Slide 1: 1H20 Results Presentation
Austin Engineering Limited 1H20 Results Presentation 27 February 2020 www.austineng.com
Slide 2: Important Information
Important Information This presentation has been prepared by Austin Engineering Limited (ABN 60 078 480 136) (“Austin” or the “Company”). The information in this presentation should be read in conjunction with Austin’s continuous disclosure announcements. The information is of a general nature and h
Slide 3: Agenda
Agenda ▪ Highlights ▪ Analysis of Financial Results ▪ Overview by Region ▪ Safety, People, Dividends and Growth ▪ Market Outlook and Guidance ▪ Appendices P3 Austin Engineering Limited 1H20 Results Presentation | February 2020 www.austineng.com
Slide 4: Highlights
Highlights Current period • 1H20 Normalised EBITDA of $4.7 million from continuing operations earnings • Revenue declined 20% on pcp • Maintain guidance position of Normalised EBITDA $24 million - $28 million Outlook • Order book at around 90% to achieve guidance, up from 80% at the same point last
Slide 5: Analysis of Financial Results
Analysis of Financial Results Chief Financial Officer: Sam Cruickshank P5 Austin Engineering Limited 1H20 Results Presentation | February 2020 www.austineng.com
Slide 6: Financial Performance: Normalised
Analysis of Financial Results Financial Performance: Normalised • Revenue decreased by 20% compared to 1H19 (pcp) due to: 31 Dec 30 Jun 31 Dec Dec to Dec Six months ending 2019 2019 2018 % Change — Delayed orders not received until late in the period deferred work from 1H20 to 2H20 Revenue $M 95.6 1
Slide 7: Financial Performance: Statutory
Analysis of Financial Results Financial Performance: Statutory One-off net gain: Six months ending 31 Dec 2019 30 Jun 2019 31 Dec 2018 Dec to Dec % Change • Net gains on sale of assets during 1H20 of $0.7 million, principally from sale of the former Hunter Valley property Revenue $M 95.6 111.6 119.2
Slide 8: Cash Flow
Analysis of Financial Results Cash Flow Six months ending $m Historical cash flow from operating activities 31 Dec 30 Jun 31 Dec $M 2019 2019 2018 20 Cash flows from operating activities 15 NPAT (0.8) (6.9) 2.3 10 Add: • Depreciation and amortisation 4.3 3.4 3.1 5 • Impairments – 4.0 – - • Movement
Slide 9: Working Capital
Analysis of Financial Results Working Capital As at As at As at 31 Dec 30 Jun 31 Dec 2019 2019 2018 $M Working capital reduced to $6.2 million from $22.1 million due to a large increase in $100.0 payments received in advance from clients (included in payables) $80.0 • An increase of $22.1 million fo
Slide 10: Reduction of Net Debt – $46 million in 18 months
Analysis of Financial Results Reduction of Net Debt – $46 million in 18 months Net Debt change 1 July 2018 – 31 December 2019 (AUD '000) Increase Decrease Net Debt Highlights • Improved operating cash flows from $10,000 3,346 increased earnings, focus on effective (45,904) (33,480) (19,298) 18,095 1
Slide 11: Overview by Region
Overview by Region Managing Director: Peter Forsyth P 11 Austin Engineering Limited 1H20 Results Presentation | February 2020 www.austineng.com
Slide 12: Change of Regional Structure
Overview by Region Change of Regional Structure Austin has changed its regional reporting This revised structure will be used structure to align business units servicing similar going forward from FY2020 markets • New structure better reflects the way in which the business is run and results assesse
Slide 13: 1H20 Asia-Pacific
Overview by Region 1H20 Asia-Pacific Iron Ore Asia-Pacific 31 Dec 30 Jun 31 Dec Coal Six months ending 2019 2019 2018 Brisbane Perth Revenue $M 49.0 44.5 63.6 Gold Indonesia Zinc Mackay EBITDA (normalised) $M 4.6 3.0 8.3 Other Hunter Valley EBITDA margin % 9.4% 6.8% 13.1% Operations • Perth operatio
Slide 14: 2H20 Trading: Asia Pacific
Overview by Region 2H20 Trading: Asia Pacific Growth and Trading Landscape • Perth Business expected to be near capacity throughout the remainder of FY2020 and well into FY2021 with a strong order book • Batam, Indonesia facility has capacity to support east and west coast Australia sales, together
Slide 15: 1H20 North America
Overview by Region 1H20 North America Iron Ore North 31 Dec 30 Jun 31 Dec Coal Six months ending 2019 2019 2018 America Revenue $M 26.1 34.7 30.4 Copper Gold USA Oil EBITDA (normalised) $M (0.3) 2.2 3.2 Other EBITDA margin % (1.2%) 6.5% 10.6% Operations • The USA operations experienced a reduction i
Slide 16: 2H20 Trading: North America
Overview by Region 2H20 Trading: North America Growth and Trading Landscape • Other North American countries, such as Canada are considered growth markets, opportunities to expand regional footprint • USA market has softened over the last 12 months, the broader manufacturing sector has slowed • Key
Slide 17: 1H20 South America
Overview by Region 1H20 South America South 31 Dec 30 Jun 31 Dec Coal Six months ending 2019 2019 2018 America Revenue $M 20.5 32.5 25.2 Copper Chile EBITDA (normalised) $M 0.4 5.0 (0.5) Other Peru Colombia EBITDA margin % 1.9% 15.5% (1.8%) Chile • The La Negra facility made a modest EBITDA contribu
