Acrow Limited (ACF) Earnings Call Transcript & Summary

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

Thank you, and good morning, everybody, and thanks for joining us today. As we present our first half FY '26 results, I am joined by our CFO, Andrew Crowther; and our COO, Matt Caporella, who will assist me in the presentation today. I'm going to walk through the investor presentation that was released after market close last night. So firstly, in terms of the overview of the business, I think what has become clear over the last couple of years is that the Acrow today is actually now a very different business than it was certainly a few years ago, 7 years ago when we listed. Today, we're a multifaceted company providing services to both the industrial and construction markets. Clearly, we've grown our industrial business very significantly over the last couple of years. And in today's presentation we'll talk a fair bit about that and the future prospects for that division. We've really concentrated over the last 2 years on diversifying the revenue streams within Acrow. That has been a successful strategy. And again, as we go through the presentation, we'll talk about how that looks. And certainly, a lot of this presentation has to be seen through the lens of what is our biggest Formwork market in the country being currently one that's probably performing at the lowest level, certainly the lowest level it has for some time, but also has by far the biggest upside opportunity in it within the next relatively short period of time. The highlights of last year, so again, the Industrial Access division, it's now 62% of group revenue in this half. So over a 2-year period, both organically and via acquisition, we've almost tripled the revenue within this division. The 2 acquisitions that we made at the tail end of the last financial year, Above and Brand and what is now known as Acrow Infrastructure based in Muswellbrook and the Hunter Valley. Both of those businesses are performing above our expectations. Over the first 6 months, we've had significant growth in our screens business. We are the national market leader in the provision of protective screens on high-rise projects. It's a highly profitable division, high return on investment and will continue to grow. The biggest project currently underway in probably all of Acrow is the Column Climber at the Meriton Cypress project on the Gold Coast. It is industry first, primarily using our jumpform technology. Matt will talk more about that project later on. It has had a very heavy capital investment into it on that project, but it has very, very strong both medium- and long-term prospects at a whole new level for -- very high level, probably above sort of 50 or 60-story construction projects. The SA/WA Formwork growth in the first half has been very encouraging. I think this is indicative of the business' ability to capitalize on opportunities when markets turn in their favor. You can't invent work, but when the markets are there and the opportunities present themselves, this business can capitalize on them and the growth we're getting in SA/WA is indicative of that. And our hire revenue pipeline continues to grow. It's grown by 12% to $235 million this half, so indicative again of the strong forward [ outlook ]. Next page, in terms of pipeline, you see that. It's been a stable period in terms of winning hire work. It does fluctuate on a month-to-month basis, but I'm still happy with the trajectory in that regard. And our labor hire forward order book is now up in excess of $300 million. I mean that's become obviously a very large part of Acrow as we pivoted heavily towards the industrial markets. In terms of safety, look, again, this is a more complex area for us now given the growth of our industrial business that we have circa 700 to 800 scaffolders in the Industrial Access [ division ] at any given time. We've increased the number of working hours by some 40% year-on-year. So look, our aim clearly is to have a very low TRIFR, low total recordable injuries and low lost time injuries. I still think there's work to be done here. I think the result is okay, but there's work to be done. We've recently appointed a new National Safety Manager, General Manager, who has come from one of the larger construction companies based in Queensland and already he's making a big impact in our business. In terms of the key financial metrics, while obviously, it's great to have a 23% growth in revenue, none of the other results can we be pleased with clearly. But again, I just want to point out that they need to be looked at through a lens of what's going on in the Queensland Formwork market on a year-to-year basis. So we will talk about this a little bit later on. But there's a $6 million reduction in EBITDA in that business PCP by itself. Now if we were just even able to hold that let alone grow to what we know will happen going forward, every one of those metrics would have been in the positive territory. And then when we get to the dividend, given the heavily front-loaded CapEx again for us this year, we just think it's prudent at the moment to reduce the payment of our dividend down from 2.9% to 2%. Clearly, we'll review that on a full year basis when we get to July, August. So firstly, you can't look at these results without understanding what we've done with capital over this period. We're not investing in core Formwork products. We are investing in Jumpforms, Screens and Industrial Access. The Screens growth is generating almost 100% return on investment within the first year of operation. The industrial goes hand-in-hand with that -- tripling of the revenue in that business over the last couple of years. The Jumpform spend is heavily slated towards the Column Climber project that again, Matt will talk about in more detail later. We expect the second half to have a very strong reduction in spend. We spent $25.5 million in the first half, expect to spend between $5 million and $10 million in the second, although we are not going to back away from opportunities if they present themselves, that will generate strong returns. 