business loans. When we did the acquisition of MI being $15 million and Benchmark $6.4 million, we also increased our equipment finance facility by $5 million to absorb the additional growth we were doing. You can see our headroom was $21.2 million, compared to $16.6 million, which is still quite a healthy headroom. But what we -- you can see that -- I was just having a look from what we've done from 2022, our assets have basically gone up by almost 70%. Our EBITDA doubled. So this was the appropriate time to really having a look at where our absolute capital profile was. So we've got a very close relationship with our bank and we've been working with them recently and we're finalizing terms right now to basically get us into the future so that we have 3 things. We've got certainty of funding if we have any acquisitions that we're looking at, which we're always looking. We want to reduce our amortization and we want to improve our cost of debt. So that's -- we're finalizing terms right now. And I think this will help us into the near future. And as I said, this doesn't mean we're going to be blowing up debt metrics whatsoever. We look at those things very closely and even though we may move up a little bit, we will always have a pathway to get back down to [ 1 to 1.1 ]. And I'll hand back over to you, Steve.

Thanks, Andrew. So I'll just sort of wrap up on what the outlook looks like at the moment. So I think...

Pardon me. We have temporary lost the speaker's audio.

Project we're talking about that are backlog.

Please go ahead.

Sorry. Okay. So some of the projects I'm talking about sort of backlog are not being canned, they're just being slow to start and they're going to have to start. But with Olympic Games coming up, that date is not moving, right. There's a significant hospital project, the hospital spend in Queensland has been pushed out, but it's not going away, and contracts are now being awarded. So medium term, we don't -- we believe that the general construction sector that we participate in primarily being commercial and civil will be -- we'll see an uplift over the next sort of 5 to 10 years. In terms of the civil projects that are kicking in Northeast Link, we talked about the fact that we've now won and that we're up to about $7-odd million worth of work. We've won in Northeast Link and it's continuing almost every day. Contracts are now being awarded for Suburban Rail Loop. We're still some time away from Torrens to Darlington that, that we expect that to be a significant project there. So who's the major contract [indiscernible]. Sydney Metro West, we've now got -- we've got -- we've announced we've got our first contract for the Aerotropolis Station for $1 million. We've also won another contract for about $700,000 for another station on Sydney Metro West. Melbourne Airport Rail, and then you go into Brisbane Olympics and Queensland hospitals and Coomera Connector, which we're enjoying some good revenue out of at the moment. The biggest part of that project kicks in around about 6 to 12 months' time and we expect that will go a very similar sort of opportunity revenue for us as the Bruce Highway extension was, which was one of our absolute lead projects over the last few years. The internal product development will open up more channels for revenue, additional growth. There are the Acrowdeck product platform what's Matt's bringing in, Jumpforms are continuing to grow. Other smaller products like bridge access will just generate more revenue. The general market opportunities for product development, I mean, we're not even scratching the surface here at the moment. Industrial Services, so clearly, I mean, we now -- I now believe the Industrial Services business is just as important as the Formwork businesses to Acrow. It gives us high certainty of earnings, strong annuity earnings, great contracts with blue chip clients such as Visy and BHP and Sun Metals, et cetera, Ampol, et cetera, et cetera. Snowy Hydro. We're very, very keen to continue to grow this business nationally. We are looking at some acquisitions at the moment, both in New South Wales and Western Australia. Early days, but promising in terms of potential for us. We want to grow into that New South Wales market and the Western Australian market to complement our strong position in Queensland. We won't be paying more than low 4s for anything that we acquire going into the future. The training facility in Mackay I talked about is part of the overall strategy. We want to make ourselves -- give ourselves the best opportunity we possibly can to be the market leader in this space. So we think -- well, I believe that we can grow an Industrial Services business within a couple of years, doing circa $150 million of revenue on similar margins that we're making at the moment. So general outlook, sort of summarizing the points we've just made there. The general formwork business in terms of contract wins and pipeline is never been positioned better to take advantage of what's in front of us in both civil and commercial. And I mentioned those Queensland hospital and Brisbane Olympics projects. They will start to kick in, in the second half of this financial year and then the next few years will be a significant revenue [ generator ] for us as long as we can maintain our market share. Now, nothing says for me that we won't do that. We are already basically aware of winning many millions of dollars worth of work for both screens, job forms and our traditional formwork in the hospitals as those contracts get awarded. Again, nothing really yet to report on Brisbane Olympics, but I don't see any reason why we won't maintain our market share in Queensland as that kicks in. We will get further formwork growth this year off the back of the new revenue channels generated off the back of Acrowdeck, Jumpform, screens and the other internal products that we develop. Our Industrial Services outlook is incredibly strong. The businesses that we purchased are performing better than we expected them to, so we'll see growth off the back of organic and also further target to them as I've mentioned earlier. Commercial Scaffold hire revenue is down and it will be down this year compared to last year. We started to see that in the second half, but now it's basically stabilizing now at above historic levels. That's a supply and demand market. It's the cycle market we participate in, and it's the market place the least importance on. And at this stage we're guiding to 20% circa growth in revenue year-on-year and double-digit EBITDA growth. I mean, the thing that's just driving the same, it's double-digit EBITDA growth is just some degree of uncertainty about commencements of projects that will definitely commence. Will they commence this half? Will they commence next half? That's the only thing that gives us any degree of uncertainty. But just that environment, especially in Queensland, has been difficult, given again some uncertainty about what the state government's plans are. There is an election in Queensland in a few months and then you can't underestimate the uncertainty that the CFMEU issues, certainly in Queensland, have been affecting developers and builders in that state. And I now expect that to change dramatically over the next few months now that the federal government has taken the action that it's taken. So that's the summary from us at the moment. So thank you for listening and now happy to pass through for any questions.

