Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Austal Ltd (ASX:ASB, Financial) achieved a record order book of $12.7 billion, reflecting strong demand and future growth potential.
- The company delivered seven ships this year and has 45 ships under construction or scheduled, indicating robust operational activity.
- Revenue from the US support business and Advanced Technologies business increased by $85 million, showcasing growth in these segments.
- The company resolved the long-standing Department of Justice matter, removing a significant uncertainty.
- Austal Ltd (ASX:ASB) has continued to invest in its facilities, including a significant CapEx in San Diego, positioning the company for future growth.
Negative Points
- Group revenue decreased by AUD116 million to AUD1.469 billion, primarily due to reduced revenue from the maturing LCS program in the US.
- Australasian operations experienced a decline, with minimal commercial vessel construction and reduced defense work, impacting overall revenue.
- The company faced a blip in the Australasian business, resulting in a $29 million hit to the bottom line.
- Operating cash flow was significantly impacted by onerous contracts and Australasian losses, affecting the cash position.
- No dividend was declared due to the future requirement for cash and the impact of the DOJ resolution, which may concern shareholders.
Q & A Highlights
Highlights of Austal Ltd (ASX:ASB) FY24 Earnings Call
Q: Can you provide an update on the timing and funding needs for the overall expansion in Mobile, especially with the tax REA still outstanding?
A: (Paddy Gregg, CEO) The REA process is complex, and we need to ensure we fully understand the consequences of design changes before finalizing. We aim to resolve this in FY25. The funding for the Mobile expansion, estimated at up to $300 million, will depend on the resolution of the REA and our cash flow generation.
Q: How confident are you in replicating or exceeding the EBIT margin of 2.9% in the US, given the higher margin programs are running off?
A: (Paddy Gregg, CEO) We are confident in EBIT growth due to the strong performance of our support and technology businesses, the ramp-up of new programs like OPC, and the non-repetition of the $29 million hit in Australasia. These factors give us confidence in achieving better results next year.
Q: Are there any risks around the Strategic Shipbuilding Agreement not being signed?
A: (Paddy Gregg, CEO) The agreement looks very positive, with strong support from defense and government. Negotiations are progressing well, and the agreement is crucial for delivering announced programs like the landing craft.
Q: What is the outlook for the US support business as the San Diego dry dock gets up and running?
A: (Paddy Gregg, CEO) The dry dock will open new revenue streams by enabling us to lift vessels out of the water for maintenance. Despite some regulatory delays, we expect it to contribute meaningfully to revenue once operational.
Q: What are the non-Australian and non-US defense opportunities, particularly with the Philippine Coast Guard?
A: (Paddy Gregg, CEO) We see significant opportunities with the Philippine Coast Guard, leveraging our existing facilities and workforce in the Philippines. This aligns with the strong relationship between Australia and the Philippines and could balance our commercial and defense work.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
