VEEM Ltd (VEE) Earnings Call Transcript & Summary

[Audio Gap] Investor webinar to discuss the company's first half FY '26 results. On today's webinar, we have Managing Director, Mark Miocevich and CFO, Tinotenda Kapfumo who will go through the presentation released this morning on the ASX. To ask a question, please submit the bit Q&A button at the bottom of the screen, and we'll do our best to get through as many of those as possible. I'll now hand it over to Mark.

Thank you, Ben. Good morning, everybody, and look to our presentation. Perhaps we could just start off, we could go through the highlights, which Tino will run through for us.

Thank you, Mark. Revenue for the half year was $23.4 million with activity similar. Our EBITDA came in within guidance at negative EUR 0.2 million versus guidance of negative EUR 1 billion plus EUR 1 billion. Our cash at the end of the year was $9.1 million. Our net debt vastly reduced to $1.8 million, and we have $8.8 million in undrawn facilities between our overdraft trade loan and also undrawn loans in preparation for equipment financing. Cash flows from operating during the half year was GBP 4 million, which was very strong as our ASC contract kicked off. I'll let push to Mark for the executive summary.

Yes. Thanks, Tino. Look, our revenue was down, and we had a slow start to the first half of the year. There is a marine slowdown going globally, which we're having to deal with. And there's also defense work, which we've been working so hard to gain accreditation for and start on as just all being legally delayed, unfortunately, which is not good. So our EBITDA and the NPAT were down a little, and we had a write-down, which bought it down to 19.3% as a write-off. And we -- EBITDA, we're sort of within guidance, what we said around the AGM, which we predicted based on the activities we're likely to see in that time. So look, we've got a -- we took this noncash impairment of $24.8 million, which was associated with stabilizers, Tino will come a bit later on, but that was a review of the Jira operation as we moved into the Mark II gyros. So cash flows were actually strong which occurs with us as the turnover goes down, there's more cash available from working capital requirements are reduced. And the net proceeds from the capital raising strengthen our balance sheet and pleased to say that we still have all that available to us. So we haven't used any of that. So the Propeller revenue was only down a little, even though there was some global marine slowdown, we've managed to stay within 9%, which does indicate that we've been increasing our market share, which is important, but some of our larger clients are indicating -- some of them have gone back 50% over the last year. So we're sort of seeing a bit of a slowdown, and I believe this will pick up towards the end of this calendar year. So we're looking forward to that. The revenue from defense was down because we're in between ASC contracts that was delayed due to necessary negotiations of resigning our 6-year contract, but now we've placed a lot of orders, and I believe we've placed over $10 million worth of orders that ASC have placed on us. So that's really positive from our perspective. And there's a bit more to come, and that will be arriving third quarter of this financial year and into the next quarter of next financial year. We launched -- back in October, we launched the Giro Mark 3 and also the VME range of propulsion gear. So the Mark III, though, is it is the combination really over the last 5 or 6 years of engineering work, which is a transitional gyro to the 1 that we perhaps felt we always should have and it's extremely reliable. It has very, very low through life costs. So we'll see these leads will turn into reality once the markets are on the market later this year. So we sort of look at this year as a transitional year. We've picked up a lot of costs in bringing the Mark III to market and developing those and VEEM extreme range of propellers and propulsion systems. So the cost of developing those and turning them into production items and sales has all been going on, and the defense market has been particularly slow. It's -- and the government shutdown in the U.S. didn't help that, of course. But what we're seeing, that's all moving to the right, but we are moving with -- and dealing with a lot more defense customers. Just perhaps the next slide there, no would be good. So just did is we put to put this graph in to show where the company has been working since it was a public company. Obviously, this year will be a little different to that. But the general trend is that, and we expect it to get back on to that trend in 2027. So we've got some panels here of all our products. Propulsion is obviously a busy 1 and the biggest 1 at the moment. And we've spent last year developing the meme which was launched back in October. And what we now have to do is all we were to launch it, test the prototypes to release the results, but now we have to develop the production methods for making these propels and that is very intensive and that's where we're in at the moment. But the results have been spectacular. And just with our router and Propeller, which we've been trialing and have now got other boats, we're seeing about an 18% reduction in fuel burn compared to a standard hand-finished commercial propeller and industry basic parallel plate runner, very basic, but it's what they use a lot of. So that's an enormous reduction in fuel burn and pay for it over a very short period. So we've been also working on the shaft and the bracket that holds it to the whole. The shaft of the hole. And that's due for testing. It will be tested before June 30. We think there may be another 4-odd percent in that. So we've got to test that and verify, but we do believe we'll be certainly putting out a system which will give, I would suggest, a little over 20% fuel reduction. And along with the fuel reduction comes the carbon footprint reduction and the ability to generate carbon credits. So we see this as a very significant product that we're bringing to production now. And over the rest of this year, we'll see all this come to fruition, and we expect to see sales, more sales towards the end of the year into next year of complete systems. So it's all happening now. We have our first contract for 6 vessels and rudders, and now we're developing routers for a couple of other clients globally to bring them in. So that's all good. Along with that, we have a facility expansion going on here with about 1,000 square meters and 3 more machines that are arriving probably in April, the 1 would be running in May. So that's a necessary space we need as soon as the market recovers. So later this year, we'll need them for normal production, but also the Ventre takes longer in these machines being a material, which is -- has twice the strength, so it is -- takes longer to machine, and we'll need it for the runners and brackets as well. So it's very timely. In fact, it is coming on -- coming into production for us. On the defense side, as I said a bit earlier, we're dealing with 4 international defense customers and 7 Australian ones. So that's growing and growing, but we've seen some quite extraordinary delays, particularly with the Hunter class where whilst we now finally have our secret accreditation, our certificate, which took 6 months after completing all the necessary requirements, which was quite extraordinary from our perspective. But now that certificate is gone off to our customer in Sweden, they have to go to their customer in England to get approval. So we have Sweden approval. We do not have British approval that could take another 2 to 6 months. So that's the kind of delays defense have. And then once we've got that organized, then we can then start looking at the production side. So much later than what we thought. But once it's running, the 100 class program and other type 42 opportunities is good steady work for 20 years. So we also have the overseas opportunities, what we're seeing with the overseas companies in America. We're seeing now we have 3 -- 2 of the majors and 1 of the very major subcontractors to them that we're in negotiations with terms and conditions working on going forward and getting tenders, more specifications. So this is all a slow steady progress that's all happening now at the moment, but it's been delayed. And we've got -- I think there's been 5 people working on defense accreditations for the last year. So we're carrying a $0.5 million cost as well at the moment. The gyro has been a bit of a, I think, a bit of a victim of the slowdown in the marine sector. We've seen similar products that are well established, halving their volumes. So this 1 is not a surprise that we haven't seen sales particularly in light of the fact we've released the Mark III told the market, and they'll come out progressively over this calendar year, everyone's waiting. So we've got a bit of a double -- double effect there. But the market is certainly the product we think we perhaps should have always had. So the improvements mean that moving into this now scheduled maintenance regime is a huge bonus for the operators. And we've now got ourselves an extremely robust product. engineering side, all going on well. It seems to have -- I think it's done very well, considering in Western Australia, the nickel industry is now gone, and the coal-fired power stations are slowing down. So that's gone quite well. And Hollivarhas been a very positive part of this as well. So I think that's always good to see continue on our business. And I'll hand across if Tino, you can go through the financial results.

