Operator: Thank you for standing by, and welcome to the Austin Engineering Half Year 2026 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Sybrandt Dyke, Austin Engineering's CEO and Managing Director. Please go ahead.
Sybrandt van Dyk: Good morning, everyone, and thank you for joining Austin Engineering's Financial Year 2026 First Half Results Briefing. Together with me is Austin's Chief Financial Officer, David Bonomini, who will take you through the presentation released to the ASX this morning and then open for questions at the end. I will begin with an overview of the results and the key drivers for the half. David will then cover the financials in detail, and I will return to discuss regional performance, operational priorities and our outlook for the second half. Before reviewing the results overview, please note the small graph on Slide 6, showing our total workforce. We have adjusted our global workforce to match activity levels and improve efficiency significantly over the last 6 months. We reduced our workforce to 1,222 at December '25. If you could please turn to Slide 7 for the results overview. I would like to point out that we are displaying our statutory results from continuous operations here and for material items, please refer to Slide 8. Overall, the half has presented some challenges across the business, which we have previously flagged to the market and are reflected in the results here. The performance was disappointing and below what we can deliver as a team. While revenue was broadly stable, earnings were impacted by operational inefficiencies and contract-related margin pressure. Importantly, these issues are operational and within our control, not a reflection of customer long-term demand, market dynamics or Austin's competitive position. We have pleasingly increased operating cash flow and generated free cash flow for the first 6-month period, which has supported another dividend return to shareholders. Group revenue for the half was marginally down 3% to just over $170 million, but excluding the prior year restatement was broadly in line. North America has continued its growth trajectory, up 12% to over $71 million off the back of strong demand for our product offering. This was offset by falls in APAC, down 12% to around $70 million and 11% decline in the Chilean business to $28 million. The lower APAC revenue reflects some timing delays in trade orders from a major Australian-based customer and a softer East Coast market. Counter to this, market demand in Australia continues to be strong with increasing production encouraging, additional $21 million of trade orders have been secured post half year-end. In South America, revenue was broadly in line with last year once you exclude the previous year's restatement. However, revenue was capped while we restructured the business to improve our efficiencies and cost control. Group EBITDA came in at $8 million and EBIT at $3 million, both down on the first half last year. This was driven by a loss in Chile of $4.1 million and margin declines in the U.S. and Indonesia, all of which we have made some changes to address, and I will talk about shortly. Australia made a solid contribution to profit with improved margins on increased market revenue. Overall, this has led the group reporting a modest statutory net profit after tax of $2 million for the 6-month period. Our operating cash flow was pleasingly $6.6 million, an $11 million turnaround from the $4.4 million outflow in the first half last year. This underpinned free cash generation of just over $3 million after allowing for interest, tax and Capex. The positive cash flow and expectations of this continuing in the second half has supported the Board's decision to declare an interim dividend of $0.03 per share fully franked. Importantly, I want to stress that the negative issues I have touched on are operational and within our control, not a reflection of underlying customer demand or the strength of our market position. Encouragingly, customer activity remains robust. Additional orders secured post period end, namely $51 million and strong market demand in Australia support a stronger second half as operational improvements take effect. Please turn to Slide 9, and I want to speak about our South American business and explain how we are overcoming some of the recent challenges we have faced in that division. We took on a large OEM contract and it's now apparent that Chile business was still prepared to manage the substantial volume increase required, along with different manufacturing requirements of the OEM specifications. There was a range of labor and steel productivity issues in Canada and capacity at Chile became strained. In order to deliver the OEM contract, we shifted some of the production to Batam, which while solving the immediate issue, simply spread the margin dilution to other areas. We have many of these issues in hand now. The OEM contract is being renegotiated. We will continue only if better pricing and terms are agreed. Otherwise, it will end in April 2026 with no further orders accepted. It is clear that the contract has played a major role in the poor operational performance of Chile with contract performance resulting in a negative EBITDA of $3.2 million in this reporting half. Of this amount, $1.6 million is an onerous contract provision we made against the product produced sitting in our work in progress at December 2025. Other main actions taken are: we have a new management team in place, supported by the American management team. We have worked hard to get control over our steel yard and processes to manage steel. We have reduced our direct headcounts and displaced underperforming subcontractors. We have put in place improved planning and scheduling, which will improve throughput in the facility and lower our cost base. Now turning to Slide 10 and North America. Here, we have had revenue basically triple over the last 4 years. For this half, North America accounted for 42% of group revenue. This is a strong growth story and demand remains strong. On the downside, however, the pace of growth has started to outstrip our ability to scale the operations constantly. And we have seen profit margins fall as we have had to make greater use of contract labor and outsourcing to deliver on our orders. Whilst we are not seeking to slow revenue growth, we are now putting significant emphasis on backfilling the necessary scaling of the business with an emphasis on workshop efficiencies. The slide details some of the specific initiatives, and I'm pleased to say we are seeing progress in what we are now starting to measure. While room for further improvement exists, I'm confident that we'll see margins in North America return as these initiatives bear fruit. I will now hand over to David to go through the results in more detail.
