PWR Holdings Limited (PWH) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the PWR Holdings Limited HY '24 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Kees Weel, Managing Director. Please go ahead.

Thank you. Good morning, everybody. Yes, we're here again. We have been here a few times now. It just seems not long ago that we were here before. So I'll move straight into it. For our -- in our view, I think it's a cracking result. The half year performing highlights. Obviously, they're in our first block of growth of revenue of 22% and our growth of NPAT did over 25%. Moving on from there, we're investing in growth. We're investing in the future and also concerned about the shareholder returns. So investing in the future is investing now and collecting later, roughly $6 million of CapEx is spent so far. And the 50 headcount, an extra 50 headcount and obviously, we all know about the new factory of 20,000 square meters coming up in '25. Shareholder return of $0.048 interim dividend, up 33% for the same period last year and our 5-year CAGR is 24% share price and 25% earnings per share. Moving on to the next slide. Our 5-year performance trend for the half year, it's very similar to read, it's exciting to read that because it's over 5 years. It's not just one good year and then not another. But when you read through those percentages year-on-year, particularly, it's a very comforting for us to have a slide like that. Performance overview I guess the big key points, investing in capability to deliver on future opportunities. And we've always said this, particularly over the last 4 to 5 years, we're certainly spending on the left-hand and getting return on the right hand. And that could be anything from 6 months to 12 months in between. So our revenue growth our NPAT, very strong and cash balance is also strong. So a very good performance overview. The revenue by market sector, some surprises there. We've always said that -- I've always said that Motorsports will be flat and [indiscernible] 10%. So good to see that Motorsports has had a good half year. There's a couple of drivers for that. OEM was reasonably flat, which we predicted. And Automotive Aftermarket was doing great. I guess the standout particularly is Aerospace & Defense. The Aerospace & Defense the programs are certainly getting larger. Motorsports, the growth in F1 and particularly Le Mans and GT classes are very active now after COVID. OEM, Automotive OEM, our pipeline continues to develop and also Automotive Aftermarket's focus in North America and Europe. Revenue by currency for the half year. I think that is very self-explanatory. The -- our FX, foreign exchange, is out to a little bit over GBP 11 million. And as we increase our manufacturing capability in Europe, we're certainly getting -- reducing our exposure to the pound and similar to what we've been doing in the U.S. over the past years. Operating expenses. Raw materials and consumer usage have increased for a bit over $3 million. Employee expenses, as we all know, we have spoken about this before. That's our biggest expense increasing for future growth and wage rises and bonuses and provisions and everything that goes with employing people these days. We all know what that's about. Occupancy expenses include the outgoing and other expenses of marketing recruitment, professional fees, et cetera. The balance sheet, very strong liquidity and cash position. We spent nearly $9 million in dividends in September. And inventory is increasing. Plant and equipment, as I mentioned before, $6 million of capital expenditure. We still have $10 million on multicurrency and $7.5 million of equipment facilities remain undrawn, I should say. And so the balance sheet is very good. And I also would like to say that we still have no debt. Working capital and cash flow, certainly had a very strong sales period, particularly the second part of the first half in November and December. And that certainly resulted in some [ debtors ] to in compared to the comparative period last time. Inventory, which we've spoken about, CapEx, which we've spoken about also and liquidity is still in a very, very strong position. Business outlook. The -- really would like to emphasize and talk about our vertical integration. The vertical integration is very important to us. We're one of very, very few companies that -- we are fully vertically integrated from raw material to customer. We don't send anything out to get reworked and someone else puts a piece on it and it comes back, et cetera, et cetera. Organic growth, extensive opportunities and certainly focusing and discipline on future pipelines. Aerospace and defense, go without saying is certainly our largest growing area of what we're doing. Motorsports, very strong OEM programs, as I said before, flattish and Automotive Aftermarket is a potential growth and particularly in North America and Europe. Our Europe manufacturing plant has really kicked on significantly in -- for the first half. We're very surprised of how well that's gone. And we look forward to a very strong half, particularly out of the U.K. Pipelines, I know there'll be probably questions on the