From the company, Chris will run through a brief talk on today's announcement, and then we invite Q&A following that. For analysts, if you wanted to raise your hand to ask a question, please do so, and you can ask a question audibly. Otherwise, type it in, and I'll do that at the end of the talk. Chris, I'll hand it over to you. Thanks for that.
Thanks, Simon. Thanks, everyone, for joining us here. Yeah, we're just following up on our market update that we put out this morning. Just wanted to run through that, put a bit of color on some areas, do the Q&A as we need to, and Simon will probably compare that or ask you questions directly. What we've found is our revenue's down from the original guidance to our new guidance. We're off probably to the tune of AUD 30 million. That rolls down into EBITDA. Our new EBITDA range is between AUD 50 million-AUD 53 million, which was AUD 52 million-AUD 56 million. What we're finding is AUD 30 million worth of revenue, which comes into two sectors, which I'll describe in effectively mining and defence.
What we're finding is that if we took that AUD 30 million revenue, put 10% EBITDA on it, that would have had us more at the AUD 55 million, and now we're aiming at about AUD 52 million. If we look at those two sectors and what's happened to us, yes, we have had a fair few things to the right. In the defence space, the estate works, there were a few jobs there we're anticipating more going into the first half of 2026. We're seeing that effect. That was through a couple of reasons. The estate work slowed up in February. We also had, in the caretaker mode of the government going into the election, caused some stalling. We don't see a fundamental problem whatsoever in that division, by the way, or that sector. We're actually seeing it as one of our strengths.
Despite the revenue dropping, it is still our number one strength. We've got Surf West Program, which is coming up as well, which is still on target. We're actually seeing the AUD 20 million that we felt we're short of in FY2025 being pushed and probably spread across FY2026. That's a summary of the defence sector. Into mining, there's a couple of things that played out there. There was a slight weather event that has occurred, that more occurred into April. Some of the work that we go back to start up in the iron ore sectors really has pushed right a little bit. Our May and June are very strong for mining, and that will roll into the start of FY2026 as well. We're also seeing a bit of an arrangement there with some of the big iron ore miners.
There is still a large amount of mining work to be done. These packages are getting bigger, but we're also seeing them shift more into a framework arrangement where they're trying to get the best value for money. The jobs are bigger. We're just working with them on things. The way I see that in the simple sense is if they're going to give out AUD 80 million worth of work instead of AUD 40 million, they just want to see what we can do in that space. We love to be involved in those conversations as we are. That is a little bit of a shift. We felt we were about AUD 10 million shorter where we wanted to be for FY2025, but again, into 2026, very comfortable. The other sectors, by the way, are going very good.
We have the energy sector has been very strong in the first half, very strong in the second half. Building and facades, very steady, consistent, and some growth there. The other sector's good. WPF and DDR are within as those business units are going extremely well as well. What we're very happy with, by the way, is the margins, the gross margins of all sectors, including the defence and mining, have held up. Effectively, our EBITDA as a % has held up as well. That's probably a quick summary of where we sit and how it looks into the future. We have looked, we understand where consensus sits from a market analyst perspective, and we're still very comfortable with FY2026.
Just get back to the business fundamentals have not changed, and we are very, we believe there's tailwinds in all of those sectors for all the reasons we've probably described there. That's a bit of a summary of our recent update, and pretty happy to take any questions from Simon or anyone in the audience.
Perfect. Thanks for that, Chris. I've just got Abe from Shoreline Partners. Abe, please go ahead.
Thanks, Simon. Hi, Chris. Just two quick questions to start off with. Firstly, I guess, how do we reconcile, I guess, activity being at record levels in DDR, any comments around defense being a bit weak given the caretaker mode the government has been placing spending in?
Yeah. DDR had the Project Phoenix awarded last year, I think it was, or a period ago that where it wasn't in effect. So they've had a very good job going through. They're in a different procurement pattern as well, being an Aboriginal business, so slightly different to where we are, but they did and had won a fair bit of work. Those that follow our story closely will know where Tyndall's coming to a close or has been finished. We're just handing that asset over. Kuna Warren's getting towards the end, but the biggest stuff ahead of us in the Surf West packages, CCO1 and CCO2, as we call them, that's imminent as well. We're probably just in that crossover there and got caught up in the caretaker mode plus a few of those projects being pushed into July.
