HÉROUX-DEVTEK REPORTS FISCAL 2011 FOURTH-QUARTER AND YEAR-END RESULTS

  • Record Q4 results with sales of $106.0 million, versus $85.0 million last year, and diluted earnings per share of $0.25, up from $0.14 a year earlier 
  • Sales of $357.6 million, up 11.6% from $320.4 million last year
  • EBITDA of $54.8 million, versus $48.4 million a year ago
  • Diluted earnings per share of $0.61, up from $0.52 last year
  • Solid balance sheet with a cash position of $32.9 million and a net debt-to-equity ratio of 0.29:1

LONGUEUIL, QC, May 27, 2011 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), a leading Canadian manufacturer of aerospace and industrial products, today reported its results for the fourth quarter and fiscal year ended March 31, 2011. Results include the contribution of Eagle Tool & Machine Co. ("Eagle") and of its subsidiary All Tools, Inc. ("E2"), acquired on April 28, 2010. Unless otherwise indicated, all amounts are in Canadian dollars.

RECORD FOURTH-QUARTER RESULTS
For the fourth quarter of fiscal 2011, consolidated sales reached $106.0 million, up from $85.0 million in the fourth quarter of fiscal 2010. This 24.8% increase includes a $12.8 million contribution from Eagle and E2, while fluctuations in the value of the Canadian dollar versus the US currency reduced sales by $2.3 million. Aerospace sales rose 25.7% to $99.5 million, while Industrial sales grew 11.2% to $6.5 million. As a result of a higher business volume, EBITDA was $18.4 million, or 17.3% of sales, versus $12.3 million, or 14.4% of sales, a year earlier. Operating income stood at $12.2 million, or 11.6% of sales, compared with $7.3 million, or 8.6% of sales, last year. Net income totalled $7.7 million, or $0.25 per share, fully diluted, versus $4.4 million, or $0.14 per share, fully diluted, in the prior year. Finally, reflecting improved profitability, cash flow from operations was $16.7 million, compared with $12.3 million in the corresponding period a year ago.

 
Financial highlights
(in thousands of dollars, except per share data)
Quarters ended March 31,   Fiscal years ended March 31,
  2011   2010   2011   2010
Sales 105,994     84,965   357,572   320,354
EBITDA  18,365     12,268   54,830   48,437
Operating income 12,244     7,287   31,220   27,177
Net income 7,724     4,405   18,527   16,003
  Per share - basic ($) 0.26     0.14   0.62   0.52
  Per share - diluted ($) 0.25   0.14   0.61   0.52
Cash flows from operations 16,736     12,250   48,754   45,867
Weighted-average shares outstanding (basic, in '000s) 30,135     30,490   30,112   30,662

FISCAL 2011 RESULTS
Consolidated sales reached $357.6 million, an increase of 11.6% over sales of $320.4 million in fiscal 2010. This growth reflects sales of $45.0 million from Eagle and E2 and a $3.1 million increase in Industrial sales, offset by an $11.7 million negative impact from fluctuations in the value of the Canadian dollar versus the US currency. Currency fluctuations also had a $1.6 million negative impact on gross profit. The impact of currency movements on the Corporation's gross profit is mitigated by the use of forward foreign exchange sales contracts and the natural hedging from the purchase of materials made in US dollars.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") grew 13.2% to $54.8 million, or 15.3% of sales, excluding restructuring charges of $637,000 due to the closure of the Rivière-des-Prairies facility during the year, compared with $48.4 million, or 15.1% of sales, last year. This improvement essentially reflects a more favourable sales mix in the Landing Gear and Aerostructure product lines, as well as higher volume and efficiencies at the Industrial product line. Operating income stood at $31.2 million, or 8.7% of sales, compared with $27.2 million, or 8.5% of sales, last year. Net income totalled $18.5 million, or $0.61 per share, fully diluted, compared with $16.0 million, or $0.52 per share, fully diluted, a year ago. Cash flow from operations amounted to $48.8 million this year, up from $45.9 million last year.

As at March 31, 2011, Héroux-Devtek's balance sheet remained healthy with cash and cash equivalents of $32.9 million and long-term debt, including the current portion, of $99.5 million. As a result, the net debt-to-equity ratio stood at 0.29:1 at the end of the fourth quarter, compared to 0.28:1 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.

"Héroux-Devtek concluded fiscal 2011 with the strongest quarterly results in its history, as all of our product lines solidly contributed to sales and operating income," said President and CEO Gilles Labbé. "Fiscal 2011 was a successful year on many fronts. We broadened our global reach by adding to our customer base and completed a strategic acquisition that met our financial objective of a 10% accretion to profitability. We also reaffirmed our leadership in key markets by winning several multi-year contracts on important programs and, just after year end, announced a new facility in Mexico to further enhance our value proposition to our customers. More importantly, Héroux-Devtek continued to prosper despite the persistent strength in the value of the Canadian dollar driven by a more favourable sales mix and further efficiency gains."

