Adjusted EBITDA of $11.2m masked a $21.5m statutory loss

Adjusted US GAAP EBITDA was a positive NZ$11.2m, yet loss before tax widened from NZ$1.6m to NZ$22.5m and net loss after tax widened from NZ$0.2m to NZ$21.5m. The non-GAAP definition expressly excludes restructure costs, impairments, asset write-downs and acquisition transaction costs, which is consistent with the size of the gap.

Revenue fell 6.6% to NZ$63.2m, with US South revenue down 9% and Brazil up 11% in local currency (41% of group revenue). Seedling unit volumes fell 11% to 328 million.

Operating cash flow dropped 76.9% to NZ$2.7m, capex rose 18.2% to NZ$7.8m, and pre-lease free cash flow swung from +NZ$5.1m to -NZ$5.1m. Gross borrowings rose to NZ$24.4m and total equity fell 16.2% to NZ$124.6m.

Adjusted EBITDA of NZ$11.2m, by ArborGen's own footnote, strips out restructure costs, impairments, write-downs and acquisition costs. With PBT at -NZ$22.5m and an acquisition flagged in the period, the read is that material below-EBITDA charges, not core trading, generated most of the statutory loss. The PBT swing of n/m sits below Annolyse's historical baseline range, and the -35.6% PBT margin is well below the -6.3% to 1.6% historical range.

Cash conversion deteriorated sharply and is now economically weak. OCF/EBITDA of 24.1% on adjusted EBITDA of NZ$11.2m, combined with capex of 12.3% of revenue, produced -NZ$5.1m pre-lease FCF against a historical mean of +NZ$3.0m. Inventories rose NZ$3.3m to NZ$38.4m on falling unit volumes, absorbing cash and raising questions about saleable mix.

Leverage weakened on a shrinking equity base. Net debt rose from NZ$14.4m to NZ$20.9m (1.9x adjusted EBITDA), while equity fell NZ$24.1m. ROE moved from -0.1% to -17.3%, also below the historical baseline range.

The half-year shape supports that: HY25 contributed only 20.9% of full-year revenue and EBITDA at the half was -NZ$0.5m, so essentially all of the NZ$11.2m adjusted EBITDA was earned in H2. H2 operating cash flow was only NZ$0.6m, however, so the second-half profit recovery did not convert to cash.

The release says US headwinds "persist" and Brazil continues to grow. With no quantified forward target supplied, the result supports a thesis of regional divergence rather than a clean pan-group recovery, and any read on FY26 depends on whether the below-EBITDA charges recur.

First, the headline EBITDA is non-GAAP and excludes the items that explain the NZ$33.7m gap to PBT; statutory profitability remains deeply negative for a second consecutive year. Second, even on management's preferred measure, only NZ$2.7m of NZ$11.2m adjusted EBITDA reached operating cash flow, and after NZ$7.8m of capex the group consumed NZ$5.1m of pre-lease cash. Pre-lease FCF of -NZ$5.1m matches the lower edge of Annolyse's historical baseline (mean +NZ$3.0m, range NZ$0.9m–NZ$5.1m).

Working capital absorbed cash: inventories rose NZ$3.3m on falling units, and operating working capital grew by NZ$6.2m. The 4.4% effective tax rate (versus 87.5% prior) is too small to materially distort the read, so PBT growth of n/m is the cleaner operating measure and tells the same story as NPAT growth of n/m. The leverage move from NZ$14.4m to NZ$20.9m of net debt, with cash falling 37.5% to NZ$3.5m, is the durable balance-sheet imprint of the year.

This briefing cannot assess the specific composition of the items excluded from adjusted EBITDA, since the release excerpts only describe the categories rather than disclosing individual amounts.