Understood. I guess also looking at, I guess, your numbers in terms of your tenders and pipeline, how they've moved since February, there hasn't been much movement, I guess, in terms of tenders blowing up given the delays of tenders moving towards awards. Do you expect that delta to move towards the order book much more quickly given the new government has been sworn in, they've been re-elected? Should we expect the order book to rise quite dramatically over the next quarter?
Yeah, we'll jump into each sector for a little bit. Just prior to pointing that out, the tender section, which is AUD 1.7 billion, was AUD 1.6 billion, but one of the bigger projects in other, the Hawkesbury, we have removed that out, so circa AUD 200 million. We've actually replaced it with then some with other projects. There's a fair bit, despite that number only going up, the AUD 100 million that we see, there's a lot more going on behind the scenes. That's occurring. The wins that we expect, yep, we can break into sectors. The building facades, we've got a couple of reasonable sized jobs we're on the ECI for now. We would like them to come across. The big effect, obviously, CCO1 and CCO2, we do anticipate in July some defence jobs coming through as well. Those again follow the story.
Probably our AUD 400 million worth of work on hand has been up a bit, down a bit, but we expect that to do that and maybe up a bit in the next few months. Really, the significant jump's going to be in the second quarter of FY2026, more so than the first, but we still expect some good winds there and the overflow of the work. We expect FY2026 to start quite sharply in July, August. I think probably went through that. Hopefully, the order book will jump up with that when those awards occur.
Awesome. Just to round off with the can you put an update for the ECIs on Garden Island, Clementina, the waste facilities? I couldn't find much commentary in your statement.
Yeah, it's following a pretty good path, and we didn't focus in on that too much, but the timeline's there. So we've said second quarter, the award should be the second quarter of FY2026. Everything tells us is that still the case. We are thinking that they could do some early procurement because if they want to meet their timelines, their quite public timelines, then that sort of has to occur. That could actually have us having some revenue prior to signing the award. They're still outwardly saying they want those assets. One of them's an upgrade, one of them's a new asset. That's the two ECIs that we're working on now. They want them by the end of 2027 calendar. Again, if we're to meet those timelines, then this has to happen on that timeline I'm talking about, i.e., the award and the pre-procurement.
Just for those, if you're not aware, like in Perth, we hear this all the time, and they've got houses being built right now for those 2,000 mariners that are coming over for the rotational force. This is all happening, and the timeline hasn't shifted that we see from the defence or the, and obviously, there's some politicians that are around that as well. It is still a really good story, really good pathway.
Awesome. Thanks, Chris.
Thanks, Abe. Just quick, Gavin Allen at Euroz Hartleys. Gavin, please go ahead.
Thanks, Simon. Can you guys hear me? Apologies.
Yes.
Yeah. Yeah. Great. Just finishing that last one out, Chris. Just on the defence timing, so I get all that in terms of in order to meet end requirements, we've got to be awarded by 2Q, and that all makes perfect sense. Just given the delays that you've seen just in the last number of months, what are they physically telling you, defence? Is their messaging consistent with that idea of 2Q as well?
Is that in reference to those two particular projects?
Yeah. In terms of the award of them, I mean, one method by which we have confidence in awarding 2Q is just the timeline of when they've got to complete, but another method is sort of what conversations are you guys having with those guys that gives you confidence that they'll start then?
Yeah. We've got both ways too. Yeah, the public statements are there. Internally, we meet with, we have weekly meetings with, so you've got the designers, you've got the PMCA as well. You've got all these people. We meet weekly. Obviously, we've got deliverables inside there. Some of those deliverables are program pricing, constructability, all of those things. They get ticked off at 30%, 50%, 90%. We've done the 50% deliverables. All of this stuff behind the scenes, and you've got the ASC, the Australian Submarine Corps, they're all there as well. We're meeting. All this stuff is happening. People wouldn't know that, but that has to happen. There are heaps of stakeholders involved, and they're all fully in the detail. From our perspective, it's tracking along exactly as Perth. The public perspective, it is as well.
Yeah. Okay. Makes sense. Thanks, guys.
No worries. Thanks.
Perfect. Thanks, Gavin. Just a few submitted questions that will come through. Is there any repair work that will come from the weather events?
No, not really. The weather events for us, there are some minor things that do occur, like bridges and railway infrastructure. That is more another element for the major weather, but that is not something that we get a benefit of. In our industry of anything to do with steel, rain affects greatly. You can have cyclones and rain. This is probably getting into the detail. That is why we have a stronger effect than other businesses when rain occurs. That is it. There is no extra work that really comes out of it unless there is a flood and something happens with a bridge or something, then we can get involved from that element, but no.
