Austal Limited (ASB) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Austal Limited FY 2023 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Patrick Gregg, Chief Executive Officer. Please go ahead.

Good morning, everybody, and welcome to our full year results call. I'm Paddy Gregg, the CEO at Austal, and I'm joined on the call by Christian Johnstone, our new CFO. I'm actually doing this call from our office in Mobile in the U.S. So if there's any delays on handovers between me and Christian or in answering questions, it's because we're not sat beside each other on the call as we would normally do. But as it being said, we'll present in the same format as usual. I'll give a business overview and context to the results, while Christian will focus on the financial details. And as always, we'll try and present for about 30 minutes and then allow plenty of time for questions at the end. I think there should be no surprises to these financial results based on the fact we gave guidance about a month ago around the T-ATS provision we had to take around the uncertainty of recovering some of the losses on that program, but this will be a good opportunity to take to everything else that's going on in the business. And unfortunately, these previously announced T-ATS provisions masked a very respectful set of results, with some great operational financial performance areas such as support growing Australian defense and profitability. So we'll talk through that on the call. And I will finish up on the call with where I see the business growth and where we're going in the future. So if I just give you a bit of an overview, my view on the financial headlines. It would have been a really solid set of results if it hadn't been torpedoed by the T-ATS provision that we have to make this year. We have made some organizational changes on the back of that and really are focusing on the execution of the tremendous order book that we have won over the last year or so. Good, strong operational cash flow. Net cash is still healthy, even with significant investment made in the business. And that's why we've decided to pay a $0.03 full year dividend, $0.07 in total for the year. And really, for us, the order book of $2.3 billion increasing to about $11.6 billion when you include all the options on OPC and T-AGOS is really the highlight of the business. And if I look back 2 years ago when we were talking about the challenge of life after LCS, I think we've absolutely smashed that challenge. And we've got a very long, very bright future ahead of us in the U.S. business. If we look at some of the key facts. So revenue has grown from last year, and we expect this to continue based on the orders that we've won. The business is now growing again, which is a very nice position to be in. T-AGOS win takes us to another record order book from last year's record order book. So great that we've won that work, and we're looking to grow the business. We have a good year of delivery. A couple of LCS ships delivered EPF 13 with its autonomous capability delivered in the year, 3 Evolved Capes and 2 of the Australian -- 1 Australian Navy and 2 commercial vessels, delivered 1 from the Philippines, 1 from Vietnam. So again, another really solid year in terms of business performance, delivering on our commitments and getting ships out to customers. Also excited to see the service business grow both in the U.S. and in Australia and pleased to report that San Diego floating dock has arrived. And for those of you that are looking at the presentation, there's a nice photo of it in the pack. So you can see the size and scale of it. The team over there are working on commissioning and getting that into service to generate future revenue growth on that target to $500 million by FY '27. Eight service centers around the world and 60 vessels under sustainment contracts, really good statistic. We've consistently said we want to grow the support business, and we're well on the way to doing that. And again, headcount growing roughly sitting at about 4,300, most of that in the U.S. at the minute, based on the work that we've won and got some great opportunities in the Australasia business as well, which we will talk about as we go through the business. And still a huge number, so 40 vessels scheduled or under construction with another couple of EPFs, still 2 LCS to deliver, 5 T-ATS vessels, floating dock, online, Craft in the U.S., Capes and Guardians, T-AGOS -- 7 T-AGOS and 11 Cutters. It's really a tremendous look ahead of the work that we've got coming in the pipeline and our focus on execution. So I think with that, I will hand over to Christian, and he will talk you through some of the financial details before handing back to me. Over to you, Christian.

