Provided by Héroux-Devtek Inc./CNW
Financial Highlights
- 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. (TSX: HRX) (“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.
1 This is a non-IFRS measure.
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.
SUBSEQUENT EVENTS
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.