Perfect. Thanks, Chris. In terms of medium-term growth, even margin outlook, should we be more conservative given your comments around miners taking better pricing, trading off maybe more dollar revenue?
Yeah. It's a mining-specific comment. The mining force is quite a strong margin. We're not going to walk into lower margins unless we get something out of it, and that's a bigger volume. It has to affect positively the bottom line if we're to go into that. Again, if our overhead remains stable and we can add an extra AUD 40 million of Rev at the right margin, gross margin that is, then we'll look at that opportunity. Yeah, that conversations will have a positive effect on EBITDA, maybe a slightly negative effect on the actual gross margin of the area. We will never do it to the detriment of the EBITDA % down the bottom line.
Perfect. Just a question around estate management works. Can you differentiate from Base Transformation Program that are currently being procured, both from an actual perspective via how are they different? Does the award timing of one have any influence on the timing of the other?
Probably just with defence style of work, you can get some EMOS, some local providing works out of some of the providers on site. You have then the Oracle Agility, which is more the estate works, and then you have the CFI works, we call them, which is direct to government. The direct to government is the bigger stuff, which is the ones that we do, which has been Oxley Wharf and these packages that are ahead of us now. The estate works are through Oracle Agility. They are the ones we are talking about at the moment. You have what we call the EMOS providers, which could be program maintenance and some of those ones that are embedded. That side of things we do not really get much out of anyway.
They're smaller bits and pieces that when you're on a base, the estate works is quite specific around repairs, how do you say, or refurbishment of some office blocks and buildings. That's the one that's probably had the most effect. The Base Transformation Program is kind of your venture downer, big billion dollar kind of spend, which we don't really have much exposure to. It's probably lower margin type work. We're focused on the estate works project, as Chris mentioned. With those projects, if you look at AusTender, there's right across the board, not just for Duratec, there hasn't been many projects awarded.
There is a lot of projects that we have had feedback on that we are in a good position or we are preferred, but those awards are going to be probably happening in that July-August period, whereas traditionally we would have seen them flow all the way from March, April, May right through. That obviously affected the ability to convert those or the, I suppose, defence's lack of ability to award and holding off awards until July has meant that we are pushing some of that revenue to the right.
Perfect. Thanks, Ollie. Just paraphrasing you here, I think EBITDA consensus for FY2026 was around 6.5, which you said you're comfortable with. Can you just clarify just around the EBITDA margin in 2026? Is it up or down?
The EBITDA margin?
Yeah.
Yeah. We're anticipating it to be up a bit. We're comfortable with what consensus has said, the AUD 60 million you mentioned. Yeah. We sit there and we look at all the work that we've got ahead. We still believe the work ahead is far better than the work behind in the sense some of that was one, two and a half years ago. This is a defence story effectively, and the work ahead's a bit better because it's ECI. We've got a guaranteed margin on top, and we're working with the client. We think our gross margin can come up a little bit, probably back to where it was within the defence sector. If we blend that up, we're going to be a better, more efficient business. That's why we think we can get the EBITDA % up.
The theory of it's there, just to get back to our fundamentals of this business have not changed. That's for us to roll out ahead of us and while we're comfortable with consensus.
Perfect. Just one final question. What's the size of the Surf West contract, which is expected to be awarded in Q2?
Yeah. The two of them together, and they are in parallel and about equal in progressing because they come with each other. The two of them together is over AUD 500 million, just over AUD 500 million. That's DEJV, so that's half of that towards us spread out over approximately a two-year time period.
Perfect. Thanks, Chris. Thanks, Ollie. That concludes the Q&A segment. Chris, I might just hand it back to you for closing remarks.
No worries. Yeah. Thanks for everyone for joining us on the update. Just wanted to reiterate the strength of the business, and we've gone through all the segments. We have some super strong segments. The defence and mining, as much as they're off a little bit as far as revenue goes, margins are still strong. The future looks bright. Order book's still good. The pipeline, the tender section of AUD 1.7 billion is very strong, and when we get them to convert, we're in a good place. Appreciate everyone that follows our story, sticking with us, and we'll look forward to delivering.
Perfect. Thanks, Chris. Thanks, Ollie. Thanks all for coming. Cheers.