Acrow Limited (59Y.F) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Acrow Half Year 2021 Results Conference Call. [Operator Instructions] Please be advised that this call is being recorded today, Tuesday, 23rd of February 2021. I will now hand over to your speaker today, Mr. Steven Boland, Chief Executive Officer. Please go ahead, sir. Thank you.

Thank you very much, and thanks, folks, for joining us this morning. It's my pleasure to give you an update on the performance of our business in the first half of the 2021 financial year and also to outline the way we think the next 6 months is going to go and certainly into the future after that. I'll be running through the investor presentation that we released to the ASX yesterday. So firstly, I'm very, very, very happy with the first 6 months' financial performance of the business across all the key metrics. It's an incredibly strong performance, in my view, 32% up in revenue. We're now tracking to over $100 million of revenue per annum. Our EBITDA 41% to $11.1 million; NPAT, up 72%; sales contribution of 24%; underlying EPS, up 42%; EBITDA margin up 140 points compared to last year; and we have declared interim dividend of $0.0075 fully franked. So across every financial metric in the business, it's been an extremely good 6 months. It consolidates the excellent work that we did last year, consolidating the Uni-span acquisition and Natform acquisition into Acrow. I'll talk a bit more about those achievements shortly, but on the business that we have today, and that we will have in the next 3 to 5 years, is actually nothing like the business that we had when we were -- became a public company 3 years ago. We have transitioned this business almost completely now to focusing on engineered solutions in the formwork area, focusing on civil infrastructure and now the industrial scaffolding business that we acquired as part of the Uni-span acquisition. In terms of the -- I guess, the slightly nonfinancial key achievements in the first half of '21, we have secured, over the last 6 months, higher revenue contracts, up 31% on the prior corresponding period last year. That trend is continuing into the new financial year, I'll talk a little bit about that shortly. We stated clearly when we became a public company that we wanted to grow our formwork footprints, primarily in New South Wales and Victoria in the civil infrastructure space. We have succeeded beyond our own expectations, certainly in the Melbourne market, where our revenue is now up 120% on the prior corresponding period in Melbourne. We've gone from nothing to being absolute clear market leader in that market now in Melbourne. And really, the -- I guess, the last part in the jigsaw puzzle for us in that grow to delivering our promises to get the same position in New South Wales, and I'll also talk about that shortly. Product sales growth is -- or product sales, in general, is now a very important part of the Acrow business, has become more important since we purchased Uni-span and have the relationship now with ULMA. It's now 18% of group revenue comes out of product sales. It's proven to be an incredibly effective tool for us in both acquisition and retentions of customers, something that really Acrow never really had a full understanding of until we made the Uni-span acquisition. That sort of segues into the next point there around our expanded operating footprint. We have a great opportunity to organically grow our business in, I guess, the previous non Natform Uni-span states of Victoria, South Australia, Western Australia and Tasmania by utilizing both ULMA and Natform products in those regions. This is -- especially now in the case of ULMA products, where we have [ gee ] now in Tasmania, South Australia and Western Australia that we didn't previously have. We've just won a very large contract in Western Australia worth surface $600,000 to $700,000, utilizing ULMA equipment for the first time in that state. So this opening up new channels to revenue in new markets will be a very important part of our Acrow story going forward. On the industrial scaffold business, you'll see as we go through the numbers is a highly profitable business with great growth opportunities. We're still focused primarily on the Queensland market, but we have won contracts now in both New South Wales and South Australia and I expect this to become a significant part of the Acrow story as well going forward. And the last point here, I'm extremely pleased to be able to report that the Natform business sales revenue was up 33% on the prior corresponding period. I will go through a bit more detail around this later, but if there were any doubts about the value of the Natform acquisition in Acrow