Operator: Thank you for standing by, and welcome to the Austal Limited FY '26 Half Year Results Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. I'd now like to welcome Paddy Gregg, Chief Executive Officer, to begin the conference. Paddy, over to you.

Patrick Gregg: Good morning, everybody, and welcome to our 2026 half year results call. I'm Paddy Gregg, the CEO, and I'm joined by our CFO, Christian Johnstone. We will be presenting in the same format as usual with me giving business overview and context, while Christian focuses on the financial details. And as always, we plan to present for no more than 30 minutes to allow time for questions. I think it's been a very exciting half for the company. We've seen the strategic shipbuilding agreement provide the backbone for significant contract awards in Australia with the signing of the Landing Craft Medium contract before Christmas and then last week, the signing of the Landing Craft Heavy contract. These 2 contracts total about $5 billion and take the order book to a record $17.7 billion. That translates to about 76 ships in build or scheduled in our shipyards, providing certainty of jobs and revenue for a decade. And you'll see revenue and employee numbers are growing in line with the order book as programs come online, and that's translating into earnings, too. We announced a revision to guidance a couple of weeks ago that was caused by a forecasting error, very disappointing, but we are still delivering a very strong financial performance this year despite this. The outlook is fantastic, both in the United States and in Australasia. So I'll talk through where the business is today. Christian will take you through the detail of the financials, and I'll finish by updating you on where I see the strategic outlook for the company. So for those of you that are following along in the pack, Austal at a glance, a couple of slides that cover the key facts. For anyone who doesn't know Austal, so we're operating 5 shipyards in 4 countries with 8 service centers in 4 countries, 76 ships under construction or scheduled, 64 vessels under sustainment contracts. And importantly, we've continued to add to the order book, and it stands at a record high. We've received orders for some 22 ships this year and delivered 2. Employee headcount globally is over 4,600 and growing daily and recruiting people to deliver that record order book. And the vast majority of our work is in the defense sector these days, and defense will continue to grow relative to the commercial sector. But interestingly, we'll start to see more balance between the U.S. and the Australian operations. So if I talk about the financial highlights, and as I said, Christian will go into the details. So jumping straight in, we're building sustainable growth, seen through the order book, that was predominantly in the U.S. and now followed in Australia with the signing of those Landing Craft Medium and Heavy contracts. We also signed 2 more Evolved Cape-class vessels before Christmas. And while that used to be big news, I think that was lost due to the size and scale of the Landing Craft announcement. And for me, this is all about us creating long-term value for shareholders. When I look at the results, I see lots of greens across the key financial measures, demonstrating strong business performance with year-on-year improvement and foundation laid for growth. Encouraging EBIT, slightly skewed to the first half, revenue growing in line with forecast as new programs move from design phases into construction with a big increase compared to the previous corresponding period. It's really encouraging as the legacy programs start to tail off. And of course, we saw the delivery of the last LCS last year. And the order book at $17.7 billion, secures revenue for years. It's grown in Australia following the strategic shipbuilding agreement and the Landing Craft Medium and Heavy. There's growth in submarine module production. The commercial yards have got a really sound order book and future potential for growth, particularly in the low emission space. And indeed, in Australia, we expect to start general purpose frigate contract discussions this financial year with the Commonwealth of Australia. Both the submarine module manufacturing facility, MMF3 and the final assembly sheds for the large steel ships, FA2, as we call them, are fully funded and in construction and ready to support future growth. I've put a slide in the pack where you can see the progress on MMF3 and Stage 1 opening is due this financial year, bringing that project online. Of course, cash was projected to be lower than full year due to the capital investment in facilities and an increase in capacity and capability. It was a little bit lower than we expected due to a couple of late milestone payments in December. As announced, we settled the request for equitable adjustment on tax. And for me, that really demonstrates the strength of relationship we have with the customer in the U.S. Interestingly, we're becoming victims of our own success, and we have become the lead yard for that program, and we're in discussions with the customer about the implications of that. And Christian will talk about that a bit more in the financial section. And so looking at the order book slides, we include programs and revenues for those of you who still like to try and build your own financial model. It doesn't include the commercial vessels, but with relatively fewer of these and our ASX announcements, I'm sure you have the information you need to factor those into your forecasting models. For me, it's really pleasing to see those commercial orders have returned following the challenges we saw during COVID and really excited about seeing the Philippines yard ramping up and testing those low-emission technologies ready to be deployed in the defense world as and when necessary. So I'll hand over to Christian now, and he'll talk you through some of the financial highlights.

