Fleetwood Limited (FWD) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Fleetwood Limited First Half '25 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Bruce Nicholson, CEO. Please go ahead.

Thank you. I'm pleased to welcome you to our investor webinar to present our financial results for the first half of 2025 financial year and share an update on the outlook for our future. Thanks to everyone for joining us today. Just some housekeeping. There will be an opportunity for questions at the end of the presentation for those who have registered for the conference call. We'll do our best to address all the questions today. However, if we do run out of time, feel free to reach out afterwards and we'll ensure that we get back to you in due course. I'd like to acknowledge the traditional owners of the land in which we meet today. For Cate and myself, it's the Gadigal people of the Eora Nation here in Sydney, and we pay our respects to elders, past and present. Let me make some brief introductions. I'm Bruce Nicholson, the CEO and Managing Director of Fleetwood Limited and I'm pleased to be here with our CFO, Cate Chandler today. We will take you through the presentation today and field questions at the end. As you can see from our slide, there are plenty of highlights to talk you through, which have been delivered by our terrific teams right across Australia. A brief but important note of thanks to the 650 people at Fleetwood who are working tirelessly across our three operating segments. Your efforts have led to these significantly improved results and I look forward to our continued progress for the remainder of FY '25 and into '26. Our people at all levels of the organization are guided by our vision and values in seeking to achieve our purpose. Our vision to be the leader in reimagining sustainable spaces is underpinned by five core values: zero harm to our people and the environment, collaboration, integrity, accountability and innovation. These values guide the way we operate on a day-to-day basis and have been integral to creating a positive culture within each of our businesses. And this ladders up to our overarching purpose as a company to create innovative spaces so people can thrive. A well-grounded set of values, an ambitious vision and a compelling purpose set us up for enduring success. I am confident this will be a positive impact on the remainder of FY '25 and our future years at Fleetwood. As we review the first half of 2025 financial year and look forward to the coming years in terms of our strategic outlook, I'm proud to report our significant progress on our Build, Transform and Grow strategy and its positive impact on our performance in the first half. As mentioned previously, our Build, Transform and Grow strategy provides the road map for medium- to long-term improvement in the quality and consistency of earnings across all of our operating segments, Community Solutions, Building Solutions and RV Solutions. The build phase of our strategy has centered on improving our capability, our systems and processes and lifting our brand awareness to underpin our long-term sustainable growth. This has seen our teams aligning national workflows and developing common processes and procedures to deliver consistently nationwide. As Australia's largest modular manufacturer, the Build, Transform and Grow strategy remains our focus in the Building Solutions segment, in particular, with ongoing work centered on executing the growth phase of our plan. We've invested in enhancing our capabilities and our focus on building a quality pipeline of work that will drive our future success. Moving to our highlights. Here is where we can clearly see the benefit of the Build, Transform and Grow strategy across our Community Solutions, Building Solutions and RV Solutions businesses. I'm very pleased to take you through these highlights. In the first half of FY '24, we saw our half-on-half improvements in revenue, earnings, profit and cash flow, topped off by a significantly larger dividend to our valued shareholders. Our earnings before interest and taxes surged to $10.1 million, up 65% on the previous half. Considering the one-off restructuring costs and impairment as part of our strategic alignment for success in RV Solutions, our underlying EBIT reached $18.3 million, reflecting nearly 3x the increase compared to the first half of FY '24. Similarly, our net profit after tax reached $7.4 million on a statutory basis, an increase of 18% on the first half of FY '24. These results not only demonstrate our commitment to financial growth, but also reflect the resilience and dedication of our entire team. In line with our strong performance, we've declared a fully franked dividend in the first half of the year at $0.115 per share, almost 5x the dividend paid in the first half of last year, reinforcing our commitment to maximizing returns to our shareholders. The share buyback announced in the 14th of May 2024 resulted in the acquisition of more than 530,000 shares to the end of December. Now amid this success, we've also taken a prudent approach with regards to the RV Solutions business in an industry which continues to face challenges. Our board conducted a strategic review of RV Solutions as cost-of-living pressures continued to negatively impact consumer discretionary spend right across the segment, resulting in lower demand with direct impact on our margins and profitability. The outcome of this review resulted in a $6 million impairment and a one-off $1.9 million restructuring costs to right size and reduce our cost base in this business. This has helped to provide a platform for RV Solutions to continue contributing to Fleetwood on a more sustainable basis. We'll be able to provide more detail on this when we dive deeper into the RV Solutions segment shortly. Looking at our half-on-half progress, this graph shows an underlying EBIT over multiple consecutive halves helps to paint a very clear picture of the increasingly important role of our Community Solutions and Building Solutions segments to our business and the relatively smaller role for RV Solutions. As you can see, Community Solutions has been a standout segment for our business in recent halves and we see this continuing alongside our ongoing growth in Building Solutions as well as a return to profitability for RV Solutions in the back half of this financial year following the strategic review. I'm now pleased to hand over to our CFO, Cate Chandler to talk you through some of our financial performance.

