EVZ has started FY27 with an $80 million contract backlog, $17.7 million in cash and no drawn loan debt, while Brockman Engineering positions itself for Australia’s proposed fuel-storage expansion. The quarter also brought progress across defence, desalination, power services and potential acquisitions, although several growth opportunities remain prospective.
- $32.5 million in quarterly customer receipts, up 12% on the previous quarter
- $0.4 million net operating cash outflow after materials purchases for new contracts
- $17.7 million cash balance and no drawn loan debt at 30 September
- Brockman targeting a role in the Fuel Security Reserve program, estimated at more than $1 billion
- Two defence projects carry a combined value of about $25 million
Cash conversion remains the immediate test
EVZ Limited (ASX:EVZ) has entered FY27 with a sizeable order book and a balance sheet that leaves room for expansion, but the September quarter still consumed cash. The engineering and infrastructure group reported a net operating cash outflow of A$0.4 million, alongside A$32.5 million in customer receipts, which were 12% higher than the previous quarter.
EVZ said the outflow mainly reflected working capital committed to materials for new Brockman Engineering contracts and would be recovered as those projects progress. It described underlying trading as comparable with the previous quarter, citing margin expansion and disciplined working capital management. The filing does not provide earnings guidance, so the next evidence investors receive on performance will come through the conversion of the A$80 million backlog and the group’s cash generation.
Brockman targets fuel-storage expansion
The most substantial prospective opportunity sits with Brockman Engineering, which is supporting industry participants preparing submissions to the Federal Government’s Australia’s Fuel Security Reserve program. Industry submissions were lodged on 15 September, with the implementation phase expected to begin in the fourth quarter of FY27.
The program is designed to increase Australia’s long-term onshore hydrocarbon fuel storage. EVZ estimates the related design and construction program could be worth more than A$1 billion, while Brockman brings specialist experience in bulk fuel storage tanks and distribution assets. That places the business in a potentially useful position, but the filing describes an opportunity pipeline rather than awarded work. Brockman is currently assisting with technical analysis, budgets and financial modelling for industry responses to the government’s A$14.8 billion funding package.
Defence and water projects add contracted work
Brockman is delivering two defence projects with partners, with a combined contract value of about A$25 million. At Woomera in South Australia, design and construction of a water-storage tank for the RAAF base and township is under way. At RAAF Base Learmonth in Western Australia, two jet-fuel storage tanks are at the initial design and procurement stage.
The business has also completed the major tank works for Rio Tinto’s Coastal Water Supply Sustaining Project at the Dampier Seawater Desalination Plant in Western Australia. Stages one and two have a total contract value of about A$46 million, covering eight process-water tanks. Once fully operational, the plant is expected to supply 8GL of desalinated water each year to the West Pilbara Water Supply Scheme and reduce reliance on regional aquifers.
Diversification broadens the revenue base
Beyond Brockman, TSF Power reported continued demand across engine servicing, spare parts, renewals, rebuilds and standby-power maintenance. The business is also working with industry partners on proposals for gas-fired generation at new data centres in eastern Australia, although the filing does not disclose whether any proposal has been awarded.
EVZ’s building-products operations are supplying another leg of the group’s expansion. Syfon Systems reported resilient demand and a substantial contracted backlog, while Syfon Systems Asia cited improving infrastructure investment in Malaysia, Indonesia and Vietnam. Tank Industries said major process-water storage projects, including work for Stack Infrastructure’s data centre in Melbourne’s western suburbs, had materially increased revenue and were expected to support momentum through FY27.
Balance sheet leaves acquisition capacity
EVZ finished the quarter with A$17.664 million in cash and no drawn loan facilities. Its disclosed financing arrangements total A$15.5 million, of which A$8.17 million was drawn, largely through bank guarantees and a A$0.5 million credit standby arrangement; A$7.33 million remained available. The facility structure follows the HSBC banking facility upgrade, which increased committed facilities and shifted the group’s banking arrangements from Commonwealth Bank.
That liquidity supports management’s stated interest in acquisitions that complement EVZ’s capabilities, and the company said several opportunities had progressed during the quarter. No transaction has been agreed, however. The practical question is whether EVZ can turn its backlog, prospective government-linked work and acquisition pipeline into stronger operating cash flow without allowing working-capital demands to outrun contract progress.
Bottom Line?
EVZ has the cash and backlog to pursue growth, but the next meaningful proof point is conversion: awarded Fuel Security Reserve work, delivered defence projects and sustained cash generation.
Questions in the middle?
- When will the Fuel Security Reserve process produce identifiable contracts for Brockman, rather than tender-stage opportunities?
- How quickly will materials spending on new contracts convert into customer receipts and operating cash flow?
- Can EVZ complete an acquisition that adds earnings without diluting the group’s balance-sheet flexibility?