Thank you, Paddy. For everyone online, we're on Slide 4. We're going to look at the group revenue movement for the financial year. The revenue picture is a positive one with revenue increasing $156 million to $1.5 billion. All of these numbers are in U.S.A. and Australian dollars being our presentation currency. The segment breakdown, consistent with prior years, is by the U.S., and then we break that down by shipbuilding and support, and Australasia build-out broken down by shipbuilding and support. So first, movement in the year-on-year is a weakened Australian dollar led to an increase in FX of $86 million in our revenue position. The U.S. shipbuilding year-on-year increase was $48 million based on the buildup from the new programs from T-ATS, the Floating Dock and OPC programs, which offset the maturing LCS program. It's pleasing that the support -- the U.S. support business increased by $35 million as this is a focal area for the business to diversify its revenue streams and one we have invested in for growth. And as Paddy mentioned, the Floating Dock, that's now safely arrived in San Diego is a key capital investment to underpin that growth going forward. The Australasian shipbuilding segment declined by $63 million due to the decrease in the commercial vessel construction market, which has been felt over a number of years post the COVID-19 travel restrictions and the impact this has had on commercial vessel utilization. It is pleasing to note that this Australasian support business increased revenue by $46 million as, again, this is a focus to diversify the income streams for the group. If I move to Slide 5. This is the group EBIT movement. As Paddy said, the T-ATS program completed the group results for FY '23 and the EBIT decreasing by $126 million to a loss of AUD 5 million. The T-ATS position down a little bit. We actually impacted the results by $171 million, comprising of 2 components. One is the $61 million loss for FY '23. But because we've deemed this contract as onerous, we've had to bring forward expected future losses of $110 million. And that's also what happened in the financial year. We had an award of the T-ATS vessel in June that increased the program from 4 to 5. And because it's onerous, then that obviously increased the provision because we were expecting onerous costs for 1 to 4. So the award of that one increased that onerous provision. Should we highlight, we had a convergence of a number of factors here. We obviously commissioned a new modern steel facility after $100 million, and this is U.S. investment. We commenced production of our first-in-class steel T-ATS vessel, and we've had inflationary impacts on materials. All of those contributed to the disappointing loss result from that program. U.S. shipbuilding has increased $48 million based on the buildup from the new programs for T-ATS, Floating Dock and OPC programs, which offset mature LCS program. And it's pleasing the U.S. support business increased by $35 million, as is the focal area to diversify the revenue streams. And Australasian shipbuilding segment declined by $63 million due to the decrease in commercial vessel construction market, what is felt over a number of years post COVID. If we turn to Slide 6. We look at the segment breakdown, and this is -- which break down the U.S. shipbuilding that increased revenue of $118 million comprising of $70 million of favorable FX and $48 million of greater underlying activity, reflecting the net growth in the U.S. shipbuilding business. The shipbuilding decline in EBIT was due to the previously mentioned loss on T-ATS. The U.S. support segment maintained a steady margin at 6.5% on a higher revenue to deliver EBIT of $14.7 million for the year. Australasia ships generated EBIT of $6.7 million on revenue of $222 million, which was lower than FY '22 due to the lack of commercial awards. However, it's pleasing that the support EBIT margin increased to 6.3%, which led to the Australasia combined segment margin improving to 4.3%, generating EBIT of $15.8 million. On our cash position, that's Slide 7. Our operating cash flow increased by $49.2 million to $86.7 million based on the receipt of milestone payments, partially offset with USD 40 million of OPC supplier prepayments that we made within the financial year. We had continued investment in enhancing capital expenditure, including $32 million for additional waterfront land in Mobile, Alabama, for expansion of capacity to deliver the increasing order book. From financing activities, there was no additional debt drawn down despite over $100 million of capital expenditure and the payment of $29 million of dividends, which was $0.08 paid in the FY '23 year. That left us with a robust cash position of $179 million. And considering the aforementioned capital expenditure, dividends and the supplier payments that we've made, we have a healthy cash to support our future shipbuilding programs. On Slide 8, we have a breakdown of our historical investor data that shows share price revenue and EBIT from the period of FY '18 to '23. When you look at the order book growth since FY '21, the pace of growth has increased substantially. The future shipbuilding activity is on a growth trajectory. And the investment we've had of USD 100 million in the steel capacity forms part of that expanding capacity to deliver this growth. We expect to invest in further expansion of capacity to deliver on the record order book. The focus now is in delivering the order book profitably. That's the #1 focus for the business. And we've shown the impact from the T-ATS loss and the provision for future losses, a significant drag on the results for this year and unfortunately detracted from the strong performance of the other programs and regions. As an example of the impact on T-ATS was separated out from the group EBIT. The underlying EBIT would have been $166 million without those T-ATS losses. So it gives an indication of the strength and financial performance of the other business, excluding T-ATS. If we turn to Slide 9 on a guidance perspective. We are expecting revenue next financial year to grow between 8% to 10%. And that's of FY '23 base of $1.585 billion with an underlying EBIT of 3% to 4%. So when we talk about underlying EBIT, it excludes any kind of one-off capital expenditure or profit on sale of any capital investment. So it's really the underlying operating EBIT for the business. I will now hand back across the Pacific to Paddy.