pipeline of OEM and Motorsport technology programs. The -- you'll see that there's quite a few more programs that we've entered into with being nominated and also in discussion. That is an ongoing thing that we'll certainly make sure our pipelines are going forward for the next 5 to 10 years. The pipeline, particularly in Aerospace & Defense, very similar to our motor programs. Very -- it's all about timing and when these programs hit us. It's not if we get them, I think, it's more so when they hit. So it's a little bit about timing. And I know everybody knows Aerospace & Defense can be a little bit slow and what have you. We certainly increased that time of shortening the time lines and what have you. So I'm very certain that that's going to be our -- one of our biggest drivers. I've said it before. I said that our emerging tech part of that business would be bigger than motorsport, and I'm sure some people out there will hold me accountable for that. And because I do remind me from time to time -- and -- but I think we're certainly creeping up to my comments proves to be correct, certainly in the next 12 to 18 months. We've appointed a new General Manager in North America, David Proctor. He started in the beginning of January. He spent some time out here at the main office in Australia. And we have our strategy a couple of days in March, and we'll be coming back in March and what have you. So we've taken a fair while to get the right person for the right fit for that program over there, and he certainly start to move the needle on what we're doing over there. 2 new Board Members, Amanda and Kristen. I think it's self-explanatory. Amanda is a CEO of a company in Melbourne that obviously does -- involved in aerospace, et cetera. So certainly a good person to have on-site because she does know about how business is run and how to make a dollar. And also, Kristen, with her background of -- lawyer background and [ seeing ] that with legal firms, et cetera. So investing in people. We -- as you know, we are investing in a lot of people and our biggest expenditure is certainly payroll. We're certainly investing in our head count. We increased our headcount for the full year last year of a total of 50. We have over 36 apprentices at this time, which is a little bit low. I must admit. And that will be certainly increasing in the next 12 months. And we have a graduate, 2-year graduate program, where we move engineers from between here and the U.S. and the U.K. And we also have an exchange program for tradespeople to come back from the U.K. and the U.S. to be working in Australia. And also, we're very involved with the work experience program with high schools, et cetera. And we also have an engineering program with a couple of the universities here in [ Brazil ]. Retaining our staff; speaks for itself. We have all the usual things and hopefully, we are a little bit better than the others because retaining staff is not an issue, but it's a challenge today. But with our LTI and STI, Weely's diner, et cetera, employee assistance program, career opportunities and recognition and reward of their effort is a big thing that we do. This important notice, make sure everybody reads that. So I'll just move on to the next one. I'm not going to read that for everybody already knows that. This slide is more about us, about what we do and where our future is and where we value add, et cetera. And it certainly correlates a lot of the stuff that I've been speaking about in the last 15 minutes. The -- our locations, we have a total of 535 staff globally. We've spoken about the new factory, CNC machines is an ongoing thing. Our 3D printing of aluminum is certainly a big thing. We're doing for R&D for the future. Target markets, self-explanatory, motorsports, aerospace, OE, original equipment, industrial, marine aftermarket, which we've spoken about and how we add value. And certainly, as I said before, our vertical integration from raw material to the end product to the customer is not many people do that. And we're very bullish, and we do sell that as a big thing for us that no one else does. Certainly are spending a lot of money on R&D, looking at new prototypes and new areas of the business. And we're very comfortable, I guess, with the prototypes and certainly the low volume production mix, but also some of the higher volume production jobs that are coming through. Global manufacturing, where it will be -- it won't be long, it will be in the next 12 to 18 months, and we'll be able to manufacture exactly what we're doing here in Australia. And we certainly can do that in America right now, and then we'll be able to do that in Europe as well. So manufacturing in 3 different continents with the same products being mostly being able to supply from each of those facilities. Our executive management team, you're dealing with the real people from a moment ago from the top office to the guys on the floor and the people that make it happen. We have a very strong team. So that's the preso. Thank you very much for listening. I'm sure there's quite a few questions. I'll be disappointed if there's not. So I'll open it up for questioning.