Thank you, Mark. From our P&L market touched about prepared revenue was slightly down, but resilient in the face of a softer marine market. which we're seeing green shoots of improvement starting right at the end of last calendar year and into this quarter. So we're optimistic. And as Mark has touched on, everyone thinks that by the time we get to the end of the year, we'll be really hitting our straps. VEEM extreme inquiries have been robust. Mark will talk later about how that rollout is happening, but starting off with some launch customers, which will start us off. ASC revenue was down 65% due to the delay in delivery of orders, but that was important in terms of buttoning down the new contract and making sure it works for both parties. Those orders are now in hand, and we've started delivering into them that are underpinning defense revenue into the second half, particularly while we carry on with the work Mark mentioned with qualification with other defense contractors, which will then hopefully come online as we finish the work with -- in relation to these orders. Engineering Products & Services was steady. And as Mark talked about in the face of anecdotal evidence and nickel industry and the like, which you've been coming down. But we continue to receive work in that area as we have not a huge or big growth sector in the business, but steady and reliable. Part of the result obviously includes costs, which we've incurred to bring our products to market, so Gyrak3,VmXtreme and also costs we are incurring to our qualifications for defense contractors, particularly the U.S. This has particularly been big in the IT section, so cybersecurity and making sure our systems are robust. We'll then obviously see that, that investment we've made will pay dividends as the revenue comes through and the revenue will be multiples of that. So there will be a big inflection when that happens. We've also taken a pretax noncash impairment of $24.8 million in relation to Gyros. The lack of sales in the half was an impairment indicator and management of the Board looked at that in to this opportunity to write that off with some of those costs relating to the original MAC 1, which we did have some issues back in the past. Market has been far more robust and good in the market, but our advancements with Mark mean that there's a lot of that technology we're making redundant, which is how we're going to be able to do things like the nerscheduled maintenance and the bearing technology that's going to reduce power. So that has resulted in that write-down and also $600,000 of inventory, which relates to Mark 2, which we won't be using going forward. In terms of the positives on the balance sheet, $13.1 million net proceeds from the capital raising strengthened that balance sheet. We ended the half year with $9.1 million in the bank. And end of January, it's about $10 million in the bank. We have $8.8 million in unused facilities. That's across our -- that's across our trade loan, overdraft and also facilities granted for equipment that's on the way. Cash flow from operations during the half was strong at $4 million, and that's a result of the commencement of the next stage of ASE. Some of it is a working capital adjustment has received deposits to begin that work. We raised $13.1 million net from our capital raise, and we repaid $1.1 million higher purchase liabilities as well as eliminating our overdraft and eliminate the rest of our trade loan at the end of January. So at the end of January 2026, our cash balance has risen to $10.3 million. Now, putting on to what Mark has spoken about earlier in terms of the disappointment we had with the U.S. government shutdown that delayed our entry into the U.S. defense and work around that. That money has really been held in reserve as a result of those delays. As you can see, we started with EUR 13.1 million net debt at the end of June 2025. that reduced to $1.8 million and now a net cash position of $200,000, and that's after our net proceeds of EUR 13.1 million. So essentially, those net proceeds from our capital raising are still there. The business essentially outside of that generated a little bit of cash in the half year. That's showing the resilience of the underlying business, but also now we'll be hitting our straps in terms of pursuing those defense opportunities and we're looking forward to working with all those contractors. Mike has mentioned, we're working with 11 all up. So a lot of work going into that. I'll now hand over to Mark to talk about the different sections of the operations separately.

