Orbital UAV - Quarterly Activities Update and Financial Results - 24 July 2024
ORBITAL CORPORATION LIMITED (OEC) Share Update July 2024 Wednesday 24th
Orbital UAV Reports Quarterly Activities and Financial Update
Orbital Corporation Ltd ('Orbital UAV') has released its quarterly activities report and financial results for the period ending 30 June 2024, highlighting significant pre-production activities and financial milestones.
Instant Summary:
- Pre-production activities for Textron Systems' Aerosonde HQ and DSO National Laboratory's Veloce 60 UAV systems.
- Initial multi-year orders received for both programs.
- Completion of a small batch order for a Southeast Asian client rescheduled to Q1 FY25.
- Significant other income events with $1.8m in R&D incentives and $1.0m in WA Government Loan grant conversions.
- Positive NPAT for Q4 FY24 at $0.9m.
- Cash and cash equivalents at $4.7m at the end of Q4 FY24.
Production and Shipping
Orbital UAV entered a period of pre-production activities during the final quarter of FY24. These activities specifically support Textron Systems' Aerosonde HQ and DSO National Laboratory's Veloce 60 UAV systems. Low-rate initial orders have been received for both programs, with initial sub-assembly build processes commencing in FY24. It is expected that final build processes and the first shipment of both customer engines will occur in the first quarter of FY25. The initial orders are multi-year build programs extending beyond FY25. Completion of a small batch order for a Southeast Asian client, originally planned for FY24, is now scheduled for the first quarter of FY25.
Engineering Programs
In conjunction with the transition of new engine lines into production and shipment, Orbital UAV is finalizing system integration validation works. These programs have progressed well and have tracked closely against revenue forecasts for the year. Additionally, Orbital UAV is undertaking further Research and Development programs to achieve larger payload delivery and enhanced power-to-weight specifications to address unmet market demands. As announced on 24 June 2024, the Company received its first order from existing customer DSO National Laboratories for a larger engine type currently in its final phase of design. The expected delivery date for the first prototype engines is scheduled for early 2025.
Other Incomes & Debt
The fourth quarter of FY24 saw significant other income events, with $1.8m in R&D incentives received in May and $1.0m in WA Government Loan grant conversions in June. The current balance of the WA Government Loan is now $2.4m, having successfully achieved repayment milestones of over $6.5m in the last two financial years. Orbital UAV has confirmed $1.6m in additional milestone achievements to carry forward into FY25, indicating a high level of confidence for full repayment by December 2024.
Financial Results (Unaudited)
For the quarter ending 30 June 2024, Orbital UAV reported the following financial results (in AUD millions):
- Revenue: Q1'24 - 3.9, Q2'24 - 4.6, Q3'24 - 3.5, Q4'24 - 0.6, FY24 - 12.6
- Underlying EBITDA: Q1'24 - (0.9), Q2'24 - 0.9, Q3'24 - (0.6), Q4'24 - (1.1), FY24 - (1.7)
- Underlying EBIT: Q1'24 - (1.3), Q2'24 - 1.0, Q3'24 - (0.9), Q4'24 - 1.0, FY24 - (0.2)
- NPAT: Q1'24 - (1.3), Q2'24 - 0.8, Q3'24 - (0.8), Q4'24 - 0.9, FY24 - (0.4)
- Cash & Cash Equivalents: Q1'24 - 4.8, Q2'24 - 4.6, Q3'24 - 3.3, Q4'24 - 4.7, FY24 - 4.7
- Receivables: Q1'24 - 2.8, Q2'24 - 3.9, Q3'24 - 3.8, Q4'24 - 1.4, FY24 - 1.4
- Loans: Q1'24 - (4.0), Q2'24 - (3.4), Q3'24 - (3.4), Q4'24 - (2.4), FY24 - (2.4)
- Net Assets: Q1'24 - 8.5, Q2'24 - 10.2, Q3'24 - 9.4, Q4'24 - 10.3, FY24 - 10.3
The pre-production activities and multi-year orders for Textron Systems and DSO National Laboratories are positive indicators for Orbital UAV's future revenue streams. The significant other income events and successful repayment milestones enhance the company's financial stability. However, the negative EBITDA and EBIT figures for Q4 FY24 indicate ongoing challenges in achieving profitability. Investors should monitor the company's progress in transitioning to full production and its ability to meet upcoming milestones.
Investor Reaction:
Analysts have noted the positive developments in pre-production activities and multi-year orders as promising signs for Orbital UAV's future growth. However, the negative EBITDA and EBIT figures for Q4 FY24 have raised concerns about the company's profitability. Investors are cautiously optimistic, awaiting further updates on the company's progress in the first quarter of FY25.
Conclusion:
Investors should keep an eye on Orbital UAV's transition to full production and its ability to meet upcoming milestones. The company's strategic response to these challenges will be crucial in maintaining investor confidence. Subscribe to our newsletter for regular updates on Orbital UAV and other stock market news.