Austin Engineering reports $170.3m revenue with operational turnaround underway
Austin Engineering has reported revenue of $170.3 million for the first half of FY26, down 3% on the prior corresponding period. EBITDA came in at $8.0 million (down 63%), reflecting operational challenges in Chile and the USA that are now being actively addressed by management. Despite the earnings pressure, the company delivered a positive operating cash flow of $6.6 million (compared to negative $4.4 million previously) and free cash flow of $3.1 million (versus negative $9.7 million). The board maintained a fully franked dividend of 0.3 cents per share and reaffirmed FY26 guidance: revenue of $350 million+ and EBIT of $14 million to $16 million.
The cash flow turnaround signals improving working capital management despite earnings pressure. The maintained dividend demonstrates board confidence in the recovery trajectory.
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What drove the first half performance?
Austin’s headline declines were driven by specific, identifiable issues now being addressed across its three operating regions. North America delivered 12% revenue growth to $71.5 million, building on exceptional growth the prior year, but suffered margin compression due to labour inefficiencies. APAC revenue softened 12% to $70.6 million, primarily due to timing of tray orders from a major customer, though this was partially offset by strong bucket demand (up $14.2 million). Chile reported a loss driven by a problematic OEM contract, which alone contributed an EBITDA loss of $3.2 million in the half and $7.2 million over its life to date.
| Region | Revenue H1 FY26 ($M) | Revenue H1 FY25 ($M) | EBITDA Margin H1 FY26 | EBITDA Margin H1 FY25 |
|---|---|---|---|---|
| APAC | 70.6 | 80.0 | 15.0% | 17.1% |
| North America | 71.5 | 63.6 | 5.8% | 13.8% |
| South America | 28.3 | 31.9 | -14.6% | 9.5% |
The regional breakdown reveals that problems are concentrated and specific, not systemic. North America remains a growth engine, whilst APAC has secured $21 million in post-half tray orders, indicating renewed momentum heading into the second half.
Understanding Austin Engineering’s operational improvement plan
Austin Engineering operates as a design-led mining solutions provider, manufacturing truck trays, buckets, and water tanks for major mining customers including Rio Tinto, BHP, Newmont, and Glencore. The company’s margin profile depends heavily on workshop productivity and labour mix. When internal manufacturing efficiency drops, the business is forced to outsource assembly work to third-party contractors at higher cost, compressing margins. Conversely, restoring internal productivity and converting contractor roles to permanent staff trained in “the Austin Way” creates significant margin recovery potential.
Chile turnaround in progress
Management appointed a new General Manager reporting to the Vice President Americas and reduced headcount from 250 in July 2025 to 169 by January 2026. The problematic OEM contract, which has generated $38.8 million in revenue but lost $7.2 million in EBITDA over its life, is being renegotiated or will terminate in April 2026 with no further purchase orders. The company implemented KPIs to measure efficiency, productivity, and performance against quotes, introduced stricter vendor management to control costs, and improved factory flow and work order management. Steel yard operations are now overseen from North America, improving yield and security controls.
USA productivity improvements gaining traction
Workshop productivities in the USA have improved steadily from 62% in July 2025 to 76% in December 2025, measured as productive hours relative to total workshop employee hours. Management is shifting the labour mix from contractors to permanent staff, targeting a ratio greater than 80% staff to 20% contractors (currently 75%/25% in January 2026, up from 63%/37% in June 2025). The company is investing in welding automation, internal training programmes including an expanded weld school, and restructured working teams pairing experienced staff with trainees to improve productivity.
- July 2025: 62%
- August-September 2025: 64%
- October-November 2025: 67%
- December 2025: 76%
- January 2026: 70% (holiday period impact)
The productivity data provides tangible evidence of operational discipline taking hold. If USA margins normalise towards historical levels (13.8% in H1 FY25), it represents meaningful earnings upside for the second half and beyond.
Balance sheet and cash flow position
Austin closed the half with a cash position of $15.8 million and net debt of $18.2 million, up from $12.8 million at FY25 due to working capital support requirements in the USA and Chile. Working capital remained broadly flat through the half despite revenue softness. Strong collections in APAC reduced receivables by $17.7 million. EBITDA to free cash flow conversion reached 39%, with the company generating $9.0 million in operational cash flow before interest and tax of $2.4 million and capex of $3.5 million. Capital allocation during the half included a $5.3 million dividend payment and $1.2 million share buyback.
Key cash flow movements:
- EBITDA: $7.9 million
- Working capital: $0.7 million inflow
- Capex: -$3.5 million
- Dividend: -$5.3 million
- Buyback: -$1.2 million
The company funded both dividends and buybacks from operating cash flow, demonstrating capital discipline during a transitional period whilst maintaining investment in operational upgrades.
Growth strategy and market opportunity
Austin estimates the accessible market for truck trays is approximately seven times its current production levels. External industry sources indicate approximately 26,000 haul trucks greater than 100 tonnes operate in Austin’s home markets (Australia, North America, South America, Indonesia, and selected African operations), with Austin estimating approximately 4,500 annual body replacements based on typical wear life across commodities and conditions. Current Austin production sits at approximately 700 units annually.
Revenue diversification is improving, with copper exposure increasing to 22% (from 4% in the prior period) and oil at 28%. The company launched AustIQ, a digital platform for through-life asset management, providing customers with real-time wear and condition data. The customer base includes major miners across diversified commodity exposures: 83% miners, 7% OEMs, 2% mining contractors, and 8% other customer types.
Market Opportunity
Approximately 26,000 trucks operate in Austin’s home markets with approximately 4,500 annual body replacements, compared to current Austin production of approximately 700 units.
The structural market opportunity remains substantial. Revenue diversification towards copper aligns with electrification demand trends, whilst the digital AustIQ platform positions Austin to capture through-life service revenue beyond initial equipment sales.
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FY26 outlook and guidance
Management reaffirmed FY26 guidance of revenue $350 million+ and EBIT $14 million to $16 million (excluding foreign exchange movements). The second half is expected to show stronger weighting, supported by an improved order cycle in North America and resolution of the Chile OEM contract in Q3. Post-half developments include $21 million in APAC tray orders secured, providing visibility into H2 revenue. Order levels in North America were lower in the first half due to timing, with a stronger order cycle expected as underlying customer activity remains robust.
Achieving the midpoint of EBIT guidance would imply a significant improvement in H2 margins, underpinned by operational turnaround benefits in Chile and the USA, normalising order flow, and increased in-house production capacity reducing reliance on higher-cost outsourcing.
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