Alfabs delivers turnaround year as free cash flow strengthens and dividend pathway advances
In its FY26 results presentation delivered on 27 August 2026, Alfabs Australia outlined a turnaround year, led by Managing Director & CEO Matt Torrance and Chief Financial Officer Peter White.
Management framed FY26 as a reset year, headlined by a material step-up in second-half free cash flow and progress against its dividend reinstatement plan, with 6 of 7 milestones now complete. The presentation positioned the business as re-baselining for disciplined growth and a return to shareholder distributions.
Key FY26 metrics included revenue of $105.7m (up 11% on FY2025), underlying EBITDA of $22.6m (down 19%), underlying NPAT of $5.2m (down 57%), free cash flow of $5.7m (flat year on year, with Q4 FY26 at $4.1m), and net debt of $36.6m.
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FY26 results at a glance
Management presented the headline financial scorecard below. EBITDA and NPAT figures are reported on an underlying basis, before exceptional and one-off items.
| Metric | FY26 Value | Change vs FY25 |
|---|---|---|
| Revenue | $105.7m | +11% |
| Underlying EBITDA | $22.6m | -19% |
| Underlying NPAT | $5.2m | -57% |
| Free Cash Flow | $5.7m (Q4 $4.1m) | Flat |
| Net Debt | $36.6m | Down from $38.9m at 31 Mar 2026 |
| Leverage | 1.7x | Within 1.5x–2.0x target range |
The stand-out signal for investors was free cash flow resilience. Despite lower EBITDA, FCF held flat, with the second half delivering a marked improvement and Q4 contributing $4.1m.
From reset to execution — the turnaround scorecard
A review of the business in January 2026 led to a reset presented at the 11 June 2026 Investor Day. Management used the FY26 presentation to track delivery against those commitments.
The FY26 presentation was the first formal progress report against commitments made at the June 2026 Investor Day, where management set out a plan to triple free cash flow by FY28 through approximately $8 million in pre-tax cost and facility savings alongside a tightened capital allocation framework.
The cost base restructure is complete, including a total headcount reduction of approximately 15%. Phase I of the debt restructuring has been completed, with Phase II reported as on track. Continuous Miner #4 was contracted on 23 July 2026, which management noted was ahead of plan.
The status of each key initiative was outlined as follows:
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Free cash flow improvement plan (targeting a 2x–3x increase by FY2028) — ON TRACK (Q4 FY26 FCF $4.1m)
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Disciplined capital allocation — IN PLACE (acquisition put on hold)
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Balance sheet optimisation — ON TRACK (Phase I complete, Phase II on track)
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Cost base restructure — COMPLETE (approximately 15% headcount reduction)
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Deployment of capital — CONVERTING TO REVENUE (Shell program largely complete, CM04 commissioned and contracted from August 2026)
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Pathway to dividend reinstatement — ADVANCING (6 of 7 milestones complete)
The company’s Key Messages slide highlighted that the turnaround is working and the company is delivering on its plan, and that the underlying business fundamentals remain strong.
Divisional performance — Mining momentum, Engineering resilience
Mining division and Shell Program
The Mining division recorded FY26 EBITDA of $23.9m, up 2% on FY2025. The average daily hire rate rose to $79.1k, up 14% on the prior year.
Management pointed to several future earnings drivers: Continuous Miner #4 hired from August 2026 for 12 months; AX-10 (#1) on a 12-month hire from July 2026, with AX-10 (#2) under construction; and two Driftrunners on hire, with a further two near complete and forward sold.
The CM04 hire agreement, struck with a Queensland mining customer and locking in approximately $2.5 million in annualised revenue under a minimum 12-month term, was flagged by management as a demonstration of the Shell program converting refurbished assets directly into contracted cash flow.
Operationally, the mining workshop workforce was reduced by approximately 60%, Wollongong operations were consolidated into Kurri Kurri, and Dartbrook assets were redeployed following administration.
Engineering division
The Engineering division reported FY26 EBITDA of $5.5m, down 15% off the back of a record FY2025. Contracted work in hand, the value of forward work already contracted but not yet invoiced, stood at $11.6m, down 55% on FY2025.
The division achieved the highest level registration in Queensland for government steel fabrication supply. The St Mary’s Train Station Upgrade progressed to approximately 95% completion at 30 June 2026, and management noted a developing tender pipeline across government infrastructure.
Understanding free cash flow and why it matters
Free cash flow (FCF) measures the cash a business generates after covering interest, tax, lease payments, working capital funding and maintenance capital. For a capital-intensive equipment-hire business, FCF conversion, or FCF expressed as a percentage of EBITDA, indicates how effectively earnings translate into deployable cash.
The FY26 result is notable because FCF held flat at $5.7m despite lower EBITDA, with second-half conversion stepping up to approximately 50%. Q4 FY26 FCF of $4.1m included around $1.3m of one-off working capital improvement.
The reported FCF trend through FY26 showed the momentum building:
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H1 FY26: $0.8m
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Q3 FY26: $0.8m
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Q4 FY26: $4.1m
Sustained cash generation is the gateway to both disciplined growth and a return to shareholder distributions, which is why management flagged the H2 step-up as the key positive signal.
Balance sheet, debt restructure and the path to dividends
Net debt rose year on year to $36.6m, up 76%, driven by growth capex in the Shell program. That trend reversed in Q4 on improved FCF generation, with net debt falling from $38.9m at 31 March 2026.
On financing, management detailed that 74% of drawn debt at 30 June 2026 is amortising to nil over 4–5 years, rising to approximately 95% post year-end as the Come & Go facility converts to Asset Finance. Gross drawn debt stood at $50.1m. Phase II of the restructure is aimed at providing appropriate flexibility and covenants.
Management confirmed that dividends are expected to recommence once the Phase II debt restructure is complete, marking a return to distributions after the dividend was paused in January/February 2026. The NAB dividend covenant is expected to be below 2.25x for a 50% NPAT dividend, with a Dividend Reinvestment Plan (DRP) under consideration.
The seven milestones on the dividend reinstatement pathway were presented as follows:
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Cash buffer established and Phase 1 facility restructure completed — COMPLETE
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Cost savings program and workshop resizing plan completed — COMPLETE
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Workshop resizing completed — COMPLETE
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2026 Shell program finished — COMPLETE
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Sustained free cash flow generation demonstrated — COMPLETE
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Net debt below 2x EBITDA — COMPLETE
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Phase 2 facility restructure — WORK IN PROGRESS
The remaining Phase II item is the single trigger for a dividend review, making it the key catalyst investors are watching.
Market backdrop and the FY27 outlook
Management presented a demand context of resilient global coal consumption. Global coal demand reached a record of approximately 8,835 Mt in 2025 and is expected to plateau above 8,680 Mt through 2030, with energy-security-driven gas-to-coal switching cited as a near-term tailwind (source: IEA/DISR as cited in the presentation). Stable metallurgical coal prices were noted as supporting underground mining services demand.
The company highlighted its embedded East Coast footprint, operating three workshops across the NSW and QLD coal regions.
Looking to FY27, management outlined its priorities: complete deployment of the remaining Shell Program assets, preserve Engineering earnings, and pursue selective growth opportunities including M&A against a >15% IRR hurdle. Alongside this, the company aims to deliver sustained free cash flow, secure more flexible financing facilities, and progress towards dividend reinstatement.
Management closed on its stated strategic positioning: disciplined growth is the most value-accretive pathway for shareholders, with a focus on cash generation and capital allocation as the means of delivering it.
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