Lindsay Australia (ASX:LAU) management said the company’s multi-year strategy of growth, transformation and investment in scalable operations is moving into a new phase, with recent capital spending and acquisitions expected to provide operating leverage and support improved earnings as market conditions normalize.
Strategy update: network expansion and transformation
Chief Executive Officer Clay McDonald told investors the company remains focused on executing its strategy across three pillars: strategic growth, transformation, and building a more sustainable and scalable performance-based business. During the first half of FY2026, the company expanded its network into Tasmania and southwest Western Australia, which McDonald said connects Lindsay into regions where volume growth is exceeding national averages and further balances the portfolio toward “lower risk and counter cyclical regions.”
Market conditions: competitive road freight environment
McDonald said competitive intensity in the road transport market remains elevated, driven mainly by an oversupply of capacity. While the company’s key market indicators—new truck sales and transport insolvencies—are moving in a direction that supports a gradual return to more normal market conditions, he said the oversupply is expected to remain elevated for the next 12 months.
Despite the near-term competitive backdrop, McDonald described medium- to longer-term fundamentals as positive, pointing to population growth, increasing freight volumes, and expanding horticultural output. He also said Lindsay’s recent investment has enabled it to cover “the full spectrum of temperature-controlled freight,” from fresh to frozen and from basket-of-goods freight to ready-to-eat meals.
SRT acquisition: integration progress and expected synergies
McDonald highlighted the acquisition of SRT, completed on July 1, 2025, and said integration is progressing positively. He said Lindsay forecasts SRT to continue delivering on-island growth, trans-Bass growth, and benefits from being part of an integrated organization, making the combined offer attractive to existing and new customers.
Management said business case hurdles are being met, with momentum in cost and capital synergies, continued volume growth, and the benefit of a counter-seasonal earnings profile. McDonald said the acquisition’s impact extends beyond Tasmania through combined capability, deeper customer relationships, equipment interoperability, greater procurement scale and sharing best practices across the broader group.
During Q&A, management provided examples of early synergy benefits, citing people, procurement and operations, including redeploying equipment that had previously been leased, “significant procurement benefits,” and “people optimization.” McDonald said the company is confident it will achieve the AUD 1 million synergy benefit outlined in the business case and expects it to be above that level.
Half-year financial performance and divisional results
McDonald noted that Lindsay has transitioned from pre-AASB to post-AASB reporting from this reporting season, with a reconciliation included in the presentation appendix.
For the first half of FY2026, management reported:
- Group revenue increased 24.8% to AUD 540 million, driven by a full half contribution from SRT and GJ, plus core growth across all three divisions.
- Underlying EBITDA increased 16% to AUD 66.3 million.
- Underlying NPAT was flat at AUD 15.8 million, which management attributed to high depreciation from the investment cycle, elevated interest rates, and higher interest charges following the SRT acquisition.
McDonald said the group now has a more balanced earnings profile, with recent acquisitions expected to support improved second-half earnings. The board declared a fully franked dividend of AUD 0.021 per share, a 59% payout ratio compared with 49% in the prior year.
By division, management said:
- Transport underlying EBITDA increased 15.6% (up AUD 9.6 million).
- Rural was up 17.7%, delivering a record first-half result.
- Hunter improved underlying EBITDA by 32%, supported by a three-year turnaround plan.
McDonald also said Lindsay expects to deliver more than AUD 1 billion in revenue in FY2026, noting that the investment phase that supported 87% growth over the last four years has “largely been executed.”
Capital investment, debt, cash flow, and EPS discussion
Chief Financial Officer Justin Green said that in the past 12 months the company invested AUD 140 million in invested capital, taking invested capital to nearly AUD 425 million at the end of December. In the first half of FY2026, CapEx totaled AUD 28 million in fleet and facilities, with spending skewed to the first half to support seasonal volumes. Green said second-half CapEx is expected to be much lower, and that Lindsay has reduced its original full-year CapEx forecast to around AUD 43 million, citing synergy benefits from the SRT and GJ Freight acquisitions alongside transformation and procurement initiatives.
Green also addressed return on invested capital (ROIC), saying the scale of investment has had a short-term impact but that management expects ROIC to normalize and trend back toward its midterm target range as benefits are extracted over time.
On borrowings, Green said Lindsay entered the cycle with a strong balance sheet and that while debt has increased, it is associated with long-term growth. He said “core debt” (pre-acquisition) rose only AUD 4.7 million, or 3%, over the past 12 months, with the remainder of an AUD 89 million increase linked to acquisitions. Green said AUD 62.5 million of new debt is “one-off” and is expected to reduce over the midterm as acquisition earnings are delivered. He added that leverage increased as expected due to the investment program, and management expects leverage to move back toward its target range over the next 12 months.
On cash flow, Green said tax payments were almost AUD 18 million in the period as deferred tax positions continued to unwind, and that roughly 70% of de-deferred tax has now been unwound. He forecast second-half FY2026 tax payments to be around AUD 10 million lower than the first half. Green said operating cash flow remains seasonally lower in the first half and that the company expects a higher second-half conversion, targeting around a 70% conversion rate for the full year.
Green also addressed underlying earnings per share, noting that while underlying EPS appeared down 14%, the SRT acquisition involved issuing 46.5 million shares on July 1, while SRT earnings are only included for six months in the consolidated accounts, creating a first-period dilutive impact. He said the company provided a 12-month pro forma EPS illustration incorporating SRT as if it had been acquired on January 1, 2025, which represented a 13% increase versus FY2025 EPS. Green cautioned it should not be interpreted as forecast or guidance, but said it illustrates management’s commitment to double-digit EPS growth from SRT.
Looking ahead, McDonald said near-term conditions are expected to remain competitive, but that insolvencies and reduced truck acquisitions are supportive of normalization over time. He said the second-half focus will be utilizing investments and scale to drive margin improvements, including improved terminal efficiency, and that the company has “line of sight” on further integration synergies as SRT and GJ are connected into the core business.
About Lindsay Australia (ASX:LAU)
Lindsay Australia Limited, together with its subsidiaries, provides integrated transport, logistics, and rural supply services to the food processing, food services, fresh produce, and horticulture sectors in Australia. The company operates through Transport and Rural segments. It also provides seed, chemical, nutrients, fertilizer, irrigation, farm consumables, and packaging. In addition, the company offers linehaul, dry and general, refrigerated chiller freight, and local pick-up delivery services.