40% is still our hurdle rate. We probably won't accept 40% for the balance of this year, but certainly in Screens and some of the other categories, but Screens primarily, we're getting 1 turn of revenue based on $1 of capital spend. We're going to continue to invest in that [indiscernible] For the first time, we've now broken our business into 2 divisions, Construction Services business, which encapsulates both Formwork Screens, jumpforms and commercial scaffold; and the Industrial Access business. So you can see in the half, 62% of the revenue now comes out of Industrial Access. Going to the Construction Services division. So we have a $4 million decline in revenue. We have a $3 million decline in underlying EBITDA. But I think it's the next page of this presentation that spells that out very clearly as to actually what's going on. So if you go by state, you can see here that the $14.4 million of revenue in Queensland is $6.8 million less than the first half '25. It's another couple of million dollars less than the first half '24. As I said before, you can't invent work. We haven't lost market share in Queensland. This is purely a result of the conditions within that market. And I think if anybody who also follows other construction-based stocks, everybody is saying the same thing about current results in Queensland. I think everybody is also saying the same thing about the -- I would call it, medium- to long-term opportunity in Queensland that we'll talk to later. Clearly, great growth in Queensland, great growth in South Australia, great growth in Victoria. And whilst Victoria -- sorry, in WA. And whilst Victoria shows a couple of million dollar decline, there's a project profile change in Victoria, and I would expect the Victoria's second half will be better. And while I'm on the second half, already with work secured and what we see in front of us for Queensland, we're going to get a circa 25% increase in revenue Formwork in Queensland second half to first half, and that's going to be heavily slated towards an increase in the last quarter that takes us into the new financial year. And so just some facts around Queensland. So we called out, so you can see clearly, understand what's going on here. The projects in December '24 that we're making up the vast majority of our revenue, that have all finished. The projects that are in play at the moment, and there's not a lot of them, and we're talking civil infrastructure here primarily. And then the projects that will commence from quarter 4, '26 through to quarter 4, '27. There is work -- we've already secured a lot of revenue on the Rockhampton Ring Road and Coomera Connector South projects. And I could put some models around the size of the revenue opportunity for us there. I won't call that out today, but they are substantial. In terms of Jumpforms and Screens, both of those divisions are heading towards the best revenue and EBITDA performances that those divisions have had since we started them. Certainly, and they are complementary as there's almost half a project now where we [indiscernible] both the Jumpform and Screens package. And as you said, both are heading towards record revenue levels in both. In terms of Industrial Access, I called out 62% of group revenue. It's still a very strong gross profit margin of 35% and EBITDA margin of 21%. Any company that is primarily providing labor, I think, would be quite envious of those results. There is a reality that with the contract in Perdaman that we've won, it comes with a lower overall margin. Given that there's no hire revenue on that project, it's basically all labor. So it comes with a lower margin, but still acceptable 13% of labor margin. And the business that we bought Brand based in the Hunter Valley, I mean their overall margin as a percentage of their revenue is lower than we have in the rest of Acrow, but that's totally taken into account with what we paid for that business. But the actual profit performance in that business is something -- is turning out to be something like a 3x multiple on what we paid for that business. We now -- as I said, we've got a national profile in industrial. You can see where we're operating at the moment. We are heading towards -- the current target actually is $195 million for revenue for the year. I hope we hit $200 million because it's a bit of a milestone, but $97.5 million second half looks like circa $98 million at the moment. We've still got clearly 4 months, 4.5 months to go. We're going to keep growing this business. We're going to keep growing it organically. There's lots of opportunities opening up into new sectors like defense, marine, industrial mining, et cetera, off the back of some of the contracts that we won recently. Asset maintenance in Above. What we're doing on the Sydney Harbor Bridge is quite radical. I'll talk about some other stuff there a little bit later on. We like this business. We're going to keep growing it. It's going to happen both -- I said, both organically and through M&A activity probably in the next 24 months. I'll now hand over to Andrew for the financials.

