PWR Holdings Limited

Thank you for standing by and welcome to the PWR Limited Half Year 26 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you would like to ask a question via the phone, you'll need to press the star key followed by the number 1 on your telephone keypad. If you'd like to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I'd now like to hand the conference over to Mr Matthew Bryson, Acting CEO. Please go ahead.

Good morning. I'm Matthew Bryson. Acting CEO of PWR Holdings Limited and I am joined by Sharon Williams, PWR's Chief Financial Officer and incoming CEO. Today I am pleased to present PWR's half-year results for the financial year 2026. This presentation will provide an overview of our financial performance, strategic priorities and outlook. Turning to slide four, Following a transitional year for the company in FY25, the first half of 2026 demonstrates clear earnings momentum underpinned by volume growth and the early emergence of operating leverage as the significant investments in capacity and capability begin to scale. Group revenue growth of almost 28% was weighted to a stronger second quarter as operational disruption associated with the final stages of the factory move and temporary power arrangements was removed, enabling improved execution and higher throughput. With the transition complete and stable infrastructure in place, the business is now operating on a far more consistent and scalable footing. NPAT growth of 38% to $5.7 million outpaced revenue growth supported by higher utilisation of our expanded labour base and improving operational efficiency as throughput increased. Strong cash conversion at over 100% remains a core characteristic of the business, supporting continued strategic investment. Net debt at period end is modest and already reflects deleveraging from peak levels earlier in the half. We expect further deleveraging in the second half. A major milestone in the half was the completion of our transition to the new Stapleton headquarters in February. Delivered in line with budget, the new facility materially increases capacity and enhances operational capability, positioning the business to execute on larger, more technically complex opportunities. Importantly, we successfully completed recertification to AS9100 and NADCAP following the relocation, ensuring no disruption to our aerospace and defence credentials and positioning us to capture further program opportunities. This facility underpins our ability to scale over the medium to long term. We're seeing strong momentum in the order book supported by improving mix and structural drivers in the key markets we serve. There is growing adoption of next generation technologies across high power motorsports and aerospace and defence applications. This is driving both market share gains and profitable growth. The structural shift towards increasingly advanced and technically complex cooling solutions aligns directly with PWR's core strengths in engineering, vertical integration and quality. We're also seeing increased AMD program activity, broader customer diversification and early repeat activity, which is strengthening the quality and visibility of the order book as the pipeline matures. With the Australian facility now scaled, we have capacity to support long-term growth well into the next decade. In the US, we've progressed key accreditations and production capability for AMD products, expanding our ability to service customers locally. Additional investment across the UK and the US enhances flexibility and de-risks supply for global customers. Capital allocation remains disciplined We're balancing growth investment with financial conservatism, ensuring the business is positioned to deliver sustainable returns as operating leverage continues to build. Overall, Half One reflects a business that has completed a significant investment phase and is now beginning to translate that scale into earnings momentum with a stronger platform to capture growth across our key markets. On slide five, we outline the progress made in the half in service of our four key strategic priorities. The relocation of our new Australian site is now complete, a significant milestone for the company and one we are extremely proud to have delivered. We continue to strengthen our aerospace and defence platform. We have also expanded our position as an approved supplier, now covering all key defence primes, including Tier 1 players. This materially broadens our addressable opportunity set. Growth on the half was strong and profitable. Operationally, we continue to build a more resilient global model. Finally, we have implemented a more scalable global operating structure positioning the business to support continued growth across our global footprint. Turning to slide six, where we break down revenue by market sector. As evidenced in the revenue bridge, the key drivers of growth this half were motorsports and AMD. Motorsports growth of 40% exceeded our expectations, in part reflecting race testing for Formula One commencing two to three weeks earlier, and increased uptake of our technical services. This result also reflects a broadening customer base across categories outside of Formula One and increased customer adoption of PWR's unique core constructions. This increase in market share is driven by improved thermal performance, packaging and aerodynamic advantage that our solutions provide our customers. Aerospace and Defence delivered over 30% growth on PCP, reflecting contributions from Defence, commercial aerospace, including eVTOL, and the developing MRO, or maintenance, repair and overhaul segments. Following delays caused by customer design changes, 75% of the US government project was recognised in Q2, albeit production spanned Q1 and Q2. we exited the half with strong year-on-year growth in back orders. In OEM, the strong revenue growth reflects the cycling of a softer PCP that was marked by the completion of two concurrent high-volume, high-complexity OEM programs. This half was supported by the maturing of new programs into production phases, and we expect this to underpin stable second-half revenue on half-once. Automotive aftermarket, revenue declined due to a deliberate provision of discount structures to improve margins. To this end, we streamlined the historical catalogue to concentrate on high-volume vehicle opportunities. The external environment is challenging for discretionary spend, but demand for our premium aftermarket products is resilient. I'll now hand over to Sharon to run through the financial performance in greater detail.