Christian Andrew Johnstone: Thank you, Paddy. Turning to Slide 8. It's my pleasure to present Austal's FY '26 first year first half performance. Before I get into the details, the key message is that we've had double-digit growth across all key financial performance metrics: Revenue, earnings, and NPAT, which represents the results from the focused efforts of our employees across the group to construct and deliver ships, submarine modules, sustainment services, and additive manufacturing to our growing customer base. The balance sheet is stable, and we have a robust cash balance to support the significant capital investment we have underway as we complete 2 key infrastructure growth projects in the U.S.A., which have a combined spend of more than $1 billion. The order book is at all-time high of $17.7 billion, which underpins continued growth over many years. Group revenue increased by 34.4%, which was a solid growth across the group. And pleasingly, all segments experienced growth, which is an exceptional outcome. U.S.A. shipbuilding increased 29% based on increased revenue from the OPC, T-ATS, and submarine contracts, which more than offset the completion of the LCS and EPF programs. It should be noted that the company's auditors had a qualification in their opinion relating specifically to the judgment on the T-ATS and AFDM programs. Whilst the company is in ongoing discussions with its sole customer in the U.S. and is seeking some contractual relief, the company's auditors, Deloitte, included a qualification in their review opinion to reflect the position that whilst the company considers it has sufficient evidence to support the judgments made in respect of the contractual relief for these programs, the auditors have concluded that they need additional evidence above what has been provided and so have qualified on this particular judgment on these particular programs. Further details appear in the notes for the half year report. U.S.A. support revenue increased by 11%, primarily due to additional contribution from the growing additive manufacturing business, which is performing strongly. It was particularly pleasing that Australasia shipbuilding continued its growth with an increase of 83%, which has 2 key drivers being the appointment of Austal as the Commonwealth of Australia's sovereign shipbuilder and the work performed on the first 2 key contracts under this umbrella being the Landing Craft Medium and Landing Craft Heavy contracts with the Australian Army. In addition, the work completed from our Asian shipyards was a strong contributor to this performance. The Australasia support business improved by 27% due to the increase in servicing work driven by an expansion of the fleet requiring sustainment services. It is pleasing to see ships built by Austal continue to be serviced by Austal across our regional service centers. Moving to EBIT. Earnings growth of 41% across the group was extremely pleasing with EBIT of $60 million for the half year. And whilst there are mixed results across key segments, the geographical diversification of the group provides an ability to manage these variances. The standout earnings growth was Australasia shipbuilding at over 600%, which benefited from the work performed on the 2 Landing Craft programs and the commercial shipbuilding activities progressed by our Philippines and Vietnamese yards. Australia support business had an additional throughput from work from patrol boats and sustainment contracts and posting earnings growth over 400%. There was a contraction in earnings from U.S. shipbuilding, primarily driven by the margin compression as a result of the wind down of the LCS and EMS programs, the earlier stages of the windup of the OPC and T-AGOS programs and from 2 onerous contracts that continue to dampen margins. The U.S. support business results were steady in the 6 months. We continue to see strong contributions from the Advanced Manufacturing Center of Excellence facility in Danville. Turning to the segment breakdown. We are now at 96% defense weighted across the group and with the growth in Australasia business, with the geographical contributions are nearing a 70-30 split between U.S.A. and Australasia. On a segment basis, the Shipbuilding segment continues to report tight margins as a result of 2 onerous contracts we have in the U.S. However, it should be noted that this segment is profitable, albeit at a level below our expectations. The Support segment is a key earnings contributor at an EBIT margin of 17.9% across the group, contributing the majority of earnings of $41.1 million for the half. The group's balance sheet was stable with net assets at over $1.3 billion. The group has a significant cash balance of $371.6 million at the close of 2025. And whilst it reduced in the half, this reflects a significant capital investment underway in the U.S. on growth infrastructure. The trade receivable balance was higher by 43% at $211 million, reflecting the growth in production in the 6-months period. Overall cash position decreased by $212 million with $131 million of this comprising the capital expenditure on the ongoing MMF3 and FA2 projects. The cash flow from operations was negative $63 million, which reflected the 2 onerous contracts we have in the U.S. and the late receipt of customer payments. As I highlighted earlier, the trade receivables is $211 million across the group, and the collection of this could have significantly impacted this position. This will be a key focus for management in the second half. I'll now hand back to Paddy.

