Héroux-Devtek reports first quarter results



    
    Annual meeting of shareholders later this morning

    - Sales of $82.2 million compared to $82.6 million last year
    - Operating income of $7.5 million, versus $9.8 million last year
    - Net income of $4.5 million, or $0.15 per share fully diluted
    - Funded backlog of $468 million
    

    LONGUEUIL, QC, Aug. 6 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), a
leading Canadian manufacturer of aerospace and industrial products, today
reported results for the first quarter of fiscal 2010 ended June 30, 2009.
Unless otherwise indicated, all amounts are in Canadian dollars.
    Consolidated sales for the quarter were $82.2 million, versus $82.6
million for the same period last year. Operating income stood at $7.5 million,
or 9.1% of sales, compared with $9.8 million, or 11.9% of sales, a year ago.
The Company reported net income of $4.5 million, or $0.15 per share, fully
diluted, compared with net income of $5.7 million, or $0.18 per share, fully
diluted, a year ago. Cash flow from operations amounted to $11.8 million this
year, up 0.9% from $11.7 million last year. While the fluctuations in the
value of the Canadian dollar versus the US currency increased sales in the
first quarter by $7.3 million or 8.8%, compared with last year, it had
basically no impact on gross profit in dollars but a negative impact of 1.3%
on the gross profit margin, expressed as a percentage of sales. The impact of
currency movements on the Company'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.
    "As anticipated, results reflect lower shipments in the commercial
aerospace and industrial markets offset by the solid performance of our
military aerospace operations," said Héroux-Devtek President and CEO Gilles
Labbé. "Lower profitability mirrors decelerated production schedules as well
as a favourable aftermarket sales mix in the first quarter a year ago. We are
proactively implementing cost reductions measures to reflect a more difficult
environment. However, time schedules have been reduced at some facilities
while our three main business units in Longueuil, Kitchener and Texas have not
been significantly affected."

    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial Highlights
    (in thousands of dollars, except per share data)
    -------------------------------------------------------------------------
                                                        First quarters ended
                                                               June 30
                                                          2009          2008
                                                       ----------------------
    Sales                                               82,160        82,571
    Operating income                                     7,471         9,803
    Net income                                           4,542         5,698
      Per share - basic and diluted ($)                   0.15          0.18
    Cash flow from operations                           11,830        11,719
    Weighted-average shares outstanding ('000s)         30,946        31,645
    -------------------------------------------------------------------------
    

    As at June 30, 2009, Héroux-Devtek's balance sheet remained healthy with
cash and cash equivalents of $15.2 million and long-term debt, including the
current portion, of $87.0 million. As a result, the net debt-to-equity ratio
stood at 0.35:1 at the end of the first quarter, compared with 0.24:1 three
months earlier. The increase stems from working capital requirements that
reduced cash and cash equivalents during the quarter. 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.
    During the first quarter, the Company repurchased 407,000 common shares
at an average cost of $4.51 per share under its normal course issuer bid
program. This program allows Héroux-Devtek to repurchase a maximum of 1.5
million shares until November 23, 2009. As at June 30, 2009, the Company had
repurchased a total of 941,000 shares.

    FIRST QUARTER HIGHLIGHTS

    The Aerostructure Division was awarded a multi-year contract by Lockheed
Martin Aeronautics Company to fabricate, assemble and deliver complex
structural components and assemblies for the outer wing, inner wing, and
forward fuselage for all three F-35 Lightning II aircraft (JSF) variants in
support of Low Rate Initial Production lots 3 through 7 over the next five
years. This contract begins in the second half of calendar year 2009 and
continues through the first half of 2014, at which time the JSF program enters
its first multi-year procurement phase. Based on best estimated quantity
production rates, the value of the contract is estimated to be in excess of
$50 million. This agreement is in addition to a $135-million, multi-year
contract awarded in 2007 for forged aluminum bulkheads and other complex
components and confirms Héroux-Devtek's status as the largest JSF
aerostructure supplier for Lockheed Martin.
    Noranco Inc. awarded the Aerostructure Division a multi-year contract
related to electronic chassis components for the JSF aircraft. The Magtron
business unit will perform operations, including brazing, heat treatment, and
testing of complex avionic housings for all three JSF variants over the next
eight years, beginning in calendar 2010. Based on best estimated quantity
production rates, the value of the contract is estimated to be in excess of
$10 million. This contract expands Héroux-Devtek's reach on the JSF program
across all three sites of the Aerostructure Division.