Thanks, Matt. I'll walk through the key parts of our financial performance on slide eight. We delivered strong revenue growth during the half, particularly the second quarter, with uplift in aerospace and defence and motorsports of 31% and 40% respectively. In our trading update provided at the October 2025 AGM, revenue for the first quarter was up 6% as the business settled into the new Australian facility. During the first quarter, we undertook production work in preparation for the US government order. This groundwork supported stronger execution and revenue recognition in the second quarter. Raw materials were broadly in line with PCP as a percentage of revenue. We did have some increasing costs, both direct and indirect, associated with US tariffs. These are being actively managed through increased production in the US facility, supply chain adjustments and our pricing strategies. Employee expenses increased in absolute terms, reflecting higher revenue volumes and declined as a percentage of revenue, improving margins. This reflects operating leverage with the existing platform and headcount supporting higher throughput without scaling proportionally in line with revenues. Average headcount increased by circa 5% versus PCP. This single digit increase reflects early benefits from the implementation of the scheduling and capacity planning system. In addition, labour availability across some skill sets has tightened, leading to a higher number of vacant roles. Wage inflation ranged between 5.5% to 7% across Australia and US respectively, with the UK being approximately 2%. During the half, we increased provisioning for incentives. and recognised an accelerated expense in relation to the Chairman's performance rights, which will remain on foot until their original vesting date. As flaked previously, the relocation to the new factory has resulted in a step up in our fixed cost base, particularly across occupancy and right of use expenses and depreciation in debt finance costs. This has temporarily diluted return on equity. As capacity utilization increases and margins progressively normalize, we expect returns to improve over the medium term. Notwithstanding the step up in fixed costs, NPAT increased 39% versus the PCP. Finally, a fully franked interim dividend of $0.03 per share has been declared and is payable in March 2026, equating to a 53% payout ratio. This is consistent with our proportional payout policy of between 40% and 50% of net profit after tax. We remain disciplined in our capital allocation decisions, balancing shareholder returns with investment and growth. Slide 9 speaks to working capital and cash flow. Our working capital increased by $2.5 million since June 2025, driven by an increase in inventory to support stronger revenue and A&B programs. Cash conversion remains strong at over 100% on a rolling 12-month basis. Free cash flow was negative for the period, reflecting the final stages of the investment cycle as we completed the new factory construction, particularly the controlled environment areas. FX remains an important consideration, particularly as our A&D revenues increase, which are largely denominated in USD. Consequently, we have commenced disclosing a constant currency growth rate to enhance transparency. As a net exporter, a weaker AUD benefits us, especially against the USD and the pound. A key advantage of our global manufacturing strategy is the natural hedge that it provides, with a proportion of our costs denominated in those currencies. Moving into SY27, we will continue to actively manage FX risk, maintaining hedges to provide budget certainty, and to act as shock absorbers when FX rates fluctuate. Moving on to slide 10, strategic investments in CapEx and the Australian factory are essential for supporting growth and enhancing production capacity and our ability to deliver more technically complex programs. This investment positions the business to support the increasing demand for our products and deliver sustainable long-term growth. CapEx for the first half was $12.7 million. This investment was predominantly focused on the completion of the Australian facility and installing new equipment to expand capacity and capability while improving automation, compliance and business continuity. The investment facilitates a step change in scalable production capacity that was simply not possible in the previous footprint. For the full year, we estimate total capex of $22.5 million. This slight increase relates to specific production equipment that produces direct revenue benefits by increasing our capacity. Specific investments during the period include the Stapleton electrical connection upgrade and substation where energy infrastructure requirements added an incremental $2 million. This connection occurred in late September. allowing our investment in solar power to reduce our reliance on grid electricity and help offset the higher energy requirements of a larger factory footprint. Further investments include a step change in our controlled atmosphere environments, materials capabilities and software for our scheduling and planning system to enable realisation of efficiency gains. This completes the Stapleton factory upgrade extends our US A&V capabilities, unlocks some capacity constraints in the technical services area and our emerging technology capability. We have incurred modest one-off costs of $0.8 million to relocate our controlled atmosphere production to Stapleton and additional energy costs due to running on generators for the first quarter. This new site has lifted our cost base in three areas. as can be seen in the first half profit and loss. Firstly, increased right of use depreciation and interest due to the new 15-year lease with AA's B16 front-loading lease expenses, meaning we will see a $2.2 million increase in lease expenses per year from FY26. Secondly, leasehold improvements and equipment depreciation. The new equipment and fit-out unwind in our depreciation expenses estimated at 1.2 million per year. The other area is occupancy expenses related to increased outgoings of circa 1.1 million per annum. In FY27, our investment focus will shift towards targeted efficiency initiatives and leveraging our global operating model, particularly as we expand A&D activity in Europe and with a view to increasing production flexibility. Turning to slide 11, We're pleased to have moved past our peak debt period and have already reduced net debt to $13.4 million at 31 December. The balance sheet remains strong with cash of $10.6 million and undrawn facilities of $18.5 million. Importantly, we have maintained a conservative leverage position while completing a significant investment cycle. As the group's expanded capacity and capabilities come online, We are seeing the signs of those investments translating into revenue growth, particularly through new technical capability and R&D-driven opportunities. Since listing, the group has pursued growth with discipline. Strong cash generation has funded reinvestment, resulting in modest leverage and preserving balance sheet flexibility. We remain committed to maintaining financial discipline as we pursue the opportunities ahead. with a clear focus on generating appropriate returns on invested capital. Matt will now talk through the outlook for the group.

