Q3 Financial and Operational Highlights
- Sales of $157.3 million, up 8.8%
from $ 144.5 million last year
- Operating income of $13.5
million, up 13.1% from $11.9
million last year
- Adjusted EBITDA1 of $24.6
million, up 7.3% from $22.9
million last year
- Corporation announces increase to Fiscal 2020 sales guidance to
$600-610 million range
- Funded backlog2 increased to a record-level of
$839 million, up 9.1% from
$769 million in Q2
- Successful completion by Boeing, subsequent to quarter-end, of
the first flight for the new Boeing 777X commercial aircraft for
which Héroux-Devtek provides complete landing gear systems
LONGUEUIL, QC, Feb. 6, 2020 /CNW Telbec/ - Héroux-Devtek
Inc. (TSX: HRX) ("Héroux-Devtek" or the "Corporation"), a leading
international manufacturer of aerospace products and the world's
third-largest landing gear manufacturer, today reported its
financial results for the third quarter ended December
31, 2019. Unless otherwise indicated, all amounts are in
Canadian dollars.
"I am pleased with our Q3 results and by the continued growth of
our commercial and defence sales, especially on the heels of what
had been a particularly strong third quarter last year.
Accordingly, we have reviewed our sales guidance for Fiscal 2020
upwards, which we now expect to reach $600-610 million as a reflection of stronger than
expected growth," said Martin
Brassard, President and CEO of Héroux-Devtek.
"We are committed to continue to deliver on all our programs,
especially as several of them will be reaching important
development milestones over the course of the next twelve months,
including the very promising Boeing 777X program that successfully
completed its first flight on January 25,
2020. Our short-term focus is to execute on our
backlog," concluded Mr. Brassard.
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FINANCIAL
HIGHLIGHTS
|
Three months
ended
December 31,
|
Nine months
ended December
31,
|
(in thousands, except
per share data)
|
2019
|
2018
|
2019
|
2018
|
Sales
|
$
157,253
|
$
144,528
|
$
446,196
|
$
325,963
|
Operating
income
|
13,466
|
11,904
|
34,356
|
22,050
|
Adjusted operating
income1
|
13,466
|
13,973
|
34,971
|
25,355
|
Adjusted
EBITDA1
|
24,563
|
22,883
|
67,582
|
48,303
|
Net income
|
8,705
|
7,390
|
21,455
|
14,236
|
Adjusted net
income1
|
8,705
|
9,367
|
21,971
|
17,558
|
Cash flows related to
operating activities
|
9,664
|
12,651
|
25,863
|
32,788
|
Free cash
flow1
|
7,939
|
11,901
|
13,599
|
26,241
|
in dollars per
share
|
|
|
|
|
EPS – basic and
diluted
|
$
0.24
|
$
0.20
|
$
0.60
|
$
0.39
|
Adjusted
EPS1
|
0.24
|
0.26
|
0.61
|
0.48
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As
at
|
|
|
December 31,
2019
|
September
30,
2019
|
Funded
backlog2
|
|
|
$
839,000
|
$
769,000
|
|
1 This is a non-IFRS measure. Please
refer to the "Non-IFRS Measures" section at the end of this press
release.
|
2 Represents firm orders
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THIRD QUARTER RESULTS
Consolidated sales grew 8.8% to $157.3 million, up from $144.5 million last year, including a 1.4%
organic growth and a contribution of $10.8 million by the Corporation's recent
acquisitions. Commercial sales grew 11.8% from $65.5 million to $73.2
million, while defence sales were up 6.3%, from $79.0 million to $84.1 million.
Strong performances by Beaver and CESA, offset by the
temporarily dilutive effect of the margin of more recently acquired
businesses, led to relatively stable gross profit as a percentage
of sales for the third quarter as compared to the corresponding
period last year.
Operating income increased to $13.5
million, or 8.6% of sales, up from $11.9 million, or 8.2% of sales last year.
Adjusted EBITDA, which excludes non-recurring items, stood at
$24.6 million, or 15.6% of sales,
compared with $22.9 million, or 15.8%
of sales, a year ago. Foreign exchange fluctuations had an
unfavorable net impact of $1.1 million year-over-year, or 0.7% of
sales.
EPS grew from $0.20 last year to
$0.24 as last year's EPS included
non-recurring acquisition costs of $2.0
million net of taxes or $0.06
per share. Adjusted EPS decreased from $0.26 last year to $0.24 mainly due to the foreign exchange
fluctuations representing $0.02 per
share.