This is the conference operator. We have temporarily lost connection with Patrick's line. Please bear with me while I try to reconnect him.

Paddy, I've completed the Slide 9 on our guidance. So it's now over to you for the business overview.

Okay. Thank you. Perfect timing. I don't know what happened there. It just dropped out. So if I talk a little bit about the operational highlights and just pick on a few things that stick in my mind over the last year. OPC contract execution underway. And while it was great to get the protest dropped, there are still lawsuit pending. But nonetheless, that has allowed us to carry on with our work along with material items and getting through the design stuff. The EMS ships. We know 3 of those have been funded in the budget, and we anticipate award in September. Maybe where they are just dotting Is and crossing Ts, and listen, it's very frustrating. Based on the fact the U.S. Defense Secretary named the first ship, I thought that would have come by now. And a very similar story for the landing craft as well, dotting Is and crossing Ts, and I anticipate that's going to be awarded any day now. I've talked about the T-AGOS win, up to 7 ships, $3.1 billion contract, very exciting and a great opportunity for us. And in support of that, we purchased another bit of land next to our site in Alabama, and ready for some potential future growth and continued investment in our facilities and the programs we see coming downstream. Some good awards in additive manufacturer and some investment in 3D printing and machinery. I'm really working with the submarine providers over here in the U.S. around printing parts and speeding up their ability to procure very difficult complex castings. It should be a good opportunity for us in the future. If we think about Australasia, 5 Evolved Capes now in service with the Royal Australian Navy and some positive feedback on their capability and performance. 16 Guardian handed over to the Commonwealth. We did Federation of the States of Micronesia the other day. So there's another 3 built ready for acceptance, and that's been a great program for us that, that carries on. And something reasonably exciting and the autonomous patrol boat that we are doing an R&D project on in Australia when we bought an Armidale back, and we're busy fitting that out with an autonomous system, has been on trial and is performing well. And in due course, we will set up a formal trial and an immediate day to talk more about that on these capabilities. And looking at some of the other technology we've developed around the Lucy software. We now have that on trial with the Navy. We now have that on trial with the Air Force, and there might be an opportunity to put that into other sectors like mining as well. So constantly looking for ways to grow the order book. And we've done very well in shipbuilding over the years. We are improving our support business and now time to look at systems and technology and grow that part of the business as well. I'm just talking about service, the Trinidad and Tobago service center, up and running at the minute, really supporting the 2 Capes that we delivered last year but also looking to grow that for commercial opportunities and other coast guard opportunities for Trinidad. So wanting to grow that business as well. I'm really focusing a little bit on shipbuilding and support. As I said at the head in the meeting, we've spent the last 2 years really focusing on replenishing and growing that order book and bringing diversity of programs to the business, whether it's steel, whether it's aluminum. We had Navy as a customer. We've added Coast Guard. So we got a great year again in terms of looking much further and much broader. So we continue looking for design studies to put work into the long-term order book and really try and look as far as we possibly can. And I think we're very well placed for a positive long-term outlook with the Australian defense strategic review. And the confidence target from that is based around our delivery performance. If you look over the last 5 years, I think we've delivered 25 ships from our shipyard in Henderson. And I think that puts us in great shape. When you think of some of the quotes that were in the defense strategic review, where we talked about Tier 2 ships being built in Western Australia, an immediate need for medium and heavy landing craft and the government reconfirming its commitment to a continuous naval shipbuilding. While I think we all would have hoped for an immediate output with orders on the back of the DSR, doing the fleet review is something that we understand, and we're working with the Commonwealth of Australia on that to help them understand our capabilities and what we can do. We anticipate the output of that in October, as has been highlighted by Richard Marles. And hopefully, that's the next opportunity then to really kick off the Australian business again in defense in exactly the same way as we've done in the U.S.A. So looking, for me, strategic outlook before I finish and open for questions. It's not changed from winning the work to how we execute the work following all the deal wins and the order book that we've got. T-ATS is really disappointing. We need to resolve it both operationally and through the REA with the customer. And both of those things are being focused on very heavily at the minute. Great to see support growing in line with our long-term target and being able to deliver on what we committed to. One thing we haven't really talked about so far as AUKUS and what that can do. We had an amazing event in Sydney, where the U.S. Navy commissioned the first warship ever outside of the United States with the USS Camber, the LCS that we built, and really just demonstrating that we are already made conduit for some of those links and whatever AUKUS may bring, whenever you consider submarines and we're building submarine modules in the U.S., some of the warships that we're building could be used by both navies. And autonomy is a key feature of AUKUS as well and EPF 13 being the largest autonomous vessel in the U.S. Navy, coupled with the autonomous demonstrator we are building in Australia. We really are trying to make more and more links and get some mileage out of the AUKUS relationship we already have both in Australia and in the U.S. Still a whole lot of growth opportunities on new vessel programs. So this isn't it for the next 10 years. What we've won is great, but we continue to focus on what comes next and making sure we never get back to that valley of death. And as we've talked about before, we're not just bidding as a brand but working with partners and finding a way to increase the revenue through the business, keep our people employed and make money. And we continue to invest in the business, build the capability and seek the opportunities for growth. So I'm disappointed with T-ATS, but I'm very pleased about the underlying business, where it's going and the opportunities we have in front of us. So with that, I will open up for questions.