David Bonomini: Thanks, Sy. Good morning, everyone. I would like to start with the group's profit and loss performance and then cover the results by region before moving to the cash flow and balance sheet. Turning to Slide 12, financial performance. Group revenue for the half was $170.3 million, down 3%, reflecting lower performance in APAC and Chile, the prior year Chile misstatement, partly offset by the 12% growth in North America. EBIT declined 63% to $8 million. This was driven by the $4.1 million loss in Chile, a $4.6 million reduction in U.S. profit and a $3.1 million decline in APAC, primarily due to operational inefficiency, the loss-making OEM contract and delays in major trade orders. Depreciation and amortization increased slightly, mainly from investments in the U.S. and APAC during FY '25. Tax expense reduction was mainly driven by the decline in the profit performance of Indonesia, U.S. and Chile, lowering the effective tax rate to 10%. Net profit after tax was $2 million, down from $13.4 million in the prior period. Turning to Slide 13 and the revenue chart. Group revenue declined by $5.2 million overall. APAC revenue fell 12% to $70 million, largely due to the timing of the major trade orders and softer East Coast demand, partially offset by growth in the Australian bucket sales. North American revenue increased 12% to $71 million, continuing its strong growth trajectory. South America revenue declined by 11% to $28 million, reflecting the capping of the OEM production, restructuring in Chile and the prior year misstatement. Turning to the EBITDA chart on the right. APAC EBITDA was $10.6 million with stronger Australian bucket performance more than offset by the Indonesian inefficiencies and the delayed trade orders. Indonesia entered the year with excess staff compared to the workload, which was addressed in October. Further, Indonesia produced 15 trays for Chile to meet the OEM contractual requirements, which negatively impacted margins. North American EBITDA was $4.2 million, down due to labor inefficiencies and increased use of external contractors and outsourced manufacturers. South America recorded a loss of $4.1 million, driven by the operational inefficiencies, restructuring costs and the loss-making OEM contract. Please note, we have taken a $1.6 million onerous contract provision into account, as Sy mentioned earlier. While the first half performance was weaker year-on-year, APAC remains the largest contributor. North America is expected to recover and Chile's performance is positioned to improve in FY '26 with a new leadership team and the support of the U.S. team. Turning to Slide 14, cash flow. The group closed the half with $15.8 million in cash compared to $20 million last year. Free cash flow was $3.1 million, a significant improvement on the prior year outflow of $9.7 million, driven primarily by working capital improvements. The operational cash flow was just over $9 million, including an approximate $1 million in working capital inflow compared to $17 million outflow last year. Capital expenditure was $3.5 million, down $2.6 million year-on-year. Financing activities included $1 million borrowings, dividend of $5.3 million, lease repayments of $2.6 million and a $1.2 million share buyback. Despite the lower EBITDA, the group delivered improved cash performance, lifting the free cash flow conversion close to 40% through tighter working capital management. Turning to Slide 15, financial position. The balance sheet remains strong with total assets of $273 million and net assets of $140 million. Net debt increased to $18.2 million from $12.8 million, reflecting working capital support to the U.S. and Chile, the payment of the dividend and the share buyback. The net debt-to-equity ratio remains low at 11.5%. Working capital improvements included the inventory reducing by $6.4 million through improved inventory management, receivables decreasing by $17.7 million, driven by the APAC collections. Payables decreased by $16.5 million, mainly due to steel supplier payments and customer advance payments declined by $1.8 million due to delayed major customer orders, especially in the U.S. Overall, working capital increased marginally by $0.7 million with further improvements identified across the group. Thank you for your time, and I'll now pass you back to Sy.