Thanks Bruce and good morning, everyone. In terms of revenue, in the half, Fleetwood delivered very strong revenue growth of 19%, supported by contract wins in Building Solutions and occupancy of 71% in Community Solutions at the Searipple Village in Karratha. The EBIT in the first half was $10.4 million, up from $6.3 million last year, and the net profit after tax was $4.7 million, up from $3.9 million last year. The step-up in EBIT performance was off the back of Building Solutions revenue growth, improved project execution and Community Solutions occupancy. Cost of living pressures continue to impact RV Solutions as consumers spending on discretionary items, particularly in the OEM caravan segment. Across the past two reporting halves, RV Solutions reported operating losses due to softer demand, higher input costs and an inability to pass on price increases to OEMs, resulting in lower margins and profitability. These factors required an impairment assessment of RV Solutions carrying value. As a result, the board has taken the decision to impair the carrying value of goodwill by $6 million. The impairment of goodwill is not deductible for tax, resulting in a higher effective tax rate and a full 100% impact on the net profit after tax. In addition to this, a strategic review of the RV Solutions business unit manufacturing operations has resulted in $1.9 million in restructuring costs to right size the cost base. These costs included $650,000 to make good provisions for lease exits as the business reduces the warehousing and factory footprint, $800,000 in redundancy costs as the business moves to a more simplified manufacturing model and $500,000 in stock obsolescence provisions for raw materials and other stock no longer required as part of this review. Excluding the impact of nonrecurring restructuring costs and goodwill impairment outlined above, the underlying EBIT was $18.3 million, a $12 million improvement on the first half last year. Turning now to cash flow. Our cash position as a business remains very good, supported by solid underlying earnings and disciplined working capital management as we've been able to deliver a cash conversion of 98%, free cash flow of $21.6 million and a closing cash position of $57.5 million. Our net CapEx spend was $3.2 million with most of the spend directed towards Community Solutions and the Searipple Village, where we upgraded Wi-Fi and kitchen facilities. In the half, we bought 531,000 shares for $1.1 million as part of the share buyback. Turning now to Capital Management. Reflective of the significant improvement in earnings, positive outlook and a strong balance sheet, the company has declared a fully franked interim dividend of $0.115 per share. This is up some $0.09 on the $0.025 per share declared for the first half of last year. Since the commencement of the buyback, we have acquired just under 1.1 million shares to this reporting date. And pleasingly, our share price is considerably higher than when we put the facility back in place in May 2024. Going forward, we will continue to maintain our dividend policy to pay 100% of net profit after tax. I will now hand back to Bruce Nicholson, who will take you through the segment results. Back to you, Bruce.

