LEADING THE WORLD IN THE DESIGN AND CONSTRUCTION OF HIGH SPEED ALUMINUM VESSELS AUSTRALIAN INSTITUTE OF MANAGEMENT – AUGUST 2010
OVERVIEW Overview: AUSTAL LIMITED IS A PUBLICLY LISTED AUSTRALIAN COMPANY SPECIALISING IN THE DESIGN AND CONSTRUCTION OF ALUMINIUM COMMERCIAL AND DEFENCE VESSELS. Corporate Profile: Founded: 1988 Listed: Australian Stock Exchange 1998 (Stock Code: ASB) Revenue: 2009 $500M Total Employees: ~2300 in Australia and USA yards combined Head Office: 100 Clarence Beach Road, Henderson, Western Australia
PRODUCT OVERVIEW Commercial Veh / Pax Commercial Passenger Defense Custom-Production Yachts
Product Hull Forms Monohull Catamaran Trimaran
Global Market Estonia Norway Denmark UK Ireland Greece Milwaukee Italy Portugal New York Turkey Miami Japan Canaries Mobile Spain Kuwait Bahamas China French Caribbean Saudi Arabia Mexico Hong Kong Venezuela Yemen Malaysia Singapore Maldives Indonesia Darwin Tahiti Broome Cairns Sydney Perth Shipyards Support offices Locations where Austal vessels are operating today
YARD OVERVIEW - AUSTRALIA Austal - Tasmania Austal - Ships Austal - Image
Planning for the Future Required Looking at Our Past
Historical Performance Large commercial vessels sales are somewhat unpredictable: EBIT $M $60 Other $40 USA $20 Australia $0 ($20) ($40) FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Forecast (Feb-09)
Historical Performance Austal’s share price performance is closely linked to sales success: Share price ($) Austal’s share price ASX All Ordinaries Source: Austal Finance Department
Historical Performance Historically, Total Shareholder Returns have been volatile: TSR Share price ($) $4 80% 60% $3 40% 20% $2 0% (20%) $1 (40%) $0 (60%) FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Year end share price TSR 1. Definition of TSR: Share price growth + dividend yield
Austal’s Strategic Footprint Marine products Large freighters Service Platforms Submarines Steel surface combatants Composiites Non ali vessels Work boats Submarines Corvettes Non Austal ali vessels Steel surface combatants Fast ferries Private boats Trimarans Transport Forward integration Catamarans Patrol Austal vessels Backward integration Monohulls Maintenance Maintenance Commercial flying squad service hubs operator Design & construct ali ships Major equipment Electrical / electronics Australia Ali design & production USA = Current business Marine Systems integration = Under review Middle East Resources India = Not under review Road Steel warship & submarine design & production China Rail Europe Structures Aerospace Geography Industries Capabilities
The US Opportunity • In 2000, the US represented a huge potential market; – Commercial ferries – Support vessels for oil and gas industry – Defense vessels – growing interest by the Navy for high speed craft • Two barriers to entry – The Jones Act – Security restrictions in selling to the US Navy
YARD OVERVIEW - USA Established shipyard in 2000 in Mobile, Alabama; Delivered our first vessel in January 2002 2 x 45 meter Crew/Supply Boat Delivered our most recent commercial vessel June 2009 113 meter Vehicle-Passenger Catamaran
Austal USA Expansion Site aerial view 1998 Site aerial view 2004
Austal USA Expansion Site aerial view 2007 Site aerial view 2009
Module Manufacturing Facility (MMF) Phase 1 • Designed to support the production of up to 3 vessels per year; • 350,000 square feet of production space under roof; • 80,000 square foot drive-through warehouse; • Approximately 600 additional employees required; • An $81M investment.
Module Manufacturing Facility (MMF) Phase 1
Austal USA Expansion
Littoral Combat Ship (LCS) Program Sprint Speed: 45 kts + Length: 417 ft. Hangar for (2) H-60 Multiple mission Beam: 99 ft. Flight Deck for (2) H- packages 60 or (1) H-53 Draft: < 10 ft.
Positioning to Pursue the LCS Program • Navy was seeking to replace 3 aging vessel classes with 1 new one, the Littoral Combat Ship o Capable of performing multiple missions, e.g. � anti-submarine warfare � swarm boat defense � mine detection and removal o Capable of operating at high speeds and in shallow waters • Austal saw an opportunity to adapt an existing design to address the Navy’s needs • Austal partnered with Bath Iron Works (BIW) to pursue the LCS program o BIW – prime contractor o Austal – shipbuilder o GD-AIS – ships systems integrator
LCS PROGRAM • LCS 2, USS Independence , departed Austal USA on March 2010 (4 years in construction) • Currently in Norfolk, Virginia to to complete test and trials • Will be permanently based in San Diego • LCS 4, Coronado, approximately 26% complete (expect a 3-year build cycle) • Delivery of LCS 4 to the Navy expected in late 2012
LCS PROGRAM • Austal has submitted a bid for a 10-vessel award • Austal acquired its own security clearances and separated from BIW • As prime contractor, Austal is competing against Lockheed Martin • Navy expects to make the award this month • Total value of the award is circa $5B
US Navy-Army Joint High Speed Vessel • Austal won the JHSV contract in November 2008 with US Navy & Army • High speed transport • Over 330 feet in length • ~$160M average cost/ship • 10 ships in the program • The first vessel will be delivered in late 2011 • Navy’s 30-year shipbuilding plan calls for 41 of these vessels • Army is planning for 12 JHSV’s
JHSV PROGRAM Austal drew from its experience in constructing Westpac Express and 2 Hawaii Superferries in winning this program.
US DEFENSE NEAR TERM PURCHASE PLAN By year-end 2012, Austal’s total order book may exceed $2B = vessels currently under contract = JHSV options remaining to be exercised = 10-vessel award if Austal wins contract
State and Local Support US, Alabama and Mobile Financial Support: Purpose Amount US Government $33.7M Stimulate economic development in the Gulf Coast post hurricane Katrina Stimulate economic development in the State $37.0M State of Alabama and reimburse employer training costs Stimulate economic development and City & County of Mobile $10.0M employment in the Mobile area Total $80.7M Austal’s Total Investment $127.0M
A Return on Investment A strong partnership with Alabama: • Austal currently employs nearly 1,600 in Mobile. This number could grow to 3,500 if we win the LCS program; • For every $1 of Austal USA’s payroll, the surrounding area gains $8 of economic impact, according to the Mobile Chamber of Commerce; • State and local communities have provided Austal with $80.7M of financial support; • This coming year, Austal USA will generate $640M of economic impact (at current employment levels).
A Bright Future for Austal USA If successful in the LCS award, Austal will be responsible for building the vessels which ultimately represent ~40% of the Navy’s targeted fleet size of 313 ships.
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