The Quickstep Holdings Limited (ASX: QHL) share price is shooting higher today following the release of its first quarter results.
In late-morning trade, shares in the aerospace manufacturer are up 4% to 7.8 cents after earlier reaching as high as 8.1 cents.
Let's see how the Quickstep share price performed for the first quarter of FY21.
Trading update
For the period ending 30 September, Quickstep reported a robust performance while crediting its risk management process for COVID-19.
Total sales came to $22.6 million, an increase of 16% over the prior corresponding period. This is in line with production efforts at its facilities, which are continuing to meet all contract delivery schedules.
Operating cash flow was $1.4 million after funding headcount reductions to deliver annual savings of $1.5 million. The cost to implement these changes was $500,000. Quickstep said that inventory management was crucial in mitigating COVID-19 supply chain risks.
Net bank debt decreased by $800,000 over Q1 FY20 to $5.6 million. Total debt including capitalised interest stood at $8.8 million.
The company recorded a cash balance of $2.5 million at the end of the quarter, up from $1.7 million on June 30. Furthermore, $700,000 is available in restricted term deposits.
Operational highlights
F-35 fighter jet
Quickstep noted that its F-35 production contract is continuing at full-rate, and is being delivered to plan. The first batch of its components are on track, with the 10 new parts awarded by defence giant, Northrop Grumman. All remaining shipments are due to be delivered by the end of the current calendar year.
Volume production on the F-35 vertical tails contract with Marand has amplified over the past 12 months.
MJU-68 decoy flares
Quickstep has completed testing on the final batch of MJU-68 flare housing. The company is awaiting formal approval from the United States Department of Defence before the end of 2020 and is in discussions to address production requirements.
The countermeasure program's objective is to establish a reliable secondary source of income for Quickstep.
C-130J transport plane
Demand for the C-130J military aircraft has been consistent, and negotiations are taking place with Lockheed Martin on new product initiatives.
Micro-X Nano lightweight xray machine
Production is ongoing, and the machine is being used by medical staff in the fight against COVID-19. Contracted deliveries are running through FY21, including the latest Lockelec train ramp.
Outlook
Quickstep said its outlook for the remainder of FY21 was strong. Customer revenues are expected to increase between 5% to 10%, excluding any major contract wins. In addition, commercial aerospace production volumes look to stabilise in the next 12 months, with full recovery anticipated in FY23.
The company will focus research & development spend on implementing its AeroQure process in the commercial aerospace market. While current volumes are down, the company believes AeroQure's cost reduction offer over rival firms can win new customers.
No material guidance was given for the end FY21, but Quickstep foresees further opportunities emerging post COVID-19.
