- Sales from continuing operations of $61.7 million, compared with $62.0 million last year
- Net income from continuing operations of $3.3 million, or $0.11 per diluted share, versus $4.5 million or $0.15 per diluted share last year
- Cash and cash equivalents of $91.4 million following the special cash distribution to shareholders
- Funded backlog of $376 million
- Expect the fourth quarter to yield a strong sales volume
LONGUEUIL, QC, Feb. 8, 2013 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), ("Héroux-Devtek" or the "Corporation"), a leading Canadian manufacturer of aerospace products, today reported its results for the third quarter of fiscal 2013 ended December 31, 2012. Unless otherwise indicated, all amounts are in Canadian dollars.
These results reflect the sale of substantially all of the Corporation's Aerostructure and Industrial Products operations (the "sale transaction") on August 31, 2012 to Precision Castparts Corp. (NYSE: PCP) for proceeds of $233.4 million, net of related taxes and related costs. Héroux-Devtek retained all of its Landing Gear product line and the Magtron operations in Toronto. As a result of the sale transaction, the Corporation recorded a gain on the disposal of discontinued operations of $108.4 million, net of related taxes, in the nine-month period ended December 31, 2012, including a $1.3 million gain in the third quarter resulting from favourable adjustments on certain transaction related costs.
|FINANCIAL HIGHLIGHTS||Quarters ended December 31,||Nine months ended December 31,|
|(in thousands of dollars, except per share data)||2012||2011||2012||2011|
|Sales from continuing operations||61,742||61,988||183,206||178,744|
|EBITDA from continuing operations||7,654||10,240||22,879||26,036|
|Operating income from continuing operations||4,692||6,743||13,573||15,743|
|Net income from continuing operations||3,296||4,505||9,045||10,273|
|Per share - diluted ($)||0.11||0.15||0.29||0.34|
|Net income from discontinued operations||1,289||2,405||114,547||7,246|
|Per share - diluted ($)||0.15||0.23||4.00||0.57|
|Weighted-average shares outstanding (diluted, in '000s)||31,339||30,665||30,887||30,660|
"Héroux-Devtek continues to benefit from increased production rates on a number of large commercial aircraft and business jet programs on which it has significant content. Although some military orders were pushed out during the third quarter, we are well positioned on leading programs as evidenced by the award, in November 2012, of an important multi-year contract from The Boeing Company to manufacture the landing gear for all H-47 Chinook helicopters aircraft destined to the U.S. Army, beginning in the first half of calendar 2014. Our financial position remains solid, enabling us to consider investments in growth initiatives and in strategic acquisitions in our core landing gear market," said Gilles Labbé, President and CEO of Héroux-Devtek.
THIRD QUARTER RESULTS
Consolidated sales from continuing operations for the third quarter were $61.7 million, relatively stable from sales of $62.0 million for the same period last year. Sales to the commercial aerospace market rose 21.5% to $27.6 million led by higher production rates for large commercial aircraft, mainly the B-777 and B-787 programs, and certain business jet programs, as well as by increased aftermarket sales for regional aircraft programs and for Bombardier's LJ-45 and CL-415 programs. Sales to the military aerospace market decreased 13.1% to $34.1 million essentially due to order push-outs on certain programs, lower aftermarket sales resulting from delayed deliveries that are expected to be made up in the fourth quarter, as well as lower electronic enclosure and cabinet military sales at Magtron.
Fluctuations in the value of the Canadian dollar versus the US currency decreased third quarter sales by $1.0 million, or 1.7%, compared with last year, and reduced gross profit by $0.3 million, or 0.2% of sales. The impact of currency movements on the Corporation'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 U.S. dollars.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") from continuing operations were $7.7 million, or 12.4% of sales, compared with $10.2 million, or 16.5% of sales, last year. This variation mainly reflects the under-absorption of manufacturing overhead costs from lower production volume resulting from order push-outs and delayed deliveries, as well as higher research and development expenses for the development of new technologies and manufacturing improvements for landing gear systems. Operating income from continuing operations stood at $4.7 million, or 7.6% of sales, versus $6.7 million, or 10.9% of sales, last year.
Net income from continuing operations amounted to $3.3 million, or $0.11 per diluted share, in the third quarter of fiscal 2013, versus $4.5 million, or $0.15 per diluted share, a year ago. Given the aforementioned adjustment to the gain on discontinued operations, net income reached $4.6 million, or $0.15 per diluted share, in the third quarter of fiscal 2013.
