Héroux-Devtek reports record results in fiscal 2009



    
    - Sales for the year increased 9.7% to $337.6 million
    - Operating income grew 24.1% to $34.5 million or 10.2% of sales
    - Net income of $21.4 million or $0.67 per share fully diluted
    - Healthy balance sheet with nearly $40 million in cash and cash
      equivalents
    

    LONGUEUIL, QC, May 29 /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,
2009. The Company concluded fiscal 2009 with record sales and net income, as
well as a solid balance sheet.

    FISCAL 2009 RESULTS

    Sales for fiscal 2009 amounted to $337.6 million, an increase of 9.7%
over sales of $307.9 million in fiscal 2008. Operating income increased 24.1%
over last year to reach $34.5 million, or 10.2% of sales, compared with $27.8
million, or 9.0% of sales, last year. Net income in fiscal 2009 totalled $21.4
million, or $0.67 per share, fully diluted, up from $19.0 million, or $0.59
per share, fully diluted, in fiscal 2008. When excluding a $2.4 million income
tax benefits due to the utilization of tax losses carried forward and a $0.9
million favourable impact coming from the forgiveness of a loan, net income
would have increased from $15.7 million to $21.4 million or 36.3%. Cash flows
from operations amounted to $48.0 million, up 26.9% from $37.8 million a year
earlier.
    Fluctuations in the value of the Canadian dollar versus the US currency
increased fiscal 2009 sales by $6.9 million, or 2.2%, compared with last year.
In spite of this favourable variance, currency fluctuations had a 0.3%
negative impact on gross profit, compared with last year and expressed as a
percentage of sales, considering the Company's hedging policy. The impact of
currency movements on the Company's gross profit margin, expressed as a
percentage of sales, is mitigated by the use of forward foreign exchange sales
contracts and the natural hedging from the purchase of materials made in US
dollars.

    
    -------------------------------------------------------------------------
    Financial highlights                  Quarters ended  Fiscal years ended
    (in thousands of dollars,                March 31,         March 31,
     except per share data)               2009      2008      2009      2008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Sales                               92,146    83,088   337,635   307,882
    Operating income                    10,020     9,627    34,453    27,768
    Net income                           6,431     6,474    21,363    19,019
    Per share - basic ($)                 0.20      0.20      0.68      0.60
    Per share - diluted ($)               0.20      0.20      0.67      0.59
    Cash flows from operations          14,056    11,966    48,042    37,848
    Weighted-average shares
     outst. (basic, in '000s)           31,391    31,636    31,583    31,610
    -------------------------------------------------------------------------
    

    As at March 31, 2009, Héroux-Devtek's balance sheet remained healthy with
cash and cash equivalents of $39.8 million and long-term debt, including the
current portion, of $87.3 million. As a result, the net debt-to-equity ratio
stood at 0.24:1 at the end of fiscal 2009, compared with 0.29:1 one year
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.
    "Fiscal 2009 was a very successful year for Héroux-Devtek, as all
divisions further improved their market position in spite of rapidly
deteriorating business conditions in certain segments," said Héroux-Devtek
President and CEO, Gilles Labbé. "The Landing Gear Division won two
large-scale design and development mandates as well as important aftermarket
contracts, the Aerostructure Division further strengthened its relationship
with key customers through the attribution of additional orders on strategic
programs, and the Gas Turbine Components Division significantly improved its
profitability. We concluded the year in a strong financial position and with a
solid backlog, well diversified among customers and market segments."

    FOURTH QUARTER RESULTS

    For the fourth quarter ended March 31, 2009, sales grew 10.9% to $92.1
million, versus $83.1 million last year. Operating income was essentially
stable at $10.0 million or 10.9% of sales, compared with $9.6 million or 11.6%
of sales a year earlier. Last year's fourth quarter operating income included
the forgiveness of a $1.3 million non-interest bearing loan accounted for as a
reduction of cost of sales, which increased the operating margin by 1.5%. Net
income amounted to $6.4 million, or $0.20 per share fully diluted, in the
fourth quarter of 2009, versus $6.5 million or $0.20 per share, fully diluted,
a year ago. Net income for the fourth quarter of fiscal 2008 benefitted from
$0.8 million, or $0.03 per share, fully diluted, in tax loss utilization,
while the net impact of writing off the non-interest bearing loan also
increased diluted earnings per share by $0.03. Cash flows from operations were
$14.1 million, an increase of 17.5% over $12.0 million a year ago.