and its results, I think they are now extinguished. Turning to Page 7 of the presentation. We will continue to show this because it continues to be the story, and it's becoming even a larger part of the story. So I mean, where are we in this cycle? This question gets asked quite frequently around when does the civil infrastructure boom in Australia peak, and you can see by this chart, it isn't even close to peaking yet. So a couple of sort of reference points here from 2018, when Acrow became a public company, to where we are today, there's been $2 billion of growth in the civil infrastructure spend in the country over that period. Between where we are today and between the peak -- the projected peak of sort of '23, '24, there is still another 70% of growth in major transport, infrastructure projects in the country forecast. The really important thing for Acrow in this is, if you look at that chart, the 3 biggest projects that are forecast to increase that spend over the next 2 to 3 years are all in Queensland. The Bruce Highway, the Cross River Rail and the Inland Rail are primarily -- or Inland Rail is primarily a Queensland project and certainly, Cross River Rail and Bruce Highway are Queensland projects. We are already winning very significant packages on both the Bruce Highway and Cross River Rail, which I'll talk about later on. So I'm extremely encouraged by the continued growth in this area, and it's -- and what is a significant hill that's going to climb in the next 2 to 3 years. What's not talked about here, and is this is transport infrastructure, our other civil infrastructure projects across the country that we're also getting a strong foothold on and will contribute to our revenue growth over the next period of time. In the mining sector, we're getting, at the moment, circa $100,000 a month of revenue out of Arden. We will shortly -- we're confident in securing a significant package on the railings mine in Queensland. In utilities, the Snowy Hydro, we've mentioned in the past that we've sold the first Natform of equipment onto that job that was only around about a $300,000-odd sale. But over the next 5 years, Snowy Hydro will be a significant contributor to revenue in our business. The Warragamba Dam upgrade in New South Wales, we are -- we've put packages into the major tenders for the Warragamba Dam project over the next 5 years. Brookwood wear in Central Queensland another dam project, significant dam project. Coombabah, which is on the Gold Coast, water treatment plant, another significant utilities project. And in the defense sector, there is an Australian-Singapore military joint venture to develop a training facility for the Singapore Army, just north of Townsville. Again, we are already getting inquiries around that project, which is effectively building a mini city. So the transport infrastructure is a great picture, but there's a significant number of other non transport style, civil infrastructure projects that we are already on our radar that will contribute to revenue to our business over the next 3 to 5 years. In terms of the state of the markets, one thing I'd say there is, we go group to group -- stable and end at soft. If there was something called double green, that would now be Queensland civil. So I've never seen anything like the pipeline opportunity for Acrow in the Queensland civil infrastructure market at the moment in the 8 years I've been working in Acrow. That's particularly good news for us, given that our market position in Queensland. So you can see across the country, pretty good news across most sectors, except for New South Wales residential now. Those who followed our story know that we've exited its 2-story house residential market. And whilst there's been a lot of reports that, that sector is now going to see some uplift due to government funding initiatives, in the part of the market where we play, which is more to do with high-rise residential, that's still incredibly soft. I'll talk about that a little bit later on, too. In a lot of cases, I mean, the residential story for Acrow has become basically a nonevent. It's now such a -- such a small -- sorry, part of our of our revenue and our earnings now our potential that it's almost now what we're talking about. Equipment hire wins in pipeline. So we had a very, very good 6 months compared to prior corresponding period, up 31%. We had a very good 6 months compared to the last half of last year. And as I said, we've had a very good start to the year, 2 months in and we still haven't finished February yet. Obviously, we're still got 4 days to go in February, and we're up to the 25% compared to where we were for January, February of the prior corresponding period. The month of