IT and audiovisual company SKS Technologies (ASX: SKS) has recorded a positive first quarter for FY24, achieving cash receipts from customers of $26.83 million, marking a 15.4% increase on Q4 FY23 and a 2.7% increase on the previous corresponding period, which collected cash receipts of $26.12 million.
During the quarter, SKS Technologies obtained several major projects worth around $15 million, including contracts with the defence force in Darwin, Australia Post for outfitting their new office in Richmond, and a global IT company for a data centre project.
It also completed major works for Collingwood Football Club and Monash University in Melbourne and a Westfield shopping centre in Brisbane.
Chief Executive Officer, Matthew Jinks, said, “This level of receipts from customers provides a strong foundation for the $90 million to $100 million of revenue that we are targeting for FY24. It also reflects the continued momentum in organic growth that has characterised our performance over the past several years.”
SKS Technologies is an IT company installing audio visual and other creative tech solutions across companies—from TVs in hotel rooms to advanced interactive tech in libraries (including the State Library of Victoria) and hotel lobbies.
In Q1 FY24, it spent $26.44 million on operating costs, marking a 19.5% rise over the previous quarter and an 8.1% increase over the corresponding period from the prior year. This escalation can be attributed to a 32.5% surge in product manufacturing and operating costs, which rose to $17.09 million from $12.89 million in the previous quarter.
According to SKS, these cost increases are a positive signal, indicating growth and demanding increased capital expenditure to expand operations and gain cash receipts. Consequently, cash flows from operations totalled $410k for Q1 FY24, resulting in a reduction of the overdraft by $310k to $1.45 million.
Right now, SKS’s workload is valued at $55 million, even though projects are getting completed faster. Enhanced management in Brisbane and Perth drives growth, with increased project wins and a strong brand presence in diverse sectors. Its new Darwin office is also gaining traction in the Northern Territory markets through multi-million-dollar contracts in line with the growth strategy.
Jinks added, “After much market sector and systems analysis several years ago, as well as sustained investment in the people with the expertise and connections to open up those markets for us, we are witnessing the benefits of a determined commitment that began several years ago when we consolidated and mapped out the most logical growth options for our business. Our growth in these targeted areas is the result of these endeavours, and I look forward to updating shareholders on our progress and our successes.”
In this quarter, the Company spent over $8.3 million on staff costs and $102k on ads and marketing. Its cash flow from operating activities was positive at over $400k. Yet, SKS Technologies ended the year with a mere $11k cash in hand and $3.55 million in undrawn funds available within the overdraft.
Alinda is a Business Reporter for The Sentiment
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