Emeco Guides FY26 EBITDA US$290-295M, Sets 90% Utilisation Target

Emeco Holdings (ASX: EHL) issued a trading update that set FY26 earnings guidance and laid out the operating assumptions behind its FY27 outlook. The mining services equipment rental provider now expects FY26 Operating EBITDA of US$290 million to US$295 million, with Operating EBIT of US$145 million to US$150 million. Operating free cash flow is projected at about US$100 million to US$110 million, subject to debtor collections. Net leverage is expected to improve to roughly 0.4 times, excluding supply chain funding, compared with 0.5 times at 31 December 2025.

The company described FY26 trading as moderately softer than earlier expectations. It cited a reduction in equipment utilisation and delayed fleet redeployment caused by wet weather, supply chain challenges and fuel price uncertainty. Even so, the business remained cash generative through the softer conditions. The balance sheet also gained flexibility from a new A$355 million syndicated facility maturing in December 2030, which extended debt tenor.

For FY27, Emeco said it assumes broadly consistent market conditions and stable earnings relative to FY26, with second-half weighting linked to redeployment and improving utilisation. The company has secured FY27 equipment redeployment opportunities ahead of the FY26 close-out. It now targets utilisation at 30 June 2027 of about 90% for surface equipment and about 80% for underground equipment. Those levels are forecast to be consistent with achieving a 20% return on capital in FY28.

The earnings shape for FY27 is expected to be second-half weighted, reflecting the timing of redeployment and utilisation improvement through the year. The key operational question is whether the secured redeployment opportunities translate into higher utilisation across FY27. The company's own outlook relies on redeployment in the first half helping support stronger utilisation and earnings weighting in the second half.

Capital intensity is another point to watch. In February, Emeco said FY26 growth capex was expected to be about US$170 million to US$175 million, with fleet growth constrained until utilisation exceeds 90%. That means observers will likely focus on whether utilisation trends improve without putting pressure on cash generation or slowing the deleveraging path.

The external factors cited in this update remain relevant. Wet weather and supply chain challenges were both identified by the company as reasons FY26 was softer than planned. Each has a direct effect on deployment timing, utilisation and project activity. Fuel price uncertainty also played a role.

More broadly, management has said its priorities include growing fully maintained rental projects, expanding maintenance services, lifting fleet utilisation, and improving return on capital and cash flow. Maintenance services now account for about 50% of the company's revenue base and are growing, alongside fully maintained rental work including customer-owned fleets. That strategic mix is intended to support return on capital and cash generation with lower capital intensity than pure fleet expansion.

For now, the near-term test is straightforward: delivery of the FY26 numbers and evidence that redeployment is feeding through to better utilisation in FY27. The credibility of the FY27 stability message rests on whether secured redeployment opportunities convert into higher utilisation through the year, while weather, supply chain timing and cash collection remain practical risks to monitor.