Austal (ASB) H2 2024 earnings summary

Executive summary

• FY2024 revenue declined to $1,468.9 million, down 7.3% year-over-year, but EBIT improved from a $4.8 million loss in FY23 to a $56.5 million profit, driven by strong U.S. program contributions and support business growth, meeting guidance despite challenges in Australasia.

• The company operates five shipyards and eight service centers across four countries, with a record order book of $12.7 billion (including options), 45 ships under construction or scheduled, and 13 ships ordered and 7 delivered during the year.

• Service and support business grew, achieving $468 million revenue, tracking ahead of the $500 million FY27 target, with technology and additive manufacturing segments expanding.

• Strategic Shipbuilding Agreement in Australia and new U.S. contracts underpin long-term growth, with significant expansion in shipbuilding, technology, and submarine modules.

• Leadership transition saw the founder step down as chairman, succeeded by a new chairman, with continued management changes in the U.S.

Financial highlights

• Group revenue decreased by $116 million to $1,469 million, mainly due to the maturing LCS program in the U.S. and minimal commercial vessel construction in Australasia.

• EBIT improved to $56.5 million (3.8% margin), in line with guidance, with underlying EBIT at $59 million, driven by strong U.S. program performance offsetting Australasian losses.

• NPAT reached $14.9 million, reversing a net loss of $13.8 million in FY2023, but included a high U.S. tax charge and DOJ penalty as a disallowable expense.

• Net cash position decreased to $3.9 million due to capex in San Diego and Mobile, with cash at bank at $173.5 million as of June 30, 2024.

• No dividend declared, reflecting the need to preserve cash for future capital requirements and planned capex.

Outlook and guidance

• EBIT growth anticipated in FY2025, driven by recovery in Australasian operations, record order book, SSA orders, and productivity improvements on key U.S. programs.

• Guidance for FY25 will be provided ahead of the AGM, with key drivers including new contracts, operational improvements, and full benefits of San Diego support facility expected from FY2026.

• Strategic Shipbuilding Agreement in Australia expected to provide a 20-year pipeline and continuous naval shipbuilding, with additional orders anticipated.

• Significant hiring planned, with over 2,000 new roles expected in the next 2-3 years.

• Weakening USD could reverse some FY24 tailwinds.