Q2 Financial Highlights
- Sales of $145.5 million, up 52.1%
from $ 95.7 million last year, with
14.3% coming from organic growth
- Operating income of $10.5
million, up 98.9% from $5.3
million last year
- Adjusted EBITDA1 of $21.5
million, up 63.3% from $13.2
million last year
- Adjusted EBITDA margin of 14.8%, up from 13.8% last year
Q2 Operational and Commercial Highlights
- Funded backlog2 increased to a record-level of
$769 million, from $747 million in Q1
- Successful completion by Boeing of the first test flight for
the MQ-25 unmanned aerial refueler for which Héroux-Devtek provides
complete landing gear systems
LONGUEUIL, QC, Nov.
8, 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 second quarter ended September 30, 2019. Unless
otherwise indicated, all amounts are in Canadian dollars.
"While the second quarter has historically been a seasonally
softer one for Héroux-Devtek, I am pleased that we were able to
deliver strong commercial and defence sales growth, both
organically and through acquisitions – even outperforming first
quarter sales. As we continue to focus on executing our plan, I
wish to thank each member of our team for their continued
commitment towards our success," said Martin Brassard, President and CEO of
Héroux-Devtek.
"We now turn to the second half of the year with a strong
commitment towards the execution of our business integration and
operational delivery strategies. With a record-setting backlog, up
60% from a year ago, and all our programs progressing according to
plan, we are now well on track to achieve our revenue and
profitability targets for the year," concluded Mr.
Brassard.
|
FINANCIAL
HIGHLIGHTS
|
Three months
ended
September 30,
|
Six months
ended September
30,
|
(in thousands, except
per share data)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Sales
|
$
|
145,516
|
$
|
95,665
|
$
|
288,943
|
$
|
181,435
|
Operating
income
|
|
10,519
|
|
5,289
|
|
20,890
|
|
10,146
|
Adjusted operating
income1
|
|
10,519
|
|
6,165
|
|
21,505
|
|
11,382
|
Adjusted
EBITDA1
|
|
21,510
|
|
13,176
|
|
43,019
|
|
25,420
|
Net income
|
|
6,307
|
|
3,294
|
|
12,750
|
|
6,846
|
Adjusted net
income1
|
|
6,307
|
|
4,405
|
|
13,266
|
|
8,191
|
Cash flows related to
operating activities
|
|
12,504
|
|
11,687
|
|
16,199
|
|
20,137
|
Free cash
flow1
|
|
7,248
|
|
8,152
|
|
5,660
|
|
14,520
|
In dollars per
share
|
|
|
|
|
|
|
|
|
EPS – basic and
diluted
|
$
|
0.18
|
$
|
0.09
|
$
|
0.36
|
$
|
0.19
|
Adjusted
EPS1
|
|
0.18
|
|
0.12
|
|
0.37
|
|
0.22
|
As
at
|
|
|
|
|
September 30,
2019
|
March 31,
2019
|
Funded
backlog2
|
|
|
|
|
$
|
769,000
|
$
|
624,000
|
1 This is
a non-IFRS measure. Please refer to the "Non-IFRS Measures" section
at the end of this press release.
|
2
Represents firm orders.
|
SECOND QUARTER RESULTS
Consolidated sales grew 52.1% to $145.5 million, up from $95.6 million last year, including a 14.3%
organic growth and a solid performance by the Corporation's recent
acquisitions, which contributed $36.1 million. Commercial sales grew 38.1%
from $47.0 million to $64.9 million, while defence sales were up 65.7%,
from $48.6 million to
$80.6 million.
Gross profit as a percentage of sales decreased during the
second quarter to 15.3%, from 16.2% last year, mainly due to the
0.6% negative net impact of exchange rate fluctuations and higher
manufacturing costs at the Longueuil facility. These negative factors
were partially offset by the positive impact of the CESA
acquisition.
