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

Thank you for standing by, and welcome to the Acrow FY '26 Results. [Operator Instructions] Thank you for joining us today. I will now hand over the call to Steven Boland, CEO; Andrew Crowther, CFO; and Matt Caporella, COO. Please go ahead.

Thank you, and thanks, everybody, for joining us this morning as we run through the FY '26 Acrow results and also want to talk about the FY '27 position as we go into the new financial year. And I'm joined today by our CFO, Andrew Crowther; and COO, Matt Caporella. So I'll kind of walk through the investor presentation that was released on the ASX platform this morning. So firstly, just in terms of the overview of the business, I think the first thing to, I guess, recognize is that this company was listed in April 2018 with a $70 million turnover and a $20 million EBITDA and was effectively a commercial scaffolding business. We've now obviously developed it into a market leader in formwork hire and sales. We are the market leader in the Australian market, and we've developed a significant industrial access business over the last 3 to 4 years. The cornerstone of all of that growth has been around the competitive advantages that we have in engineering, the general quality of our people, product range and the geographic footprint of the business. I think we can add to that now innovation. Innovation sort of goes hand in hand with our product development and our engineering area. Matt will talk about some of the new products that we're bringing to the market later on in the presentation. And innovation is very much front and center of the Acrow way of doing business. In terms of the FY '26 highlights, we've grown $200 million industrial access business in the FY '26 period, up 53% on prior corresponding period. Importantly, that growth was still about half organic and half based on the acquisitions we made at the end of the FY '25 year. And this is going to keep growing. I'll talk later about what our forecast for revenue is in this business in '27. We made 2 complementary acquisitions post 30 June that were part of a very successful capital raise in the -- towards the end of June. Both the Preston's SuperDeck loading platform business and the Ausgroup Industrial Access business. I'll give a bit more color about that shortly. We had a great year in both our Jumpform and Screens business. It's the best example of cross-selling we have in Acrow. They're both at record levels of revenue and especially Screens now, we've grown very significant national presence off the back of what was really only New South Wales-based business a couple of years ago. A great example of innovation is the Column Climber Jumpform project we've got on the Gold Coast working with Meriton. It is the first of its kind in the country. We'll talk more about that project shortly, but a great indication, again, of engineering excellence and innovation within Acrow. Probably the most important thing, I think, in this presentation in terms of the forward outlook for Acrow is the second half formwork revenue that we had for FY '26. Again, I'm going through more detail in relation to that, up 26% on the first half. But it is the most important thing, I think, in looking forward to what the significant uplift in result is that we are not expecting, but we will see in the FY '27. Hand in hand with that is the equipment -- Hire Equipment Pipeline is up by another 33% to $290 million. In terms of secured hire contracts, that number was flat. There is a timing issue there, especially with the size of the Jumpform and Screens contracts that we win in this regard now. A lot of the Screen contracts that we win in 1 year, you don't see the revenue until the following year. They are awarded sometimes 6 to 12 months in advance of the job starting. So there can be a bit of a lag effect in there. Certainly, in terms of the revenue, the work in Screens that we won in FY '25, we saw the revenue in FY '26, and we will show that a little bit later on. So on to the next page around safety. So still -- it has to be really strong emphasis. I mean we've increased the number of hours worked in the business by 60% from FY '25 to FY '26. In some weeks now, we have well over 1,000 industrial access scaffolders working for the company. So I guess our risk profile is higher than it was when we were purely a formwork hire and sales business. So to go through that whole year with only 2 lost time injuries, I think is still a good result, albeit as I say you don't want any -- you want that number to be 0. The recordable injuries number is relevant, I think, in terms of our ability now to capture and act on injuries before they become LTIs. But it's going to continue to be -- it has to be a strong focus. We've got a really good national safety manager who started with the business about 12 months ago, who is now getting consistency across all of our depots. In terms of the financial metrics, clearly good to see the revenue up by 27%, but that's relevant in terms of an increased profitability from the industrial sector of the business and a reduced profitability in the year of the construction part. So basically $5 million less in construction and $5 million more in industrial. Importantly, over 1/3 of the EBITDA for the business for the year was generated in the last quarter. Last quarter was the most profitable quarter in the company's history, and that is flowing into the new year. EBIT and NPAT were down based on obviously flat EBITDA with more finance and more depreciation costs. That will stabilize itself now into the new year and EPS was also in line with the NPAT reduction. I'm going to talk about this again later on when we're talking about our guidance. We haven't given specific guidance for NPAT and EPS at the moment, whilst we have for revenue and EBITDA. But we are expecting our NPAT to be up over 50% this year, and we're expecting our EPS despite all the additional shares on issue the [indiscernible] raise to be up by over 20%. In line with our new dividend policy that we outlined a couple of months ago, the dividend for the final half of $1.042 is actually at the high end of the new guidance that we've given. And it is something that can be tracked more accurately now and it is fair to say it's a reset for Acrow. For a company that's growing as much as we are and has uses of capital that can return better than 40% for every dollar we spent, we believe that we've probably been overpaying dividends for a few years, and this is a rest, and we don't apologize for that. I'm going through the operational update, the divisional breakdown. I think a couple of things that I want to point out here. Firstly, obviously Industrial Access $200 million, we talked about that. The margins whilst you're seeing an EBITDA margin of 24% versus 34% -- sorry, 30% in the previous year, Industrial division now contributes 60% of our revenue rather than 50%. I think, any business with as much revenues we've got coming out of that sector now can still maintain EBITDA margins in the mid- to high 20s has got an extremely good margin profile. We are looking