Service Stream (SSM) H2 2024 earnings summary

Executive summary

• Achieved strong double-digit growth in revenue, earnings, and profit for FY24, with robust operating cash flows and a return to a net cash position at year-end.

• Strategic repositioning of the utility segment is substantially complete, creating a strong platform for growth in FY25 and beyond.

• Secured over $2.2bn in new contract works, supporting a robust $5.5bn work-in-hand pipeline and providing momentum for future growth.

• Fully franked dividend increased to 4.5 cps, a 200% rise year-over-year.

• Acquisition and integration of Lendlease Services expanded market exposure and diversified the client base.

Financial highlights

• Total revenue reached AUD 2.4 billion ($2,392 million), up 11.2% year-over-year.

• Underlying EBITDA was AUD 129.2 million, up 13.2% on the prior year, with a 5.4% margin.

• NPATA increased 36.4% to AUD 50.1 million; statutory NPAT was AUD 32.3 million, reversing a prior year loss.

• Operating cash flow was AUD 131.2 million, with an EBITDA to OCFB/OCFBIT conversion rate of 101.6%.

• Net cash position at year-end was AUD 7.9 million, a AUD 43.6 million improvement.

• FY24 total dividend of 4.5cps, fully franked, a 200% increase year-over-year.

Outlook and guidance

• Work in hand exceeds AUD 5.5 billion, with multi-year extension options adding another AUD 3 billion.

• 85% of FY25 revenue is already secured under contract or extension agreements, supporting revenue visibility.

• Expecting further earnings growth in FY25, especially from the utility segment as margin targets are achieved.

• Revenue profile enhanced by new agreements, with ~90% under cost reimbursable or schedule of rate models.

• Priorities include maintaining safety performance, realizing utility margin improvements, and pursuing organic and external growth opportunities.