Service Stream Delivers Robust FY25 Growth with $4.2bn Contract Wins
Service Stream Limited reported solid FY25 results highlighted by double-digit profit growth, a strengthened balance sheet, and a significant increase in contracted works, setting the stage for continued momentum in FY26.
- Revenue rises modestly to $2.42 billion
- EBITDA from operations up 13.1%, NPAT-A surges 36.7%
- Net cash position strengthens to $73.6 million
- Contracted works exceed $4.2 billion, up 40%
- Final dividend increased 22.2% to 5.5 cents per share
Strong Financial Performance Amid Infrastructure Demand
Service Stream Limited (ASX, SSM), a key player in Australia's essential network services sector, has unveiled its FY25 financial results, showcasing a year of steady revenue growth and impressive profitability gains. The company reported total revenue of $2.42 billion, a 1.2% increase over the previous year, supported by the successful completion of a major telecommunications upgrade and the commencement of new contracts.
More notably, Service Stream's EBITDA from operations climbed 13.1% to $146.1 million, while its net profit after tax (adjusted) surged 36.7% to $68.5 million. These results reflect not only operational efficiencies but also the company's ability to enhance margins, with the EBITDA-A margin improving by 60 basis points to 6.0%.
Robust Contract Wins and Work-in-Hand Pipeline
The company’s growth story is underpinned by a substantial increase in contracted works, which rose 40% year-on-year to over $4.2 billion. This has bolstered the work-in-hand pipeline to a record $7.6 billion, excluding contract extension options. Such a strong backlog provides a solid foundation for revenue visibility and operational planning into FY26 and beyond.
Service Stream’s Managing Director, Leigh Mackender, highlighted the strategic execution behind these results, emphasizing the company’s scalable platform and the ongoing demand for critical infrastructure maintenance and upgrades. The firm’s ability to secure annuity-style operations has also helped reduce labour turnover and mitigate resource challenges, a notable achievement in the current market environment.
Cash Flow Strength and Capital Management
Cash generation remained a highlight, with operating cash flow before interest and tax (OCFBIT) increasing 13.5% to $148.9 million. Impressively, the company achieved an EBITDA-A to OCFBIT conversion rate exceeding 100%, underscoring strong cash discipline. This robust cash flow has further enhanced Service Stream’s balance sheet, lifting net cash to $73.6 million despite increased dividend payments and investments in growth initiatives.
Safety and Shareholder Returns
Service Stream also reported significant improvements in safety metrics, including a 24% reduction in total recordable injuries and a 28% decrease in lost time injuries, reflecting its commitment to workforce wellbeing. On the shareholder front, the company declared a fully franked final dividend of 3.0 cents per share, bringing the full-year dividend to 5.5 cents, a 22.2% increase from FY24.
Outlook, Confident Growth Ahead
Looking forward, Service Stream is well positioned with approximately 85% of FY26 revenue already secured. The company anticipates further earnings growth, driven by a robust order book and sustained infrastructure investment across its markets. Chairman Brett Gallagher expressed confidence in the company’s ability to capitalize on emerging opportunities, signaling a positive trajectory for the year ahead.
Bottom Line?
Service Stream’s FY25 momentum and record contract wins set a confident tone for sustained growth in FY26.
Questions in the middle?
- How will Service Stream manage potential margin pressures amid rising input costs?
- What impact will new infrastructure policies have on contract opportunities?
- Can the company maintain its strong cash conversion amid expanding operations?