at the moment in the new financial year, even with a stronger contribution again in Industrial, we think our EBITDA margins will probably be more like 26% to 27% this year. In terms of Construction division, pleasing to say, and we'll go into more detail on the next page which [indiscernible] margin profile. If you look at the chart at the bottom, we had a greater sale product revenue of the total revenue this year compared to last year than we did in hire. And that just shifts the margin around. So this is not a reduced margin overall, this is again just a shift between hire and sales revenue. Going to Page 12, which is the revenue by state. As I said, i this is probably, I think almost the most important in this presentation in terms of the future outlook. So firstly I'll draw your attention to the national formwork revenue where you can see that the split we've got for FY '26 between first half and second half. So the second half revenue was $66.7 million, is the highest revenue we've had in any half in the history of the company and up significantly, obviously, from the $53 million we had in the first half. And most of that growth came in the last quarter. So you can see that -- and again, really pleasingly, that growth we saw in the last quarter is finding its way into the new financial year, which we'll talk about in more detail later on when we talk about guidance. A couple of other things in here. Clearly, New South Wales, South Australia and Western Australia had very good years. This is indicative of what happens when the market turns in our favor. I mean we don't -- you can't create work. We're very jealously proud of our market share in each state. Despite the reduction in revenue in Queensland, we haven't lost market share. It's purely indicative of the way that the work in that particular market at any given time. I think I just also want to, I guess, reiterate here, we saw -- we had growth over a 3-year period in formwork revenue. You can see from '21 through '24, our national formwork revenue of $60 million to $121 million. So we doubled it over a 3-year period. Our EBITDA over those 3 years went from $20 million to over $60 million in 3 years. That was all off the back of the last surge of activity in construction activity in the country. That surge in activity has basically stopped for the last 3 years. Our revenue has stagnated. However, as I said, you can see in that last half, how it's really kicked back in. That's really why 3 years ago, we decided to invest heavily in our industrial access business because we didn't want to be just one trip show based on civil infrastructure and general construction activity cycles. So you can see again a great second half result going into the first -- going into this year already. And Queensland more specifically, Queensland coming off the lowest 6 months they've had in 3 years to get to increasing [indiscernible] the prime example of cross-selling. In terms of our Screens business, we are definitely the national market leader with over 100 projects going at any given time. So earlier, I mentioned how the work that you win in 1 year in Screens, you really see the next year. And you can see in FY '25, the revenue whilst we won significant -- only won $25 million of work in FY '25, the revenue was only $16 million in FY '25 and that grew to $23.5 million in FY '26. So we've got a great result in Screens. We've grown a very strong presence in Western Australia, which we've done primarily off the back of our growth in Jumpforms. You can see the WA continues to be the biggest state for us in terms of Jumpforms, but you can also see that we've got 10 Jumpforms jobs in WA. We've also got 10 screen jobs in WA. So it's fair to say at the moment that almost on every job that we're winning Jumpforms across the country, we're providing Screens as well. Project example, the Meriton Cypress contract. This is the column climbers, first of its kind in the country. Again, a great example of innovation and engineering excellence. The job is now going at full total. So how many columns we've got in this project -- 16 columns? okay. We have inserted a time-lapse video in here. I won't show that now, but you can access that at your leisure to show you how [indiscernible]. All 16 columns have done 10 jumps. Working extremely well, very happy customer. This is industry changing. Moving on to Industrial Access. Look, very strong EBITDA margin for this type of business making 18% on what is primarily a labor orientated business. I would suggest if you want to double check the strength of the Acrow Industrial business, you check against the peer group that are other public industrial companies, I don't think anybody is making 18% margins out of their business. So this is a very strong revenue and margin profile. In terms of the labor component of this business, the average labor is around 22%. However, the biggest contracts that we've got, which now contributed more than 43% in what they generated this year, the average labor margin for those biggest contracts is around 15%. We will take 15% every day of the week [indiscernible] these are not lump sum contracts, these are do and charge. That is a very strong margin. However, they are becoming a bigger component of total revenue, and they again this year a couple of them are growing significantly that might reduce the labor margin to more like 20% across the group average. Some of the specific projects in this group, you can see we're front and center on some of the most important national critical infrastructure projects and industrial projects. Industrial business, you can sort of categorize into 4 different areas, long-term maintenance contracts, construction style industrial projects, maintenance packages and shutdowns. So each of these projects are covered by some of those. So for example, Snowy Hydro is a construction style industrial project. Ampol and Kent is a construction style industrial project, so is Perdaman. BMA and Glencore are long-term maintenance contracts. Sydney Harbor Bridge are basically ad hoc maintenance packages, but they are all indications of the sort of work that we do in these areas. I'm going to go into more detail about a couple of these later on. On the next page, we give an example of [indiscernible] shutdown project. So this is the first one of this nature where we are the principal contractor. We took principal contractor responsibilities, and then over a 6-week period, we mobilized up to 98 personnel, 14 different trade groups. You can see this number, 37,700 manhours. It was a massive undertaking, and we pulled it off incredibly successfully. Very happy client, just under $8 million in revenue, a good contract for us in terms of margins and an indication that we can pull this sort of project, and we'll be looking to do more of this sort of project into the future. Effectively on this project, the cooling power for the power station needed significant rectification work done to it, and we came up with a plan to be able to support that work. And again, very happy customer and successfully completed. Over to you, Andrew, on the financials.