Thanks, Tino. I've alluded to a lot of what's occurring in propulsion at the moment, and this is covering that in more detail. But the VEEM Extreme range is a real first globally. And it's not just the design side of what we're doing here. It's been the development of what we've developed in terms of materials, which we will apply for a patent for. So the ability to have corrosion-resistant materials with very high strength is very rare, and they're traditionally reasonably difficult to cast -- so we've developed those techniques, and that's actually a picture you can see on the screen there of a VEEM extreme Propeller. They're kind of looking beautiful, but they're also very strong. So they're almost double the strength of the bronze that we were using previously. And they have very high corrosion resistance, so which is very, very important. But the whole shaft line package is what we're now putting forward. Now we don't make a lot of shaft line packages and haven't historically done so. But this will -- because it involves using a smaller shaft in many cases and with the high-tech brackets and rudders, that will gain so much advantage by using a complete package. We believe that, that's what we'll be selling very quickly. We have also offered a retrofit package which is a propeller and runner, which will give them as much as 18% of an improvement based -- dependent upon what their current configuration is. But it means that they can fit these products overnight and be back in the water the next day. So I won't interrupt their operations at all they do enjoy the benefits. But for new builds, of course, they can gain that extra advantage by using the bracket and the shaft on the new build boat, which is quite easy. So Manifa are really key. And I think we mentioned at the AGM, they've signed up for 6 more boats for the propellers and -- but they wouldn't sign the contract until we agreed to make them a set of rudders. So we're actually going to production with those, I think, next week. So that if they're successful as they were on our boat, then we will produce another 6 sets for them. And of course, we've been contacted by Sydney pilots and the Sydney Ferries because they're also looking to reduce their carbon footprint. So this is going to grow legs, and we're dealing with a couple of companies in America. And now we've got, I think, the next target we've got some customers in Italy and the Supia area that we'd like to turn our attention. So it's a couple of customers that are very, very keen. So we're getting a lot of contact around the world, and it's going to be very positive, but we have to just be careful. There's a lot of development work in the designs and we have to develop what's known as parametric models on the routers and the bracket, so we can automate the design process, which is what you have to do and we've done with propels necessary to get the cost efficiencies out of the product, and it's a process of doing a sample of vessels that we can then use the results from to build up that model. So it takes time, and we'll do it over the next year and a lot of work in engineering at the moment going on behind the scenes, but the results so far have been extraordinarily impressive. But on top of this, what we've done is by developing its material, it's also applicable to Charo. So we're still working with Shar and we are producing some shares at the moment, but they are still developing the design side of this to optimize the performance. But certainly, with the VEEM Extreme materials, we're taking everybody forward on that journey. And we believe that the share of propellers will see the same benefits from VEEM Extreme that we've seen on our product range. So we are very -- still walking in a lockstep with them and allowing them the space to develop their product the technical side of that product so we can manufacture it. So let's move on to defense. Defense has been interesting. We've -- the ASC work, as you know, goes up and down over the years, and we just had to go into our upside, we're going to be very, very busy. But we are talking to a number of other people Australia-wide. I think the overall defense accreditation going to secret level and now working with them with these other companies means that when people contact us, they have the confidence. And there is a defense contract in Australia that we've made contact with us. We're moving forward very quickly because we already have all of the necessary Australian accreditations in place. So it didn't help us at the American government shutdown for 6 weeks. It's taken a further 6 or 7 weeks after that, just to catch up on that work. So things we thought we would see around the time of our AGM last year, we're only just starting to see now. So obviously, there is a bit of a slowdown in that space. However, they're very, very supportive we've seen from people like the HII's electric boat company, Northrop Grumman's, they're all on board with bringing Australian companies into the Arcus program, and we're 1 of the first companies coming in. So a very positive result. They want this to work, and they are going to be sending us tenders. I think our last audit for them is in April. So we should start to see things start to move up from that point. So it's just taken a lot longer. It's got to march to its own drum and not having the experience in this before, we're a little surprised it takes us long, but that this has to go through its journey. So very pleased to be in that space. And as I said, already dealing with 11 people is quite good. I do expect more from Australia, perhaps from the missile program. and for as August gets closer. So we're spending our time marketing in that area as well at the Sea Air and Space Conference in Washington, and we'll be there in the next few months just to pursue all the leads that we've got so far. So looking very good, but delayed. Okay. The next