February, at the moment, is the third best month in the history of the business in terms of new contracts, one turning in about $3.6 million. That number could well get to $4 million, $4.5 million by the end of the month. In terms of the pipeline, the one thing I will point out is that if you're looking at the June '20 numbers with the December '20 number, the June '20 number included $15 million on one package on the Cross River Rail, in which we were not successful. So if I take that out, and that was always going to be very difficult for us because it would have required an enormous amount of capital investment, and we're up against a couple of European companies that had proprietary equipment already that they've been doing similar work on the Sydney Metro Rail project. So that one excluded, we're still up significantly in the rest of the business on pipeline value down half to half and certainly compared to the last -- December '19, December '20 period. We are getting real value-added cross-selling, and we're getting, as I said earlier, real value now out of opening up new channels of revenue by utilization of Uni-span/ULMA/Natform equipment across all of the geographies in which we operate. Page 10 just proves again the strategic pivot and how irrelevant residential is to Acrow. 80% of our earnings now come out of formwork and Industrial Scaffold, up from 43% in '17. And every 6 months, if you look at our business, you'll see a lower number again in residential and of what will be a growing total revenue pool, you'll see residential continue to reduce in that story. So you can see that we've got very good growth in that Industrial Scaffold from full year '20 in the half year '21. That will continue to be a more important part of our business, but the pivot that we went -- we undertook 3 years ago is continuing. It's not complete. As I said, I'm sure when we do a full year '21 presentation, residential will be less than 20% of the total value of revenue in Acrow. A bit of color around these marque projects. We've really developed on top off the back of the brilliant work of our engineering team and the innovation that our engineering team brings to civil infrastructure projects. We've developed a real sweet spot in the rail projects, which is really important, clearly, given the predominance of rail projects across the eastern seaboard in the next 3 to 5 years. So on Sydney Metro Rail, we -- last year, undertook work in both high end sales on Barangaroo, Marrickville and Chatswood stations. And in the last 4 months, we won $4.5 million worth of work on Waterloo and now Crows Nest, and particularly pleased with the Crows Nest contracts that we've only won in the last few weeks. We won $800,000 worth of hire contracts on Crows Nest that will go for a 6-month period between March and September and the fundamental difference for Acrow on those projects was the innovation that our engineering team have brought to the requirements that the customers had for those jobs. . Our Melbourne Metro Rail, the absolute flagship project for Acrow over these last 6 months has been the Arden Street Station, where we generated circa $1.5 million to $2 million in hire. That now will continue -- maybe not exactly at those same levels, but we will win packages on CBD North, CBD South, and there is more work to be done at Arden Street. The western distributor, which is actually interesting because like I'm sure 2 years ago, we expected to be getting more revenue from the western distributor than we have at Metro Rail. It doesn't mean the western distributor is not a great contributor, it just goes to show the Metro Rail is sort of dwarfing it now in size of opportunity. Western distributor it's been quite a little publicized that there's been -- it's slower than it was what anticipated due to some government issues with the contractors around getting rid of contaminated soil, et cetera, but it's still generating good revenue for us now. We're only now getting into the High Street Bridge part of the project, in which we'll probably see the greatest amount of revenue for Acrow over that project's life. And now we're turning our attention to the Brisbane Cross River Rail, where we've got our first package of approximately $600,000 of revenue for the Gabba station. We won about $400,000 worth of sales revenue for some of the tunneling work, and we're now turning our attention to [ boggar ] rail station and some of the other stations there. What we've now come up with almost a unique Acrow proprietary system for the station boxes, and this is really important because if you look at the growth of the rail projects in New South Wales and, certainly, the Cross River Rail and how they're still going to