Earnings call transcript: Mitie Group Q1 2026 shows strong growth

Mitie Group PLC, the UK’s largest technology-led facilities management company, reported significant financial growth in its Q1 FY2026 earnings call. The company achieved double-digit revenue growth, with sales reaching £5.1 billion. This performance was bolstered by strategic acquisitions and investments in energy management services. Mitie’s stock price increased by 2.62%, reflecting investor confidence in its growth trajectory. According to InvestingPro data, the company has demonstrated strong financial health with an overall score of 2.79 (GOOD), supported by robust profitability metrics and consistent dividend growth over the past four years.

Key Takeaways

• Double-digit revenue growth to £5.1 billion, outpacing market growth.
• Stock price rose by 2.62%, indicating positive market sentiment.
• Strategic focus on energy management services and significant acquisitions.
• Expansion of workforce to 76,000 employees.

Company Performance

Mitie Group demonstrated robust performance in Q1 FY2026, with revenue increasing by 10% to £1.2 billion compared to the previous year. The company’s strategic focus on energy management and its recent acquisitions in power and grid connections, as well as security services, have positioned it well ahead of the 3% growth rate in the facilities management market.

Financial Highlights

• Revenue: £5.1 billion, a significant increase from the previous year.
• Operating profit: £234 million, showcasing strong profitability.
• Free cash flow: £143 million, supporting shareholder returns.
• Share buybacks: £100 million, reflecting commitment to shareholder value.

Outlook & Guidance

Looking ahead, Mitie plans to complete its £350 million acquisition of Marlowe plc in August, which will add 3,000 employees and £300 million in revenue. The company remains focused on its three-year facilities transformation plan, emphasizing energy management and compliance services to drive future growth. Based on InvestingPro’s Fair Value analysis, Mitie currently appears fairly valued, with analysts projecting continued profitability. The company maintains a strong Altman Z-Score of 12.68, indicating robust financial stability.

Executive Commentary

Phil Bentley, Chief Executive, stated, "We delivered double-digit revenue growth to £5.1 billion, significantly outpacing the wider facilities management market." He highlighted the strategic decision to invest in energy management, which has become a key growth area for the company.

Risks and Challenges

• Integration of recent acquisitions could pose operational challenges.
• Dependence on energy management services may expose the company to market fluctuations in the energy sector.
• Macroeconomic factors, such as inflation and interest rate changes, could impact profitability.

Mitie Group’s earnings call highlights a strong financial performance and strategic initiatives that have positioned it well for future growth. The company’s focus on energy management and strategic acquisitions has bolstered its competitive position in the facilities management market.

Full transcript - Mitie Group PLC (MTO) Q1 2026:

Derek Mapp, Chairman, Mighty: Well, good morning. May I welcome you to the mighty twenty twenty five annual general meeting? The time is now 11:30, and I therefore declare the meeting open and core. I am Derek Mapp, chairman of the company, and I shall chair the annual general meeting. This will be my final address to you as chairman.

Over the past eight years, I’ve had the privilege of watching Mighty grow in the face of unprecedented circumstances. As I step down today, I’m proud to hand over the leadership to Chris Rogers, and do so knowing the company is in great hands. With the continued dedication of our board and leadership team, I’m confident that Mighty will continue to thrive and continue to make meaningful impact on our communities and our environment. I’d now like to hand over to Phil Bentley, Chief Executive of the company, who will present a Q1 of this financial year’s update.

Phil Bentley, Chief Executive, Mighty: Thank you. Okay. Good morning. Thank you, Derek. Good morning, everybody.

It’s good to have everyone here and welcome to our twenty twenty five Annual General Meeting live from Knight’s headquarters here in The Shard. This is my ninth AGM as your Chief Executive. And as always, I would like to start by saying a very big thank you for everyone here today and those dialling in for your support as our shareholders. And on your behalf, I’d like to also thank the exceptional Mighty colleagues for their contribution to your company’s success. We now have over 76,000 colleagues in my team making us one of Britain’s biggest employers.