[Operator Instructions] Your first question comes from Alex Lu from Morgans Financial.

Efficient as always, Kees, with the presentation. So I just start with EBITDA margin, please, and the 110 basis point improvement in the EBITDA margin. It looks like it was driven by improved sales mix and increased operating efficiencies. So just wondering, can you just talk a bit more on that, please, and the drivers of that margin increase.

Yes. Thanks, Alex. A good question. Look as we are getting more and more into the higher numbers and particularly revenue, et cetera, we're very cautious and very tight on costs. And we spent a lot of time of being more efficient than we were last month, if you like. And some of the efficiencies have certainly driven that. And yes, we have, I guess, probably a little bit of that is probably some of the foreign exchange. But you've got to take the good with the bad there, and we've taken plenty of bad in the foreign exchange before and the foreign exchange has contributed a little bit, not everything. But as we -- and that's the whole program of moving into the new factory in '25. It's a bit over 20,000 square meters. And the efficiency that we will get out of that will be up again. So it's all about driving that bottom number on the bottom line. And yes, we -- as you know, we have a lot of key people that in our business that are shareholders, and they have skin in the game. So I think it is a big -- that also is a very big contributor to how we operate.

It's also... Alex, it's also helpful to notice the increase in emerging technologies across all markets. And that's the higher IP parts of our business. So that certainly helps when that's increasing.

If I then just go to Slide 12, please, and just our pipeline with Aerospace & Defense. Just wondering, are you getting more contracts or, I guess, discussions with the existing customers? Or is the growth in the pipeline more with new or potential customers?

Probably 50-50, Alex. We're certainly getting a lot more programs with existing customers. Once people realize our capability and what we can deliver in particular on a timely basis, et cetera. But also the number of companies that we're doing, particularly in the U.S., we're starting to get some fairly positive inquiries, et cetera, out of the U.K. as well because we done a show over there last year. So that certainly started to rattle the chain in the U.K. So yes, but it's probably 50-50, probably 50% of the new stuff would be of existing customers and 50% of new customers that we're dealing with.

Your next question comes from Jack Dunn from Citi.

I'll just ask a couple and then I'll jump back in the queue. Just firstly, I was wondering if you could probably provide a little color on what sectors you've been more successful in expanding your A&D program pipeline into?

Probably... As everybody knows, the our motorsports sector, particularly F1. And I don't want to throw that down everybody's throat, but if one is a technology driver. And we certainly spend quite a bit of money on R&D in F1. The other one is 3D printing and because we 3D print or aluminum but 3D printing and also MMX. MMX is really starting to get into other categories such as Aerospace & Defense. And I think the full potential of MMX will be sort of delivered over the next 2 to 5 years, particularly. Its growth trajectory is fairly rapid, particularly on some of the programs involved with Aerospace & Defense. So probably motorsports and Aerospace & Defense is probably where we are spending the fair margin of our R&D program.

And then just in the A&D program pipeline, I think I'm not going to hold you anything, but previously you mentioned that there have been 4 to 5 going into production this year and next year. Is this still the same number? Or have some of those programs you've added increased the number of programs [indiscernible] production?

Certainly. It will be probably more about the timing of some of these programs. The -- some of the programs that we have slotted in for this second half we'll certainly be there. And I think we're going to have more color when we get to the end of that financial year to see how it all falls into '25. But '25 and '26 are really looking very, very strong for different programs that we've started to work on over the last 2 years, and they'll be coming -- certainly coming into production in '25 and '26. What we can get into the last half of this year, I think we'll be still very tidy and what have you. So I think more so in '25 and '26. And sorry, and to answer your question in full, yes, there's more programs that we've added into that over the last -- since the last time we spoke 5 or 6 months ago.

And just a last follow-up, and then I'll jump back in the queue. [indiscernible] the size of maybe the magnitude of some of these programs in terms of potential earnings from them? Are they like large production ones making drive a serious increase in the earnings of the A&D segment?