Sybrandt van Dyk: Thanks, Dave. I'll move on to provide an update on the performance of our global regions. So I'll move on to Slide 17. First, Asia Pacific. APAC has continued its position as the cornerstone of profitability for the group despite some softening in revenue, down 12% to $70.6 million. Trade sales were down just over $20 million with delayed timing in orders I mentioned earlier, along with an East Coast softening. Pleasingly, an additional $21 million in tray orders have been secured post half year. Aketaine, on the other hand, has been robust. We saw a $14 million revenue uplift and have entered the second half with a stronger order book. Australia's performance was offset by lower production and efficiency challenges in Indonesia, impacted by order deferrals and the Biden facility stepping in to fulfill the OEM production requirements out of Chile. This resulted in overall EBITDA and margins for APAC being lower compared to the prior corresponding period. Coming out of this, we have implemented changes in Indonesia, rightsizing the business to align with current demand and a keen focus on improving manufacturing efficiency and stability. With an improvement anticipated in the second half and a strong momentum in Australia, Austin expects a return to both revenue and earnings growth for the APAC division. Now on to Slide 18. As I mentioned upfront, the U.S. business has continued its revenue growth, up 12% to over $71 million, contributing 42% of Austin's total revenue. I've covered already the plans we are executing to improve operational leverage by improving workshop productivity, increasing production flow and reducing dependency on external subcontractors. Primarily, this is via investment in workforce capability and debottlenecking our Casper facility. Order levels in the first half were lower due to timing with a stronger order cycle expected in half 2. Underlying customer activity remains robust, and the region is positioned to benefit from improved efficiency and increased in-house production capability. Turning to Slide 19. And in South America, the lower revenue was principally driven by the production restructure stemming from the OEM contract I mentioned earlier and the restatement we did in the prior period. Margins were also significantly pressured by this contract, operational inefficiencies and some restructuring costs, resulting in a $4.1 million EBITDA loss for the half. This includes the $1.6 million onerous contract provision we took. Chile is firmly in recovery mode with a new General Manager and a refreshed leadership team having implemented change, including the initiatives I've outlined. We are seeing tangible results and expect a return to revenue growth and profitability commencing in the second half. Please turn now to Slide 21, our strategy on the page. Our strategy continues to provide a robust foundation for sustained success. I remain dedicated to advancing our strategic priorities, which are anchored in 3 operational pillars: product leadership, customer focus and manufacturing excellence. On the product leadership, we continue to design and engineer products that meet the changing needs of our customers for productivity, efficiency and sustainability gains. On the customer focus, we continue to build our sales and marketing programs and ensure we are constantly improving our service to customers throughout the life of our products. And in manufacturing excellence, we remain focused on ensuring centralized operational systems are in place across the company and training the team to increase productivity for Austin, value for our customers and reduce waste within our operations. Now on to the final slide on Page 26 and guidance for the full year. We are revising our revenue guidance to greater than $350 million and our statutory EBITDA, excluding FX movements to between $14 million and $16 million. We delivered a statutory EBITDA of $3 million in the first half. So this calls for an EBITDA of between $11 million to $30 million in the second half of FY '26. We do not foresee the material items repeating in the second half to the quantum listed in the first half. I further discussed the improvements we are undertaking in Chile and the U.S. to improve operational performance and how we are working on debottlenecking our facilities to reduce reliance on subcontractors. We have rightsized the business during the first half, reducing our employee number significantly, mostly across Indonesia and Chile. We are renegotiating the Chile OEM contract or it will -- we will not accept new orders post fulfilling our current obligations. With these actions, we aim to deliver on an improved second half financial year 2026. With that, I'll hand it back to the operator. David and I are now happy to take any questions you might have.
