Press release from CNW Group
Héroux-Devtek reports fiscal 2013 fourth quarter and year-end results
Friday, May 24, 2013
Héroux-Devtek reports fiscal 2013 fourth quarter and year-end results07:00 EDT Friday, May 24, 2013
- Fiscal 2013 sales from continuing operations of $257.0 million, up from $253.5 million last year
- Net income from continuing operations of $13.8 million, or $0.44 per diluted share in fiscal 2013, versus $15.9 million or $0.52 per diluted share in fiscal 2012
- Cash and cash equivalents of $101.3 million, equivalent to $3.21 per share, as at March 31, 2013
- Funded backlog of $361 million
LONGUEUIL, QC, May 24, 2013 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), ("Héroux-Devtek" or the "Corporation"), a leading Canadian manufacturer of aerospace products, today reported its results for the fourth quarter and fiscal year ended March 31, 2013. Unless otherwise indicated, all amounts are in Canadian dollars.
These results include the sale of substantially all of the Corporation's Aerostructure and Industrial Products operations (the "sale transaction") on August 31, 2012 to Precision Castparts Corp. (NYSE: PCP) for proceeds of $234.3 million, net of related taxes and transaction costs. Héroux-Devtek retained all of its Landing Gear product line and its Magtron operations. As a result of the sale transaction, the Corporation recorded a gain on the disposal of discontinued operations of $112.0 million, net of related taxes, in the fiscal year ended March 31, 2013, including $3.7 million in the fourth quarter, mainly resulting from final adjustments on the net gain from the sale transaction. Net income from discontinued operations also includes the results of the businesses sold up to the closing of the sale transaction.
|FINANCIAL HIGHLIGHTS||Quarters ended March 31,||Fiscal years ended March 31,|
|(in thousands of dollars, except per share data)||2013||2012||2013||2012|
|Sales from continuing operations||73,816||74,777||257,022||253,521|
|EBITDA from continuing operations||10,141||11,411||33,020||37,447|
|Operating income from continuing operations||6,914||8,085||20,487||23,828|
|Net income from continuing operations||4,774||5,602||13,819||15,875|
|Per share - diluted ($)||0.15||0.18||0.44||0.52|
|Net income from discontinued operations||3,679||3,360||118,226||10,606|
|Per share - diluted ($)||0.27||0.29||4.24||0.86|
|Weighted-average shares outstanding (diluted, in '000s)||31,670||30,774||31,114||30,682|
"Fiscal 2013 was a transformational year for Héroux-Devtek, as we made the strategic decision to focus on our core competencies in the design and manufacturing of complete landing gear and value-added assemblies. Our strategic plan is fundamentally aimed at positioning the Corporation as a lasting source of value creation for its stakeholders. Further confirming its leading position in the landing gear market, Héroux-Devtek generated slightly higher sales from continuing operations in fiscal 2013, as a solid increase in sales to the commercial aerospace market was partially offset by lower sales of military products, mainly due to U.S. budgetary restrictions,"said Gilles Labbé, President and CEO of Héroux-Devtek.
Consolidated sales from continuing operations for the fourth quarter of fiscal 2013 reached $73.8 million, down slightly from $74.8 million in the fourth quarter of fiscal 2012. Sales to the commercial aerospace market increased 23.0% to $32.2 million driven by a higher production rate on the B-777 program, higher aftermarket sales for certain regional and helicopter programs as well as for the Bombardier CL-415 program. Sales to the military aerospace market declined 14.4% to $41.6 million as a result of a lower throughput due to certain manufacturing inefficiencies, combined with lower military customer demand due to customer push-outs on certain military programs and order cancellations on the C-5 program, which reflects the weaker U.S. military market.
Fluctuations in the value of the Canadian currency versus the US currency had a negligible impact on fiscal 2013 fourth-quarter sales and gross profit compared with last year. The impact of currency movements on the Corporation's gross profit is mitigated by the use of forward foreign exchange sales contracts and the natural hedging from the purchase of materials made in U.S. dollars.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") from continuing operations amounted to $10.1 million, or 13.7% of sales, compared with $11.4 million, or 15.3% of sales, last year. The decrease reflects an unfavourable military aftermarket sales product mix and the under-absorption of certain manufacturing overhead costs resulting from lower military production volume. Operating income from continuing operations stood at $6.9 million, or 9.4% of sales, compared with $8.1 million, or 10.8% of sales a year earlier.
Net income from continuing operations was $4.8 million, or $0.15 per diluted share, in the fourth quarter of fiscal 2013, versus $5.6 million, or $0.18 per diluted share, in the fourth quarter of fiscal 2012. Net income for the fourth quarter of fiscal 2013 totalled $8.5 million, or $0.27 per diluted share, reflecting net income from discontinued operations of $3.7 million, mainly resulting from final adjustments to the net gain from the sale transaction, compared with $9.0 million, or $0.29 per diluted share, including net income from discontinued operations of $3.4 million in the fourth quarter of fiscal 2012.
