Emeco Holdings Limited

Emeco reported group revenue of $421 million, up 9% year on year, operating EBITDA of $155 million, up 7%, and operating EBIT of $77 million, up 13%. Operating NPAT increased 21% to $46 million, while statutory profit after tax was $38.7 million, up 15%. Operating free cash flow rose 37% to $67 million, supported by 110% EBITDA-to-cash conversion; return on capital improved to 18%, and net leverage fell to 0.5x. For FY26, management expects stay-in-business capex of approximately $170 million to $175 million, depreciation of $160 million to $165 million, and nonrecurring spend of about $15 million, with positive second-half performance expected subject to wet weather in Queensland.

Ian Testrow said Emeco has delivered six consecutive halves of growth in earnings and cash flow and that the balance sheet is in its best shape in 10 years. He emphasized a strategy centered on disciplined organic and inorganic growth, with a strong push into fully maintained rental projects, stand-alone maintenance work, adjacent maintenance services, and selective consolidation opportunities. He also highlighted technology, AI and operational know-how as key differentiators and said the company is focused on preserving capital while pursuing shareholder returns.

Theresa Mlikota highlighted that the earnings uplift was driven by low-capital maintenance services, even though those services carry lower margins, because they generate much higher returns on capital. She pointed to statutory NPAT of $38.7 million, operating NPAT of $46.5 million, operating free cash flow of $67 million, and a $45 million increase in cash to $171 million at period end. She also noted $90.7 million of stay-in-business capex, $4 million of PPE disposal proceeds, net capex of $86.7 million, and that a $5-year $355 million syndicated bank facility was completed on better pricing and terms; the Board recommended no shareholder distributions while preserving flexibility for growth.

Analysts pressed on how long it might take to reach the 20% ROC target and whether that goal could be achieved within 12 to 24 months. Management said progress depends mainly on utilization, suggesting that moving fleet utilization from about 85% toward 90% would help get to 20%, while continued growth in maintenance services would also support returns. On M&A, Ian Testrow said Emeco has not been overly active this year, but is looking at both consolidation opportunities and maintenance/asset-management adjacencies, with a strong focus on value discipline rather than buying aggressively.