Thank you for standing by, and welcome to the Austal Limited FY 2023 results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Patrick Gregg, Chief Executive Officer. Please go ahead.
Hey, 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 US, so if there's any delays in 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 has been said, we'll present in the same format as usual, and 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 tax 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 you through everything else that's going on in the business. And unfortunately, these previously announced tax provisions mask a very respectful set of results with some great operational financial performance, you know, areas such as support growing, Australian defense, and profitability. And 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, and, you know, it would have been a really solid set of results if it hadn't been torpedoed by the tax provision, but that we had to make this year. We have made some organizational changes on the back of that, and really around focusing on the execution of the tremendous order book that we have won over the last year or so. There's good, strong operational cash flow, and net cash is still healthy, even with significant investment made in the business. And that's why we've decided to pay an AUD 0.03 full year dividend, AUD 0.07 in total for the year.
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, you know, two years ago when we were talking about the challenge of life after LCS, I think we've absolutely smashed that challenge. And, you know, we've got a very long, very bright future ahead of us in the US business. If we look at some of the key facts, you know, so revenue has grown from last year, and we expect this, 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 had a good year of deliveries. A couple of LCS ships delivered, EPF 13 with its autonomous capability, delivered in the year. 3 Evolved Capes to the Royal Australian Navy, and 2 commercial vessels delivered, one from the Philippines, one 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 US and in Australia. Pleased to report that San Diego floating dock has arrived.
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 now working on commissioning and getting that into service to generate future revenue growth on that target to $500 million by FY 2027. 8 service centers around the world and 60 vessels under sustainment contracts, you know, a 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 about 4,300. Most of that in the US at the minute, based on the work that we've won.
Got some great opportunities in the Australasia business as well, which we will talk about as we go through the business. Still a huge number, you know, so 40 vessels scheduled or under construction, with another couple of EPFs, still two LCS to deliver, the five T-ATS vessels, floating dock, unmanned craft in the US, Capes and Guardians, T-AGOS, seven 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 gonna look at the group revenue movement for the financial year. The revenue picture is a positive one, with revenue increasing AUD 156 billion to AUD 1.5 billion. All of these numbers are in US and Australian dollars, being our presentation currency. The segment breakdown, inconsistent with prior years, is by the US, and then we break that down by shipbuilding and support, and Australasia broken down by shipbuilding and support. So first movement in the for year-on-year is we can Australian dollar led to an increase in FX of AUD 86 million in our revenue position.
The US shipbuilding year-on-year increase was AUD 48 million, based on the build up 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 US support business increased by AUD 35 million, as this is a focal area for the business to diversify its revenue streams, and one where we, 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 AUD 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 though, that this Australasian support business increased revenue by AUD 46 million, as again, this is a focus to diversify the income streams for the group. I move to slide 5. This is a group EBIT movement. As Paddy said, the T-ATS program preceded the group results for FY 2023, and the EBIT decreasing by AUD 126 million to a loss of AUD 5 million. To break the T-ATS position down a little bit, we actually impacted the results by AUD 171 million, comprising of two components. One is the AUD 61 million loss for FY 2023, but because we've deemed this contract as onerous, we've had to bring forward expected future losses of AUD 110 million.
And that's, and then also what happened in the financial year, we had an award of the fifth T-ATS vessel in June. That increased the program from four to five, and because it's onerous, then that obviously increased the provision, because we were expecting onerous costs for one to four. 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 US 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.
US 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. It's pleasing, US support business increased by $35 million, as it's a focal area to diversify the revenue streams. The Australasian Shipbuilding segment declined by AUD 63 million, due to the decrease in commercial vessel construction market, but it's felt over a number of years post-COVID. If we turn to slide six, we look at the segment breakdown, and this is, we break down the US 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 US shipbuilding business. The shipbuilding decline in EBIT was due to the previously mentioned loss on T-ATS.
The US support segment maintained a steady margin at 6.65% on a higher revenue to deliver EBIT of AUD 14.7 million for the year. Australasia Ships generated EBIT of AUD 6.7 million on revenue of AUD 222 million, which was more than FY 2022 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 AUD 15.8 million. On our cash position, that's slide 7. Our operating cash flow increased by AUD 49.2 million to AUD 86.7 million, based on the receipt of milestone payments, partially offset with $14 million of OPC supplier pre-payments that we made within the financial year.