Operating income increased to $10.5 million, or 7.2% of sales, up from
$5.3 million, or 5.5% of sales
last year, mainly driven by lower selling and administrative
expenses as a percentage of sales. Last year's operating income
also reflected non-recurring acquisition-related costs, as opposed
to this year. Adjusted EBITDA, which excludes non-recurring items,
stood at $21.5 million, or 14.8%
of sales, compared with $13.2 million, or 13.8% of sales, a
year ago. For the same period, EPS doubled from $0.09 last year to $0.18 this quarter, while adjusted
EPS1 grew 50%, from $0.12
last year to $0.18 in Q2.
SIX-MONTH RESULTS
Consolidated sales grew 59.3% to $288.9 million, up from $181.4 million for the corresponding period
last year. Organic growth accounted for 14.7% of this increase,
while the solid performance of the Corporation's recent
acquisitions contributed $80.7 million. Commercial sales grew 42.7%
in the first six months of the year, from $92.8 million to $132.4 million, while defence sales were up
76.6% for the same period, from $88.6 million to $156.6 million.
Gross profit as a percentage of sales increased during the first
half of the year to 16.1% from 15.7% last year, mainly due to the
positive impact of the Beaver and CESA acquisitions, partially
offset by the 0.3% negative net impact of exchange rate
fluctuations and higher manufacturing costs at the Longueuil facility.
In the first six months of the year, operating income increased
to $20.9 million, or 7.2% of
sales, up from $10.1 million, or
5.6% of sales last year. Adjusted EBITDA, which excludes
non-recurring items, stood at $43.0 million, or 14.9% of sales, compared
with $25.4 million, or 14.0% of
sales last year. For the same period, EPS grew 89.5%, from
$0.19 last year to $0.36, while adjusted EPS grew to $0.37, up 68.2% from the $0.22 recorded in the same period last year.
The Corporation's funded backlog increased to $769 million
as at September 30, 2019, compared to $624 million as at
March 31, 2019, mainly due to an increased demand for defence
products combined with Alta's backlog at acquisition, as recorded
in the first quarter.
HEALTHY FINANCIAL POSITION
Cash flows related to operating activities reached $12.5 million in the second quarter, up from
$11.7 million last year. For the
six-month period, cash flows from operating activities amounted to
$16.2 million, down from
$20.1 million for the
corresponding period last year, mainly due to an increase in
inventories in preparation for upcoming growth.
As at September 30, 2019, net debt
stood at $264.7 million, up from
$243.0 million as at April
1, 20193. The increase in long-term debt during the
six-month period is mainly due to the Alta acquisition partially
offset by a US$12 million ($15.9 million) repayment made over the
course of the second quarter.
CONFERENCE CALL
Héroux-Devtek Inc. will hold a conference call to discuss these
results on Friday, November 8, 2019
at 8:30 AM Eastern Time. Interested
parties can join the call by dialing 1-888-231-8191 (North America) or 1-647-427-7450 (overseas).
The conference call can also be accessed via live webcast on
Héroux-Devtek's new
website, www.herouxdevtek.com/en/news-events/events or at
https://webinars.on24.com/cision/hrxq2f20. An accompanying
presentation is also available on Héroux-Devtek's website
at https://www.herouxdevtek.com/en/investors/financial-documents.
If you are unable to call in at this time, you may access a
recording of the meeting by calling 1-855-859-2056 and entering the
passcode 455983 on your phone. This recording will be
available on Friday, November 8, 2019
as of 11:30 AM Eastern Time until 11:59 PM
Eastern Time on Friday, November 15, 2019. Additionally, the
recording will be made available for replay on Héroux-Devtek's
website after that date.
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 second quarter ended September 30, 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.
ABOUT HÉROUX-DEVTEK
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.
___________________________________
|
1
|
This is a non-IFRS
measure. Please refer to the "Non-IFRS Measures" section at the end
of this press release.
|
2
|
Represents firm
orders.
|
3
|
Pro forma net debt as
at April 1, 2019 reflects the impact of the adoption of IFRS 16 –
Leases. See the Corporation's financial statements for further
details.
|
SOURCE Héroux-Devtek Inc.