Calix Limited (CXL) Earnings Call Transcript & Summary

Good morning all. Just give you a second to file into the room before we begin. Okay. Thank you all for dialing into Calix's full year '26 results webinar. Today, MD and CEO, Phil Hodgson; and CFO, Darren Charles, will run through Calix's full year results. But first, I'll cover some quick housekeeping. The Zoom webinar format we are using me'ayptymous. Lastly, please be advised that this session is being recorded, and a replay will be made available on the website. With all that out of the way, we're ready to begin, and I'll hand over to you, Phil.

Excellent. Thanks very much, Christina, and welcome all. First of all, just a little bit about our values. We still acknowledge the First Nations people and traditional custodians on the land on which we live and work and respect and recognize the deep connection to the land and pay our respect to elders past and present and extend that respect to all First Nations peoples. We still are committed to fostering a fairness and belonging at our workplace and believe everyone should feel safe and respected. And we still have sustainability at the core of what we do. We firmly believe that Mars is forquitters. So that hasn't changed. Let's move through it into the overview, if you like, the results highlights we'd like to talk about today. Darren will take us through the numbers. Record revenues, continuing strong year-on-year growth. Operating cost discipline focus, we'll cover off all the work that we've been doing there. I'll talk a little bit about strategy, the fact that we're really starting to emphasize capital-light strategy and how we're -- the evidence, I guess, to show that we've been successful in that focus. I'll talk about the commercial milestones that we achieved this year, which have been substantial and new global strategic partners are part of that. Rio Tinto, Norskydro, Adani Group, all joining us to support the commercialization of our technology in some very, very large markets. So we think it's been a very good year for us from a business perspective, and we'll cover that off as we go through the presentation. So Darren, do you want to take us through the key financials?