We had continued investment in enhancing capital expenditure, including AUD 32 million for additional waterfront land in Mobile, Alabama, for expansion of capacity to deliver the increasing order book. From financing activities, there's no additional debt drawn down, despite over AUD 100 million of capital expenditure and the payment of AUD 29 million of dividends, which was AUD 0.08 paid in the FY 2023 year. That leaves us with a robust cash position of AUD 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 historical investor data that shows share price, revenue, and EBIT, from the period of FY 2018 to 2023. When you look at order book growth since FY 2021, the pace of growth has increased substantially.
The future shipbuilding activity is on a growth trajectory, and the investment we've had of our US $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. Key focus now is on delivering the order, order book profitably. That's, that's number one focus for the business.... We've shown the impact on the LCS loss and the provision for future losses, a significant drag on the results for this year, and it unfortunately detracted from the strong performance of the other programs and regions. As an example, if the impact on LCS was separated out from the group EBIT, the underlying EBIT would have been AUD 166 million without those LCS losses.
It gives an indication of the strength and financial performance of the other business, excluding tax. If we turn to slide 9, on a guidance perspective, we are expecting revenue next financial year to grow 8%-10%, and that's off a FY 2023 base of AUD 1.585 billion, with an underlying EBIT of 3%-4%. When we talk about underlying EBIT, it excludes any kind of one-off capital expenditure or profit on sale of any capital investments. It's really the underlying operating EBIT for the business. I will now hand back across the Pacific to Paddy.
Pardon me. This is the conference operator. We have temporarily lost connection with Patrick's line. Please bear with me while I try to reconnect him. Pardon me, Patrick now rejoins.
Hi, 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, 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 you know, while it was great to get the protest dropped, there's still a lawsuit pending, but nonetheless, that has allowed us to carry on with our work on the material items and getting through the design stuff. The EMS ships, you know, we know three of those have been funded in the budget, and we anticipate award in September.
Maybe really are just dotting i's and crossing t's on this, and it's very frustrating based on the fact the US 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 i's and crossing t's, and I anticipate that's gonna be awarded any day now. I've talked about the T-AGOS win, you know, up to seven ships, $3.1 billion contract. Very exciting and great opportunity for us. And in support of that, we've purchased another bit of land next to our site in Alabama, ready for some potential future growth and continued investment in our facilities and the programs we see coming downstream.
Some good awards in advanced manufacture and some investment in 3D printing and machinery. I'm really working with the submarine providers over here in the US around printing parts and speeding up their ability to procure very difficult and complex castings. It should be a good opportunity for us in the future. And if we think about Australasia, five Evolved Cape-class in service with the Royal Australian Navy and some positive feedback on their capability and performance. 15 Guardians, 16 Guardians handed over to the Commonwealth. We did Federated States of Micronesia the other day. So, you know, there's another three builds ready for acceptance, and that's been a great program for us that carries on.
And something reasonably exciting, the autonomous patrol boat that we are doing an R&D project on in Australia when we bought 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 a media day to talk more about that and its capabilities. And, you know, looking at some of the other technology we've developed around the LUSI software, you know, 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 I'm constantly looking for ways to grow the order book and, you know, we've done very well in shipbuilding over the years. We are improving our support business and more 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 two 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. And really focusing a little bit on shipbuilding and support.
You know, as I said at the head of the meeting, we've spent the last two 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. And, you know, so we had a great year, again, in terms of looking much further and much broader. And so we continue looking for design studies to put work into the long-term order book and really try and look as far out as we possibly can. And I think we're in very well placed for a positive long-term outlook with the Australian Defence Strategic Review. And the confidence I get 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. I think that puts us in great shape. When you think of some of the quotes that were in the Defence Strategic Review, where they talked about Tier Two ships being built in Western Australia, an immediate need for medium and heavy landing craft, and the government reconfirming its commitment to 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.