Patrick Gregg: Thanks, Christian. And so focus on strategic outlook. In summary, our key growth pillars are increasing defense expenditure, and this is going to continue to drive positive momentum in the medium-term. We have revenue and earnings growth with the underlying business performing well. And as Christian pointed out, it is especially pleasing to see the Australia business contributing so significantly on the back of the strategic shipbuilding agreement and the associating contracts and all of that work starting to come online. And then also the commercial business as well. No drag from that business and some very exciting projects that we're building there. The order book of $17.7 billion has grown significantly to the record high that we have today. And as I said earlier, that gives us certainty of work for the next decade, a position we've just never been in before as a company. And the greater diversity in the contracts will lower the overall risk profile of the business. We're making significant CapEx investments, and those projects are performing very well. That will enable further growth for the company and increase our capacity and capability. We've got additional opportunities to grow on top of what we're talking about today. The AUKUS agreement, the submarine modules, the technology business, and generally, the world becoming a less safe place is a good time to be in defense shipbuilding. We're capitalizing on those defense spend trends, both in the United States and in Australia. And I think that trend will continue. So overall, the business is performing well and executing the strategy we set out 5 years ago. So with that, thank you, and we're happy to open up for questions.

Operator: [Operator Instructions] And your first question comes from the line of Pia Donovan of Argonaut.

Pia Donovan: Hello, Paddy and Christian. I just have one question regarding the margin. So obviously, the margins are slightly lower on a half-on-half basis. Just wondering, do you expect the current margins to be going forward into the second half? Or will there be an improvement back to those margins levels of last half?

Patrick Gregg: Yes. Good question. I think the -- it was the U.S. shipbuilding business that was slightly lower than we wanted to be for reasons that we've talked about. But as those programs come online, we get stability in that business, yes, I absolutely see that returning. The U.S. has been a massive contributor to our earnings for the last few years, and they will absolutely get back into their stride. And it's been fantastic to see how well the Australian business has done. And the new contracts coming online, I think, are what's very exciting about earnings growth going forward.

Pia Donovan: Okay. Yes. Great. So yes, you said about the Australian business growing. Do you expect that trend to continue and the U.S. to also continue or remain relatively flat there?

Patrick Gregg: No, I expect them to continue. As the programs really come online and the U.S. gets back into the strides, we'll be up into the 7% to 10% sort of EBIT range that we've often talked about, that is pretty common in defense shipbuilding.

Operator: And your next question comes from the line of Sam Teeger of Citi.

Sam Teeger: Hello, Paddy, hello, Christian. Well done in securing the Heavy Landing Craft. The pipeline now looks very good. I want to ask about cash. So you called out $105 million of milestone payments that didn't come through in the first half. Have they come through now?

Christian Andrew Johnstone: Yes, they've come through now. But it wasn't -- obviously, the balance -- well, that's why there's a bit of spike in trade receivables. So that would have had a different earnings profile from the operating segments that they have come through. So yes, they've come through.

Sam Teeger: Okay. And in that cash flow number for the first half, is there tax [ REA ] money in there? Or does that come in the second half?

Christian Andrew Johnstone: Tax REA is across the program. So there will be tax REA cash in the first half as well because it's earned through the progress of the whole 3 ships under that program.

Sam Teeger: Okay. And then what are you budgeting for cash at the end of the financial year? And maybe just as part of that, is MMF3 and FA2, are those construction projects? Like how they're proceeding versus budget?

Christian Andrew Johnstone: So first question, we don't provide cash flow guidance. Second question, they're both in line with budget. Actually, MMF3 is ahead of schedule. So we had always said that that would open at the beginning of next financial year. Phase 1 is targeted to be open in the fourth quarter of this financial year. So look, if that comes to fruition, what we expect, then that's a phenomenal effort by the team in the U.S. to get that large growth infrastructure up and running. If we can then drive some earnings through that for the fourth quarter, that's going to have a boost to the business. So that's really pleasing. But both are on schedule, on time, and then both are in cash flow and their budget cash flow around the cost of them. So we have significant cash. And you can see through our untapped debt lines, we've got a huge amount of debt capacity if we were to meet that for those programs going forward.

