Héroux-Devtek reports solid second quarter results



    KITCHENER, ON, Oct. 31 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), a
leading Canadian manufacturer of aerospace and industrial products, today
reported its results for the second quarter of fiscal 2008 ended September 30,
2007. Sales for the period reached $69.8 million, an increase of 11.3% over
sales of $62.7 million in the same quarter a year earlier. Operating income
for the second quarter stood at $5.2 million, compared with $2.3 million last
year, resulting from improved productivity and higher overall business
activity. As a result, second quarter net income was $3.1 million, or
$0.10 per share, fully diluted, compared with $1.5 million, or $0.05 per
share, fully diluted, for the same quarter last year. Cash flows from
operations amounted to $8.3 million, up 33.6% from $6.2 million in the second
quarter a year ago.
    For the first six months of the current fiscal year, sales increased by
15.2% to reach $148.5 million, versus $129.0 million last year. Operating
income of $11.6 million compares favourably with $3.8 million a year earlier.
Net income amounted to $7.3 million, or $0.23 per share, fully diluted, versus
$2.2 million, or $0.07 per share, fully diluted, a year ago. Finally, cash
flows from operations stood at $17.2 million, an increase of 55.7% over
$11.1 million a year ago.
    The stronger Canadian dollar reduced sales in the second quarter by
$3.4 million, or 5.4%, in comparison with last year and lowered the gross
profit margin by 0.9%. Year-to-date, the stronger Canadian dollar reduced
sales by $4.9 million, or 3.8%, compared with last year. The Company uses
forward foreign exchange contracts to mitigate the risks related to the
Canadian currency fluctuations towards the US currency.

    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial highlights
    (in thousands of dollars, except per share data)
    -------------------------------------------------------------------------
                                      Quarters ended        Six months ended
                                        September 30,           September 30,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Sales                         69,758      62,669     148,534     128,986
    Operating income               5,200       2,313      11,580       3,838
    Net income                     3,107       1,496       7,258       2,184
      Per share - basic and
       diluted ($)                  0.10        0.05        0.23        0.07
    Cash flow from
     operations                    8,285       6,200      17,223      11,060
    Weighted-average shares
     outstanding (basic)      31,622,268  31,509,778  31,587,133  31,501,315
    -------------------------------------------------------------------------

    "We are pleased with our performance in the second quarter, which
represents our eighth consecutive profitable quarter," said Héroux-Devtek
President and CEO, Gilles Labbé. "Business activity was solid in all our
markets, including the power generation sector, despite the normal seasonal
slowdown associated with plant shutdowns and summer vacations. We are
particularly satisfied with profitability improvement in our business
segments, a direct consequence of the hard work and dedication of all
employees of Héroux-Devtek."
    During the quarter, Héroux-Devtek was awarded contracts totaling
$14.5 million to supply landing gear components mainly for the C-130, C-5,
F-16, KC-135, E3 and B-1B aircraft, essentially from the United States Air
Force. These new orders are in addition to similar contracts announced in
October 2006. Production will be spread out over the next four years, with
deliveries expected to start in fiscal year 2009.

    SECTOR RESULTS

    Aerospace sales for the second quarter totaled $62.1 million, representing
an increase of 10.4% over sales of $56.2 million for the same quarter last
year. Sales of the Landing Gear division grew by 6.5% from the same quarter a
year ago to $41.1 million, mainly reflecting continued growth in large civil
aircraft and business jet sales. Aerostructure sales reached $20.5 million, up
22.8% over last year owing to greater shipments for the Joint Strike Fighter
(JSF) and F-16 programs and, to a lesser degree, the schedule recovery of
orders for a commercial aircraft program. Aircraft engine component sales of
$0.5 million represent residual business following the decision to exit this
market based on a mutual agreement with the customer.
    Operating income reached $5.4 million, or 8.6% of sales, compared with
$3.1 million, or 5.4% of sales, in the same period last year. The improvement
stems from higher sales, and improved performance at the Aerostructure
division as well as from benefits of lean manufacturing initiatives
implemented in preceding years in all divisions. The reduced military repair
and overhaul sales, at the Landing Gear division, partially offset these
improvements.
    Mainly reflecting the same factors, year-to-date sales for the Aerospace
segment increased 15.1% to $134.2 million while operating income stood at
$11.8 million or 8.8% of sales, $6.6 million better than the $5.2 million or
4.5% of sales reported for the first six months of last year.
    Industrial sales for the second quarter amounted to $7.7 million, up 18.9%
from $6.5 million last year. The recovery in Industrial Gas Turbine sales
continues to gain momentum with a year-over-year sales increase of
$0.6 million in the second quarter to $3.9 million. The improvement in the
industrial segment with a reduced operating loss of only $0.2 million,
compared with an operating loss of $0.7 million in the second quarter of last
year, is owed to a greater level of business activity and further operational
improvements.
    Driven by the improving performance of Industrial Gas Turbine sales,
Industrial sales for the first six months of this fiscal year increased 15.4%
to $14.3 million when compared with the first six months a year earlier.
Operating loss stood at $0.2 million compared with a loss of $1.4 million for
the first six months of last year.

    CHANGES IN ACCOUNTING POLICIES

    The implementation of the new accounting standards, at April 1, 2007,
relating to the new financial instruments rules reduced the Company's net
income by $36,000 in the second quarter and $88,000 for the first six months
this year, but it had no impact on cash flows from operations.

    OUTLOOK

    The order books of large commercial aircraft manufacturers continue to be
very strong, a situation conducive to further business opportunities for
suppliers such as Héroux-Devtek. The military aerospace market also remains
solid. Meanwhile, the power generation industry continues to improve, which
should help restore operating profitability in the Industrial segment.
    "Given our solid backlog, we continue to expect achieving approximately
10% internal sales growth in fiscal 2008. In light of the continued strength
of the Canadian dollar toward the US currency, we must continue to improve or
make productivity gains to maintain our competitiveness. Our significant
capital expenditure investment plan to support the expected internal sales
growth along with our additional training programs for employees should both
contribute to improvements in productivity" concluded Mr. Labbé.

    CONFERENCE CALL

    Héroux-Devtek Inc. will hold a conference call to discuss these results
tomorrow, November 1, at 10 AM (ET). Interested parties can join the call by
dialling 514-807-8791 (Montreal or overseas) or 1-800-732-1073 (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 21250687#
on your phone. This tape recording will be available on Thursday, November 1,
2007, as of 12:00 PM until 11:59 PM on Thursday, November 8, 2007.

    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 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
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 interim 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; 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