And we anticipate the output of that, in October, as has been highlighted by Minister Marles. And, you know, 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, in the USA. So looking for me, strategic outlook before I finish and open for questions. You know, it's not changed from winning the work to how we execute the work and following all the steel 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 is AUKUS and what that can do. We had an amazing event in Sydney where the US Navy commissioned the first warship ever outside of the United States with the USS Canberra, the LCS that we built. Really just demonstrating that we are a ready-made conduit for some of those links and whatever AUKUS may bring. Yeah, whenever you consider submarines, and we're building submarine modules in the US, some of the warships that we're building could be used by both navies.
Autonomy is a key feature of AUKUS as well, and EPF 13 being the largest autonomous vessel in the US 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 that we already have both in Australia and in the US Still a whole lot of growth opportunities on new vessel programs. You know, 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, you know, as we've talked about before, not just bidding as a brand, but working with partners and, finding a way to, to increase the revenue, through the business, keep our people employed and, 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 tax, 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.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the headset to ask your question. Your first question comes from Sam Teeger from Citi. Please go ahead.
Hi, Paddy. Looks like it's been a warm day in Mobile today. Thanks for the presentation. Just in terms of the outlook, how do you land on 3%-4% margin for FY 2024, especially given the extent of tax provisioning you've done in 2023? Just wondering, is this margin outlook more of a function that you're being conservative on tax, or is it more of a function of new programs ramping up?
I think it's, I'll go, Christian might want to jump in. You know, we, we really are in that transition, Sam, where we're at the back end of the existing programs, and we're at the front end of the new programs. So we try 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. You know, but it's also to try and give confidence that we think there is profitability there, even through that transition.
I'll just chip in there. On net tax provision, we obviously took an owner's provision at the end of June 2023 to try and bring forward future losses related to that into the FY 2023 position. That provision will unwind over the balance of the program. The underlying EBIT forecast guidance doesn't have a major impact on tax because it's been taken in FY 2022 year.
... Yeah, got it. So just in terms of you saying there's still uncertainty around the back end of, you know, yeah, LCS and some of the EPF you're doing, of the FY 2024 revenue guidance, how much, you know, is related to LCS and EPF? Just consciously bleed out the rest of the, the dim tubes for LCS and EPF in 23.
I think the way we tried to look at it is, you know, we've done very well on those ships, and we haven't had any issues. Some concern around last to class and will there be any transition issues where things hang on to the existing ships before they jump onto the new ships. So, we tried to be really 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 you might get to in FY 2028. Does that chart just take into account programs you've won, or does it take into account programs you expect in the future, such as hospital ships and other stuff?
Yeah. So the charts really around stuff we've won. So anything we're currently bidding for is not in that. You know, so it gives everyone an idea of the direction and that we're going and where we think we're gonna get to with the revenue going forward.
Okay. Thank you.
Your next question comes from Russell Gill, from J.P. Morgan. Please go ahead.
Hi, guys. Just to add a bit more clarity on that, the guidance on the 3%-4% margin. And whether there's some other moving parts in there, if we just look at your USA EBIT for FY 2023, cumulative, that's AUD 24 million. At the bottom of your guidance range, it's kind of like 50. We'll presume that USA would be half EBIT next year at the bottom end of that guidance range. Is the USA and your guidance to USA growing as well? Is there a bit of movement or noise in the USA numbers in 2023? You know, just so I can understand how the cadence of that EBIT margin goes, because it would imply some very, very low implied margins in your shipbuilding program next year.
So again, we, you know, we continue to see the support business grow, and we're reasonably confident that 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 prudence in there for that as we move forward. And then again, you know, I'll just come back to that slight uncertainty we've got around the back end of the existing programs and the pickup of the new programs and exactly when that profit will start kicking in is why we've put a bit of prudence into the guidance. Not many miles away from where the analyst average is at the minute, so.
So just on that prudence, I guess, is that you see FY 2024 as kind of a transition year from a understanding as these contracts start, you get a bit of visibility on what the longer-term margin could be, and 2024 we should envisage as a transition year, or will that transition? Because the impression certainly being 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 2024 and even maybe 2025 as kind of transition years as you start these programs, and then, you know, if everything works out, you normalize back up to a higher margin of what, you know, you'd anticipate bidding these projects or these programs on?
