PWR Holdings Limited

Thank you for standing by and welcome to the PWR Limited FY26 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. And if you wish to ask a question via the webcast, please enter it into the ask a question box and click submit. I would now like to hand the conference over to Sharon Williams, CEO and Managing Director. Please go ahead.

Good morning. I'm Sharon Williams, CEO and Managing Director of PWR Holdings Limited, and I'm joined by Robert Shaw, Chief Financial Officer, who joined us in April. Today, we present PWR's full year results for the financial year 2026. Before we begin, I'd like to acknowledge the executive team for their leadership through a year of significant change. Our founder and managing director, Piers Wheel, moved into the chair role and Matthew Bryson stepped in as the acting CEO. while that transition happened. My thanks to Matthew in particular. That continuity of leadership supported the result that we are presenting today. I'll cover the group highlights and market segments. Rob will take you through the financials and I'll close on strategy and outlook. Turning to slide four, FY26 was a year of strong execution. We delivered on our strategic priorities and the momentum in the business is now delivering operating leverage. The group delivered record revenue of $171 million, up 31%, driven by significant growth in our two largest strategic growth markets, motorsports and AMD. Importantly, that revenue growth translated into a materially stronger earnings outcome. Statutory NPAT increased 83% to $17.9 million. An NPAT margin improved to 10.5%. At the FY25 results, We said we expected modest NPAT margin improvement in FY26. We have delivered three percentage points. At the same time we absorbed the cost of the new facility, increased research and development spend and added capability and capacity. This demonstrates early benefits of operating leverage as the investments we have made begin to scale. The first quarter saw constrained output as we commissioned new manufacturing assets and settled into our new location. We then gain momentum to finish the year with record revenue, a considerable achievement by our teams, and a clear demonstration of what the new capacity and capability can do together. Consistently strong cash conversion is a defining characteristic of this business, funding de-leveraging. This discipline provides flexibility to invest in growth and deliver returns to shareholders, with the full-year frank dividends of 8 cents doubled the prior year. Operationally, the Stapleton transition is complete, and it delivered record Australian revenue of approximately $106 million, which was not achievable at the former site. Pleasingly, there is a strong momentum in the forward order book. We enter FY27 with a record order book of more than $82 million, half of this within A&D, which gives us confidence in the medium-term growth pathway for that segment. With our current revenues less than 0.1% share of a large and growing market, we believe there is substantial growth runway, particularly in the US and European markets. We've previously flagged capital allocation towards the European A&D opportunity to help deliver that medium-term growth. We have now taken that step with a measured, phased investment in a fourth manufacturing location in Poland. It sits within our existing capex forecast and margin expansion profile and I'll come back to it on slide 20. After an exceptional year, motorsports has reset to a higher baseline. OEM is returning to growth and aftermarket has been repositioned towards higher value SKUs. I will take each of those in turn over the next three slides. Turning to slide five, which outlines our value creating strategy, against the tangible progress we delivered in FY26. Key progress includes increasing our investment in R&D by 17% above the prior year, A&D scaling, relocation of our headquarters, accreditations, progress on sustainability and investment in our people. The latter is of great importance as labour markets remain tight and access to skilled trades constrained across all three locations. Turning now to slide six in motorsports. The year was a record for the segment, with revenue increasing 45% to $102 million, representing approximately 60% of group revenue. More important than the record itself is that the business is now operating at a structurally higher baseline. Firstly, the investments made over recent years are translating into revenue. The completion of our new controlled manufacturing environment expansion of MMX and energy store cooling capability, and targeted investment in Europe have allowed us to convert demand into revenue more effectively than in previous cycles. And that capacity met genuine demand. We are seeing increased adoption of PWR's differentiated core constructions across motorsport categories, driven by the packaging and aerodynamic advantages they deliver for our customers. Secondly, the 2026 Formula One electrification and chassis changes created a significant opportunity as teams and power unit manufacturers continue to optimize performance under the new rules. Thirdly, our technology continues to extend beyond Formula One into other racing categories, and I'll come back to that later in the presentation. We're also seeing increasing demand for technical services as customers engage PWR much earlier in their development cycle, leveraging our CFD capability, simulation, testing, cleanliness validation and durability expertise. Strategically, motorsports remains critically important. It's our largest business today and our innovation engine where new technologies are developed. Turning to slide seven, NAMD, AMD delivered another record year, with revenue increasing 31% to $35 