Slide 1: 2017 half year results
2017 half year results For personal use only David Singleton, Chief Executive Officer 27 February 2017 Greg Jason, Chief Financial Officer
Slide 2: Highlights
Highlights For personal use only Revenue: $649.2 million Financial EBIT Headline $18.1 million EBIT Underlying: $31.2 million USA Shipbuilding EBIT margin: 6.6% NPAT: $9.3 million NPAT Underlying: $18.6 million Order book: $3.1 billion, securing work through FY2021 SHIPS SYSTEMS SU
Slide 3: Highlights: Operational
Highlights For personal use only Maturing major programs: Operational o EPF production in USA performing exceptionally well o LCS stabilised and improving. Remains a key area of management attention o Pacific Patrol Boats (PPB) on schedule and cost. Major design milestone met-on-time. Construction
Slide 4: Highlights: Orders and Capital
Highlights For personal use only Strongest ever pipeline being tendered: Orders o LCS program extension bid in February for up to 13 ships. Expect one in FY2017 (circa $500 million) o OPV bid submission end March with down select due August 2017 ($3 billion with circa $1billion for construction) o
Slide 5: LCS program update
LCS program update For personal use only USS Jackson (LCS 6) successfully completed Full Ship Shock Shock trials Trials in July 2016 completed US Navy data analysis underway, no significant issues identified USS Gabrielle Giffords (LCS 10) successfully delivered in December 2016 Subsequent v
Slide 6: Financials
Financials For personal use only SHIPS SYSTEMS SUPPORT 6
Slide 7: Earnings in line with guidance
Earnings in line with guidance For personal use only FY2017 FY2016 Revenue decrease was driven by Income H1 H1 Change statement o Higher Australian dollar A$m A$m Revenue 649.2 747.4 (98.2) o Lower throughput in USA EBITDA 33.3 41.8 (8.5) o Lower activity in Australia following CCPB 1 – 8 and Oman
Slide 8: Segment breakdown
Segment breakdown For personal use only ($m) Ships Systems Support Other Total Revenue 440.7 97.7 55.8 - 594.3 USA EBIT 29.2 0.7 7.0 4.2 41.1 EBIT Margin % 6.6% 0.7% 12.5% - 6.9% Revenue 24.3 - 23.1 - 47.4 Australia EBIT 2.8 - (1.0) - 1.7 EBIT Margin % 11.5% - (4.5%) - 3.7% Revenue 12.7 - - - 12.7 P
Slide 9: Cash and debt
Cash and debt For personal use only Negative H1 operating cash flow FY2017 FY2016 Cash flow H1 H1 Change o Working capital movements in USA $m $m based on timing of billings and change to project retentions Operating (43.8) 51.8 (95.6) Investing includes $30 million of CCPB 9 & Investing (32.8)
Slide 10: Net cash / (debt) – subject to volatility in working capital
Net cash / (debt) – subject to volatility in working capital For personal use only A$ M $100 Jun 2016 Dec 2015 $52 M $31 M $50 Dec 2014 Jun 2015 Cash $7 M $(4) M $0 (Debt) ($50) Dec 2013 Dec 2012 $(100) M Dec 2016 $(101) M $(33) M ($100) Jun 2014 $(78) M Includes $45 M of CCPB 9 & 10 debt related to
Slide 11: Continued reduction in long-term US denominated debt
Continued reduction in long-term US denominated debt For personal use only A$ denominated debt will rise to circa $65m because of nature of CCPB 9&10 charter arrangement to Australian Navy. Likely to remain until mid 2018 with 120 114 opportunity to extend charter. 112 105 105 100 97 Gross debt ($mi
Slide 12: Operations update
Operations update For personal use only SHIPS SYSTEMS SUPPORT 12
Slide 13: Overview – shipbuilding programs
Overview – shipbuilding programs For personal use only Order book of $3.1 billion at 31 December 2016 secures revenue through CY2021, including: o 11 Littoral Combat Ships for US Navy 11 funded, with 3 delivered o 12 Expeditionary Fast Transports vessels for US Navy 12 funded, with 7 delivered o 1
Slide 14: LCS program continuing to mature
LCS program continuing to mature For personal use only Physical shock trials completed with analysis by US Navy continuing as expected Ship modification program stabilising focus is on reducing costs of implementation vessel by vessel More progress necessary to give full confidence that LCS wi
Slide 15: Significant Milestones last months
Significant Milestones last 6 months For personal use only • Awarded contract to design and construct two expeditionary fast transport vessels (EPF 11 & EPF 12) • Delivery of third-party- • USS Gabrielle Giffords designed 70m vessel to (LCS 10) completed Azerbaijan acceptance trials • Delivery of se
Slide 16: US Navy – Littoral Combat Ship
US Navy – Littoral Combat Ship For personal use only 11 ship contract awarded as prime contractor, worth approximately US$4.8 billion o LCS 6, 8 & 10 delivered o LCS 12 & 14 preparing for sea trials o LCS 16, 18, 20 & 22 under construction o LCS 24 & 26 funded Additional 2 LCS constructed and pr