one, the gyros. We've talked a fair bit about this. The Mark III has got this mechanical boiling system, we've applied for a patent 4, which means that the oil pumping system is critical to the operation and success of this model is now mechanical and it is absolutely 100% reliable forever. We have been using up to this point, electric pumps, which have proved to be quite problematic. And whilst we have now developed new electric pumps and have them and are using them. We still feel that the ultimate solution is what the market has got. That's the end of the equation. We can remove all the seals from inside the ball or the gyro, which have to be changed regularly, reduce the cost of the realized cost. A major service 1 of these units, even the small ones is over $20,000. That's all gone. And the way we're marketing it is the retrofit kit we've developed with it, can be sold to our existing customers for around the same price as a major service and then they won't see us again. So from here on in, it will just be small filter changes and oil sampling to run that gyro. And of course, we have telemetry, which enables us to monitor the gyro all times. So that's a really important feature. We're also moving to a lower friction bearings, which are coming down the track as well. And sometime this year, they will appear -- and that's a great thing on both. There's limited power. We'll have gyros with around 20% less power consumption. And of course, the tidy things up, because we make our own castings here, we've been able to incorporate all of the fluids being moved around the Garo. -- we've incorporated them into the casting, which means all the pipe work has disappeared off the tariff the board of the gyro. So that's about 60 points of potential leakage, and we have eliminated that. So again, making the unit much more robust. So we just found that this year, people are waiting for the new model, so a bit of incidence and the slowdown in the global marine market has meant we just have to be patient. And there is a lot of leads we have at the moment that we think will be very fruitful. We just have to be patient. So we are still the largest supplier of the biggest gas globally, and it still is $1 billion year market around that number. So we still see it as a very important product for vein going forward. It is the product we've got here that can turn over very large amounts of turnover and that hasn't changed. But I think our product has developed to the point where now we've got something which we believe is the best in its class, and we think it will bring the success that we want. Engineering Products and Services. It continues on as always forever pipe, going well. Everything is good. We found that the demand is still there and that will continue on as normal. So for the outlook of what we're -- we're looking for. We expect the global demand for propellers to pick up in the second half of this financial year and into beyond. And we think the VEEM extreme that is going to be a game changer for us because every propeller that we used to sell, if they move to VMtreme, we'll be selling 5x at value at a higher margin. The VEEM extreme we're targeting particular target customers that are of great value to us where we get good feedback and key customers -- 1 of our key customers in the U.S. once they make the change to our product, the rest of the market will tend to follow. So a very powerful influencer in that space, and we have an excellent working relationship with them for over 20 years. So obviously, expanding the range -- and automation is still driving us. So the continued automation going into the business, including in our foundry, we're just installing now a 3D sand printer where we can start printing molds printing our own core, specialist calls for castings. So we are using more robotics, and that's a continued drive for us. If we want to compete on the global stage, we have to be highly automated and highly efficient and that we're still marching down that path. On the defense side of it, I think that's -- everyone can see the future of that is growing and growing. The fact that we're in contact now and negotiating with 11 companies is terrific news from Ven's perspective, and they will all fall into place over the next 12 to 18 months. And the demonstrator program for the hunter is great. We're a bit sad that that's taken so long to get through the government review processes. Unfortunately, no was able to tell us any of this when we finished our accreditations last May. There's a very lengthy review process. I guess in hindsight, you'd say, well, you are going to secret, I guess there should be a lot of scrutiny and review. But it's certainly been a long time. But we'll move into the manufacturing program, I would imagine, in the back half of this year and into, I guess, 27 is when we'll start manufacturing. So it's looking very strong. We're very well positioned, and we know that August is still strong and a lot of other defense programs as well that we're looking into. On gyros yet, Mark, I'm so excited it's a product that always should have been, in my opinion, and it's with a new concept and new technology. It just takes time to develop, but we're certainly seeing the MACI had significant improvements out in the marketplace. The Mark 3 is what I call the killer. So it's going to go very well. Engineering is steady, which is great. Generally speaking, and we reduce our overheads during the year, which is really important. On an annualized basis, about $3.5 million, just to make sure running as lean and as keen as possible. There may will be -- with the automation we're putting in place, -- we won't necessarily be growing back to the same amount of people in those areas. So that's probably a good thing and we can grow with automation rather than having to bring more people back in. So that's in the presentation. Any questions from anyone?

