Héroux-Devtek reports solid first quarter results
Annual meeting of shareholders later this morning
- Sales of $99.2 million, up 8.0% from $91.9 million last year
- EBITDA of $16.1 million, compared with $14.9 million a year ago
- Net income of $6.3 million, or $0.20 per diluted share, up 8.4% from $5.8 million, or $0.19 per diluted share last year
- Healthy balance sheet with cash and cash equivalents of $62.5 million and a net debt-to-equity ratio of 0.22:1
LONGUEUIL, QC, Aug. 2, 2012 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), a leading Canadian manufacturer of aerospace and industrial products, today reported its results for the first quarter of fiscal 2013 ended June 30, 2012. Unless otherwise indicated, all amounts are in Canadian dollars.
"Héroux-Devtek posted improved first quarter results driven by higher deliveries to the large commercial aircraft and business jet markets, as well as strong sales of Industrial products. Military sales also increased reflecting our extensive diversification with regards to product and service offering as well as aircraft programs. More importantly, once we complete the proposed sale of substantially all of our Aerostructure and Industrial product line operations later this quarter, Héroux-Devtek will remain well diversified within its core Landing Gear market. Our balanced portfolio between commercial and military activity, combined with our internal strengths and extensive know-how, gives Héroux-Devtek the ability to capture any new business opportunity that may arise," said President and CEO Gilles Labbé.
|FINANCIAL HIGHLIGHTS||Quarters ended June 30,|
|(in thousands of dollars, except per share data)||2012||2011|
|Per share - basic ($)||0.21||0.19|
|Per share - diluted ($)||0.20||0.19|
|Cash flows from operations||13,101||12,811|
|Weighted-average shares outstanding (basic, in '000s)||30,449||30,215|
|Weighted-average shares outstanding (diluted, in '000s)||30,818||30,516|
Consolidated sales reached $99.2 million, up 8.0% from $91.9 million a year earlier, including a favourable year-over-year currency impact of $1.5 million. Earnings before interest, taxes, depreciation and amortization ("EBITDA") totalled $16.1 million, up from $14.9 million a year earlier. As a percentage of sales, EBITDA was stable at 16.3%, as a better product mix and manufacturing cost improvements in the Aerospace segment were offset by non-recurring selling and administrative expenses related to specific projects. Operating income stood at $10.0 million, or 10.1% of sales, compared with $9.1 million, or 9.9% of sales, last year.
Net income totalled $6.3 million or $0.20 per share, fully diluted, up 8.4% from $5.8 million or $0.19 per share, fully diluted, in the prior year. Results for the first quarter of fiscal 2013 include start-up costs of $502,000 net of income taxes, or $0.02 per share, related to the new facility in Mexico, compared with similar costs of $180,000 net of income taxes, or $0.01 per share, in the first quarter of fiscal 2012. Cash flow from operations was $13.1 million, up from $12.8 million a year earlier.
As at June 30, 2012, Héroux-Devtek's balance sheet remained healthy with cash and cash equivalents of $62.5 million and long-term debt, including the current portion, of $116.8 million. As a result, the net debt-to-equity ratio stood at 0.22:1 at the end of the first quarter, compared with 0.23:1 three months earlier. The net-debt-to-equity ratio is defined as the total long-term debt, including the current portion, less cash and cash equivalents over shareholders' equity.
Aerospace sales were $88.8 million in the first quarter of fiscal 2013, up 4.9% from $84.6 million a year ago. Sales of Landing Gear products rose 2.5% to $60.9 million due to increased activity for large commercial aircraft programs, mainly the B-777 and B-737 programs, as well as higher customer requirements on the LJ-45 business jet program. Aerostructure product sales increased 11.2% to $27.7 million due to higher sales to the business jet market and for certain military programs, mainly the F-16 and the JSF, as well as favourable currency fluctuations. These factors were partially offset by lower production rates on the regional turboprop Dash 8 program.
Industrial sales totalled $10.5 million in the first quarter of fiscal 2013, compared with $7.2 million in the first quarter of fiscal 2012. This solid 44.7% increase mainly reflects greater demand for heavy equipment in the mining industry.
On July 17, 2012, Héroux-Devtek announced that it had executed a
definitive agreement for the sale of substantially all of its
Aerostructure and Industrial product line operations to Precision
Castparts Corp. (NYSE:PCP) for a cash consideration of $300 million,
subject to post-closing adjustments. Héroux-Devtek expects to realize
net cash proceeds of approximately $230 million from the sale, after
related taxes and expenses. Assets to be acquired by Precision
Castparts include the Dorval (Quebec), Querétaro (Mexico) and Arlington
(Texas) Aerostructure product line manufacturing sites, as well as the
Cincinnati (Ohio) Industrial product line manufacturing sites. The
assets to be sold generated sales of $126.8 million in the fiscal year
ended March 31, 2012.
