Quickstep Reports $17M Revenue and $0.96M EBITDA in Q2 FY25

Financial Overview

Quickstep Holdings Limited (ASX: QHL) has released its quarterly update for the second quarter of fiscal year 2025, revealing a mixed financial performance. Revenue from continuing operations declined by 21% to $17.07 million compared to the same period last year. This drop was attributed to a more stable but lower volume profile in the Structures business, the closure of the Services segment, and reduced activity in Development Engineering, particularly drone production.

Despite the revenue setback, Quickstep's EBITDA from continuing operations surged by 44% to $0.96 million. This improvement underscores the effectiveness of the significant restructuring initiatives undertaken in the Structures division during the first quarter, which have enhanced operational efficiency and cost discipline.

Cash Flow and Balance Sheet Strength

The company reported a robust net operating cash inflow of $7.3 million for the quarter, supported by consistent customer receipts and stringent cost management. Quickstep ended the quarter with a healthy cash balance of $8.9 million. Additionally, the company repaid $2.3 million in borrowings, reducing its drawn loan facilities to $11.8 million, reflecting a cautious approach to leverage amid ongoing restructuring.

Strategic Business Developments

Quickstep continues to execute its strategy focused on sustainable growth and shareholder value. A notable milestone was achieved on 9 December 2024, when Quickstep signed a Deed with Defence, positioning the company to pursue future contracts in Guided Weapons and Explosive Ordnance (GWEO). This development leverages Quickstep’s strong reputation and technical expertise, potentially opening new revenue streams in a strategically important sector.

Meanwhile, the company completed the closure of its Services business on 31 October 2024, as previously announced. The closure incurred restructuring and make-good costs of $1.4 million during the quarter, contributing to an estimated total closure cost of approximately $2.4 million. The full exit from the Services site is expected by the end of February 2025, marking a significant shift in Quickstep’s operational focus.

Corporate and Financing Update

Quickstep also entered into a Scheme Implementation Deed (SID) with ASDAM on 20 December 2024, signaling potential corporate developments ahead. The company’s financing facilities remain secured with the Commonwealth Bank of Australia, including a $10 million working capital facility and a $1.8 million secured loan facility, both at an interest rate of 7.47%. The company’s disciplined financial management is evident in its ability to maintain liquidity while reducing debt.

Outlook

While the revenue decline may raise questions about market demand and operational stability, the strong EBITDA growth and cash flow generation highlight Quickstep’s resilience and adaptability. The company’s focus on Defence contracts and the completion of restructuring initiatives could set the stage for renewed growth momentum in the coming quarters.