[Operator Instructions] First question today comes from Philip Pepe at Shaw and Partners.

Well done on the good result. Just quick ones, please. Just on the guidance of the -- very specific on the revenue, 20% revenue growth, double-digit EBITDA guide, does that mean 10, does that mean 25? Can you give us a bit more color as to whether some operating leverage comes through or cost...

Philip, we could have given you a range, but the range would have been silly because there's just so many moving parts. So we're happy to give that. I mean, there was a debate internally about whether we should nominate a number, but we're going to stay with where we are, and then we'll provide more color as we move through the year, but certainly, by the time of our AGM, further color, but you know our history. We don't intend to change from our history, which is that we like to upgrade as we can through the year, and we always like to overachieve. So nothing's changed in that regard. We can be more specific on revenue because, frankly, the revenue is driven a lot these days by industrial because it's big revenue and add a lot of the major big labor revenue in a lot of the major contracts. So we can see the revenue. A lot of our formwork business has significant impacts on the EBITDA, and it's just the commencement date of the project profile that gives us a degree of, I'll not say uncertainty, but we just -- it's too early for us to get more specific than that.

No, that makes sense. And secondly, you mentioned some large revenue, large work that came through in June. Has that cash come through post period end to improve the -- reverse the working capital drag in June?

Yes, it's starting to, yes. Yes, some of these were negotiated sales. So it just takes time to come through, but it just happened -- just happened to happen in June. It was just a timing...

Your next question comes from James Lennon at Petra Capital.

Just a couple from me. Firstly, just on your guidance for revenue. Just curious to know, based on what you're saying, a record pipeline, you're going to get full 12 months from those recent acquisitions, there's cross-selling opportunities, et cetera, et cetera. Just wondering, is that guidance you've given, you're fairly comfortable? Is that conservative? Just seems if you back out the M&A contribution, you'll get for the full 12 months, you're looking at sort of an incremental sort of $10 million, $15 million of revenue growth on PCP.

We're pretty happy with that as starting point, to be really frank, James. Again, we're 6 weeks into the year. We're pretty -- we're continuing to get growth from the general business on top of what's going to be generated by the acquisition in industrial. We're pretty happy with that situation to start with right now. Again, it's this environment we're operating in at the moment. Nationally from the construction sector, it's actually not wonderful, right, except for our results, I think. Anyway, I think they're remarkable given the sort of the macro environment and there's some other results that have been coming out around the place that's showing significant downturns. What we're seeing is with the pipelines that have been as good, we're winning more than we've ever had before, but the start dates are questionable. So that's the only thing that gives us any keep awake at night stuff. And I'm not worried about that. I don't get worried about projects that are delayed by 2 or 3 months because they eventually happen. The big concern is if projects get canceled, I also get concerned if we lose market share. Well, we're not losing market share, in fact, we're gaining market share pretty much across all of the country. And major projects are not being canceled. So that just means all that revenue is going to be generated at some point. At the moment, I just don't know whether it's first half or second half or first half next financial year.

