Discl: Held IRL 1.27%

Wrapping up my SXE deep dive with the 1HFY26 results. Apart from the WestConnex arbitration debacle, I really like:

1. How the rollup acquisition strategy makes sound sense in terms of carefully expanding SXE's adjacent capability around its core electrical expertise, has come together nicely and showing up in revenue and in providing SXE with a multi-disciplinary capability that seems to be resonating with its customers.

2. The impact of the structural tailwinds of (1) Data Centres (2) Infrastructure (3) Renewables (4) Electrification clearly showing up in revenue and the growth outlook ahead - there are many ways to win and SXE is well positioned in each.

3. The spreading out of the order book in terms of geography, sector and discipline, reducing dependence of a single instance of these dimensions.

REVENUE

• Translating into revenue growth
• 1HFY26 revenue is 12.2% down from pcp as activity from the Collie Battery and Western SYD airport projects winding down
• Force Fire was consolidated in full and continues to perform strongly

Infrastructure - down 33.8% as project ends were offset by significant ongoing revenue contribution from Shoalhaven, Shellharbour Hospital and Data Centre projects including NEXTDC SYD03 Artarmon

Commercial - up 44.2% from Force Fire industrial warehousing and commercial building projects, ongoing Coles, Woolies works by SJ Electric, Heyday’s SYD/ACT projects including the Atlassian Building

Resources - marginally down, ongoing SCEE works for BHP, RTO, Sino Iron and SEME Solutions minesite and accomodation village security upgrades

GROSS PROFIT

$65.9m, a record half-year result, up 30.3% on pcp

Underlying EBITDA and EBIT rose30.8% and 25.5% from pcp, excluding the impact of the WestConnex debacle

$46.1m was written off from WestConnex, resulting in Net loss of ($12.8m) vs NPAT of $16.2m pcp

Gross margin percentage 18.9%, significant jump from pcp 12.7% and 2HFY25 13.2%

Driven by (1) successful outcome of the CBESS project (2) more favourable mix of Heyday commercial building projects (3) contribution from Force Fire

CASH

• $58.8m, down from $88.6m end 2HFY25
• Includes settlement of WestConnex, dividend payout $13.3m, unwinding of $12.2m CBESS advance payments, deferred consideration payments $4.7m for Force Fire and MDE acquisitions
• Debt free

ORDER BOOK

• Consistent steady rise since FY22, up 6% from pcp
• Infrastructure is the largest component at 65%
• 85% of the Order Book is now on the East Coast
• Over $200m of the orderbook is in the adjacent non-electrical disciplines
• Ability to provide multi-disciplinary offerings is gaining traction with clients as evidenced by recent rewards, growing proportion of tendering pipeline composed of multi-disciplinary offerings

OUTLOOK

• Increased underlying FY26 EBITDA guidance to at least $72m, up 31% on FY25 EBITDA
• Growth expectations underpinned by strong exposure to structural tailwinds of the growth in (1) Data Centre construction (2) Infrastructure investment (3) renewable energy projects and (4) electrification
• Data Centre revenues expect to be similar to FY25 of $120m, with significant growth in this sector in FY27, tendering on NEW DC projects with over $1b of work for SCEE over construction period
• As Western Sydney Airport Stand Alone Facilities project is now underway, expecting long-term pipeline of works with further airport expansion and development of the surrounding Aerotropolis region, particularly industrial warehousing construction for Force Fire and Heyday
• High confidence of future awards on the SYD Metro West station developments, following award of St Mary’s Station Project
• Positioning around major hospital developments in NSW and ACE in the medium term
• Tendering for multiple battery and wind farm developments across the country and expect to announce further battery projects this year