    SECTOR RESULTS

    Aerospace sales for the first quarter rose 1.6% to $75.2 million compared
with $74.0 million last year. Sales of the Landing Gear Division increased by
4.2% to $48.1 million reflecting higher military sales and favourable currency
fluctuations, partially offset by the deceleration of production schedules for
business jet, helicopter and, to a lesser extent, large commercial aircraft
programs. Aerostructure sales declined 2.7% to $26.7 million, as greater sales
from the ramp-up of the JSF program and favourable currency movements were
more than offset by reduced aftermarket sales as well as by reduced business
jet and regional jet activity.
    Operating income was $6.7 million, or 8.9% of sales, compared with $8.4
million, or 11.4% of sales, in the first quarter of last year, essentially
reflecting a less favourable sales mix at the Aerostructure Division and the
negative impact of reduced production schedules in the commercial aerospace
market.
    Industrial sales totalled $7.0 million for the first quarter of fiscal
2010, representing a decrease of 18.7% over sales of $8.6 million in the first
quarter of fiscal 2009. As a result of a weaker economy, the power generation
industry, including wind energy, and the heavy equipment industry are
experiencing softer market conditions.
    Reflecting a lower sales volume, operating income stood at $0.8 million,
or 11.4% of sales, for the first quarter of this year compared with $1.4
million, or 16.3% of sales, last year. Operating income as a percentage of
sales still remains healthy by historical standards.

    OUTLOOK

    The commercial aerospace market remains affected by persistent economic
uncertainty. Given reduced levels of new orders, as well as cancellations or
deferrals, production schedules are being reduced in the business jet,
helicopter and, to a lesser extent, large commercial aircraft segment. The
military aerospace market remains solid with major programs progressing as
expected, particularly the JSF program. Still, the new US administration may
reduce funding of subsequent military budgets. The power generation industry
is impacted over the short-term by the financial crisis given the significant
capital requirements of these projects, although wind energy still holds
considerable potential over the mid-term.
    "Decelerations of production schedules as well as order cancellations and
push-outs in the commercial aerospace market have reduced Héroux-Devtek's
funded backlog to $468 million as at June 30, 2009, down from $485 million
three months earlier. Despite strong customer relationships and a backlog that
nevertheless remains solid, we are not anticipating any significant sales
growth for fiscal 2010 considering the prevailing economic environment. It is
also important to remember that our second quarter has traditionally been a
somewhat slower period owing to seasonal factors, such as plant shutdowns and
summer vacations. In light of the Canadian dollar's recent volatility, we will
seek further productivity gains and continue to streamline our cost base to
remain globally competitive," concluded Mr. Labbé.

    ANNUAL MEETING OF SHAREHOLDERS

    The Company is holding its Annual Meeting of Shareholders this morning at
11:00 a.m. in the Salon Pierre de Coubertin of the Omni Mont-Royal Hotel, 1050
Sherbrooke Street West, Montréal, Québec.

    CONFERENCE CALL

    Héroux-Devtek Inc. will hold a conference call to discuss these results
on Thursday, August 6 at 3:00 P.M. Eastern Time. Interested parties can join
the call by dialling (416) 915-5649 (Toronto or overseas) or 1-800-814-3911
(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
21311652# on your phone. This tape recording will be available on Thursday,
August 6, 2009 as of 5:00 PM Eastern Time until 11:59 PM Eastern Time on
Thursday, August 13, 2009.

    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 (including spare parts, repair and
overhaul services) and airframe structural components. The Company also
supplies the Industrial segment with large components for power generation
equipment and precision components for other industrial applications.
Approximately 65% of the Company's sales are outside Canada, mainly in the
United States. The Company's head office is located in Longueuil, Québec with
facilities in the Greater Montreal area (Longueuil, Dorval, Laval and
Rivière-des-Prairies); Kitchener and Toronto, Ontario; Arlington, Texas and
Cincinnati, Ohio.
    Héroux-Devtek was recognized, in the July/August edition of The Globe &
Mail's Report on Business magazine, as the fourth fastest growing company in
Canada measured in terms of net earnings growth between 2003 and 2008.

    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 Company. 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 Company'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.

    
    Note to readers: Complete unaudited interim consolidated financial
                     statements and Management's Discussion & Analysis are
                     available on Héroux-Devtek's website at
                     www.herouxdevtek.com.
    




For further information:

For further information: Héroux-Devtek Inc.: Gilles Labbé, President and
Chief Executive Officer, (450) 679-3330; Réal Bélanger, Executive
Vice-President and Chief Financial Officer, (450) 679-3330; MaisonBrison:
Martin Goulet, CFA, (514) 731-0000

Organization Profile

Héroux-Devtek Inc.

More on this organization

MaisonBrison Communications

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890