Macquarie WA Forum Presentation

Transcription

1 Macquarie WA Frum Presentatin Andrew Bellamy, Chief Executive Officer 17 Octber 2013

2 Austal verview Austal is a leading prime defence cntractr. Funded in 1988 and listed n the Australian Stck Exchange in 1998, Austal specialises in the design, cnstructin and maintenance f revlutinary vessels fr the United States Navy, as well as an extensive range f patrl and auxiliary vessels fr defence frces and gvernment agencies glbally. Austal als cnstructs high perfrmance vessels fr the cmmercial ferry market. Austal has a glbal ftprint with strategically lcated shipyards and service facilities: Australia Caribbean United States Middle East Eurpe Asia Austal cmprises three business segments: Ships Systems Supprt Ships Systems Supprt SHIPS SYSTEMS SUPPORT 2

3 Ships Advanced design, cnstructin, engineering and supprt are Austal s cre cmpetencies. 249 vessels cnstructed. Delivered glbally. Defence Glbal defence prime cntractr with significant prgrams in place. US Navy s Littral Cmbat Ship (LCS). US Navy s Jint High Speed Vessel (JHSV). Australian Custms and Brder Prtectin Service s Cape Class Patrl Bat. Patrl and auxiliary vessels fr the US Navy, Ryal Australian Navy and ther defence frces and gvernment agencies. Cmmercial 25 year recrd in vessels fr cmmercial market. Wrld leader in the design, cnstructin and supprt f high perfrmance aluminium vessels. Warships and Multi Rle Vessels Patrl Vessels High Perfrmance Vessels SHIPS SYSTEMS SUPPORT 3

4 Systems Austal s Systems divisin prvides advanced integratin, maintenance and cmmand and cntrl systems fr defence and cmmercial applicatins. Advanced Integratin: Radars, cmmunicatins, cmmand and cntrl systems and userinterfaces. Maintenance: Thrugh Life Supprt f machinery, radars, cmmunicatins and ther nbard systems thrugh remte mnitring and Cmputerised Maintenance Management Systems. Cmmand and Cntrl: Prprietary, scalable, netwrk slutins with cmmn perating picture fr glbal and lcal crdinatin f assets in a maritime and land envirnment. Advanced Integratin Maintenance Cmmand and Cntrl SHIPS SYSTEMS SUPPORT 4

5 Supprt Austal has a large supprt ffering thrugh its reginal centres: Washingtn Lndn Mbile Trinidad Dubai Muscat Philippines Singapre Darwin Perth Canberra Service prducts are tailred t address custmer requirements, including: Thrugh life supprt, lgistics supprt and systems maintenance. Repair, retrfits, upgrades, vessel surveys and life-extensin. Cnversin and mdernisatin. SHIPS SYSTEMS SUPPORT 5

6 2013 results SHIPS SYSTEMS SUPPORT 6

7 Highlights Financial Recrd revenue f $902.8 millin, a 38% increase n FY2012. Earnings cnsistent with guidance: $62.6 millin EBITDA. $35.7 millin statutry NPAT. Balance sheet strengthened and simplified debt facility in place. Operatinal EBIT margin almst dubled at US 5.2% fr full year. Australia peratins returned t small prfit; Philippines delivering cst and perfrmance advantages t Austal and custmers. Streamlined gegraphical structure fr service divisin. Recrd rder bk f $2.6 billin, securing wrk thrugh t Peple & Strategy Management team strengthened and Bard renewal taking place. Cash management pririty t deliver n recrd wrk in hand. Ptential defence vessel exprts int Asia and Middle East. Opprtunities fr supprt wrk with the expected deplyment f US and Australian defence vessels in Asia Pacific. SHIPS SYSTEMS SUPPORT 7

