HIGHLIGHTS
22nd April 2016
FINANCIAL PERFORMANCE
Continuing strong sales
Sales of $11.3 million for Q3 FY16, $35.6 million year to date
Positive operating profit for nine months to 31 March 2016
Firm order book in excess of $110 million at 31 March 2016
Cash of $12.7 million
AEROSPACE MANUFACTURING
Lockheed Martin C-130J production
8 ship-sets delivered in Q3
Joint Strike Fighter (JSF) production
128 parts delivered in Q3, and 415 year to date, which is up 28% on the previous corresponding period (pcp)
JSF vertical tails now fully qualified and on track for delivery in Q4
Bankstown and Waurn Ponds capital program
Ongoing capital program to support JSF growth and new technology, with $1.2 million spend in Q3
NEW TECHNOLOGY
Ford Falcon XR6 production commences
Carbon fibre air intake system manufacturing begins at Waurn Ponds
Thales Hawkei vehicle program
Production of tools and engineering orders underway and on track
Production anticipated in Q4 as per plan
Korea Institute of Science and Technology (KIST) contract secured
Post Q3, KIST has purchased Quickstep's composite technology including Qure and RST
Opens up South Korean automotive market for Quickstep
CORPORATE
Management team strengthened
Strengthened management team with broad experience and skills
361 Milperra Road Tel: (02) 9774 0300 ASX Code: QHL
Bankstown Airport NSW 2200 Fax: (02) 9771 0256
www.quickstep.com.au Email: info@quickstep.com.au
1.0 FINANCIAL PERFORMANCE
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STRONG Q3 SALES
Production of parts for the F‐35 Lightning II Joint Strike Fighter (JSF) and C‐130J Hercules drove sales for the third quarter FY16 of $11.3 million, in line with management expectations. Total sales for the nine months to 31 March 2016 were $35.6 million, up 25% on pcp.
- FIRM ORDER BOOK
At 31 March 2016, Quickstep's order book was valued in excess of $110 million extending through to FY19.
2.0 AEROSPACE MANUFACTURING
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C-130J PRODUCTION CONTINUES
Quickstep is the exclusive supplier of composite wing flaps to Lockheed Martin for the C‐130J Hercules aircraft under a five‐ year memorandum of agreement (MoA) valued at US$75 million.
During the quarter, 8 ship‐sets were completed. This takes production for the nine months to 31 March 2016 to 26 ship‐sets, which is consistent with plan. Current C‐130J orders extend through to 2019 in line with Lockheed Martin's C‐130J Multiyear II contract with the US Department of Defense.
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JSF PRODUCTION GROWTH
The JSF Program is the world's largest defence aerospace program, and Quickstep is the sole supplier globally to Northrop Grumman for 21 JSF components including doors, panels, skins and other composite parts. In Q3 FY16 Quickstep completed 128 parts. Production for JSF is forecast to increase over the next three years.
Following completion of qualification for vertical tail fairings components in Q1, qualification of vertical tail spars was completed in Q2. Qualification of vertical tail skins was also approved on 14 April, and JSF vertical tail deliveries are expected to begin in Q4 FY16.
Under the agreement with BAE's supplier Marand Precision Engineering, Quickstep will supply 700 sets of composite parts including skins, spars and fairings over the next 14 years.
- CAPITAL EXPANSION AT BANKSTOWN
Quickstep continued its capital expenditure program at Bankstown where preparations are being made to accommodate higher levels of contracted production for the JSF. During Q3 Quickstep continued to invest with a spend of $1.2million, in addition to $0.8 million in the previous quarter.
3.0 NEW TECHNOLOGY
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FORD FALCON XR6 SPRINT PRODUCTION BEGINS
Production at Waurn Ponds to manufacture a carbon fibre air intake system for the Ford Falcon XR6 Sprint has commenced. Quickstep has received full global signoff from the Ford Motor Company to manufacture this innovative component, and the sports car will be the first global mass‐produced Ford to feature the technology. Quickstep developed materials, resins and processes to replace a thick‐walled, injection moulding plastic component with a very thin‐walled carbon fibre part.
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THALES HAWKEI PRE PRODUCTION UNDER WAY
Quickstep is the exclusive supplier of the bonnet, side skirts and mudguard composite parts for Thales Australia's Hawkei vehicles, supporting Thales Australia's $1.3 billion supply contract to build 1,100 military vehicles and 1,000 trailers awarded by the Australian government in October 2015. Pre‐production of composite parts using Quickstep's resin spray transfer (RST) technology has begun, and initial production is expected to commence in Q4.