Thanks, Cate. Great set of results. And with prudent capital management, providing even stronger returns for our shareholders. To help us continue to provide returns for our shareholders, in Community Solutions, we've once again seen a very strong set of results, where we delivered earnings before interest and tax of $16.8 million on $33.5 million of revenue. Revenue almost doubled in the half, and EBIT nearly quadrupled compared to the first half of FY '24. Increased occupancy rates driven by contracted rooms from clients like Rio Tinto and Saipem and Clough have significantly lifted our profitability, and the Osprey Village in Port Hedland remains fully occupied and with a wait list for potential tenants. Our Searipple facility in Karratha had an occupancy of 71% for the first half. And even with the Category 4 cyclone in December, the site remained fully operational, providing a safe haven for our staff and clients in the region. I'm also very proud to showcase some of the fine examples of our Building Solutions projects that helped to underpin our strong first-half results, a great collection of diverse projects across our great nation. I'd particularly like to highlight the women's shelter project supplied from our Perth facility in Western Australia, which we're incredibly proud of as it plays directly into our purpose to create innovative spaces so people can thrive. This project not only provides a safe and supportive environment for women and children in need but also demonstrates our commitment to community and social responsibility. The shelter is a testament to our dedication to using innovative design and construction techniques to address pressing social issues. Our team worked tirelessly to ensure the facility was completed to the highest standards, reflecting our core values. Our Building Solutions business continues to improve, with EBIT more than doubling in the first half to $7.1 million compared to $3.2 million in the corresponding first half of last year. We maintained a focus on delivering quality revenue in modular construction, supported by our education panel-based business and diversifying our revenue streams into health, mining, lifestyle villages, housing and industrial sectors whilst targeting sustainable margins. This helps us to exceed our short-term EBIT margin targets with an improved order bank and growing gross margins as the business targeted more made for modular projects as well, and well-disciplined project execution delivered a step change in our performance compared to the first half of last financial year. Our current order bank stands at $137 million, up from $100 million in December 2023, reflecting our steady growth trajectory. Our RV Solutions, as we've said, has faced some significant challenges due to cost-of-living pressures reducing consumer discretionary spending, particularly in the OEM segment Cate referred to. Although the short-term outlook is subdued, we remain optimistic about the long-term prospects. Not shying away from the half year performance, difficult trading conditions impacted sales to our OEMs, combined with an inability to pass on price increases with those same OEM customers. As mentioned earlier, a strategic review of the RV Solutions business by the Board resulted in a $6 million impairment and a one-off $1.9 million restructuring cost to right size the business and lower our base cost. The plans we have implemented to reduce operating costs and generate a return to profitability in the second half of this year are currently well on track. A large fleet of caravans in service across Australia supports ongoing aftermarket demand for our products and services, and we saw this element of the segment hold up well in the first half. Our ability to adapt and innovate will be key as we navigate these challenges. Despite these challenges, I'm pleased to report that our new product innovations, such as the Invicta store, our sandwich panel walls and our aluminum frames, are continuing to show promising growth and continue to offset some of the declines we're seeing in the OEM markets. Now, let's move on to the segment-by-segment strategy update and outlook. Our strategic focus for the Community Solutions business in the second half of FY '25 and beyond is centered around optimizing Central Village and leveraging the emerging opportunities in the Karratha market. We're focusing on maximizing the potential for Searipple across the economic cycle, which involves securing the base contracted business while strategically continuing to layer in additional demand. Following the recent announcement of additional rooms contracted through to May 2025, our Searipple Village now has an annualized occupancy of 80% for FY '25, up from the previously announced 72%. Looking ahead to next year, Fleetwood is set to benefit from a promising outlook, with contracted occupancy already at 73% for FY '26 and further upside opportunities expected with high project demand in the region. These factors continue to position us well to capitalize on the increased planned projects across the oil and gas, fertilizer and green energy sectors in the region. The Karratha region continues to benefit from a diverse array of projects and infrastructure requirements utilizing Searipple in FY '26 and beyond. Our Osprey Village continues to demonstrate robust demand for remote worker accommodation and social housing with a strong waitlist for tenants, highlighting the critical need for accessible housing solutions in the region. We're committed to addressing this demand, ensuring we are not only providing shelter, but also fostering community well-being. Another key pillar of our strategy is the commercialization of our Glyde technology platform, a