8 Financial grwth targets met Revenue (A$m) EBITDA (A$m) NPAT (A$m) FY2012 FY2013 FY2012 FY2013 FY2012 FY Strng imprvement in earnings and revenue: Revenue f $902.8 millin. EBITDA f $62.6 millin. NPAT f $35.7 millin. EBIT margins at USA peratins grew as efficiencies frm first-in-class vessels were implemented, frm 2.7% in FY2012 t 5.2% in FY

9 Delivered n divisinal utlk Nvember 2012 utlk USA End FY2013 Apply learnings t imprve margins. 5.2% EBIT margin fr FY2013; $39.2m EBIT. JHSV 10, LCS 14 & LCS 16 cntracts t be funded. All three cntracts funded, with LCS cntracts funded pst-sequestratin. Revenue in excess f $700m fr FY2013. Strng revenue grwth t $749.4m fr the year. Australia Hendersn Shipyard Execute Cape Class cntract. Cape St Gerge (CCPB 1) delivered; phased increase in cnstructin activity n subsequent CCPBs. Pursue defence exprt pprtunities. Pipeline develpment cntinuing. Operate at break-even fr FY2013. $0.5m EBIT in FY2013. Philippines Shipyard Cmplete mbilisatin and ramp up. First ship delivered; staff mbilised t deliver n cntracts. Cntinue full capacity peratins. Wn additinal wind farm vessel cntract frm repeat custmer; cntinuing cnstructin f 80 metre catamaran. Operate prfitably fr FY2013. $5.0m EBIT in FY2013. Service Cntinued grwth, psitin t benefit frm US Navy frward deplyment. Realigned divisin t best service deplyment f US Navy vessels in Asia-Pacific. SHIPS SYSTEMS SUPPORT 9

10 Objectives fr sustained grwth Restructure balance sheet Imprve peratins Onging delivery Pursue pprtunities Reduced net debt thrugh $77.9m capital raising. Simplified debt structure thrugh a syndicated banking facility, replacing club facility. Achieved targeted +5% EBIT margin at US peratins. Prfitable Australian and Philippines shipyards. Restructured service divisin t drive efficiencies. Cash management initiatives t prfit frm delivery f recrd amunt f wrk in hand. Prgressive grwth in prfit margins n US Navy cntracts. Cntinue t target pprtunities fr additinal variantstyle defence vessels and cmmercial ships. Scpe fr service wrk with deplyment f vessels in Asia- Pacific. DELIVERED FOCUS UPSIDE 10

11 Financials SHIPS SYSTEMS SUPPORT 11

12 Earnings summary Incme statement FY2013 (A$m) FY2012 (A$m) Increase (A$m) Revenue EBITDA EBIT NPAT EPS Met riginal guidance NPAT (A$m) EBITDA (A$m) Reprted R&D tax benefit (11.0) - Lss n stck yacht * Restated after capital raising Delivered Nv 2012 frecast FY2013 results: Met stated guidance fr the year. Margin imprvement in the USA, with EBIT margin at 5.2% in FY2013 vs 2.7% in FY2012. USA imprvement lifted verall grup EBIT margins t 4.2% vs 2.5% in FY2012. Australian peratins returned t prfit, with $330m Custms cntract prviding sustainable wrklad thrugh t H1 FY2016. Philippines shipyard prfitable in its first full year f peratins. Translatin f prfits frm US is unhedged, therefre benefits frm falls in Australian dllar. SHIPS SYSTEMS SUPPORT 12