Great. Thanks, Steve, and welcome to everyone. So as Steve said before, when we look at the P&L, this really is a reflection of what Steve talked about with the Queensland Formwork market and on the other side, our hire conviction for the future, in particular with our CapEx profile. So if we get into the P&L, so Slide 19, we -- our EBITDA, as Steve said $38 million, down from $39 million. And EBITDA margin is slightly down from 30.8% to 24.4%. That's a reflection of the change in mix between Industrial Access and commercial only. So we pretty much held our margins there with, as Steve said, the Brand has gone -- sorry, Industrial Access has slightly gone down to the -- a couple of projects and [indiscernible] and the Brand acquisition. Depreciation increased by from $11.5 million to $14.7 million or 27%. That was a reflection of the increase in our property, plant and equipment from an average of $180 million to $217 million in average PP&E. So the actual average depreciation rate was pretty much steady at 8.7-odd percent. It's just a reflection of the increase in the CapEx. We had to front-end this CapEx as you've seen with the very large pipeline of work we've got coming up. From a net interest point of view, interest likewise, $4.7 million up to $6.6 million. Our average debt increased from $80.5 million PCP to $134 million. Now the debt, which we'll go into a moment was to finance both our working capital increase and obviously, our large CapEx in the first half. Then we get to pretax profit, down from $22 million last year to $16.6 million. And then tax expense -- the statutory tax expense was about 36%. Now the reason that's above 30% is because of the acquisition type expenses we have that are nondeductible. So when we go below, so NPAT underlying is down from $16 million down to $12.8 million. Significant items, we had significant items of $2.7 million during the period. Now $1.8 million of that was in relation to the integration and restructuring of the 2 acquisitions we had plus the ATEC acquisition, so Brand, Above, and ATEC. It's very expensive to do these restructures and the integrations, particularly from a system point of view. We also had about -- we had an amount we're doing a new ERP system at the moment. So there was quite a bit went into that. We're looking at some of that may be capitalized in the future. We also had a [ depot ] move, and we had some other adviser items in that significant items. Then we had contingent consideration. Now this $1.579 million is in relation to a $1.1 million expense on the MI earnout. You probably remember from last year, we actually -- MI, we had to pay a full earnout of $4.95 million, which is an excellent outcome considering given they made the full amount. But we had to expense $1.1 million because we actually didn't accrue enough when we first did the acquisition. We also had another $400,000 in relation to other earn-outs to build up what we have to pay in the future. We also had -- so in the future, that will be a low number, a very low number because we paid out the big MI number now. Amortization of intangibles, this is in relation to Brand and customer intangibles that we've taken up. That will be pretty much an ongoing expense of about $186,000 per month. And obviously, that's a nontax item. And then we had share-based payments that were quite a bit lower than last year. That's just the timing. And then NPAT reported $9 million down to $6.5 million. But our EPS down from $5.38 down to $4.16. And as Steve said, an interim dividend of $0.02, 100% franked for the period. Over to the balance sheet. So net debt, it increased in the period from $28.2 million to $151.5 million. Now that was predominantly CapEx related. CapEx was just under $25 million, and we actually had an expansion of labor in Industrial Access. So every time we increase our Industrial Access, there's a working capital hit, and that was about $7.2 million. So in general, basically all that increase in debt was from was growth-related items. You have a look at the actual net debt bridge, you can see the $123 million up to the $151 million. The predominant or the largest parts in this, which relates to growth, there's a working capital hit of $7.2 million. There's also other significant items of $2.7 million, which was cash, and that relates to predominantly past acquisitions, and then we had $25.5 million of growth CapEx. All the other items there wouldn't have really increased our debt to the level [indiscernible]. So net debt to EBITDA went from 1.8 to 2.2x, which is above the level that we said we're comfortable with. But we've got a plan to start reducing that level, and that's through reduced CapEx for one thing. EBITDA is obviously going to increase in the future. And also, we'll start rationalizing our working capital. In particular, we had a large inventory balance at the end of December. So that will start monetizing itself. Working capital to sales was actually not a bad level at 23% versus 25.7% at June. We aim for to get below 25%. Current assets of $22.4 million versus $6.8 million at June. Now the $22.4 million, we actually did a restructure of our debt and $10 million of what had been our overdraft or at-call has been moved down to noncurrent. So it's actually not like-for-like, but we still do have that part that was current is now noncurrent. Cash flow from operations, we had $27.6 million, a 73% conversion rate. So slightly up from 71%. And the main differences there with the conversion is working capital and ex-hire sales. So that's sort of the main differences there. Over to the next page, our debt. So we had -- as you can see, we had $158 million of gross debt up from $131 million in the previous period. Our headroom went down at June from $40 million down to $30.4 million. We actually had a restructure of the debt during the period. We've got a very close relationship with our bankers, Westpac. And we increased our debt headroom by $15 million. But -- because of the -- as I said before, because of our large upfront CapEx and our working capital impact from Industrial Access, our net debt to EBITDA went up to 2.2x. I think that's it for me.

