• Operating cash outflow of $1.3 million, Group remains Net Cash positive
• Group Operating Expenses $6 million lower than prior period
• Middle East conflict impacts sales and costs, but April sales show early improvement

Gale Pacific Limited (ASX: GAP) reported its Quarterly Activity Report and Appendix 4C for the quarter ended 31 March 2026. The company continued to build on strategic and operational progress, though it was impacted by the developing conflict in the Middle East. Operating cash flow for Q3 was an outflow of $1.3 million, a positive result given the working capital requirements as the company enters the US peak trading season. The Group remains in a net cash positive position at the end of Q3, an $18 million increase from 31 March 2025. Point-of-sale data from the early stages of the US peak season indicate reasonable resilience in US consumer demand, with EBITDA in line with the company's internal forecasts. In Australia and New Zealand, the company reported stable year-on-year EBITDA. However, the direct effect of the Middle East conflict has been a contraction in the company's Middle East market. The conflict is also creating indirect impacts, including constrained supply of polymers, significant price volatility, and higher logistics costs. The company is progressing alternative polymer sourcing options and expects to engage with customers regarding pricing over time. Operating expenses for the nine months to March 2026 are more than $6 million lower than the same period last year, highlighting the effectiveness of the company's strategic restructuring actions. The company is moving into the execution phase of its revised strategy, with key priorities including growing the Commercial business globally and increasing the range of existing retail products sold in the US.

The company's decisive actions have strengthened short-term resilience and created the necessary runway to manage challenging impacts more effectively. Ongoing conflict in the Middle East is likely to continue generating both direct and indirect effects, with some lagging impacts potentially extending into FY27. Given the ongoing volatility caused by the Middle East conflict, the company will not be providing full year guidance.