13 Segment breakdwn USA FY2013 (A$m) FY2012 (A$m) Revenue EBIT EBIT margin (%) Delivered margin grwth. JHSV 1 delivered and prductivity lessns implemented, de-risking the prgram. LCS 14, LCS 16, and JHSV 10 cntracts all funded by US Navy within expected timeline. Australia (HSO) FY2013 (A$m) FY2012 (A$m) Revenue EBIT 0.5 (13.6) EBIT margin (%) 0.6 n/a Small prfit in FY2013 and frecast t remain prfitable in FY2014, with imprving efficiencies n Cape Class vessel. Custms Cape Class Patrl Bat wrk until H1 FY2016, underpinning peratins. USD-AUD exchange rate imprving exprt cmpetitiveness. Philippines (PSO) FY2013 (A$m) FY2012 (A$m) Revenue EBIT 5.0 (0.8) EBIT margin (%) 12.6 (0.8) Prfitable in its first full year. Prgressing with cnstructin f wind farm and cmmercial ferry in the year. Technlgical capabilities transferred t deliver n cntracts. Service & Systems FY2013 (A$m) FY2012 (A$m) Revenue EBIT (0.5) 1.6 EBIT margin (%) n/a 8.2 Revenue grwth thrugh service wrk in Australia and US. Renewed charter f WestPac Express. Restructuring f divisin affected earnings but has been intended t imprve efficiencies and ensure alignment with wrk pprtunities. SHIPS SYSTEMS SUPPORT 13

14 Balance sheet Balance sheet At 30 Jun 2013 (A$m) At 30 Jun 2012 (A$m) Ttal assets Cash Restricted cash Receivables Inventries Prperty, plant & equipment Other Ttal liabilities Trade creditrs G Zne Bnds Other interest bearing debt Gvernment grants Other Net assets Balance sheet summary: Grwth in asset base, reflecting increasing scale f USA business. Balanced sheet strengthened by successful $77.9m capital raising. Net debt reduced by $54.8m since 30 Sept 2012, with gearing dwn frm 38.7% t 25.1% ver the same perid. One f tw stck vessels remved frm balance sheet. Funds frm selling the remaining stck vessel wuld be used t reduce debt. Reduced capital expenditure n prperty, plant and equipment, ttalling $21.3m. FY2014 capex at similar levels. SHIPS SYSTEMS SUPPORT 14

15 A$m Gearing Debt psitin Significant steps taken t reduce net debt and gearing, and simplify the cmpany s debt prfile. Net Debt/EBITDA at 2.12x, within Bard s target range (1.5x-2.5x) Onging debt reductin thrugh dispsal f excess assets (e.g. surplus land), sale f the stck bat, and use f earnings. Debt will be prject-specific. Cmpleted $77.9 millin capital raising: Bard elected t use remaining US$55 millin f restricted cash t pay dwn further G Zne debt in September 2013, simplifying debt structure and reducing interest payments fr guarantees. US$35 millin f unutilised G Zne Bnds retired in Feb New syndicated facility agreed with banks in Dec 2012 t replace club facility with simplified, cmmn terms and extended maturity prfile t Dec % 25.1% $187.7 $132.9 Nte: Includes restricted cash cmpnents. This term sheet was ultimately executed after the balance date, n 17 July 2013, fllwing nging 1 1 negtiatins and in line with new terms Austal was perating under. As such, the majrity f debt was classified as a current liability at 30 June, given the new facility agreement had nt been clsed at year end. Syndicated agreement includes $50 millin, 3-year revlving credit facility fr wrking capital SHIPS SYSTEMS SUPPORT 15 0 Pre-capital raising At 30 Jun 13 Net debt Gearing 50% 40% 30% 20% 10% 0%

16 Operatins update SHIPS SYSTEMS SUPPORT 16

17 Majr prgress acrss the business Cmmenced steps t imprve the balance sheet debt psitin reduced and simplified. JHSV 1 delivered Craig Perciavalle prmted t President f Austal USA. Jey Turan appinted President at Philippines Shipyard. Greg Jasn appinted CFO. CCPB 1 delivered. Initiated efficiency changes t systems and service divisin. JHSV 2 delivered. JHSV 3 launched Keel laid n LCS 8. USS Crnad (LCS 4) delivered t the US Navy. Nvember December January April June September Nvember Rear Admiral USN (Retired) Jhn Dugan Shipway elected t Chair Austal USA. December Funding cnfirmed fr JHSV 10, wrth US$144m. March May August Octber Funding cnfirmed fr LCS 14 & 16. Graham Backhuse appinted President f Australian Operatins. JHSV 2 cmpleted acceptance trials. Keel laid n JHSV 4. Keel laid n third Cape Class vessel. Furth wind farm vessel cntract awarded. JHSV 1 successfully cmpletes US Navy peratinal testing and evaluatin. SHIPS SYSTEMS SUPPORT 17