Thanks Sharon. Turning to slide 13, PWR is extending its global leadership position in high performance thermal management, leveraging our motorsports innovation capability into aerospace and defence and other mission critical applications. Underpinning this momentum are four structural competitive advantages. First, vertical integration across Australia, the US and the UK provides geographic flexibility, operational resilience and control over quality and delivery. Second, we are technology agnostic. We select the optimal cooling solution for the application rather than forcing customers into a single process enabling high performance application-specific outcomes as our key competitive advantage. Third, we maintain a structural lead time advantage. Vertical integration and in-house capability allow us to, quote, materially shorter lead times, often around 50% of industry norms, which is increasingly decisive for defence programs to simplify the supply chain or offer responsiveness when operating under tight schedules. Finally, our defence-grade quality systems and accreditations position PWR as a credible, approved supplier to major primes. Collectively, these advantages are resonating with motorsports and AMD customers and are translating into tangible demand growth. Turning to slide 14. We see four clear structural drivers underpinning long-term demand for advanced thermal management. Collectively, these structural trends underpin our confidence in the medium-term outlook for aerospace and defence. Importantly, these trends directly align with PWR's core competitive strengths. Turning to slide 15, PWR's strategic priorities continue to focus on four key areas, innovation, profitable growth, sustainability and investing in our people. Our strategic priorities will be led by our experienced leadership team as outlined on slide 16. Slide 17, OEM and Emerging Technology Motorsports. We're currently tracking 37 discrete programs across financial year 26 to financial year 28. Current financial year programs are up approximately 54% versus the PCP, reflecting improved program momentum and forward visibility. Our motorsports product development in emerging technologies remains strong and we continue to be encouraged by the outlook for the balance of 2026 and beyond. The new Formula One regulations represent a technical shift of unprecedented complexity and we have seen in the past new regulations drive rapid innovation cycles within the teams and their critical supply chain partners such as PWR. We expect ongoing optimisation and performance development through second half and into financial year 27 first half. as learnings from the current cars are transferred into financial year 27 designs. Early Formula One power unit track testing has initially exceeded mileage expectations. This reinforces confidence in the long-term viability of the new hybrid formula and the increasingly technically complex both power unit and chassis cooling systems. Adding to this, Our engagement in LMH and LMDH classes continues to strengthen, supported by new manufacturer participation in premier endurance racing categories. We're also seeing increased activity in European and US off-road racing markets, including Dakar and the US trophy truck programs. The number of programs we supply to OEM And whilst our revenue for this sector has recently declined on prior year due to high-end program completions, our presence in niche OEM opportunities continues to expand with new program engagements offering volumes such as the 800 vehicle hypercar referenced on this slide and with the supporting commencement of the Ford Mustang S650 program late in financial year 26. Our future focus in OEM is not exclusive to automotives, with industrial and marine sector leads giving confidence in new opportunities for PWR advanced cooling and emerging technology adoption. Turning to slide 18, our aerospace and defence pipeline continues to strengthen with a broadening customer base contributing to improved order book resilience. As shown in the slide, Of the total top 40 programs identified out of financial year 28, 33 are already secured in financial year 