Great. Thanks, Steve, and Hi, everyone, on the call. As Steve has already said, our revenue was up 27%, but we had relatively flat EBITDA. And as discussed, the predominant reason for that is the revenue split between Construction and Industrial from 50-50 to 60-40 Industrial. And with that came the lower EBITDA margin. So essentially, that was brought around through Queensland formwork delay and sort of increase in certain costs. Now one of the costs you'll see in the P&L there was there was a $1.5 million increase in bad debt during the year. That doesn't mean our debt is out of control. There was quite a few things bubbling away and the decision was made to provide these in the second half. That flat EBITDA then translated to an underlying profit after tax of 20% decline. So from $34.5 down to $27.5. Now the reason between that flat EBITDA and the lower underlying NPAT is essentially increases the depreciation and interest that were brought about through increased CapEx and working capital. And basically, we've been preparing for a strategic expansion for a while now. And I suppose construction as Steve has already talked about, just wasn't what we expected in '26, but that's all basically been delayed and moving into '27. So moving on to that depreciation. Depreciation was higher. You'll see from '24 to '29, and that was basically just our average PP&E has increased from $189 to $226. Our average depreciation rates essentially the same at around 8%. It is an increase in [indiscernible] interest likewise, our average debt went from $95 million to $144 million and our lease liability also increased. And therefore, our interest increased by close to $3 million. Our tax actually increased. You'll see that our statutory rate of tax increased from 33% to 38% or the tax itself went from 11.5% down to 10.8%. The reason for that increase in statutory tax, there was 2 adjustments for essentially previous period income tax expense of about $500,000 each. So that $1 million translates to about 3.5%. Our statutory tax rate will revert back to around 33% next year. Now so that gets us down to an underlying of $27.5 million. And our earnings -- our underlying earnings per share, you'll see as well is [$0.886], down 20%. Now that EPS reduction is purely from the underlying NPAT our weighted average shares basically stayed relatively flat. Obviously, it increased 32% after share raises at the end of June and July, but for the year it was relative flat. Now getting between underlying NPAT and NPAT reported. NPAT reported likewise reduced by about 24% and 17.8. And then the difference from those two essentially were all our growth initiatives. Significant items of $4.5 million. That's predominantly on restructuring and integration expenses as well as [indiscernible] future growth plus some adviser fees. Amortization of intangibles are the same as previous. We had to value our customer relations and certain brand items for some of our acquisitions and that will amortize over 10 to 12 years. And as [indiscernible] we announced a dividend of 0.142 final that brings us to 3.42. The way we calculated that dividend was on the second half. Our underlying NPAT on the second half was about 14.7 million and that basically we are paying out the high end of new policy of 50% of that. Now moving over to the balance sheet. The FY '26 balance sheet includes around $31.5 million that we received in the first tranche of our institutional placement. The second tranche and the SPP came in after year end. So net debt including $31.5 million was up $9.8 million to $133 million, and that increase is predominantly from all of our growth initiatives and we'll get on to that in a moment in the next slide. Net debt to EBITDA increased from 1.8 to 1.9 at 30 June, our headroom essentially stayed the same at close to $40 million as last time. Total assets were up by $76.7 million. That was from CapEx. We had $36 million of CapEx, $31 million of growth plus we had quite a lot of probably record sales in May and June. And likewise, I'll get on to that. Our average sales for May and June were about [$38] per month. For the balance of the previous year was about 2 per month. So our receivables basically had an increase of $20 million for the year, so that basically was one of the big reasons for our assets up. Working capital sales, almost the same as last year, 26.5%. As previously said, that was impacted by May and June invoicing as well. Now cash conversion, likewise, almost identical to last year, 72% versus last year's 71%. Now that variance, if we want to get to 100%, it's very difficult for a business like ours because we're in growth mode, particularly in our Industrial Access division. So as I said before, our working capital or particularly our debt has increased by $20 million. That's about 20%. So that's sort of where our impact on our cash conversion is. And on our pro forma column on the right side, what that takes into the account is the second tranche of institution placement plus the SPP. It is about $51.2 million less the acquisition cost on Preston's and what will be Ausgroup, which is $47.8 million. We've also taken into account what we expect around $13 million of contribution from the acquisitions. We have different views of that probably higher. But with that pro forma, we would be roughly the same debt and debt headroom, but our net debt to EBITDA would be about 1.6. Now as we said it raises, we're still forecasting that our net debt to EBITDA at the end of this year or '27 will be around 1.3, so we are making good headway. Now over the next slide, this is our net debt bridge that we always have [indiscernible] but what you will see is our debt. This the debt increase from 123 to 133, so around $9 million. The vast majority of the outflows are investment related or future growth of about 62 [indiscernible]. Dividends you'll see was $14 million for the year. It is worth a call out there. That will start reducing under our new dividend policy. As Steve said, it is relatively clear that we are probably overpaying dividends with the amount of growth that we were doing. Over the next slide, capital expenses spend. You can see from this that our investment in CapEx this year were very much into profitable growth areas, in particular Jumpforms and Screens, which by far has been record levels of revenue for the year. And looking forward, these are very much strategic opportunities for the future years. So this is money very well spent. And on top of that, you'll see that the Uni-Ring lay was $1.4 million. Most of that went into our organic growth areas being South Australia, New South Wales and North Queensland. But we probably underinvested in other areas of formwork, which will be adjusted in the following year. You see FY '27, our CapEx budget and forecast at this stage is $30 million. However, opportunities may show themselves with extremely high returns, we may make decisions. But our budget at the moment is $30 million. Over to Steve.