Yes. Thanks very much, Phil, and good morning, everyone, and thank you very much for joining us. So it's my pleasure to take us through the next few slides, the next few financial slides. And some really great results from my perspective to start with. Firstly, some records, record revenue, record gross profit. So just touching on the revenue, a 16% overall increase in revenues over all revenues and a 28% increase in product and services revenue. And products and services revenue just exclude things like government grants and other income and things like that. Product and services revenue grew from $28.2 million to $36 million in FY '26. We've also seen significant growth in the magnesia business, which is our wastewater treatment company part of the business. 40% increase in magnesia products and services, touching $34 million, up from $24.3 million in the prior period. Obviously, we've also got contribution from Linac and SuspR as well. The other side of the coin and importantly, is continued discipline across OpEx and CapEx. We delivered significant improvement in revenue and gross profit at the same time as significantly reducing our operating cost base, down 24% from $39.5 million last year and as well as significantly reducing our cash CapEx, down 80% on the prior year. So in summary, from my perspective, the financial highlights are a strong year of cost and cash discipline with record growth. So Chris and I just Flip to the next slide, and we'll kind of talk through each of those points in a little bit more detail. So the first slide there just kind of emphasizes from my perspective, record revenue and record gross profit, both in terms of the actual numbers and really strong growth in gross profit as well. But as I said before, 28% revenue growth and 34% growth in gross profit to $14.2 million. I mentioned cost discipline across every element of our operating cost base, sales and marketing, R&D and admin. We've made significant changes and structured the business to continue to deliver solid revenue growth, continue to deliver the commercial milestones, which Phil will talk more about. that saw our operating cost base come down from $39.6 million in FY '25 to $30 million in FY '26. And again, we've delivered a very strong improvement in our underlying operating result. There's even been reductions in our depreciation and amortization, share-based payments expenses year-on-year. And then again, I just want to reiterate, I guess, during the year, we did have an impairment for the unincorporated joint venture. This was announced at the half year. So this is not new to the full year. And again, essentially, as I said, at the half year, that impairment unwinds or unwound the gains -- the noncash gains that we had recorded in the accounts over the previous 2 financial years. So yes, a very, very strong improvement in the operating result of the company. But just digging into the revenue in terms of the next slide. Thanks, Christine. So again, the chart on the right-hand side is one, I think, that most CFOs like to see, strong growth in revenues, and that's year-on-year. So you can see back in 2023, where we reported $18.6 million in products and services revenue, we're now almost doubled in 2026 to $36 million. And importantly, we're seeing accelerating growth in the second half. So in the first half, we delivered $16.3 million in products and services revenue. That was up to $19.7 million in the second half. And I'll talk a little bit more about magnesia/thwater business on the next slide and why we're still very confident of continued -- delivering continued growth in products and services revenue. So just back to the other slide, sorry, Kristin. So 28% growth in overall products and services. We also grew our gross margin. So our gross margin last year was 39%, 40%. So we've delivered strong growth in revenues at very healthy gross margins. So again, great execution and delivery by our operations team to be able to do that. And again, significant and record gross profit, up 34% on the prior year. So just digging in then now on the next slide, Christine, the magnesia business, which is primarily focused on serving wastewater treatment -- our wastewater treatment business. Again, very fast growth FY '25 versus FY '26 versus FY '25. In FY '26, we've achieved a 40% increase in revenue from $24.3 million last year to $34 million this year. Importantly, it's worth recalling and remembering that we announced around December that we secured a new contract with a new customer in the U.S. that would be worth up to $10 million moving forward. Now we've only started to deliver product and services to that customer in the early part of calendar year 2026. So I think from February, we started to ramp