Bhagwan Marine H1 Earnings Call Highlights

25 Feb 2026, 21:10 by Jessica Moore · The Cerbat Gem

Bhagwan Marine (ASX:BWN) reported a “solid performance” for the first half of FY2026, highlighted by improved margins and stronger cash generation despite lower revenue that management attributed largely to the timing of major contract awards.

Half-year financial highlights

Managing Director and CEO Loui Kannikoski said first-half revenue totaled AUD 116.9 million, down 8.5% from the prior corresponding period, with the decline “largely due to the timing of major contract awards.” He said underlying demand remained strong across the company’s sectors, particularly offshore energy, ports, and inshore.

Kannikoski said EBITDA margins improved to 19%, which he attributed to “disciplined execution across the business.” He also pointed to cash generation as a standout result, with operating cash flow of AUD 25.4 million, up 21%, and free cash flow of AUD 8.6 million, which he said was “significantly higher” than the prior year’s first half.

Management also declared an interim dividend, citing confidence in the outlook while continuing to invest in long-term growth and innovation.

Earnings, margin initiatives, and decommissioning work

Chief Financial Officer Cheryl Williams said pro forma EBITDA for the half was AUD 22.4 million, down 4.3% from the prior year’s first half, and noted the comparison excluded AUD 3.9 million contributed by the TVI decommissioning project in the first half of FY2025. Williams said core EBITDA margins improved from 18% to 19%, supported by high-performing contracts and ongoing margin expansion initiatives.

Williams also referenced non-recurring transaction costs related to the Riverside acquisition, noting a pro forma adjustment of AUD 0.4 million.

On decommissioning, Williams said the TVI project contributed AUD 91.9 million in revenue and AUD 9.9 million in EBITDA at an 11% margin across FY2024 and the first half of FY2025, and said it helped position the company in what management described as a high-growth segment. She added that in 2025 and the first half of 2026, Bhagwan completed work on the Northern Endeavour for Petrofac, contributing approximately AUD 26 million of revenue across that project.

Williams said the company remains focused on further margin expansion in FY2026 toward a 20% medium-term target.

Cash flow, CapEx, and balance sheet

Williams said operating cash flow increased to AUD 25.4 million, driven by “strong margins, high-quality earnings, and disciplined cost and capital management,” translating into free cash flow of AUD 8.6 million versus AUD 1 million in the first half of FY2025.

She outlined capital expenditure across growth, sustaining, and discretionary categories. During the half, Bhagwan acquired the Seawind landing craft to strengthen inshore capability, with an expected cash flow payback of about three years. The company continued investment in remote operations and hybrid vessel technology, and Williams highlighted the launch of Nara, an electric hybrid vessel for the Port of Melbourne. Looking ahead, she said second-half FY2026 growth CapEx is expected to include a planned acquisition of the Keller Ocean Multi-Cat vessel for approximately AUD 6 million.

On the balance sheet, Williams said net debt to equity was 1% (excluding operating leases) and net financial debt was minimal at around AUD 1 million (excluding operating leases). Net tangible assets per share were maintained at AUD 0.61.

Lease liabilities rose by AUD 8.1 million, which Williams said reflected deliberate long-term investment. She attributed the increase mainly to a AUD 6 million rise in property leases related to a new long-term head office lease and renewal of the Dampier facility lease, and a AUD 1.9 million increase in vessel leases driven by longer tenure.

Operational activity and safety

Kannikoski said the company made progress in its core operations, including securing a five-year contract with Jadestone Energy for the Coral Knight, and completing additional decommissioning projects. He also said Bhagwan embedded a CIO role and strengthened business development and financial governance processes.

Safety metrics improved, with Kannikoski reporting LTIFR improved to zero and TRIFR improved to 8.32.

In an operational update, Kannikoski said offshore energy activity remained busy, including continuation of a five-year standby contract in the Pilbara, two-year extensions with Jadestone and Vermilion, and the new five-year Coral Knight contract. In subsea, the company completed a WA decommissioning dive project and delivered ROV debris cap replacement work, along with OMR support and platform inspections. In ports and inshore, management cited a six-year maintenance contract with the Port of Melbourne, the Groote Eylandt wharf repair project, and the award of the Alkimos Desalination Marine Works project. In defense, Kannikoski said AFMR and Border Protection contracts continued and engagement with defense industry support was expanding.

Riverside acquisition: rationale, financial expectations, and integration priorities

Kannikoski described the announced agreement to acquire Riverside Marine Holdings as a “step change” for Bhagwan, citing strategic and cultural fit and an expansion of service offering, geographic reach, and commodity exposure. He said the acquisition would improve “earnings quality,” noting that about 88% of Riverside’s revenue is supported by long-term contracts with Tier 1 customers, and that this would lift Bhagwan’s repeatable revenue from approximately 40%–50%.

For FY2026, management said the transaction is expected to be highly accretive, including:

EPS accretion of approximately 14%
Return on equity accretion of greater than 20%
Group EBITDA margins expanding from 18%–24%

Kannikoski said Riverside manages and operates around 30 vessels across five brands and forecast FY2026 revenue of AUD 63.3 million and EBITDA of AUD 26.2 million, implying an EBITDA margin of 41.3%. He also emphasized Riverside’s “capital-light” model focused on vessel operation and management, with more than 20 vessels under management supported by long-term contracts, and ownership of nine vessels valued at about AUD 35.7 million. Management said Riverside carries no vessel lease payments and expects annual maintenance CapEx of about AUD 7 million to AUD 8 million.

During Q&A, Kannikoski said cross-selling opportunities would come from expanding towage contracts nationally and combining expertise. He also pointed to potential synergies in charter vessels for hydrographic surveys and in “sand opportunities” where Riverside’s expertise could support Bhagwan’s ambitions. Management said the integration priority would be “business as usual,” maintaining customer relationships and retaining the underlying value of the business.

Asked about the timing of contract awards after December 31, Kannikoski said contract timing can shift and he would not comment on specific dates, but added that the company had already seen developments before December 31. In response to a question about a second-half rebound, management said it expected improved margins and higher activity levels in the base business in the second half, including across decommissioning and ports and inshore.

About Bhagwan Marine (ASX:BWN)

Bhagwan Marine Limited owns and operates marine vessel for oil and gas, subsea, port, civil construction, renewables, and defense industries in Australia. It offers vessels and services to support exploration, development, and production activities to offshore oil and gas industry; harbor towage, survey support, geotechnical support, and infrastructure maintenance services; construction of bridges, ports, jetties, and other marine infrastructure; anchor handling tug supply vessels; and geophysical, surveying, and civil engineering services.