Quickstep continues to deliver improved profitability, evidenced through $2 million earnings before interest and taxes (EBIT) and $0.9 million net profit after tax in the first half of FY19 compared to a $2.9 million net loss for the first half of FY18.
The company’s turnaround has been driven by continued strong volume growth on the Joint Strike Fighter programme, lean enterprise programs at the company’s Bankstown and Geelong sites, plus increasing efficiency, delivering first half gross profit of 23 per cent, an improvement of 10.5 per cent points on the previous corresponding period, the $3.8 million year on year net profit after tax (NPAT) improvement includes a lift of $4.3 million in gross profit.
Mark Burgess, CEO and managing director of Quickstep, welcomed the company’s turnaround, saying, “First half FY19 NPAT of $0.9 million positions the company well for future profitable growth, and increased investment in business development has contributed to a healthy pipeline of new business from which we anticipate securing significant new business during FY19.”
Quickstep’s profitability has been driven by a number of existing and new contracts, including:
- F-35 production ramp-up: Revenue from Quickstep’s F-35 Joint Strike Fighter contracts for H1 FY19 was $24.0 million, up 36 per cent from $16.7 million in the previous corresponding period, JSF revenues are expected to further increase in the second half of FY19, in line with the growing F-35 production schedule, which has delivered 358 JSF aircraft to date, ahead of full-rate production, expected in 2021.
- C-130J Super Hercules Wing-flap production: Quickstep’s recently extended five-year contract to support the production of composite wing-flaps for the Lockheed Martin C-130J Super Hercules aircraft will ensure that Quickstep will continue to provide wing flaps for the C-130J/LM-100J aircraft through to 2024.
- Boeing Defense: Quickstep continued development work for two Boeing contracts for both F-15 and F-18 combat aircraft. These contracts add a new “prime” customer, as well as new aircraft platforms and part families for Quickstep’s portfolio. Quickstep has “approved supplier” status with Boeing, which opens up significant future business opportunities across the scope of Boeing’s operations.
- Chemring: In July 2018, Quickstep was awarded a new defence project to establish production for F-35 countermeasure flare housings. The contract, funded via Chemring from the F-35 Joint Program Office, and an additional NACC-ISP grant of $1 million to complement the investment made by Quickstep.
The success of these two long-term production contracts has enabled the company to position itself for broader expansion in the US defence and aerospace market, pursuing contracts with Boeing, which resulted in the company securing a three-year deal to support Boeing as a “gold” supplier, positioning the company for new business in 2019. Securing this supplier status has enabled Quickstep to deliver on a new three-year programme with Boeing Defense with broader opportunities expected across the Boeing Company.
Burgess also reported negotiation progress with General Atomics Aeronautical Systems Inc (GA-ASI) as part of the Team Reaper Australia (TRA) industrial consortium to provide Australia with an armed remotely piloted aerial system (RPAS) as part of the AIR 7003 program outlined in the 2016 Defence White Paper.
The company plans to accelerate its business development activities to win additional business through its tiered growth strategy, focusing on key areas, including:
- Core defence aerospace: Increasing revenue and diversifying the company’s customer base within the defence/aerospace sector, utilising existing Bankstown facilities while expanding core capabilities.
- Aerospace Qure/advanced manufacturing deployment: Strategic growth within the aerospace and other sectors, using Qure and innovative technology solutions to attract new business opportunities.
- Step-change growth: Step change to commercial aerospace supply. Securing of large global programs and/or inorganic growth across the wider defence, commercial aerospace and automotive industries.
Quickstep anticipates that the business will continue to strengthen over the remainder of FY19 as JSF deliveries ramp up towards peak production volumes over the next two years. The group’s revenue is expected to grow by more than 20 per cent in FY19 and gross margins will continue to improve as the group benefits from further economies of scale and increasing efficiencies.
The group expects to deliver positive EBIT and positive NPAT for FY19 as well as positive operating cash flow for the full year. This is despite the impact of a failure in a key machine during Q2. This issue has now been resolved; however, it will impact Q3 results. The group has significant growth potential and expects to win new composite manufacturing contracts, primarily in the aerospace sector, using traditional techniques and its proprietary advanced manufacturing Qure and QPS technologies. These provide faster, more controllable methods for curing of parts and enable a Class A finish.
Burgess added, “Our focus on driving efficiency improvements across the business and revenue growth backed up by a strong order book is now delivering profits.”
Quickstep is an independent aerospace‐grade advanced composite manufacturer in Australia, operating from state‐of‐the‐art aerospace manufacturing facilities at Bankstown Airport in Sydney and a manufacturing and R&D/process development centre in Geelong. The group employs more than 200 people in Australia and internationally.