Financial Data and Key Metrics Changes - For FY 2025, underlying NPAT A was $279 million, a 33% increase from FY 2024, while statutory NPAT rose 82% to $149 million [5] - Underlying EBITDA increased by 25% to $474 million, with a cash conversion rate of 98% [5][22] - Pro forma revenue declined by 2.5% to $10.6 billion, reflecting a focus on revenue quality and selective tendering [18][22] - The net debt to EBITDA ratio improved to 0.9 times, down from 1.4 times in FY 2024 [5][22] Business Line Data and Key Metrics Changes - Transport segment earnings increased by 11.1% to $278 million, with an EBITDA margin of 5.2% [8] - Energy and Utilities segment earnings rose by 43.9% to $122 million, despite a revenue decrease of 7.7% to $3 billion [11] - Facilities segment revenue remained stable at $2.2 billion, with earnings increasing to $151 million and a 7% EBITDA margin [13] Market Data and Key Metrics Changes - Government funding allocated increased by almost 6% in 2025, supporting infrastructure projects [3] - The energy sector is experiencing growth driven by decarbonization and government policies promoting energy investment [12] - The Australian transport agency spend is expected to remain subdued in the short term, while New Zealand's infrastructure programs are anticipated to support demand [35][36] Company Strategy and Development Direction - The company is focused on a portfolio simplification strategy to enhance revenue quality and reduce volatility [4][7] - Future growth will be driven by organic growth within existing core markets, with selective consideration of bolt-on acquisitions [31][34] - The company aims to modernize work practices and invest in technology to improve productivity and customer experience [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 4.5% average EBITDA margin target for FY 2026, emphasizing the importance of quality revenue [42] - The outlook for FY 2026 includes expectations of flat to slightly lower underlying revenue, with a focus on maintaining margin improvements [37] - Management noted that while short-term revenue may be subdued, medium-term opportunities remain strong [41][50] Other Important Information - The company announced an on-market share buyback of up to $230 million and increased its dividend payout ratio to 60%-70% of underlying NPATA [33][32] - Safety metrics improved, with a 20% reduction in injury frequency rates [16] Q&A Session Summary Question: Can you elaborate on the flat to down revenue guidance for next year? - Management highlighted the focus on quality revenue and selective opportunities, acknowledging subdued volumes in road services and the runoff of certain contracts [39][40] Question: What is the confidence level for achieving greater than 4.5% average margin? - Management expressed confidence in achieving the margin target, citing progress in price, cost, and productivity improvements [42] Question: Will there be a cleaner year in terms of significant items next year? - Management indicated that while some legal matters may continue, the nature of significant items is expected to decrease [45][46] Question: What are the expectations for road activity in Australia? - Management noted that road maintenance needs to increase, and while volumes are currently down, there are early signs of improvement [50][51] Question: How does the $4.5 billion in preferred business status influence revenue guidance? - Management confirmed that these contracts are typically long-term and will be factored into revenue expectations [60][64] Question: What portion of FY 2026 revenue guidance is already secured? - Management indicated that typically, about 75% of revenue would be secured at this stage of the year [72] Question: What earnings benefit is expected from the cost-out program in 2026? - Management expects a significant portion of the cost savings to contribute to FY 2026 results, with ongoing cost pressures to be addressed [75][76] Question: Will there be any net cash impact from divestment activity in 2026? - Management anticipates proceeds from the sale of Keolis Downer to impact cash flow in FY 2026 [77][79] Question: What types of M&A are being considered? - Management is focused on complementary bolt-on acquisitions that enhance existing capabilities, particularly in transport and energy [80][81]

Financial Data and Key Metrics Changes - For Q1 2025, the company recorded revenue of $132.4 million and a net loss attributable to common stockholders of $200.3 million, which is expected to improve significantly upon closing the remainder of the multi-tenant portfolio sale [19][20] - The gross outstanding debt balance was $3.9 billion at the end of Q1 2025, down by $1.3 billion from the end of Q1 2024 [20] - The net debt to adjusted EBITDA ratio was 6.7 times at the end of Q1 2025, improved from 8.4 times at the end of Q1 2024 [21] Business Line Data and Key Metrics Changes - The company achieved a milestone with the signing of a definitive agreement for the sale of its multi-tenant portfolio, generating $1.1 billion in gross proceeds from the first phase, which included 59 unencumbered properties [8] - The portfolio's occupancy stood at 95% at the end of Q1 2025, with a weighted average remaining lease term of 6.3 years [12] - Following the departure of Contractor Steel, the company sold five vacant properties for a combined $60 million, which helped minimize vacancy downtime [13] Market Data and Key Metrics Changes - Geographically, 76% of straight-line rent is earned in North America and 24% in Europe, providing diversification across economic cycles [15] - The portfolio features a stable tenant base, with 60% of tenants receiving an investment grade or implied investment grade rating [15] Company Strategy and Development Direction - The company is focused on reducing leverage and enhancing financial flexibility, with a goal of achieving an investment grade credit rating [5][9] - A $300 million share repurchase program was approved, with 7.9 million shares repurchased at a weighted average price of $7.5, reflecting a strategic approach to capitalize on undervalued stock [11] - The company is strategically scaling back its exposure to the gas and convenience store sector, reallocating capital toward higher growth sectors [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market volatility and highlighted the importance of a strong balance sheet for future growth [5][24] - The company reaffirmed its AFFO per share guidance range of $0.90 to $0.96 for 2025, indicating a positive outlook despite current market conditions [23] Other Important Information - The company has a closed plus disposition pipeline totaling $2.1 billion, with total asset sales expected to reach nearly $3 billion by the end of 2025 [9][10] - The weighted average interest rate on debt stood at 4.4%, with an interest coverage ratio of 2.5 times [20] Q&A Session Summary Question: Can you break down the remaining $300 million in the disposition pipeline by sector or geography? - Management indicated that the remaining pipeline consists of non-core dispositions identified since the end of 2024, continuing the deleveraging strategy [29][30] Question: How will market volatility impact asset sales and pricing? - Management believes there will still be opportunities to sell assets, leveraging relationships with local brokers to navigate the market [31][32] Question: Is the 12% AFFO yield the hurdle rate for future buybacks? - Management expressed satisfaction with the current buyback execution and indicated that they will continue to monitor AFFO accretion for future buybacks [33][34] Question: What is the capital allocation strategy regarding share buybacks versus debt repayment? - Management emphasized a focus on reducing leverage and opportunistic share buybacks, while also maintaining a disciplined approach to capital allocation [40][41] Question: Can you share insights on credit rating upgrades and potential savings? - Management noted that conversations with credit agencies are confidential but acknowledged the positive credit watch status and the long-term goal of accessing investment grade debt opportunities [46][47] Question: What types of dispositions are being targeted moving forward? - Management mentioned looking at retail opportunities and continuing to evaluate the portfolio for potential sales, particularly in the gas and convenience store sector [49][50] Question: Did Contractor Steel pay any rent in Q1? - Management confirmed that Contractor Steel did not pay any rent in Q1 [78] Question: How should investors think about the run rate for AFFO in the back half of the year? - Management explained that the income statement already accounts for discontinued operations related to the multi-tenant portfolio, and they expect a decrease in G&A expenses due to the sale [82] Question: Are there more vacant assets available for future proceeds? - Management indicated that after the completion of the multi-tenant sale, the portfolio would be nearly 98% occupied, suggesting limited future vacant asset sales [86]