26. Importantly, approximately 38% of the top 40 programs represent new customers, demonstrating deliberate diversification of the revenue base and reducing concentration risk. Pipeline momentum continues to build. Current financial year secured programs are up approximately 10% versus the prior comparable period, and we now have 51 approved supplier relationships, covering all key defence players, including Tier 1 primes. That uplift in approved supplier status continues to underpin program access and order book durability. Turning briefly to the key segments on the right-hand slide, The demand backdrop remains supportive. US defence spending continues to increase, with a growing proportion directed towards advanced platforms aligned to PWR's cooling capabilities. NATO commitments reinforce a multi-year demand outlook. A follow-up US government order of US $9.1 million was received in Q3. With delivery scheduled across Q4 in FY26 and into FY27, this reinforces execution capability and strengthens our position for future program participation. Commercial air and MRO remain strategically important segments. MRO typically represents 60% to 70% of total aircraft lifecycle costs. and provides longer-dated, repeatable revenue streams once qualified. We continue to expand our presence here, supporting diversification and improving stability of AMD revenue base over time. Overall, the Aerospace and Defence Outlook remains supported by increasing program scale, broadening customer relationships, and a shift towards longer-duration, high-visibility revenue streams. Turning now to the outlook on slide 19. Outlined on the left-hand side of the slide are our revenue expectations by market sector. Firstly, for motorsports, we expect strong but moderating second-half revenue growth. Based on the current pipeline, FY27 is expected to be in line with elevated regulation-driven FY26 revenue. For A&D, continued momentum is expected to support a broadly even first half and second half revenue split. Financial year 27 revenue is expected to be supported by the follow-on US government order with aggregate growth dependent on the timing of pipeline conversion. OEM, the medium term pipeline is rebuilding momentum. Consequently, we expect a broadly even first half, second half revenue split with modest growth expected in FY27. Lastly, in terms of our aftermarket business, we continue to expect new FY26 revenue growth due to the continued reshaping of the sales mix towards higher value, higher volume programs. At a group level, our expectation for modest statutory NPAT margin improvement in FY26 is unchanged. This is driven by higher volumes with improved operating leverage and early productivity gains partly offset by investment in Australian factory incremental costs of $5.5 million, as outlined on slide 10, a US cyber accreditation, and some one-off costs relating to the factory moves and CEO transition. Over the medium term, we continue to see a pathway to NPAT margin recovery. The step change investment in capacity and capability is now largely complete. That expanded platform positions us to scale without a corresponding increase in fixed costs. Going forward, investment remains a fundamental part of the business, particularly in technology, capability and accreditations, but at a more normalised level. As volumes continue to grow across motorsports and aerospace and defence, we expect operating leverage to progressively rebuild margins towards FY24 levels over a three to five year period. That concludes our presentation on the first half results. But before handing back to the moderator, I would like to acknowledge and thank our team. This last period has been a demanding period for the organisation. With the completion of the factory transition alongside continued delivery customers across all markets. That level of execution evidenced in the result today is a credit to the capability and professionalism of our people. I'm incredibly proud of the way our team has stepped up during this period of transition. On behalf of the board and the management team, I'd like to thank our global team for their effort and ongoing commitment to PWR. Thank you.

