Stealth Group Posts Record $82M Half-Year as HBT Deal Lifts FY28 Target to $500M
Stealth Group Holdings Limited (ASX: SGI) has reported record half-year results for the period ending 31 December 2025, with sales reaching $82.2 million (up 11.8%), EBITDA climbing to $5.3 million (up 18.8%), and net profit after tax surging 51.4% to $1.6 million. The performance follows the November 2025 completion of the transformational Hardware & Building Traders (HBT) acquisition, which management describes as a genuine inflection point that has prompted an upgrade to the company’s FY28 sales target from $300 million to over $500 million.
The Stealth Group HBT Acquisition Results position the industrials-focused distributor as the leading independent alternative to Wesfarmers and Metcash in a $93 billion addressable market, with consolidated annual purchases now exceeding $800 million across more than 1,200 locations nationally.
Stealth Group delivers record half-year as HBT acquisition reshapes national footprint
The 1H FY26 result represents the strongest six-month performance in Stealth’s history across all key financial metrics. Sales of $82.2 million were accompanied by maintained gross profit margins of 29.4%, translating to $21.2 million in gross profit. EBITDA growth of 18.8% outpaced revenue expansion, demonstrating early operating leverage from the enlarged platform.
Net assets strengthened to $49.5 million, supported by a $19.5 million capital raise completed to fund the HBT transaction. Cash on hand stood at $32.5 million (up 212.6%), while net debt reduced 34% to $7.3 million. Net gearing improved from 18.3% to 12.8%, with net debt to annualised EBITDA falling to 0.7x from 1.1x.
The company remains compliant with all banking covenants and maintains capacity for disciplined organic and inorganic growth initiatives. Free cash flow of $0.1 million reflected capital investment of $1.6 million during the integration phase.
Mike Arnold, Group Managing Director & CEO
“HY26 represents a genuine inflection point for Stealth… We operate across more than 1,200 locations nationally, representing approximately $800 million in annual purchases. This positions Stealth as the clear market-leading independent alternative within a highly fragmented $93 billion market.”
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What buying groups mean for distribution economics
The HBT platform operates as a buying group representing approximately 1,165 independent hardware and building stores across Australia. This model differs fundamentally from traditional retail ownership by aggregating procurement power without requiring capital-intensive store acquisition or operation.
Under a buying group structure, independent store owners retain ownership and operational control while benefiting from collective purchasing leverage. Stealth coordinates supplier relationships, negotiates pricing, and provides distribution services, generating revenue through member fees and charge-through sales on goods supplied.
Three key characteristics define the buying group economic model:
- Procurement leverage from consolidated purchasing volumes enables preferential pricing and supplier terms that individual stores cannot achieve independently
- Capital-light expansion occurs because members own their stores and inventory, allowing Stealth to scale its addressable market without proportionally increasing capital requirements
- Recurring revenue streams flow from ongoing member fees and transaction-based earnings as goods move through the distribution network
This structure delivers high return on invested capital (ROIC) characteristics by generating earnings from distribution coordination rather than from capital deployed in physical retail assets. The model becomes more valuable as network scale increases, creating supplier leverage that benefits all members while generating incremental margin for the platform operator.
HBT acquisition transforms Stealth’s national scale
The Hardware & Building Traders acquisition, completed in November 2025, fundamentally reshapes Stealth’s market position. The transaction added approximately 1,165 independent stores to a pre-existing footprint of 32 company-owned locations, expanding the addressable platform from approximately $145 million in FY25 sales to over $800 million in consolidated annual purchases.
HBT brings approximately $700 million in annual member purchases and relationships with approximately 490 suppliers. The acquisition immediately contributed revenue in 1H26 and is expected to deliver approximately $8 million in annual profit synergies by FY27 through procurement optimisation, operational efficiency, and supplier rationalisation.
Management upgraded the FY28 sales target from $300 million to over $500 million based on the enlarged platform’s capability. The company now operates across hardware, industrial, safety, and consumer product categories with national coverage spanning Western Australia, Queensland, and eastern seaboard markets.
| Metric | Pre-Acquisition | Post-Acquisition |
|---|---|---|
| Locations | 32 | 1,200+ |
| Annual Purchases | ~$145m | $800m+ |
| Supplier Relationships | Limited | ~490 |
| FY28 Sales Target | $300m | $500m+ |
The transaction positions Stealth as the primary independent alternative in a market dominated by Wesfarmers (Bunnings) and Metcash (Mitre 10, Home Timber & Hardware). With over 1,200 distribution points and $800 million in consolidated purchasing activity, the platform achieves structural scale sufficient to compete for supplier attention and preferential commercial terms.
Divisional performance breakdown
Sales growth was achieved across both operating divisions during 1H26. The Hardware, Industrial & Safety division reported 16% growth, benefiting from exposure to Western Australian and Queensland geographies where resources, infrastructure, engineering, and construction activity remained resilient despite broader macroeconomic headwinds.