million, and now representing approximately 21% of group revenue. Importantly, we have opportunities across multiple programs and customers. We are starting FY27 with our strongest ever order book and multiple selection of tenders for multi-year defence contracts. I'll come to the order metrics on slide 23, but the foundations for a strong year ahead were built this year. FY26 was also a year in which new capability opened up a broader set of programs. Historically PWR's expertise has been strongest in aluminium based thermal management solutions. During FY26 we expanded our capabilities into higher temperature materials including Inconel, stainless steel and nickel. That is strategically important because high-temperature heat exchangers represent around 30% of the global heat exchanger market, a portion we previously could not address. It positions us for high-temperature, high-pressure applications such as aerospace turbine engine cooling. We also continued extending our proprietary MMX platform into new applications through the Moon to Mars Development Program, which completed during the year. This demonstrated that technologies originally developed for elite motorsport environments can be adapted for extreme aerospace applications. While still early stage, it highlights the broader applicability of our thermal management technologies across a growing range of high performance markets. On accreditation, these are not simply compliance milestones. They are prerequisites to participate in larger defence and aerospace programs. PWR North America is now officially CMMC 2.0 accredited, which reflects cyber maturity and drives increased business opportunities within US government defence supply chains. This combines with our NADCAP heat treatment and chemical processing in US and AS9100 and NADCAP in Australia. We were also proud to receive the Supplier Excellence Award from Northrop Grumman. Independent validation from a customer of that scale carries weight in this market. Turning now to OEM and aftermarket on slide A. Combined, these businesses contributed approximately 30 million of revenue during FY26, 18% of group revenue. Both segments remain strategically important and a source of diversification. Starting with OEM, FY26 revenue was 14.6 million and the FY27 growth outlook is positive. OEM is inherently program driven. and individual years are influenced by launches, product timing and customer development cycles. We continue to be highly selective and have been nominated on new customer platforms and two of those underpin the improving FY27 outlook. The Ford Mustang F650 is now in production and we have signed a new eight-year hypercar program expected to begin contributing from late FY27 or early FY28. Turning to aftermarket, revenue was broadly stable at $16 million, despite deliberate actions taken during the year to rationalise the catalogue toward higher volume vehicle opportunities and focus on high performance direct fit kits. More broadly, we reshaped the strategic direction toward brand awareness, product performance and manufacturability, freeing bespoke manufacturing capacity for higher margin opportunities elsewhere in the group. To summarise, OEM is rebuilding towards growth on new programs and aftermarket has traded revenue for margin quality and operational efficiency over short-term growth. I will now hand over to Rob to run through the financial performance in greater detail.

Thanks Sharon. I'll walk through the key elements of our financial performance starting on slide 10. The header captures the results. Strong volume and earnings momentum, continued funding for the investments that keep us ahead of the growth opportunity. Revenue of $170.7 million was up 31.2%, driven by higher volumes across motorsports and AMD. Raw materials increased in line with revenue and greater purchases of third-party components for the US government program. We did see some increase in costs associated with both US tariffs and the inflationary impact on our raw material costs, including fuel surcharges. We actively managed this through increasing production in our US facility and our pricing strategies. Employee expenses increased 19.6% against revenue growth of 31.2%, which reflects operating leverage on that higher headcount to support greater throughput, and also includes an increase in incentive provisions. Average headcount increased by circa 12%, reflecting the additional capacity and technical sales capability that the Formula 1 regulation changes and AMD program growth requires. Labour availability across some skill sets remains tight alongside wage inflation which was approximately 4% globally. Occupancy expenses in the year included higher outgoing costs for the new larger facility and make good costs on our old Queensland facility, our prior Queensland facility which was fully exited during FY26. That brings us to EBITDA of 40.7 million and a margin of 23.8% which was up 4.2 percentage points. This result includes $800,000 pre-tax of one-off factory costs relating to generator power and the relocation. Low EBITDA, we carried the high depreciation of right of use assets, leasehold improvements and equipment, as well as the finance charges on the debt that funded the new facility. NTAT for the year was $17.9 million, which was up 83.2%. with the NPAT margin improving 3 percentage points to 10.5%. Return on equity improves 7.1 percentage points to 16.8% as we leverage the high capacity to deliver a strong first year of our multi-year NPAT margin improvement strategy. As Sharon outlined, a final fully franked dividend of 5 cents per share has been declared and is payable in September 2026, which brings the full year dividend to 8 cents. At around 45% this is consistent with our proportional