Okay. Thank you, Andrew. I'll go through the current sort of, I guess, midterm growth opportunities as we see them in the business. and Matt will help me with a little bit of this. So firstly, just the other areas, other than just winning work, the other areas that go to making our business as strong as it is today. Clearly, now with scale, we've got a very capable and flexible workforce. So both in terms of looking at our scaffolders with the number of people we have available to us now in this particular Industrial Access space, we can take much larger projects every day, basically, I'm hearing more opportunities that are presenting themselves across the country due to the scale of that operation and the talent of that operation. And then obviously, the effort we put into growing a very strong engineering team continues to pay dividends for the business. We focus on training and development. We've got a great Cadet-ship program for engineers. We've broadened that to include now sort of administrative HR and sales type roles. And then the ATEC acquisition that Andrew mentioned, which is a training facility in Brisbane and now one in Mackay, basically focused on growing our own scaffold talent, very important part of the business. I've got real hope for how that cannot just be an internal training facility, but also can be a profit-generating business down the line. Massive effort going into making sure our supply chain is as tight as possible given the work that we see that's in front of us as we lead into that Olympic cycle, certainly in Brisbane, if you've got the equipment in the island -- on the island, you'll be able to take advantage of the opportunities that present themselves. And as Andrew mentioned, our ERP project that is well underway, and we hope to have a new system in place by sort of July, August period. Industrial Access. So we've grown this business to a $200 million business now. I have aspirations to double that over the next 2 to 3 years, both through M&A focus and through organic growth. Given the Above Scaffolding the example. So we bought the Above Scaffolding business in May last year. One of the things that those guys do particularly well or the 2 things that they do particularly well that are new to Acrow. First is their relationship with the [indiscernible] defense and with the Navy at Garden Island. So they've got some substantial contracts that they do, maintaining the fleet, the naval fleet when it comes into the Garden Island that's opening up more national opportunities for us. The second big one is in asset maintenance and primarily bridge maintenance. So we've got some really strong packages of work we're currently undertaking on the Sydney Harbour Bridge. They will continue to multiply over the next number of years. And it's not -- that expertise now is more broad than just the bridge. So only in the last few months, the Above team won a significant package of work on the Nowra, what was the Nowra Road Bridge in New South Wales that has been converted to a pedestrian bridge. That's around about a $2 million to $3 million package of work. So it's become a real opportunity and sweet spot for Acrow nationally now to look at bridge maintenance. I mean we've got a lot of road and rail bridges across the country that are in pretty urgent need of maintenance given their age, and we see this as a great opportunity given the expertise that's coming out of above. We're going to target organic growth in WA and SA. We recently hired a very senior guy from one of the biggest industrial providers in South Australia and Western Australia to head that opportunity up for us. And then we've launched our own industrial scaffold product, Uni-Ring. Matt will talk about that more in a second. That gives us an opportunity to both sell that product into the market and also to grow hire opportunities off the back of having our own proprietary system. So that's a good segue, Matt, into where we're up to at the moment with product development.