digital and ESG market leader. Glyde not only enhances operational efficiency but also strengthens our relationships with our new and existing customers. By extending and enriching these partnerships, we can provide innovative solutions that address the evolving needs of our clients, ensuring we're at the forefront of our industry. In addition, we continue to prudently explore, build, operate and transfer or build-to-rent opportunities in the mining, residential and key worker segments. These strategies will allow us to balance the cyclical nature of our business, creating stable revenue streams whilst also supporting community development. Our Building Solutions business in FY '25 is to maintain our momentum and expedite our transformation efforts, innovating and evolving from builder to manufacturer. As we've said, the Build, Transform and Growth strategy is the roadmap to drive improved quality and consistency of earnings, especially in the Building Solutions segment. The continued focus on the Build, Transform and Growth strategy will help us to reach the medium-term 15% return on capital employed hurdle, now expected to occur 12 months ahead of schedule, through a more simplified business model focused on improving utilization and productivity across our factory network. Our clear vision is to establish ourselves as a leader in modular manufacturing, specifically by winning made for modular projects that exemplify our commitment to innovation and excellence. We're already seeing growth in the acceptance of modular construction as a quality, cost-effective and timely solution. This trend is driving growth in our brand recognition and opens new opportunities across various sectors, including lifestyle housing, villages, new worker accommodation, and even education expansions. As a leader in modular construction, we are actively collaborating with various levels of government, community housing organizations, and industry partners to demonstrate the benefits of modular construction. Our commitment to this is reflected in our current order book, which has grown significantly. The outlook for Building Solutions continues to improve with the current order bank of $137 million, up 37% from the first half of last financial year. In addition to the order bank, Building Solutions drives approximately 50% of its revenue from repeatable long-term panel agreements in the education and housing sectors across 3 states, positioning it to generate a 20% to 30% revenue uplift in the second half compared to the second half of last financial year. Together, these initiatives are positioning us not just for immediate success but for long-term growth and leadership in the modular manufacturing space. While the RV Solutions sector is facing headwinds over the next year, the RV Solutions business is expected to return to profitability in the second half of this year on a lower cost base. This directly reflects the strategic review of the business and the rightsizing of our cost base to ensure we will maintain resilience through this economic cycle. Our ability to adapt and innovate is key as we navigate the current economic challenges while positioning ourselves for future success. In light of the current economic pressures impacting consumer discretionary spending, we will continue to implement further targeted price increases to help recover costs. To support our segment strategy, we're undertaking a digital refresh of the Camec Brand. This includes simplifying our sales process through digital commerce platforms, which will enhance our online and retail sectors at our branches and our dealer network. By making it easier for customers to engage us, we will drive sales and improve our overall customer experience. Other areas of focus continue developing structural product solutions such as sandwich tunnel walls, doors and aluminum frames. By enhancing our capabilities in these areas, we aim to increase profitability and deliver superior products that meet the evolving needs of customers in this segment. We'll also continue to introduce new products and accessories for both OEMs and the aftermarket segment as this is vital for keeping our offerings fresh and relevant, ensuring we capture the attention for both existing and new customers. So, in conclusion, we are very pleased with our financial results for the first half of the financial year and the outlook. Looking ahead, we are confident that the growing acceptance of modular construction, coupled with our strengthening order book and forward contracted rooms and community solutions will drive continued earnings growth momentum in FY '25 and beyond. Our commitment to innovation and sustainable practice position us well for future opportunities. We remain focused on quality of revenue through diversification, generating sustainable margins, increasing utilization and reducing overheads to improve our earnings. This is underpinned by our capable leadership across the business to successfully execute our strategy. As Cate said, the company's dividend policy remains to pay out 100% of net profit after tax. Our balance sheet is very strong, and we'll be prudent in the way that we leverage this strength to support our growth. In wrapping up and before we open for questions, I want to thank you, our valued shareholders, for your ongoing support and trust in our vision. Together, we'll continue to Build, Transform & Grow, ensuring that Fleetwood remains a leader in modular construction and community solutions while supporting the RV sector. As a result, we are confident we've established a solid foundation with growing momentum to deliver sustainable earnings and shareholder returns. Thank you, and we're now happy to take any questions.

