EGL delivers $112M revenue and meets revised FY26 guidance as recurring income tops 55%
In its FY26 Financial Results Presentation delivered in August 2026, The Environmental Group Limited (ASX: EGL) detailed a full-year result headlined by revenue holding flat at $112M and underlying EBITDA of $8.7M, landing within the company’s revised guidance range.
The strategic through-line of the EGL FY26 results was the continued expansion of its most dependable earnings base. Recurring and contracted revenue now exceeds 55% of total income, a level management framed as central to building a more resilient engineering group.
Management characterised FY26 as a transition year, with strong recurring-revenue growth helping to offset softness tied to project timing across parts of the portfolio.
Underlying EBIT came in at $4.4M, down 46.2%, while underlying EBITDA declined 22.0% on the prior comparable period (PCP). On the operational side, the Group treated over 5M litres of PFAS-contaminated water and recorded one lost-time injury (LTI) across 419,000 hours worked, with all CE and ISO certification maintained.
When big ASX news breaks, our subscribers know first
FY26 by the numbers: within revised guidance despite project timing
The presentation set out a clear earnings bridge. FY26 normalised EBITDA of $8.7M sits within the revised $8.5M–$9.0M range announced in May 2026, stepping down from original guidance of $12.7M–$13.5M.
Management attributed the step-down to two identified and quantified items. EGL Energy contributed roughly $2.5M of impact from ERP implementation, job-level cost allocation, historical job balance clean-up and higher fleet diesel costs. EGL Baltec accounted for approximately $1.5M, driven by delayed deliveries, shipping and port disruption, and slower Middle East tender awards.
The EGL guidance revision in May 2026 identified EGL Energy and EGL Baltec as the sole contributors to the shortfall, with management at that point characterising both as discrete, addressable issues rather than signals of broader demand deterioration.
| Item | Amount | Status |
|---|---|---|
| FY25 underlying EBITDA | $11.1M | Reported |
| Original FY26 guidance | $12.7M–$13.5M | Superseded |
| EGL Energy impact | c.$2.5M | Identified & addressed |
| EGL Baltec impact | c.$1.5M | Timing & logistics |
| Revised guidance | $8.5M–$9.0M | Announced May 2026 |
| FY26 underlying EBITDA | $8.7M | Within range |
The presentation kept statutory and underlying figures clearly separated. On a statutory basis, operating EBITDA was negative at -$2.1M, compared with the $8.7M underlying figure. The difference reflects $10.8M in significant items, including a $5.7M non-cash Airtight impairment and a further $5.1M of other normalised costs spanning ERP, relocation, a historical contract write-off, FX and restructuring, as reconciled in Appendix A.
The reconciliation supports the view that the softness was timing and one-off driven rather than a structural decline in demand.
Why recurring revenue matters for EGL investors
For an engineering group, recurring or contracted revenue is income that repeats rather than depending on the sale of large, one-off projects. In EGL’s case, this comprises maintenance service contracts, regular service work, ad-hoc repairs, spare parts and water processing service charges.
Several structural drivers underpin this base. Australian standards mandate that steam boilers be serviced and inspected at set intervals, EPA regulation requires ongoing waste compliance, and installed PFAS plants generate continuing demand for service and spares over their operating lives.
The revenue types EGL classifies as recurring include:
- Maintenance service contracts
- Regular service work
- Ad-hoc repairs
- Spare parts
- Water processing service charges
The strategic benefit is smoother earnings, better cash conversion and reduced reliance on lumpy plant sales. Recurring revenue has grown at a compound annual growth rate (CAGR) of +25.2% between FY22 and FY26, lifting its share from 44.0% in FY22 to 52.8% in FY25 and 55.3% in FY26. EGL Energy, the Group’s largest division, now generates approximately 73% of its revenue from recurring sources.
| Period | Recurring revenue ($M) | Plant sales ($M) | Total ($M) | Recurring % |
|---|---|---|---|---|
| FY22 | $25.2 | $32.0 | $57.2 | 44.0% |
| FY23 | $39.9 | $42.7 | $82.7 | 48.3% |
| FY24 | $47.8 | $50.1 | $97.8 | 48.8% |
| FY25 | $59.1 | $52.8 | $111.9 | 52.8% |
| FY26 | $61.9 | $50.1 | $112.0 | 55.3% |
Divisional performance: Energy growth, PFAS foundation, Baltec timing
EGL Energy — the growth engine
Revenue rose 20.2% to $64.5M, with gross profit up 21.0% to $19.4M and gross margin improving to 30.1%. EBITDA eased 7.7% to $7.0M, largely reflecting the impact of the ERP system and fuel prices. FY26 captured a full year of Advanced Boilers & Combustion compared with three months in FY25, and management noted new boiler sales have been particularly strong in early FY27, with margins expected to improve to normal levels over the coming period.