[Operator Instructions] Just the first question, Mark. Does the extreme directly compete with a share shaft dry propeller.

It's interesting that it probably doesn't because the team Extreme will be using the same materials. So if you look at the shares and bronze, and our propels and bronze, we believe the share will show advantages over our propeller. We expect the same difference with the new materials because they'll both be available and BMEXtreme. So we still think that Sharoultimately perhaps be even more efficient, but it's up to show with the development work to be able to bring them into the market and demonstrate that, and we simply manufacture those. So I don't mind which 1 becomes the most efficient product in the world because we'll be manufacturing both of them. So I think we're in a very strong position.

Well, thank you, Mark. Nexon. So just regarding the share JV. I'm just wondering how you see that evolving over the next 2 years?

At the moment, we've extended our agreement with them, which enables them to work directly with their customers and design the Propel and we simply manufacture them for Sharoand they delivered to the customer. I think that is a much more efficient arrangement, and they're very happy with that arrangement, and we've extended it by 6 months. So what we see is as they go into the marketplace more and more, they're selling more and more at some point when the designs are finalized, it makes a great deal of sense for team to then take over that marketing distribution role and sales role because we have such a large global spread. So it's really going -- looking at every 6 months, we review it with them and we're working together in lockstep to achieve the best result for Sharon.

Thank you. Does mean expect any flow-on from the recently announced landing craft projects.

Yes. In a nutshell, we are very interested in the propulsion side of these vessels, and we are already in discussions on the larger landing craft on the propulsion side, the smaller landing craft uses water jets. So that won't be an area that we necessarily be involved in. But because Asia literally minutes drive away and we do a lot of work for them. We are staying in very close contact to see what else might come with that project. So there may well be other fabrication and manufacturing, which we will be able to tender on.

Okay. A question from Alex Lu of Morgans. The reduction in overhead costs of around $3.5 million, was that mostly labor? If so, are you confident you can add labor back when volumes improve.

Yes, happy to take that one. Yes, most of that was labor, but that's overhead. We've made sure, obviously, not to reduce our capabilities in terms of skills for the products we have. So there was a natural reduction coming after the products were launched, and there was a natural peak there, but also other costs were overhead costs, which we rationalized. But certainly, in terms of where we're going, going forward, Mike has talked about automation. So some of those rules won't be required used by automation. And some of that, what we expect to grow going forward. means we'll be able to do more with less. So we're very comfortable. It was certainly a considered decision. Other costs were also within the business, not personnel related, and that's just a means of making sure as lean and as keen as possible going forward.