Without their passion and professionalism and commitment every day, we wouldn’t be the company that we are today. Now in case you’re looking at the weave effect on our slide here behind you, this is our new corporate visual identity representing the threads that connect people to the places they depend on and how mighty with our national footprint is woven into the fabric of society as it were. Now the year just gone by ending March 2025, what we call fiscal year twenty five, was the foundation year of our new facilities transformation three year plan. And in our first year of this plan, your company has made a strong start. We delivered double digit revenue growth to £5,100,000,000 significantly outpacing the wider facilities management market.

We delivered double digit operating profit growth to $234,000,000. We had record contract wins and renewals and our order book and pipeline are also at record levels. We bought three companies in power and grid connections, in fire and security, and a security business in Spain, all of which are performing strongly. And our free cash flow generation of GBP143 million was also strong and that enabled us to fund record shareholder returns, GBP100 million of share buybacks as well as increasing dividends, which if approved today at 4.3p per share is also at a record level. So in summary, we are on track to deliver our three year plan ambitions, including the £350,000,000 acquisition of Marlowe plc which we’ll complete in the next two weeks.

Now this slide shows that over a four year period and over a wide measure number of measures your company has been building momentum. Momentum in our financial performance, momentum in growth and momentum in generating shareholder returns. And that momentum has continued, as Derek said, in the first quarter of our new fiscal year FY 2026, the results of which we announced to the market this morning. Sales revenue is up by another 10% to GBP 1,200,000,000.0 in the quarter. This is again significantly ahead of the market.

It’s only growing at 3%. We’ve made good progress on our program of cost savings initiatives to offset the GBP 50,000,000 increase in employers’ national insurance contributions, which were announced in the last budget. And finally, the £350,000,000 acquisition. This is our largest ever deal in Mighty, will give us leadership in facilities compliance to complement our leading position in both core facilities management and project led facilities transformation. Now the deal should complete at the August, at which point we’ll be welcoming a further 3,000 new employees to Mighty and over £300,000,000 of new revenue.

So in summary, your company continues to make good progress. Thank you again as always for your support and interest. I noticed that the AGM this time last year, our shares were 1.19p per share today at just over 140p. Together with the 4.3 dividend to be approved later today, this represents a 21% rate of return for you, our shareholders, over the last twelve months. Now before I hand over to Derek to answer your questions and lead us through the rest of today’s AGM proceedings, I would just like to take a moment to thank Derek on your behalf, our shareholders, for his extraordinary contribution as our Chairman.

This is his ninth as well his last annual general meeting, and he steps down literally at the end of today’s proceedings. Now when Derek joined us in 02/2017, Mighty was a very different company indeed. Revenue was just £2,000,000,000 now we’re at £5,100,000,000 Profits were only £82,000,000 now we’re at two thirty four million, and employees numbered 29,000. And now we have, as I said, 76,000 employees. And that’s how much progress we’ve made, and we tripled the value of your company during Derek’s leadership.

We’ve also built strong foundations focused on improving customer service, building better employee engagement, divesting a number of non core businesses and buying businesses, which really strengthened our competitive position and our balance sheet strength. So in short, Derek, your guidance, your strategic thinking has enabled Mighty company to grow and grow profitably. Thanks to your vision, Mighty has emerged as The UK’s largest technology led facilities management and facilities transformation company delivering superior returns to all our shareholders. So on behalf of our shareholders, a huge thank you to Derek and for me personally and for the entire team. We wish you a very happy and healthy semi retirement.

And I think you all deserve a round of applause. We will miss you. Thank you. Thank

Derek Mapp, Chairman, Mighty: you, Phil. Now let’s turn to the formal business of the meeting. The notice of the meeting was sent to all shareholders and made available on our website on the June 20 this year. This can be found on pages three and four of the notice of AGM booklets and will be our guide for the proceedings today. Printed copies are also available at the entrance for the room should anybody require one.

