Financial Highlights
- Sales increased to $143.4 million
up from $85.8 million a year ago
- Operating income grew to $10.4
million, up from $4.9 million
a year ago
- Adjusted EBITDA1 reached $21.5 million, up from $12.2 million a year ago
Operational and Commercial Highlights
- Highest funded backlog ever, reaching $747 million, up from $624
million as at March 31,
2019
- New contract with Boeing to supply the complete landing gear
system for the MQ-25 program
- Expanded the F-18 agreement with Boeing to include the Advanced
F-15 program
- Acquired Alta Precision Inc., and increased guidance
accordingly
LONGUEUIL, QC, Aug. 9, 2019 /CNW Telbec/ - Héroux-Devtek
Inc. (TSX: HRX) ("Héroux-Devtek" or the "Corporation"), the world's
third-largest landing gear manufacturer, reported strong financial
results today for the first quarter ended June 30, 2019. Unless otherwise indicated, all
amounts are in Canadian dollars.
"Our first quarter results remained strong on all fronts due to
the contribution of our recent acquisitions and the 15.2% growth of
our legacy products, which was driven by the production ramp-up of
the Boeing 777/777X and Lockheed Martin F‑35 programs as well as
higher aftermarket sales to the defence market. I want to emphasize
the outstanding work done by all our employees, without whom we
would not have achieved such great results," said Martin Brassard, President and CEO of
Héroux-Devtek.
"I am proud to announce that our firm order backlog reached the
highest level in the history of the Company. It grew by almost 20%
over the last three months, mainly in our defense sector in
North America, due to the
introduction of new programs and increased demand for our products.
Following the recent acquisition of Alta Precision, we are
increasing both our fiscal 2020 and long-term sales guidance. While
this transaction temporarily increased our debt, we believe in the
strengths it adds to our commercial program portfolio and growth
prospects" concluded Mr. Brassard.
|
|
FINANCIAL
HIGHLIGHTS
|
Quarters ended
June 30
|
(in thousands of
dollars, except per share data)
|
2019
|
2018
|
Sales
|
143,427
|
85,770
|
Operating
income
|
10,371
|
4,857
|
Adjusted operating
income1
|
10,986
|
5,217
|
Adjusted
EBITDA1
|
21,509
|
12,244
|
Net income
|
6,443
|
3,552
|
Per share – diluted
($)
|
0.18
|
0.10
|
Adjusted net
income1
|
6,959
|
3,786
|
Per share
($)
|
0.19
|
0.10
|
___________________________________
|
1
|
This is a non-IFRS
measure. Please refer to the "Non-IFRS Measures" section at the end
of this press release.
|
FIRST QUARTER RESULTS
Consolidated sales grew 67.2% to $143.4
million, up from $85.8 million
in the same period last year. $44.6
million of this increase was driven by the CESA and Beaver
acquisitions while the growth of Héroux-Devtek legacy sales
contributed 15.2% or $13.1
million.
Commercial sales grew 47.4% to $67.4
million, up from $45.8 million
in the same period last year. The strong increase was driven by the
CESA and Beaver acquisitions and growing legacy sales from the
ramp-up of the Boeing 777/777x programs.
Defence sales grew 89.9% to $76.0
million, up from $40.0 million
in the same period last year. This strong increase was driven by
the CESA and Beaver acquisitions, growing Héroux-Devtek legacy
sales mainly from the ramp-up of the F-35 program and higher
aftermarket sales.
Gross profit increased to $24.2
million, or 16.9% of sales, up from $13.1 million, or 15.2% of sales last year. The
increase is attributable to the impact of the Beaver and CESA
acquisitions and positive foreign exchange rate fluctuations,
partially offset by higher manufacturing costs at our Longueuil facility.
Operating income increased to $10.4
million, or 7.2% of sales, up from $4.9 million, or 5.7% of sales last year. This
quarter's operating income included $0.6
million of non-recurring items, up from $0.4 million of non-recurring items in the same
period last year. These non-recurring items are mainly
acquisition-related costs. Adjusted EBITDA, which excludes these
non-recurring items, stood at $21.5
million, or 15.0% of sales, compared with $12.2 million, or 14.3% of sales, one year
ago.
Net income for the first quarter of fiscal 2020 stood at
$6.4 million, or $0.18 per diluted share, up from $3.6 million, or $0.10 per diluted share, in the corresponding
period of last fiscal year. Excluding non-recurring items net of
taxes, adjusted net income reached $7.0
million, or $0.19 per share,
up from $3.8 million, or $0.10 per share last year.
As at June 30, 2019,
Héroux-Devtek's funded (firm orders) backlog stood at $747 million, an increase of 19.7% from
$624 million as at March 31, 2019 mainly on the strength of organic
growth and the contribution of Alta.
LIQUIDITY AND FINANCIAL
POSITION
Cash flows related to operating activities amounted to
$3.7 million in the first quarter of
fiscal 2020, down from $8.5 million in the same period last fiscal
year. This variation mainly reflects a negative net change in
non-cash working capital items due to an increase in inventory in
anticipation of production ramp-up. As a result, free cash flow
decreased to a usage of $1.6 million,
down from a positive free cash flow of $6.4
million in the same period last year.
As at June 30, 2019, net debt
stood at $269.6 million, up from
$228.1 million at March 31, 2019, mainly due to the recognition of
$27.0 million of additional lease
liabilities as debt following the adoption of IFRS 16 as well as
higher utilization of the credit facilities to finance the
acquisition of Alta Precision.
SUBSEQUENT EVENTS
On July 18, 2019, the Company
announced that the unionized employees at its Longueuil, Québec, facility voted in favour of
the early renewal of a three-year collective agreement, which now
extends through April 30, 2023. The
renewal relates to approximately 210 employees who are members of
Unifor, Local Section 1956. This agreement ensures a period of
stability during which all time and resources can be dedicated to
delivering our record backlog and meet customer expectations.
GUIDANCE
Management increased both its fiscal 2020 and long-term sales
guidance to reflect the expected contribution of Alta Precision.
Management expects sales to reach between $580 million and $600
million in fiscal 2020 and between $650 million to $680
million in fiscal 2022.
Please see "Forward-Looking Statements" below and the Guidance
section in the Corporation's MD&A for the quarter ended
June 30, 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 Friday, August 9, 2019 at
11:30 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 toll-free 1-855-859-2056 and
entering the passcode 7260609 on your phone. Local dial-in numbers
for Toronto: 416-849-0833 and
Montreal: 514-807-9274. This
recording will be available from Friday,
August 9, 2019 as of 2:30 PM until
11:59 PM on Friday, August 16, 2019.
ANNUAL MEETING OF SHAREHOLDERS
Héroux-Devtek will hold its Annual Meeting of Shareholders
today, Friday, August 9, 2019 at
10:00 a.m. local time in the
Fortifications Ballroom of the Westin Hotel located at 270
Saint-Antoine Street West, Montreal,
Quebec.
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
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
Canada, the United States, the United Kingdom and Spain.
SOURCE Héroux-Devtek Inc.