Operator: [Operator Instructions] Your first question comes from James Lennon with Petra Capital.
James Lennon: Looks like it's been a busy period. Just a couple of questions from me. You mentioned there that the competitive position hasn't really changed for you guys. Just wondering what's happening in terms of pricing of product. I think previously, you sort of mentioned you might have had a pricing advantage given the efficiencies you're getting out of Indonesia, but that looks like it's sort of changed. But can you just give an update on why you think your competitive position is still intact?
Sybrandt van Dyk: Yes. Is that the only question, James? Was it one...
James Lennon: I'd also be keen to know just like buckets is obviously a great result. is there visibility into next half as to whether you continue to see that sort of gains? Or is it sort of difficult to know? And I guess, finally, just around the timing of the improvement in these controllables that you see, what sort of timing are you giving to getting margins back to sort of where they need to be?
Sybrandt van Dyk: Yes. So I mean, as I said, the market and the market dynamics and our competitive position really hasn't changed. So that really hasn't had any impact on pricing across the region. We do have -- if you look at, obviously, you're probably referring to the Byon facilities more specifically in your first comment, which supports the APAC region and pretty much everything out of the Americas, which is obviously serviced by American operations. That is still -- it's still performing well. I mean this half, -- by probably hasn't performed well, and it is because we had -- we entered into the period with a lot more people than what the business activity required. So if you look at our accounts in a lot more detail, you'll see that the main item that has changed year-on-year is our labor cost and our subcontractor costs. And that is just because of inefficiencies, but also we had a lot more people than what the business activity called for. And that we needed to restructure the business, which we've done, and that's resulted in that reduction. But as to the positioning of that facility and its lower cost base, that is due. What we need to work on and to be full transparent, we need to also increase our operational effectiveness in Chile. Whilst labor is cheap, it needs to improve its efficiency to ensure it is optimized out of that facility. And when I say it needs to improve its efficiency, it needs to improve the time it takes to build the body. And we are working hard on putting those efficiencies in place as well. But that hasn't changed. I mean as to the question regarding buckets, buckets -- I mean for those of you that have been invested in the story for a while you probably would have known a few years ago, the Australian business unit that pivoted from making trays and buckets to only buckets and we move all tray manufactured for the APAC region into Indonesia. That business unit was in a very bad position was losing money -- quite a bit of money. And the team has worked really well through great initiatives that they've implemented to turn that business around from a loss-making situation to profit-making situation, and they've got really the business under great cost and efficiency control. That has resulted in us being able to put more through our workshops and also to improve effectively our competitive pricing position, which has helped in that sense. So as I've said, we're entering the second half with a strong order book and buckets, and we see that continuing both on the East Coast and the West Coast. We've got both an operation, obviously, in Mackay and Yankov. As to timing of the recoveries, that's baking. Yes, we are in the process of recovery. As you can see some of those charts. In North America, we are seeing -- now that we're measuring it, we're seeing the productivities improving month in, month out. Now that is due to a lot of work that we're doing, flow manufacturing that we're putting in, body systems that we're putting in. some of them are basic and some of them are more complex. We're also debottlenecking the facility as there's a capacity constraint in one of our final assembly bays. So we are going to use our second bay and do a different manufacturing technique to actually ensure we can actually increase our throughput. Now that's all -- a lot of it is already in the making and some of it still needs to be baked through. I'm confident we've got a very capable management team in North America by the results, and I understand that might sound counter intuitive, but they are very experienced. They know their problems, and they'll fix it. And in Chile, we've seen -- you've seen those photos there on the steel yard. So we've got steel under control right now. We have rightsized the business. We've decreased our direct labor quite considerably. We have moved our subcontractors that work for us in our facility there. We've disclosed some of them that have been really poor performance. But the biggest challenge in Chile is that OEM contract is really hurting us. It's hurting us twofold. It's a lot more complicated to make. We're losing money. It's slowing down throughput and it's not allowing us to backfill that with more profitable work from other clients and the demand in South America is really robust.
James Lennon: Great. All right. That's good. I appreciate that. So just getting back to that competitive advantage. It's not like you're having to turn away work. It's the rightsizing of the business means you're still going to be able to deliver ultimately getting revenues back to where they were. It's just that you're now going to be able to do it more efficiently once the sort of systems and flow production gets sort of set.
