Service Stream (SSM) H1 2026 earnings summary

Executive summary

• Delivered strong first half FY 2026 results with improved profitability, higher quality of earnings, and substantial increase in work-in-hand, especially in utilities and transport.

• Achieved record contract wins, including major expansion into the defense sector as a Tier 1 contractor, with a significant Department of Defence contract now live.

• Interim dividend increased by 20% to 3.0 cents per share, fully franked, reflecting confidence in future growth and enhanced shareholder returns.

• Maintained a robust net cash position of $87.6 million, supporting organic and M&A growth.

• Statutory net profit after tax was $26.8 million, a decrease of 19% year-over-year, while underlying EBITDA rose 2.3% to $75.3 million.

Financial highlights

• Group revenue for H1 FY 2026 was $1,194 million, down 5.8% year-over-year due to prior period one-offs and contract transitions.

• Underlying EBITDA rose 2.3% to $75.3 million, with group EBITDA margin up 50 bps to 6.3%.

• Adjusted NPAT was $36.6 million, up 4.6% year-over-year excluding prior year tax refund; statutory NPAT was $26.8 million.

• Operating cash flow before interest and tax conversion reached 148%, reflecting strong cash generation.

• Net cash improved by $14 million since June 2025.

Outlook and guidance

• Confident in delivering earnings growth for FY 2026, with a traditional second half bias and new contract mobilisations underway.

• Defense contract to contribute $240 million in annual revenue from FY 2027, with ramp-up underway.

• Ongoing focus on margin improvement, contract optimization, and selective bidding to enhance quality of earnings.

• Investment cash flows and CapEx expected at the upper end of guidance range due to contract mobilizations and systems transformation.

• Utilities segment expected to continue benefiting from strategic repositioning and margin uplift.