that. So that new customer as well has only just started to contribute to the revenues that we've been able to deliver in FY '26. We've also just delivered -- completed a new manufacturing facility in Caloundra. So I guess, in summary there, from our perspective, a great year in Magnesia, and we're certainly looking forward to continuing to deliver strong growth in revenues and gross profit in that part of the business. The other point that I wanted to make in terms of the magnesia business as well, and this is not in this slide, but the detail is set out in our financial statements and in the segment note. In FY '25, the Magnesia business delivered approximately $300,000 of EBITDA for the group. In FY '26, it delivered $3.8 million worth of EBITDA for the group. So a very strong performance from our water treatment business, and we think there's lots of scope for that continue to improve. Just with the next slide, Kristin, if I may. So again, the other theme on top of revenue growth was cost and cash discipline. And I think that really is illustrated quite well with this next slide. And again, I like the chart on the right-hand side of this slide in the deck. Again, we've reduced our operating costs from $39.5 million in FY '25 down to $30 million. And you can see looking back sort of second half '24, first half of '25, we were run rating at about $44 million. So we've gone from about $44 million in operating cost base down to $30 million of cost base in a little over 12 to 18 months. Again, we've delivered significant revenue growth and some significant commercial milestones whilst doing that. So again, great performance in the team in terms of focused business delivery and a streamlined operating cost -- operating model. Again, not only on the operating cost side of the business, we've also significantly come out of a significant period of cash CapEx spend. Again, in FY '25, our cash CapEx was $10.3 million. That was reduced by 80% down to $2.1 million in FY '26. And just in terms of -- I'll just touch in the second half of FY '26, it's about $1.5 million, I think, as you can see there from that chart. The bulk of that has been some additional spend in terms of engineering as we move towards touch wood, an FID for the Zesty demo plant, again, that we've previously announced, obviously, that we're working on in partnership with Arena and Rio Tinto. So there was a little bit of CapEx spent on the Zesty demo plant process in CapEx in the second half. But again, an 80% reduction in CapEx in FY '26. And finally for me, my last slide is, again, just in terms of the cash and the cash operating performance of the company. So again, we've been able to report a significant improvement in operating cash outflows improved by 60% on the prior year. So we had $10 million of cash at the end of the financial year. At the balance date, we've received $5.7 million from PLS. So again, worth pointing that out. But importantly, at the half year, we said that we expected to be cash flow neutral in the 2026 calendar year, excluding the recycling of capital from the PLS Midstream transaction that we announced earlier in the year. And we're reaffirming that statement today. And that's going to be driven, again, those 3 dot points of what we said at the first half, continued revenue and gross profit growth and continued cash and cost discipline. The second half is significantly skewed with some significant cash inflows due associated with some grants that we've already secured. There's some milestones payments that are due, some U.K. tax -- R&D tax incentives that are due and also a second payment of $5 million from Rio Tinto under our joint development agreement that's subject to the achievement of project milestones, of which we are on track to deliver. So finally, as I've said previously, there has been some spend in the first half of calendar year 2026, which is in the second half of the financial year '25, '26 for ZESI. So we have taken a decision to reinvest some of the $11.4 million of capital that was released from the midstream project to accelerate the development of the ZESTI project and the ZESI technology. But other than that, again, continued cash discipline, continued focused cost discipline, strong revenue growth, strong gross profit growth, and we expect to be cash flow neutral, excluding that $11.4 million of money released from PLS, the midstream project and the recycling of -- or the investment of about $3 million of that, half of which is essentially in the first half anyway into the ZESI demonstration project. So a very strong set of results that we're very happy with and that we are looking forward to kind of continued growth and execution in the year ahead. And with that, I'll hand back to Phil.