Yes, a bit early to tell. Well, it's a bit early for us to say because it's never done until the ink is dry on the page. So a lot of people, [indiscernible] to OE companies and what have you, they'll start off with a fairly big number to get you excited. But then when it's in true reality, it's maybe half that. So it's probably a little bit early for that, but I think we certainly have a lot more color on that in the full year preso.

Your next question comes from Tim Piper from UBS.

Just first one, apologies if you've actually covered this, but the motorsports' revenue portion in emerging tech saw a really nice uplift and there's obviously some stuff in the pipeline slides around hydroelectric in motorsports. That -- can you just give us a bit more detail in terms of which motorsports teams you're seeing success in emerging tech. And then second part of that is, obviously, like if it's F1 there is a fair bit of seasonality on H-to-H for that side of motorsports, would you expect a similar kind of seasonality in the motorsports revenue line within emerging tech?

Yes. Yes, we would. It's -- Yes. When you look at emerging tech, and I think the big driver for that is certainly MMX that's driving a lot of that emerging tech business there. The -- when you look at programs other than F1, particularly if you're looking at GT programs and [ WIC and LNP ] programs, particularly they're all vehicles now that are very -- very much going across to the hybrid side. And the hybrid part of it is certainly very interesting. I think there's a lot of conjecture around the industry right at the moment about a full EV vehicle. Is it the right thing? Is it not? A lot of the OE manufacturers have pulled back their expectations of what they're selling. So hybrid is certainly poking its head above the water line, particularly now and as a good alternative. So -- and a lot of that R&D on hybrid stuff is definitely done in racecars before -- it's tested in racecars and then it's reverted back to OE programs. So I think you'll find that it will be pretty much the same again for the second half.

So same again as in 6-odd mill again in the second half or you're actually going to see a second half skew to seasonality in that line like you do in Motorsports, so it could be bigger in the second half?

Which could be -- yes.

And then when we think about that in the context of the broader emerging tech revenue for this year, I mean, your comments there around Aerospace & Defense, probably more of a ramp in '25, '26. So if we think about where the second half hits some of that growth in motorsports can maybe offset a slightly flatter half-on-half in Aerospace & Defense. Is that the way to think about it?

I think Aerospace & Defense will be -- I think it'll be certainly better in the second half than the first half of this year. And whether -- like obviously, our SKU is going to be 45, 55 for the first half to the second half, I guess, across the board, if you like, when you do the numbers. Is it going to below that in Aerospace? I would think so.

And so did you disclose the EBITDA tailwind from the FX in the half? You've sort of given the revenue number. I couldn't find an EBITDA. Can you give us what that was?

I can't give it to you right now, but I'm sure we'll be seeing you next week, and we'll give it to you. That's for sure.

That's not a problem we can give it to you.

Just one final one, if I can squeeze it in. Just around the headcount in the business, you've got the new facility in Queensland coming online end of say FY '25. I think it was. What's the progression of sort of adding headcount from now in terms of getting that facility set up through sort of progression phase and then online? How soon are you going to be sort of adding heads for that new facility?

We'll -- we're actually adding heads right now. And employing people right now and procuring people from all parts of the world really to head that up. So yes, by July '25, that's when we want to be in and operating out of that facility, as in actually fully operating by July, 1st of July '25. So if not sooner. How many more people? I would think in the vicinity of between 50 and 75.

At the 1st of July '25?

Correct. Yes.

Your next question comes from Sarah Mann from MA Moelis Australia.

Just another question on, I guess, the comments around emerging tech. You mentioned again that you expect it to kind of be bigger than motorsports, somewhere in the next 12 to 18 months. Just wanted to clarify, do you mean on a run rate basis? Or are you saying that by the end of FY '25 emerging tech could be at least similar size to motorsports given that Motorsports also continues to grow. And then if that's the case, like to hit that expectation, do you need to win any big like sizable contracts? Or is it more just around kind of the smaller prototyping work or just ramping up into kind of production that should be enough to kind of get you to that number.

Those are long questions there.

Sorry. I hope it makes sense.