Now with your permission, I’d like to state the notice of the resolutions one to 19 as having been read. I now formally propose resolutions one to 19, which are set out in the notice of the general meeting. Resolutions one to 16 inclusive are proposed as ordinary resolutions requiring a simple majority of votes to be passed. Resolutions 17 to 19 are proposed as special resolutions and do require at least 75% of votes to be passed. Now before we vote, shareholders have an opportunity to ask any questions that you may have.

And we will take questions in the following order. First, we’ll take questions from any shareholders in the room. And then secondly, we’ll take questions from shareholders that we’ve received via email. Now let me ask whether any of those shareholders in the room have any questions about the business of Mighty or the resolutions themselves. And on those questions, I will see whether it’s Phil or our most appropriate person on this table to be able to answer your questions.

Phil Bentley, Chief Executive, Mighty: Who we got, Mike?

Derek Mapp, Chairman, Mighty: If you could introduce yourself as well, that would be helpful.

Phil Bentley, Chief Executive, Mighty: Is that switched on? Just just check that it

Gary Dave, Private Shareholder: Is that better? I don’t know. Gary Dave, private shareholder. Just looking at your financials. Yep.

The buybacks almost doubled the dividend paid, and they’re greater than the profit for the year. So is there a policy of just you could just do buybacks rather against increasing the dividend?

Derek Mapp, Chairman, Mighty: I’ll start by answering that, and then perhaps Phil and Simon might wish to add further. The primary purpose of this company is to create shareholder value, and we look to the best and most appropriate way to do that. Share buyback is one way of doing it and maintaining an accretive dividend policy has been another. We see from surplus cash that we’ve created that we should share that with our shareholders, which is why we’ve triggered several share buybacks. I think the total amount of share buybacks today, Simon, is It’s 100,000,000 last year and we’ve done 700 to 200 100 just over 200,000,000.

Yeah. Yeah. So that’s together with increasing dividend should give our shareholders the comfort of knowing that this is a board that believes that shareholder returns should show good increase. Is there anything else you want to add?

Phil Bentley, Chief Executive, Mighty: I think the only thing you could say is that our shares are £1.4 today on an average. We pay just under a pound for each of those shares. Our shareholders now own more of the company because those shareholders that have sold are no longer shareholders. You’re essentially getting more of the company’s future growth. We’re not alone in believing that a balance of dividends with buybacks is the right way to run the company and to increase a little bit of the borrowings level because we are generating cash and therefore our borrowings have been quite low really relative to companies of our size.

Derek Mapp, Chairman, Mighty: Does that answer your question, Garry?

Gary Dave, Private Shareholder: Well, it’s all about opinion basically. You could also look at quarterly dividends, but that might be more challenging. Looking at your the work you’re doing, I just wondered about you’re talking about links and work that you’re linking to the growth of the national grid. I just wonder how the business dovetails with that because I’ve always had a concern about national grid, way it’s operating in The UK and overseas and the problems that there are. I know there are issues about connections.

I just wonder how this business dovetails with the work that needs to be done on the national grid by the national grid for The UK. They’re also focused in North Atlantic Seaboard, York Coast up there. Yep. And they’re overstretched. And I’ve I’ve always got a concern about the national grid.

I have shares in them. They pay a nice dividend. They’re very good. Your business is very good. I just wondered what the opportunities are in that area.

Derek Mapp, Chairman, Mighty: So we’ve got stocks there then, Harry. Look, the the whole national grid and source of energy is in is in dynamic change at the moment because of the source of the source of generation fuel. Perhaps

Phil Bentley, Chief Executive, Mighty: I mean, yeah. Yeah. We it’s a really good point because as you know, we in The UK, we import energy into The UK and many, many of our clients want more and more energy. Even just putting EV charges into say a hospital can overload the grid going into the hospital. Hospitals through MRI scanners and all the different equipment the hospital is using are using more and more energy.

That’s true of whether it’s our retail clients through refrigeration. We have a large number of high energy use consuming clients. We’re trying to do is help them with their firstly to buy energy for them but also help them reduce their energy consumption. So we have a company that does solar panels, for example, big solar panel arrays on on roofs. We have companies that then connect some of those solar panels into the grid so they can export.

