Coventry Reports $99.3M Q1 Sales and $2.9M EBITDA, Eyes >$20M FY26 Target

• Q1 FY26 sales reach $99.3 million, up 4.5% year-on-year
• Unaudited EBITDA improves to $2.9 million from breakeven in Q4 FY25
• Annualised $10 million cost-out program underway, $2.9 million savings identified in Q1
• New CFO and CIO appointed to drive 'back to basics' strategy
• FY26 EBITDA guidance set above $20 million with expected quarterly improvement

Steady Sales Growth Amid Regional Challenges

Coventry Group Ltd (ASX, CYG) has kicked off FY26 with a solid trading update, reporting group sales of $99.3 million for the first quarter, a 4.5% increase compared to the same period last year. This growth is particularly noteworthy given the ongoing softness in key markets such as Victoria, Tasmania, and New Zealand, indicating resilience in the company’s core distribution and fluid systems segments.

Despite these regional headwinds, Coventry’s sales culture appears to be shifting positively, driven by new management initiatives and a group-wide incentive scheme powered by enhanced PowerBI reporting tools. These measures seem to be fostering stronger sales momentum across all levels of the business.

EBITDA Turnaround and Cost Reduction Progress

On the profitability front, Coventry reported an unaudited EBITDA of $2.9 million for Q1 FY26, a marked improvement from a breakeven position in the previous quarter. This uptick aligns with the company’s ongoing $10 million annualised cost-out program, which is ramping up as planned. During the quarter, the team identified and implemented approximately $2.9 million in annualised labour and expense savings, signaling tangible progress toward the broader efficiency goals.

The cost-out program is expected to build further momentum throughout FY26, with full benefits anticipated in FY27. Notably, the current EBITDA guidance of over $20 million for FY26 does not yet factor in the complete impact of these cost savings, suggesting potential upside as the program matures.

Leadership Refresh to Drive Strategic Focus

Supporting these operational improvements, Coventry has strengthened its executive team with the recent appointment of a new Chief Financial Officer, who commenced duties on 1 October 2025. The CFO will work closely with CEO Nik Alpert to execute the company’s “back to basics” strategy, emphasizing sales growth, cost control, cash generation, and debt reduction. Additionally, a new Chief Information Officer is set to join in mid-November, underscoring the company’s commitment to leveraging technology in its turnaround efforts.

Capital Raise Bolsters Financial Position

In September, Coventry launched a non-renounceable entitlement offer aiming to raise up to $20 million. The company successfully raised approximately $11.5 million through the issuance of over 19 million new shares at $0.60 each, with the new shares issued in mid-October. This capital injection provides additional financial flexibility to support the ongoing transformation and growth initiatives.

Outlook, Cautious Optimism with Clear Targets

The board remains confident in Coventry’s market opportunities and the refreshed leadership team’s ability to deliver on its potential. With meaningful revenue scale and strong gross margins, the company operates in markets free from significant structural challenges. The outlook for FY26 is cautiously optimistic, with expectations of quarter-on-quarter earnings improvement and a clear pathway to enhanced profitability as cost savings deepen and sales initiatives gain traction.

Bottom Line?

Coventry’s early FY26 results hint at a turning tide, but execution on cost savings and sales growth will be critical to sustain momentum.

Questions in the middle?

• How quickly will the full benefits of the $10 million cost-out program materialize in EBITDA?
• Can the new executive team sustain sales growth amid ongoing regional market softness?
• What impact will the recent capital raise have on Coventry’s debt levels and cash flow?