Slide 18: 2H20 Trading: South America
Overview by Region 2H20 Trading: South America Growth and Trading Landscape Remaining Asset Sales • Signs of market turning in Chile, South America for new product 31 Dec 19 • Strong order book position in Chile for the balance of $M Book Value FY2020 Chile Crane Business • Growth leveraged from key
Slide 19: Safety, People, Dividends and Growth
Safety, People, Dividends and Growth P 19 Austin Engineering Limited 1H20 Results Presentation | February 2020 www.austineng.com
Slide 20: Safety
Safety, People, Dividends and Growth Safety Safety statistics TRIFR LTIFR 20.0 20.0 Other Machinery and 18.0 18.0 Equipment Manufacturing 16.0 16.0 Industry Average – Frequency rate 14.0 Frequency rate 14.0 10.3 12.0 12.0 10.0 10.0 8.0 8.0 6.0 6.0 4.0 4.0 2.0 2.0 - - Jun 18 Dec 18 Jun 19 Dec 19 Jun
Slide 21: People
Safety, People, Dividends and Growth People Headcount North America South America Asia-Pacific • Headcount fell to 1,609 at 31 December 2,500 2019 from 1,725 at 30 June 2019 due to: — Lower workload over the Christmas break reducing the number of 2,000 contractors engaged, particularly in Australasi
Slide 22: Return to dividends
Safety, People, Dividends and Growth Return to dividends Austin has reinstated a fully franked dividend, Historical Dividend Paid (Total Payout to Shareholders) due to be paid on 31 March 2020 • Fully franked interim 2020 dividend declared of $8 Millions 0.2 cents per share $7 • Franking account bal
Slide 23: Growth through Partnerships
Safety, People, Dividends and Growth Growth through Partnerships Austin is actively seeking collaborations with outstanding businesses located in regions where it does not have a physical presence and seeks to grow. • Austin has partnered with ETT, a highly respected engineering and fabrication busi
Slide 24: Market Outlook and Guidance
Market Outlook and Guidance P 24 Austin Engineering Limited 1H20 Results Presentation | February 2020 www.austineng.com
Slide 25: Commodity Analysis
Market Outlook and Guidance Commodity Analysis Commodity Prices AUD 160 AUD 10,000 AUD 140 AUD 9,500 Coal - Newcastle - AUD/t AUD 120 AUD 9,000 Iron Ore 62% FE - AUD/t AUD 100 AUD 8,500 AUD 80 Copper (RHS) - AUD/t AUD 60 AUD 8,000 Aug-2018 Sep-2018 Aug-2019 Sep-2019 Oct-2018 Apr-2019 May-2019 Oct-20
Slide 26: Austin's Macro View
Market Outlook and Guidance Austin’s Macro View • Global growth is estimated to increase from 2.9% in 2019, to 3.3% in 2020 and 3.4% in 2021 • Mining capital expenditure is expected to reduce overall over the next 3 years from a recent high in 2019, largely as a result of decreased development capit
Slide 27: FY2020 Guidance
Market Outlook and Guidance FY2020 Guidance • Austin is on track to meet the guidance range provided in August 2019 of Normalised EBITDA of $24 to $28 million from continuing operations — Following 1H20 results, Normalised EBITDA of $19.3 – $23.3 million is expected for 2H20. A considerable increase
Slide 28: Appendices
Appendices: – Competitive advantage – Market analysis – Operations – Products and services P 28 Austin Engineering Limited 1H20 Results Presentation | February 2020 www.austineng.com
Slide 29: Competitive advantage
Appendix: Competitive advantage Market leading position Strong financial position • Large global producer of custom truck • Significant reduction in net debt levels to bodies and buckets levels below 1 times normalised EBITDA • Strategically located across four (net cash at 31 December 2019) contine
Slide 30: Market analysis
Appendix: Market analysis Asia-Pacific North America South America • Largest territory covering Australia, • History of success with the strong • Historically a challenging market for Asia and Africa Austin Westech product brand and Austin established field population • Australia is a mature market,
Slide 31: Operations
Appendix: Operations Asia-Pacific • Perth is the largest workshop in Australia spread across two locations in Kewdale. Predominantly services the Pilbara iron ore range as well as other key mining areas in Brisbane Perth Western Australia Indonesia • Indonesia is home to a modern workshop that fabri
Slide 32: Products and services
Appendix: Products and services Austin Engineering Products Service • Leading designer and manufacturer of customised dump truck • A complete service provider, offering on and off-site repair and bodies, buckets and ancillary products used in the mining maintenance to customers including miners, min
Slide 33: Lease Accounting Impacts
Appendix: Lease Accounting Impacts 1H20 financial impact of new leasing standard – AASB 16 • AASB 16 provides a new lessee accounting model which requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months. Depreciation on leased assets and interest on lea
Slide 34: www.austineng.com
Innovation Update Limited Austin Engineering www.austineng.com P 34 www.austineng.com