No, for sure. Look, [indiscernible] that number will certainly need some reasonable contracts which we're on the verge of right now. Yes, and I did say emerging tech would be. I think [indiscernible] motorsport in 3 to 5 years, and I'm getting close to that 4-year period. So I still stand by that. We're very confident of particularly '25 and '26 of the, I think, massive years in aerospace and defense. And we have no shortage of opportunity, so I'll say. So I don't think we'll have any problem of hitting that number. And remind you, with Motorsport and say, caught my flat of 10%. It looks like that's caught me out a bit again this year, but -- or this half, there's some things in there that pushed that up a little bit for this half. But if you can sort of rely on Motorsports seeing an increase of between 10% and 15% year-on-year for the next few years. It brings that number up. But we're still very bullish on expectation for Aerospace & Defense. And I think everybody's got to understand that we have invested very heavily in equipment and know-how and people across the globe, but also equipment in the new factory in America. We're just doing a replication of that what we have here in Australia, particularly for our vacuum brazing and on that side of the business and also our anodizing plant that we have over there, particularly for a lot of the [ coal plates ] and the projects that we do for Aerospace & Defense. So the equipment over there is exactly the same what we have in here. And between the 2 companies today, we have good capacity to do that growth. And I wouldn't be at all surprised that in 2 to 3 years’ time, we're not doing a similar thing in the U.K. because what we have seen of opportunity and people we've spoken to over there over the last couple of years in the U.K. is that tremendous amount of opportunity over there as well. So I'll still stand by my comment of that will be dwarf Motorsport in a few years’ time.

Just to clarify that, Sarah, the motorsport, it's advanced cooling motorsport. So for the half, we did $24 million. And the total emerging tech was $15.5 million. So we're fast gaining.

And then just you kind of touched a little bit on kind of the facility expansion and CapEx. Through memory, I think at the full year conference call, you guided to this year doing $7 million of CapEx, I see you spent $6 million in the first half. Like is it going to be -- is this just timing? Or is it there's just more opportunity and so you've decided to kind of invest ahead of it? Or just interested in, I guess, how your thoughts on that $7 million might have changed?

A little bit of both, a little bit of both timing and opportunity. And also looking forward ahead to the new factory. We don't ever bring old machinery over there. Not, mind you, we haven't got too much old machinery, but we certainly have spoken about automation a lot. And to provide efficiency through some of our programs, and we're very heavily in discussion about different ways of automation, and we have put on some staff members for that side of the business. So the main investment that we'll be doing in the new building will be about automation and the new equipment for future growth. So yes, the $7 million might be $9 million, particularly -- and it's a little bit about timing. And we've just -- we just ordered another furnace for the U.K. for some [ boron plate ] programs that we're doing over there as well. So -- but that's just ordered in the last week or so. So it will be -- delivery will be 6 or 8 months’ time. So it's about timing and opportunity.

Last question for me is just on the U.K. factory. So clearly, you kind of hived off 50% of the floor space for that OEM contract that you decided to walk away from. And yet on your conference call, you're kind of talking to, yes the U.K. kind of really humming and looking like it's going to do even better in the second half. Can you maybe give us a little bit of color around what kind of work you're backfilling for that 50% of the factory that you had allocated to the OEM contract now?

Yes. A lot of those programs, particularly in the U.K., there's some small OE programs over there that we're manufacturing in the U.K. now. And also the GT classes are particularly are very strong in the U.K. and Europe more so Europe. And also the LNP programs over there. So a lot of that has certainly been a big driver over there for what we're doing. And we have -- and I think I did mention at the start of the year that we have put an Aftermarket Manager over there to see what aftermarket opportunities there over there, and that's starting to bear some fruit, although it's early days. So between a few of those programs, and we're very, very happy of what we're producing out of that facility in its current state. And that's only going to increase. And as you said, the OE contract that we walked away from, I think, we're still looking pretty good on that as in why we walked away because EV is not what everybody thought it was going to be. And sort of, I guess, that might have been a stroke of genius on our side to call that early, but there's certainly a lot of other opportunities besides EV in Europe. And there are some small EV programs that we're involved in and what have you. So we'll make use of that second half of the business, second half of the fact you sure say in good stead, but in good time, I should say. But we're not rushing around or we're very -- as you know, we're very picky in the programs that we do. They've got to be profitable. And to our type of profit margin. So yes, it's good to have the extra space there for growth, and we'll certainly make good use of that because the opportunities are there.

