- Sales increased to $143.4 million up from $85.8 million a year ago
- Operating income grew to $10.4 million , up from $4.9 million a year ago
- Adjusted EBITDA1 reached $21.5 million , up from $12.2 million a year ago
Operational and Commercial Highlights
- Highest funded backlog ever, reaching $747 million , up from $624 million as at March 31, 2019
- New contract with Boeing to supply the complete landing gear system for the MQ-25 program
- Expanded the F-18 agreement with Boeing to include the Advanced F-15 program
- Acquired Alta Precision Inc., and increased guidance accordingly
LONGUEUIL, QC , Aug. 9, 2019 /CNW Telbec/ - Héroux-Devtek Inc. (HRX.TO) ("Héroux-Devtek" or the "Corporation"), the world's third-largest landing gear manufacturer, reported strong financial results today for the first quarter ended June 30, 2019 . Unless otherwise indicated, all amounts are in Canadian dollars.
"Our first quarter results remained strong on all fronts due to the contribution of our recent acquisitions and the 15.2% growth of our legacy products, which was driven by the production ramp-up of the Boeing 777/777X and Lockheed Martin F‑35 programs as well as higher aftermarket sales to the defence market. I want to emphasize the outstanding work done by all our employees, without whom we would not have achieved such great results," said Martin Brassard , President and CEO of Héroux-Devtek.
"I am proud to announce that our firm order backlog reached the highest level in the history of the Company. It grew by almost 20% over the last three months, mainly in our defense sector in North America , due to the introduction of new programs and increased demand for our products. Following the recent acquisition of Alta Precision, we are increasing both our fiscal 2020 and long-term sales guidance. While this transaction temporarily increased our debt, we believe in the strengths it adds to our commercial program portfolio and growth prospects" concluded Mr. Brassard.
Quarters ended June 30
(in thousands of dollars, except per share data)
Adjusted operating income1
Per share – diluted ($)
Adjusted net income1
Per share ($)
This is a non-IFRS measure. Please refer to the "Non-IFRS Measures" section at the end of this press release.
FIRST QUARTER RESULTS
Consolidated sales grew 67.2% to $143.4 million , up from $85.8 million in the same period last year. $44.6 million of this increase was driven by the CESA and Beaver acquisitions while the growth of Héroux-Devtek legacy sales contributed 15.2% or $13.1 million .
Commercial sales grew 47.4% to $67.4 million , up from $45.8 million in the same period last year. The strong increase was driven by the CESA and Beaver acquisitions and growing legacy sales from the ramp-up of the Boeing 777/777x programs.
Defence sales grew 89.9% to $76.0 million , up from $40.0 million in the same period last year. This strong increase was driven by the CESA and Beaver acquisitions, growing Héroux-Devtek legacy sales mainly from the ramp-up of the F-35 program and higher aftermarket sales.
Gross profit increased to $24.2 million , or 16.9% of sales, up from $13.1 million , or 15.2% of sales last year. The increase is attributable to the impact of the Beaver and CESA acquisitions and positive foreign exchange rate fluctuations, partially offset by higher manufacturing costs at our Longueuil facility.
Operating income increased to $10.4 million , or 7.2% of sales, up from $4.9 million , or 5.7% of sales last year. This quarter's operating income included $0.6 million of non-recurring items, up from $0.4 million of non-recurring items in the same period last year. These non-recurring items are mainly acquisition-related costs. Adjusted EBITDA, which excludes these non-recurring items, stood at $21.5 million , or 15.0% of sales, compared with $12.2 million , or 14.3% of sales, one year ago.
Net income for the first quarter of fiscal 2020 stood at $6.4 million , or $0.18 per diluted share, up from $3.6 million , or $0.10 per diluted share, in the corresponding period of last fiscal year. Excluding non-recurring items net of taxes, adjusted net income reached $7.0 million , or $0.19 per share, up from $3.8 million , or $0.10 per share last year.
As at June 30, 2019 , Héroux-Devtek's funded (firm orders) backlog stood at $747 million , an increase of 19.7% from $624 million as at March 31, 2019 mainly on the strength of organic growth and the contribution of Alta.