[Operator Instructions] Your first question comes from Matthew Chen from Moelis.

Just a couple of questions, if I could. Just around the Searipple margin, we kind of, how should we think about like the second half because the occupancy is going to be pretty close to full. It's going to step up again from that first half. How should we think about that in terms of the margin?

Thanks for the question, Matthew. You're right. So, we do talk about a large proportion of costs at, as Searipple occupancy increases, we do have a spread. So, a combination, as you say, we're at about 90% occupancy with the second half with the new contracted rooms. We would expect our EBIT margin to be expanded in the second half over the first half.

Great. And then just on the modular, can I just clarify, sorry, Building Solutions, I mean, that 15% return on capital target, that's come 12 months earlier, which is great. So that's expected to be achieved like through FY '25. And can you just remind us the capital base for that $70 million?

Matt, it can vary. That's a guide. I think it's sitting higher than that at the end of first half.

Okay.

But yes, if you have a look at Note 3 in the accounts, you can form a view and you can potentially look at year-end position, which is slightly lower and take -- maybe take a blended view of those 2 points.

And I think where case going with that is we do have working capital shifts in that business. So, month-on-month, the working capital does move can move quite materially, so.

Yes. And we do it in a very targeted way. We might have additional inventory that we might build that we know that we are going to get an order from a government department. So, it can move by $5 million to $10 million.

Your next question comes from Caleb Weng from PAC Partners.

Congrats on the results. Just on, I guess, Building Solutions, given that second half is traditionally a bit seasonally weaker, how much of the margin expansion this time around was from increased utilization in the factories versus the efficiency gains?

You're right. We seasonally do have a little bit softer second half because of just the timing of the education spend. So, we're in that right now. A bit hard to guide you without sort of being too specific, and I'm not trying to be smart here, Caleb. So, thanks for the question. It varies. And it is a bit of a state-by-state thing. I'd like to say we just look at it on a national basis. It does depend on where the work is and how we move the work around in the business, Caleb. So, without answering the question directly because I don't know the full answer to that question, Caleb, we do expect a slight softening in the revenue outlook. Our GPs are holding up very strongly in the Building Solutions business. We have no projects in that business that are currently losing money or that are of great concern to us at all. The portfolio of projects in there is quite good. So, you're right, there will be a softer revenue, and I'll sort of let you work out what that might look like in terms of margin. We are aiming to hold our margin, but of course, revenue does play into that a bit.

Caleb, just building on that, I think the mix of work in one of the outlook slides where we indicated that we'll be doing more installation work in our education business, less manufacturing and that can be slightly lower revenue and more in and out, but it is revenue in any case.

And maybe I think you guys mentioned that New South Wales government is also looking to do something similar to the QBuild program in Queensland. I guess, the progress there? And what are you guys seeing on the ground?

So, the New South Wales government has a modular task force. We have not seen great progress or traction in that space. So, it's not a high focus for us at the moment. We sort of will put attention where we think there's real opportunities. We do think there is an opening opportunity in schools' infrastructure in New South Wales. You may have seen in the Sydney Morning Herald a couple of weeks ago, the desperate need for classrooms is 90,000 students coming to the New South Wales education system. So, we're reengaging with schools' infrastructure in New South Wales around the education offering. But I think it would be wrong to think that New South Wales is going to follow QBuild with the MMC housing projects in Queensland. I think they're still a little way off that. As I said, there is a task force, and they've had a handful of very small tenders there, 2 or 3 houses. But we don't think that's going to land a big volume of work for us in the next 12 months.

Helpful. And last one for me, just on the Searipple contract with the Saipem Clough, do options to take on additional rooms at that fixed price? Or can you guys negotiate on price for the options?

It's tied into their contract, Caleb. So, under their contract, they have the optionality to take additional rooms, and we have the optionality if only if they're available. So, it does have pricing built into the structure. I won't disclose what that pricing was or how it's structured. But sensibly, once they contract further rooms, they become part of the take-or-pay.

Your next question comes from Charlie Kingston from K Capital.