Excellent. Thanks very much, Darren. One thing -- what I want to have a quick chat through now, we'll start broadly with how we see the sort of landscape, if you like. And we'll start with decarbonization, even though I'll expand on that particular topic a little bit later on and its relevance for our technology. But certainly, there's no avoiding the fact we're class as sort of a clean tech stock. We're put in that basket. And as a result, there are some near-term headwinds associated with those sorts of technologies. On the graph on this slide, you can see how much funding went into different rounds or capital raisings into clean tech companies over the years. And you can also see how many deals have been done, which are the black dots there. And it's no surprise, I don't think, to anyone, there's been a significant decline since about 2021, in clean tech investment in the capital raisings in capital markets. And that's manifested itself through into the public capital markets. Exchange-traded funds and portfolios have been not as bullish around cleantech as they were back in '21 and '22. So that's the reality of the market we have today. But longer term, has there been a big retreat from global policy direction in terms of decarbonization and net zero. Certainly, in the U.S., under the current administration, there's a withdrawal from the Paris Agreement. And that's had an impact, if you like, on global perception around decarbonization. But several U.S. states continue to main legislative net zero targets. So it's not all one story in the U.S. Of course, across Europe, Asia and Australia, there are policy reviews around decarbonization, but they remain strong, and they remain committed, especially, say, for China. So they've expanded their emissions trading scheme there and have not moved away from their 2060 net zero target. And so despite the fact that the headlines around the U.S. are really sort of a reversal of their ambition, if you look across the global economies, then 77% of global GDP is still committed to net zero in some way, shape or form in terms of policy. So near term, some challenges if you're talking about decarbonization. But longer-term policy is still very much committed towards net zero. But that's not the only story of Calix. One of the things that we really want to try and emphasize if we move to the next slide, Christine, is that our business model isn't tied to decarbonization. Our business model is tied to improving value with decarbonization as the cherry on top. And hopefully, that's starting to come through in the deals that you're seeing and the evidence that we'll cover in the 2026 results. Certainly, the things that we're really trying to focus on are the largest target markets. So with limited resources, the focus really has to be around those ones to the left of this chart. cement and iron ore, lime in and of itself, a significant market and alumina. And so you can see the carbon dioxide removal and ultimately lithium, much, much smaller markets than the huge markets and the huge opportunities that the technology brings us in cement and lime. And with that, look at cement, one of the largest markets by far in the industrial world. And there, I'll talk a little bit about the Adani deal, but developing and prioritizing the customer value proposition that delivers economic benefits today without a carbon price is where we've been focused. And that Adani deal was all about that. It was all about an economic proposition for energy flexibility and debottlenecking their cement plant. Decarbonization is a cherry on top as and when there's a price on carbon. But that deal is moving forward today as a result of the value proposition today. And so that's really where our focus lies, big markets and opportunities for economic benefit for our customers today without a carbon price. And so with that development of the value proposition, obviously, we look to establish strategic partnerships with industry leaders, Adani, again, a perfect case in point there. You'll hear the word capital light. You've seen the focus on capital from Darren's numbers and ensuring that our progress is capital light and then as much as possible is customer -- funded by the customer is the focus. What that speaks to is a few things. First of all, it speaks, I guess, to some credentialing of the technology. If you have a look at the counterparties we're dealing with, -- the fact that they're willing to pay for us now, even though we haven't built a full-scale commercial cement plant or iron ore facility yet, we're getting paid today for engineering studies. We're getting paid today to develop these projects. And so that speaks to the credentialing of the technology to quite some extent. And so really, we're going for a lean capital-light model. We're targeting large industries. We're targeting economic solutions today without a carbon price. That's our business model, and that's our strategic focus. If we move to the next slide, Christine. Let's have a quick look at the year in recap. It's easy to forget that it was only 12 months ago, we didn't even have an Arena grant for the iron ore facility. We were able to announce that in July. We then moved into the announcement of the partnership with Hydro, Norsk Hydro for alumina, another massive application of the technology, as you can recall from the previous slide. And then early November, we announced the joint development arrangement with Rio Tinto, where they're supporting the development of the ZEC technology with $35 million in cash and in kind, subject to project milestones, and we've already achieved one of those, which is the deep due diligence on the technology and the release of the first $3 million of that in December. Also in December, we announced that $10 million contract -- per annum contract up to $10 million that Darren talked about in the financial results. Those numbers have started to flow through, but not fully yet. into the first -- into the second half results into the overall result. So there's more to go there from that customer, and there's plenty more upside in the magnesium business that we'll talk about. We completed the construction of the midstream lithium demonstration plant with Pilbara Minerals, which we restructured in that February announcement, releasing another $11.4 million in cash. And you can see that tiny little dot on the right-hand side of the previous slide, which is the lithium market, releasing a bit of cash, a little bit of that cash, we're going to invest in the iron opportunity because that's a massive big stack you would have seen in the previous slide. As we said, we're going after the highest and largest markets with a capital-light model. We also talked a little bit about Frontier contract in January. So this is Shopify and Google, again, supporting looking at Ocean Alkalinity as another application of Lime from our Lilac technology. And then in March, we achieved the first Arena grand milestone, which was a project process -- progress milestone, another $2 million came in there. And additionally, a tolling agreement for calcine clay. -- when I talk about the different projects, I'll cover these as well. But a tolling agreement for calcine clay with Green 360 technology. So it's another application of with very -- with 0 capital required from us, which is fantastic. We started commissioning that midstream demonstration plant. So the heating cycles and those sorts of things were being tested in, I guess, a warm commissioning step, and we're looking sometime this quarter or early next quarter to have a look at the -- how the beta spodumene or alphabeta spodumene conversion is going through there as PLS commissions the rest of that plant and the rest of the hydrometallurgical circuit. In May, we announced that we've completed pre-FEED on the Zeta piece. Zeta is our zero emissions technology in Australia or it's our lime calciner in South Australia. And we've completed successfully the material -- the processing of alumina successfully for Hydro. And then June, that important agreement with Adani Group's Ambuja Cement was signed, a joint development arrangement there where, again, once we pass the go/no-go decision on that particular project there, that's 0 capital from us. That's Adani or Ambuja Cement from the Adani Group moving forward on a project where they're paying for all the capital for our LA technology. And again, just to emphasize, that's nothing to do with carbon price and everything to do with economic benefits today. So let's keep moving. The next slide covers off that project slate. And the bright blue dots are all of those projects where we've got to put 0 capital. That's nothing to develop it all the way through. So again, emphasizing our capital-light business model. We're partnering with pretty big counterparties who are prepared to help us develop the technology with no capital input from us. Several projects there do require a little bit of capital from us. Obviously, ZESI, the project for the green on application of our technology with Rio Tinto and Arena backing. That one there, we do need to find some capital, and we are in a process of doing that right now. And so that's to get the first demonstration scale or commercial demonstration scale plant away. It will be a full-scale tube, single tube of our tech and a full commercial scale plant will be several of those tubes. So it's a commercial demonstrator as we call it. quite some significant progress on that during the year, and that will require about 50% of the capital from us, which, as I say, we're looking to raise into the subsidiary called ZEST Limited, much the same way as we raised money into our Leilac business a few years ago. The LeLA-2 project there requires quite a reasonable amount of capital. We announced that a pause for permitting, financing. Those are the sorts of things that have decided along with the consortium to see if there's an alternative, and we're looking for alternative sites for that particular project there. So that's on pause. Zeta having passed pre-FEED is also on pause. We do need to find a matching capital for $15 million in government funding there. And so that project, as we announced a couple of months ago, is also paused, again, with a focus on a capital-light business model with partners like Adani. And the Airloo model as well, the Airloo project paused. The U.S. -- the state of the project in Louisiana is still very unclear. So that one there requires no capital from us but remains paused. At the end to the right of this slide, you'll see PLS requiring no capital from us. The upside there, we're continuing to revenues from engineering services and the upside in terms of licensing fees to third parties is still there as well for us. So that's in the commissioning stage now. And the other one there was the Green360 Technologies, which is the clay application. Again, 0 capital from us. We charge tolling fees for Green 360 to put the material that they're making there in calcine clay through our unit in Bus Marsh. So that's the project slate and all the stuff we're working on. And as I say, the bright blue dots are all the ones where 0 capital is required from us to develop. Okay. We keep moving, Christine. Just a quick word on magnesia. Obviously, this particular part of our business is growing very nicely. As Darren said, we're starting to generate some pretty good EBITDA out of this business to help support the other business and help with the cash management in the company. So what does this magnesia business look like? Certainly, Australia has grown quite substantially in the last few years. We've added a new plant in Caloundra in Queensland on the Sunshine Coast to help serve the Unity Water business and all customers north of there. And so a new capacity added there just recently. And in the States, you can see a couple of new plants that we added there over the course of '25 and '26 Ron, Wisconsin and Lufkin in Texas. And so the strategy there to move East and South into the food belt and start to really generate some extra revenues and growth is really paying off for us now. So very pleased with the way the U.S. is working. It's a great business. It's a low annual churn rate, 5% to 6%. Customers that come to us tend to stay with us a while. So 85% of our current customers have been buying from us for over 2 years. So it's a nice business to be in. We're doing it well, and we remain bullish about the growth in the magnesium business across Australia and the U.S. So just to complete the presentation today before we go to Q&A, just to cap up. As Darren had covered, record revenues especially driven by magnesia. That's allowing a big increase in our gross profit number given the EBITDA being generated by that business now. A lot of focus on reducing our costs and making sure that our business remains focused on those large industries that I talked about before. And CapEx expected to be minimal moving forward. Just enough to support growth is the target. So there may be some possible CapEx and a little bit in magnesia as we move forward to continue to expand and grow that business, but not much else. And then the overall operating performance, therefore, improves. Revenue is up, costs down, your overall operating performance improves, simple as that. So across the priorities for FY '27, we want to obviously continue to grow revenue and gross profit and the contribution from the magnesia business. In sustainable processing, we're really going to make sure we continue to progress paid campaigns, get the final investment decision and get the financing to match the arena funding for the ZESI demonstration plant and continue the momentum in customer-funded zero capital projects to get to commercial scale there. So lots to happen in FY '27, and we very much look forward to FY '27. And certainly, if we tick off those boxes that are there, it will be a fairly transformative year for the company. So we're very focused on those things. On that note, happy to open up to questions, Christine.