Absolutely agree. I think your profit before tax is -- it's a great growth number, so well done on that. Can you please remind me also just on the margin contributions, Industrial Services versus Formwork? Is that -- as you sort of grow the Industrial Services, is it naturally, there will be a slight decline in that margin?

Definitely not. I mean if you look at the numbers at the sales contribution margin line, Formwork contributes 74% margin -- contribution margin and our industrial is about 38%, right? So clearly, as we grow the industrial part of the overall pie, that will reduce the margin but still be highly profitable. I mean what we've got here is the balance, and this is the thing that we've been making the point for some time, and it is absolutely the strategy of Acrow. We have a formwork business that's incredibly profitable, high returns, very strong margins, but you've got to go project to project. So we've got to keep winning work, keep winning work, keep winning work to keep the thing going, and we do, right? But it is -- there is -- I'm not going to say there's a cycle, but you're going to go through periods where you're going from project to project. And then you've got an industrial business, those margins compared to others in the market are incredibly good. [indiscernible]. It's also not as big a drain on capital, but it's more -- far more predictable earnings. I mean if we're going to make 35% to 40% contribution margins out of industrial business, that's actually quite fantastic because I know that other companies are lucky to be doing 10% or 15% in this regard. So we've got a very specific focus about how we run that part of the business. But yes, you're right, over time, if the industrial business becomes part of -- a bigger part of the pie as it will, that overall EBITDA margin booked in the company will probably reduce.

Also just on the one-offs there, are you done with the relocation of yards? Is there still some sort of significant items that we'll see in '25?

Yes, not really. There's not that much in that regard. I mean we have a very big project over the next 2 years to relocate 3 yards into 1 in Southeast Queensland. So we're building or getting built for us, but our purpose-built facility in Southeast Queensland, we've got currently -- we've currently got 3 facilities that will go into 1. That's a couple of years away yet. That's a very, very big undertaking that sets up in the future.

All right. And just last one for me. Just on the CapEx, just to be clear, the guidance you're giving for CapEx, that's gross CapEx? Or do you net that out with what you expect to sell in terms of...

No, we don't forecast that because that's very hard to forecast because that will change year by year. Yes. So that's pure growth or staying business CapEx.

[Operator Instructions] Your next question comes from Alex Lu at Morgans Financial.

Can I just start with Jumpform, please? And it looks like the pipeline in Jumpform's gone from $36 million 6 months ago to $42.5 million. And can you correct me if I'm wrong, but did Jumpform deliver about $8 million, [ so the ] $7.9 million in FY '24? And do you think you can still get to that run rate of $20 million, which was your target by, say, FY '26?

We can, but no, it didn't deliver $8 million, it was less than that. So we'll go from about -- what was it, max $5 million? Yes. So we're going to go from $5 million to probably $12 million. I mean Matt is going to kick me under the table. That's -- but our budget for Jumpform revenue this year is $10.8 million, up from $5 million.

And we've already got $5.9 million committed.

Yes. We've got $5.9 million already committed, we're winning projects every month. So our internal target is $12 million, right? And then you get that momentum moving. And so there's absolutely everybody who's involved in Jumpforms business is focused on getting it back to critical $20 million revenue number. I think the other thing to point out, Alex, around CapEx, as you get to it, we're spending a lot of -- we're spending upwards of $30 million on Jumpform a year -- a couple of years to get us to that point where we're making $10 million, $12 million of profit out of that business. And then you get to a critical mass. Now that's -- I think I hope people understand in our CapEx profile that these are choices we're making. We're making choices to invest in Jumpforms. We're making choices to invest in Acrow Deck. We're making choices to invest in our industrial business. We're spending not much in our traditional core Acrow business because we're looking to diversify the revenue and profit streams. So we're not a one-trick-shot. We're not just a Queensland formwork business. We dropped $4 million of revenue in Queensland formwork for the year, and we got $20 million nationally. So these are the sorts of things that we're needing to -- we're investing into, just to make Acrow more bulletproof -- further bulletproof as we go forward over the next decade.

And can I move to then, Industrial Services, please? So you're targeting further organic growth. And obviously, you've flagged some acquisitions there. But can I just focus on the organic side of things? And I guess, explain how you've been able to expand organically over the past few years and obviously going into FY '25 as well? I'm just wondering, is it leveraging existing customer relationships? Is it -- are you being aggressive on pricing, you're cold-calling? So just trying to understand that organic growth part of Industrial Services.