transport, there is something like 40 more stations to be built in -- on the eastern seaboard over the next 3 to 5 years, and what we've come up with is a way of dealing with the station boxes, I think we'll roll out will give us a great opportunity, certainly, to roll out that sort of work over this next period of time. On Page 12 of the presentation in terms of our segment breakdowns. Total revenue, you can see half to half, up 32% and still up from the second half of '20 to the first half of '21, and that's despite the biggest hire contract that we've ever done in Acrow, Sun-Metals, generating something like $2 million in formwork hire in first half -- second half '20 and not being replicated in first half '21, that contract finished. We still managed to keep the revenue for the business at that same level, despite that $2 million of revenue dropping off from Sun-Metals. Similarly on the sales of formwork, $19 million and $19 million, we had a one-off sale to BKH Barangaroo Station. It generated $2.8 million of revenue in second half '20. In spite that not being replicated directly in first half '21, the revenue has still been able to be maintained at that level. So strong revenue, strong sales contribution, strong underlying EBITDA of some $7.8 million to $11 million. The $11.6 million down to $11 million is just representative really of the Sun-Metals high-margin revenue dropping off, but still that's a result that we're incredibly pleased with and it's above our budget and was above our expectations as we entered that half. In the formwork division, total contribution is up despite, again, Sun-Metals and net sales of BKH. The standout figure is Melbourne 120% up, extraordinary result, really, over that 6 months first half '20 to first half '21. I will point to key project wins here. I already mentioned Gabba station. Cooroy to Curra Highway upgrade, which is the Bruce Highway in Queensland. This is work that we have won that has not commenced yet. Waterloo station in Sydney, it's work that is just in its infancy, will go from sort of January through June, July. Arden Street is pretty much now complete. Most of the revenues in the first stage of that. The Shenton Quarter Urban Village in WA, which is the first ULMA contract in WA, has not commenced yet. We're kicking in about March, April, and it's worth about $600,000 over about a 7 month period. And now what is not mentioned there is, I can point to the Crows Nest Station that we have won, $800,000 worth of hire revenue in New South Wales that will go from March to September. New South Wales is obviously very important for us now, and I've got more confidence now than I've ever had that we've now got the right team, and I'll point to a part of that shortly. And Natform, biggest evidence screens contract in the Natform business, the $1.1 million contract and 180 George St, Parramatta is going along at the moment. So all good news in our formwork division. A couple of specifics. Here's a story around Melbourne. We talked about 120% increase year-on-year. The marque projects, the Western Distributor and Metro Rail record secured contracts of $1.6 million for the period, up 4.5 (sic) [ 45% ]. And you can see in the chart below, the way the quarterly revenue has gone for Melbourne formwork over the last 6 quarters. Bob Caporella, who has been the standout formwork guy in Acrow for certainly the whole 8 years that I've been here, moved from Queensland to Melbourne just over 2 years ago, has done a remarkable job with the team down there and getting us to where we are now in the Melbourne formwork market and Bob is now moving to New South Wales. He will be starting as the New South Wales GM in the next week. And we've appointed a new Victorian formwork GM -- sorry, Victorian State Manager, sorry, Brad Craven, who comes to in the construction industry after our search. Very confident that Brad will continue the great work that Bob has established there with the team. I mean, if you look at the history of Queensland, Bob set that business up with a great team there, moved to Victoria. The momentum in Queensland has continued. Exactly the same thing, I believe, will happen in Melbourne, and now we'll get the benefit of Bob's expertise in the New South Wales market with some really good guys that we've now been in our formwork sales and engineering team in New South Wales. So good days ahead I think there. In terms of Natform, again, I think probably the achievement that I'm most proud of in Acrow over the last 12 months, you can see the chart on the bottom here, how the Natform revenue has gone quarter-to-quarter over a 6-month period. We had a slow start to this acquisition, but now it's exceeding the expectations of the