Babcock International Group (BAB) 2025 Investor Day September 04, 2025 04:00 AM ET Company ParticipantsSir Nick Hine - Chief Executive - MarinePaul Watson - MD - ArrowheadIlgi Kim - CCO - MarineDavid Lockwood - CEODavid Farrell - SVP - UK Industrials Equity ResearchDavid Perry - Head - European Aerospace & DefenseGeorge Mcwhirter - VP - Equity ResearchBenjamin Pfannes-Varrow - VP - Equity ResearchDavid Mellors - CFOPhil Craig - MD Programmes - MarineConference Call ParticipantsSash Tusa - Partner - Aerospac ...

Summary of Babcock International Group (BAB) 2025 Investor Day Company Overview - **Company**: Babcock International Group - **Event**: 2025 Investor Day - **Date**: September 04, 2025 Key Industry and Company Insights Marine Sector Importance - Marine accounts for approximately one-third of group revenue in FY '25, indicating its scale and strategic relevance [2][3] - The Marine business is expected to grow significantly due to increasing demand for sovereign naval capabilities and export opportunities [2][10] Business Streams - Focus on two core business streams: design and build capabilities, and support activities, which together represent around $900 million in revenue, approximately 20% of the group total [3][8] - Current revenue mix is about 25% from build and 75% from support, with expectations for a shift towards a higher proportion of build revenue in the future [8] Competitive Advantages - Babcock's Marine business is characterized by world-class technical capabilities, long-term customer relationships, and a comprehensive understanding of the naval engineering lifecycle [5][6][16] - The company has a robust order book valued at $22 billion, positioning it well for future growth as global naval investment rises [10][38] Infrastructure and Capabilities - Rosyth is highlighted as a key strategic asset, being the only site in the UK where all capabilities (manufacturing, support, design, build) converge [15][17] - The facility is modern, digitized, and capable of accommodating large-scale advanced manufacturing [18][25] Growth Strategy - Babcock aims to become a multi-domain naval prime, focusing on international expansion and strategic partnerships to enhance capabilities and market reach [34][36] - The company is pursuing a disciplined capital investment strategy to support growth in sovereign UK programs and export opportunities [43][56] Financial Performance and Projections - The Marine business has historically delivered steady revenues supported by long-term build programs and enduring support contracts [9] - The Type 31 program is a cornerstone of Babcock's naval shipbuilding capability, with expectations for significant revenue generation from upcoming contracts [26][77] Market Dynamics - The global defense environment is supportive, with rising investments driven by geopolitical instability and the need for rearmament [54][56] - There is a shift in customer priorities towards faster delivery, affordability, and adaptability in naval capabilities [54] Challenges and Considerations - Constraints include capacity limitations and the need for skilled labor, with ongoing efforts to build a sustainable workforce through apprenticeship programs [104][105] - The company acknowledges the challenges faced during the Type 31 program but emphasizes lessons learned and improvements made in risk management and supply chain resilience [29][100] Conclusion - Babcock International Group's Marine business is positioned for significant growth, supported by a strong pipeline of opportunities, strategic partnerships, and a commitment to innovation and digital transformation [39][85] - The company is focused on delivering long-term value through its differentiated engineering capabilities and robust market presence [38][39]

Marine Sector Overview - The Marine sector has a strong platform for growth due to specialist capabilities and high barriers to entry[6] - Structural growth is expected from global naval fleet recapitalisation[6] - Increased opportunities are driven by design and build activities with a pipeline exceeding £17 billion and long-term support with a pipeline exceeding £5 billion[6] - The Marine sector is confident in delivering MSD growth and margin improvement to over 9% in the medium term[6] Financial Performance and Pipeline - Marine FY25 revenue is £0.9 billion[9] - The contract backlog for design and build is £0.9 billion, with a pipeline exceeding £17 billion[16] - The contract backlog for support is £1.5 billion, with a pipeline exceeding £5 billion[16] - Advanced manufacturing has a medium-term pipeline exceeding £500 million[68] Design and Build - Design and build revenues are projected to double to £500-£600 million over the medium term[39] - Advanced manufacturing has a backlog of approximately £360 million over 4 years for the US-UK Common Missile Compartment programme, with approximately 80% market share[56]