18 Order bk Order bk f $2.2 billin secures revenue until 2017, including: Littral Cmbat Ships fr US Navy x6 funded (ut f 10 vessel cntract) x2 delivered under 2 vessel cntract frm General Dynamics. Jint High Speed Vessels fr US Navy Fully funded, with x2 delivered (ut f 10 vessel cntract). Cape Class Patrl Bats fr Australian Custms and Brder Prtectin Fully funded, with x1 delivered (ut f 8 vessel cntract), plus thrugh-life supprt. Cmmercial vessels x3 27 metre wind farm supprt catamarans. x1 21 metre wind farm supprt catamaran. x1 80 metre vehicle-passenger catamaran. SHIPS SYSTEMS SUPPORT 18

19 Littral Cmbat Ship 10 ship cntract awarded as prime cntractr, wrth US$3.5 billin: 2 ships ut f Austal s 10 cntract award have been funded by US Navy each year, with the final 4 ships cntracted t be funded in FY2014 and FY additinal vessels cnstructed and delivered by Austal fr General Dynamics (LCS 2 and LCS 4). 8 ships are fully funded, securing wrk until 2017: LCS 2 Delivered; underging peratinal testing. LCS 4 Delivered in September LCS 6 70% cmplete, expected t be launched befre end CY2013. LCS 8 Keel laid in June 2013; 40% cmplete. LCS 10 Cmmenced cnstructin; 20% cmplete. LCS 12 Cmmenced cnstructin in September. LCS 14 & LCS 16 Funded in March Opprtunities exist beynd 10-ship award, including further LCS vessels in US and variants in Middle East. The LCS is the weapn system that will clse ur littral shrtfalls and bridge the gap frm cnventinal naval tactics t the future cnflict. Cdr Dale Heiken and Cdr Jeff Miller Authrs f article The Right Ship at the Right Time, in well-knwn independent US Naval Institute magazine Prceedings June 2013 SHIPS SYSTEMS SUPPORT 19

20 Jint High Speed Vessel 10 ship award t Austal valued at US$1.6 billin, with all vessels funded, securing wrk thrugh t Prgram has been cnsiderably de-risked, fllwing lessns learnt in cnstructin and delivery f JHSV 1. Prgress: JHSV 1 Delivered in December 2012, with peratinal testing cmplete in Octber JHSV 2 Delivered in June JHSV 3 Vessel launched in June 2013, with main equipment cmmissining underway. JHSV 4 Keel laid in May 2013; 70% cmplete. JHSV 5 Prductin cmmenced; 30% cmplete. JHSV 6 & JHSV 7 funded in February JHSV 8 & JHSV 9 funded in February JHSV 10 funded in December Austal well placed t secure a significant rle in servicing the JHSV vessels thrugh their life. Flexible. That s prbably the wrd I ve heard mre than anything. We can d a lt f things t it. Mark Deskins Deputy Prgram Manager, Naval Sea Systems Cmmand, as quted in Navy League f the United States publicatin Seapwer Magazine August 2013 Ptential fr prgram t be extended and technlgy adptin t penetrate new markets. SHIPS SYSTEMS SUPPORT 20