Okay. Let's have a look at what has come through. So which should be at the bottom of the screen. And I'll go through these and relay them to Phil and Darren. So just give me one second have a look. All right. So first question is, what is the opportunity to win more business or potential M&A for the water business in the U.S.

We still see considerable opportunity. We conservatively estimated the U.S. business is in excess of $100 million in value, where a minority percentage of that potential value just in the magnesia business currently. We've been very successful in converting caustic to magnesia. And in fact, quite a large proportion of the new contract we won in December is to do with caustic conversion. Now caustic is multiples of the size of the current magnesia business. So we see quite some considerable potential in U.S. growth. So we're certainly chasing that. But Australia is not to be forgotten. We've done well on the East Coast of Australia. We've got most of the major contracts here now, but the West Coast represents an opportunity for us as well, which we're working on hard. So there's growth that we see across both Australia and the U.S.

This one is for Darren. How much revenue did the new U.S. water contract contribute in FY '26?

Yes. Thanks, Kristin, and thanks for the question. Fair to say that's probably a little bit commercial in confidence, including the name of that customer is commercially in confidence. I think it would be inappropriate for us to say the exact dollar amount. What I will say, though, is that started in February time frame and has been ramping since then. So certainly, the first half do not contain 6 months' worth of full run rating from that customer. But yes, they've been ramping up steadily from February onwards. And our team have done a great job of, I guess, onboarding that customer. It's a considerable amount of revenue -- additional revenue for that -- our U.S. business. The team have done an excellent job to service that customer. And yes, we continue to look forward to kind of a successful medium and hopefully, very long-term partnership with that business.

Okay. Next one is, congratulations on Calix's strong performance and significant progress over the past year. While many of your recent commercial milestones are international, how do you see the opportunity in the Australian mining and industrial market? And could Australia become a major growth market for Calix over the medium term?

Yes, that's a great question. And certainly, particularly in iron and steel opportunities, I think Australia is one of those areas that we're looking at to be a strong player. In other industries like cement and lime, for example, I think Australia has about 3 cement plants and there's sort of 1,500 or more globally. So Australia is a very small player in the cement market. So naturally, our focus with cement and lime is more overseas than in Australia. On the -- back on to the iron steel though opportunity here, there was a report put out by the Super Power Institute, led by Rod Sims. And that particular report outlined the very significant opportunity Australia has for a green iron, if you like, or lower carbon iron industry. Iron ore itself is a huge part of what Australia earns as foreign income, but there's the chance to ultimately triple that almost in green iron. A few things need to happen if the potential is going to start to be realized there. We need the renewable electrons to help enable that to happen and infrastructure, obviously, to progress that. But I'm not saying we'll hit that, that will triple the size of our iron ore to iron if we move from iron ore to iron in terms of exports, but that's a very significant opportunity, and we're working closely with quite a few parties there on having a look and seeing what potential there is there and how we could deliver that. So -- and then there's the water business. The water business is a great earner for us here. not quite as big as the state. So like they have a bit of rival. I'd like to see sort of play off against each other month-to-month who's made more money. But there's lots of opportunity in Australia still in that business. And so I think there's certainly no loss of focus on continuing to grow that business here in Australia as well. And the other ones are, I guess, alumina. It's certainly part of the heavy industry low emissions transition CRC or Hilt CRC, and there are numerous Australian companies in there. Obviously, there's companies like Rio Tinto, for example, who are working with on iron steel, but they're bigger than alumina as well. And so opportunities to look at the alumina applications of our technology in Australia, we're obviously working through as part of the Hilt CRC. So biggest opportunity is Australia, iron steel, alumina and continued growth in water.

Okay. Next question is with LLAC's strong European partnerships and carbon direct investment, how do you see the EU and U.S. markets contributing to Calix's revenue growth over the next 3 to 5 years?

Yes, that's a good one. Europe, as we've described in the presentation, continues to have strong policy objectives for net zero. There is debate at the moment in the European Parliament about whether they reset the ambition a little bit. But that debate is also being had with a debate around increased electrification. So despite the fact decarbonization might be a little bit reset, increased electrification is part of those discussions. I think a lot of the industry is perhaps watching and waiting to see what happens in the EU and how that legislation, if that's passed, how that will shape their strategies in the -- having said that, we still have a consortium to progress SILEC 2 as best we can. As I mentioned, where that particular project in Germany is paused, but we are looking at alternate sites there, including sites in Europe. In the U.S., obviously, the administration there is perhaps not quite as favorable towards decarbonization. We still have not heard the outcome of our applications and our work with -- especially, I guess, the Roanoke cement plant in the U.S. where we got a grant there to look at debottlenecking, similar to the Adani opportunity. It's a debottlenecking and energy flexibility economic proposition. And so I guess the wait continues with respect to the DOE and what's going to happen with those particular opportunities in the states -- so we're a bit of a standstill there across our projects as we've disclosed previously. We'll wait and see how -- whether and how the DOE gets to assessment of those grants that they've already granted but haven't either canceled or endorsed and there's a whole basket in the middle of which we have one. So the U.S. remains a bit of a question mark for us for the LLA. So Europe and Asia are the focus and especially, obviously, we can talk about Adani. There's another cement customer that we disclosed that we're also progressing with similar time scale to the Adani one that we announced in June. So both of those are very encouraging to see Asia moving ahead. And Yes. So Europe is strong policy, but there's a bit of watch and wait. The States is on hold and Asia is moving ahead faster than we expected. So that's a sort of balance across the globe.