[Operator Instructions] Your first question comes from Sam Teeger from Citi.

Paddy, it's been a warm day in Mobile today. Just in terms of the outlook, how do you land on 3% to 4% margin for FY '24, especially given the incentive T-ATS provisioning you've done in '23. Just wondering, is this margin outlook more as a function that you're being conservative on T-ATS? Or is it more as a function of new programs ramping up?

I think it's -- I'll go first, Christian might want to jump in. We really are in that transition, same way at the back end of the existing programs, and we're at the front end of the new programs. So we tried to put a bit of a range in there because there is still some uncertainty about the finish of the back end and how quickly the new programs ramp up. But it's also trying to get confidence that we think there is profitability there even through that transition.

And I'll just chip in on that one. T-ATS provision, we obviously took an onerous provision at the end of June '23 to try and bring forward future losses related to that into the FY '23 position. So that provision will unwind over the balance of the program. So the underlying EBIT forecast guidance is not -- doesn't have a major impact from T-ATS because it's been taken in FY '23 year.

Yes. Got it. So just in terms of the fact there's still uncertainty around the back end of LCS and some of the EPFs you're doing, all the FY' 24 revenue guidance, how much does relate to LCS and EPF, just conscious if you could lay out the rest of the LCS and EPF in '23.

I think the way we try to look at it is we've done very well on those ships, and we haven't had any issues, some concern around last plant and will there be any transition issues where things hang on to the existing ships before they jump on to the new ships. So we try to be reasonably prudent in our guidance and just account for everything that we foresee in the business.