Yeah, 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 one. And, you know, so based on the fact they are very much in their infancy, trading at full margin, from day one, we saw as a slightly higher risk. You know, so there is a bit of prudence at the start of the program, and very quickly once we get into it, we'll, we will understand that and trade in a way that, again, we never wanna have to reverse, but we do put a bit of prudence into all of our forecasts.
Just a second question, just on cash flows and the balance sheet. You made comments earlier on that there's the expect some further investment for capacity, given, you know, the order book outlook. $100 million of CapEx in 2023, how should we be thinking about CapEx for the business in 2024, 2025? And then just on that, the TAPS 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, a recovery in profitability on, as the vessels develop through the program, but how should we be thinking about that, you know, net $150 million cash outflow, and CapEx timing over the next two years?
Yeah, so we have... That really works in terms of... Do you want to have a go, Christian, first?
Sure. Probably, well, firstly is around the CapEx profile. Obviously, with 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 at a pace that we can actually manage, one, to execute, and secondly, to manage group cash flows. The other part around tax that you said, you're correct, and then adding, we've taken a provision. The one thing that we've had to take as 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 it's a bit of a blend of the both, as we move forward in that.
Just to clarify that question: so let's just say, you know, round numbers, AUD 150 million cash outflow to come from tax. Is it a three-year, you know, based on current projections, 50, 50, 50? Or is it kind of 100, 25, 25? How should we think about just the timing around at the moment, how you're viewing those cash outflows could look like?
Yeah, well, just as a touch point, there is a 5-vessel program. We are around 40-odd% through the first vessel, so it's not... We haven't even done 100% of the first. So even if you take a fifth of that, we haven't yet burned through that yet. So, we're obviously going to simultaneously construct two 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 know, you've done three, well, three years of kind of elevated CapEx. You know, previously the run rate was more like 20-30. Is the run rate going forward, I guess, materially higher than that? Should we be thinking about the run rate more like 50 in CapEx?
Yeah, it looks a little bit higher. I think there's two components of CapEx. There's always a sustaining CapEx. It's probably where your historical cadence has been, and that's just around, you know, keeping things up to date and, and, you know, efficient. But when you're undertaking a growth program, expanding capacity, and obviously, you've looked at the FY 2023, we bought additional land, waterfront land in Mobile. We have plans to then expand our capacity by investing in the infrastructure to that. So it'll be based on, yeah, just managing that across the forthcoming years around what our build program is and to match what our order book delivery requirements are.
Okay. Thanks, guys.
Thanks.
Your next question comes from Patrick Moore of KMP Super. Please go ahead.
Thank you. Just for clarification, does your growth in underlying EBIT of 3%-4% guidance, does that apply to the AUD 166 million underlying EBIT you said you had for 2023?
No, no, no. The way to look at what we've done this year on guidance. The touch point and the reference point is the FY 2023 revenue position.
Yeah.
So if you build it up from 1.585, we are giving a growth on revenue around the range of 8%-10%. And from that revenue range, you take the underlying EBIT margin across that revenue range. So that, that'll give you a range of what our guidance for underlying EBIT is for.
Oh, okay, I understand. Yep.
Yeah.
So that underlying EBIT now is 3%-4% of the revenue?
The range-
Margin of growth. Thank you very much. Appreciate that.
No problem. Thanks.
Thank you.
Your next question comes from Daniel Laing from Bell Potter. Please go ahead.
Yeah. Hi, Paddy. I was just wondering if you could make some comments regarding the management changes in the US?
Yeah, sure. You know, I think, as I talked about on the call, Rusty has done a tremendous job of filling the order book and winning, winning new work and turning the business around and strategically to resolve that issue we had a couple of years ago. And you know, now, now is the time that we absolutely need that operational, operational focus in the business. And you know, that's, that's the conclusion we've come to. That's, that's what we're doing, and we're really locking down and and we're gonna get into operational delivery.
Okay, great. And do you have any timeframe on putting in a permanent member in that management there?
