Structural Monitoring Systems (ASX:SMN) returns to profitability as avionics momentum and CVM™ commercial pathway advance

Structural Monitoring Systems has delivered a December 2025 quarter and half year that mark a clear inflection in operating and financial performance, with sustained profitability, positive cash generation and a strengthening balance sheet coinciding with continued progress across its avionics and smart sensor technology platforms.

The period reflects the fourth consecutive quarter of profit and cash flow, underpinned by growth in AEM Avionics, disciplined execution in contract manufacturing and the advancement of the Company’s CVM™ technology toward regulatory engagement and commercial adoption.

Highlights

• 1HFY26 profit after tax of $1.5 million, compared with a 1HFY25 loss after tax of $2.3 million

• 1HFY26 EBITDA of $3.6 million, compared with 1HFY25 EBITDA of $0.4 million

• Cash at bank of $4.6 million at 31 December 2025, an increase of $1.5 million during the quarter

• 2QFY26 revenue of $8.4 million, up 40% on the prior corresponding period

• 1HFY26 revenue of $16.5 million, up 31% on the prior corresponding period

• Progressing CVM™ toward commercial adoption through FAA engagement and targeted OEM applications

• Appointment of Neville Bassett AM as Non Executive Chair

For the December quarter, the Group reported profit after tax of $0.4 million and EBITDA of $1.6 million on revenue of $8.4 million, representing a 40% increase on the prior corresponding period.

On a half year basis, revenue of $16.5 million was 31% higher year on year, while profit after tax of $1.5 million and EBITDA of $3.6 million marked a substantial improvement on the prior period, which had delivered a loss after tax of $2.3 million and EBITDA of $0.4 million.

Operating cash flow for the quarter was $2.5 million, contributing to a cash balance of $4.6 million at period end, with unused finance facilities of $6.5 million providing total available funding of $11.1 million.

The performance was led by AEM Avionics, which recorded quarterly revenue growth of 48% and half year growth of 68%, reflecting demand across special mission applications, an expanding installed base and a growing pipeline of new and upgraded products.

Contract manufacturing revenue for the half year was $6.5 million, broadly stable year on year, following the implementation of a revised strategy focused on selected programs where margins and capacity utilisation support profitability and overhead absorption.

Progress in the CVM™ smart sensor platform continued during the quarter, with the Company advancing technical documentation validation for the Boeing 737NG application.

The remaining documents for the FAA submission package were provided to the Engineering Unit Member in December, with final updates in progress, positioning the Company to move into formal FAA engagement, including review of the Service Bulletin for the targeted OEM application.

Discussions with major operators regarding potential commercial agreements also continued, alongside assessment of additional applications to support OEM buy in and a broader commercial rollout strategy.

Management characterised the quarter as a further step in establishing a consistent operating cadence, with Chief Executive Officer Rick Freeman noting in the release that

“the December quarter marks our fourth consecutive quarter of positive profitability and cash generation”,

and highlighting the contribution from avionics sales and the pipeline of new products expected to enter the market in FY27 and FY28.

On the governance front, the appointment of Neville Bassett AM as Non Executive Chair followed the Company’s Annual General Meeting in December.

The quarter also included resolution of an interim Federal Court injunction relating to a former director, with the Court removing the injunction and ordering costs in favour of the Company, after which the Board terminated the related executive services agreement.

Taken together, the quarter positions Structural Monitoring Systems as a business transitioning from recovery to sustained operational delivery, with growing avionics revenues, positive free cash flow of $3.5 million for the half year, and a strengthened balance sheet providing capacity to support ongoing product development, regulatory engagement and commercial discussions.

Within the broader aviation and aerospace technology sector, the combination of recurring profitability, expanding avionics penetration and the progression of CVM™ toward FAA review frames the Company’s next phase around execution of its existing growth plan and the conversion of its certification and product pipeline into commercial outcomes.

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