The Corporation's funded backlog increased to $839 million
as at December 31, 2019, compared to $769 million as at
September 30, 2019, mainly due to increased demand for defence
products under long-term contracts.
NINE-MONTH RESULTS
Consolidated sales grew 36.9% to $446.2 million, up from $326.0 million for the corresponding period
last year. Organic growth accounted for 8.8% of this increase,
while the Corporation's recent acquisitions contributed
$91.5 million. Commercial sales
grew 33.8% in the first nine months of the year, from $158.3 million to $211.8 million, while defence sales were up
39.8% for the same period last year, from $167.7 million to $234.4 million.
Gross profit as a percentage of sales for the first nine months
of the year was also negatively impacted by higher manufacturing
costs at our Longueuil facility
compared to last year.
In the first nine months of the year, operating income increased
to $34.4 million, or 7.7% of
sales, up from $22.1 million, or
6.8% of sales last year. Adjusted EBITDA, which excludes
non-recurring items, stood at $67.6 million, or 15.1% of sales, compared
with $48.3 million, or 14.8% of
sales last year.
For the same period, EPS grew from $0.39 last year to $0.60, while adjusted EPS grew to $0.61, up from the $0.48 recorded in the same period last year. Last
year, adjusted EPS excluded non-recurring acquisition costs
representing $3.3 million net of
taxes or $0.09 per share.
GUIDANCE UPDATE
Management increased its Fiscal 2020 sales guidance to reflect
stronger than expected growth. Management expects sales to reach
between $600 million and $610 million in Fiscal
2020.
Please see "Forward-Looking Statements" below and the Guidance
section in the Corporation's MD&A for the quarter
ended December 31, 2019, for further details regarding the
material assumptions underlying the foregoing guidance.
FINANCIAL POSITION
Cash flows related to operating activities reached $9.7 million in the third quarter, down from
$12.7 million last year. For the
nine-month period, cash flows related to operating activities
amounted to $25.9 million, down
from $32.8 million for the
corresponding period last year. For the third quarter as for the
nine-month period, the variations in cash flows related to
operating activities are mainly explained by an increase in
inventories in preparation for upcoming growth, even though cash
flow from operations increased.
As at December 31, 2019, net debt
stood at $256.8 million, up from
$243.0 million as at April
1, 20193. The increase in long-term debt during the
nine-month period is mainly due to the Alta acquisition, partially
offset by a US$12 million ($15.9 million) repayment made over the
course of the second quarter.
Over the course of the third quarter, the Corporation reached an
agreement with its syndicate of banks to extend the term of its
Revolving Facility from May 2022 to
December 2024. Most of the other
terms remained unchanged.
CONFERENCE CALL
Héroux-Devtek Inc. will hold a conference call to discuss these
results on Thursday, February 6, 2020
at 8:30 AM Eastern Time. Interested
parties can join the call by dialing 1-888-231-8191 (North America) or 1-647-427-7450 (overseas).
The conference call can also be accessed via live webcast on
Héroux-Devtek's
website, www.herouxdevtek.com/en/news-events/events or at
https://webinars.on24.com/cision/hrxq3f20. An accompanying
presentation is also available on Héroux-Devtek's website
at https://www.herouxdevtek.com/en/investors/financial-documents.
If you are unable to call in at this time, you may access a
recording of the meeting by calling 1-855-859-2056 and entering the
passcode 8169806 on your phone. This recording will be
available from Thursday, February 6,
2020 as of 11:30 AM Eastern Time
until 11:59 PM Eastern Time on Thursday, February 13, 2020.
Additionally, the recording will be made available for replay on
Héroux-Devtek's website after that date.
FORWARD-LOOKING STATEMENTS
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 third quarter ended December 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.
NON-IFRS MEASURES
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.
ABOUT HÉROUX-DEVTEK
Héroux-Devtek Inc. (TSX: HRX) 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.
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1 This is a non-IFRS measure. Please
refer to the "Non-IFRS Measures" section at the end of this press
release.
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2 Represents firm orders
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3 Pro
forma net debt as at April 1, 2019 reflects the impact of the
adoption of IFRS 16 – Leases. See the Corporation's financial
statements for further details.
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SOURCE Héroux-Devtek Inc.