Your next question comes from Harry Saunders from E&P.

Firstly, just noticed your flagging overall global factory space increasing by 42% in 2025. So we'd just like to understand what your current capacity utilization is overall? And what do you think the capacity increase is from this, perhaps sort of how much growth or how many years of growth do you think this underpins?

Well, the whole idea, Harry, is on the new factory, we're building this new factory for the next 20 to 30 years. So it's -- and I think those who have been to our current facility in Queensland would see that we're struggling for room and our initial facility that we built in 2006. And then we pushed the property next door, then the property the next door and then the property next door. So now we have a so-called rabbit warren, which is great and has been great for growth and what have you. But for efficiency, it hasn't been that great. And the whole thing is to build efficiency into the next -- into our next building, no different to what we've done in Europe, in the U.K. and by using half of that factory space was certainly a great idea. And we'll obviously fill up the rest of the factory space when that comes to fruition and the programs need to do that. So your question is how long it's going to last? Or is that correct? Is what you're saying on future growth? We're building this facility with the right infrastructure to do the 20- to 30-year program.

Just also wondering on the sort of 45, 55 seasonality comment, I think you were talking about revenue across the group. Just wondering how that should drop through to margin compared to your first half margin was up, I think, 28.7% EBITDA. So how that could look in the second half given the sort of higher revenue?

Yes, it will be higher revenue, but our costs will be higher as well, and what that will be in the second half. So the -- if we can have our NPAT margin in the 19s at the full year. I'd be very happy, and that's certainly our aim. And I think we can get there. So I think it's probably going to be around about that 19.5% to 20% NPAT margin for the full year.

Just final one for me on Motorsports overall growth. Do you see that sort of Motorsports number as the new kind of run rate? And has there been sort of any pull forward in -- particularly in the advanced calling side of that?

[indiscernible] has been pulled forward. The -- how do I see it in the future? Look, certainly, this year and next year will be in that 15% range, really, but in the '25, year '25, it's probably going to be a little bit more because they got the -- they finally got the new car coming out, the new regulations and the chassis coming out in 2026. So certainly, and that new car in '26 is very challenging. And we have got a lot of exposure to that car already and -- but it will be certainly challenging when things are challenging prices go up and what have you. So a little bit early to say. But we can maintain that 15% growth year-on-year particularly in Motorsports today or what we already have a very big saturation in that market. I think it will be pretty good.

And just to clarify, the 15% across emerging tech and advanced cooling and Motorsports like the total number?

Sorry, can you say that again? So we just had a bit of a blink on the line here. Sorry.

Just wondering that 15% growth you're talking about, is that across everything in Motorsports. So including emerging tech, your sort of total $30.4 million.

Yes.

Your next question comes from [ Claude Woka from Erich Life ].

Given the confidence and optimism around the aerospace and defense sector over the next few years, I was just wondering, do you think there's any kind of political risk, for example, a change of government in the U.S. or anything like that? Are there any like key programs that could be changed or defunded that might cause any kind of issues for the plan?

No. Yes, thanks for your question. No, I don't think there's any risk there. And I've got to be careful on how I answer that. I could have a personal view or a company view. But no, the company view is that it will be pretty much business as usual regardless of what government is in. My personal opinion is if Trump gets in, which people say he might, he might not. But my personal opinion, if he does get in; I think, the only way it will increase, they will certainly increase a lot of their spending in aerospace and defense without a doubt.

One thing we're focused on is making sure we have a good spread of programs and that's outlined in the pipeline. So we're not reliant on one big program that's overweight in the pipeline.

Your next question comes from Jack Dunn from Citi.

Just a quick follow-up. You mentioned before, Martin, that emerging tech is higher IP. So I'm assuming that means it's higher margin is what you're inferring to there. So maybe give us a sense of how it compares to some advanced cooling?