Thanks. Sorry, folks we've just been told by one of the participants that the call sort of drops out every now and then for 10 seconds or so, I apologize for that. Not sure why that's happening. We will do the best we can taking that into the account. So if anything that needs clarification through the questions process, please make sure that you ask those questions. clarest,kest. Moving on to growth opportunities. Firstly, we completed the acquisition of the SuperDeck business effective on the 3rd of July. It's been already well integrated into Acrow, works in conjunction with our Screens and Jumpform business. It is the market leader in this area in the country. Excellent early results. We've already obviously have the July result, strong forecast for the next few months, performing at the levels that we expect it to. And we've got great ambitions for this business on a national basis in conjunction with our Screens and Jumpforms offering for high-rise commercial and residential develop. The Ausgroup acquisition report that today is effectively the final day for ACCC sign-off. All indications are that we'll get that. We actually had the ACCC approval 2 weeks ago, but then undertake a 2-week cooling off period. That cooling off period completes today. We understand that there has been no adverse commentary in relation to the acquisition over that 2-week period. So we'll be going ahead with completion of this acquisition to be effective on the 31st of August, 1st of September for us. Look, this business provides great scale for that Bowen Basin region for us in terms of equipment and manpower, totally complementary to the MI Scaffold business, gives us a wider service offering in the region with the paint and blast and engineering services that Ausgroup have, which is a relatively small part of the revenue, but it's an important part of what we see as the future growth of the region. I'm going to touch on that in a second further. Integration planning is already well underway given that we're still week and a half away from [indiscernible]. There are meetings going on today between senior management of MI, Ausgroup and Industrial business to get the integration planning well underway. Moving on to product development, look, it's one of the forefronts of our strategy. We're talking about innovation as one of the strong points of Acrow, and I'll let Matt talk through some of these opportunities we have got in front of us.