Thanks, Steve. So as Steve mentioned, we've -- over the last 6 to 12 months, we've been focusing sort of 3 new product groups, which is the Uni-Ring, Powershore 60, the column one, I'll cover a little bit later and a new market segment in the property insurance space. So as Steve mentioned about the Uni-Ring, we launched this in January 2025. So far, we've landed around 4,500 tonnes of the product in Queensland, WA and SA, and it's 100% compatible with our existing Ringlock here in the industrial sector. But the key here is scalability. So we own the IP of this product. We have multiple manufacturing options importing it directly through our existing supply chain. And what this is doing now is supporting a good margin on when we're selling products and also improving our ROI on as well. And ultimately, our supply chain continuity has remained great, as Steve mentioned. The Powershore 60 product is new. We've launched this in January 2026. It's already hit the ground running. So the market response has been immediate. We've had a $220,000 sale that's going through in March when the product arrives before we even actually made a stock in Australia, which is a good sign. And we've got our first 5 projects starting at the end of March as well. This product here sits beside our Powershore 150 product we launched about 4 years ago. It was in that heavy-duty trucking space performance-wise. So we've innovated on this product. It's brand new to the market. It's twice as strong as the comparable products and it's only 20% heavier, but then it's integrating seamlessly with the rest of the Acrow fleet. Then in sort of another market segment where we're looking at now and we're getting into the propping and shoring segment. So we're leveraging our existing fleet here, the formwork kit, so -- and then building on the Powershore 60 and Powershore 150. We're targeting more propping-only projects. And this is allowing us to unlock sort of new opportunities and return on the assets that we already own. So we're really excited in this space. We've made a few key acquisitions that's helping us along better experience in the propping-only space and people. And then we've mentioned this in the past, but we're well advanced now on the ground flooring space, too. So we are looking at this space. We've got some innovative stuff that we're working on and plan to sort of launch that in the next financial year.

Thank you, Matt. Okay. So just turning to major infrastructure projects. Look, the infrastructure pipeline in the country is increasing. It's not decreasing. So we're still in the -- we're sort of at the very, very start of Suburban Rail Loop in Victoria. We're not seeing a lot of revenue from that yet, but we will. We're doing very well in North East Link at the moment. Torrens to Darlington also it's in its infancy, but you can see from our South Australian formwork numbers, we're getting very good penetration on that job. Rockhampton Ring Road is interesting because it's -- you look at it and say it's $2 billion project versus some of these are $30 billion and $26 billion. That will probably be the biggest generating revenue project for Acrow in civil infrastructure over the next 12 to 18 months. We've already won some very large packages that are sort of going to kick in for the sale of product and hire in probably the May, June period. It's going to be, I would say, this time next year, we'll be reporting it as our largest civil infrastructure project in the country. The North -- the Whyalla desalination plant in South Australia, just really at its infancy. Sydney Western Harbour Tunnel, we have one what's that, Matt, about?

$1 million.

