Australia-based Quickstep Holdings has released its results for the fourth quarter of 2018, providing financial, operational and key program updates for Quickstep’s participation in the F-35 and C-130J programs.
Quickstep delivered strong sales growth in Q4 with sales revenue of $16.6 million, an increase of 14 per cent compared with $14.6 million in Q4 FY17. Full-year sales were $59.0 million, an increase of 14 per cent compared with $51.9 million in FY17.
Quickstep remains on track to deliver higher Joint Strike Fighter (JSF) volumes over the next two years, with JSF revenue expected to increase more than 40 per cent in FY19. All components were supplied on time and in line with program demand.
Operating cashflow was $1.1 million for Q4 with OneQuickstep initiatives improving gross margin and delivering positive EBITDA and working capital reduction. This was offset by a net deferred income reduction of $2.9 million:
- Deferred income had a net negative cash impact of $2.9 million in Q4 (which reflects the timing of half-yearly partial advance payments received in Q1 and Q3 for C-130J production);
- EBIT was positive and stronger in Q4. The business achieved positive EBIT in FY18 H2 and EBIT is expected to continue to improve in FY19; and
- Cost savings from OneQuickstep activities of around $3.5 million net achieved in FY18.
At 30 June 2018, the group held $2.9 million in cash (31 March 2018: $2.9 million) and $0.8 million in restricted term deposits (31 March 2018: $0.7 million). Total outstanding debt, including capitalised interest, was $13.6 million at 30 June 2018. This was a reduction of $0.2 million from 31 March 2018.
Stronger volume production and savings from lean manufacturing contributed to improved gross margin in H2 with an increase of 5 percentage points in H2 compared with H1. Further, gross margin improvements are expected in FY19 as JSF volumes continue to increase and the ongoing lean manufacturing program. Cost benefits from OneQuickstep helped deliver EBITDA of $1.9 million in H2.
Key new actions and activities:
- Boeing Defense: Quickstep continued the development for two new small contracts from Boeing Defense for F-15 and F-18 components – these contracts add a new tier 1 customer, and business platforms and part families to Quickstep's key portfolios;
- General Atomics: Quickstep is partnering with General Atomics as part of the 'Team Reaper' tender for remotely piloted aircraft (RPA) systems. The partnership is progressing and may lead to additional project opportunities and collaboration with General Atomics;
- Airbus: Quickstep is now an approved supplier to Airbus in Australia and the south Pacific. This will allow Quickstep to formally quote for new business with Airbus in Australia Pacific; and
- US market: Quickstep appointed a senior business development leader in Q4, who will be US-based. This will allow for more regular and deeper engagement with existing and potential new US customers.
C-130 J Super Hercules:
- Lockheed Martin awarded Quickstep the sole supplier of composite wing flaps for the C-130J 'Super Hercules' military transport aircraft;
- Quickstep’s initial five-year memorandum of agreement (MoA) extends through to 2019 in line with Lockheed Martin's C-130J Multiyear II contract with the US Department of Defense;
- Discussions are underway for a further five-year contract for the period 2020 to 2024; and
- The business supplies wing flaps in shipsets, which comprise of four main structures – an inner and outer left and right flap. Spares supplied can be a partial shipset (one quarter) through to a full shipset.
F-35 Joint Strike Fighter:
- Over the life of the JSF program, Quickstep will manufacture and supply more than $1 billion in JSF composite components and assemblies;
- The F-35 Lightning II JSF Program is the world’s largest military aerospace program, valued in excess of US$300 billion;
- Quickstep is the key supplier globally to Northrop Grumman for 21 JSF components including doors, panels, skins and other composite parts; and
- Quickstep will also supply 700 sets of vertical tail parts over 14 years under an agreement with BAE Systems’ supplier, Marand Precision Engineering.
Mark Burgess, managing director of Quickstep, said, "This was a strong quarter with increased revenue and positive operating cashflow. The OneQuickstep Program has successfully realigned the business to drive growth, improve gross margins and reduce costs. Over the next year, we expect further improvement as JSF production increases. We were delighted to achieve approved supplier status with Boeing and also Airbus in Australia and south Pacific. This opens up significant business opportunities, and the company is well positioned for further growth."
Quickstep Holdings is is the largest independent aerospace-grade advanced composite manufacturer in Australia, employing more than 220 people in Australia and internationally. Quickstep operates from state-of-the-art aerospace manufacturing facilities at Bankstown Airport in Sydney, NSW and a manufacturing and R&D/ process development centre in Geelong, Victoria.