Austco released a trading update today to coincide with their AGM later this morning. Overall impression is it was what you would want to see, which is to say, solid. They didn't break down the organic/inorganic split, which would have been nice, but did reconfirm targeted 10-14% organic growth for FY26. Highlights included:

• Revenue of $23.2 million, up 51% on the pcp, which includes both organic and inorganic growth.

• EBITDA of $4.2 million, representing 18.1% EBITDA margin, up from 16.0% at FY25 year-end.

• Order book of $54.6 million at 23 October 2025. 

Here's how the order book has tracked over the past six years:

Overall it continues to deliver at or above what I need it to in order to justify continuing to hold. I've been lightening some positions that have gotten a bit frothy in recent months but Austco is not one of them.

[Held]

Austco today announcing the acquisition of NZ-based call system solutions provider and Austco reseller, G&S Technologies. I don't know about others but I find it very difficult to play armchair quarterback on acquisitions. There are just too many factors, like working capital pegs and balance sheet health, that are completely unknown unless you're in the tent. However, what we can say based on what's available to us:

• 3.5 times EBITDA - tick. It's in line with other acquisitions they've done, which have so far proven successful. They're maintaining price discipline.
• The EBITDA conversion % is roughly in line with the existing Austco business - tick. On that measure at least seems to be of reasonable quality.
• Strengthens direct sales capacity - tick. They've been doing this across multiple regions and it's been working so far.
• Up to 75% funded by scrip, at Austco's discretion - tick. Give them skin in the game and preserve cash. Yes, it's somewhat dilutive but there's always going to be a trade off.
• It's a meaningful addition - tick. It roughly represents half of Austco's business from 12 months ago. They've grown considerably since so probably represents about a quarter of FY25 business but still significant.

Only slight quibble is that they didn't take the opportunity to update on the order book but I'm nit picking.

[Held]

@LifeCapital and @BendigoInvesto covered this, so I won't back over what they've written. Except to say that I was scratching my head at this result. The numbers just looked too good, and I couldn't get them anywhere near to adding up until I re-read almost to the bottom of their trading update:

Talk about burying the lead - a 5.6% increase in GM is huge! Much higher than anything they've done for at least 10 years. What is that? Is that Technocorp? I'd thought of Technocorp as strategically important, but of lower quality than the existing business. That isn't borne out by the numbers though:

So Teknocorp appears to be holding its own and then some. But the underlying business appears to have had a standout quarter as well. While I thought the 1H numbers were fair-to-good, I had expected a lot more given the growth in order book and commentary around impacts of COVID impacts easing. Q3 appears to have made up for that.

It's just as dangerous to extrapolate a good quarter as it is a bad one, but I'll do it anyway cause I'm a slow learner. Although they disclose NPAT, I'll focus on EBITDA because their tax is all over the shop. They are run-rating at almost $10 million EBITDA, which is an EV/EBITDA ratio under 6. Add a record order book and I'm a happy holder.

Austco has announced a $3.8 million contract win across two hospitals in Singapore.

They have also announced this has taken their order book to $40.7 million, up from the $38.7 million announced at the AGM last month. They've been on a bit of tear this year having more than doubled the order book since February this year.

Zooming out a bit the order book has been steadily rising since late 2019, apart from some COVID and supply chain impacts through 2022 and early 2023.

Nice to see at least one of my holdings kicking ass and taking names. I still think it flies under the radar a bit considering its history of profitable, non-dilutive growth. @Strawman have we spoken with Clayton?

Austco has come out with a roadshow presentation today, with lots of funky graphs and "buy me" arguments. Not a lot new, although they did disclose sales orders were up again from last month's record high to $37.2m - so they're filling the funnel faster than they can drain it. (Ignore the 'Revenue from customers' tag - revenue it ain't).

Austco is one of my more comfortable holdings. They disclose often enough to make you feel wanted, without getting all over-promotional. When they make investments in product or people they set realistic expectations about how long it will take to get a payback from the investment. They certainly appear to be in that zone of getting a return of previous investment right now though.

If I were being hyper-critical I'd say the CEO is very well compensated for a company of this size. However, Clayton appears to be getting the job done so I'll not quibble while that remains the case. It's arguably not a screaming bargain but if they keep growing at the rate they are it will look cheap soon enough. Happy to hold.

If I have a pet hate - and I have many! - it's when a company describes an acquisition as earnings per share accretive when they're paying largely cash in the deal. As long as there are earnings how could it be anything but EPS accretive? Anyway, Austco are doing an EPS accretive deal for Melbourne-based Healthcare reseller Teknocorp.

Including likely earnouts they will pay $3.85m to purchase $9m in revenue and $1.1m in EBITDA. The EBITDA multiple of 3.5x seems reasonable even in these austere markets, although they're to some extent cannibalizing their own sales given that a significant but undisclosed proportion of Teknocorp's sales are Austco products. Also a reseller is inevitably going to have a lower quality people-based business model, relative to Austco's proprietary hardware/software model, and so should justify a lower multiple.

In addition to Austco, Teknocorp also partners with Avigalon, Gallagher, inner range and IndigoVision. The rationale would appear to be gaining a greater proportion of the reseller's sales and acquiring a direct sales capacity in Australia. Other regions in which Austco operates already have this capacity.

The deal is expected to complete in early Q1 FY24.

[Held]

Austco snuck in a price sensitive investor presentation this morning, which was an interesting decision given they released results less than two weeks ago (sans presentation). It came two days after a competitor, Hills Limited (HIL.ASX) announced they had been successful in bidding for the New Footscray Hospital tender in Melbourne. I'm not saying it was because of that. I'll leave that to others.

Largely it replicated what they they had already released with some swanky graphics added. It did give a little more detail about the growth investment being made in each region. One nice little new tidbit it shared was an increase in the order book to a record $24.7m. That's $2m higher than they had disclosed at the end of August and is probably what justified it being price sensitive.

[Held]

Not a great deal of insight provided in terms of FY22 trading or outlook. Main takeaways for me were:

• increase in open order book to $22.9m (from $20.1m at Jun 2021)
• Biggest risk being supply change shortages, particularly semi-conductors

Austco copped a first strike against their remuneration report in FY20 but this was passed comfortably this time around. The re-election of director Brett Burns was the most contentious with 22.69% voting against. Claude Walker chipped in with a question to Brett Burns to detail one opportunity and one risk to the business. To his credit he did answer it, although I wouldn't say I was left any more enlightened about Austco after doing so. Given the stage the business is at and the stated strategic direction of the business I think an acquisition in FY22 is probable.

[Held]