At $1 million package on Sydney Western Harbour Tunnel. Sydney Metro is in sort of a lull at the moment and about to kick into a very, very large upgrade projects and also the same for Coomera Connector. So this is just a snapshot of some of the projects across the country. As I said, the infrastructure pipeline is actually going to increase, not decrease significantly over the next period of time. Just a bit on the Olympics. So I think there's been a bit of a misunderstanding about when Olympic revenue opportunity to present themselves. Building tenders are starting -- I saw the first one go out a few days ago. So a tender went out for the building of the new aquatic center. It's the first one I've seen. So if you look at the time line at the bottom, the time line is relatively accurate. So you come to this time next year where sort of some of the construction commences. And clearly, from the end of '27 into '31, that's the peak period. So for us, at the moment, it's about focus. So we are -- I can say we are really clearly focused on all of the Olympic orientated activity in terms of tenders that are being led, who the potential tenders will be and getting in very early -- having very early engagement with potential tenders. So I'm very happy with the focus in our business in relation to the opportunity this presents. It's a broad opportunity. I've said many times before, having lived through the Sydney Olympic Game development, this is once-in-a-generation stuff, and it really is. It's the one project that the commencement date cannot get pushed back. And anybody that wants to tell that Queensland's ahead is wrong. They are behind. So there is going to be a strong condensing of work required. And if you position yourself well with equipment and manpower, you're going to be in an extremely strong position to capitalize on this, I'd say, from the tail end of FY '27 through. But it's not just about the Olympics in Queensland. There's going to be an unprecedented project spend in civil infrastructure outside of the Olympic activity between the current date and FY '29. So the next 4 years, forecast spend in major projects in Queensland is going to -- is almost tripling, $10 billion to $30 billion. We're starting to see some of the seeds of that now, certainly with the Rockhampton Ring Road and the next stage of Coomera and then a range of other projects that we sort of referred to earlier. So you're going to get this perfect storm in Queensland. So again, I make the point it's currently actually the weakest-performing part of our business compared to where it would normally be. It's a $6 million impact on our EBITDA for this half. And you're going to go from that to over a period of time, but it's clearly the business in the market that has the greatest opportunity for growth over the next 5 years. And we are extremely well positioned to take advantage of that. Matt, more detail, please, around the Meriton Column Climber.

Yes. So we mentioned the Column Climber. So the Meriton project itself is 78 Gold Coast. We've got our main jumpform on there. So there's two parts to it. There's a standard jumpform. So that's up and away sort of level 10 at the moment. And then there's something that we called a Column Climber. So there's 16 mega columns around this tower. As you can imagine, for a 78-story building, they're quite large. So what we're doing is we're using a lot of our existing jumpform kits, but then we've also basically done the product development on a new bit of kit using the existing jacks to climb all 16 columns and our perimeter screens below the upper ones. So when this is all built and climbing, we're going to be getting 850 tonnes in one go. So it's a massive project. It's Acrow's biggest project, one of the biggest formwork projects in the country at the moment, this column climb sort of project. But over the last 6 to 12 months, we've been developing the project. It's been a lot of focus on reusability. So this system now is 100% reusable on sort of any sort of multistory tower. It's suited to over 50 stories, but we can sort of plug and play now on any column up to 4 meters by 2 meters. So all the hard work has been done now. There's a lot of opportunity in the space. We have priced a few more projects sort of starting next calendar year. There is a lot of towers, especially on the Gold Coast in Brisbane over that 50 stories in the works. And yes, strong pipeline. Installation on the Cyprus project has commenced. So we should be climbing middle of March at the moment, as is planned.

