Q4 Highlights
- Sales of $155.0 million, compared to $166.8 million last year
- Defence sales up 13% year over year, mitigating the impact of the pandemic on the civil sector
- Operating income of $12.2 million compared to a loss of $64.4 million last year
- Adjusted EBITDA1 of $25.0 million, or 16.1% of sales, compared to $28.6 million, or 17.2% last year
- Solid cash flows from operating activities of $31.6 million, compared to $26.7 million last year
- Awarded a Life-Cycle Contract for the new Dassault Falcon 10X
- Normal course issuer bid to repurchase up to 2.4 million shares announced today
Longueuil, Québec, May 20, 2021 – 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 strong financial results for the fourth quarter and fiscal year ended March 31, 2021. Unless
otherwise indicated, all amounts are in Canadian dollars.
“Even if this past fiscal year has brought along challenges of unprecedented magnitude for the global aerospace
industry, our early and decisive actions, resilience and focus on execution have enabled us so far to successfully
weather the storm. More importantly, we have done so while strengthening our balance sheet, generating record
cash flows and gaining new operational efficiencies across our sites – lowering fixed costs, reallocating resources
as well as optimizing inventories and working capital. We achieved these objectives while keeping our employees
safe and healthy, which has always been our number one priority. I want to thank each of my colleagues for their
continued work and dedication; you truly make us proud,” said Martin Brassard, President and CEO of HérouxDevtek.
“As pleased as I am with our performance this past year, I am equally confident that our more agile structure
positions us favorably for the road ahead as the industry outlook slowly starts improving, enabling us to capture
opportunities across all markets. This namely includes a recently announced life-cycle contract to design, develop
and manufacture the complete landing gear system for the new Dassault Falcon 10X, furthering our position in the
large business aircraft market segment. Finally, recognizing that our share price does not reflect the full
underlying value of Héroux-Devtek, we announced today our decision to initiate a normal course issuer bid to
optimize our capital allocation with the objective to unlock stronger returns for our shareholders, without
compromising our position for future growth initiatives,” concluded Mr. Brassard.
FOURTH QUARTER RESULTS
Consolidated sales decreased 7.1% to $155.0 million, down from $166.8 million last year. Defence sales were up 13.1%, from $94.8 million to $107.3 million, namely resulting from the ramp-up of deliveries under the Boeing F18, Sikorsky CH-53K and Saab Gripen E contracts as well as from strong deliveries for existing OEM platforms such as the Eurofighter and Lockheed F-35 programs. Civil sales decreased 33.7% from $72.0 million to $47.7 million. The decrease was mainly the result of lower deliveries for large commercial programs, where twinaisle deliveries decreased 45% reflecting lower OEM demand due to the COVID-19 pandemic.
The decrease in gross profit from $29.9 million or 17.9% of sales, to $25.2 million or 16.2%, was mainly due to less favourable sales mix than last year and lower sales volume without a corresponding decrease in fixed costs, such as depreciation. Foreign exchange fluctuations had a negative net impact of 0.5% of sales.
Operating income reached $12.2 million, compared to a loss of $64.4 million last year when the Corporation had recorded $82.0 million of non-cash impairment charges. Adjusted EBITDA, which excludes non-recurring items, stood at $25.0 million, or 16.1% of sales, compared with $28.6 million, or 17.2% of sales, a year ago due mainly to lower volume and the negative year-over-year impact of foreign exchange representing $1.7 million or 1.1% of sales.
Results per share increased from a loss of $1.98 last year to earnings of $0.24, and decreased from $0.38 to $0.28 per share on an adjusted basis due to the same factors described above.
YEAR-END RESULTS
Consolidated sales decreased 6.9% to $570.7 million, from $613.0 million last year, due mainly to the 45% decrease in deliveries for twin-aisle large commercial programs caused by the COVID-19 pandemic. Defence sales were up 14.6%, from $329.3 million to $377.5 million, while civil sales decreased 31.9% from $283.7 million to $193.2 million. Gross profit decreased from $103.1 million, or 16.8% as a percentage of sales, to $94.9 million, or 16.6% as a percentage of sales, mainly explained by lower sales volume without a corresponding decrease in fixed costs such as depreciation, which represented a negative year-over-year impact of 0.4% of sales. Operating income reached $34.1 million, compared to a loss of $30.1 million the year prior when the Corporation recorded $82.0 million of non-cash impairment charges. Excluding non-recurring items, adjusted EBITDA stood at $88.3 million, or 15.5% of sales, compared with $96.2 million, or 15.7% of sales last year, mainly due to lower volume and negative foreign exchange impacts. Results per share grew from a loss of $1.38 last year to earnings of $0.55, while adjusted EPS decreased to $0.80, from the $1.00 recorded last year due to the factors described above.
FINANCIAL POSITION
As at March 31, 2021, net debt stood at $157.5 million, down from $246.9 million a year prior. The substantial $89.3 million decrease during the fiscal year is mainly the result of the record $89.2 million of cash flows from operating activities, up from $52.6 million the prior year. The increase in cash flow generation is mainly the result of strong working capital management.