Slide 17: US Navy – Expeditionary Fast Transport
US Navy – Expeditionary Fast Transport For personal use only 12 ship award to Austal valued at US$2.2 billion (fully funded), securing work through to CY2022 Program progressing well – matured into a phase of efficient production and predictable delivery o EPF 6 & 7 – delivered in FY2016 o EPF 8
Slide 18: Austal remains strongly positioned in US
Austal remains strongly positioned in US For personal use only Force structure review Support business for LCS Austal-built vessels have proposes to increase US Navy growing and likely to exceed continued to be funded and by 30% to 355 ships. New $100m revenue in FY2017. programs are maturing. admin
Slide 19: Australia & Export Defence Contracts
Australia & Export Defence Contracts For personal use only SHIPS SYSTEMS SUPPORT 19
Slide 20: Design work load continues to increase for Australia and Philippines
Design work load continues to increase for Australia and Philippines as new contracts are won For personal use only Full Time Equivalent Design personnel Design workload for new vessels 120.0 Potential Order has nearly trebled in last 12 intake Current Design months which is a strong lead 100.0 Lo
Slide 21: Pacific Patrol Boat (PPB) contract for Australia Government
Pacific Patrol Boat (PPB) contract for Australia Government For personal use only 19 x 37m Patrol Boats to be provided by Australia to 12 Pacific Island Nations Contract value $305 million includes 5 years support awarded May 2016. Building Cairns base to deliver support Austal’s first steel s
Slide 22: Offshore Patrol Vessels (OPV) contract for Royal Australian Navy
Offshore Patrol Vessels (OPV) contract for Royal Australian Navy Part of Royal Australia Navy re-equipping program, contract For personal use only value circa $3 billion (c $1bn vessels plus support) over 12 years 60-80m steel patrol vessels of circa 2000 tonnes o Follows on from PPB steel makin
Slide 23: Military Export vessel pipeline reasonable although limited to Middle East
Military Export vessel pipeline reasonable although limited to Middle East For personal use only Austal has been down selected in 2 overseas contracts and is actively engaged in one other major campaign in Middle East Nature of contracts makes predicting actual contractual order intake timing di
Slide 24: Frigate Contract for Royal Australian Navy
Frigate Contract for Royal Australian Navy For personal use only 9 Frigates to be built in existing site in South Australia commencing 2020 at circa 1 per year 3 foreign designs being considered from Navantia (Spain), Fincantieri (Italy) and BAE Systems (UK) Initial contract value circa $10 bi
Slide 25: Commercial Pipeline at strongest level since before 2008
Commercial Pipeline at strongest level since before 2008 For personal use only Six ferries sold in CY2016 exceeds 5 previous years combined Current fast ferry bidding pipeline now the strongest since before 2008 Philippines needs throughput in excess of US$60 million p.a. but ramp up means bel
Slide 26: Systems and Support
Systems and Support For personal use only Austal has invested extensively in sustainment capability in USA, Australia and overseas with new people, facilities and systems. EBIT increasing to circa 15% of group total. USA: o Revenue expected to exceed $100 million for the first time in FY2017 o M
Slide 27: Strategy and Outlook
Strategy and Outlook For personal use only SHIPS SYSTEMS SUPPORT 27
Slide 28: Strategy
Strategy For personal use only Strengthen the Scale the Sustain the business Diversify the business business business • Deliver our current • Improve margins • Grow annuity-style • Position Austal for a programs to the high through procurement revenue by expanding leading role in quality our custome
Slide 29: Pipeline
Pipeline For personal use only • Strong potential to continue United States extending the LCS and EPF 1 Defence programs • Exports from Austal’s portfolio Middle East of aluminium high performance 2 Defence naval vessels including HSSV and CCPB variants • Steel vessels for the RAN’s Australia fleet
Slide 30: Outlook
Outlook For personal use only OPV for Australia being bid now, award expected end LCS program to stabilise Good opportunity for award CY2017 and mature of additional LCS and EPF Frigate programme is the major Australian opportunity Export opportunities from Strong cash position funds Naval support b
Slide 31: Disclaimer
Disclaimer For personal use only 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 o