Quickstep Holdings reports record drone production and strong Q4 FY24 results

Quickstep Holdings Limited (ASX: QHL) has announced a strong performance for the fourth quarter of fiscal year 2024, marking significant milestones in its restructuring efforts, production achievements, and strategic contracts.

Financial and Operational Highlights for Q4 FY24

Quickstep Holdings reported a notable increase in full-year group revenue, reaching AUD 99 million (unaudited), surpassing the previously provided guidance of AUD 94 million to AUD 96 million. This achievement reflects a 5% year-over-year growth, demonstrating the company’s resilience and effective strategic management.

The company’s Services business unit saw remarkable growth, with revenue rising by 94% year-over-year to exceed AUD 10 million. Additionally, Quickstep’s Engineering Development business unit experienced a substantial 57% increase in revenue, underscoring the company’s expanding footprint in advanced manufacturing and technology.

Quickstep Holdings has also reported a positive underlying EBITDA for FY24 (unaudited), further highlighting its operational efficiency and financial stability. The company has successfully completed its restructuring activities, which include a significant reduction in direct production and operational support headcount by approximately 20% each. These changes, announced in June 2024, involved transitioning to a more efficient 2-shift, 5-days-a-week production model and streamlining various operational teams.

Key Contracts and Production Milestones

Quickstep has finalized pricing and volume agreements with Lockheed Martin for the C-130 program, covering the period from February 2025 to December 2029. This contract entails the delivery of 100 ship sets, with final pricing reflecting adjustments for inflationary pressures. Lockheed Martin will also provide funding for the purchase of long-lead materials, enhancing Quickstep’s cash flow and reinforcing the company’s position in the Australian supply chain.

The Northrop Grumman F-35 program, Quickstep’s largest endeavor, has seen the completion of negotiations for a level-loaded production plan for FY25 and FY26. This plan includes the current Lot AD contract, new contracts for Lot 18, and Lot 19, with final purchase orders expected by the end of July 2024. Discussions with Northrop are ongoing regarding potential price adjustments due to supply chain impacts. Negotiations with Marand Precision Engineering for the F-35 Vertical Tail components are also in progress.

In drone production, Quickstep’s Geelong facility achieved record output in Q4 FY24, significantly surpassing earlier periods. The company’s expansion of this facility and the receipt of a Department of Science, Industry and Resources Grant under the Moon to Mars initiative are expected to bolster its capabilities in drone production, space initiatives, and guided weapons components development.

Restructuring and Strategic Developments

The restructuring measures, aimed at improving operational efficiency, include the reduction of headcount and the shift to a more streamlined production schedule. These changes are part of Quickstep’s broader strategy to enhance productivity and operational effectiveness.

The company’s focus on the Australian Government’s Guided Weapons and Explosive Ordnance Enterprise (GWEO) initiative positions Quickstep to capitalize on emerging opportunities in advanced manufacturing and development programs.

Looking Ahead

Quickstep Holdings Limited, recognized as Australia’s largest independent aerospace composite business, is poised for continued growth with its strengthened financial position and strategic advancements. The company operates from facilities in Sydney, Geelong, Melbourne, and Dallas, and remains committed to expanding its footprint in the aerospace and defense sectors.