Yes. Well, done on the cash flow in particular. But just around that, please, a few guessing one-offs. Can you just run through the, sorry if I missed it, I jumped on late, but the tax inflow and then working capital benefit that you had in the half, how should we think about that for the full year? I suppose I'm just trying to get a sense of, yes, what the free cash flow looks like going forward. Clearly, it's helping you pay a very large distribution or dividend, well done. Clearly, the market is very happy with that, but just trying to get a sense as to how to think about that cash flow going forward. I suppose your occupancy is going to increase. So, you're going to get a benefit in that division with Searipple. So yes, just appreciate any thoughts on the free cash flow going forward?

Thanks, Charlie. I'll take this question, given it goes to cash. On the cash flow side, if you just take a quick look at it, we have been targeting a cash conversion of between, I guess, 90% and 100%. We won't always get there, but when we make deliberate decisions to hold more inventory for another time, we may not hit that, but we are targeting between 90% and 100%. We expect a similar CapEx number next half. So going to free cash flow because we've got some things that we want to do to shore up Searipple into the future, which are a little bit on the strategic side, but not large, but sub-$1 million. And we expect it will be sort of a $5 million to $6 million full year CapEx number. In terms of interest, roughly the same. That, there's a one-off item there you can probably see we've got an inflow of tax refund from the ATO. So, since coming on board a year ago, I've been working to finalize previous tax returns, and that's potentially a bit of an abnormal for the period. So that's not really working capital. But that has been partly why we've been able to generate such good free cash flows. There's $4.5 million net debt. But at some point, on these fabulous earnings, we will need to start up re-instalment again with the ATO. And then our lease repayments of minus $4.3 million in the half, you could more or less expect to see that every half because that is our lease footprint. Of course, it will shrink ever so slightly with the two leases that we are exiting for in RBS, but look, it's not going to be material. So based on that and your view on our EBITDA, I'll leave you to reflect on how you think, how much cash you might generate next half.

Very good. That was all from me. Thank you.

Thank you. Your next question comes from Gavin Allen from Euroz Hartleys. Please go ahead.

Impressive Cate. Hi, thanks. Great results. Just a couple for me. Just fleshing out some of the questions with a bit of more of a bigger picture view, I guess. So, Building Solutions, great turnaround there. Any particular regions that are doing better than others perhaps? And the flip side of that, are the regions that you can see improvements in continuing over the next year or so? First one.

I can answer that. Thanks, Gavin. Good question. Look, Queensland and WA continue to perform very, very well, very strongly in both those segments. As you would have seen, the $40 million for 60 homes in Queensland has been good in the first half. That has carried into the second half, and there is more work in that pipeline. So, Queensland continues to be strong and strengthening. WA has had a significant improvement as well. Actually, New South Wales, Vic and South Australia are actually all grown year-on-year. So, they've actually all done, each business has actually done better year-on-year. So, I'm actually quite pleased there. If you were to sort of, get really granular, Victoria is probably one of the softer markets, but underpinned by, we have a very strong position with government work down there with the education sector. So again, we have a great cornerstone business down there to grow from. But again, all five of the businesses have grown year-on-year, Gavin. So, I guess that's my call out there.

Yes, that's good. And it probably leads me to the next question because one of the things you do point out in your summary is that you expect to deliver a 15% return on capital employed by the end of FY '25, which is great. But I guess the natural question that then occurs is what's next? And it just occurs to me that Vic having been a bit softer in more recent times, maybe there's improvements there at a point and how to think about that in terms of what was previously the capital employed in a business that's had a bit of impairment over the journey.

