Financial Highlights
- Q4 Sales increased by 39.7 % to $157.9
million
- Q4 Operating income grew to $15.2
million, up from $6.7
million
- Q4 Adjusted EBITDA1 reached $25.9 million, up from $19.4 million
- Fiscal 2019 sales reached $483.9
million, an increase of 25.2% over last year
- Fiscal 2019 cash flow from operating activities at $70.0 million compared with $56.1 million year-over year.
Operational and Commercial Highlights
- New contract with Boeing to supply the complete landing gear
system for the MQ-25 program
- Delivered a record 15 landing gears to Boeing for the 777 and
777X programs
- Funded backlog at $624 million,
up from $466 million as at
March 31, 2018
- Expanded agreement with Boeing to include the Advanced F-15
program
- Incoming President and Chief Executive Officer Martin Brassard has been nominated to the Board
of Directors, effective June 1,
2019
LONGUEUIL, QC, May 23, 2019 /CNW Telbec/ - Héroux-Devtek
Inc. (TSX: HRX) ("Héroux-Devtek" or the "Corporation"), a leading
international manufacturer of aerospace products, today reported
strong results for the fourth quarter and fiscal year ended
March 31, 2019. Unless otherwise
indicated, all amounts are in Canadian dollars.
"Our fourth quarter and full-year results reached record levels
on all fronts. The strong performance of our acquired businesses
and the ramp-up of deliveries for the Boeing 777 and 777X programs
led us to exceed our revenue guidance. Operating profitability also
improved significantly due to our recent acquisitions and the
internalization of our surface treatment activities, while cash
flows reached record levels, allowing us to quickly focus on
deleveraging," said Gilles Labbé, President and CEO of
Héroux-Devtek.
"We are entering fiscal 2020 with a strong backlog of firm
orders. Our recent acquisitions of Beaver and CESA are providing
additional exposure to the defence market and optimally
diversifying our revenues within the growing and resilient global
aerospace market. Our expanding customer relationships in
Europe and in North America, and our growing landing gear
and complementary product offerings position us well for growth.
This solid base on which we are building for the future allows us
to project sales of $560 million to
$580 million in fiscal 2020 and
reiterate our longer-term revenue growth target of sales between
$620 million to $650 million in fiscal 2022," added Mr.
Labbé.
|
|
|
FINANCIAL
HIGHLIGHTS
|
Quarters ended
March 31,
|
Fiscal years ended
March 31,
|
(in thousands of
dollars, except per share data)
|
2019
|
2018
|
2019
|
2018
|
Sales
|
157,914
|
113,024
|
483,877
|
386,564
|
Operating
income
|
15,190
|
6,697
|
37,240
|
23,378
|
Adjusted operating
income1
|
16,208
|
12,089
|
41,563
|
30,325
|
Adjusted
EBITDA1
|
25,910
|
19,369
|
74,213
|
56,904
|
Net income
|
11,958
|
5,858
|
26,194
|
13,674
|
|
Per share – diluted
($)
|
0.34
|
0.16
|
0.73
|
0.38
|
Adjusted net
income1
|
12,794
|
10,439
|
30,352
|
24,213
|
|
Per share
($)
|
0.36
|
0.29
|
0.84
|
0.67
|
1 This is a non-IFRS measure. Please
refer to the "Non-IFRS Measures" section at the end of this press
release.
|
FOURTH QUARTER RESULTS
Consolidated sales grew 39.7% to $157.9
million, up from $113.0
million last year, driven by internal operations and our
CESA and Beaver acquisitions, which contributed $43.5 million. Sales growth was achieved both in
the commercial and defence market, which now represent 49.4% and
50.6% of our consolidated revenues respectively. Sales were
impacted by a net positive effect of $3.4
million resulting from year-over-year fluctuations in the
value of the Canadian currency versus foreign currencies.
Commercial sales grew 35.6% to $78.0
million, up from $57.5 million
last year. The strong increase was driven by CESA and Beaver.
Excluding the impact of foreign exchange, Héroux-Devtek legacy
commercial sales were relatively in-line with last year's fourth
quarter.
Defence sales grew 43.9% to $79.9
million, up from $55.5
million. The strong increase was driven by CESA and Beaver,
while Héroux-Devtek legacy sales decreased $1.5 million resulting from the net effect of the
end of the USAF Repair & Overhaul contract, which was partly
offset by the ramp-up of the corresponding contract with AAR, and
from lower manufacturing sales for the CH-47 contract.
Gross profit increased to $29.7
million, or 18.8% of sales, up from $19.0 million, or 16.8% of sales last year. The
increase is attributable to the impact of the Beaver and CESA
acquisitions and from higher throughput leading to improved
absorption of manufacturing costs.
