Stealth Group (ASX:SGI) used its half-year FY2026 investor presentation to highlight what management called a record first-half result, alongside an updated strategic roadmap following the November 2025 acquisition of Hardware & Building Traders (HBT). Management emphasized that the company has now delivered “12 consecutive periods of growth” across profit and loss metrics and believes it has entered a new phase of scale-driven expansion.
Record first-half result and balance sheet improvement
For the half, Stealth reported sales up 11.8% to AUD 82.2 million. The company said hardware, industrial and safety sales rose about 16%-17% and represented roughly 73% of sales, while consumer sales increased 2% in what management described as a challenging consumer environment.
Underlying EBITDA increased 17.5% to AUD 5.4 million and net profit after tax rose 51% on a like-for-like basis to AUD 1.6 million.
Management also highlighted a materially stronger balance sheet following a November capital raise. The company raised AUD 19.5 million gross (or AUD 18.7 million net), ending December with AUD 32.5 million cash at bank and net debt of AUD 7.3 million. Green said net leverage was 0.7x, and management described liquidity and covenant headroom as “very comfortable.” Operating cash flow was AUD 3.7 million, with Green noting a year-on-year change influenced by a AUD 1 million tax payment.
HBT acquisition positioned as “transformational” scale
Executives repeatedly framed the HBT acquisition as a structural shift for the group. The company said HBT is Australia’s largest privately owned hardware buying group and, post-acquisition, Stealth now has an independent distribution footprint of roughly 1,200 locations and access to an annual purchasing volume now described as about AUD 800 million (with retail sales value referenced at AUD 1.3 billion).
Management reiterated the acquisition price was AUD 22 million, including AUD 17 million paid upfront and AUD 5 million deferred for 12 months. The company also referenced additional deferred settlement tranches tied to profit targets: a AUD 5 million tranche plus two more AUD 5 million tranches in FY2027 and FY2028, contingent on achieving profit targets.
Stealth said HBT generated AUD 7 million of revenue and AUD 3.7 million of EBITDA, with revenue “achieved through commission” on member purchases. Management said HBT had FY2025 purchases of AUD 645 million from 1,165 members across 490 suppliers, including AUD 30 million of rebates the company described as “uncaptured” in revenue between suppliers and independent operators.
A central theme of the call was Stealth’s plan to “reroute” purchasing volume into group sales. Management said it is seeking to capture half of the purchasing volume flowing through the buying group and convert it into sales through Stealth’s distribution channels, describing the opportunity as one “available to us today,” rather than dependent on winning new market share.
Strategy update: omni-channel distribution and new initiatives
Management described Stealth as a distributor, wholesaler, and retailer with roughly 4,700 stores available across Australia through a mix of company operations, independent retail and trade partners, and retail resellers, plus online channels and a national sales team. The company cited a supplier base of about 1,300 and “about 1 million products available.”
Several growth initiatives were updated in the context of the expanded HBT network:
- H Hardware brand expansion: Stealth said the HBT acquisition added 50 licensed H Hardware stores and management plans to grow this to 200 over the short to medium term. Executives emphasized the model is a license structure (not a franchise), which they said reduces complexity and cost.
- Exclusive and private-label brand rollout: Management pointed to opportunities to expand distribution of ranges such as Caterpillar and Harden across the larger store base.
- RIVO Safety pilot with 7-Eleven: The company said RIVO Safety has commenced in a pilot of around 14 7-Eleven stores, with an objective to expand into about 1,000 stores across convenience and independent hardware channels in the coming months.
- Digital strategy shift to H Hardware: Management said a previously discussed United Supply Co. B2C initiative has been “rebadged” to H Hardware, aiming to create a national single-brand online marketplace fulfilled through local stores.
- Payroll centralization: Stealth said it centralized payroll from five businesses into one system and one employing entity, citing productivity improvements and a broader platform for employee benefits.
- Tool hire: Management said tool hire is ready for a wider rollout with a soft launch completed, and it expects to deploy across HBT stores in the last quarter of FY2026. The company stated the tool hire business delivers 85%-95% margin with a 13-week payback period, with a maximum capital item cost of AUD 5,000 and an average cost of about AUD 700.
- Loyalty rewards: Management said the loyalty program has been rolled out to 22 trade members and will be expanded to H Hardware and HBT members.
Trading update and FY2028 targets reiterated
Management said it entered the second half of FY2026 with “good momentum,” noting that HBT contributed only two months in the first half. The company expects H2 FY2026 to exceed H1 FY2026 and stated that FY2026 will surpass FY2025, which it expects would represent another record year.
While management referenced macro pressures including cost of living, cost inflation and geopolitical uncertainty, it said demand across Stealth’s core sectors remains resilient, describing much of its industrial and safety product mix as non-discretionary. Management also reiterated its longer-term guidance remained unchanged: a goal of AUD 500 million in sales by FY2028, with an 8%-12% EBITDA margin target and 5%-8% NPAT margin target. The company said its capex remains capital-light at about 1.5% of sales and that wholesale distribution is expected to represent 35%-40% of sales in the future.
Investor Q&A: wholesale/retail concerns, guidance, and member response
During Q&A, management addressed questions about free cash flow, saying the business will “continue to promote and push” free cash flow and expects it to be strong as scale improves, citing the capital-light nature of HBT.
On potential channel conflict between wholesale customers and Stealth’s retail/e-commerce presence, management said it does not see a conflict and framed the model as designed to support independent operators and retail resellers. Executives also discussed HBT member economics, saying the company intends to improve fee structures and renegotiate commercial terms in ways that benefit both Stealth and independent operators.
When asked about FY2026 guidance, management said it has not historically provided annual guidance, but reiterated its expectation that FY2026 will outperform FY2025, while keeping focus on the FY2028 targets.
Management said HBT member reaction has been “very positive,” emphasizing that HBT’s former CEO remains in the business, two former directors are involved (including the former chair on an advisory board), and that the company has not lost personnel following the acquisition.
About Stealth Group (ASX:SGI)
Stealth Group Holdings Ltd operates as an industrial distribution company in Australia and internationally. The company offers industrial maintenance, repairs, and operations supplies; safety and PPE products; truck and automotive parts and accessories; and workplace supplies, and other related products and services. It serves customers from a range of industries, including commercial, mining, resources, industrial, government, transport, automotive, agriculture, building, construction, manufacturing, engineering, trade, and retail sectors.