Look, and again, unapologetically, this has been a very capital-intensive project. Given that it's game-changing opportunity for that high-rise market, we've invested a lot of capital in this first project. But as Matt said, totally then reusable on the next series of projects. In terms of our Screens business, as I said, we are the market leader. We're heading towards $20-plus million in revenue this year, up from $15 million last year. And one of the main things that we see some of it this year. But going into next year, we will get an improvement of around -- between $2 million and $3 million in EBITDA at our Western Australian Screens business. So we won a range of projects that we won 5, 6, 7 months ago, only start generating revenue around about June. That will give us a great lead into the next year. So we're going extremely well in New South Wales. Queensland is actually really improving now. We've got a good business in Victoria, and we're going to have a $2 million to $3 million profit business in Western Australia next year that we don't have this year. So finally, just wrapping up the observations. So as I said, we'll keep growing that Industrial Access division. We will push towards $200 million. The recently acquired businesses are going extremely well. And as I mentioned, are opening up new markets for us. We're going to keep looking at WA and SA organically. We're renewing our M&A focus in that industrial space into next year. And then we're going to keep growing the Screens and Jumpforms business. I mentioned WA specifically. We have got -- right now, as we sit here today, we've still got subdued trading conditions in Queensland in quarter 3, but there is now clear signs of improvements in the quarter 4. As I mentioned, we think we'll be up about 25% in formwork revenue second half in Queensland compared to the first, and all of that growth is going to come in the last quarter. We'll keep seeing really good results in WA and SA, and New South Wales and Victoria will continue to operate at acceptable levels. Without giving a number, but I can say very clearly, quarter 4 FY '26 will deliver the largest quarterly contribution for the year in terms of EBITDA by quite some way, carrying that momentum into FY '27. So we're giving guidance at the moment of revenue between $315 million and $325 million. So that will be 21% up on last year. And EBITDA of $80 million to $84 million, 2% up on last year. So that's the presentation at the moment. Thank you, everybody, and happy to hand over to any questions.

[Operator Instructions] Our first question comes from John Hynd with Petra Capital.

I just wanted to follow on perhaps, Steve, from the comments you made just then. Can you perhaps provide a little bit more commentary on how the construction segments have performed in first quarter, second quarter and then into the third quarter? And also, when we take into account the new revenue guidance range in consolidation with the Industrial Access guidance commentary for $200 million worth of revenue, when you back all that, it looks like you're flat to slightly up in construction. So can you overlay that quarterly -- those quarterly insights into that guidance range you provided, please?

Thank you, John. Yes, it's fair to say that the first quarter was very soft. The second quarter reasonably significantly improved. January and February are always by far our quietest months and they were that again this year. And then you get momentum with projects commencing into that April, May, June period, and that's where we get the really, really significant uplift that takes us into next year. So I mean there is a bit of a yearly cycle, but then there's also a macro cycle on top of that. So there is a yearly cycle that says January and February are poor every year. That's the worst period every year. But then there's a macro cycle that I see now that shows that, as I said, 25% increase in Queensland, increasing revenues in Victoria and probably stable revenues in New South Wales, South Australia and Western Australia into that second half coming off good results from all of those businesses in the first half.

And so just on that third quarter, if you may, is that -- would that have been -- would the performance have been below that of the first quarter as well?

About the same.

About the same. Right. And just I've got a couple here. So you've narrowed your range on the Olympic build as well, like when you expect activity to start. Can you give us a little bit more color on how you expect Acrow to be involved? I mean is it going to be the early-stage type work with your formwork? Or do you think you'll be heavily relied on for the jumpform and screens work as well? And I guess, how are the contractors talking to you guys at the moment on the ground about how they're going to use your products through the process?

Well, it's very early engagement, John. So look, it really does depend who wins -- like in terms of the -- I've said many times, I think you've heard me say this, the Olympic Stadium is not the price. right? What -- in my experience, some of those bigger high-profile projects are actually not the project you target. However, depending on who the builders are -- now the consortiums are being formed. So we now know who the consortiums are that will be bidding for the major construction projects like the main stadium. Depending on who wins that project will change our view because there are some builders that we work with who work with certain formworkers who we work with, that will mean we'll absolutely be doing the work. But in other cases, we know that certain builder wins, it's not likely to go to us. But again, I'll stress, it's not the big prize anyway. So I think it's going to be -- it's across a range of areas. It could be -- it's definitely going to be in construction. It's definitely going to be a very big opportunity for us in all the different villages because there's 4 villages, right? It's not just Brisbane. There's Rockhampton, Sunshine Coast, Gold Coast and Brisbane. So there's 4 villages. Then -- so there's the range of venues. There's a massive amount of other smaller venues that will all require formwork activity. And then you get to all of the associated infrastructure to get people around, I think that's probably our biggest opportunity. I mean I think the high-rise stuff will be great for screens and jumpforms and potentially for our decking systems, for decking systems. But then there's all the other infrastructure to get people around the city of Brisbane that is unraveling itself now. that's a massive amount of work in road, pedestrian walkways, bridges, et cetera, that is absolutely right in our sweet spot for our formwork business.