Okay. A couple of questions on magnesia revenues. So magnesia revenue increased by $3 million in second half compared to the first half, but gross profit only increased by $0.2 million between first half and second half. Can you explain these movements?

I think that -- I just need to double check where that comes from. I suspect that's something to do with the consolidation of the impact of, say, lower-margin toll processing business like Subo, which has contributed a little bit into the magnesia business. and also the impact of the new U.S. customer, which is again lower margin, but again, significant revenue and the actual gross profit numbers are much stronger. For us, the focus is on driving that gross profit absolute dollar number and driving the EBITDA number. So again, which I think in the first half, the EBITDA from magnesia business was $1.6 million. In the second half, the EBITDA from the magnesia business was $2.2 million. So overall, the EBITDA is accelerating in the magnesia business. So I think, like I said, absolute dollar terms is what we're focusing on in terms of driving the cash result of that part of that business.

And you've answered half of the next question. So it was what sort of run rate does the magnesia business into FY '27...

Yes. So I guess, as you said, Kristine, I answered that a little bit. It's accelerated in the second half in terms of its absolute cash contribution to the business. And as Phil said, I think there's lots of scope for growth still in that business, and we're very excited about it. So yes, we're going to kind of continue to work on growing that business.

Okay. I've got a bunch of questions on Zesty, so I'm going to group them. First one is, is Rio actively marketing the technology to their partners? Can you comment on any reception?

Yes. I mean, obviously, as part of the joint development arrangement that we announced, there's a marketing aspect and a joint aspect to developing the market for the technology. And so what we can say is, yes, we're working on that with Rio closely. Obviously, as anything material comes to fruition, we can announce that to the market in due course. But yes, we're working very well with Rio and that joint development arrangement is working well.

Yes. Next one is a little bit on funding. What is the expected time line? And when do you expect the remaining Arena and Rio Tinto funding to be secured and released...

Yes. So we would love to get past final investment decision this year, which includes the financing aspect. Things are taking a little longer than we'd wanted, but it is -- the capital markets at the moment are a little tight. But joining -- with Rio joining, that certainly added a lot of momentum to that effort. That's the key sort of piece we've got to get through is to get the project to final investment decision point. And on the technical side and project side, that's progressing well. But obviously, match the financing. That's a high, high area of focus for me personally and our team at the moment. And so once we get that, provided we get that, then that then starts to trigger things like the Arena payment. And so once we hit the heavy lifting part of the project where we start engineering, procurement, construction, those sorts of things, there's progressive payments that come from Arena as a result of hitting those project milestones. So yes, the time line, we remain hopeful and focused to do this calendar year, and that will allow us to continue with the project on a time frame, which we previously disclosed to the market. So that remains our high area of focus.

Yes. Phil, I might just add a couple of comments to be clear. And again, I mentioned in my section that subject to completion of the project milestones, which we remain on track, the second cash installment of $5 million, we expected this calendar year. So when Phil talks about this year, he was referring to this calendar year.

Calendar year.

And that would pretty much complete the cash contribution as part of that JDA. There's also obviously ongoing in-kind contribution with -- from Rio in support of the project. In terms of the Arena milestones, yes, there is -- there has been one payment received of $2 million, which was received in FY '26. There are future cash milestones that are linked to FID and other project milestones. At this point, it's fair to say that we haven't -- I haven't included those in any of our cash neutral statements. Those would be kind of incremental to that as and when those project milestones are complete. And those are all subject, as Phil said, to the kind of FID process that we're working very hard on.

Okay. I'm just going to flag that we've got 15 minutes left on the clock and quite a few questions. So maybe we'll treat the following ones as rapid fire and see how many we can get through. The first one is noting there's a limit to what you can say, do you still feel a level of confidence of completing a subsidiary style deal in the Zesty business? What gives you confidence you can complete the deal here?

We remain confident.