payout guide of between 40% and 60% of net profit after tax. Slide 11 breaks down revenue by market sector. Sharon has taken you through the drivers so I'll just cover the numbers and the phasing. Motorsports is the largest contributor to the bridge, up 45.4% on the prior year and the drivers are as Sharon described. The point I'd add is that the F1 regulatory change lifted content per car and that will continue into FY27. In February we guided to a strong but moderating second half growth and in the second half motorsports came in stronger than expected with additional development activity following early season testing and racing. In A&D we guided to a broadly even split and that's what we delivered. The major US government program shipments were weighted to the first half of FY26 with the second half growth driven from wider AMD opportunities including the maintenance, repair and overhaul opportunities. FY27 shipments have already commenced in July 2026 for the follow on US government order and so we expect that order to be weighted to the first half of FY27 as well. The MRO revenue grew 356% off a low base. While small in absolute terms, it's significant in terms of the repeatable revenue we expect from this opportunity over time. Our A&V business predominantly builds in USD and saw a headwind through the year with revenue up approximately 35.6% in constant currency against the 30.8% ported. The AMD order book finished the year at $40 million for delivery in FY27, and that supports our expectations that the FY26 revenue growth trajectory will continue through FY27. In OEM, we saw a slightly softer second half, reflecting completion of major programs and the timing of commencement on two newly secured programs. And in aftermarket, we guided to muted revenue while we reshaped the sales mix, and focused on higher volume and higher value skew opportunities. We expanded the aftermarket e-commerce platform into the UK, which supports continued growth in online sales. Moving to slide 12, we provide more detail around currency, given 86% of revenue is billed in foreign currency, predominantly sterling at 50%, US dollars at 32% and euro at 4%. Our absolute exposure has grown as revenue has scaled, Our US and UK manufacturing provides an offset where revenue and costs sit in the same currency. But growth in offshore revenue manufactured or partially manufactured in Australia carries Australian dollar costs against foreign currency revenue and so the natural hedges do not cover the full exposure. We have hedging in place for 17.3 million pounds sterling and 5 million US dollars to partially manage this residual exposure in FY27. In FY27, the unhedged FX impact was a $3.4 million revenue headwind, so revenue grew 34% in constant currency against 31% reported, predominantly due to worsening US dollar rates, which was particularly impactful to our A&D segment, which saw an unhedged headwind there of approximately $1.5 million. We expect currency to remain a headwind in FY27 and subject to significant volatility which our foreign operations and our hedging policy aims to mitigate. Looking at the balance sheet on slide 13, we have a strong balance sheet with minimal net debt at $5.6 million following rapidly leveraging in the second half. Our gross debt reached the second quarter peak of around $28 million and was reduced to $12.8 million at the year end. Gearing is 4.7% and we had unused borrowing capacity of around $30 million at 30 June which provides plenty of flexibility to execute our growth strategy. Receivables remain carefully managed. 97% of debtors are within terms. An inventory increase with higher volumes and a strategic decision to hold greater raw materials given global supply chain uncertainties. P&E reflects investment in global capacity and capability and is in line with our expectations. Slide 14 shows working capital was flat. despite 31% revenue growth and operating cash conversion on EBITDA was strong at 104.9% for the year. Pleasingly, free cash flow returned to positive $10.6 million which is a $25.6 million turnaround on FY25 as capex normalised following completion of the Australian factory relocation. Moving to slide 15. and looking at CAPEX in more detail, total grid CAPEX was a net $22.7 million, against the peak $40.6 million in the prior year. Looking at the split of CAPEX, the majority of that spend was growth-related, with $7.6 million to complete the stapleton upgrade, $14.7 million was further growth CAPEX, particularly to expand AMD capabilities into new materials and technology, alongside more general CAPEX to expand capacity. Only $400,000 was for placement and stay in business capex. FY27 capex is expected to normalise to approximately $14-16 million including investment in offshore facilities and our initial investment on the new Poland facility. The lower table sets out the Australian relocation and the step change in lease expenses. Whilst the relocation cost is a one-off, the right of use, depreciation and occupancy expenses are ongoing from FY26. and naturally net debt costs will be expected to fall in FY27 as the drawn portion of our debt facility is repaid. On slide 16 we set out how we apply a disciplined approach to capital allocation which balances investment with shareholder returns. The hierarchy runs from protecting the business through high return growth opportunities, innovation and research and development expenditure, maintaining a conservative balance sheet and then returning surplus capital. Organic investment remains our preferred use of capital, deployed where expected returns exceed our internal hurdle rates, and our dividend policy of 40% to 60% NPAT sits within that framework. Sharon will now talk through the strategy and the outlook for the group.