We have a company that does EV charging, and we’re doing a lot of EV charging all the way from Lloyd’s Bank to the Department of Works and Pensions offices and car parks. And we have a battery energy storage company that will store surplus energy. So we’ve made the strategic decision to invest in energy and energy management for our clients. Last year our revenues were about £250,000,000 and probably this year it be over 300,000,000 So we see it as a really important part of what we do to help our clients reduce energy consumption.

Derek Mapp, Chairman, Mighty: As we as we look for the future for my team, we look for growth businesses that we should invest in that take us to an opportunity for future growth and future shareholder value. We identified that the use and the requirements for connected electricity facilities and the ever increasing demand that there is for electric is an opportunity, and we’ve carefully gone into that market while having have invested confidently in those businesses that Phil has just articulated. Yeah. That photograph,

Gary Dave, Private Shareholder: is that City Airport?

Phil Bentley, Chief Executive, Mighty: It is. City of London where we provide services to City of London. Yeah.

Gary Dave, Private Shareholder: Oh, yeah. That’s the wrong direction.

Phil Bentley, Chief Executive, Mighty: They simply come back that way. They come back from the West And Land.

Derek Mapp, Chairman, Mighty: Okay. I’ll I’ll take I’ll take that out with our commerce department. Right. Another And question?

Gary Dave, Private Shareholder: Are

Derek Mapp, Chairman, Mighty: there any other questions? Are there any questions that we’ve had by email, Kate? No further questions. Okay. So each of the resolutions that I referred to before will be voted on by way of a poll.

Now before we take the poll, I’ll briefly explain the procedure. For shareholders attending the meeting today, a poll card was offered to you as you entered the meeting. If you’ve already completed a proxy form and do not wish to change the way you have voted, there is no need to complete that poll card. The votes you’ve already cast will be counted. However, for those shareholders who have not submitted a proxy form or wish to change their votes already submitted, please complete that poll card.

If there are any shareholders in the room who do not currently have a poll card and would like one, could you raise your hand? So I therefore assume that everybody has had a poll card. Now please complete your poll card by clearly printing your full name and if you are a proxy or corporate representative, the full name of who you are representing. If you’re voting on behalf of more than one shareholder, please complete a separate poll card for each shareholder. Please then indicate how you would wish to vote by inserting a cross in either the for or against box alongside each resolution, or you may opt to abstain by inserting a cross in the withheld box.

Please note that a vote that a vote that is withheld is not a voting law and will not be counted when calculating the number of votes for and against the resolution. And then finally, if you could please sign and date the poll card. MUFG corporate markets will act as scrutineers and will count and check the votes against the register. And the final results will be made available on the company’s website and will be announced at the London Stock Exchange as soon as possible. Does anybody have any questions on the poll procedure?

As there are no further questions, we’ll now proceed to vote on the resolutions which are formally proposed at the meeting. Could those shareholders, attending the meeting person please mark your poll cards with your votes for all resolutions and then raise your hand with your completed poll card and the registrars will collect the poll cards from you now.

Gary Dave, Private Shareholder: Yep.

Derek Mapp, Chairman, Mighty: Thank you. Thank you. Ladies and gentlemen, that concludes the business of the annual general meeting. Whilst final votes are yet to be counted, I can confirm that based on the votes received prior to the meeting, all resolutions have been passed. The final results of today’s meeting will be available on the MITEI’s website later today as referenced earlier.

In the meantime, if you’d like a copy of the proxy votes received, these are available from request from our registrar. That’s the gentleman sat on on the top tier on the right. I’d like to take this opportunity to thank you for your support as shareholders and for attending the meeting and also like to thank my board, my talented board on either side of me of my colleagues, board colleagues, executives, and the wider workforce that I’ve worked alongside in the past eight and a half years. It is with mixed feelings that I’m leaving. I wish you every success and and look forward to continuing my support for this great company by being a shareholder.

Thank you, ladies and gentlemen. Thank you.

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