Okay. And on Slide 8 of the presentation, there's a chart in there where you're saying what group revenue might get to in FY '28. Does that chart just take into account programs you've won? Or does it take into account programs you expected in the future such as hospital ships and all the stuff?

Yes. So the chart is really around stuff we've won. So anything we're currently bidding for is not enough. So it gives everyone an idea of the direction that we're going and where we think we're going to get to with the revenue going forward.

Your next question comes from Russell Gill from JPMorgan.

Just a bit more clarity on that, the guidance of the 3% to 4% margin. If we just talk -- and whether there's other moving parts in there. If we just look at your support EBIT for FY '23, cumulative, that's $24 million. The bottom of your guidance range is kind of like $50 million. We presume that support would be half EBIT next year at the bottom end of that guidance range. Is the support -- and you're guiding to support growing as well. Is there a bit of movement or noise in the support numbers in '23? Just so I can understand how the cadence of that EBIT margin goes because it would imply some very, very low implied margins in the shipbuilding program next year.

So again, we continue to see the support business grow, and we're reasonably confident with those margins. Will there be any transition issues in San Diego as we commission the Floating Dock? We don't think so, but there's some prudency in there for that as we move forward. And then again, I'll just come back to that slight uncertainty we've got around the back end of the existing programs and the pickup in the new programs and exactly when that profit will start kicking in is why we put a bit of prudency into the guidance. Not a million miles away from where the analyst average is at the minute. And so...

So just on that prudence, I guess, is that -- you see FY '24 as kind of a transition year from -- understanding as these contracts start, you get a bit of visibility on what the longer-term margin could be and '24 we should envisage as a transition year? Or will that transition -- because the impression certainly given that you're bidding on these vessels, assuming a margin much higher than what it is -- than what you're reporting or guiding to. So should we see '24 and even maybe '25 as kind of transition years as you start these programs? And then if everything works out, you'd normalize back up to a higher margin of what you'd anticipate bidding these projects or these programs on?

Yes. I think as you've seen in the past, these are very long, very complex projects, and we've got no desire to overtrade profit on day 1. So based on the fact they are very much in their infancy, trading at full margin from day 1, we saw a slightly higher risk. So there is a bit of prudency at the start of the program. And very quickly, once we get into it, we will understand that and so trade in a way that, again, we never want to have to reverse. But we do -- we'll put a bit of prudency into all of our forecasts.

And just a second question just on cash flows and the balance sheet. You made a comment earlier on that there's -- you expect some further investment for capacity given the order book outlook, $100 million of CapEx in '23. How should we be thinking about CapEx for the business in '24, '25? And then just on that -- the T-ATS program, you'll be building the rest of the vessels over that time period. Even though you've taken, I guess, the earnings provision this year, there's, I guess, genuine cash outflows that will come from that program as you deliver those vessels. Can you just talk through the timing of those cash outflows? Obviously, you've got -- expected a recovery in profitability as the vessels develop through the program, but how should we be thinking about that net $150 million cash outflow and CapEx timing over the next 2 years?

Yes. So last year, the works in terms of -- do you want to have a go, Christian?

Sure. But probably -- well, firstly, on the CapEx profile. Obviously, the increasing order book to actually expand capacity to deliver that, we are looking to continue to invest in capital expenditure over the next probably 3 to -- 3 and a bit years. So we'll focus on doing that in a pace that we can actually manage, one, to execute, and secondly, to manage our group cash flows. The other part around T-ATS that you said, you're correct. And then -- as in we've taken a provision. The one thing that we've had to take is a provision based on what we expect the future throughput to be. If that throughput going forward is higher, we will actually have avoidance of some of those built-in fixed costs that we've had to bring forward. So there is -- it might -- actually the cash impact might not be as severe as what we have provisioned. But that depends on future throughput and vessels award and execution and as we build through those programs. So about the blend of the both. And we look forward to such.