The Consumer division grew 2% despite cost-of-living pressures affecting discretionary spending. Performance was supported by the launch of Apple’s iPhone 17 range and expanded distribution through profitable channels including JB Hi-Fi and 7-Eleven. The division navigated rising inflation and interest rates while maintaining margin discipline.
Key end markets served across both divisions include:
- Resources sector procurement
- Infrastructure project supply
- Commercial construction
- Residential housing and renovation
- Trade services
- Home improvement retail
The HBT acquisition’s contribution from November 2025 onwards provides confidence for continued strong performance in 2H FY26, particularly given the platform’s exposure to end markets demonstrating structural resilience.
Brand rollout accelerates wholesale distribution strategy
Stealth’s exclusive and own-label brand strategy serves as a key margin expansion lever within the FY28 financial targets. These products carry higher gross margins than third-party distribution while building customer loyalty and reducing competitive pricing pressure.
In July 2025, the company secured exclusive Australia and New Zealand distribution rights for Casetify, Belkin, Ember, and extended its existing D3O® partnership. All brands are tracking to plan according to management commentary.
The RIVO Safety rollout (Stealth’s own-label safety product range) has accelerated significantly:
- Currently ranged in 14 7-Eleven stores as of 1H26
- Target expanded to over 1,000 7-Eleven stores by June 2026 (upgraded from 700 previously stated)
- Represents significant penetration of the national convenience channel for industrial safety products
The CAT® and Harden product rollout is progressing ahead of original targets:
- Currently ranged in 22 stores as of 1H26
- Targeting 74 stores by June 2026 (adding 52 stores, up from 30 previously planned)
- Targeting 224 stores by September 2026 (adding a further 150 stores, representing 120 more locations than previously stated)
Management aims to increase wholesale distribution to 35-40% of total sales by FY28, up from current levels. This strategic shift directly supports the targeted EBITDA margin expansion to 8-12% by capturing higher-margin product mix and reducing reliance on lower-margin third-party distribution.
Balance sheet strengthened for growth
The $19.5 million capital raise completed to fund the HBT acquisition has materially improved Stealth’s financial position. Cash on hand of $32.5 million provides substantial liquidity for ongoing integration requirements and future growth initiatives.
Net gearing improved from 18.3% to 12.8%, while net debt reduced 34% to $7.3 million despite funding a transformational acquisition. Net debt to annualised EBITDA of 0.7x (down from 1.1x) demonstrates conservative leverage appropriate for a business in integration and growth mode.
The HBT platform operates with strong free cash flow conversion and high ROIC characteristics, which management expects will enhance group-level cash generation as integration progresses. The company remains compliant with all banking covenants and maintains capacity for disciplined expansion.
| Balance Sheet Metric | 1H FY26 | 1H FY25 | Change |
|---|---|---|---|
| Cash on Hand | $32.5m | $10.4m | +212.6% |
| Net Debt | $7.3m | $11.0m | -34.0% |
| Net Gearing | 12.8% | 18.3% | -5.5pp |
| Net Debt / EBITDA | 0.7x | 1.1x | -0.4x |
The strengthened balance sheet provides optionality for further acquisitions in the fragmented hardware and industrial distribution sector while maintaining financial discipline appropriate for a growth-phase industrial distributor.
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FY28 targets and pathway to scale
Management has outlined a clear multi-year pathway to achieve structural scale and margin expansion. The upgraded FY28 targets reflect the enlarged platform’s capability following the Stealth Group HBT Acquisition Results and subsequent integration progress.
| Metric | FY28 Target |
|---|---|
| Sales | $500+ million |
| EBITDA Margin | 8% – 12% |
| NPAT Margin | 5% – 8% |
| Net Debt / EBITDA | Below 1x |
Five growth catalysts underpin the pathway from $145 million in FY25 sales to over $500 million by FY28:
- Procurement scale and supplier leverage from consolidated purchasing power across $800 million+ in annual purchases
- Exclusive and private-label expansion driving wholesale distribution to 35-40% of sales with higher gross margins
- Wholesale and charge-through sales generating recurring revenue streams from the buying group platform
- Network expansion from 32 to over 1,200 locations creating national distribution density
- Digital and operational efficiency gains through systems integration, process standardisation, and overhead leverage
Management provided a trading update indicating 2H FY26 is expected to surpass 1H26 performance, with stronger FY27 anticipated from full-year HBT contribution. The company entered 2H FY26 with operational momentum, early integration synergies being realised, and confidence in achieving the multi-year targets.
Mike Arnold, Group Managing Director & CEO
“The focus now is disciplined execution, integration, procurement capture, exclusive brand rollout, and driving operating leverage across the expanded platform. We believe the runway ahead is significant, and we are confident in our ability to outperform.”
The transformation from a $145 million revenue business with 32 locations to a $500 million+ revenue target platform operating across 1,200+ locations represents fundamental repositioning within Australia’s hardware and industrial distribution sector. With scale now secured, execution against the brand rollout, procurement optimisation, and margin expansion initiatives becomes the primary determinant of whether the FY28 targets are achieved.
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