BSA Posts Strong Q3 FY2025 Growth Amid Contract Losses and Restructuring Plans
BSA Limited reported a robust Q3 FY2025 with revenue and EBITDA growth, but faces significant contract reductions and plans a major restructure to adapt its business model.
- Q3 FY2025 revenue rose 12.3% to $74 million
- EBITDA (including restructure costs) increased 26.6% to $7.4 million with a 10% margin
- Net cash position improved to $11.4 million with $16.5 million undrawn facilities
- Lost new NBN Co Field Module contract; existing contracts expected to decline sharply
- Planned restructure costs of approximately $7 million to reduce operating expenses
Strong Quarterly Performance Despite Market Headwinds
BSA Limited has delivered a solid financial performance in the third quarter of fiscal 2025, reporting a 12.3% increase in revenue to $74 million and a 26.6% rise in EBITDA (including restructure costs) to $7.4 million. The company’s EBITDA margin improved to 10%, reflecting operational efficiencies and a favourable work mix in its fixed line platforms.
Operating cash flow for the quarter was a healthy $9.4 million, contributing to a net cash position of $11.4 million as at 31 March 2025. BSA also retains $16.5 million in undrawn banking facilities, providing a strong liquidity buffer amid evolving market conditions.
Contract Losses Signal Challenging Outlook for FY26
However, the upbeat quarterly results mask significant challenges ahead. BSA was unsuccessful in securing the new NBN Co Field Module contract, a key growth opportunity. The existing Unified Field Operations contract, which carries no volume guarantees, is expected to see a progressive decline in work orders from May 2025, with new orders ceasing by mid-July.
Further pressure comes from BSA’s smart metering contracts with Intellihub and Bluecurrent. Both contracts, which historically contributed around $15 million in annual revenue, are anticipated to reduce significantly due to shifts in the retail energy landscape, with no material revenue expected in FY26. These contracts are evergreen but lack volume guarantees, adding uncertainty to future earnings.
Restructuring to Align Costs with Revenue Decline
In response to the anticipated revenue contraction, BSA plans to incur approximately $7 million in restructure costs during the current financial year, with a cash impact estimated at $10.5 million once employee entitlements are included. The company has already recorded $1.2 million of these costs in Q3 FY2025.
The Joint CEOs, Arno Becker and Richard Bartley, emphasized that the group is prioritizing an orderly demobilisation of key contracts while adapting its operating model to the new customer portfolio. They also confirmed that strategic options are under active consideration to reset the business for sustainable future growth.
Financial Position and Operational Efficiency
BSA’s financial discipline is evident in its improved cash flow generation and net cash position, which rose from $2.2 million in the previous quarter to $11.4 million. The company has no drawn external debt and maintains full access to its $16.5 million borrowing base facility with CBA at an interest rate of 6.3875%.
Year-to-date revenue stands at $222.3 million, up 18.8% from the prior comparative period, driven by volume improvements and a favourable work mix. EBITDA for the nine months to March 2025 increased 34.6% to $21.4 million, underscoring the company’s focus on operational efficiencies.
Looking Ahead
While the near-term outlook is clouded by contract losses and the need for restructuring, BSA’s strong cash position and operational improvements provide a foundation for navigating this transition. The company’s strategic review will be closely watched by investors seeking clarity on its path forward amid a shifting telecommunications and smart energy landscape.
Bottom Line?
BSA’s strong quarterly results offer a buffer, but contract losses and restructuring mark a pivotal reset for the company’s future.
Questions in the middle?
- What strategic options will BSA pursue to offset contract losses and drive growth?
- How will the restructure impact employee numbers and operational capacity?
- What is the outlook for new contract opportunities in the evolving Telco and smart energy sectors?