Austal USA expands ship maintenance and repair capabilities with finalisation of lease purchase in San Diego

COMPANY ANNOUNCEMENT

16 DECEMBER 2022

Austal USA expands ship maintenance and repair capabilities with finalisation of lease purchase in San Diego

Austal Limited (Austal) (ASX: ASB) is pleased to announce that Austal USA has completed the purchase of a long-term lease of the Marine Group Boat Works facilities in the Port of San Diego, USA, enabling the further growth of the Company’s service and support business.

The lease of the facility has a duration of 27 years. Austal estimates the purchase of the yard and build of a floating dock will cost a total of ~US$80 million (~A$112.5 million), to be funded from the Company’s cash reserves.

When combined with the Company’s recent inclusion on the United States Navy’s Sustainment Execution Contract West (SEC West), Austal’s new, long term presence in San Diego is a critical enabler to winning new maintenance contracts from the Navy, Coast Guard and Military Sealift Command.

“Now we will have Austal employees in an Austal yard supporting Austal ships and other vessels, so we can fully capitalise on our SEC West inclusion,” said Austal Chief Executive Officer Paddy Gregg.

“The strategic purchase of a west coast yard capability will grow our revenue, grow our margin and enhance our operational flexibility. It will also complement the maintenance work that our Mobile shipyard is performing.”

The newly leased yard, part of the San Diego Unified Port District (owned and controlled by the Port of San Diego) is immediately adjacent to U.S. Naval Base San Diego, occupies five acres and includes a pier capable of accommodating ships up to 80 metres long, a travel lift (with lifting capacity up to 300 tons) as well as machine shops and warehouse space.

Austal will establish a full-service ship repair capability, providing maintenance and modernisation for a wide variety of ships, including small surface combatants and autonomous vessels. Services will include technical and material support, topside work, and dry docking.

Austal is in the process of commissioning the construction of a new floating dock, which will support frigates and small surface combatants, including the US Navy’s Independence and Freedom-class Littoral Combat Ships.

“Our support business is gathering considerable momentum,” Mr Gregg said.

“When you combine our existing maintenance works in Mobile with San Diego, with SEC East and West contract inclusion and with our recent US$72.5-$216 million contract1 to perform maintenance on Littoral Combat Ships (LCS) deployed to the Western Pacific and Indian Ocean, it demonstrates the growing importance of our support business and the future opportunities it is generating for Austal.”

This ASX announcement has been approved and authorised for release by Paddy Gregg, Austal Limited’s Chief Executive Officer

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Media Contact:

Cameron Morse, FTI Consulting
+61 433 886 871
cameron.morse@fticonsulting.com