Just to clarify that question. So let's just say round number is $150 million cash outflow that come from T-ATS. Is it a 3-year, based on current projections, $50 million, $50 million, $50 million? Or is it kind of $100 million, $25 million, $25 million? How should we think about just the timing around, at the moment, how you're viewing those cash outflows could look like?

Yes. Well, just as a touch point, it's a 5-vessel program. We are around 40-odd percent through the first vessel. So it's not -- we haven't even done 100% of the first. So even if you take 1/3 of that, we haven't yet burned through that yet. So we're obviously going to simultaneously construct 2 ships. It's not just in sequential. So it's probably over the next 2 to 3 years substantially, it's probably 3 years is better. It tips into the fourth. But I'd probably evenly push it over the next 3 years is what that unwind would be just on sequencing because it's going through the same steel panel line.

Got it. And then just on CapEx, you said you kind of managed the CapEx to the balance sheet of, I guess, the cash in and cash out. You've done 3 years of kind of elevated CapEx. Previously, the run rate was more like $20 million to $30 million. Is the run rate going forward, I guess, materially higher than that? Should we be thinking about the run rate more like $50 million in CapEx?

Yes. Look, it will be higher. I think there's 2 components of CapEx. There's always a sustaining CapEx. It's probably where your historical cadence has been, and that's just around keeping things up to date and efficient. But when you're undertaking a growth program, expanding capacity, and obviously, you've looked to that FY '23, we bought additional land -- waterfront land in Mobile, we have plans to then expand our capacity by investing in infrastructure to that. So it will be based on just managing that across the forthcoming years around what our build program is and to match what our order book delivery requirements are.

Your next question comes from Patrick Moore from [indiscernible].

Just a clarification. Does your growth in underlying EBIT of 3% to 4% guidance, does that apply to the $166 million underlying EBIT you said we had for 2023?

No, no, no. The way to look at what we've done this year on guidance, the touch point in the reference point is the FY '23 revenue position. So if you build up from $1.585 billion, we have given a growth on revenue around the range of 8% to 10%. And from that revenue range, you take the underlying EBIT margin across that revenue range. So that will give you a range of what our guidance for underlying EBITDA is for.

Okay. I understand. Yes. So that underlying EBIT now is 3% or 4% of the revenue. [indiscernible].

Your next question comes from Daniel Laing from Bell Potter.

Yes. Paddy, I was just wondering if you could make some comments regarding the management changes in the U.S.

Yes, sure. I think as I talked about in the call, Russ has done a tremendous job of selling the order book and winning new work and turning the business around strategically to resolve that issue we had a couple of years ago. And now is the time that we absolutely need that operational focus in the business. And that's the conclusion we've come to. That's what we're doing. And we're really not going down, and we're going to get into operational delivery.

Okay. Great. And do you have any time frame on putting in a permanent member in that management there?

Not immediately. We have an internal person we're very happy with operationally, but we'll have a look at, but we're always striving to get the best person possible. So we have also started a global search as well.

[Operator Instructions] Your next question comes from Lawrence Specker from Alabama Media Group.

I was also looking for whatever you might be willing to say on the leadership transition. This is the second time in a couple of years that we've had the Austal President leave on what seems like fairly abrupt notice, which raises -- may raise some concerns locally about stability. So what would you say to that issue?

Yes. I think if you look at the business, it's gone through a couple of radical transformations. The first one only 2.5 years ago when Rusty took over. That was really based on the fact that we've had a lot of years successfully building LCS and EPF. LCS was coming to an end, and we absolutely have to find the right person to grow the business strategically get out there, diversify, win the work. And Rusty did a fantastic job at that, and he really has set this business up for a great 10 years. But with the work that we've got more in the book, and now it's time to find the right person that is going to deliver all of that work and started doing business winning, different to execution, and we're just trying to do the best thing possible we can to make sure that the workforce here are delivering ships for our customers.

Your next question comes from Dilip Badlani from SKM.

Congrats on all the contracts. And I just wanted to ask the same question as asked earlier. When do you think we get back to a normalized EBIT margin of 6% to 8% number you were doing in the past?