Okay. Perhaps that's a good section to talk about that investment in kit that you made late last half or in the second quarter. It's largely jumpform, I think, that you've acquired here. Where did you expect to deploy it? And how long is that project, I guess, going to engage that kit for? And then how do we think about the return on that investment going forward, please?

The vast majority of that spend is on the Cyprus project. It is a significant amount of the capital spend on that project. I won't call it out because there's a competitive confidentiality thing around that, I think, really, but it's a significant spend. Now the gear is going to be on that job for, Matt, how long 18 months?

Yes, about 18.5 months.

So 18 months or so that gear is going to be tied up on that project. It's fair to say the return on investment for that gear on that project is not on a normal level. But then you move from that project to using that gear on other similar style projects that I think will attract a far higher revenue value than the revenue that is attributable to that first project. And so longer term, the returns for that equipment are going to be considerable. And we're beginning to scale with our Jumpform business. We are absolutely getting to a scale where you don't need to keep investing at this level. I mean if it wasn't for the Column Climber, we would have been spending far less in CapEx this year for jumpforms. It's almost got to be seen through a lens of being another business, not just a traditional Jumpform business. The great thing about our system is the fact that it goes from one job to the next. There's basically almost no kit that's just money to be used on one application.

Right. So with the Cyprus project with the deployment of this kit, hopefully, that I guess, what you get back your sort of cost of capital or you get back -- sorry, the capital investment. So essentially, next time you use it, you're talking about full margin. Is there -- and there's no risk that this project is, I guess, not delayed, but is extended further and the kit is tied up for longer?

Matt.

Yes, 100% will be used another project with no cost. So if we did another project similar, it's 100% margin. And then yes, there is tied up, but the main core is now at Level 10, they're doing for a week. Once the Column Climber starts, I mean this project is the way it's designed to go, it should perform, and we're aiming for a week cycles, so 78 weeks.

But look, these things do blow out. We do get project revenue overruns on it. But definitely, the next style of projects that we do that uses this system will attract a far higher revenue value than the current project. This was an entry project that I think was priced at a level that we would not price again, we wouldn't have to price again. And we've invested, to be frank, more capital into the system than we probably expected to start with. But the next time we're talking about winning a project of this nature using that kit, it will be a highly profitable entry or highly profitable project for the company.

Yes. that makes sense. You've given us a little bit more detail with the EBITDA segment this year. How should we think about the cost -- so we can see the costs within the segment. How should we think about those individual cost lines in the second half '26 and then into FY '27? Like, for example, with construction, as kit is utilized and Cyprus, for example, winds down, should you see yard costs and labor costs actually come down as leverage improves? And then is there any impact to the cost lines with Industrial Access as well?

Not really, John. I wouldn't call any of that as being substantial.

So sort of flat half-on-half.

Look, I think -- I haven't done the exercise. There's nothing -- there's no great shifts happening in any of the branches across the country at the moment. There's a bit of investment in yard staff for jumpforms because once you get that kit back in the yard rather than jobs does require maintenance to get it back out to the next work for of work. But no, I mean, there's no significant changes in that area.

Got it. Okay. And then last one for me. With Industrial Access, obviously, you're consolidating the acquisitions and you called out Brand as having a lower margin versus the other businesses within that segment. Is Brand a larger component of the revenue of Industrial Access now? And how does the growth profile look for Brand compared to the other businesses within that segment going forward? I guess what I'm asking is where do you expect segment margins at an EBITDA level to settle now?