Operating income increased to $15.2
million, or 9.6% of sales, up from $6.7 million, or 5.9% of sales last year. This
quarter's operating income included $1.0
million of non-recurring items resulting from
acquisition-related costs, down from $5.4
million of non-recurring items in the equivalent quarter of
last year, resulting from restructuring charges related to
workforce adjustments and acquisition-related costs. Adjusted
EBITDA(1), which excludes these non-recurring items,
stood at $25.9 million, or 16.4% of
sales, compared with $19.4 million,
or 17.1% of sales, one year ago.
Net income for the fourth quarter of fiscal 2019 stood at
$12.0 million, or $0.34 per diluted share, up from $5.9 million, or $0.16 per diluted share, last year. Excluding
non-recurring items net of taxes, adjusted net income reached
$12.8 million, or $0.36 per share, up from $10.4 million, or $0.29 per share last year.
As at March 31, 2019,
Héroux-Devtek's funded (firm orders) backlog stood at $624.0 million, an increase of 33.9% from
$466 million as at March 31, 2018 on the strength of contributions
from CESA and Beaver totaling $113.8 million and organic growth of
$44.2 million.
YEAR-END RESULTS
For fiscal 2019, consolidated sales reached $483.9 million, up 25.2% from $386.6 million in fiscal 2018. Commercial sales
were at $236.3 million, up from
$195.1 million a year ago, while
defence sales stood at $247.6
million, up from $191.5
million last year. Sales growth was mainly driven by CESA
and Beaver, followed by increased deliveries for the Boeing 777 and
777X programs, higher sales in the business jet market from the
ramp-up of deliveries for the Embraer 450/500 program and higher
sales of spares to the U.S. Government. Year-over-year fluctuations
in the value of the Canadian currency versus foreign currencies had
a positive net impact on sales of $4.3
million.
Gross profit for fiscal 2019 increased to $83.2 million, or 17.2% of sales, from
$61.3 million, or 15.9% of sales last
year. The increase is attributable to the impact of the Beaver and
CESA acquisitions and from higher throughput leading to improved
absorption of manufacturing costs. Foreign exchange did not
significantly impact gross profit. Operating income was
$37.2 million, or 7.7% of sales, from
$23.4 million, or 6.0% of sales a
year ago. Adjusted operating income grew to $41.6 million, or 8.6% of sales, up from
$30.3 million last year, or 7.8% of
sales. Adjusted EBITDA reached $74.2
million, or 15.3% of sales, up from $56.9 million, or 14.7% of sales last year.
Net income stood at $26.2 million,
or $0.73 per diluted share, an
increase from $13.7 million, or
$0.38 per diluted share in fiscal
2018. Adjusted net income stood at $30.4
million, or $0.84 per share,
an increase from $24.2 million, or
$0.67 per share last year.
SOLID CASH FLOWS AND HEALTHY FINANCIAL POSITION
Cash flows related to operating activities amounted to
$37.2 million in the fourth quarter
of fiscal 2019, up from $18.5 million
in the fourth quarter of fiscal 2018. This variation mainly
reflects the favourable contribution of CESA and Beaver results and
positive net change in non-cash working capital items mainly from
an increase in accounts payable. Fourth quarter free cash flow grew
to $31.7 million, up from
$20.0 million last year. For fiscal
2019, cash flows related to operating activities grew significantly
to $70.0 million, up from
$56.1 million last year, with a
record free cash flow amounting to $58.1
million, up from $50.8 million
last year, primarily from the contribution of the results of CESA
and Beaver.
As at March 31, 2019, net debt
stood at $228.1 million, down from
$257.3 million at the end of the
third quarter reflecting strong free cash flow generation during
the fourth quarter. The increase as compared to net debt of
$38.8 million as at March 31, 2018 mainly reflects the acquisitions
of CESA and Beaver during the fiscal year.
ACQUISITION OF TEKALIA
On January 23, 2019, the
Corporation completed the acquisition of 60% of the shares of
Tekalia Aeronautik (2010) Inc. ("Tekalia"), a supplier of surface
treatment services to the aerospace sector, for a purchase price of
$3.5 million. The acquisition of
Tekalia will allow the Corporation to further secure surface
treatment capacity to support its North American customers'
growth.
SUBSEQUENT EVENTS
On April 8, 2019, subsequent to
the end of the fiscal year, Héroux-Devtek announced that it has
been awarded a contract by The Boeing Company to supply the
complete landing gear system for the MQ-25 unmanned aerial
refueling program. The MQ-25 is the U.S. Navy's first operational
carrier-based unmanned aircraft and is designed to provide a
much-needed refueling capability. The contract supports Boeing's
engineering and manufacturing development program to provide four
MQ-25 aircraft to the U.S. Navy for Initial Operational Capability
by 2024.
