IPD Group released earnings today, with results coming in ever so slightly above the downgraded guidance from the end of May. Mr. Market has digested this OK news and rewarded them with a 14% share price pop at the time of writing!

Looking through the numbers released on the PDF, I thought there might be a bullish market outlook statement driving this move, but it's pretty standard stuff about being well-placed for new work and they removed any mentions relating to the size of their order-book which has been common previously. On the call, the CFO explained that they've decided to stop regularly reporting the order-book size as it jumps around due to revenue recognition requirements, but it is currently at a similar level to previous. Not sure what to think about that. He's technically correct, but you wouldn't call removing the order book figure a bullish change.

The key positive news on the call that didn't really make the results announcement was around data centres and commercial construction. Data centre revenue was expected to be up 25% yoy in May, but actually finished the year 33% up on FY24. Beyond this they're forecasting a further 25% growth in data centre business for FY26 which would be an additional $15m of revenue. For commercial construction, in the CMI electrical business they are starting to see green shoots of demand and are hopeful of an improved year in FY26.

So in general, a steady result in competitive market conditions, and a positive outlook seems to have been just what the market wanted to see. But I can't quite get to a 14% jump based off these figures myself.

Keen to hear the thoughts of our resident expert @mikebrisy when he finds the time amongst a sea of other reports!

Key information from the release

• Revenue of $354.7 million representing 22.1% growth on pcp

• Continued revenue growth across the core IPD business (+5.2% on the pcp), CMI’s Minto Plugs (+6.4% on the pro-forma pcp), and EX Engineering (+5.2% on the pro-forma pcp), with all ahead of guidance on strength in key infrastructure sectors (i.e. Data Centres, Water & Waste Water)

• Addelec (revenue -12.8% on the pcp) was impacted by previously-disclosed project delays, while CMI Cables (revenue -10.2% on the pro-forma pcp) was lower than previously guided, driven by a major project order being realised in July (instead of prior to 30 June).

• Data Centre revenue growing strongly, up 33% on FY24, now representing 16% of group revenue

• EBITDA of $46.4 million, up 19.3% on pcp and NPAT of $26.2 million, up 17.0% on pcp

• EPS of 25.3 cents for FY25, up 8.6% on pcp, demonstrating the success of accretive acquisitions made in FY24

• Operating free cash flow (before interest and tax outflows) has continued to increase, rising to $52.7 million for FY25 with Operating free cash flow conversion (before interest and tax outflows) of 113.6% for FY25 (up from 91.3% in the pcp)

• Net Cash of $9.8 million as at 30 June 2025 (vs a Net Debt position of $8.8 million at 30 June 2024) after repaying $20.0 million of core debt during the year

• Total fully franked dividends of 12.6 cents per share declared for FY25, up 16.7% on pcp

Following a surprising 12.5% fall on no news since the start of May, IPD came out today with a reduced FY25 earnings guidance. EBITDA was initially forecast at $49.8m and will now fall between $45.7-$46.3m (7.5% reduction).

Given that current market conditions are somewhat tight I'm not overly shocked to see a downgrade and am willing to cut management some slack given the long-term growth story is still intact, however the leaky share price drop seems to confirm earlier concerns on here about management behaviour / reliability.

The good news to takeaway from my perspective is that firstly, the order book is more or less unchanged, with $91.5m in backlog orders currently and secondly, data centre revenues have grown 25% on the pro-forma pcp. Should market conditions open up a little with the latest RBA rate cut, IPD seem well placed to continue strong growth in FY26.

Information from the release

• Revenue for FY25 is forecast to exceed the pcp (Pro Forma), with continued revenue growth forecasted across the core IPD business (+4.9% on the pcp), CMI’s Minto Plugs (+5.2% on the pro-forma pcp), and EX Engineering (+4.6% on the pro-forma pcp)

• CMI’s Cables (forecasted revenue -7.6% on the pro-forma pcp) remains affected by headwinds across its key end-market (Commercial Construction/Buildings), while Addelec (forecasted revenue -12.6% on the pcp) has experienced project delays

• Data Centre Revenues have grown 25% on the pro-forma pcp

• Order Backlog (as at mid-May 2025) remains elevated at $91.5m

• Gross Profit Margins have seen downward pressure as the order book transitions from daily trade to larger, more complex and competitive orders

• Operating Expenses as a % of Revenue has improved on successful completion of additional investment in the operating cost base, leaving the Group well placed to efficiently service future growth

• Cash flow conversion (before interest and tax outflows) is expected to remain above 100%, with the Board of Directors approving an additional $10m repayment of core debt