    RECENT EVENTS

    On April 28, 2009, Lockheed Martin Aeronautics Company awarded the
Aerostructure Division a multi-year contract to manufacture complex structural
components and assemblies for the outer wing, inner wing, and forward fuselage
for all three F-35 Lightning II (JSF) aircraft variants in support of Low Rate
Initial Production (LRIP) lots 3 through 7 over the next five years. Based on
best estimated quantity production rates, the value of the contract is
estimated to be in excess of Cdn$50 million and is in addition to a Cdn$135
million, multi-year contract awarded in 2007 for forged aluminum bulkheads and
other complex components.

    SECTOR RESULTS

    Aerospace sales for fiscal 2009 amounted to $299.4 million, an increase
of 7.3% over sales of $278.9 million in fiscal 2008. Sales of the Landing Gear
Division grew 4.9% to $190.7 million resulting from greater volume in the
business jet and helicopter markets, as well as improved throughput on repair
and overhaul work, partially offset by the labour strike at Boeing, the
unfavourable exchange rates considering the Company's hedging position and the
completion of a major large commercial retrofit program late in fiscal 2008.
Aerostructure sales grew 13.2% to $107.6 million driven by schedule catch-up
on military sales, the ramp up of the JSF program and favourable currency
movements during the year, somewhat offset by lower sales to the large
commercial aerospace market. Fourth quarter sales for the Aerospace segment
increased 8.8% to $82.3 million.
    The Aerospace segment operating income for fiscal 2009 was $29.3 million,
up from $27.4 million a year earlier. As a percentage of sales, it reached
9.8% in fiscal 2009 and 2008. Despite higher sales, the currency translation
loss on net monetary items mainly at the Landing Gear Division more than
offset this favourable variance. In the fourth quarter, operating income
amounted to $9.0 million compared with $9.3 million last year, reflecting the
favourable effect, in fiscal 2008, of the aforementioned loan forgiveness.
    Industrial sales totalled $38.2 million in fiscal 2009, up 32.0% from
$29.0 million last year. All major market segments, namely gas turbines, wind
energy and heavy industry markets, experienced double-digit revenue growth.
Industrial sales for the fourth quarter of fiscal 2009 increased 36.5% in
comparison with a year ago, to $9.9 million.
    Operating income for the Industrial segment amounted to $5.2 million, or
13.5% of sales in fiscal 2009, versus $0.4 million or 1.4% of sales, last
year. This improvement mirrors the increase in value-added sales to the
industrial gas turbine and wind energy markets as well as better overall
production efficiency and sales mix. In the fourth quarter of fiscal 2009,
operating income reached $0.7 million compared with $0.3 million last year.

    OUTLOOK

    In the face of mounting economic uncertainty, the volume of order intake
for commercial aircraft manufacturers has been reduced in recent months. While
backlogs remain sound, existing orders can be deferred or cancelled which
could lead to further reductions in production schedules. The military
aerospace market remains solid with major programs progressing as expected,
particularly the JSF program, for which the U.S. Department of Defense
recently recommended increasing the number of aircraft to be purchased
throughout the U.S. government's 2010 fiscal year. Still, the new U.S.
administration may reduce funding of future military budgets. In the power
generation industry, the industrial gas turbine and wind energy markets will
be impacted over the short-term by the financial crisis given the significant
capital requirements of these projects and the infrastructure issues
associated with the distribution of power from these new energy sources.
    "The current economic environment will unquestionably slow the activity
of some business segments. However, our achievements of the past year and the
measures we are taking to continue to reduce costs and improve operating
efficiency have positioned us strongly for the coming years. Although
Héroux-Devtek can count on strong customer relationships and a solid backlog,
we are not anticipating any significant sales growth for fiscal 2010
considering the prevailing economic uncertainty," concluded Mr. Labbé.

    CONFERENCE CALL

    Héroux-Devtek Inc. will hold a conference call to discuss these results
on Friday, May 29, 2009 at 10 AM (ET). Interested parties can join the call by
dialling 416-644-3417 (Toronto or overseas) or 1-800-731-6941 (elsewhere in
North America). The conference call can also be accessed via live webcast at
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
21306169# on your phone. This tape recording will be available on Friday, May
29, 2009, as of 12:00 PM until 11:59 PM on Friday, June 5, 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 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.

    Forward-looking statement

    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 consolidated financial statements and Management's
Discussion & Analysis of Financial Position and Operating Results 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; Héroux-Devtek Inc., Réal Bélanger,
Executive Vice-President and Chief Financial Officer, (450) 679-3330;
MaisonBrison, Martin Goulet, CFA, (514) 731-0000

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