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WAURN PONDS UPDATE
Fitout of the Automotive division's site for production at Waurn Ponds is continuing. The company's resin spray transfer (RST) cell is in operation, and the installation of a Qure cell is continuing. The site, which also houses Quickstep's global R&D centre, supports Quickstep contracts with Ford Australia, Thales Australia and the Korea Institute of Science and Technology (KIST).
- KIST CONTRACT OPENS UP SOUTH KOREAN MARKET
Subsequent to the end of the quarter, Quickstep announced that it has secured a new sales contract with KIST (Korea Institute of Science and Technology), the multi‐disciplinary research institute that has had a significant role in the development of South Korea's growing carbon fibre composite materials industry.
Quickstep will develop and supply composite manufacturing equipment, including its patented Resin Spray Transfer (RST) and Qure (Out‐of‐Autoclave) curing machine technologies, which KIST will use to develop prototype, demonstrator and niche‐volume composite parts. Delivery is expected to be completed by the end of 2016 and will pave the way for further adoption of Quickstep's technologies in the South Korean automotive sector, one of the larger automotive markets in the Asian region.
The Qure cell being developed for KIST will take Quickstep into the medium volume production market, as it will enable throughput exceeding 10,000 parts per year.
KIST specialises in supporting Korean companies in the research, evaluation and introduction of new technologies into production environments, and will demonstrate the benefits of the Qure system for industry uptake in the Korean market.
4.0 CORPORATE
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CASH POSITION
At the end of the quarter, the consolidated group cash balance was $12.7 million and, in addition, the company held $0.8 million in restricted term deposits to be held to maturity. Net assets at 31 March 2016 were $16.4 million, reflecting a healthy balance sheet following the capital raising in late 2015.
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CASHFLOW
Operating cashflow for Q3 was an outflow of $1.2 million, reflecting an inventory increase of $2.4 million. The stock build is to ensure no disruption occurs to production of the JSF Program while capital expansion at Bankstown is underway.
- STRENGTHENED MANAGEMENT TEAM
Quickstep has strengthened and expanded its management team to support Quickstep's growth. The broadened team has significant experience across many professional disciplines and business environments, including international expertise. Managing director, David Marino, now leads a strengthened team with the following changes since his commencement:
Andrew Crane - Chief Financial OfficerAndrew joined Quickstep in September 2015 as chief financial officer. His previous roles include general manager - finance and commercial at GWA Group and CFO/finance director at SCA Hygiene Australasia.
Kevin Boyle - Chief Operating OfficerKevin has been appointed as COO, joining Quickstep from McGrath Nicol where he was director, manufacturing advisory. He has more than 15 years' automotive sector experience and was general manager, Ai Automotive from 2010 to 2014 and, before that, held management roles at Cooper Standard in Australia and Asia Pacific.
Jacque Courtney‐Pitman - Executive General Manager Human ResourcesJacque joined Quickstep in March 2016. Previously, she was general manager - people and performance for property developer Devine Limited. She has more than 15 years' human resources management experience including roles with Jones Lang LaSalle, Veolia Water and Coca‐Cola.
Carl de Koning ‐ Executive General Manager Business Development (Automotive) and External RelationsCarl joined Quickstep in 2014 initially in an advisory role. He has 35 years' automotive experience and previously held executive business development roles with Futuris Automotive in Australia, Thailand and China.
Michael Hau ‐ Executive Director ‐ European OperationsMichael joined Quickstep in February 2016 to manage its European operations. Previously, he was managing director of SafetyKleen Germany, and held management roles with Cytec Solvay Group, most recently as director, global procurement. Before that, he held a senior engineering position with Boeing Hawker de Havilland in Australia.
Tim Olding - Executive General Manager SystemsTim joined Quickstep in February 2015 and manages Quickstep's technology development. His 25 years' automotive experience includes 19 years at GM Holden culminating as managing engineer of advanced vehicle development.
Quickstep Holdings Limited issued this content on 26 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 April 2016 00:22:12 UTC
Original Document: http://clients2.weblink.com.au/clients/quickstep/article.asp?asx=QHL&view=6760865