On May 21, 2019, subsequent to the
end of the fiscal year, Héroux-Devtek also announced that it has
extended the scope of its agreement initially announced on
July 17, 2018, to supply the main
landing gears for The Boeing Company's F/A-18 E/F Super Hornet and
EA-18G Growler to include the manufacturing of the nose and main
landing gears for Boeing's Advanced F-15 program. The extended
scope now covers the supply of spare parts and aftermarket services
for both defence aircraft programs over a period of performance of
five years.
GUIDANCE
Management expects sales to reach between $560 million and $580
million in fiscal 2020, reflecting the contribution of the
acquired businesses as well as increased deliveries related to the
Boeing 777 and 777X programs. For fiscal 2022, management
reiterated its sales guidance of $620
million to $650 million.
Please see "Forward-Looking Statements" below and the Guidance
section in the Corporation's MD&A for the quarter ended
March 31, 2019, for further details
regarding the material assumptions underlying the foregoing
guidance.
CONFERENCE CALL
Héroux-Devtek Inc. will hold a conference call to discuss these
results on Thursday, May 23, 2019 at
8:30 AM Eastern Time. Interested
parties can join the call by dialling 1-888-231-8191 (North America) or 1-647-427-7450 (overseas).
The conference call can also be accessed via live webcast at
Héroux-Devtek's website,
www.herouxdevtek.com/investor-relations/events.
An accompanying presentation will also be available on
Héroux-Devtek's
website, www.herouxdevtek.com/investor-relations/events.
If you are unable to call in at this time, you may access a tape
recording of the meeting by calling 1-855-859-2056 and entering the
passcode 7496207 on your phone. This tape recording will be
available on Thursday, May 23, 2019
as of 11:30 AM Eastern Time until 11:59 PM
Eastern Time on Thursday, May 30, 2019.
FORWARD-LOOKING STATEMENTS
Except for historical information provided herein, this press
release contains information and statements of a forward-looking
nature concerning the future performance of the Corporation.
Forward-looking statements are based on assumptions and
uncertainties as well as on management's best possible evaluation
of future events. Such factors may include, without excluding other
considerations, fluctuations in quarterly results, evolution in
customer demand for the Corporation's products and services, the
impact of price pressures exerted by competitors, and general
market trends or economic changes. As a result, readers are
advised that actual results may differ from expected results.
Please see the Guidance section in the Corporation's MD&A for
the fiscal year ended March 31, 2019,
for further details regarding the material assumptions underlying
the forecasts and guidance. Such forecasts and guidance are
provided for the purpose of assisting the reader in understanding
the Corporation's financial performance and prospects and to
present management's assessment of future plans and operations, and
the reader is cautioned that such statements may not be appropriate
for other purposes.
NON-IFRS MEASURES
Earnings before interest, taxes, depreciation and amortization
("EBITDA"), adjusted EBITDA, adjusted net income, adjusted earnings
per share and free cash flow are financial measures not prescribed
by International Financial Reporting Standards ("IFRS") and are not
likely to be comparable to similar measures presented by other
issuers. Management considers these to be useful information to
assist investors in evaluating the Corporation's profitability,
liquidity and ability to generate funds to finance its operations.
Refer to Non-IFRS financial measures under Operating Results in the
Corporation's MD&A for definitions of these measures and
reconciliations to the most comparable IFRS measures.
PROFILE
Héroux-Devtek Inc. (TSX: HRX) is an international company
specializing in the design, development, manufacture, repair and
overhaul of aircraft landing gear, hydraulic and electromechanical
flight control actuators, custom ball screws and fracture-critical
components for the Aerospace market. The Corporation is the third
largest landing gear company worldwide, supplying both the
commercial and defence sectors. Approximately 90% of the
Corporation's sales are outside of Canada, including about 50% in the United States. The Corporation's head
office is located in Longueuil,
Québec with facilities in the Greater
Montreal area (Longueuil,
Laval, Montreal and St-Hubert); Kitchener, Cambridge and Toronto, Ontario; Springfield and Strongsville, Ohio; Wichita, Kansas; Everett, Washington; Livonia, Michigan; Runcorn, Nottingham and Bolton, United Kingdom; and Madrid and Seville,
Spain.
_______________________________________
1 This is a non-IFRS measure. Please refer to the
"Non-IFRS Measures" section at the end of this press release.
SOURCE Héroux-Devtek Inc.