Thanks Steve, so one of the things that Steve said that differentiates Acrow is our ability of continually innovate and develop proprietary solutions. But over the last two or three years, what we've really done is to solve problems with [indiscernible] Australian market, creating more opportunities for the business. I'll just cover a few things, products that we launched in the last 12 months plus a couple of exciting opportunities that are about to launch in the first half of this financial year. First I'll cover is Powershore 60, but we launched this in February and we've been working on this for the last couple of years. This product is entirely developed in-house. Acrow own [indiscernible] for the product and the manufacturing ability. This product, we're delivering around double the load capacity of comparable product in the market, but we're only about 20% heavier. So quite innovative and really well received in the market. We've successfully commercialized the product basically across every state in Australia. That's in higher end sales of the products and it's really expanding our foray into the temporary works propping segment. I'll cover this further on. The next product is our Uni-Ring. Uni-Ring is our version of ringlock scaffolding system. The same here, we've now got projects across all of Australia, Queensland, New South Wales, Victoria and WA. Most importantly, this is supporting the growth in our Industrial divisions, and opening up new opportunities in the infrastructure markets. Also seeing an increase in product sales [indiscernible] product now. We've got multiple sales in Queensland and Victoria. We're benefiting from owning the IP her as well and the manufacturing capabilities, and this primarily was shown on the project in Perdaman where we had to mobilize thousands of tons of materials in a very short time frame. We could spread it across different factories and deliver quickly. One part of the business we're getting around into now is propping. So strong demand for engineering propping solutions. This is not just the traditional formwork sort of packages we're doing. It's standalone propping. We're supplying the propping in. We're also doing labor in some positions where we're installing the propping. This is using our extensive fleet of systems that we've already got in our formwork business. And we're continuing to invest into these sorts of product lines, much like the Powershore 60 I mentioned before. One thing that we've always done in the past is bespoke formwork, but it's really ramping up in the last 12 months, and this is where proprietary systems remain. they remain core of our business, but with complex projects now becoming more and more prevalent, customers require a more tailored solutions. We've always offered this, but now we're getting into it a lot more. Ultimately, this is like bespoke formwork capabilities using our design engineering and supply chain. And basically offering a standalone model for the customer where it's a single point of contact where we're leveraging our engineering expertise and also our manufacturing capability.

So on that it is fair to say this product is sold onto the project.

Sold on to the project.

Single use, sold to the project. There are some very large examples. One examples at the moment [indiscernible] Western Harbour Tunnel in Sydney.

Yes, which is the photo on the report. And we're doing a similar sort of project [indiscernible] Melbourne as well. [Large bespoke tunnel] formwork is probably where that is primarily seen.