The Corporation will retain all of its Landing Gear product line design engineering and manufacturing capabilities that have allowed it to set the industry standards on various platforms over the years and will have more than 1,000 employees in Canada and the U.S. The pro forma entity has revenues of more than $250 million. Héroux-Devtek will focus on growth opportunities, both organically and through strategic acquisitions, in its core Landing Gear product line operations, leveraging its market-leading position in the sector. The transaction, which has been unanimously approved by Héroux-Devtek's Board of Directors on July 16, 2012, is expected to close in the second quarter of the current fiscal year. Héroux-Devtek is currently evaluating various alternatives for the anticipated proceeds, including a significant distribution to shareholders and certain debt repayment.
- On July 18, 2012, Héroux-Devtek announced that its Landing Gear product line operations have renewed an important long-term contract with the U.S. Air Force to provide landing gear repair and overhaul services for the C-130, E-3 and KC-135R aircraft. The contract is for a definite four-year term, extending to August 2016. Based on the Corporation's expectations, the contract is valued at up to $90 million. Under the terms of the agreement, Héroux-Devtek is also responsible for the manufacturing and delivery of aftermarket components for these aircraft.
Conditions are mostly favourable in the commercial aerospace market. As large commercial aircraft manufacturers are proceeding with production rate increases on certain leading programs, they are forecasting higher deliveries in calendar 2012. New orders remain solid and backlogs represent approximately seven years of production at current rates. The business jet market continues to see positive signs and shipments should increase modestly in calendar 2012, followed by sustained growth in subsequent years. The military aerospace market remains uncertain, as governments address their deficits, but Héroux-Devtek's diversified military portfolio, balanced between new component manufacturing and aftermarket products and services, should lessen its exposure to defense budget cutbacks.
On June 30, 2012, Héroux-Devtek's funded (firm orders) backlog stood at $480 million, including $94.9 million from the businesses to be sold, versus $493 million three months earlier. This backlog remains well diversified.
"We are looking forward to further enhance our presence in the landing gear market, as we continue to build Héroux-Devtek into a world-class organization. Going forward, we will continue leveraging our strengths, know-how and leading position as an integrated supplier of value-added products and services to OEMs and Tier 1 players. Furthermore, once the transaction is completed, our stronger financial position will allow us to consider strategic acquisitions that would add to our product portfolio and provide new technology. Assuming the Canadian dollar remains at parity versus the US currency and considering forward foreign exchange contracts, we anticipate an internal sales growth of approximately 5% for the Corporation's operations to be continued in the fiscal year ending March 31, 2013," concluded Mr. Labbé.
Héroux-Devtek Inc. will hold a conference call to discuss these results on Thursday, August 2, 2012 at 3:00 PM Eastern Time. Interested parties can join the call by dialling (514) 807-9895 (Montreal or overseas) or 1-888-231-8191 (elsewhere in North America). The conference call can also be accessed via live webcast at Héroux-Devtek's website, www.herouxdevtek.com or www.newswire.ca.
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 98128147# on your phone. This tape recording will be available on Thursday, August 2, 2012 as of 6:00 PM Eastern Time until 11:59 PM Eastern Time on Thursday, August 9, 2012.
Héroux-Devtek Inc. (TSX: HRX), a Canadian company, serves two main market segments: Aerospace and Industrial Products, specializing in the design, development, manufacture and repair and overhaul of related systems and components. Héroux-Devtek Inc. supplies both the commercial and military sectors of the Aerospace segment with landing gear systems (including spare parts, repair and overhaul services) and airframe structural components. The Corporation also supplies the industrial segment with large components for power generation equipment and precision components for other industrial applications. Approximately 70% of the Corporation's sales are outside Canada, mainly in the United States. The Corporation's head office is located in Longueuil, Québec with facilities in the Greater Montreal area (Longueuil, Dorval, Laval and St-Hubert); Kitchener and Toronto, Ontario; Arlington, Texas; Springfield, Cleveland and Cincinnati, Ohio, as well as Querétaro, Mexico.
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of the Corporation. These statements are based on suppositions 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.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a financial measure not prescribed by International Financial Reporting Standards ("IFRS") and is not likely to be comparable to similar measures presented by other issuers. Management considers this to be useful information to assist investors in evaluating the Corporation's profitability, liquidity and ability to generate funds to finance its operations.
|Note to readers:||Complete unaudited interim condensed consolidated financial statements and Management's Discussion & Analysis are available on Héroux-Devtek's website at www.herouxdevtek.com.|
SOURCE: HEROUX-DEVTEK INC.For further information:
President and Chief Executive Officer
Tel.: (450) 679-3330
Executive Vice-President and Chief Financial Officer
Tel.: (450) 679-3330
Martin Goulet, CFA
Tel.: (514) 731-0000