• Revenue: Circa $1.3 billion.
• EBITDA: $59 million, up 31% on FY24.
• EBIT: $42.1 million, up 48% on first half FY24.
• Earnings Per Share (EPS): Up 35%.
• Interim Dividend: Fully franked dividend up 25% to $0.025 per share.
• EBITDA to Cash Conversion: 120%.
• Net Cash Position: $9.1 million, transitioned from net debt pro forma of $38.2 million.
• Work in Hand: $3.4 billion, up nearly 80% year-over-year.
• FY25 Guidance: Upgraded to an EBITDA range of $125 million to $128 million and an EBIT range of $91 million to $94 million.
• Available Liquidity: $229 million.
• Net Profit After Tax (NPAT): Up roughly 50%.
• Capital Expenditure (CapEx): Circa 2% of revenue.

• Warning! GuruFocus has detected 6 Warning Signs with ASX:CGF.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SRG Global Ltd (ASX:SRG) reported a record first half EBITDA of $59 million, up 31% from FY24.
• The company achieved a significant EBIT increase of 48% compared to the first half of FY24.
• SRG Global Ltd upgraded its FY25 guidance, reflecting strong growth expectations with an EBITDA range of $125 million to $128 million.
• The acquisition of Diona has been successfully integrated, contributing positively to the company's performance.
• SRG Global Ltd has a robust work in hand of $3.4 billion, up nearly 80% from the previous year, providing strong future visibility.

Negative Points

• Despite strong performance, the company did not provide specific cash guidance for the second half, which may concern some investors.
• The integration of Diona, while successful, is still in its early stages, with only a four-month contribution in FY25.
• SRG Global Ltd's expansion into the defense sector is relatively new, with significant revenue expected only in FY27 and beyond.
• The company's growth strategy relies heavily on maintaining cultural alignment in acquisitions, which can be challenging.
• While dividends increased by 25% in the first half, no specific guidance was provided for future dividend payments.

Q & A Highlights

Q: Can you elaborate on the cash conversion rate of 120% and expectations for the second half? A: Roger Lee, CFO, explained that SRG Global has a strong track record of cash conversion, typically around 100%. The focus remains on maintaining cash discipline through basic principles like cash claims and collections. The expectation is for continued strong cash conversion in the second half.

Q: How does the new road and bridge accreditation impact contract opportunities? A: David Macgeorge, Managing Director, stated that the accreditation provides flexibility to undertake projects independently, potentially doubling contract sizes. However, the strategy remains focused and targeted, with no significant change in approach.

Q: What is the outlook for Diona's performance in the second half and beyond? A: David Macgeorge noted that Diona is expected to grow by over 10% in FY25, with a 10-month contribution. The focus is on cultural integration, and the acquisition was based on past performance rather than future projections.

Q: What is the outlook for SRG's performance excluding Diona? A: David Macgeorge confirmed that SRG Global continues to grow as a business, with upgraded guidance for the full year. The company is positioned as a growth business for the next three to five years.

Q: Can you provide guidance on EBITDA growth for FY26 and beyond? A: While not providing specific guidance for FY26, David Macgeorge suggested an 8% to 10% growth as a proxy for future expectations, emphasizing the focus on FY25's strong performance.

Q: What is the current work in hand for Diona? A: David Macgeorge mentioned that Diona has approximately $1 billion in work, highlighting the successful integration and growth potential of the acquisition.

Q: What is the outlook for margins in the Maintenance and Industrial Services and Engineering & Construction segments? A: David Macgeorge expects margins to remain consistent, reflecting strong operational execution and industry-leading performance.

Q: Can you elaborate on defense opportunities for SRG Global? A: David Macgeorge indicated that defense is a newer sector for SRG, with expected turnover of around $50 million in FY25. The sector offers significant future opportunities, with major spending anticipated in FY27 and beyond.

Q: What is SRG's approach to acquisitions? A: David Macgeorge emphasized that acquisitions are evaluated based on strategic fit, cultural alignment, and value creation rather than size. The focus is on unlocking shareholder value through both organic and inorganic growth.

Q: What is the outlook for dividends in the second half? A: While not providing specific guidance, David Macgeorge highlighted SRG's strong track record of increasing dividends, with a 25% increase in the first half compared to the previous year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.