Sybrandt van Dyk: Correct.
Operator: Your next question comes from Michael Besley with A2B. If my memory serves me correctly, you said on a prior call that you had moved key managers from the U.S. to Chile to improve productivity. Was this a driver in the fall in U.S. productivity? And if so, do you think now you have the right people in place across all your operations?
Sybrandt van Dyk: So yes, thanks for the question, and I can see where that comes from. No. So if you -- what we have done is we have -- the business used to be run out of Perth, the CEO and the Chief Operating Officer and the Chief Operating Officer looked after all regions. That was very complicated for multiple reasons. Firstly, a timing issue that basically a 12- to 16-hour time difference. So what we -- what I've done is I've elevated a guy called Max Floris that used to run the American business to the VP of America, which is effectively the Chief Operating Officer for the Americas. So he oversees North America and he oversees Chile, and he can speak Spanish. The big challenge we have from Perth is no doubt in where we work Spanish, they speak Spanish and the English is poor. And obviously, our Spanish is either poor or nonexistent. So the whole aim was to put the North American or Chile business under North America so that Max can oversee that. He can speak to the Chilean, so he can speak to Chilean and he can actually direct and put in the processes that we already have or implementing in the U.S. across Chile very quickly. We're also using -- so if you look at what we're using out of North America, we're using their steel -- what we call the steel nesting expertise. So when we take steel plate and we actually nest that, so we cut that up. It was one of the issues that I saw in Chile that wasn't optimized. There was excessive steel wastage. So now that is processed out of North America. So it's a use of one resource in the North American team to oversee that workload. And then we're using some of the North American sales expertise just to oversee the sales team in Chile because they are all relatively new to Austin. And we want to ensure that the sales concepts that we deploy everywhere else in the world is deployed into South America, and that is explaining our total cost of ownership model to a client rather than just trying to compete on price because there are cheaper manufacturers in Chile than us, but clients come to us because of the quality we deliver plus the total cost of ownership over the life cycle of that body. So hopefully, that addresses your question.
Operator: Your next question comes from Patrick Moore, private investor. You've had the Chile problem for some time. How long do you expect your Chile improvement plan will take to sort out the problems? And in the meantime, what drain will that be on your management and financial resources?
Sybrandt van Dyk: Yes. Thanks for the question. So the biggest challenge in Chile, as I said, is the OEM contract that actually, we've got orders, and we've accepted orders a while back that will be completed by April of 2026. Some of those sales that we'll see in the first half, we've made a contract provision for in the first half. We are in renegotiations with that OEM contract -- sorry, OEM provider to renegotiate that contract at significant improved rates. And I'm not sure if I'm allowed to say this, but I'm quietly confident we'll get to that point. But we'll make obviously an ASX announcement when we get there. The alternative is that we walk away from the contract and then we go after higher work where we can actually make better margin on. And when I say that this is -- the OEM body is totally different to our body. The way you put it together is totally different to the way we put our body together. And to be -- to make it quite simplistic, it is a lot more complicated. So it takes a lot more hours to stitch together. And therefore, it slows down the throughput we have in the facility. And if we either increase our rates, make good margins through that work, it's great work. It's consistent work. So that's the great part of it. The bad part of it is we're not making margin. If we don't make that, we'll just displace that with other work, and I'll either bring in new work or we'll right size the business for the workload. We have quite a substantial amount of subcontractors in Chile that we use. So it's easy to scale the business up and down in Chile rather than just focusing on our own staff in Chile. So yes, the whole plan is that by the end of this half, we should be back up to improved margins out of Chile by the actions we've taken. And yes, I'm confident that, that will be the case.
Operator: Your next question comes from Oliver Porter with Euroz Hartleys. David, can you please give an indication of the normalizations that were included in the prior underlying $30 million to $40 million EBIT guidance? And can you confirm the updated range is statutory ex FX?