Thank you. If you would like to ask a question via the phone, you need to press the star key followed by the number one on your telephone keypad. If you would like to cancel, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. If you would like to ask a question via the webcast today, please type your question into the ask a question box and click submit. Your first question today comes from Alex Liu from Morgan's Financial. Please go ahead.

Hi. Morning, Matt. Morning, Sharon. I'm happy about it as well. Can I just start with motorsports revenue, please? So I know you've given some guidance there around the second half revenue growth, but historically you've had that skew to the second half. It looks like you had some pull forward of demand into the first half, particularly the second quarter. So should we still expect a second half skew this year, but maybe just not as big as previous years?

Yeah, Alex, I think you've interpreted that correctly. But yeah, definitely we saw effect of the new regulations, clearly in terms of opportunity, which is obviously reflected in the results, but also timing. Because of the scale of regulation change, a lot of the work was done a little earlier in regards to the releases of new season designs with all teams was brought forward and the testing of the new formula actually commenced in January whereas historically that testing would commence in February. So what you're seeing there is both an increase in the base going forward but also there is also influence in starting some of the new season work a little bit earlier which will change the shift between first and second half a little bit more than what we would have historically seen, but we still see a very strong result for the second half as well.

Okay. Thanks, Matt. And can I just clarify the one-off cost for FY26, please? So it looks like you had the 1.2 related to the factory location, the generator. the CEO transition. Was that 1.2 all in the first half and is there anything in the second half and also in FY27 that we should expect?

Alex, all in the first half, that's correct. $800 relating to the factory expenses and then the remainder for the CEO transition. No large one-offs expected in the second half besides calling out the CMAC is predominantly second half weighted.

Okay, so that 0.8, most of that is going to be second half for the CMMC.

About 75% in the second half for CMMC, that's right.

Okay, thanks. And just lastly, can you talk about that CapEx for increased capacity and extending capability into new materials? So, yeah, just interested on what types of new materials and what you're looking at and I guess for what applications they're for, please.

Yeah, sure, happy to talk to that. Matt will likely build on my comments. So we're really looking at other materials that we'll be able to use across the business. So whether that be in additive brazing, et cetera, we think there's real opportunity in that space. We do focus our R&D in terms of looking at new materials, et cetera. So this CapEx largely helps us progress that capacity.

Yeah, and Alexia, that is... really capitalising on new materials opportunities in key markets like aerospace and actual space applications, also some hydrogen. So in particular, investment in equipment and processes to expand on stainless steel and Inconel product, which is a key opportunity, particularly in the MRO space. We've commenced on that already but there is obviously future work. Okay, great. Thanks a lot, guys.

Thank you. Once again, if you would like to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question today comes from Sarah Mann from MA Morwellis Australia. Please go ahead.

Morning, Matt. Morning, Sharon. Thanks for taking my questions. My first question was just on the Aerospace and Defence pipeline. Just wondering if you could give us a bit more of a qualitative update on how the MRO opportunity is progressing, specifically, I guess, you know, how much contribution was in this half and how we should think about it in terms of the make-up of the pipeline?