21 Austal well psitined in US Austal-built vessels have cntinued t be funded LCS 14 & LCS 16 funded in March 2013 after budget sequestratin. JHSV 10 funded in December Funded vessels and assciated revenue is lcked in nt affected by US gvernment shutdwn. Funding f vessels LCS 18 & 20 expected in FY2014 and LCS 22 & 24 in FY2015, as per the cntract. US fcused n Asia-Pacific defence strategy US Navy cmmitted t maintaining an apprximately 300-vessel naval fleet, with littral vessel prgrams supprting that bjective. Maiden deplyment f Lckheed Martin-built LCS 1 in Sutheast Asia prvides a further indicatin that the US is cmmitted t its Asia-Pacific strategy. LCS and JHSV are especially designed fr the littrals. Austal has a strng presence in Asia-Pacific. Additinal pprtunities US Navy cntinuing t develp thrugh-life supprt strategy fr LCS & JHSV. Austal well placed fr significant supprt rle, prviding annuity-style revenue. Future blck-buy cntracts beynd LCS 24 cntinues t be expected. SHIPS SYSTEMS SUPPORT 21

22 Cape Class Patrl Bat $330 millin cntract t design, manufacture and supprt 8 new Cape Class Patrl Bats, including $50 millin supprt wrk. Vessels are fully funded and underwrite activity at Hendersn shipyard until H1 FY2016. Prgress: CCPB 1 Delivered in April 2013; peratinal deplyment in Octber CCPB 2 80% cmplete. CCPB 3 Keel laid in Aug 2013; 40% cmplete. CCPB 4 20% cmplete. Efficiencies and margins t imprve in FY2014 fllwing delivery f the first-in-class vessel. Prpsing faster build f Cape Class vessels. Australian defence requirement fr Cape Class-style vessel, including early replacement f Armidale fleet, with further pprtunities fr variant-type vessels existing ffshre. [Cape] is, in sme ways, a mre capable vessel then even the Armidale Class patrl bats deplyed by the Navy. Hn. Tny Abbtt Prime Minister f Australia 11 Octber 2013 SHIPS SYSTEMS SUPPORT 22

23 Philippines Enables Austal t cmpete in the glbal cmmercial market (e.g. ferries, wind farm supprt vessels) delivering cst and perfrmance advantages t Austal and custmers. Delivered a prfit in its first full year f peratins. First ship delivered December 2012; grwth t 500 emplyees achieved as planned and technlgy transfer t imprve cmpetitive psitin. Full rder bk in shrt-term, with: x3 27 metre wind farm vessels. x1 21 metre wind farm vessel. x1 80 metre vehicle-passenger catamaran. The 80m Aremiti ferry catamaran is ne mnth behind schedule. Onging pprtunities in wind farm vessel market. Award f eighth wind farm vessel under furth cntract frm repeat custmer shws ur ability t build vessels that meet custmers needs. SHIPS SYSTEMS SUPPORT 23

24 Service and systems Prvides lng-term pprtunity and stability fr Austal thrugh annuity-style wrk. Ptential fr high margin cntracts. Lw capital intensity. Recurring revenue. Austal has been building its glbal ftprint, especially in the Asia Pacific regin, thrugh shipyards, strategic partnerships and develping IP t prvide thrugh-lifesupprt fr vessels such as the LCS and JHSV. Ships designed fr 20 t 30 year life. Supprt cntracts expected t begin t be awarded in this financial year. Als wrk pprtunities fr Australian vessels, with Austal currently servicing the Armidale fleet. Streamlined gegraphical structure t imprve efficiencies, drive margins, and create better alignment with expected wrk. The JHSV culd prve especially valuable in the Asia-Pacific regin, where the distances make range and the ability t maintain gd high speed key cnsideratins in terms f deplying assets. Daniel Taylr Special Crrespndent fr Navy League f the United States publicatin Seapwer Magazine August 2013 The LCS is pised t engage with ur allies and friends in the Western Pacific at a level nt experienced since Wrld War II. Cdr Dale Heiken and Cdr Jeff Miller Authrs f article The Right Ship at the Right Time, in well-knwn independent US Naval Institute magazine Prceedings June 2013 SHIPS SYSTEMS SUPPORT 24

