Verbrec Accelerates Growth with 52% Revenue Rise and Strategic Acquisition

Transformational Year Boosts Scale and Capability

Verbrec Limited (ASX:VBC) marked a pivotal FY2026, posting a 52% surge in revenue to $118.5 million and a 179% jump in net profit to $10.4 million. This leap was underpinned by the December 2025 acquisition of Alliance Automation, a major player in industrial automation and cyber security, and the strategic divestment of its non-core Competency Training business.

The $5.5 million acquisition of Alliance Automation, funded entirely from cash reserves, added approximately $60 million in annualised revenue and expanded Verbrec’s footprint to around 700 employees across 18 locations in Australia and New Zealand. Alliance Automation’s integration broadened Verbrec’s service offering into operational technology (OT), digital transformation, machine learning, and artificial intelligence, positioning the group for deeper penetration in growth sectors such as water, mining, manufacturing, and Defence.

Meanwhile, the sale of Competency Training to RelyOn Australia for $11.5 million freed capital to fuel this expansion. The divestment yielded a gain of $6.8 million, strengthening Verbrec’s balance sheet and enabling a continued dividend program.

Financial Performance Highlights

On a continuing operations basis, Verbrec’s gross profit climbed 55% to $42.1 million, with gross margins improving modestly to 35.5%. Adjusted EBITDA rose 47% to $8.7 million, though the margin dipped slightly to 7.3% due to Alliance Automation’s lower margin profile. The company targets an 8%–10% EBITDA margin range as integration synergies take hold.

Statutory EBITDA, including discontinued operations and one-off gains, nearly doubled to $15.4 million. Net cash soared 421% to $11.7 million, providing financial flexibility for organic growth and potential bolt-on acquisitions. The board declared a fully franked final dividend of 0.15 cents per share, lifting total dividends for FY2026 to 0.25 cents, a 150% increase over FY2025.

Diversified Revenue Mix and Growing Pipeline

Verbrec’s revenue mix shifted materially post-acquisition. Energy remains the largest sector at 36%, but water surged to 21%, mining to 18%, and manufacturing increased to 6%. Defence and infrastructure accounted for 8% and 11%, respectively, reflecting a broader, less cyclical client base.

Long-term client relationships underpin approximately 61% of revenue, with panel agreements and multi-year operations and maintenance contracts representing around half of total revenue. This model enhances revenue visibility and reduces sales friction.

Work in hand at fiscal year-end reached $78 million, up 77%, while the opportunity pipeline more than doubled to $277 million, signaling robust demand and successful cross-selling of the expanded service suite. The trailing tender win rate held steady at 34%, indicating disciplined project selection amid growth.

Strategic Focus on Energy Security and Digital Transformation

Verbrec’s market outlook is shaped by Australia and New Zealand’s accelerating investments in energy security, water infrastructure, and digital resilience. The company is well positioned to capitalize on the gas market transition, electrification, energy storage, and critical infrastructure cyber security.

Notably, Verbrec secured a $21 million contract for the McArthur River Pipeline Bi-Directional Upgrade Project, enhancing Northern Territory’s gas supply security and supporting the Beetaloo Basin’s commercial gas development. The company also highlighted its growing role in data centre infrastructure and renewable energy projects.

Digital transformation remains a growth pillar, with Alliance Automation’s capabilities in OT cyber security, SCADA, and AI-enabled asset management complementing Verbrec’s engineering and operations services. This integrated lifecycle approach aims to boost margins and client retention.

Leadership and Governance Stability

Mark Read, appointed Managing Director in March 2026 after serving as CEO since 2023, continues to steer the group’s growth and integration strategy. The board, chaired by Phillip Campbell, maintains a focus on capital discipline, operational excellence, and strategic acquisitions to sustain momentum.

Verbrec’s strong safety culture was reaffirmed with a tenth consecutive year of zero lost-time injuries, underscoring operational discipline amid rapid expansion.

Outlook and Growth Priorities

Verbrec reaffirmed FY2027 guidance with revenue expected between $140 million and $160 million and adjusted EBITDA of $10 million to $12 million. The company aims to convert its sizable opportunity pipeline, improve combined group margins, and deepen multi-year client engagements.

Strategic acquisitions remain on the radar, with the balance sheet’s net cash position enabling opportunistic bolt-on deals that enhance capability or geographic reach. Verbrec’s integrated service offering across the asset lifecycle positions it to capture a growing share of Australia and New Zealand’s infrastructure spend, particularly in sectors aligned with energy transition and digitalisation.

As Verbrec scales, the challenge will be to maintain delivery discipline and margin improvement while embedding Alliance Automation’s operations and culture. The company’s ability to navigate this integration will be pivotal in translating its expanded platform into sustainable shareholder returns.