EOSMarket Update24 September 2018
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Disclaimer
This presentation and any related communication may contain statements that areforward looking with regard to the business and future performance of Electro OpticSystems Holdings Limited [“EOS”] and its subsidiaries.
These statements reflect EOS’ current views, assumptions and projections based on,but not limited to, currently available information with regard to its existing andpotential customers, markets and the prevailing economic conditions.
These statements may involve risks and uncertainties which may cause EOS actualfinancial performance to differ materially from those inferred from any forward-lookingstatements.
Such statements, therefore, should not be regarded as an expressed or impliedforecast of the future financial performance of EOS. You are cautioned not to putundue reliance on this presentation.
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2007
Market Update
1. Defence Systems Sector
2. Space Systems Sector
3. Company Outlook
Copyright EOS
Defence Sector Status
R-400S Mk2 mounted on US Army JLTV Vehicle
14.5x114mm HMGRange 1800mLow accuracy
30x165mm 2A42960m/s 2000m
Friendly Forces
30x113mm M230Range 2500mHigh accuracy
• Problem. Current vehicles are generally fitted with only 12.7mm/0.50cal HMGs. These are outranged by threat HMGs & cannons.
• Answer. 30x113mm cannons are light enough to be fitted to any vehicle, delivering capability overmatch due to unprecedented accuracy of weapon system
© Electro Optic Systems Pty Limited
EOS RWS: Correcting the Lethality Imbalance
12.7x99mm HMGRange 1250mHigh accuracy
Unfriendly Forces
Production
Production tracking to the EOS schedule and contractual requirements Production for 2018 should meet or exceed upgraded forecast of 264 units All metrics meet or exceed expectations including yield, quality and cost A strong platform for further expansion
© Electro Optic Systems Pty Limited
Introducing the R-150 RWS
R-150 mounted on an Australian Army Hawkeye vehicle. The R-150 was developed with significant funding support from the Commonwealth Department of Defence.
Minister for Defence the Hon. Christopher Pyne MP announcing the release of the R-150 lightweight RWS from EOS. This new product delivers more than double the firepower previously available at this weight class.
© Electro Optic Systems Pty Limited
Integration Standards
GVA VICTORY
BMSAS LDM
Common Control Interface
EOS, GVA or MFoCS DU
ICU EMU
SPUGrip
Machine Guns5.56m Minimi
7.62m MAG58
7.62m Mk52
0.50cal M2HB
M134 Minigun
Medium Calibre
30mm M230LF/M914
30mm MK44
40mm Mk19
Lightweight RWS
R150
Medium Weight RWS
R400
R600
Heavy Weight RWSR800
Sensor Unit
Long range SU
Cooled TIHigh-zoom
day
Light-weight SUUncooled TIMed-Zoom
day
Multi-Mission Options
CUAS Detection
CUAS Soft Kill
CUAS Hard Kill
Shot Detection
Active Protection
C-RAM
RF Cueing
Slew-to-Cue
Far-Target LocateSmoke
GrenadesSituational Awareness
MissilesJavelin ATGM
Spike ATGM
Stinger SHORAD
Talon LGR
Unmanned Turrets
R1600
The Expanding EOS RWS Ecosystem
Defence: Key Points
1. Production capacity, yield, quality and margins all meet or exceed expectations. Profits goingforward are trending above earlier forecasts.
2. $620 million of cumulative contracts from 4 customers [at Q1] extended to $800 million from 7customers [at Q3]. This is on track.
3. No competitor has won an award against EOS. The cumulative sales target for 31 December2018 is now $900 million.
4. Accelerated expansion to reinforce success has been funded:
1. US activities have been accelerated with new Huntsville plant, expanded marketing andmultiple demonstrations already executed
2. GCC expansion accelerated thru new subsidiary and facilities in Abu Dhabi
3. New products. R-600DE, SHORAD, EOS turret, R-150
5. Very strong fundamentals support current and future profitability
Outlook: Defence Systems
• $0.9 billion in RWS sales expected across 2017 and 2018 with 90% [$810M] already secured
• Production risks rapidly receding as new production facilities achieve all milestones for performance and cost
• Market is developing as expected and customer liquidity going forward is strong
• New products are being released as funded customer requirements emerge
• The outlook for Defence Systems is for strong growth in both revenue and profit, under-pinned by market fundamentals, excellent technology and products, and strong execution
EOS Learmonth SSA facility. This $30M site is now fully operational and already performing customer missions
Space Sector Status
Space Sector Key Points
Learmonth WA site fully operational
Long-term military and commercial space operations tests concluded in September 2018
All performance metrics exceeded, including data volume, accuracy, capacity and cost
EOS output now exceeds 15,000 space tracks per week, or 10% of full-scale requirements
Both performance and costs can now be accurately forecast for full scale applications
Long term space contracts now in negotiation on a sole source basis with key customers
Missile defence, optical communications and directed energy will leverage infrastructure
Copyright EOS
Outlook: Space Systems
• Space Systems expected to transition to profitability from H2 2019
• The outlook for Space Systems is for strong profit growth driven by market fundamentals, excellent technology and products, product momentum and performance
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Outlook: Revenue and Profit
Key points:
1. Revenue for 2018 is as forecast in Q1 but profit will be double original estimates despite $1 million increase in business development costs targeting new orders.
2. New accounting standards will push 25% of 2019 revenue to 2020 however forecast profit for 2019 is unchanged, due to improving profitability in all EOS sectors.
3. Order intake is already sufficient to sustain revenue and profit growth beyond 2020.
4. The company currently has $58 million in cash and will not need to raise funds unless very large new orders are received.
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50
100
150
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300
2016 2017 2018 2019 2020
Revenue to 2020
At Feb 2018 At Sep 2018
‐15
‐10
‐5
0
5
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20
25
30
2016 2017 2018 2019 2020
Profit to 2020
At Feb 2018 At Sep 2018