A question from transfacing from Flaten equities. Can you please comment on U.S. defense demand? Are there any subcontractors making inquiries?

Yes, indeed, particularly in the submarine program. So we've seen Northrop Grumman who work for -- do a lot of work for both electric boat company and HII. And they're very keen and they're 1 of the companies we're dealing with very closely. It is the submarine area of the business with us most. However, 1 of the early tenders was for the aircraft carrier program. So HII do both. And there's a demand in particular areas in America where we specialize. So they were the first inquiry. So they are struggling with the nonferrous foundry industry as well. High-quality nonferrous foundries are in short supply globally, and that's what we specialize in. So that seems to be of great interest to them. And we're really excited because it's something we do very well. We don't have to invent anything new to do this. We just have to adapt what we do. So they've been very receptive and very proactive for defense. So -- and when we go to sea, air and space, they have offered to introduce us to their supplier network. So we're obviously going to pursue that with them. So we expect to be introduced to more and more. And everyone is keen because they know that the Argus program is alive and there's a great decoreof support and responsibility for making it work.

And if I can just add from Mark there in terms of a financial point of view, you've seen in this half, where we have a big drop in defense revenue of 65%. Entry into U.S. defense is really going to help us change that and have a step change. Collins class work has shown that it's very long. The longevity is great. So from the 90 days, we've been doing that. But obviously, with that work were constrained by the limited number of Collins class vessel. So that market and that work we do is based on those roofs and isn't really growing. And obviously, they're going to be retired over the next decade or 2. But going into U.S. defense, then that should enable us to increase that revenue gradually with the production, they're trying to achieve there lack of supply. And also even when that program is complete, which is a multi-decade program, there will be all the submarines that have come out of that for sustainment work and other work, which is similar to what we're doing with Colin. So going forward, where our aim is to have less variability in defense. And as we push forward and with each half year step up that revenue, we then shouldn't have this sort of half where you can have greater 50% drop because we'll have consistent, steady revenue going forward. So it's taking time, and it's something that we're working on, but it's -- that's definitely a very positive outlook that's going to make the business steadier and also mean we can grow with more certainty in terms of overheads and other products, et cetera. So there's a big advantage to that we're working towards.

Follow-up question from James. How big could the U.S. defense opportunity be?

They make 10,000 castings per submarine. -- pretty big. It's very hard. They want very hard to get information from any of these customers because it's all secret, but we were able to find out that there's 1 somewhere in a 10,000 casting. So there's lots of opportunities for being. It will be much bigger than what we're currently doing in the submarine program here, and there's more players. So we've got work and see how that is, but we think it will be significantly high. And I think, Tino, you put some conservative numbers together on this.

Yes. We've done just some very back of the envelope work. And we're sort of saying, if we are doing, say, $10 million in ASC work equivalent will translate to maybe $20 million, $25 million as we grow and enter. So I mean, we really had all the way up to say, $100 million in blue sky territory in which case, we then bump up against constraints of space here and all that sort of stuff. But really, in terms of opportunity, it's very large.

And of course, there's a local Australian defense work going on here we're building tanks. We're building underwater unmanned vessels. We're shortly building missiles. There's I think there's quite a lot of opportunities for team in these spaces. And we are very well qualified to be able to tender into that space. So the accreditation we've got will go a long way. It's expensive to get. It's expensive to run, but it opens many doors.

All right. Thank you, Mark, and Tino. That concludes the Q&A segment of the webinar. I'll now hand it back to Mark for closing comments.

Thank you, Ben. This is a transitional year for VM. We're moving to releasing such significant products that are world-leading products in the VEEM stream and the Mark III gyros. They're enormous tasks. We had to announce them in October because we were at the trade shows as the big ones are in October in for Lauderdale flips and Mets in Amsterdam. If we don't release them then, you got to wait a year. So it's critical to release and our engineers are working really hard to transition from the first designs and testing into production. So very much a transitional year for both of those products, and defense has been delayed a little, but we're transpositioning into more defense and more international defense. It didn't help us that there's been a global slowdown and a significant 1 in the marine sector, which appears to be -- we're coming out of -- we can see the signs, the green shoots now and certainly by the end of this calendar year, and I believe things will be back to normal. That's what we're dealing with at the moment. And we're very excited and we're very busy, but we've just had to deal with this slowdown as well. So obviously, we're not so we want to see, but certainly, '27 will see ourselves back on track, I believe.