- Sales increase 4.8% to $82.6 million
- Operating income of $9.8 million, or 11.9% of sales, compared with
$6.4 million, or 8.1% of sales, last year
- Net income increased to $5.7 million, or $0.18 per share, up from
$4.2 million, or $0.13 per share
LONGUEUIL, QC, Aug. 6 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX) today
reported results for the first quarter of fiscal 2009 ended June 30, 2008.
Consolidated sales for the quarter grew by 4.8% to $82.6 million from
$78.8 million for the same period last year. Operating income stood at
$9.8 million, or 11.9% of sales, compared with last year's $6.4 million, or
8.1% of sales, with marked improvements in both the Aerospace and Industrial
segments. The Company reported net income of $5.7 million, or $0.18 per share,
fully diluted, compared with net income of $4.2 million, or $0.13 per share,
fully diluted, a year ago. Last year's first quarter net income was favourably
impacted by $300,000 in tax losses carried forward for which no income tax
benefit had previously been recognized. Cash flow from operations amounted to
$11.7 million this year, up 31.1% from $8.9 million last year.
The stronger Canadian dollar reduced sales in the first quarter by
$6.4 million, or 8.2%, compared with last year and lowered the gross profit
margin by 2.2%. The impact of the stronger Canadian dollar against the US
currency on the Company's gross profit margin, expressed as a percentage of
sales, is mitigated by the use of forward foreign exchange sales contracts and
the natural hedging from the purchase of materials made in US dollars.
"These results reflect superior efforts achieved by all employees to
continuously improve our operations," said Héroux-Devtek President and CEO
Gilles Labbé. "Despite a weaker economy and a high Canadian dollar, our three
divisions increased their sales during the first quarter and, more
importantly, all generated a positive net income. Our profitability was
favourably impacted by a much better sales mix in Aerostructure operations and
by solid sales growth of value-added Industrial Gas Turbine components."
(in thousands of dollars, except per share data)
First quarters ended
Sales 82,571 78,776
Operating income 9,803 6,380
Net income 5,698 4,151
Per share - basic and diluted ($) 0.18 0.13
Cash flows from operations 11,719 8,938
Weighted-average number of shares
outstanding during the periods ('000s) 31,645 31,552
FIRST QUARTER HIGHLIGHTS
- The Landing Gear Division was awarded a contract by Bombardier
Aerospace to provide the landing gear for the newly launched
Learjet 85 business aircraft program. Under the terms of the agreement,
Héroux-Devtek will design, develop, fabricate, assemble, test and
deliver landing gear structure and actuation for the Learjet 85
aircraft. This life-cycle mandate also includes the provision of spare
- The LAHAV Division of Israel Aerospace Industries (IAI) awarded the
Aerostructure Division a ten-year contract to manufacture over
50 aluminum and titanium structural detail components such as spars,
ribs, and fitting assemblies used in IAI's production of F-15 and F-16
structural assemblies. Production will take place in Arlington, Texas.
The first purchase order was released at a value of approximately
$1 million for the remainder of calendar year 2008. Future purchase
orders will be released on an annual basis, and the total contract
value will possibly exceed $10 to $12 million.
- The Company concluded the increase of its Credit Facilities to
$125 million. These Credit Facilities, which mature in October 2011,
allow Héroux-Devtek and its subsidiaries to borrow, either in Canadian
or US currency equivalent, for working capital, capital expenditures
and other general corporate purposes including acquisitions.
- Héroux-Devtek successfully renewed two long-term collective agreements
for its Landing Gear Division. First, 140 employees at the Laval,
Québec facility accepted a new four-year contract which extends through
December 31, 2011. Second, 315 employees at the Longueuil, Québec plant
voted in favour of a three-year collective agreement which extends
through April 30, 2011. All unionized facilities now have collective
agreements in place for at least two fiscal years.
Aerospace sales for the first quarter rose 2.9% to $74.0 million compared
with $71.9 million last year. Sales of the Landing Gear Division increased by
0.7% to $46.2 million reflecting increased large commercial and helicopter
sales offset by a reduced throughput for military repair and overall work and
the negative impact of the stronger Canadian dollar on US-denominated sales.
Aerostructure sales grew 7.3% to $27.5 million driven by increased military
sales to civil customers, mainly on the F-16 program, including kit sales for
the same aircraft.
Operating income was $8.4 million, or 11.4% of sales, compared with
$6.4 million, or 8.9% of sales, in the first quarter of last year, essentially
reflecting higher sales and a better sales mix at the Aerostructure Division.
Industrial sales totalled $8.6 million for the first quarter of fiscal
2009, representing an increase of 25.1% over sales of $6.9 million in the
first quarter of fiscal 2008. Industrial Gas Turbine sales continued their
positive trend with a 15.4% year-over-year improvement while sales to the wind
energy and heavy industry markets increased in total by $1.2 million.
Operating income was $1.4 million, or 16.3% of sales, for the first
quarter of this year compared with an operating loss of $0.1 million a year
earlier reflecting higher sales, better margins stemming from increased sales
of value-added components, and continued operational improvement.
"As highlighted by our recently announced contracts, our principal markets
remain in growth mode. However, we will continue to monitor the risks
associated with a weaker U.S. economy and high crude oil price on the
commercial aerospace market as well as with the possibility of a new U.S.
administration which may reduce funding of US military budgets. Given solid
customer relationships and a strong backlog, Héroux-Devtek is well positioned
in all its key markets, but we must make further productivity gains to
maintain our global competitiveness in light of the continued strength of the
Canadian dollar. We continue to expect achieving approximately 10% internal
sales growth in fiscal 2009, although it is 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," said
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.
Héroux-Devtek Inc. will hold a conference call to discuss these results on
Wednesday, August 6 at 3:00 P.M. Eastern Time. Interested parties can join the
call by dialling (416) 644-3431 (Toronto or overseas) or 1-800-590-1508
(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
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 21278815#
on your phone. This tape recording will be available on Wednesday, August 6,
2008 as of 5:00 PM Eastern Time until 11:59 PM Eastern Time on Wednesday,
August 13, 2008.
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 70% 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
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
Note to readers: Complete unaudited interim consolidated financial
statements and Management's Discussion & Analysis are
available on Héroux-Devtek's website at
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