Austal Limited · ASX:ASB
Austal — Investor Presentation (May 2019)
39 slides from Austal's investor presentation, May 10, 2019
Slide 1: New Zealand Investor Presentation 14 & 15 May 2019
| y David Singleton, Chief Executive Officer \ New Zealand Investor Presentatior 14 & 15 May 2019
Slide 2: Updates since H1
Updates since H1 Full year guidance for revenue is now in the range $1.8bn to $1.9bn. 2 EPF vessels worth A$369m awarded since the half year. Mols 109m ferry and 2 Braveline 50m ferries delivered on time. 2
Slide 3: Additional orders for EPF since H1
Additional orders for EPF since H1 means 14 total orders with 10 delivered Austal has won all three competitions for LCS over the last 3 US Government financial years demonstrating the strong cost competitiveness that we have. Guardian deliveries on time and quality going well. Program is profitable
Slide 4: Austal is highly differentiated in the shipbuilding world
Austal is highly differentiated in the shipbuilding world and is the world leader in high speed low weight aluminium vessels for both the military and commercial applications. Constant innovation has meant Austal has kept ahead with many technical firsts including the trimaran hull which provides th
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Slide 6: Don’t think of Austal as a normal ferry builder
Don’t think of Austal as a normal ferry builder, think of Austal as building the most sophisticated high speed vessels in the world. The Ferraris of the shipbuilding world. Austal is the only designer and builder of large high speed trimarans in the world.. 6
Slide 7: Innovation has led to our newest class of vessels
Innovation has led to our newest class of vessels, more efficient in the water and lighter for its speed and size than anything that has gone before it. 7
Slide 8: Another range of unique Austal products are our Auxiliary Transport vessels
Another range of unique Austal products are our Auxillary Transport vessels. These were originally based on commercial catamaran design, one of which Westpac Express has been operating from Okinawa in Japan for 14 years. Based on this success the US Navy ordered 10 EPF and have since added 4 more EP
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Slide 11: “I am a huge fan of the LCS.”
“lam a huge fan of the LCS. It has a capacity to do modernization and add capability like no other warship we've ever built.” 11
Slide 12: HSSV for RNO
2m HSSV for RNO- 12
Slide 13: Schedule protection funding from Trinidad and Tobago
Austal has received schedule protection funding from Trinidad and Tobago for 2 Cape vessels for delivery in mid 2020. Contract is not finalised and therefore provides no certainty that these vessels will be completed. 13
Slide 14: 1 additional Guardian Class patrol boat delivered on time
1 additional Guardian Class patrol boat delivered on time program & stable (now 2 of 21 delivered). 3rd vessel has been launched and is approaching user training. Program is profitable. 14
Slide 15: Building highly quality and low cost manufacturing centres
We have been pursuing a strategy of building highly quality and low cost manufacturing centres to service our key markets in the USA, Australia, Europe and Asia whilst maintaining our technological lead based in our home base in Western Australia. 15
Slide 16: 20 years of ship building in the USA
This year we will celebrate 20 years of ship building in the USA. Today we have the largest most efficient aluminium shipyard in the USA a significant competitive advantage. 16
Slide 17: Asian expansion fundamentally changes our business
Asian expansion fundamentally changes our business. Never before been able to produce large vessel in Asia. Now 2 large vessels at a time (Philippines and Vietnam together). Reduces yard concentration issues. Asia expansion is creating new ‘home’ markets. Philippines operators prefer loc
Slide 18: New Assembly Hall would fit 3x Boeing
New Assembly Hall would fit 3x Boeing 737 —== AUSTAL 120 metres poe 40 metres « « « ' NOON AS OFFICES *Aircraft shown are Boeing 737-200 18
Slide 19: Shipyard officially commenced production in November 2018
Shipyard officially commenced production in November 2018 and now employs circa 230 people. We expect this to rise to over 400 by mid year. Yard is currently building the 94m catamaran for Trinidad. Program is on schedule for the planned delivery date. 19
Slide 20: China
China. Aulong JVisnearly3 yearsoldand == fast becoming the local market leader. AUSTAL JV announced —— ‘ 15 contract 20
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Slide 22: Order book and outlook is strong
