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Orbital Corporation has downgraded its revenue guidance for Fiscal 2019 to A$20 million. This is in comparison to the previous guidance of $24 million, presented in investors roadshow 2018.
The technology developer Orbital Corporation Limited (ASX:OEC) has revised its revenue guidance due to the scheduling adjustment for Start of Production (SOP) of Insitu designed engines. That means the company has now pushed back its timeframe to commence the production of the first of two Insitu designed engines to Q3 2019, that means beyond the Fiscal Year ended 30 June 2019, in comparison to previously scheduled Q2 2019.
It is in reference to the expanded Long-Term Agreement that Orbital UAV has signed with its key customer Insitu Inc., a wholly owned subsidiary of The Boeing Company. Orbital UAV is committed to delivering the supply, assembly, and overhaul of three highly configurable propulsion systems, forming Orbital UAVâs Modular Propulsion Solution; and the supply, assembly, and overhaul of two Insitu designed engines â serviced and built from Orbital UAVâs operational facility in Hood River, Oregon, USA.
However, the company confirmed that the production of the MPS model is on track with development work on all three highly configurable Orbital UAV designed propulsion systems advancing as planned.
The report further read that the first derivative of the MPS to enter production will be a 50cc model that features Orbital UAVâs patented FlexDI⢠technology and the start of production of this model will commence in FY19 as planned. Moreover, the second and third of the three MPS systems are scheduled to begin production in FY20.
The company believes that the MPS approach will offer unparalleled technical and volume flexibility combined with rapid system deployment to its client Insitu, a Boeing company. The system is also expected to provide inventory and supply chain advantages that return significant cost and quality benefits to the customer.
The delay in SOP of the first of two Insitu designed engines reflects the ongoing technical review and engine performance validation processes which are yet to finalised by Orbital UAV and Insitu. However, the company assured that this amended timeframe would neither impact the customer delivery requirements nor Orbital UAVâs advised LTA potential value range of A$150M to A$350M over the next five years.
CEO and Managing Director of Orbital UAV, Todd Alder concluded: âWith two world-class production facilities in Australia and the USA now operational, a five-year LTA worth up to A$350 million with Insitu, and five engines scheduled for production in FY20, Orbitalâs business growth strategy remains firmly on track.â
At the time of writing, 7 February 2019 (2:51 PM AEST), OEC is trading flat at $0.385 with the daily volume of 52,054. The stock is trading at a PE multiple of 13.370 x and a market capitalization of $29.82 million. Over the past 12 months, the stock has edged up by 1.32%.
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