Emeco Holdings Launches 10% Share Buy-Back as FY26 Earnings Nudge Higher

Emeco Holdings (ASX: EHL) has delivered modest earnings growth and strong cash generation in FY26, while approving an on-market buy-back of up to 10% of its shares and positioning its strengthened balance sheet for further growth.

Revenue rose 1% to $792.8 million for the year ended 30 June, with operating EBIT up 2% to $148.0m and operating net profit after tax climbing 5% to $89.0m.

Adjusted operating free cash flow held steady at $114.5m, while net leverage fell from 0.65 times to 0.43 times and return on capital (ROC) increased 30 basis points to 16.9%.

The mining equipment rental and maintenance group expects FY27 earnings to remain in line with FY26, weighted to the second half as new projects lift surface and underground fleet utilisation ahead of a targeted step-up in FY28.

Maintenance Services Growth

Emeco’s revenue growth was driven by maintenance services—particularly on-site maintenance through the rental segment, which rose 44%, partly offset by lower second-half fleet utilisation caused by extended wet weather in Queensland and supply and cost disruptions affecting customer fleet redeployments.

Operating EBITDA declined 3% to $292.5m and its margin eased to 36.9%, reflecting a higher contribution from lower-capital maintenance services, while the EBIT margin edged up 10 basis points to 18.7%.

The core rental business lifted revenue 4% to $637.0m and EBIT 2% to $183.9m, despite gross average utilisation of 82% for surface equipment and 67% underground.

Force generated total revenue of $276.8m, up 1%, and lifted gross operating EBIT 6% to $29m as field service hours rose 37% and internal rebuild demand increased.

Stronger Balance Sheet

Operating free cash flow before adjustments reached $127.6m with cash conversion of 108%, while sustaining capital expenditure totalled $153.2m net of disposals and was matched closely to fleet utilisation and project requirements.

Net debt was cut by $67.8m to $127.1m, leaving Emeco with about $315m of liquidity including $125.4m in cash and $190m of undrawn revolving debt at 30 June.

The group refinanced with a $355m revolving syndicated debt and bank guarantee facility maturing in December 2030, extending its debt maturity profile and preserving capacity for investment.

“This financial year demonstrates that we have built a resilient, cash-generative business capable of delivering strong earnings—we have set up a solid platform for growth, and this is evidenced in the expansion of our maintenance service business,” chief executive officer Ian Testrow said.

“Our strong balance sheet provides flexibility to pursue growth opportunities including sector consolidation and to invest free cash in our share buy-back, delivering a high-return use of balance sheet capacity.”

Utilisation Driving Outlook

Emeco expects its new project pipeline to lift surface utilisation to about 90% and underground utilisation to about 80% by the end of FY27, with about 80% of rental revenue already locked in for the year.

Capital expenditure is forecast at about $155m to $165m net of asset disposals, with depreciation forecast at about $145m to $150m and enterprise resource planning spend around $5m.

The group expects the utilisation run rate to support earnings growth in FY28 consistent with its 20% ROC target, while it expands the maintenance service platform and pursues growth opportunities including sector consolidation.

Technology remains part of that strategy, with Emeco operating in-house telemetry across more than 200 machines and developing AI and machine learning tools for predictive maintenance, reliability analysis, and improved operational decision-making.