Can Stealth Sustain Growth After Cutting Net Debt by 37%?

Record-breaking FY25 performance

Stealth Group Holdings Ltd (ASX, SGI) has delivered a standout financial year, posting record sales of $145.1 million for FY25, a 27.6% increase over the prior year. This surge was driven by the full-year contribution from its Force Technology acquisition, expanded distribution channels, and selective organic growth initiatives. The company’s EBITDA climbed an impressive 62% to $9.9 million, reflecting operational leverage and disciplined cost management.

Gross profit rose 20.8% to $40.7 million, while net profit after tax more than doubled to $3.1 million, translating to earnings per share of 2.63 cents, up 96.2%. These gains underscore Stealth’s ability to convert sales growth into meaningful profitability improvements.

Strengthening financial foundations

Alongside top-line growth, Stealth made significant strides in balance sheet health. Net debt was cut by 37% to $6.8 million, bolstering financial flexibility. Cash reserves increased 42.3% to $14.4 million, supported by strong cash flow generation despite a substantial $4.8 million capital investment program. This investment, the highest since the company’s inception, focused on growth-enabling initiatives such as launching exclusive and private-label brands, upgrading retail stores, and enhancing technology platforms.

Inventory management also improved markedly, with inventory as a percentage of sales falling from 19.1% to 14.8%, reflecting tighter controls and operational efficiency.

Strategic investments fueling future growth

Stealth’s capital deployment targeted multiple fronts, new brands including CAT®, WESCO, and Belkin; the rollout of a Tool Hire division; a loyalty rewards program; and digital upgrades including new online stores and cybersecurity enhancements. These initiatives aim to deepen customer engagement and expand market reach, positioning Stealth for sustained growth.

Operational excellence was evident in the expansion to over 3,500 retail reseller locations and improved stockturn, supported by technology investments in automation and back-office systems. The company’s multi-sector omnichannel distribution model continues to disrupt the industry with a blend of wholesale, company-owned stores, reseller networks, and e-commerce platforms.

Looking ahead, ambitious FY28 targets

Stealth’s management has laid out a clear and ambitious path to FY28, targeting $300 million in sales and an 8% EBITDA margin. The strategy emphasizes growth in exclusive and own-brand sales, aiming for over $30 million in that segment, alongside omni-channel expansion across wholesale, retail, trade partnerships, and digital commerce.

CEO Michael Arnold highlighted the company’s commitment to building scale, resilience, and long-term shareholder value, noting strong demand and a differentiated distribution model as key enablers. The company also declared a fully franked final dividend of 1 cent per share, reflecting confidence in ongoing performance.

Stealth’s FY25 results and FY28 outlook underscore a company transitioning from solid growth to a new phase of scale and sophistication, with strategic investments and operational discipline at its core.