cS a ad EPF consistent and ~~s2. Order book and outlook is strong. 3. Sustainment and support work growing as fleet grows. 4. Important non-USA opportunities. 22
Slide 23: The FFG(X) program represents a major growth opportunity
The FFG(X) program represents a major growth opportunity for Austal in the USA with a bigger and more sophisticated ship that the Navy budget suggests could be around US$800m each with a requirement for 2 per annum. (see US Navy plan and budget statements) 23
Slide 24: Increasing interest in variants of EPF
We are seeing increasing interest in variants of EPF for other mission types that could continue to extend its life. EPF 13 and 14 contracted in March this year are likely to have a medical capability. Other vessel types are also possible. In addition the Navy has published plans for a Large Autonom
Slide 25: Designs early in the cycle
designs early in the cycle and isina position to deliver into this market. Austal remains highly differentiated in its core aluminium high speed market. 25
Slide 26: Conventional large ferry construction market at record levels
Conventional large ferry construction market is running at record levels of activity, globally. New build orders per year [ Vessels >70m ] 80 30 year historic peak 70 60 sO 40 30 20 : | [| oO 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 2018 26
Slide 27: Global high speed ferry replacement market is now underway
Global high speed ferry replacement market is now underway. Market research indicates it is yet to hit its peak. Age of global high speed ferry fleet (vessels >70 metres) 16 Lf ™N Expected Life = 25 years 14 Number of vessels o ny 26 27 28 29 30 o 1 2 3 4 5 g9 10 11 12 13 14 15 16 17 18 Vessel Age S
Slide 28: New build activity in the large ferry market tracking to forecast
New build activity in the large ferry market is tracking to forecast levels, with a mix of new capacity and replacement vessel. New build orders per year [vessels >70m] 6 @ Actual - new capacity @ Actual - replacement @ Projected - average 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Slide 29: MARPOL 2020 regulation on sulphur dioxide emissions
The MARPOL 2020 regulation on sulphur dioxide emissions requires all vessels globally to operate with no more than 0.5% sulphur in fuel content. This means vessels will no longer be able to burn (low cost) high sulphur fuel oil (HSFO) without fitting an exhaust scrubbing system. Alternative is to sw
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Slide 31: Update
Update - EPF long lead has now converted to 2 contracts. - 2nd Guardian Class vessel delivered. 31
Slide 32: Earnings
Earnings $m FY2019 H1_ FY2018 Hi" Revenue $ 851.5 $ 650.3 EBITDA 60.7 43.8 EBIT 40.4 26.5 NPAT 23.7 23.2 EPS (cents) 6.7 6.7 1. F¥2018 H1 restated for adoption of AASB 15 Revenue accounting standard Operating Revenue increased across all shipyards [pre positive FX impact in USA and Asia]. Significan
Slide 33: Margin can increase in the range and potentially above it
- USA support margins strong and should stay in current 7-8% range but volatile given timing of award fee’s which can affect single half results. - Australasia support margin continues to be subdued due to the onerous Cape ISS contract (as previously advised). - US shipbuilding margin is in the 7-8%
Slide 34: Net Cash / (Debt)
Net Cash / (Debt)' $150 $100 $50 $0 ($50) ($100) ($150) ($200) Dec Jun Dec Jun Dec Jun Dec Jun Ded Jun Dec Jun Dec eDle cls c0Is = eta cla ctis e015 §=6e016 «= 2016S e017) 2017 2018 2018. + Excludes COPS 8 6 10. debt 34
Slide 35: Guidance Update — Group
Guidance Update — Group | | Revenue $1.3 - 1.4 billion increased $1.8 - $1.9 billion USA aed Ai 7-B8% 35
Slide 36: Defence dominated by USA but exports featuring again
- Defence dominated by USA but exports featuring again. EPF 13 and 14 now awarded. (Post H1 2019) See separate note on T&T contract status. Philippines OPV is at Request for Information stage. 36
Slide 37: Commercial
- Commercial strongly positive based on major product revamp. Some start up risks largely in the Philippines. 37
Slide 38: Austal recently lost the ‘Planning Yard’ contract in the USA
- Austal recently lost the ‘Planning Yard’ contract in the USA however support is still likely to grow rapidly due to a larger LCS fleet (only 9 of 19 ships on order delivered) and greater proportion of total spend being won (eg. recent dry docking awards). 38
Slide 39: Disclaimer
Disclaimer David Singleton, Chief Executive Officer Telephone: +61 8 9410 1111 For further information visit www.austal.com Disclaimer This presentation and any oral presentation accompanying it has been prepared by Austal Limited (“Austal"). It should not be considered as an offer or invitation to