Sybrandt van Dyk: Yes. So I guess the previous -- sorry, are you asking about so the underlying guidance was obviously underlying, and we didn't provide a framework for the normalizations included in that underlying. And I think the range was 30% to 34%, if I can recall correctly, that we provided to the market. But yes, the updated guidance range because we're presenting our results in statutory and the underlying were a little bit messy last year, I decided to provide an underlying guidance for EBITDA just to make it clearer and easier for people to understand without having to worry about the normalizations.
Operator: Your next question comes from Guy Moore. What are the plans for refinancing or otherwise managing the debt due over the next 12 months?
David Bonomini: Yes. Thanks for the question. Our plan is to refinance the debt. It's due to expire in November of this financial year, and we'll work with our financiers to extend that ideally for another 2 years.
Operator: Your next question comes from Chris -- while with Argonaut. Prior FY '26 revenue guidance was built on input from your regional GMs. Is the revised lower guidance because pipeline expectations have been lost to competitors shifted to the right or canceled? Has there been a change in customer behavior or demand?
Sybrandt van Dyk: No. So I guess we actually have lowered -- you're right, we have lowered our revenue guidance. It is provided. So the process we have implemented in the business is that we actually run with quarterly reforecasting after effectively the quarter has ended, which takes a bit of time from the central office to obviously prosecute review and review with those teams. The main driver for the decrease, and I'm going to probably explain the main reason why we are calling down our revenue compared to the previous revenue is mostly from North America. There was an expectation that we -- so a lot of our product goes into the oil sands into Canada. One of our larger clients that we had 42 bodies worth on order last year, we expect a repeat order to come through this year. That order hasn't come through yet. The reason being is that, that client actually has invested in $510 million of new trucks. And what they have done is they've diverted all their capital to pay for those trucks, obviously, and they put on ICE all other capital. The maintenance teams had to then resubmit requests into their management team for body replacement. So we had that client gave us 22 bodies in '24, 42 bodies in '25, and we've got 0 now that we expect it to come through. Even if those bodies come through -- those orders come through right now, just for what we've got in play, it's going to be hard to put that through the facility to meet the June reporting period. We are still -- we and the team collectively are still confident that, that client will place orders with us, but timing is going to be against us for this half.
Operator: Your next question comes from James Vanasek with V N Capital Management. What is your anticipated Capex for second half of FY 2026? Do you anticipate free cash flow increasing from $3.1 million in the first half to maintain the $6.5 million of dividends and share buybacks?
David Bonomini: In terms of the capital expenditure in the second half, we believe it will be and forecasting to be broadly in line with the first half. So no material change there. In terms of free cash flow, we achieved close to 40% cash flow conversion. We expect that to improve in the second half with the lift in profits and continued working capital management. So we're expecting around a 45% to 50% conversion rate on a free cash flow basis. In terms of the dividends and share buyback, that's -- at this stage, there has been no change in relation to those. They're still subject to obviously, Board approval, et cetera. But if cash flow and the cash flow continues and is strong, the expectation is we'll be able to maintain our dividends.
Operator: Your next question comes from Michael Monroe. Why has revenue fallen in the APAC region? Australia and especially WA is experiencing a huge boom in all types of mining with gold leading the way. Bucket sales are good, but are competitors taking market share away from us in trade orders? It is definitely concerning to shareholders? And what is ANG doing about this?
Sybrandt van Dyk: Yes. Well, we are not -- I mean, -- so let me answer from a market share perspective, we haven't lost market share in Australia. We haven't gained market share in Australia. We have a very strong competitor in town, and they have a fair share of the market share in Australia and always has had that market share in Australia. So the question as to why the APAC revenue is d. This is not only Australia. If you look at APAC, it obviously includes the Indonesian business unit. It includes the worldwide business unit. In the first half of this year, where we normally have a fair amount of work going into Indonesia to a specific loyal client of Austin. And this is not truck orders. This is not bucket orders. It's an ancillary underground product that we manufacture. They postponed all orders, and we've communicated that to the market, right, to the second half because they had a major event on site, and I think that's well published in the marketplace. So that's one of the regions. The East Coast market, the coal market is definitely under stress. I think everybody is reading the newspapers regarding companies in the coal sector that are struggling. The royalty rates are incredibly high on these companies, and they are documenting and not me. So their costs are under pressure, and that is a reflection on what we are seeing that they are, therefore, curtailing some of their capital. In Western Australia, to answer your question directly, we've got one major client here. That client does not buy the same amount of bodies year in, year out. They actually do displace -- it goes up and down year in, year out. So it doesn't -- it's not a straight line across the board. Yes, gold is going really strong, but gold there's also a lot in the underground space, -- and we are a company that is more exposed to bulk commodities. When I talk bulk commodities, they are the ones that actually grab all the truck. The truck fleet sit with only a handful of clients and those handful of clients have got big trucks with big bodies that need our bespoke body to optimize payload and also the buckets and the loading tools that are associated with loading those trucks and trays. But gold, as I said, gold, great news. And yes, it is a driver of revenue, and we do sell, but gold is mostly underground. It is not surface driven. And whilst we do sell underground product, that product sort of displacement cycle is not the same as an open cut mine.