Okay. Thank you, Matt. Just keep going. On the industrial business earnings. It's a business that has allowed us to have more confidence about what the future of the business looks like going forward. You can see what we've developed over a 3-year period. We've gone from a $40 million turnover to a $200 million turnover between '23 and '26. This year, we've already got -- we came into the year with $180 million of secured revenue, and that was before the Ausgroup acquisition. We're forecasting this year to do [ $280 million ] in revenue up $80 million for the year. About half of that would be Ausgroup and half of that still will be organic. So it's not just an M&A story. This is -- every year, we get at least about 50% of our uplift in revenue coming out of organic initiatives. One example is now working strongly if I go to the next page. We won the Perdaman contract 18 months, 2 years ago. It has been operating at a reasonable level of around $2 million to $2.5 million a month of revenue. We are now winning more packages. In the last 3 months, we have won another $1 million odd dollars worth of work overall, just over a 3-month period on really strong margins. We expect that will continue. There is a lot of discussions going on about broadening the scope of the work that we currently do on that project. We are getting the benefits of scale. Matt talked about the Uni-Ring product. Uni-Ring product has a lot of flexibility, and one of the things we are moving into strongly now is an application for Uni-Ring on civil infrastructure projects. It looks like we are going to be winning quite a lot of packages for this kind of work on the Rockhampton Ring Road project as an example. Central and North Queensland. Clearly, with the acquisition of Ausgroup and the existing business of MI Scaffold, we have got a very significant business in this area. If you take into account Gladstone and Townsville, we have got about $100 million region of revenue. It is almost 25% of Acrow's total revenue. We have got great scale. It is in an area, it is a critical region for Australia's met coal export market. We have done a lot of research on that market before we bought the Ausgroup business. It is clear that market is not deteriorating anytime soon. Big training and development focus for us to try to breed our own to develop even further scale. What we are really trying to do in this region is build a moat, put ourselves in a position where we are very strong in terms of capability. We have got the scale, we have got the manpower. From a capability perspective, we give ourselves a really strong position. Next one, the Sydney Harbour Bridge. I will go out on a limb. I will say that the Sydney Harbour Bridge project for us has a bigger growth opportunity than the Brisbane Olympic Games does. We have got over a decade of relationship with the Transport for NSW on the bridge through our Above Scaffolding division. Established a high level of customer service and reputation. The combination with Acrow enhances that capability significantly. We have recently submitted in July an expression of interest for a lot of work on the bridge leading up to the centenary of the bridge opening in 2032. There is a lot of work there. We have said $400 million to $600 million worth of revenue. I have heard other numbers floated around a lot more than that. It is a lot of work. We are a proven partner and service provider for Transport for NSW. We have got the capability to tender and deliver services on all packages. We are probably the only company in Australia that can actually do that. There are parts of it that companies might be more specialist in, but in the expression of interest, you were required to nominate whether you needed to have a subcontract partner for any packages, and we do not need that. We can provide the services for all of the packages that will be let. In terms of the construction division, strong pipeline across all sectors now. It is probably the strongest it has been for at least 3 years. A couple of examples. Snowy Hydro, which is at the moment for us an industrial project. In FY '26, that project generated around about $16 million of revenue for our Industrial division. That will go to in excess of $25 million in '27 but we've already assessed the pipeline of work and the rates that we're getting for that job. And now we move into formwork focus. So at the moment, there's upwards of $50 million of specialized formwork packages under live tender. So this project at the moment is a strong industrial one for us. We have done formwork. We probably generated maybe $5 million to $10 million of formwork revenue over the last 3 years. There's a significant increased opportunity for us on this project. Queensland infrastructure, we've rolled this out before, but it's accurate. This is the project spend or prospective spend for infrastructure in Queensland that's not directly Olympic orientated. You can see that between '26 and '30, it's going to double in size. It's a key market for us. It's been soft for some time, and it's really starting to kick in. Some of the examples on the next page are the types of projects, and they are not just in transport. There