FISCAL 2013 RESULTS
Consolidated sales from continuing operations for the fiscal year ended March 31, 2013 were $257.0 million, up 1.4% from $253.5 million in fiscal 2012. Sales to the commercial aerospace market rose 17.5% to $111.0 million, while sales to the military aerospace market decreased 8.2% to $146.0 million. Currency variations decreased fiscal 2013 sales by $1.4 million, or 0.6%, compared with last year, and reduced gross profit by $0.8 million, or 0.2% of sales.
EBITDA from continuing operations reached $33.0 million, or 12.8% of sales, versus $37.4 million, or 14.8% of sales last year. The decrease reflects the under-absorption of manufacturing overhead costs from lower military production volume, certain non-recurring costs associated with the development of a new landing gear system program and an increase in stock-based compensation expense, reflecting the appreciation in the Corporation's stock price traded on the Toronto Stock Exchange. Operating income from continuing operations was $20.5 million, or 8.0% of sales, compared with $23.8 million, or 9.4% of sales in the prior year. Net income from continuing operations totalled $13.8 million, or $0.44 per diluted share, versus $15.9 million, or $0.52 per diluted share, a year earlier. Reflecting the net gain and net income from discontinued operations up to the closing of the sale transaction, net income for fiscal 2013 stood at $132.0 million, or $4.24 per diluted share.
STRONG FINANCIAL POSITION
As at March 31, 2013, Héroux-Devtek's balance sheet remained healthy with cash and cash equivalents of $101.3 million, or $3.21 per share. At that same date, total debt was $64.3 million, including $22.4 million drawn against the Corporation's authorized Credit Facility of $150.0 million, but excluding net deferred financing costs. As a result, the Corporation's net cash position stood at $37.0 million at the end of fiscal 2013.
Conditions remain favourable in the commercial aerospace market. Large commercial aircraft manufacturers are increasing production rates for certain leading programs and are forecasting higher deliveries in calendar 2013 than a year earlier. Their backlogs remain strong, representing approximately seven years of production at current rates. In the business jet market, indicators point to an imminent recovery and shipments should experience sustained growth in the next few years driven by a better economy and the introduction of several new aircraft, including three models for which Héroux-Devtek is currently developing the landing gear. The military aerospace market is expected to remain difficult, as governments address their deficits. The Corporation may be affected by U.S. defense cutbacks beyond the fiscal year ending March 31, 2014, despite having a diversified military portfolio, balanced between new component manufacturing and aftermarket products and services, that should lessen this impact.
As at March 31, 2013, Héroux-Devtek's funded (firm orders) backlog stood at $361 million, versus $388 million from continuing operations at the end of the previous fiscal year, and remains well diversified.
"Based on our backlog and current market trends, and assuming a stable currency environment, Héroux-Devtek's internal sales growth for the fiscal year ending March 31, 2014 should be similar to that achieved in the fiscal year just ended. Driven by sustained strength in the large commercial aircraft segment and the recovery of the business jet market, commercial sales could grow by more than 10%, while military sales are expected to further decline as a result of U.S. budgetary restrictions. Given its proven reputation as a world-class integrated supplier of value-added products and services, as well as its solid financial situation, Héroux-Devtek is favourably positioned to capture business opportunities that will create further value for its shareholders," concluded Mr. Labbé.
Héroux-Devtek Inc. will hold a conference call to discuss these results on Friday, May 24, 2013 at 10:00 AM Eastern Time.Interested parties can join the call by dialling (514) 807-9895 (Montreal or overseas) or 1-888-231-8191 (elsewhere in North America). The conference call can also be accessed via live webcast at Héroux-Devtek's website, www.herouxdevtek.com, www.newswire.ca or www.q1234.com.
If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-855-859-2056 and entering the passcode 64367570 on your phone. This tape recording will be available on Friday, May 24, 2013 as of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, May 31, 2013.
Héroux-Devtek Inc. (TSX: HRX) is a Canadian company specializing in the design, development, manufacture and repair and overhaul of landing gear systems and components for the Aerospace market. The Corporation is the third largest landing gear company worldwide, supplying both the commercial and military sectors of the Aerospace market with new landing gear systems and components, as well as aftermarket products and services. The Corporation also manufactures electronic enclosures, heat exchangers and cabinets for airborne radar, electro-optic systems and aircraft controls through its Magtron operations. Approximately 70% of the Corporation's sales are outside Canada, mainly 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 and Toronto, Ontario; as well as Springfield and Cleveland, Ohio.
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 suppositions 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") is a financial measure not prescribed by International Financial Reporting Standards ("IFRS") and is not likely to be comparable to similar measures presented by other issuers. Management considers this to be useful information to assist investors in evaluating the Corporation's profitability, liquidity and ability to generate funds to finance its operations.
Note to readers: Complete audited consolidated financial statements and Management's Discussion & Analysis are available on Héroux-Devtek's website at www.herouxdevtek.com.
SOURCE: Héroux-Devtek Inc.
For further information:
From: Héroux-Devtek Inc.
President and Chief Executive Officer
Tel.: (450) 679-3330
Contact: Héroux-Devtek Inc.
Executive Vice-President and Chief Financial Officer
Tel.: (450) 679-3330
Martin Goulet, CFA
Tel.: (514) 731-0000