SOLID BALANCE SHEET
Reflecting the special distribution paid to shareholders in December 2012, Héroux-Devtek had cash and cash equivalents of $91.4 million, as at December 31, 2012. At that same date, total debt was $60.8 million, including $21.9 million drawn against the Credit Facility, but excluding net deferred financing costs. As a result, the Corporation's net cash position stood at $30.6 million at the end of the third quarter of fiscal 2013.
NINE-MONTH PERIOD RESULTS
For the first nine months of this fiscal year, consolidated sales from continuing operations amounted to $183.2 million, up 2.5% from $178.7 million a year earlier. Currency variations had a $1.3 million negative impact on sales in the first nine months of fiscal 2013. EBITDA from continuing operations totalled $22.9 million, or 12.5% of sales, versus $26.0 million, or 14.6% of sales, a year earlier, due to the under-absorption of manufacturing overhead costs, certain non-recurring costs associated with the development of a new landing gear system program and an increase in stock-based compensation expenses. Operating income from continuing operations reached $13.6 million, or 7.4% of sales, compared with $15.7 million, or 8.8% of sales, last year. Net income from continuing operations totalled $9.0 million, or $0.29 per diluted share, versus $10.3 million, or $0.34 per diluted share, in the prior year. Reflecting the net gain and net income from discontinued operations up to the completion of the sale transaction, net income for the first nine months of fiscal 2013 stood at $123.6 million, or $4.00 per diluted share.
Conditions remain favourable in the commercial aerospace market. Large commercial aircraft manufacturers are proceeding with production rate increases on certain leading programs and delivered more aircraft in calendar 2012 than a year earlier. New orders remain solid and backlogs represent approximately seven years of production at current rates. The business jet market continues to see positive signs and shipments should experience sustained growth over the next few years driven by a better economy and the introduction of several new aircraft, including three models for which Héroux-Devtek is currently developing the landing gear. The military aerospace market remains uncertain, as governments address their deficits, but the Corporation's diversified military portfolio, balanced between new component manufacturing and aftermarket products and services, should lessen its exposure to defense budget cutbacks.
As at December 31, 2012, Héroux-Devtek's funded (firm orders) backlog stood at $376 million, versus $378 million three months earlier, and remains well diversified.
"In keeping with historical trends, we expect the fourth quarter to yield a strong sales volume. As a result, we continue to anticipate an internal sales growth from continuing operations that could reach up to 5% for the current fiscal year ending March 31, 2013, assuming the Canadian dollar remains at parity versus the U.S. currency. Over the long term, Héroux-Devtek's solid reputation as a world-class integrated supplier of high-quality, value-added products and services should allow us to capture any business opportunity that may arise, as we leverage our strengths and know-how in the landing gear industry," concluded Mr. Labbé.
Héroux-Devtek Inc. will hold a conference call to discuss these results on Friday, February 8, 2013 at 10:00 AM Eastern Time. Interested parties can join the call by dialling (514) 807-9895 (Montreal or overseas) or 1-888-231-8191 (elsewhere in North America). The conference call can also be accessed via live webcast at Héroux-Devtek's website, www.herouxdevtek.com, or www.newswire.ca.
If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-855-859-2056 and entering the passcode 87436260 on your phone. This tape recording will be available on Friday, February 8, 2013 as of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, February 15, 2013.
Héroux-Devtek Inc. (TSX: HRX) is a Canadian company specializing in the design, development, manufacture and repair and overhaul of landing gear systems and components for the Aerospace market. The Corporation is the third largest landing gear company worldwide, supplying both the commercial and military sectors of the Aerospace market with new landing gear systems and components, as well as aftermarket products and services. Approximately 70% of the Corporation's sales are outside Canada, mainly in the United States. The Corporation's head office is located in Longueuil, Québec with facilities in the Greater Montreal area (Longueuil, Laval and St-Hubert); Kitchener and Toronto, Ontario; as well as Springfield and Cleveland, Ohio.
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 Corporation. 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 Corporation'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.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a financial measure not prescribed by International Financial Reporting Standards ("IFRS") and is not likely to be comparable to similar measures presented by other issuers. Management considers this to be useful information to assist investors in evaluating the Corporation's profitability, liquidity and ability to generate funds to finance its operations.
Note to readers: Complete unaudited interim condensed consolidated financial statements and Management's Discussion & Analysis are available on Héroux-Devtek's website at www.herouxdevtek.com.
SOURCE: HEROUX-DEVTEK INC.
For further information:
From: Héroux-Devtek Inc.
President and Chief Executive Officer
Tel.: (450) 679-3330
Contact: Héroux-Devtek Inc.
Executive Vice-President and Chief Financial Officer
Tel.: (450) 679-3330
Martin Goulet, CFA
Tel.: (514) 731-0000