The Environmental Group (ASX:EGL) reported higher revenue and earnings for the first half, with CEO Jason Dixon describing the period as “reasonably difficult from an operational point of view” due to major internal projects running in parallel with day-to-day delivery.
For the half, Dixon said revenue rose about 9% to AUD 58.9 million, while EBITDA increased 26% to AUD 4.9 million. He also highlighted that 54% of revenue is now recurring, which he said improves cash flow consistency and business predictability. The company recorded 205,000 hours worked without a lost time injury (LTI), which Dixon cited as a key internal KPI.
Operational changes: ERP overhaul and multiple relocations
The company also undertook extensive site relocations tied to a “one EGL” operating model. Dixon said the group moved seven different premises during the half, which he described as an “enormous undertaking” that can interrupt operations, but which supports cross-selling and improved coordination. Western Australia was also relocated because the business had grown out of the existing facility.
CFO Gareth Nicholls said relocation expenditure was “predominantly” completed in the first half, while ERP-related costs will continue for “the next two months” as the company completes final implementation phases and resolves minor issues. Management also attributed a rise in “other expenses” to the ERP project and site consolidation.
Segment performance: Energy leads, timing impacts Baltec
Dixon called the Energy segment the standout performer, with energy revenue up 39.8% to AUD 34.1 million and EBITDA up 32.6%. He said the growth came despite the relocation of five energy sites during the half. Dixon noted that within EGL Energy, the business is heavily recurring: 69% of segment revenue is recurring, supported by legislated service requirements for boilers over two megawatts (inspections every five weeks).
He also highlighted progress from Advanced Boilers, which supports manufacturing and fabrication across the group, including building PFAS plants and supplying control panels. Dixon said the internal manufacturing capability reduces reliance on third-party suppliers.
For Baltec, Dixon said first-half revenue and EBITDA were down due to project timing rather than demand. He explained that Baltec typically executes about 12 higher-value projects annually, and revenue recognition is driven by percentage of completion. Engineering is completed first, with a larger share of costs (and therefore revenue) booked during fabrication. Dixon said engineering had been completed on several projects secured from September to December, and four projects were moving into fabrication in the second half. He also referenced a previously announced project of about AUD 11 million that had begun fabrication.
Dixon said industry conditions for Baltec remain strong, citing turbine demand linked to data centers and AI, with visibility extending to 2030 and a high volume of RFQs. He also discussed completion of the Pelican Point project during the period, which included an installation component handled on a cost-plus basis to limit risk. Dixon said the job finished two days early and slightly under budget.
Clean Air: signs of market improvement and a lithium-related engineering order
Dixon said Clean Air began to see improved market conditions later in the half and that the company consolidated sites and implemented business changes to prepare for growth. He said the company received an engineering order for a new lithium plant port, described as the first in three years following the lithium price downturn. Dixon said part-one engineering has been agreed, with a full supply agreement expected to be awarded in coming months.
He said both Airtight and TAPC won significant work in recent months and should deliver a “much, much improved” second half in FY 2026. Dixon also reiterated that dry fogging systems—added as a new product via an agency arrangement—have been successful, noting that every trial completed has resulted in a sale.
Waste and PFAS: growing revenue, new capabilities, and recurring potential
The Waste Services segment continued to scale, with Dixon reporting AUD 2.3 million in revenue and stating the business was up from AUD 600,000 in the prior corresponding period. He said the business “made about AUD 750,000.” Nicholls added that first-half Waste revenue was “slightly stronger from the water side,” and said recurring revenue in Waste (including spares and supplies) was “slightly higher than 50%,” at “just over 60%.”
Dixon outlined several PFAS-related developments:
- An on-site PFAS testing device that can deliver results within an hour, eliminating delays from sending samples to external labs.
- Commissioning of a large PFAS plant installed on a soil wash facility, described as the first of its type in Australia.
- Acquisition of a “state-of-the-art vessel” installed at Victoria University that allows testing of biosolids, organics, soils, and waste streams in a way that simulates full-scale plant outcomes, with scalability options.
Management said demand dynamics shifted after the release of NEMP 3 and related changes, with Dixon describing a move from early-stage discussions to more serious customer engagement. Chief Commercial Officer Paul Gaskett said adoption is being driven both by proactive customers and regulation-related pressures, and pointed to water utility companies pushing to stop PFAS entering sewer networks, including via trade waste licensing requirements.
On sales progress, Dixon said three PFAS plants have been sold and delivered, with one currently generating recurring revenue. He said another large plant was nearing commissioning and metering would begin once commissioned, with additional installations expected during the second half, including a project in New Zealand that Gaskett said was not in the first half but would begin in the second.
Outlook: guidance maintained, second-half seasonality and project mix
Dixon said guidance was maintained, with the company expecting 15%–20% normalized earnings growth in FY 2025. He also provided several reasons the business typically produces a stronger second half, including Energy seasonality as cooler months drive higher boiler utilization and improved labor recovery, and the shift of Baltec projects into fabrication where a larger portion of revenue is recognized.
Management reiterated a longer-term goal of increasing recurring revenue to 70% of group revenue, up from 54% in the first half. Dixon said continued equipment installations (such as boilers and PFAS systems) support that trajectory by adding future service and maintenance streams.
On other topics, Dixon said headcount increased over the year (he estimated from about 225 to about 280), and he said there were no acquisitions currently underway. He also said the company has no current strategy tied to 374Water in the U.S., stating that the technology has not, in the company’s view, proven an economically viable model.
About The Environmental Group (ASX:EGL)
The Environmental Group Limited engages in the design, application, and servicing of gas and vapor emission control systems, and inlet and exhaust systems for gas turbines in Australia and internationally. Its products include gas turbine inlet filtration systems (filter houses), inlet cooling/fogging systems, acoustical components, expansion joints, and complete exhaust systems with guillotine and diverter dampers; and a range of air pollution control equipment and services for the removal of pollutants from industrial gas and air streams.