Not immediately. We have an internal person who we're very happy with, operationally, that we'll have a look at. But you know, we're always striving to get the best person possible, so we have also started a global search as well.
Yeah. Okay, great. Thanks for that.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Lawrence Specker, from Alabama Media Group. Please go ahead.
... Hey, 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?
Yeah, I think if you look at the business, it's gone through a couple of radical transformations. And, you know, the first one on the 2.5 years ago when Rusty took over, you know, 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 had 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, you know, a great 10 years forward with the work that we've got in the order book.
And now it's time to find the right person that is gonna deliver all of that work. You know, strategy and business winning are different to execution. We're just trying to do the best thing we possibly can to make sure that the workforce here are delivering ships for our customers.
All right. Thank you.
The next question comes from Dilip Badlani from SKM. Please go ahead.
Hi, guys. Congrats on all the contract wins. And I just wanted to ask the same question I was asked earlier. When do you think we get back to normalized EBIT margin of 3%, like you were doing in the past?
Yeah, it's a good, 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 types of programs that we've put into the business. So, you know, and on our end, you know, some of the questions were around transition. Yet this is absolutely a transition from two steady state programs that were coming to an end to a whole series of growth. You look at the underlying results, they're very healthy. You look at the cash the business is generating, and 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 that we'll find a new normal in the next year or two with the opportunities we have ahead of us, but for me, it's about continuing to profitably grow it.
The next question comes from Mitch Sonogan, from Macquarie. Please go ahead.
Good morning, guys. Thanks for taking the questions and apologies. I was jumping off another call, so I might have missed some of the prior. Just on the 3%-4% guidance range on the margin, Paddy, I understand you've got some new programs there, OPC, T-AGOS, over the next 30 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 shipbuilding over the lifetime of those programs, are you can you provide any color on yeah, if you're still comfortable there, like in terms of your standard shipbuilding margins?
Yeah, it's a good question. You know, all the programs have been bid in mind with, you know, traditional anticipated margins. So there's no concern in my mind about where we're gonna get to. It's focused on execution, and it will come. It's just that prudence at the start of a program, but we don't want to overtrade, similar to what we saw on LCS and EPF, where they were slightly lower earlier on, they were slightly higher later on, and, you know, they averaged in that sort of 7%-9% range.
Yeah. Okay. Good. Thanks for that. Just a quick one, just in terms of the EPS vessels and programs, can you provide a bit of an update? Are there any more expected there, I guess, or the conversations or what the US Navy is thinking, but also maybe just touching on the medical vessels and any update there?
Yeah, yeah. Medical vessels are frustrating me because they're, you know, we're dotting Is and crossing Ts, and we've been doing that for quite a while. We saw the budgets all being approved by the president for three 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 gonna come good. You know, I'm not aware of anything that suggests that they're not gonna come, and a whole lot of things that suggest they are gonna come, but that are all public. So, we'll keep pushing, and it'll be nice to get that one over the line.
Yeah. Great. And just a final one from me, just in terms of the San Diego facility. Yeah, can you just maybe just now that the dry dock's arrived, can you talk to the commissioning timeline on that? And just, yeah, 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 workflow through it. Thanks, guys.
... Yeah, okay. So there's work we are doing there, and there's top side work we're doing there 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 sink into to launch and recover ships. And then there's sort of dock masters to get familiar with the actual operation of the vessel and commission it as such, understand how we work in that environment, tide over, all that sort of thing. So you know, it's probably three or so months away from actually being really operational. 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.
Yeah, okay. Thanks, everybody, and thanks for the questions. You know, I think summary for me, tax was very disappointing, but if you look through that, the rest of the business is performing very well. You know, I think the guidance we've given is more or less in line with the annual standards that we looked at. And the range is just really given around that slight uncertainty as we transition from old programs to new programs, and how quickly we can get the people ramped up and really start delivering it. And you can see the cash position, 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.
We will continue to focus on execution, delivery, and growing the business as we've done over the last couple of years. We'll be happy to answer your calls in the future and keep you abreast of everything that's going on at Austal. Thank you all for joining today.
That does conclude our conference for today. Thank you for participating. You may now disconnect.