Operator: Your next question comes from Michael Dudley. Do we assume the share buyback has been canceled?
Sybrandt van Dyk: Not at all. It's still active.
Operator: Your next question comes from Michael Monroe. Have we lost any important customers in Chile or Australia? In August, you told us that old customers were returning to Austin.
Sybrandt van Dyk: Yes. I mean, in Chile, we have just won a major client, and I won't name its name. For the first time ever, we have got an order from a client there. This is a major mining house, worldwide mining house that we have claimed. One of our biggest -- the and I'll talk and go, but the biggest copper mine in Chile is a very long-term loyal client to Austin. And we actually got a mine site service agreement where we actually maintain the bodies for them on site. For this 6 months, no bodies were replaced at that site. We expect quite a few to be replaced in the second half. So no, we have not lost any business in Chile itself. The issue that I have in Chile is that there is an incredible amount of work in South America, not just in Chile. There's work in actually Peru. Brazil is another target for us, and we don't do any work in Brazil, but we have had clients inquiries out of that region, how we service that is something we will figure out. But we haven't lost any work in Chile per se.
Operator: Your next question comes from Chin Chan. When can we expect Chile to be profitable again?
Sybrandt van Dyk: Well, my expectation is that Chile will turn to profitability in the second -- in the fourth quarter of this year.
Operator: Your next question comes from Reese [indiscernible]. Would it have been better to instead of paying a small dividend, use that money to either reduce debt or buy back shares?
Sybrandt van Dyk: It is a fair point. We have -- I mean, the directors on the company always wrestle with how we play the capital allocation going forward. So I guess there are quite a few of our shareholders that continually ask us for dividends. We've got a fair franking balance. So therefore, we actually have decided to pay a small -- effectively a small dividend. This dividend is going to cost us $2 million once declared. So it's not a significant dividend, and it's well within our capacity to do so. Our debt levels are relatively low compared to -- I mean, if you look at our debt levels, I think it's 11%. We are well within our debt covenants, and we're expecting cash flows to continue. So that's the reason why we pay the dividend.
Operator: Your next question comes from Michael Monroe. To what extent are we using robotics to produce trays?
Sybrandt van Dyk: Michael at this stage, we probably -- in relatively in my view in the starting blocks of using robotics to build trays. We are using what they call deco's, Begos, et cetera, that is effectively, I would say, the 101 of going down an automation route is just a way to do long wells in a more consistent way. We then have cobalt. And the only place where we've got cobalt is in North America. We've got 2 cobalt's in North America. And they one does effectively beveling for us and the other one just does welding the eyes on a truck bed for us. So there is no doubt a lot of movement we can do in this space. We do have a robot, a fully fledged robot in Perth that isn't being utilized. And it's all our plans that we go down this avenue quite consistently. So charged the company. We've created teams to explore how we use automation to lower our cost base. But we're in the starting blocks of that journey.
Operator: There are no further questions at this time. I'll now hand back to the conference to Mr. Van Dyk for any closing remarks.
Sybrandt van Dyk: Yes. Thanks again for everyone for taking the time to join us this morning and for your interest in Austin. We do appreciate it. And I know it's a very busy period. So on that note, thank you for your time, and I wish you a great day today.
Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.