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Commercial Services and Supplies
Close the Loop: manager sees recovery after failed takeover and earnings slump
After a terminated takeover approach and a sharp earnings decline dragged on its FY25 result, Close the Loop's key shareholder is pointing to a newly operational Mexicali facility and fresh leadership as the basis for an improved FY26.
TT
Thesis Tracker
28 August 2025
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3 min read
Close the Loop's FY25 EBITDA fell 46% to $12.2m after failed Adamantem takeover talks, but Salter Brothers cites a now-operational Mexicali facility.
In Short
Close the Loop was Salter Brothers' key portfolio detractor in FY25, after terminated takeover discussions with Adamantem and a weaker-than-expected first-half trading update pulled the share price back.
FY25 EBITDA fell 46% to $12.2 million, which Salter Brothers attributed to an unfavourable shift in business mix and delays in approval for the company's Mexicali facility.
Salter Brothers expects FY26 to benefit from new project wins and an improved earnings trajectory, now that the Mexicali site is fully operational and new CEOs have been appointed to lead the North American ITAD division and the Australian business.
Close The Loop Ltd (ASX: CLG) had a difficult FY25 by its own major shareholder's account. Salter Brothers described the company as its portfolio's key detractor for the year, pointing to a combination of terminated takeover discussions with Adamantem and a weaker-than-expected first-half trading update that together pulled the share price back over the period.
A sharp earnings decline, with a clear cause
The scale of the earnings pressure was significant. Salter Brothers noted that while revenue was broadly in line with the prior corresponding period, EBITDA fell 46% to $12.2 million, which it attributed to an unfavourable shift in business mix combined with delays in delivery of the Mexicali facility approval. Both factors, the manager said, materially impacted the FY25 result, and represent the core of what went wrong operationally over the year even as top-line revenue held up.
Despite the disappointing interim performance, the Manager notes several encouraging developments: the Mexicali site is now fully operational, new CEOs have been appointed to lead the North American ITAD division and Australia. With FY26 expected to benefit from new project wins and produce an improved earnings trajectory.Salter Brothers, Annual Report, August 2025
What managers are watching next
The recovery case, as laid out by Salter Brothers, rests on operational execution rather than corporate activity, given the Adamantem approach did not proceed. With the Mexicali site now fully operational and new leadership installed across both the North American IT asset disposition (ITAD) division and the Australian business, the manager's expectation is for new project wins to flow through to an improved FY26 earnings trajectory. Whether that materialises is the next test for a stock still recovering from one of its most difficult years on record.
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Frequently asked questions
Frequently asked questions
Why did Close the Loop's earnings fall sharply in FY25?
Close the Loop's FY25 EBITDA fell 46% to $12.2 million, which Salter Brothers attributed to an unfavourable shift in business mix and delays in delivery of the Mexicali facility approval, even though revenue was broadly in line with the prior year.
What happened with the Adamantem takeover talks?
Close the Loop's takeover discussions with Adamantem were terminated during FY25, contributing to a pullback in the share price alongside a weaker-than-expected first-half trading update, according to shareholder Salter Brothers.
What is the case for a Close the Loop recovery in FY26?
Salter Brothers points to the Mexicali site now being fully operational and new CEOs appointed to lead both the North American ITAD division and the Australian business, expecting FY26 to benefit from new project wins and an improved earnings trajectory.