business that the business had when we first bought Natform. Fantastic pipeline of opportunities, incredibly talented and entrepreneurial management team. There is some really great young people in that business who really understand how to make a dollar, and current forecasts show that quarter 4 '21 will be the best quarter of revenue in the Natform business, and not just in New South Wales, we've got some really good signs now of growth in Queensland, and we already the numbers in Queensland are excellent, and in the next 6 months, we believe that will get even better. In terms of the Industrial Scaffold division, again, you can see the returns. It's a very profitable business, 48% contribution margins. Revenue growing from $6.6 million second half to $8.2 million first half, which is a -- it's a real like-for-like 6-month comparison. We are opening up new markets in New South Wales and South Australia. We won our first contract in South Australia with [ rigby ] dam. We've won a significant contracted base water power station in New South Wales, and we're in the throes of hopefully securing a second contract in the same area. We renewed the origin energy contract at Surat Basin, which is the core sort of underlying -- generates sort of almost 25% of the total revenue Industrial Scaffold. This will be a growing story. We'll be investing in this business over the next 12 to 18 months to expand this business, both from a geography perspective, but also in the style of work that we can carry out within Industrial Scaffold. So it's a -- so watch this space area for Acrow. Commercial scaffold, look, it continues to be a less relevant. I'll give you sort of a bit of a story around what's happening in this market. One of our largest competitors in Australia in this business, whose whole business is commercial scaffold, just trying to flag it. I've got a phone called 6 weeks ago. They're trying to sell the business for asset value only, and they're not getting any takers. This is a business that turns over $120-odd million, and they can't -- they just want to get out of it and they can't sell it and we would not be interested in buying that business. Certainly, in the New South Wales market, anything that's got CFMEU-type involvement on a project, it's almost not worth even tendering forward. The prices are ridiculous, and we'll continue to watch in group, but we've got better things to do with our time and energy then knock our head against a brick wall in a market that's in decline, and it's not particularly a smart market to operate in. Certainly, in other parts of the country, like in Tasmania, for example, most of our revenue in Tasmania comes out of residential scaffold, and we make good money in Tasmania. We make good money in South Australia out of residential, commercial scaffold. We developed a quite a nice model now in Queensland and Victoria, where it's dry, hire and medium density. We don't even go anywhere near a job that's got CFMEU involvement. We'll be doing the same thing in New South Wales, and this will stabilize this business. But as I said, I don't -- I expect the revenue added this part of the business to stay fairly constant, but it will become a lower number as the revenue grows in formwork and industrial scaffold. Big contract wins. I've alluded to a number of these already, but I'll quickly run through, and I mentioned the Surat Basin for the industrial scaffold. I've mentioned Waterloo. I've mentioned the Bruce Highway, Cooroy to Curra, it says $1.4 million here. That's already now more like $2 million worth of revenue. George Street for Screen for Meriton, the Screen business. The second quarter is the CC-4 job and other great contracted Christie Street-St Leonards been a couple of our significant wins in industrial scaffold. The UGL Tarong North, Stanwell and Bayswater Power Stations, the Downer Edi Mineron, Wivenhoe Power Stations. And there are a few contracts that just -- well, certainly the Natura Apartments, we mentioned because it uses a number of different Acrow systems on the one job. It's scaffolding. It's labor. It's screens. It's a full package. Our first Cross River Rail contract, there is a couple of others getting very close to fruition there as well. And just as an indication further of what Natform does, Natform also brings to screens work in Canberra. So a $350,000 screens contract for the Natform job in Canberra. I think we've got about 5 live projects at the moment for screens in the Canberra market. So all in all, a very good 6 months of the business. We're looking forward to a better again next 6 months. I'll hand over to Andrew now to run through the financials, and then I'll wrap up with more about the forecast in the coming period.

