Verbrec Limited (ASX:VBC) provides engineering, asset management, infrastructure services and training to the energy, mining, infrastructure and defence industries in Australia, New Zealand, PNG and the Pacific Islands. The company has released its H1 FY25 results delivering a profitable outcome for the third consecutive period, albeit below RaaS forecasts predominantly due to macro headwinds resulting in lower-than-forecast revenue on the back of project delays. Management cited that client feedback suggests “inflationary pressures, uncertainty prior to election results (both international and domestic) and shortage of qualified engineering resources caused deferrals of several notable prospective project opportunities that were expected to commence in H1 FY2025”. We interpret this as one or two large projects not landing as expected. This resulted in H1 FY25 revenue of $42.8m (down 14.4% on the pcp and 8.9% below RaaS’s forecast) and EBITDA of $3.1m (35.4% below RaaS’s forecast). Importantly, the recent cost-out initiatives and operating disciplines resulted in a profitable result with the gross profit margin strengthening to 37% at the project level, but the reduced top-line scale over the cost base resulted in a more material impact at the EBITDA line. VBC provided a forward-weighted revenue pipeline of $46.9m for H2 FY25, showing it is expecting an improved result and some momentum into FY26. We adjust our forecasts with FY25 revenue reduced by 14% to $90.3m and EBITDA by 33% to $7.0m. We had forecast a return to dividends but the weaker-than-expected H1 FY25 result at the bottom-line has delayed this. The flow-forward impact of growth off a lower base subsequently reduces our DCF valuation from $0.40/share to $0.35/share but still represents potential upside of 303% over the current share price.