Yes, it's a good question because we've seen so much growth and change in the business. I would like us to not get back to where we were before but absolutely drive through that with the diversity and the type of programs that we put into the business. So in my mind, some of the questions were around transition. This is absolutely a transition from 2 steady-state programs that were coming to an end to a whole series of -- a whole series of growth. You look at the underlying results, they're very healthy. You look at the cash the business is generating, it's still really good. You look at the order book that we've got going forward, that's why we want to invest. So I'm not certain if we'll find a new normal in the next year or 2 with the opportunities we have ahead of us. But for me, it's about continuing to profitably grow it.

Your next question comes from Mitch Sonogan from Macquarie.

Apologies, I was jumping off another call, so I might have missed some of the prior. Just on the 3% to 4% guidance range on the margin, Paddy. I understand you've got some new programs there. OPC, T-AGOS, over the next few years where you will be recognizing profit at a lower rate early in the program. But I guess just thinking about the margin in terms of building out the lifetime of those programs, are you -- can you provide any color on if you're still comfortable there, like in terms of standard shipbuilding margins?

Yes, it's a good question. All the programs have been bid in line with traditional anticipated margins. So there's no concern in my mind about where we're going to get to. It's focus on execution, and it will come. It's just that prudency at the start of a program where we don't want to overtrade similar to what we saw in LCS and EPF, where they were slightly lower earlier on, they were slightly higher later on, and they averaged in that sort of 7% to 9% range.

Okay. Just a quick one. Just in terms of the vessels and programs. Can you provide give an update? Are there any more expected there? I guess your -- the conversations or what the U.S. Navy is thinking, but also maybe just touching on the medical vessels and any update there?

Yes. Medical vessels are frustrating me because they're dotting Is and crossing Ts and have been doing that for quite a while. We saw the budgets all being approved by the President for 3 vessels. We saw the Defense Secretary naming the first one. And I thought that was a sure sign it was coming. But we're finding a way to just do a bit more review on it. And so I really anticipate that -- and we know that those are going to come good. I'm not aware of anything, but suggest they're not going to come on a whole lot of things, that suggest they are going to come that are all public. So we'll keep pushing, and it will be nice to get one over the line.

Great. And just a final one for me, just in terms of the San Diego facility. Can you just maybe just -- now that the dry docks arrived, can you talk to the commissioning time line on that? And just, yes, I guess how you go about winning work in that facility and how we should think about that flowing through or your expectations of how quickly you see that facility ramping up towards its nameplate, I guess, capacity or work flow through.

Yes. Okay. So the work we are doing is topside work we're doing there and that we're winning and we're bidding for work to try and line it up with exactly when we think the dock will be operational. We've got some piling and dredging to do to create the space that the dock can -- actually thinking to launch and recover ships, and then there's sort of dockmasters to get familiar with the actual operation of the vessel and commission it as such. I understand how we're working in that environment, all that sort of thing. So it's probably 3 or so months away from actually being really operational, but the team over there are very focused on trying to align work for that at the same time as it comes online.

There are no further questions at this time. I will now hand back to Mr. Gregg for closing remarks.

Yes. Okay. Thanks, everybody, and thanks for the questions. I think summary for me, T-ATS is very disappointing. But if you look through that, the rest of the business is performing very well. I think the guidance we've given is more or less in line with the analyst average that we looked at. And the range has just really given around that slight uncertainty as we transition from old programs to new programs and how quickly we can get the people ramp up and really start delivering it. And you can see the cash position is still generating good cash, still very healthy cash and a great time to start investing some of that cash based on up to $11.6 billion of work in the future. So we will continue to focus on execution, delivery and growing the business as we've done over the last couple of years, and we'll be happy to answer your calls in the future and keep you abreast of anything that's going on at Austal. So thank you all for joining today.

That does conclude our conference for today. Thank you for participating. You may now disconnect.