A wise Strawman once said, be slow to buy and even slower to sell… so I’m certainly being patient with Lindsay Australia.

If you’ve followed previous LAU posts here and here, you’ll know myself, @Rick and @PortfolioPlus have ridden LAU through sunshine, cyclones and a fair bit of self-inflicted pain.

HY26 feels like another chapter in the same book.

Revenue is up strongly (thank you SRT), scale is improving, diversification is real. On paper, the strategy makes sense: build national cold-chain dominance, expand rural footprint, push intermodal rail, chase operating leverage.

But the uncomfortable truth, margins are thinner. Statutory earnings are down. Cash conversion is soft. NTA has taken a whack. Leverage has crept above the comfort zone. And the cost lines of materials, subcontractors, labour still looks like they’ve had one too many long lunches. All of that led to Statutory EPS crashing to 3.6cps (presented as 4.3cps underlying).

Now here’s where it gets awkward. As part of my original buy due diligence, I spoke to two close relatives who worked with LAU CEO, Clay McDonald when he was senior at Aurizon. Both said he was a top operator. One told me how during North Queensland floods he went out of his way to look after staff, moving people, supporting families, genuinely decent leadership stuff.

That matters. Culture matters.

But looking at these numbers, I’m starting to wonder whether Clay might just be too nice a bloke.

Freight is a brutal, competitive game. When costs blow out and you can’t pass them through, margins evaporate. You don’t get paid for being well liked, you get paid for controlling cost per kilometre.

To be fair, management is investing for the future. Rail expansion. SRT integration. Rural scale. IF the diversification plan beds down and ROIC lifts back toward 18–20%, this year may look like the messy middle of a good story.

If…. Is a poem by Rudyard Kipling!!

Cheers

JM+Chatty

PS... I'm probably leaning into my patient investor vibe a bit too much here!!