Press release from CNW Group
Héroux-Devtek reports fiscal 2014 first quarter results
Thursday, August 01, 2013
Héroux-Devtek reports fiscal 2014 first quarter results07:00 EDT Thursday, August 01, 2013
Annual meeting of shareholders later this morning
- Sales from continuing operations of $63.0 million, versus $63.8 million last year
- Net income from continuing operations of $2.8 million, or $0.09 per diluted share, relatively stable compared with $2.9 million or $0.10 per diluted share a year ago
- Cash and cash equivalents of $96.7 million, equivalent to $3.07 per share, as at June 30, 2013
- Funded backlog of $368 million
LONGUEUIL, QC, Aug. 1, 2013 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), ("Héroux-Devtek" or the "Corporation"), a leading Canadian manufacturer of aerospace products, today reported its results for the first quarter of fiscal 2014 ended June 30, 2013. Unless otherwise indicated, all amounts are in Canadian dollars. Net income from discontinued operations for the quarter ended June 30, 2012 includes the results of substantially all of the Corporation's Aerostructure and Industrial Products operations sold to Precision Castparts Corp. (NYSE: PCP) on August 31, 2012.
"As anticipated, Héroux-Devtek's results for the first-quarter of fiscal 2014 produced a solid increase in commercial product sales driven by the strength of the large commercial aircraft market. Meanwhile, lower military sales reflect the weaker U.S. military market, as evidenced by the reduced U.S. funding base defense budget and the persistent sequestration situation," said Gilles Labbé, President and CEO of Héroux-Devtek.
|FINANCIAL HIGHLIGHTS||Quarters ended June 30,|
|(in thousands of dollars, except per share data)||2013||2012|
|Sales from continuing operations||62,972||63,780|
|EBITDA from continuing operations||7,747||8,271|
|Net income from continuing operations||2,814||2,946|
|Per share - diluted ($)||0.09||0.10|
|Net income from discontinued operations||-||3,258|
|Per share - diluted ($)||0.09||0.20|
|Weighted-average shares outstanding (diluted, in '000s)||31,669||30,818|
Consolidated sales from continuing operations reached $63.0 million, down slightly from $63.8 million in the first quarter of fiscal 2013. Sales to the commercial aerospace market increased 7.4% to $28.2 millionresulting from new actuator business with Boeing on the B-777 program and production ramp-up on the B-787 program. Sales to the military aerospace market declined 7.3% to $34.7 million as a result oflower customer requirements for repair and overhaul services and spare parts, as well as lower electronic enclosure and cabinet sales at the Magtron operations, partially offset by new business with Boeing on the H-47 Chinook helicopter program.
Fluctuations in the value of the Canadian currency versus the US currency reduced both first-quarter sales and gross profit by $0.3 million compared with last year's first quarter. 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 $7.7 million, or 12.3% of sales, compared with $8.3 million, or 13.0% of sales, last year. The decrease reflectsan unfavorable military aftermarket sales product mix, combined with certain non-recurring costs incurred in the development of a new landing gear system program. These factors were partially offset by a reduction in non-quality costs and lower year-over-year selling and administrative expenses resulting from a higher gain on currency translation and a reduction in professional fees related to certain projects last year.
Net income from continuing operations was $2.8 milion, or $0.09 per diluted share, in the first quarter of fiscal 2014, relatively stable compared with $2.9 million, or $0.10 per diluted share, in the first quarter of fiscal 2013.
FINANCIAL POSITION REMAINS STRONG
As at June 30, 2013, Héroux-Devtek's balance sheet remained healthy with cash and cash equivalents of $96.7 million, or $3.07 per share. At that same date, total debt was $63.0 million, including $23.1 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 $33.7 million as at June 30, 2013.
Conditions remain favourable in the commercial aerospace market. Large commercial aircraft manufacturers continue to increase production rates for certain leading programs and are forecasting higher deliveries in calendar 2013 than a year earlier. Their backlogs remain strong, representing seven to eight years of production at current rates. In the business jet market, indicators point to a 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. If sequestration in the U.S. is not reversed, 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 June 30, 2013, Héroux-Devtek's funded (firm orders) backlog stood at $368 million, up from $361 million at the end of the previous quarter, and remains well diversified.
"Despite the U.S. military spending cutbacks and the persistent sequestration, current trends in our main markets continue to point towards a marginal internal sales growth for the fiscal year ending March 31, 2014, assuming a stable currency environment. With respect to the second quarter, it is important to remember that it has traditionally been a relatively slower period owing to seasonal factors, such as plant shutdowns and summer vacations. Supported by a strong balance sheet, Héroux-Devtek actively remains on the lookout for business opportunities, both internally and through strategic acquisitions, that will enhance its value-added product and service offering and create further value for its shareholders," concluded Mr. Labbé.
Héroux-Devtek Inc. will hold a conference call to discuss these results on Thursday, August 1, 2013 at 3:00 PM 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 or www.newswire.ca.
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 17417077 on your phone. This tape recording will be available on Thursday, August 1, 2013 as of 6:00 PM Eastern Time until 11:59 PM Eastern Time on Thursday, August 8, 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 unaudited interim condensed 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:
Executive Vice-President and Chief Financial Officer
Tel.: (450) 679-3330
Martin Goulet, CFA
Tel.: (514) 731-0000