Operator: [Operator Instructions] And your next question comes from the line of Mitchell Sonogan of Macquarie.

Mitchell Sonogan: And sorry, Paddy, I might have missed some of the detail, been jumping around a few different calls this morning. Just on the Landing Craft programs, do you mind just giving a little bit more color just in terms of timing and how that might ramp, particularly in the heavy, I guess, with the visibility you have now, over what time frame would you expect that to get to more of a, I guess, a steadier mature run rate in production?

Patrick Gregg: Yes. Good question. So coincidentally, both the Landing Craft Medium and Heavy programs will cut metal towards the back end of this calendar year. So last quarter of this year. We are working through the Landing Craft Medium design and the Landing Craft Heavy design came slightly more mature as it's an existing vessel that is currently in build down and have built one of those before. Yes, so both of them should come online back end of this year and ramp up to steady-state production over about 18 months. And then as we delivered the Guardian Class program and the Cape Class program, we really want to establish a drumbeat and build those programs as efficiently as possible.

Mitchell Sonogan: Yes. Thank you. And I know you just made a comment before about the 7% to 9% sort of target shipbuilding margin range over there in the U.S. Just in terms of the Landing Craft programs, I know you've had some high-level details you put out with the announcements about the strategic shipbuilding agreement, et cetera. But yes, is there anything at this point in time, high level you can provide us just in terms of how we should be thinking about margins on these contracts over time? Is it in that typical range that you target?

Patrick Gregg: Yes, absolutely. Same sort of range and really driven by government procurement rules and what they find acceptable based on the risk we take in the contracts. So yes, both the U.S. and Australia are targeting to get into that 7%, 8%, 9% range.

Mitchell Sonogan: Yes. And just one quick one for Christian. Obviously, you had the earnings guidance update back on the 12th of Feb, just with that incentive payment. And I'm not sure if you covered this during the general presentations before, Christian. But yes, do you mind just giving us a little bit more color, I guess, on how that came about and have they been checked to make sure there's no other particular issues like that on other programs?

Christian Andrew Johnstone: Yes. Thanks, Mitch. That was an error. We're going through that, the half year close process with our auditors. And in the U.S. with one particular program, that is an onerous contract position. So it's a bit -- firstly, it's a little bit different from the run-of-the-mill programs that we have. And it was just going through that closing period and a review of the auditors that they had inadvertently double counted because of the requirements to then -- to book the revenue for -- the end revenue to the 6 months to December, but also the forecasted revenue over the program because it's onerous, we have to consider the revenue for the balance of the full program. And it was just an inadvertent error. We are putting in additional internal control checks, program checks, and revenue across each of those programs in the U.S. to ensure that this doesn't happen again.

Operator: And you have a follow-up question from Sam Teeger at Citi.

Sam Teeger: Just on the $6.7 million of sub-module revenue, what EBIT margin would this be flowing through at? And whatever it is, would that be a good guide as to what we should expect from this going forward?

Christian Andrew Johnstone: So it's a bit nuance what the answer is. That $6.7 million is related to the MMF3 program that we have. So it's a bit unusual. We have a contract to build a building. And so our delivery mechanism is the construction of that building. We previously put out a lot of guidance around what we expect the earnings and revenue profile for that. So look, in totality, that's a USD 450 million contract that will flow through the income statement. There's 0 cost related to it. So anything that's revenue recognized through that particular contract will then drop directly to earnings. What's separate to that, though, and is not -- we don't separately disclose is the earnings that we have through construction of submarine modules in the U.S. That sits in as part of the segment around U.S. shipbuilding. So we don't split program by program out, but that's a very profitable part of the business right now and somewhat offset some of the margin compression we have on the onerous contracts that we have in the U.S.

Operator: And this does conclude our Q&A session for today, and I'd like to turn the call back over to Paddy for closing remarks.

Patrick Gregg: Thanks, everybody, for joining us this morning and asking the questions. As always, we are transparent and happy to answer any questions you've got. So thanks for those of you that were able to get on the call today.

Operator: This does conclude today's conference call. Thank you all for joining us. You may now disconnect.