is a lot of utilities, water treatment plants, et cetera. The Chambers Flat Wastewater Treatment Plant is one example that is going to kick off in the next few months. Coomera Connector continues to roll. Rockhampton Ring Road is kicking in now at a reasonably good level for us. One of the major projects going forward in this area is The Wave, which is the Sunshine Coast to Brisbane rail. Overall, we expect to see significant uplift in activity in infrastructure. Touching on the Olympics, and look, it is real now. There are tenders being let. The first tender that is being let is to BMD for the early works on the stadium. We are in heavy engagement with BMD in relation to works. That is not a significant amount for us, but there will be work. The next big thing is the awarding of the contracts for the building of the stadium, which is down to two consortiums. If one of those consortiums wins that project, we will get a lot of formwork, primarily Jumpform revenue from that project. Brisbane Showgrounds, which is the redevelopment of the technically the Ekka site, is kicking in now with Hutchinson Builders. We have given them quotes for a range of work there that we expect to be well in the game for. Then you move into the Athlete's Village, where between Lendlease and Hutchies, there are six 30-story towers that will be developed over three stages. We have had early engagement in terms of the sort of offering that we can have there. Some example, there is now real meat on the bones in terms of the Olympic venues. The National Civil Infrastructure Project pipeline, just to give some examples there, we have got across the country. We have got a very strong presence on all the projects that we have mentioned here. I mentioned the Western Harbour Tunnel, where the bespoke formwork systems that we have designed, and we have now sold two of those systems. The other ones that I am going to call out are Torrens to Darlington, which has been a good project for us, but is about to go through its most significant phase. In the next three to six months, there is a couple of million dollars worth of work in hire that we expect to win on Torrens to Darlington. At the moment, probably, well, not probably, but definitely our biggest civil infrastructure revenue-generating project in the country is North East Link. We are probably doing $600,000 to $700,000 a month of revenue on that project, and we are winning more packages as time goes. We continue to be the go-to company in terms of this space. Specialized services cross-selling. Along with product development, one of the absolute strengths of our business these days, our cross-selling. The best example of that is Screens, Jumpform, SuperDeck, and probably other formwork products for high-rise. Other examples are the propping and shoring that Matt talked about, and then how that works in with general formwork. Another great example is how the civil formwork, such as Rockhampton Ring Road, now also brings Acrow access equipment using acceptance. There is a range of areas now where our product range is enabling us to cross-sell very successfully. Finally, with our guidance. Firstly, you can see we have given first half guidance of $195 million to $215 million in revenue and $50 million to $55 million in EBITDA. You can see they are up significantly on the same period last year. We are already up in the first month of the year. We made $3 million more EBITDA than we did in the equivalent month last year. Our forecast for the first quarter is that we will be $8 million minimum better than we were for the course first quarter last year. There is a clear picture now that shows that the turnaround has happened and that we will be able to be achieving the types of results that we are mentioning here. At the $110 million midpoint of our full year guidance of EBITDA, which is $30 million up on the previous year. FY 2026 year. As I said, we are going to do $8 million in the first quarter, and that is with only one month of Ausgroup, with only kicking into September for that quarter. Benjamin mentioned earlier that we have not specified NPAT and EPS numbers in our guidance because there are a range of moving parts. This is not just going to be about revenue. This is not just going to be about EBITDA. As I mentioned earlier, the underlying NPAT for this year will be up more than 50%. We know that you roll through the EBITDA guidance and you roll through what happens with depreciation and finance and tax, it will be up by better than 50%. Despite having 32% more shares on issue this year compared to 2026, we are going to be better than 20% up in EPS. This is a year '27, where we have stagnated for 2 or 3 years now off the back of restrained construction activity. We have been able to maintain our results off the back of our growth of our industrial business. This year, we are going to get both. This year, we are going to continue to grow industrial, and we are already seeing, and it will continue, the growth in the construction division that we have been looking for the last 2 or 3 years. That is the presentation as we have at the moment. Thanks. Open to any questions that we have from the participants. Thank you.