LIQUIDITY AND FINANCIAL POSITION
Cash flows related to operating activities amounted to $3.7 million in the first quarter of fiscal 2020, down from $8 .5 million in the same period last fiscal year. This variation mainly reflects a negative net change in non-cash working capital items due to an increase in inventory in anticipation of production ramp-up. As a result, free cash flow decreased to a usage of $1.6 million , down from a positive free cash flow of $6.4 million in the same period last year.
As at June 30, 2019 , net debt stood at $269.6 million , up from $228.1 million at March 31, 2019 , mainly due to the recognition of $27.0 million of additional lease liabilities as debt following the adoption of IFRS 16 as well as higher utilization of the credit facilities to finance the acquisition of Alta Precision.
On July 18, 2019 , the Company announced that the unionized employees at its Longueuil , Québec, facility voted in favour of the early renewal of a three-year collective agreement, which now extends through April 30, 2023 . The renewal relates to approximately 210 employees who are members of Unifor, Local Section 1956. This agreement ensures a period of stability during which all time and resources can be dedicated to delivering our record backlog and meet customer expectations.
Management increased both its fiscal 2020 and long-term sales guidance to reflect the expected contribution of Alta Precision. Management expects sales to reach between $580 million and $600 million in fiscal 2020 and between $650 million to $680 million in fiscal 2022.
Please see "Forward-Looking Statements" below and the Guidance section in the Corporation's MD&A for the quarter ended June 30, 2019 , for further details regarding the material assumptions underlying the foregoing guidance.
Héroux-Devtek Inc. will hold a conference call to discuss these results on Friday, August 9, 2019 at 11:30 AM Eastern Time . Interested parties can join the call by dialling 1-888-231-8191 ( North America ) or 1-647-427-7450 (overseas). The conference call can also be accessed via live webcast at Héroux-Devtek's website, www.herouxdevtek.com/investor-relations/events.
An accompanying presentation will also be available on Héroux-Devtek's website,
If you are unable to call-in at this time, you may access a tape recording of the meeting by calling toll-free 1-855-859-2056 and entering the passcode 7260609 on your phone. Local dial-in numbers for Toronto : 416-849-0833 and Montreal : 514-807-9274. This recording will be available from Friday, August 9, 2019 as of 2:30 PM until 11:59 PM on Friday , August 16, 2019.
ANNUAL MEETING OF SHAREHOLDERS
Héroux-Devtek will hold its Annual Meeting of Shareholders today, Friday, August 9, 2019 at 10:00 a.m. local time in the Fortifications Ballroom of the Westin Hotel located at 270 Saint-Antoine Street West, Montreal, Quebec .
Except for historical information provided herein, this press release contains information and statements of a forward-looking nature concerning the future performance of the Corporation. Forward-looking statements are based on assumptions 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. Please see the Guidance section in the Corporation's MD&A for the fiscal year ended March 31, 2019 for further details regarding the material assumptions underlying the forecasts and guidance. Such forecasts and guidance are provided for the purpose of assisting the reader in understanding the Corporation's financial performance and prospects and to present management's assessment of future plans and operations, and the reader is cautioned that such statements may not be appropriate for other purposes.
Earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income, adjusted earnings per share and free cash flow are financial measures not prescribed by International Financial Reporting Standards ("IFRS") and are not likely to be comparable to similar measures presented by other issuers. Management considers these to be useful information to assist investors in evaluating the Corporation's profitability, liquidity and ability to generate funds to finance its operations. Refer to Non-IFRS financial measures under Operating Results in the Corporation's MD&A for definitions of these measures and reconciliations to the most comparable IFRS measures.
Héroux-Devtek Inc. (HRX.TO) is an international company specializing in the design, development, manufacture, repair and overhaul of aircraft landing gear, hydraulic and electromechanical actuators, custom ball screws and fracture-critical components for the Aerospace market. The Corporation is the third-largest landing gear company worldwide, supplying both the commercial and defence sectors. Approximately 90% of the Corporation's sales are outside of Canada , including about 50% in the United States . The Corporation's head office is located in Longueuil , Québec with facilities in Canada , the United States , the United Kingdom and Spain .
SOURCE Héroux-Devtek Inc.
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