EGL Waste Services — building a PFAS treatment platform
Revenue increased 27.7% to $4.7M in what management described as a foundational R&D year. The division’s patented PFAS treatment technology is protected across Australia, the United States and Europe, and has been shown to apply across water, soil and biosolids. The Group commenced its global market development strategy during the period, and mobile treatment plant capability is under development to support rapid deployment for emergency PFAS remediation projects.
EGL Baltec — timing impact, resilient margins
Revenue fell 25.5% to $26.6M on project timing, while the EBITDA margin held steady at 10.7%. According to the company, demand for gas turbines in the USA is “unprecedented,” driven by data centres seeking their own power generation capacity as electricity demand rises with the growing adoption of AI. EGL Baltec has established an agency agreement and local representation within the US Midwest, a key hub for engineering, procurement and construction activity.
EGL Clean Air — second-half turnaround
Revenue of $18.9M was down 3.9%, though the second half saw EBITDA increase by approximately 84% versus the first half, with gross margin remaining strong at 36.1%. The division was awarded a major contract valued at approximately A$9M by Ozango Minerais S.A., a subsidiary of Pensana PLC. The Airtight impairment comprised a non-cash goodwill write-down and an onerous contract assumed on acquisition; the matter remains subject to legal proceedings, and while a contingent asset has been disclosed in relation to potential recovery, no asset has been recognised at reporting date.
The Angola rare earth refinery contract, awarded by Ozango Minerais S.A. for an off-gas scrubbing system at the Longonjo project, spans two financial years and marks EGL Clean Air’s deliberate move into the critical minerals sector alongside its traditional industrial base.
| Division | FY26 Revenue | FY25 Revenue | Change | FY26 EBITDA |
|---|---|---|---|---|
| EGL Energy | $64.5M | $53.6M | +20.2% | $7.0M |
| EGL Waste | $4.7M | $3.7M | +27.7% | $1.0M |
| EGL Baltec | $26.6M | $35.7M | -25.5% | $2.9M |
| EGL Clean Air | $18.9M | $19.6M | -3.9% | $1.1M |
Cash position and balance sheet
The Group’s net cash and debt position moved from -$0.8M at FY25 to -$3.0M at FY26, driven by one-off ERP and relocation costs, tax payments predominantly relating to prior-year liabilities, and investment in PFAS prototypes. Here, “underlying cash” refers to net cash from operating activities excluding relocation, ERP, interest and tax payments.
The main cash movements across the year were:
- Underlying cash +$9.5M
- ERP -$2.4M
- Relocation -$0.9M
- Interest -$1.4M
- Tax -$2.5M
- Investing activities -$1.7M
- Repayment of lease liabilities -$2.8M
On liquidity, the Group held a $7M bank overdraft facility at 30 June 2026, of which $6.2M remained unused, providing available headroom heading into FY27.
Outlook: margins, “One EGL” and PFAS momentum into FY27
Management’s forward guidance from the presentation centred on normalised EBITDA being expected to increase on the prior comparable period, with growth driven by improved margins. The Group intends to continue developing its “One EGL” culture, cross-selling multiple service lines to a single customer, supported by a recurring revenue base now above 55%.
Divisional signals pointed in a similar direction. EGL Energy reported a strong start to the year in boiler sales and anticipates improved EBITDA margins, while EGL Waste Services noted PFAS treatment plant sales gaining traction. EGL Baltec described its macro-outlook as very strong, tempered by short-term timing uncertainty, and EGL Clean Air is positioned for growth on the back of its major rare earths contract win.
EGL Waste Services
“FY26 has transformed EGL Waste from a domestic waste solutions business into a technology-led PFAS treatment platform with broader applications, stronger IP protection and a pathway to international market development.”
Taken together, the presentation positioned FY27 as a margin-recovery and recurring-revenue-expansion story, with the softness observed in FY26 attributed to timing and one-off factors rather than a decline in underlying demand.
Don’t Miss the Next ASX Industrials Breakout
Get FREE breaking ASX news delivered to your inbox within minutes of release, complete with in-depth analysis already done for you. Join 20,000+ subscribers staying ahead of market-moving announcements the moment they drop. Click the “Free Alerts” button at Big News Blast to start receiving alerts across ASX industrials and beyond.