As you can imagine, there's a whole broad range of products, but it would -- as you could appreciate higher IP, higher expertise does allow us to charge a premium price.

And then with emerging tech to overtake Motorsports and be the predominant source of revenue, does that not give upside potential to your 20% NPAT margin that you guys look at?

It certainly helps support, I suppose, the position of selling high-value product. The Motorsport is, I suppose, a good product as well. So it probably supports maintaining and underpinning the work that we do. I wouldn't necessarily get too far ahead in any financial models as far as the step change in our margin, but this certainly helps underpin that.

Your next question comes from Chris Savage from Bell Potter.

I guess I had a similar question to the one just asked because you've long held that 20% NPAT margin as your target. Is that still the target? Or is it getting harder as the years go by just with the uplift in D&A?

Well, it's certainly more challenging, what have you. And I think it comes back to what we said before, Chris, and we certainly invest and spend a lot of money on personnel and the resources and R&D and a lot of the stuff that we do. So we're spending a lot with our left hand. And then we're getting income on the right hand and that can be anywhere from 6 to 12 months of that payback. And I think you would know for sure that, that's been our trend now over the last 5 to 7 years. So I see that still being like that in the future. But I think that might level out a little bit after [indiscernible] in our new facility and [indiscernible] '26, '27, that area. But between now and '26 we can certainly we can have that continuous expenditure on R&D and development of programs before we get a proper pay day out of that program.

And appreciating your earlier comments on that OE contract you walked away from as a stroke of genius. Is it completely dead in the water? Or is there a chance that it does come back?

Look, hey, there's always a chance to come back for sure. But our risk appetite because we got -- and I've got to be careful how I say this, Chris, but I will say because we've got over an amount of opportunity of what we do, we don't need to take the risk. And I treat everything like my own money. And the Board is risk averse as well. So yes, as Roland said in our Board meeting yesterday, we looked like geniuses that's where that comment come from. But it was just the right decision at the time, it was the right decision. And then even today, it will be still the right decision. And we have a lot of opportunity, and we certainly don't be bogged down with something that doesn't work or something that falls down on the other side of the world. That's going to give us a damn good headache. So something I don't need, and I'm sure the shareholders don't want it to happen either. So there's always a chance that it might be still alive. But at this stage, we have now no real appetite to revisit that on the current pricing.

Just last question. Just on the pipeline slide to Aerospace & Defense, like I'm guessing or supposing there's a number of electrical lift vehicle type tenders in there. Are you still at the prototype stage there? Or you've actually got some contracts to start production?

Very close, Chris, very close on moving from prototype to first off production. We actually have done some first off production for a couple of those electric vehicle companies. And yes, that will sort of come in, they will default certainly in this next half of where it'd be. So I think when we have our full year delivery. And the thing we -- I am sure there'll be some contracts to speak about then. But yes, it's very, very close. It's never done until as you know, the ink is dry.

And sorry, just a follow-up. Like given there's like 4 key electric lift companies, you are like one. Could this be like F1 where you then dominate and be the principal supplier across all the key manufacturers?

We're certainly very, very involved in before. And a couple of those 4 is not just coolers. It's a whole system that we're providing for them. So it's a whole cooling system as in pipes of beddings and the whole lot. So in one box, there it is that goes into that vehicle or no -- don't have to get any from any other supplier, et cetera, et cetera. So some of those -- I think in one of those aircraft do not hold into this, but I think there's 170 different parts that we will be supplying for that electric vehicle. So is it monkey see, monkey do; where we're dealing with the 4 very heavily now and are the 4 are actually all going to get to production? Maybe, maybe not. But I think if -- well, I certainly think that at least 50% will get to production, if not 75%. So yes, we'll be busy for sure.

There are no further questions at this time. I'll now hand back to Mr. Weel for closing remarks.

Thank you. Yes, thanks very much to everybody for dialing in. And for us, it's been a very pleasing result. And I look forward to talking to a few of you in the next few days. And let's concentrate on getting a great result for the full year. Thank you very much.

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