Héroux-Devtek reports strong first quarter results

    LONGUEUIL, QC, Aug. 1 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX) today
reported results for the first quarter of fiscal 2008, which ended June 30,
2007. Consolidated sales for the quarter grew by 18.8% to $78.8 million from
$66.3 million for the same period last year. Reflecting higher sales volume
and better margins on certain contracts, operating income of $6.4 million, or
8.1% of sales, was significantly higher than last year's $1.5 million, or 2.3%
of sales, with marked improvements in both the Aerospace and Industrial
segments. The Company reported net income of $4.2 million, or earnings per
share of $0.13 on a fully diluted basis, for the first quarter compared with
net income of $0.7 million, or earnings per share of $0.02, fully diluted, for
the first quarter of the preceding fiscal year. Net income for the first
quarter this year was also favourably impacted by a $300,000 income tax
benefits from the utilization of tax losses carried forward for which no
income tax benefit had been recognized in prior years.
    The stronger Canadian dollar reduced sales in the first quarter by
$0.9 million while it had basically no major impact on the gross profit
margin. The Company uses forward foreign exchange contracts to mitigate the
risks related to the Canadian currency fluctuations towards the US currency.
    "These results are a testimony to the tremendous efforts accomplished by
all members of our organization," said Héroux-Devtek President and CEO Gilles
Labbé. "This is our seventh consecutive profitable quarter and we are now
reaping the benefits from the various initiatives undertaken in previous years
to streamline and improve our operations. Favourable market conditions in both
civil and military aerospace are also playing an important role in this
substantial improvement. We are even more satisfied with our operating margin
of 8.1% as it was achieved in spite of the negative impact on margins
associated with the development phase of the Joint Strike Fighter (JSF)

    Financial highlights
    (in thousands of dollars, except per share data)
                                                        First quarters ended
                                                                June 30
                                                            2007        2006
    Sales                                                 78,776      66,317
    Operating income                                       6,380       1,525
    Net income                                             4,151         688
      Per share - basic and diluted ($)                     0.13        0.02
    Cash flow from operations                              8,938       4,860
    Weighted-average number of shares outstanding
     during the periods                               31,551,999  31,492,855


    - The Company's Landing Gear Division was awarded a contract by Sikorsky
      Aircraft Corporation to participate in the CH-53K Heavy Lift Helicopter
      program. Under the terms of the agreement, Héroux-Devtek will design,
      develop, fabricate, assemble, test and deliver the landing gears and
      tail bumper assemblies for the CH-53K Heavy Lift's Systems Design and
      Development (SDD) phase which includes the production of 8 systems. The
      Production phase will start in 2013 and could lead to 156 deliveries to
      the U.S. Marine Corps under current program expectations. Orders for
      this phase will be awarded in a separate contract. Total revenues for
      Héroux-Devtek for the two phases could exceed $95 million.


    Aerospace sales for the first quarter rose by 18.8% to $71.7 million from
$60.4 million for the first quarter last year. The increase was primarily due
to Aerostructure sales, which grew by $7.3 million, to $25.6 million, compared
with last year reflecting increased sales for commercial turboprops and
military electronic enclosures, as well as increased deliveries on the JSF
development program. Landing Gear sales increased by $5.2 million to
$45.9 million, as a result of continued growth in sales for large commercial
aircraft and business jets. As stated in earlier periods, the Company has
essentially exited the aircraft engine components market, which explains the
$0.2 million in sales for this quarter.
    Operating income was $6.4 million, or 9.0% of sales, compared with
$2.2 million, or 3.6% of sales, in the first quarter of last year, essentially
reflecting higher sales and improved profit margins at both the Landing Gear
and Aerostructure divisions.
    Industrial sales for the quarter totalled $7.1 million for the first
quarter this year, representing an increase of 18.8% over the $6.0 million
realized during the same period a year ago. The positive trend in gas turbine
sales, which started in the second quarter of fiscal 2007, continued during
the first quarter of fiscal 2008 and improved sales by $1.2 million.
    More importantly, the operating loss was only $0.1 million in the first
quarter of this year compared with a loss of $0.6 million a year earlier
reflecting better margins stemming from continued operational improvements and
increased business volume.


    The implementation of the new accounting standards, at April 1st, 2007,
relating to the new financial instruments rules reduced the Company's net
income for the first quarter this year by $52,000 while it had no impact on
cash flows from.


    "The solid order bookings enjoyed by large commercial aircraft
manufacturers bodes well for Héroux-Devtek. In addition, with the power
generation market further improving and the military aerospace market
remaining solid, business activities at both our Aerospace and Industrial
segments should pursue their upward trends. It is, however, important to keep
in mind that our second quarter has traditionally been a somewhat slower
period owing to seasonal factors, such as plant shutdowns and summer
vacations. Nevertheless, we continue to expect achieving approximately 10%
internal sales growth in fiscal 2008 as well as further profitability gains
from the lean manufacturing initiatives implemented in recent years. 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", said Mr. Labbé.


    Héroux-Devtek Inc. will hold a conference call to discuss these results on
Thursday, August 2 at 3:00 P.M. Eastern Time. Interested parties can join the
call by dialling (514) 807-8791 (Montreal or overseas) or 1-800-796-7558
(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 21240879#
on your phone. This tape recording will be available on Thursday, August 2,
2007 as of 5:00 PM Eastern Time until 11:59 PM Eastern Time on Thursday,
August 9, 2007.


    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

    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

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