Look, there's a combination. One thing I'll say, this is not a cold-calling industry, Alex, in industrial. You're dealing with [ BHP ] and UGL and Downer, AGL, et cetera. So this is not a cold-calling industry. So to a degree, yes, we have leveraged up relationships with the likes of UGL and Downer to win other contracts that they let in, say, New South Wales off the back of Southeast Queensland relationships. We got into Visy off the back of a guy that works for us that we hired, who had a strong reputation there as a manager and a service provider, and they just kicked along with him. We've worked really hard on Snowy, and we've got ourselves in a great position there now. And when we talk about organic growth, so Snowy is doing about $500,000 to $600,000 a month at the moment of revenue with the program that's there. By January, that will be $1.2 million of revenue at 20% margin, right? So that's part of that organic growth story. The Ampol contract, there was no existing relationships whatsoever involved in the Ampol contract that we won at Lytton. Our guys have worked incredibly hard to win the contract and it's now going to be worth $15 million. And again, that's generating, at the moment, a couple of hundred thousand dollars a month, and it's going to go to sort of 3 or 4x that as we go into the second half of the year. So it's a combination of target. And at the moment, we've got some very targeted contracts we're working on in Western Australia. Even though we don't have a big presence yet in that industry, we've got a girl who works for -- a lady who works for us, is very, very well known in Western Australia. And she's got some targeted contracts there that we are hopeful that we might win a piece of. And then we're looking to grow in sort of M&A to complement that in that state over time. So look, we are definitely -- this is not just about the M&A. It's definitely organic growth in the traditional Acrow business.

Okay. Great. And just one last one for me, please. Apologies, if you've mentioned this earlier as I jumped on the call late, but the new loading platform system, Steve, so what -- is that useful?

So it's basically a platform that goes on multi -- high-rise buildings that you put material on. So if you basically keep building slabs and you need to get material into a lower level, you put these on and it basically retracts in and out of the building. So if you got like plasterboard or windows or something going to the lower slabs, this comes down, you load it up and then you basically pallet-truck them back into the building. So, it's not a revolutionary product. We have definitely changed a little bit of stuff on it, but making the adjustment is probably the biggest benefit of it because every other product in the market are fixed width. So you'll get a [ 2.2 or 2.6 or 4.2 ]. So you need a range on these platforms, I've made ours universal. So if there's a demand at onetime for 2.2, I just expand it or bring it in. But yes, it doesn't need much engineering.

Look, this is not going to be a massive game changer, Alex. It's just something that might generate a couple of million dollars as revenue. And we can lump it in together with Jumpform or screens' price, right? So -- and those customers, they want a slightly better system and have a one-stop-shop. So again, it is not going to be -- this is not a $20 million kick like Jumpform, this is a couple of million bucks a year that we hope to be able to get within the next couple of years.

This is complementing -- giving those clients a one-stop solution.

Yes. And so were you outsourcing that previously, now you're doing it yourself?

We haven't been in that space.

So you've never been in that space, you kind of see that as an opportunity. But yes, I guess, what you said is, it's kind of small, but...

Yes, we've never hired out or we've never done it before. We were looking at it, we saw a demand, then we've been asked by some of our clients who contract us for jumpforms or screens if we can provide that product. Matt's worked that as he can. He's getting it -- he designed it and he's getting it manufactured and we'll be bringing that to market [indiscernible].

Your next question comes from Tina Wilson at [ EMA ] Capital.

Just going back to Industrial Services, you mentioned that the competitors are running at much lower margin. But are they also going after the same sort of clients as in the bigger blue-chip clients that you're after?

Yes. No, look, there are different -- there are competitors for us who look to do a whole range of other services, right? Some will do painting and blasting and insulation work and a little big -- and scaffold provision might be just part of all of that. They'll do rope access, so there are a whole range of things. We're not interested in those sorts of contracts, right? We're a specialist access provider for industrial, and that's what we focus on. So there are certain styles of contracts that we just don't quote on. Those contracts don't go to 20% margins, they go from 8%, 9% or 10% margins. So it's a very different market that we focus on with some of the other larger companies in that area. We want to be good at what we're good at, and as I said, it's providing access on industrial facilities.

Thank you. That concludes our question-and-answer session and the conference for today. Thank you all for participating. You may now disconnect your lines.