SKS Technologies Group (ASX:SKS) reported a strong first-half FY2026 result, with management highlighting broad-based gains across revenue, profitability, and cash generation, supported by continued momentum in data centers alongside growth in traditional end markets.
First-half financial performance
Management said revenue for the first half of FY2026 totaled AUD 132 million, representing 13.6% growth versus the prior corresponding period. Profitability increased at a faster rate, with EBITDA up 42.9% to AUD 14 million and profit before tax (PBT) up 52.8%. The company cited a 9.7% PBT result for the half and said it was on track for its full-year guidance of AUD 340 million in revenue and a 10% profit before tax margin.
Cost mix and operating leverage
Executives explained that the cost mix shifted versus prior periods due to project staging. Raw materials declined as a percentage of sales, which management attributed to the business being in the engineering and design phase on the MEL02 STACK job with Hickory and nearing completion on AirTrunk projects—both of which had lower material spend during the half given where they sat in their respective life cycles.
Management said that when raw materials and employee expenses are combined, the increase was 10.4%, below the 13.6% sales increase, supporting margin expansion. Other overhead categories such as occupancy, administration, and depreciation increased more in line with what management described as expected full-year revenue growth “somewhere around about 30%.” The company also stated it believes its fixed cost base can handle revenues of around AUD 400 million.
Cash flow, balance sheet, and dividend
The company reported stronger cash conversion in the half. Cash flow from operations rose 47% year over year to AUD 27.8 million from AUD 18.9 million. That performance contributed to a significantly higher cash balance, with cash on hand of AUD 51.7 million at the end of the December half, compared with AUD 19.6 million a year earlier.
Management also highlighted improved working capital, which it said moved from AUD 18.3 million to AUD 9.85 million. Unearned revenue/contract liabilities declined from AUD 45.6 million to AUD 39.9 million, which executives described as reflecting project mix—being in earlier phases on one project and later phases on another.
The company said it has AUD 32 million in bank facilities and has relinquished its bank overdraft given it no longer requires it, pointing to the cash position as the primary reason.
Reflecting the first-half performance, SKS declared an interim dividend of AUD 0.035, up from the AUD 0.01 interim dividend paid in the first half of FY2025.
Sector mix, project activity, and acquisitions
Management reiterated the importance of growing traditional market sectors even as data centers become a larger portion of the business due to the scale of activity in that segment. It reported “a little over 14%” growth and said the first-half split between data center revenue and traditional revenue was “quite even,” though it expects data center revenue to rise as a share in the second half.
On strategy, executives said the company’s approach has not materially changed over the past two to three years. Key priorities include recruiting and onboarding to support rapid growth, maintaining discipline over the cost base so margins improve with scale, continuing to invest in operating platforms, and sustaining a rigorous safety culture. The company said it remains opportunistic on acquisitions but is not actively pursuing deals given organic growth prospects.
Management provided an update on the Delta-Elcom acquisition, which it said settled on 12 January. Delta-Elcom was described as a Sydney-based specialist electrical solutions provider focused on data centers and digital infrastructure as well as health projects. The company said the integration has gone well, with 100% of Delta-Elcom employees transitioning into SKS, and that the business has adopted the SKS Technologies brand “from day one.” Management also said the acquisition expands the group to nine sites nationally and strengthens exposure to New South Wales, which it described as the largest data center market in Australia, while noting Melbourne is currently growing faster. Executives said Sydney and Melbourne together represent roughly 70% to 80% of the Australian data center market.
Work in hand, pipeline, safety, and FY2026 outlook
SKS reported AUD 325 million of work in hand, up AUD 125 million from 30 June 2025. Management emphasized that the full-year revenue forecast implies a “much bigger” second half than the first half, and said the work-in-hand position supports that expectation.
Looking further out, the company reported AUD 177 million of work in hand attributed to FY2027. Management noted that at its late-November update it had cited AUD 150 million for FY2027, and said additional contract wins helped lift the figure, with some work expected to carry into FY2027. Repeat business was cited at 91%. By sector, management said data centers account for close to 85% of the work-in-hand order book, reflecting the scale of that market.
Pipeline activity also increased. The company reported AUD 572 million of open tenders and said it has seen a strong increase in tender activity since November 2025. Management characterized the pipeline as “real opportunities” and “real proposals” that the company is actively working to convert.
The company also highlighted progress at SKS Indigenous Technologies, an initiative launched a little over three years ago. Management reported work on hand in excess of AUD 13 million and first-half revenue “just short of AUD 13 million.” It also cited a 90% employee retention rate for its Indigenous workforce of approximately 40 people.
On operations, management referenced major projects completed during the first half, including work at the MEL01-B campus at STACK Infrastructure, progress on upgrades supporting ADF operations at Mount Bundy in the Northern Territory, and the Geelong Convention and Events Center, described as in final stages of handover.
Safety performance was another focus, with the company reporting zero lost time injuries across nearly 608,000 work hours in the first half, while productive work hours rose 14.2% from the prior corresponding period. Management said it expects productive hours to increase further in the second half as hiring continues to support higher activity levels.
In its outlook, SKS said it continues to see strong demand across all market sectors, underpinned by accelerating growth in data centers. Management reaffirmed its FY2026 forecast of AUD 340 million in revenue at a 10% profit before tax margin, stating it is confident in achieving the guidance.
About SKS Technologies Group (ASX:SKS)
SKS Technologies Group Limited engages in the design, supply, and installation of audio visual, electrical, and communication products and services primarily in Australia. It offers audiovisual and IT solutions, including audiovisual integration, automated audiovisual systems, digital signage, video conferencing, TP over IP networks, room control systems, medical imaging solutions, multi-screen control room, large screens and stadiums, hi-tech intuitive corporate boardrooms and training rooms, display and projector systems, interactive whiteboards, touch panel control systems, specialist controlled lighting systems, public address systems, and video and audio conferencing solutions, as well as maintenance and support services for architects, builders, and consultants.