Yeah, sure. We're not actually disclosing the percentage of contribution there from MRO, Needless to say, we are very pleased with the contribution that it has started to make to BWR's A&D pipeline and for sure it will be a significant driver of A&D growth going forward. It's not of the scale yet of our programs that we've announced for the US government But it's seen as a key opportunity for PWR because it's work that PWR can influence the speed at which we enter that market more so than we can the contract-based business of AMD. So at the moment, I would say it is a good contributor to AMD. and it will continue to build as we grow the opportunity with the existing customers and new customers as we continue to explore that market. We've attended several trade shows over the last 12 months that are specific to the MRO business, and we continue to... gain further optimism in BWR's opportunity to grow this business. So it's only a relatively new addition to the pipeline. Not long ago it was a very, very small acorn but it has grown to be a meaningful contributor to the results discussed today and we're quite buoyant with regards to its opportunities going forward. like everything that PWR does, we will always take a measured approach to our entry and the speed at which we take that up, ensuring that we're always seen as a high-quality supplier, always looking to deliver against customer expectations. So the opportunity is It's substantial but it will be responsible growth into that space to ensure that we maintain a strong reputation within that business and we set a foundation for that for the long term. So it is a good contributor to the result there today and the potential going forward is undoubtedly expected.

Excellent. No, thank you. And then on the defence side, I suppose, of AMD, like you've had really good success so far in the US, but it feels like the world's kind of spending more on defence, particularly in Europe and Asia. Just curious if your pipeline reflects this as well, or is the focus more just on the big opportunity that you have in the US at the moment?

Yeah, look, it's fair to say that the current pipeline is probably more reflective of US opportunities because that's where the business has initially focused its early attentions and certainly its relationship building with key primes. We are absolutely now starting to explore European opportunities. It's been several years behind, I guess, the majority of the commencement in the US. That probably also speaks to the strategic entry to market that PWR has always traditionally held, not wishing to find ourselves in a situation where we're over-promising against our ability to deliver. But for sure, there is shift in that space at the moment. There is greater interest within the European sector for them to be able to build more and be less reliant on the United States and that's certainly going to create further opportunities for PWR to grow our European AMD base as well.

Great. Thanks very much.

Thank you. Thank you. There are no further phone questions at this time. We'll now pause briefly before addressing any questions from the webcast. Thank you. Your first question from the webcast today is from Chris Savage. Chris asks, are employee expenses expected to rise in the second half relative to the first half?

Yes, as an absolute dollar, yes, wages will increase given we're seasonally stronger in the second half in terms of revenue. But we do expect it to reduce slightly the percentage of revenue to reflect the leverage we have in that space as revenue grows. In terms of growth on prior year, I will draw out that we did reduce headcount prior year significantly, so any modelling you do, please focus on the first half and build from there in terms of the 26 numbers.

Thank you. Your second question from the webcast today was also from Chris Savage. Chris asks, what capacity are you now operating at in the new Sapleton facility?

I would probably say in terms of the floor space, we're probably in the order of about 70% of the floor space now currently spoken for. Certainly with respect to constraints, it's now about people. The business has always been about people. with a strong history of investing in tremendous new technologies and that will continue. But the skill base of the people is always what has made the difference. They're capitalising on that technology investment. So I would say as far as the team is concerned at the moment, we're probably up around the 590s in terms of 100% utilization of our people. There is more expansion to come from investment in the team. But in terms of machinery and equipment, we would probably only be at 50% utilization the new facility, lots of opportunity to continue to flex on that.

Thank you. We do have some new phone questions. The first question from the phone comes from Evan Karatsis from UBS. Please go ahead.

Morning, Sharon. Just one for me. I'm taking your outlook comments for 26 for the Aerospace and Defence. It sort of implies like around that 36mm of revenues adding a good at least $10 million from last year. Is this a typical type or a minimum type of dollar revenue growth cadence we should be expecting for A&E? Just trying to get a better idea of how you're thinking about the growth cadence of aerospace and defence in FY27 and beyond. Thanks.

Yes, certainly our strongest growth area, we are conscious that we have been growing at 30% this year and last year. Note, though, growing on a higher base each year does get more challenging to keep those percentages up. So we're recognising the strong opportunity we've got in that space. It is dependent, as we said in the outlook, on when some of our pipeline converts, and we are conscious there's a lead time for that. So very happy with the growth rates we've been getting, expecting solid growth rates to continue in that space.

Okay, and then just remind us again around that lead time as well. So when you need to start, I guess, winning or announcing contracts that can help support the 27 and 28 type growth pipeline as well.

Sorry, when will we be announcing?