Great. Thanks, Steve. I'll push everyone over to Slide 21, which is the profit loss. I think you can see from the outcomes of the strategic pivot towards the civil infrastructure and formwork industry has been quite successful. So I'll just start off on the below EBITDA. Steve, I think, has covered the 41% increase to $11.1 million enough. So below that depreciation and interest, both increased in line with the 4 months of Uni-span, plus the renegotiation of a number of leases we had in the year is reflected in those increases. Now tax expense, you'll see we've got a $532,000 tax expense for the year. This is probably something that's going to be on an ongoing basis relatively where -- what the base is going to be. This tax expense is based on the 2 tax paying businesses being Uni-span and Natform. So the approximate effective tax rate will probably hover around the 12%. That gets us to an NPAT underlying, an increase of 72% from $2.1 million up to $3.7 million, which then leads us to an EPS underlying increase from $0.0119 to $0.0168, or 42% increase. As Steve has already mentioned, the $0.075 fully franked dividend that has been announced yesterday as well. Moving on to the next page, the balance sheet. Our net debt percentage has moved from 20% at June, up to 23.8% and this has been a function, both a decrease in cash from $7.2 million, down $2.2 million and a decrease in the loans and borrowings by $1 million. Now the cash has decreased, essentially from a deferred payment of $3.5 million approximately for the last Natform deferred payment, plus the first Uni-span deferred payment. But that essentially, that $3.5 million is essentially a reduction in a debt item. We've also obviously had the final dividend from the last financial year, plus, as we get into a moment relatively elevated CapEx for the first 6 months. That was basically the reduction in cash that we're seeing here. It's also worth mentioning, on the balance sheet, you'll see that inventory has increased by about $2.4 million from $5.6 million to $7.08 million. This reflects the -- this is really in line with the increase in sales for the 6 months. And it's probably -- the inventory levels we have will probably hover around this amount going forward, but obviously, this does have a drag on working capital. The other point worth pointing out on the balance sheet itself is the other payables amount down just above total liabilities. That's decreased by $7.2 million, down to $3.4 million. And as I said, that was -- we paid $3.5 million in the first 6 months relating to deferred payments. We now have only one deferred payment left being to the Uni-span -- for the Uni-span acquisition of $3.5 million. And after that, that's it for deferred payments. It's also worth pointing out, from a receivables point of view, our debtor days is diverging with what's been going on with the world and with the economy, our debtor days has actually improved by 3 days from the prior corresponding period from 58 days down to 55 days, good outcome. Moving on to the next page to cash flow. The way we look at dividends and what our sort of cash property is, we look at our underlying EBITDA and then take off our maintenance CapEx and also any tax pay. So what you can see on the top left table, we've got $11.1 million EBITDA. We take off actual cash leases of $2.5 million as they used to be included in our underlying EBITDA and is a cash item. We've got maintenance CapEx spend of $1.6 million, but we've also included another line called IT spend. And what -- the reason we've included this spend as a take-off is, we had elevated an IT refresh during the period of just over $700,000 plus a sort of a normal amount of office maintenance -- office infrastructure spend. The over $700,000 was an unavoidable refreshable our IT hardware and some of our software. This is essentially a one-off, obviously, in any number of years, something like this will be required again, but not in the foreseeable future. So that was elevated. We also had the cash tax, as I mentioned, of $0.6 million. So that gets us to a cash operating profit of $5.5 million or 26% increase from the previous year. If we've taken out the elevated IT spend, we would have had a tax operating profit of $6.3 million. Just provide that, we have the net debt bridge, which shows basically where we got from the $14.6 million net debt at June '20 to the $18.7 million in December '20. And as you move to the right, you can see we had a cash flow from operations of $11.7 million. The majority of that, when you look at where the uses of that cash has been, we had CapEx of over $6 million, which we'll get into in a moment, and deferred consideration, which we already mentioned of $3.5 million. So the majority of the cash flow from operations in reality has been used from still investment spend. Moving over to the capital expenditure page on 24. This is our standard page on describing CapEx. So during the half year, we had $6 million of total CapEx, $3.5 million of growth, $930,000 in office and IT maintenance and $1.6 million in maintenance CapEx. Now I can confirm that, that $3.5 million is elevated for the first 6 months, but we will get the benefit of that ongoing, and particularly, in the next 6 months. We've done a review of our growth CapEx and I know we've in the past, we've talked about it needing to achieve a 40% IRR. So we can -- what we're looking at now is more a 50% IRR on growth CapEx. We've done a review of our previous projects, and we are achieving these levels. And one of the examples we can use, and it's a great example of the way that we look at CapEx is, we had the Sun-Metals job that Steve was talking about before, where we spent around $3 million on year and essentially, we got that return back in the first job. That gear is now being redeployed by the states and being deployed to other jobs. So we basically got it back on the first job. The other thing that we have a look at with growth CapEx is if we do not buy speculative gear, we'll only buy gear that achieves these IRR -- or we model up are going to achieve the IRR targets. So we're still building the formwork business. You've seen the position on where civil infrastructure is going, not just with transport, but with, as Steve said, defense and other areas. And the reality is, there is still going to be an impact on capital ongoing, and there are significant opportunities still coming up with -- for the business. And with that, I'll hand over to Steve.

