The Environmental Group (EGL) H2 2024 earnings summary

Executive summary

• Revenue increased by 18.8% year-over-year to AUD 98.3 million, with normalized EBITDA up 51.7% to AUD 10.1 million and EBIT up 53% to AUD 7.6 million.

• Over 50% of revenue is now recurring, mainly from service and maintenance contracts, enhancing cash flow reliability.

• The business achieved a compound annual growth rate of 47% for normalized EBITDA over the last three years, with accelerated growth in the latest period.

• Net profit after tax grew 68% to AUD 4.4 million compared to FY23.

• Safety performance was strong, with 359,000 hours worked and zero lost time injuries.

Financial highlights

• EBITDA margin rose from 8.1% to 10.3%, reflecting improved operating leverage.

• Operating cash flow was AUD 4.2 million after a AUD 2.8 million working capital investment in Airtight Solutions.

• Cash on hand stood at AUD 10.1 million, with a working capital facility of AUD 5 million.

• Net profit after tax: AUD 4.4 million, up 68% year-over-year.

• Statutory EBITDA increased 64.7% to AUD 9.7 million; statutory EBIT up 71.5% to AUD 7.1 million.

Outlook and guidance

• Guidance for FY 2025 targets a further 25% increase in normalized EBITDA, driven by strong market demand and an expanded product suite.

• Growth to be supported by cross-selling, "One EGL" culture, and recurring revenue streams.

• Baltec and EGL Energy divisions are expected to deliver strong top-line and margin growth, while EGL Clean Air is forecasted to remain flat due to lithium sector slowdown.

• Waste and Water divisions to report as a single unit, targeting organic growth in PFAS treatment.

• Organic growth in Waste and Water divisions is anticipated to gain momentum.