25 Outlk SHIPS SYSTEMS SUPPORT 25

26 Strategy United States Hendersn Philippines Supprt Prgressive grwth in margins as vessel prgrams mature delivered thrugh stabilising the wrkfrce, material cst reductins (less rewrk), and imprved change management. Augment cntracts with service and maintenance wrk. Extend pipeline beynd existing cntract awards. Increase efficiencies n Cape Class Patrl Bats, fllwing first-inclass vessel. Prpsed faster build n vessels. Target cnstructin and supprt pprtunities in defence vessels t sustain the shipyard, including Australian defence requirement fr Cape-style vessel. Cntinue building technlgical capabilities at the Philippines fr cmmercial shipbuilding. Expand vessel cnstructin capacity accrding t market ptential. Utilise ur service netwrk t target service wrk in Asia Pacific in anticipatin f US Navy and Australian Custms deplyment. Leverage existing defence systems capabilities t pursue new pprtunities. Strengthened balance sheet, simplified debt structure and prudent cash management practises in place t supprt recrd amunt f wrk in prgress SHIPS SYSTEMS SUPPORT 26

27 Outlk Lng term defence cntracts prvide visibility f revenue expect revenue f apprximately $1 billin in FY2014. Targeting eight per cent EBIT margin in three years. Prgressive grwth in prfit margins as vessel prgrams mature in the US and Australia, augmented by increase in service and systems wrk ver time. Prudent cash management in place t allw delivery n recrd amunt f wrk in hand. N dividend in the shrt-term. Funds frm ptential sale f surplus assets and the remaining stck vessel wuld be used t reduce debt. Weaker Australian dllar imprving translatin f prfits frm US peratins and exprt cmpetitiveness frm Australian peratins. Pursuing variant-style defence vessel cntracts in existing and new markets, such as in Asia and Middle East, pprtunities in Australia, and nging scpe t win higher-margin supprt wrk. SHIPS SYSTEMS SUPPORT 27

28 Disclaimer Andrew Bellamy, Chief Executive Officer Telephne: Fr further infrmatin visit Disclaimer This presentatin and any ral presentatin accmpanying it has been prepared by Austal Limited ( Austal ). It shuld nt be cnsidered as an ffer r invitatin t subscribe fr r purchase any securities in Austal r as an inducement t make an ffer r invitatin with respect t thse securities. N agreement t subscribe fr securities in Austal will be entered int n the basis f this presentatin. Our presentatin cntains frward-lking statements r prjectins based n current expectatins. These statements are nt guarantees f future perfrmance and are subject t risks and uncertainties. Actual results may differ materially due t: the availability f US gvernment funding due t budgetary r debt ceiling cnstraints; changes in custmer pririties; additinal csts r schedule revisins. Actual results may als effect the capitalizatin changes n earnings per share; the allwability f csts under gvernment cst accunting divestitures r jint ventures; the timing and availability f future impact f acquisitins; the timing and availability f future gvernment awards; ecnmic, business and regulatry cnditins and ther factrs. We disclaim any duty t update frward lking statements t reflect new develpments. Accrdingly, t the maximum extent permitted by applicable laws, Austal makes n representatin and can give n assurance, guarantee r warrant, express r implied, as t, and takes nt respnsibility and assumes n liability fr, the authenticity, validity, accuracy, suitability r cmpleteness f, r any errrs in r missin, frm any infrmatin, statement r pinin cntained in this presentatin. Yu shuld nt act r refrain frm acting in reliance n this presentatin material. This verview f Austal des nt purprt t be all inclusive r t cntain all infrmatin which its recipients may require in rder t make an infrmed assessment f Austal s prspects. Yu shuld cnduct yur wn investigatin and perfrm yur wn analysis in rder t satisfy yurself as t the accuracy and cmpleteness f the infrmatin, statements and pinins cntained in this presentatin befre making any investment decisin. SHIPS SYSTEMS SUPPORT 28