Okay. So just talk through strategy, outlook and priorities. Page 26, it's the same as it's been for a while, which to me is a good thing because this is a consistent strategy. This is what the business is about. This is what we're doing. We have become the leading engineered formwork sales and hire equipment provider in Australia. We've done that. We aspire to become a leading engineer scaffold solution provider, continue to be thrilled with the quality of the people that are working in this business, those that have been coming into the business new and those that are developing their careers within Acrow. We have some incredibly talented people in the business now. It's almost unidentifiable from what we had 8 years ago, 7 years ago when I first came into Acrow. We've refreshed the team almost, say, 75%, and I think we've got some great people in the business. The organic growth will continue to be now, I think, a more important part of our story going forward, probably more important at the moment than acquisitions. There is not today one specific acquisition that's on our radar, we're always open. There was -- sorry, there is one that we would look at. We've had some discussions. It's probably a few years off to be honest. So organic growth through geographical opportunities opening up for our range of products and for product development. I mean, I should say here at this point, our research and development going on through our engineering team now is absolutely phenomenal, something, again wasn't happening in that growth for a long period of time. We've got new products now coming into our range that we'll get straight out on jobs off the back of the work we've done by our engineering team in research and development. And then at last point around acquisitions, yes, we are an acquisitive business, but right at the moment, there is nothing that I can put my head on that, I think, will come up in the next period of time. But I just want to make the point here that if you look at the -- look at what this business has delivered in the last 3 years, we've delivered on 2 of our very, very successful acquisitions that have helped us transform this business dramatically. We delivered on a great story in Melbourne formwork. We said we were going to penetrate that market than we have. And in my view, we've really only got one more thing to do, and that's New South Wales. We need to get the New South Wales model the same as Queensland and Victoria, and the early signs are, we've got some very good opportunities in that area and then again, it's about rolling out the new products across the country, and that will be the Acrow store. Page 27, just again, just -- this is where we are. We're a unique business down. We've got geographical spread across the country. We've got a fleet of equipment that no one can replicate. It's a great position to be. In terms of our outlook, we go into these next 6 months, and we really have 3 months through now with a strong tailwind off the back of the new hire contract secured in the first half. I mentioned that earlier that January and February, we're already up to circa 20%, 25%, again in new contracts secured compared to the prior corresponding period. And February looks like being our second best month probably every new contract secured, very, very strong product sales opportunities exist in the business at the moment. And I mentioned Queensland before, absolute uplift in activity in Queensland. Almost every day, there is something new significant coming up that would add to us. And we said, it's the position in Queensland in terms of market opportunities better than I've seen in the 8 years I've been with Acrow. Natform's '21 earnings second half will be in line with first half, however, definitely the fourth quarter. So fourth quarter '21 will be the best quarter in the history of the Natform business within Acrow. So a great sign of -- again, a tailwind going into the following financial year. Mentioned New South Wales, and I expect to see significantly improved results. Sydney Metro Rail projects, both Crows Nest and Waterloo secured. Further growth in industrial scaffold, I still think that there is a bit of a 2 speed construction going sector going on. It's probably not as pronounced as it was a little bit more confidence of obviously coming with -- hopefully, the results of COVID in the country and vaccines and things like that might do and borders reopening and all those things will give a bit more confidence in general. In terms of our forecast, we say we remain comfortable with consensus broker forecasts. We're not a company that wants to go after with bold statements about where we think we're going to go. We like to be conservative. We'd like to be doing -- if we like to do better than expectations. So at the moment, we're going to continue to say, we're comfortable with consensus forecasts. And finally, the wheel of priorities is still the same story. New markets, new clients, promoting formwork capabilities across the markets, grow industrial scaffold, further focus on sales and product sales and what they can bring to the business. Our absolute key competitive advantage being our engineering expertise and developing that across the whole of the country and growing that across the -- we've got 30-odd engineers. We are continually bringing in high-caliber professionals. Just in the last 6 months, we brought in a very experienced formwork guy who worked in the new work across the country into our New South Wales business on asset debt there. We've just hired a new Victorian state General Manager, who comes from the construction industry with a great track record in the hire in the construction industry. And that commercial scaffold probably becoming less important. And in terms of looking for opportunities there, there is lots of opportunities to make acquisitions in this space, and it's just not part of what Acrow is about these days. So as I mentioned a few times now, I think we'll hold that in terms of what the total revenue for that business will be, it will hold. But in a growing business, it's going to become 20% will become 18% will become 15% will become 10% of our total revenue stream over the coming fall. So that's it from us. Thank you. So now we'll open up to any questions any of the participants have got. Thank you.

