Austal Limited Awarded A New A$369 U.S. Navy Contract

Austal Limited Awarded A New A$369 U.S. Navy Contract

Australian shipbuilder and global defense prime contractor, Austal Limited (ASX: ASB)  has been awarded a new A$369 (US$261,776,539) million contract for two additional Expeditionary Fast Transport Ships (EPF) by the U.S. Navy. This extension is a significant step towards the company’s objective of building a significant service and support business.

The two additional Expeditionary Fast Transport Ships are EPF 13 and EPF 14. The construction of EPF 13 will start in late 2019 and after that the construction of EPF 14 will commence in the middle of 2020, extending the EPF program to 2022. As per the company’s CEO Mr. David Singleton, this extension is a result of the versatility of the EPF platform to perform an increasing range of roles for the U.S. Navy.

Currently, the 14-ship EPF program is worth around US$2 billion, and it has been demonstrating the company’s ability to build highly capable ships at an affordable cost.

According to Mr. David Singleton, the company is having a proven ability to build these cost-effective vessels efficiently at its state-of-the-art manufacturing facility in Mobile, Alabama and as a result, they will continue to underpin the shipyard for several years to come.

The company had recently received a contract for two additional Independence Class, Littoral Combat Ships (LCS). The management of the company is very pleased to add two new vessels (EPF 13 and EPF 14) to its order book. The combined shipbuilding margin on LCS and EPF programs increased from 6.3% in FY18 H1 to 7.1% in H1 FY19, which was within the company’s FY2019 guidance of 7–8%.

The Expeditionary Fast Transport Ships are having a large open-mission deck and large habitable spaces which will provide the US Navy with the opportunity to conduct a wide range of missions.  The design of the ship includes a shallow draft of 13 feet and an advanced water jet propulsion system which provides EPF the versatility to access austere and degraded ports with minimal external assistance.

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In the first half of FY 2019, Austal Limited reported revenue of $851.5 million which was 31% higher than the previous corresponding period (pcp). Further, the company reported EBIT of $40.4 million which was 52 percent higher than the previous corresponding period (pcp). The growth in the company’s earnings was driven by Broad based performance improvement and underpinned by 7.1 percent shipbuilding margin on US Navy programs. During the half year period, the company delivered strong operating cash generation of over $100 million. From its US segment, the company reported revenue of $687 million and an EBIT of $49.1 million for the half year period.

Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock is trading at a price of $2.225, down by 1.549% during the day’s trade with a market capitalization of ~$797.31 Million as on 26 March 2019 (AEST 03:15 PM). The counter opened the day at $2.260 and touched a day’s low of $2.220 with a daily volume of more than 395,628. The stock has provided a year till date return of 18.32% & also posted returns of 16.49%, 16.20% & -3.00% over the past six months, three & one-months period respectively. It had a 52-week high price of $2.430 and touched 52 weeks low of $1.550, with an average volume of ~870,353.


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