LONGUEUIL, QUÉBEC--(Marketwired - Aug. 4, 2016) -
Editors Note: There is a photo associated with this press release.
Héroux-Devtek Inc. (TSX:HRX), ("Héroux-Devtek" or the "Corporation"), a leading international manufacturer of aerospace products, today reported its results for the first quarter of fiscal 2017 ended June 30, 2016. Unless otherwise indicated, all amounts are in Canadian dollars.
"The first quarter of fiscal 2017 marked an important milestone for Héroux-Devtek, as we finalized the assembly of the pre-production shipset for the Boeing 777 landing gear at our Everett, Washington facility. Our first complete landing gear system was delivered to Boeing's aircraft assembly plant early in the second quarter and we remain on schedule to meet production requirements associated to deliveries," said Gilles Labbé, President and CEO of Héroux-Devtek.
||Quarters ended June 30,
|(in thousands of dollars, except per share data)
||Per share - diluted ($)
|Adjusted net income1
||Per share ($)
|Weighted-average shares outstanding (diluted, in '000s)
||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 reached $95.6 million, compared with $98.2 million in the first quarter of fiscal 2016. This decrease reflects lower sales to both the commercial and defence aerospace markets, as detailed below, while year-over-year fluctuations in the value of the Canadian currency versus foreign currencies increased first-quarter sales by $5.0 million.
Commercial sales were $50.6 million, versus $51.5 million last year. Excluding a $2.6 million year-over-year favourable currency effect, the decline stems from lower aftermarket sales in support of the Saab 340 program following last year's higher-than-normal volume, as well as lower customer requirements on certain business jet and large commercial aircraft programs. These factors were partially offset by the sales ramp-up of certain proprietary design programs, namely the Embraer Legacy 450/500 and the Airbus Helicopters EC-175, as well as greater content and a higher production rate for the Boeing 787 aircraft.
Defence sales decreased from $46.8 million to $45.0 million. Excluding a $2.3 million year-over-year currency effect, the decline reflects lower spare parts requirements and certain delayed deliveries with the U.S. government, lower repair and overhaul ("R&O") sales on the P-3 program and lower engineering sales following the completion of certain development phases. These factors were partially offset by greater R&O sales to the U.S. Air Force and certain European customers.
Gross profit reached $16.1 million, or 16.8% of sales, compared with $16.6 million, or 16.9% of sales, last year. The decrease is due to a less favourable sales mix and a higher under-absorption of costs, partially offset by favourable year-over-year currency fluctuations equivalent to 1.1% of sales.
Adjusted EBITDA was $14.3 million, or 15.0% of sales, compared with $13.1 million, or 13.3% of sales, a year ago as a result of lower selling and administrative expenses related to year-over-year variations in the currency translation of net monetary items. This year's and last year's adjusted EBITDA excluded non-recurring charges of $0.4 million and $1.5 million, respectively, related to legal fees associated with litigations.
Excluding non-recurring charges net of taxes, adjusted net income was $5.6 million, or $0.15 per share, in the first quarter of fiscal 2017, versus $5.5 million, or $0.15 per share, in the first quarter of fiscal 2016.
As at June 30, 2016, Héroux-Devtek's balance sheet remained healthy with cash and cash equivalents of $7.7 million, while total long-term debt was $137.8 million, including the current portion, but excluding net deferred financing costs. Long-term debt includes $60.3 million drawn against the Corporation's authorized Credit Facility of $200.0 million. As a result, the Corporation's net debt position stood at $130.1 million as at June 30, 2016, while the net-debt-to equity ratio was 0.40:1, versus 0.39:1 three months earlier.
Conditions remain mostly favourable in the commercial aerospace market. In the large commercial aircraft sector, Boeing and Airbus are proceeding with production rate adjustments ahead of introducing certain more fuel efficient aircraft variants on several leading programs through calendar 2019. Despite slightly lower firm order intakes, their backlogs remain strong, representing approximately eight and ten years of production at current rates, respectively. In the business jet market, the current and future production ramp-up of models for which Héroux-Devtek has designed the landing gear should be favourable for the Corporation going forward. In the defence aerospace market, a budget agreement provides additional funding through the U.S. government's 2017 fiscal year, but uncertainty remains beyond that period given the need to address the deficit. The Corporation's U.K. operations provide Héroux-Devtek with a more geographically diversified defence portfolio, which reduces its relative exposure to the U.S. market. The balance between new component manufacturing and aftermarket products and services in the Corporation's defence portfolio and its leading program content also promote more stability.
As at June 30, 2016, Héroux-Devtek's funded (firm orders) backlog stood at $438 million, versus $460 million at the beginning of the fiscal year.
"Héroux-Devtek is demonstrating its ability to execute large-scale mandates and has commenced delivery of the largest landing gear contract in its history. We remain on pace to achieve annual sales of approximately $500 million in fiscal 2019 and we continue to anticipate sales of approximately $420 million for the current fiscal year. In regards to the second quarter, it is important to remember that it has traditionally been a relatively slower period due to seasonal factors, such as plant shutdowns and summer vacation. With its strong, world-class team and fully-integrated capabilities, Héroux-Devtek is confident to further enhance its reach in the global landing gear market and create lasting value for shareholders," concluded Mr. Labbé.
Héroux-Devtek Inc. will hold a conference call to discuss these results on Thursday, August 4, 2016 at 2:00 PM Eastern Time. Interested parties can join the call by dialling 1-877-223-4471 (North America) or 1-647-788-4922 (overseas). The conference call can also be accessed via live webcast at Héroux-Devtek's website, www.herouxdevtek.com/investor-relations/events or www.gowebcasting.com/7749.
If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-800-585-8367 and entering the passcode 49508171 on your phone. This tape recording will be available on Thursday, August 4, 2016 as of 5:00 PM Eastern Time until 11:59 PM Eastern Time on Thursday, August 11, 2016.
Héroux-Devtek Inc. (TSX:HRX) is an international company specializing in the design, development, manufacture and repair and overhaul of landing gear and actuation systems and components for the Aerospace market. The Corporation is the third largest landing gear company worldwide, supplying both the commercial and defence sectors of the Aerospace market with new landing gear systems and components, as well as aftermarket products and services. The Corporation also manufactures hydraulic systems, fluid filtration systems and electronic enclosures. Approximately 80% of the Corporation's sales are outside Canada, including about 55% 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, Cambridge and Toronto, Ontario; Springfield and Strongsville, Ohio; Wichita, Kansas; Everett, Washington; and Runcorn, Nottingham and Bolton, United Kingdom.
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 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.
Earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income and adjusted earnings per share 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.
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.
To view the photo associated with this press release, please visit the following link: http://www.marketwire.com/library/20160803-1064784_800.jpg