Yes. Look, I think I am quite comfortable that the balance sheet is very, very clean. I think that's not issue. If you just focus on the, look, you'd expect we're trying to grow this business. And okay, a 15% ROCE at the end of this financial year is not the end of the game for us, Gavin. So, we want to grow the business well beyond that. But I would take this position. We have done a fair bit of work rightsizing our Victorian business because it has been softer, and that has benefited the business and will benefit the business going forward. We're not seeing any decline in the education spend down there. In fact, we're seeing that holding well, and we think there's going to be an increase. We have seen some slowing in the new work. So, there was a whole kindergarten program supposed to kick off in Victoria that has slowed right down now, but that hasn't affected our internal VSBA and relocatable schools' program. So, we've actually got a very solid base to build from. So how do I think about it? I think we've got to find other opportunities in Victoria to prosecute on top of that building block. And Brendan and the team down there are doing a pretty good job of that at the moment. New South Wales is strengthening every month for us. WA continues to have a very solid order bank and Queensland, a very solid order bank. South Australia is a little bit patchy, but it's a very small market and not a significant issue for us in terms of distraction. But again, you would have seen in the pictures there, we did a great job with Discovery Parks down in South Australia, a good quality pipeline coming through. We just got to land some of those in the next month or two. So, does that sort of answer your question, Gav?

Yes, 100%. I mean I just think it sort of talks to the potential opportunity beyond that sort of 15% on the current capital employed. So that's great. And then just one on the run. We've talked in the past a fair bit about opportunities in villages around build-own-operate opportunities. How would we think about that suite of possible opportunities in your mind? Is that, do you have to make your own weather there or is there clear and present opportunities that are presenting to you?

So you may have seen if you've been looking, and we didn't make a big song and dance, but we actually brought Marnie in to head up the Communities business because she has a different set of skills in this area coming back from her background. So, why we did that and why that's important, Gavin, is that we are seeing a lot of opportunities potentially coming through the Building Solutions business, whether it for key worker accommodation or social housing. And we feel that we could actually play a more active role in those. So, I would say right now, there is not something in our immediate vicinity target. And as I said in the presentation, we will always be very prudent with that. We're not going to rush and do something silly. We understand that the company has previously made mistakes. We don't intend to do that. So, Marnie is currently working, she's been here about six months now. Marnie is currently working on a list of projects that are at very early stages. She's talking to a number of key clients. tends to be the ones we're focused on right now are government-led type projects. There are community housing ones that are emerging and there are others in the energy transition sector that are emerging. But right now, the immediate stuff that she's focused on is in the government sector. And oddly enough in your part of the world, Gav, over in WA. But I wouldn't say there's anything in the immediate future that we'd be taking to the board in the next 3 to 6 months. And we've had a look at M&A. We don't know that there's anything of good value out there at the moment. That can change. So, we aren't necessarily, it isn't certainly something we're prosecuting in an aggressive way in any way. If something comes to us, we see value, we'll have a look at it on a case-by-case basis, Gav.

Understood. That's all from me. Thanks guys, congratulations once again.

Thank you. [Operator Instructions] Your next question comes from Matthew Chen from Moelis. Please go ahead.

Hi, again. Just wanted to double check on the pay-out policy going forward. I think there was a reference in some of the materials that policies to pay 100% of NPAT remains unchanged for FY '25. Just early indications of how you are kind of thinking about that into '26 and '27. Thanks.

That's actually a board call, Matthew. And the board discussed at least quarterly what we want to do. So that's, I would argue that's not argue, I would declare that's a watching brief for the board. And as we just talked about, there's nothing in the immediate. So, one of the positives is the Building Solutions business strategy is not capital intensive. So, if you think back a few years ago, this plan to do automation and spend large money on automation factory, that plan has emerged and we're not, we haven't got a capital intense issue there. We're also, as I said, quite prudently looking at Community Solutions. If a really valuable accretive, a value-accretive opportunity came to us in that business, then clearly, we would have to consider our dividend policy at that point. As I said, there's nothing in the immediate future in the next 6 months. But things change, Matthew. So, I can't speak for what the board chooses to do, I'm sorry. But we have just kept it on the agenda for the board such that if there is an opportunity or we need cash. Remember, we don't have any drawn debt either, Matthew, so we do have a very strong balance sheet.

Thanks

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

Thank you very much. I'd like to thank everybody for joining us today. We're very, very pleased, as you can tell, with the results. We look forward to the road show next week. And if investors need to speak to us, please let us know. Take care.

Thank you.

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