[Operator Instructions] Your first question is from the line of Alex Lu from Morgans.

I've just got a few questions. I'd like to start off with product sales, please. And obviously, revenue for product sales was up very, very strongly. So that was almost 200% there. But I just wanted to just maybe dig into some of the details behind the reasons behind that strength? You say, you're focusing more on it, but is it more -- are you marketing it more? You kind of -- yes. And also, is it mostly in a few states? Or are you seeing that product sales strength across all states?

Look, I think, firstly, Alex, it came out of the acquisition of Uni-span really in terms of the stimulus. It's always been something that we thought was -- we've sold pine timber, and we still sell pine timber is a very good opportunity for us there now to grow our margins in that area. We've sold hardware consumables to form workers. We sold a bit of new equipment, but we really didn't have a proprietary sort of system as we do now with ULMA, where we can sell systems into form workers and then get the benefits of repeat sales and cross hire opportunities as they seek to grow more volume of work, and they need more gear to compensate complements they've already got from. It's very strong in Queensland. It's very strong now in Victoria. It could be stronger in New South Wales, and it will be. It's actually -- in the last 3 to 4 months, it's become a really strong part of the Western Australian formwork business. So we only do formwork in Western Australia. We don't do any commercial residential scaffold there and sales of product has become a significant generator of profit in that WA business since probably about November and shows grade signs to improve. Look, there are -- right now, as I sit here, I know of at least 3 very big opportunities for sale of product and the probably tax lien that may or may not come off. And they are -- they are big swing factors in our numbers, and we're not factoring any of those things at the moment into our forecasts, but they can add considerable benefits to you if they come off. So I've said this, I think, for the last maybe 12 months, sale of products now has almost become as important to us as generating hire revenue. And we run a pipeline of product sales now that we monitor on an ongoing basis, the same as we do with high revenue.

Yes. So do your customers know that you do hire and also product sales now as well. So is that clear across your current customers and also your potential customers?

In formwork, yes, I'd say that's what we're well-known now in formwork. Look, it's never -- you can always be doing better. And I think in the New South Wales market, again, I'll say that that's going to be a growing understanding of our capabilities in that area. We also generate sales, we sold scaffold in the Queensland market at reasonable levels, both in industrial and in commercial, but mostly in industrial. And I think we definitely can grow that market in New South Wales, Victoria and the rest of the country. So the Queensland scaffold business generates an average of around $300,000 to $400,000 a month in new sales, and we do probably $50,000 in New South Wales and Victoria. So that certainly is an area that we can further grow.

Okay. And maybe moving on to industrial scaffold. So they had a strong result as well and, obviously, the plan is to expand that business both geographically. And I was interested in the part when you said into new industries. So maybe just talk about the types of industries that you're currently in? And then the ones that are potential opportunities in the future, please?