SEGMENT RESULTS
Aerospace sales reached $332.0 million in fiscal 2011, up 11.5% from $297.9 million a year earlier. Sales of Landing Gear products increased 16.9% to $227.9 million, reflecting the contribution of Eagle and E2. Excluding the acquisition, Landing Gear sales decreased 6.2% due to the negative currency impact, lower production rates mainly on the B-777 program and reduced military manufacturing sales. These factors more than offset new business on the A-320, B-787 and Fokker programs, higher sales of business jet products and increased repair and overhaul throughput. Aerostructure product sales rose 1.7% to $103.5 million, as increased business jet sales, the ramp-up of the Bell 429 commercial helicopter program and higher F-16 and F-18 program sales were partially offset by unfavourable currency fluctuations and lower F-22 sales resulting from that program's conclusion. Operating income stood at $27.6 million, or 8.3% of sales in fiscal 2011, up from $24.7 million, or 8.3% of sales in fiscal 2010.

Industrial sales rose 13.7% to $25.6 million in fiscal 2011. This increase reflects solid demand for heavy equipment from the mining industry which more than offset an 11.8% decrease in sales of industrial gas turbine components. Operating income grew approximately 50% to $3.6 million, or 14.1% of sales in fiscal 2011, versus $2.4 million, or 10.8% of sales last year.

RECENT EVENTS
On April 29, 2011, Héroux-Devtek announced the construction of a new manufacturing facility in the Querétaro Aerospace Park in Mexico. The first phase of the project consists of the erection of a 47,200 square-foot facility equipped with state-of-the-art machinery for the production of aerostructure components. Construction begins during the second quarter of calendar year 2011, and the facility should be ready to produce its first components early in calendar year 2012. This first phase represents an investment of up to $20 million by Héroux-Devtek over the next three years.

Also in April 2011, unionized employees at the Longueuil Landing Gear products facility voted in favour of a three-year collective agreement which extends through May 1, 2014. The Longueuil operations consist of two facilities that manufacture as well as repair and overhaul landing gears for the military and commercial markets.

OUTLOOK
Conditions remain favourable in the commercial aerospace market. The large commercial aircraft segment remains strong with production rate increases on leading programs scheduled for calendars 2011, 2012 and 2013, further increases in new orders in early 2011 and solid backlogs. Both Boeing and Airbus are forecasting higher deliveries for calendar 2011. The business jet market continues to see positive signs, such as greater aircraft utilization and fewer used aircraft for sale, but a significant recovery in industry shipments is only expected in calendar 2012. The military aerospace market is stabilizing as governments address their deficits. As to the JSF program, the ramp-up of two variants continues, albeit at a slightly more moderate pace over the near term. In Canada, the Government's decision to purchase 65 JSF aircraft should also benefit the Canadian aerospace industry. Finally, Conditions are favourable in the Corporation's main Industrial products markets. In the power generation industry, leading North American equipment manufacturers have reported increased new orders in the past quarters. Backlogs are also strongly rising for leading heavy equipment manufacturers.

As at March 31, 2011, Héroux-Devtek's funded (firm orders) backlog was $502 million, including the backlog of Eagle and E2, up from $423 million at the beginning of the fiscal year. The backlog also remains well diversified.

"The integration of Eagle and E2 is mostly completed and our priority for fiscal 2012 is to optimize operations and maximize efficiencies by further specialising facilities. This progress, combined with a solid balance sheet and the recent increase in our credit facility, places Héroux-Devtek in a position to consider another strategic acquisition that would complement its product portfolio and its technologies. 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 fiscal year ending March 31, 2012," concluded Mr. Labbé.

CONFERENCE CALL
Héroux-Devtek Inc. will hold a conference call to discuss these results on Friday, May 27, 2011 at 10:00 A.M. Eastern Time. Interested parties can join the call by dialling (514) 807-8791 (Montreal or overseas) or 1-800-731-5319 (elsewhere in North America). The conference call can also be accessed via live webcast at Héroux-Devtek's website, www.herouxdevtek.com, www.newswire.ca or www.q1234.com.

If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-877-289-8525 and entering the passcode 4440226# on your phone. This tape recording will be available on Friday, May 27, 2011 as of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, June 3, 2011.

PROFILE
Héroux-Devtek (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 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; as well as Springfield, Cleveland and Cincinnati, Ohio.

FORWARD-LOOKING STATEMENTS
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.

NON-GAAP MEASURES
Earnings before interest, taxes, depreciation and amortization ("EBITDA") and cash flows from operations are financial measures not prescribed by Canadian generally accepted accounting principles ("GAAP") and are not likely to be comparable to similar measures presented by other issuers. Management, as well as investors, considers these to be useful information to assist them in evaluating the company's profitability, liquidity and ability to generate funds to finance its operations.

Note to readers:  Complete unaudited 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:

From: 


Héroux-Devtek Inc.
Gilles Labbé
President and Chief Executive Officer
Tel.: (450) 679-3330
Contact: 


Héroux-Devtek Inc.
Réal Bélanger
Executive Vice-President and Chief Financial Officer
Tel.: (450) 679-3330


MaisonBrison
Martin Goulet, CFA
Tel.: (514) 731-0000

 

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HEROUX-DEVTEK INC.

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