Verbrec Ltd

ASX:VBC

Q2-2026 Earnings Call

[Mark Read, executive]

Welcome, everyone, to our results presentation for half year 2026, a transformational half year. We're excited to present our results and an update on our business today. But I'd like to -- before I start, I'd like to acknowledge the traditional owners of the land on which we present from today and pay our respects to the elders, past, present and emerging. This presentation may contain forward-looking statements, forecasts and preliminary pro forma financial summaries. The information should not be relied upon to make a judgment on future performance or results.

I'd like to start by focusing on some key highlights of this presentation. The acquisition of Alliance Automation has been transformational for Verbrec with an expected $60 million in annualized revenues from the transaction. Our work-in-hand and opportunity pipelines have significantly grown since it was reported in the first half of financial year 2025.

Verbrec is positioned for organic growth and strategic acquisitions with a net cash position at $11.6 million. We have achieved a continuing operations EBITDA for the period of $4 million and an increase in revenues compared to the prior corresponding period. Also note, the EBITDA for the half increases to $11.3 million when the profit on the divestment of Competency Training is included.

Verbrec is a unique professional services company operating across Australia and New Zealand and into the Pacific with core markets in energy, mining, infrastructure, manufacturing, water and defense. Our business targets 4 emerging growth areas: the gas market transition, where we're lowering emissions by the substitution of interim gas supply in lieu of coal-fired power using gas as a firming fuel. Secondly, electrification and energy storage, where key clients look to Verbrec to assist in navigating the transition in the energy markets underway across the region. Thirdly, cybersecurity for operational technology. Critical infrastructure clients face exposed risk to cybersecurity threats and are motivated to take measures to reduce their risk profile. And finally, industrial automation and machine learning. The industrial world is getting increasingly connected with the need to modernize to stay competitive and use data for decision-making to extend asset life, increase production and reduce downtime. Verbrec enables a sustainable future for our clients and their customers.

Verbrec operates under several brands, engineering, asset management and operations and maintenance. We also operate under another well-regarded brand that is Alliance Automation to provide industrial automation, digital transformation, cybersecurity and artificial intelligence integration to a variety of client industries. And of course, StacksOn, our mining stockpile Software-as-a-Service product and digital twin.

It is through our client partnership approach, I know we will be successful in growing our business and leveraging the combined strengths of Verbrec's engineering pedigree and Alliance Automation's digital innovation. Where we differentiate ourselves from others is the commitment to partnering with our clients across the entire life cycle of the asset. This builds very connected, trusted relationships with our clients. We are long-term partners of our clients. Operating and maintaining our clients' plants also provide a further benefit. We learn from our operating experience, which results in improved design for future projects.

Moving on to some financial highlights for the half. Verbrec's revenue for the half year on a continuing operations basis was $46.1 million. That is 18% growth since the first half of financial year 2025. Excluding EBITDA contributions from Competency Training, which we divested last year, the business EBITDA has risen to $4 million in first half of 2026. The divestment of Competency Training bolstered our net cash position to over $11 million, giving us flexibility to deploy and add more value for our shareholders.

There's lots of information on this slide, and I won't go into it all. What I do want to bring your attention to is the impact of the divestment of Competency Training. We received over $11 million cash consideration for Competency Training, of which $6.7 million has flowed to the bottom line result after costs and removing goodwill and assets from the balance sheet. And the Board has again approved a dividend, which is again fully franked.

Our balance sheet is strong with total shareholders' equity the highest it has been since the merger of OSD and LogiCamms in 2019. With available cash of over $21 million, we have the funds for deployment to create additional value for our shareholders.

Now looking to the future. The acquisition of Alliance Automation has been truly transformational for our business. We estimate a continuing operations revenue at the end of financial year 2026 between $110 million and $120 million, which at the upper end of the range is 50% growth year-on-year. We expect this revenue to generate between $8 million to $10 million EBITDA on a continuing operations basis. The impact of discontinued operations and gain on sale of Competency Training adds an additional $7.3 million to half '26 -- half 1 '26. Thus, Verbrec expects a total group EBITDA of between $15.3 million and $17.3 million for the full year ending 30 June 2026. Our opportunity pipeline has grown by over 50% since it was published in the first half of 2025 and work-in-hand similarly has grown by over 75%.

Now a few words on Alliance Automation. We acquired them in December 2025. Alliance Automation is one of Australia's largest electrical engineering and industrial automation service providers. On a pro forma basis, we expect them to add an annualized $60 million revenue to our business. Alliance Automation is at the forefront of digital transformation for operational technology in Australia. There's a lot to be excited about with tremendous growth potential in the industrial automation, cybersecurity, artificial intelligence and machine learning markets in Australia.

I'd like to spend some time talking about Verbrec's potential and strategy for growth. We have grown in scale from our recent transactions and have cash on hand to continue to compound that growth potential. Let's talk about the organic growth first, strategically acquiring firms that provide Verbrec with geographic expansion, bolt-on capability or technological expansion, and they are all high priorities for the management team.

We are looking closely at our options and considering opportunities as they arise. But that's not the whole story. There are lots of opportunities for organic growth, and this is our first priority. Verbrec traditionally derives most of its revenue from energy while Alliance Automation is stronger in water and mining. And together, our offering is significantly enhanced in the defense market. There are lots of opportunities to leverage those contracts each business has to diversify our revenue and expand into sectors where the brand has the strongest presence. There are many opportunities to expand and introduce other parts of our business to more fully service the needs of our clients.

Geographically, it's a similar story. Alliance Automation has more satellite office locations in Australia than Verbrec, providing us with opportunities to expand Verbrec's traditional businesses into the likes of Northern Queensland, New South Wales and Victoria. Alliance Automation has traditionally derived almost all its revenue in Australia, while Verbrec services New Zealand, Papua New Guinea and the Pacific, providing great opportunities for Alliance Automation to spread internationally.

So a summary of the key points from this presentation today. The Alliance Automation acquisition is truly transformational as we are now over 700 people across 14 locations. Revenue has increased 18%. The work-in-hand and opportunity pipelines have both increased, and we expect $110 million to $120 million revenue for the full year 2026. We very much look forward to what the second half will bring and of course, the future beyond that.

If you do have any questions, you can ask them on the Verbrec Investor Hub, and we'd be happy to answer them. We will review any questions submitted during the presentation and respond to those in due course. So in summary, thank you again very much for your attendance today. Thank you.