[Operator Instructions] The first question comes from Philip Pepe with Shaw and Partners. Please go ahead.

Guys, thanks for taking the question. Yeah, great job on starting the year strong. Yeah, I was cutting in and out a bit earlier. Just on the guidance, you touched on it then, assuming symmetric first half, second half, but almost a slowdown in the second half given how you have started. I am assuming you are being conservative. Can you elaborate on the swing factors? You have talked about the first 2 or 3 months, how that is traveling. How much are you factoring in terms of assumed contract wins and how much is in the pipeline, for want of a better phrase there, where you could be actually updating the guidance as the year progresses?

I am sorry, Philip. We have lost the presenter connection for a minute.

Okay.

Please hold on as we try to reconnect them.

For some reason. Phil, we did not get your question, if you would not mind repeating, please.

Missed out on my Wi-Fi. No, fair enough.

I know, mate, it was probably fantastic, but anyway, if you could repeat it, that would be great.

I can only do it once. I will paraphrase. Just on the guidance. You have given us how the first month started and your budget for the three months. What are the swing factors that you take into account when you give the longer term guidance, and at which point do you anticipate updating the market? Is it AGM or is it the half year result?

Look, the major swing factors always are product sales that we do not budget for. There is a lot of big packages of work out there at the moment that we put out for bespoke formwork. Also our product sales that we cannot budget for and we cannot forecast for. We would be very conservative on that. Our guidance numbers. Certainly first half, as I said, the EBITDA for July was $3 million better than the EBITDA for last July. We are almost at the end of August. We know the result for this month. We have got a very strong forecast for September. It is going to be up $8 million compared to the same period last year. For the first half, we have got a relatively strong degree of confidence. We have got a very strong degree of confidence about that result. The second half is based on our expected run rate, for the construction divisions. What we already know is basically in the order book for the industrial businesses. The swing factors will be, as I said, primarily, winning some of the bespoke packages that we currently have on tender that we do not put into the forecast and large product sales, then obviously better activity than we anticipate. I think, look, the main thing that we wanted to do here is obviously we have stagnated for three years. We have been hovering around between $75 million and $80 million of EBITDA for 3 years and looking for that to get into the 90s. Without the acquisitions this year, it is into the 90s. With the acquisitions, it is pushing up closer to $110 million. This is the year that Acrow’s EBITDA starts to lift again after three years of stagnation.

Excellent. I think you had mentioned earlier, but cut out. Obviously, cash has come in the door July, August from the raises. What is the gearing, as we stand today on a run-rate basis?

On a run-rate basis, the gearing, I think I have got it on the pro forma right now. If you have a look at the balance sheet, the net debt to EBITDA, the pro forma is 1.6 and the net gearing will be down by about 5%, 35.6%.

Thank you.

The next question comes from Alex Lu with Morgans Financial. Please go ahead.

Morning, guys. I just had a question on underlying EBITDA margins, please. Maybe just one for Andrew. Margins were down 640 basis points. You have talked to some of the key drivers of that, just around the change in mix towards Industrial Access versus Construction Services. Sounds like there is more equipment sales and also there is a bigger contribution from some of your larger customers in Industrial Access. Just wondering, can you just break down some of those contributors to that margin decline, please? Just noting that, you have said that most of that is due to the change in mix. Just wonder if you can help out there, please.

Hi, Alex. I think you actually answered that question with your question. It is literally the 50/50 to 60/40 change between Construction Services and Industrial Access. There was actually a mix of more sales than hire during the year as well. That is because of the mix of Construction Services to Industrial Access. As Steve pointed out, there was quite a large difference in revenue between our five largest customers this year to last year which has a lower labor margin. I do not have the actual. You can work it out. Alex, sorry to butt in, but you can actually work it out. The EBITDA margin in Construction Services is 42%. The EBITDA margin in Industrial Access is 18%. I cannot do the maths that quickly in my head. If you work out the difference between a 60% contribution from Industrial Access to a 50%, I am not sure that you will not get to that number. Yes. You will get. No, exactly.

Yes. Outside of that, was there anything else that contributed or those were the main things in terms of.

Yes. Look, nothing material.

Or were there main...

Yes, they are the absolute main things. One of the things I did mention was about $1.5 million of extra bad debts. There was yard increases and so forth, but that was because of our expansion. That is your only sort of one-off. The bad debts is still- It is not big, it is like less than 1% of revenue, right? Yeah. It is not big. It was more than the previous year, which is always disappointing. You do not want to have a bad debt, but it was $1.5 million more than the previous year. We had 2 years of a relatively low number there, and hopefully we will return to that this year. As I said, it is still, well, less than 1% of revenue. Yeah.

Okay. What was the bad debt last year, Andrew?

[indiscernible]

Okay.

Last year was abnormally low.