No, no, sorry, just around the lead time that's required for some of these A&D type contracts and projects.

That is a very difficult question to answer based around very program-specific requirements and obviously complexity of parts in supply. So, you know, it can be, in some instances, operating at motorsport-type lead times. But more typically, you would probably say that aerospace lead times are expected to

Okay, great. Thank you. I appreciate it.

Thank you. Once again, if you'd like to ask a question on the phone, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Kieran Harris from EMP. Please go ahead.

Hi, Matt. Hi, Sharon. Thanks for the question. I just wanted to unpack that comment you made before about your cost base and particularly the employees piece. So just to clarify, you said that we should expect that to increase in the second half. And I suppose just wanting to get a bit more colour and some comments around the overtime that you had to push through to meet those motorsport orders in the first half?

Sure. So as Matt pointed out, team constraints in terms of skilled team members is becoming more prevalent now. So we did use a fair bit of overtime in the first half. However, that was really offset by vacancies that we had as we were still seeking team members. So in terms of the second half, we're confident the percentage of revenue for wages does come down in the seasonally stronger second half. But where we will be increasing headcount would be in production roles to deliver stronger revenues in the second half. And also in areas that drive growth, such as our tech sales and engineers, managing a lot of programs, particularly in the AMD space, doesn't equate to revenue straight away. So we really need to, as we're getting more and more approved supplier status with people, make sure that we've got the team there to help manage that through to revenue realisation. So we'll be very moderate with our hip count increases, but seasonally second-half stronger revenues does mean an absolute higher wage dollar in the second half.

Okay, thanks for that. And just on the guidance comment for a modest MPAT margin improvement, appreciate you can't give us specifics, but Anything just to, I guess, help us understand the magnitude of that would be useful and whether that's been moderated, I suppose, since coming into the four year?

Thanks. Yeah, certainly no change to our comments six months ago. We are looking for margin expansion over the next three to five years that won't necessarily be linear. And the reason it's more subdued in the earlier phases is because To drive our revenue growth, we certainly need those growth driver investments such as in R&D and that headcount I spoke about earlier. So when we talk about modest NPAT margin improvement, we're referencing the FY25 underlying base of around 9.5%. So when we look at FY26, modest margin improvement, you are talking low single-digit modest margin improvement. We're very serious about investing where we need to, to make sure we can generate revenue growth through FY26 and FY27. And from there, the linear momentum in margin then starts to pick up as those revenues come into play. We certainly see strong operating margins flow through as we're outperforming on revenue. We do see that flow through the bottom line. So there's no change to our comments from last time. It's really around how that realises itself over the next few years.

Okay, thank you.

Thank you. We do have another question from the webcast. The question comes from Jeff Rogers. It reads, has there been any significant interest from the AI slash data centre market?

Yes, yeah, there is certain interest from that market. But what I would say to that is typical to our key opportunities in aerospace and motorsports It's typically around the areas where there are packaging concerns. You're looking for high performance, lightweight, low volume applications. So in instances where there are maybe mobile applications and the likes where packaging space is critical, that's where PWR's real skill set is required. Mass production of heat exchanges for data centres that don't have those, I'll say, technical limitations mean that sometimes relatively cheap and low cost and low technology solutions are able to be utilised to provide the thermal management. So undoubtedly opportunity. and PWR is engaged in that space but no different to – I'd probably liken it to automotive and our work with niche prestige manufacturers. The same would be very much true in this space where we don't seek to be producing millions of radiators for mainstream automotive. That's not our space. Our space is where there high technology and requirement for PWR's engineering expertise to deliver the solution. So it's an opportunity, but it needs to be considered scaled, as I say, probably likening it to automotive.

Thank you. There are no further questions at this time. I'll now hand back to Mr Bryson for any closing remarks.

Well, I'd like to thank everybody for your time this morning and certainly thank you for your interest in PWR, your interest in PWR both now and in the future. We're excited about our future and capitalising on the new foundations that we've built within our team and our operations. So thank you again for your time this morning. It's been a pleasure to... and yet we're looking forward to the direction of this business.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.