Héroux-Devtek reports second quarter results

Results reflect sale of substantially all of Aerostructure and Industrial 
Products operations on August 31, 2012 


    --  Sales from continuing operations of $57.7 million, up 4.0% from
        $55.5 million last year
    --  Net income from continuing operations of $2.7 million, or $0.09
        per diluted share, versus $2.5 million or $0.08 per diluted
        share last year
    --  Net income from discontinued operations of $110.0 million
    --  Cash position of $211.1 million, net of Credit Facility and
        amounts payable related to the sale transaction
    --  Special cash distribution of $5.00 per share
    --  Funded backlog of $378 million

LONGUEUIL, QC, Nov. 9, 2012 /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 second quarter of 
fiscal 2013 ended September 30, 2012. Unless otherwise indicated, all amounts 
are in Canadian dollars.

These results reflect 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 
$232.0 million, net of related taxes and expenses. Assets sold by 
Héroux-Devtek included the Aerostructure manufacturing sites in Dorval 
(Quebec), Querétaro (Mexico) and Arlington (Texas), as well as the Cincinnati 
(Ohio) Industrial Products manufacturing sites. Héroux-Devtek retained all of 
its Landing Gear product line and the Magtron operations. As a result of the 
sale transaction, the Corporation recorded a gain on the disposal of 
discontinued operations of $107.1 million, net of related taxes, in the 
quarter ended September 30, 2012.

"The second quarter of fiscal 2013 was transformational for Héroux-Devtek. We 
made the strategic decision to focus on our core landing gear market, in which 
we are the third largest player in the world and where we have successfully 
established our reputation as an integrated supplier of high-quality, 
value-added products and services. Our landing gear operations had a solid 
quarter driven by the strength of the commercial aerospace market, mainly the 
large commercial aircraft and business jet segments, in which we increasingly 
benefit from greater production on leading programs," said Gilles Labbé, 
President and CEO of Héroux-Devtek.
                                                

FINANCIAL           Quarters ended September   Six months ended
HIGHLIGHTS                               30,      September 30,

(in thousands of                              
dollars, except per
share data)            2012             2011      2012     2011

Sales from                                    
continuing
operations           57,684           55,464   121,464  116,756

EBITDA from                                   
continuing
operations            6,972            7,300    15,225   15,796

Operating income                              
from continuing
operations            3,868            3,919     8,881    9,000

Net income from                               
continuing
operations            2,724            2,481     5,749    5,768

  Per share -                           0.08      0.19
  diluted ($)          0.09                                0.19

Net income from                               
discontinued
operations          110,000            2,331   113,258    4,841

Net income          112,724            4,812   119,007   10,609

  Per share -                           0.16      3.86
  diluted ($)          3.64                                0.35

Weighted-average                              
shares outstanding
(diluted, in '000s)  30,985           30,714    30,824   30,664


SECOND QUARTER RESULTS
Consolidated sales from continuing operations for the second quarter were 
$57.7 million, up 4.0% from $55.5 million for the same period last year. Sales 
to the commercial aerospace market rose 15.5% to $24.9 million driven by 
higher production rates for certain large commercial aircraft and business jet 
programs, as well as increased aftermarket sales for the Learjet 45 business 
jet and  CL-415 amphibious aircraft programs. Sales to the military 
aerospace market decreased 3.3% to $32.8 million essentially due to lower 
electronic enclosure and cabinet sales at Magtron. 
Fluctuations in the value of the Canadian dollar versus the US currency 
decreased second quarter sales by $0.3 million, or 0.5%, compared with last 
year, and reduced gross profit by $0.3 million, or 0.4% of sales. 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 were $7.0 million, or 12.1% of sales, compared with $7.3 
million, or 13.2% of sales, last year. This variation mainly reflects certain 
non-recurring costs associated with the development of a new landing gear 
system program and lower production at Magtron that resulted in the 
under-absorption of manufacturing overhead costs. Operating income from 
continuing operations stood at $3.9 million, or 6.7% of sales, versus $3.9 
million, or 7.1% of sales, last year. 
Net income from continuing operations amounted to $2.7 million, or $0.09 per 
diluted share, up 9.8% from $2.5 million, or $0.08 per diluted share, a year 
ago. Income from discontinued operations of $110.0 million reflects the 
aforementioned net gain and net income from the businesses sold up to the 
completion of the sale transaction. As a result, net income stood at $112.7 
million, or $3.64 per diluted share. 
SOLID BALANCE SHEET
Reflecting proceeds from the sale transaction, Héroux-Devtek had cash and 
cash equivalents of $291.2 million, as at September 30, 2012. The Corporation 
used a portion of proceeds to repay certain debt totaling $54.0 million. As a 
result, total debt was $60.5 million as at September 30, 2012, including $21.6 
million drawn against the Credit Facility. Considering the Credit Facility 
used, as well as income tax and expenses payable in regards to the sale 
transaction, Héroux-Devtek's net cash position stood at $211.1 million as at 
September 30, 2012. 
SIX MONTHS RESULTS
For the first six months of fiscal 2013, consolidated sales from continuing 
operations amounted to $121.5 million, up 4.0% from $116.8 million a year 
earlier. Currency variations had no significant impact on sales in the first 
six months of fiscal 2013. EBITDA from continuing operations totalled $15.2 
million, or 12.5% of sales, versus $15.8 million, or 13.5% of sales, a year 
earlier, due to a $0.8 million increase in stock-based compensation expenses 
in the first six months of fiscal 2013. Operating income from continuing 
operations stood at $8.9 million, or 7.3% of sales, compared with $9.0 
million, or 7.7% of sales, last year. Net income from continuing operations 
totalled $5.7 million, or $0.19 per diluted share, versus $5.8 million, or 
$0.19 per diluted share, in the prior year. Reflecting the net gain and net 
income from discontinued operations, net income for the first half of fiscal 
2013 stood at $119.0 million, or $3.86 per diluted share. 
SPECIAL CASH DISTRIBUTION OF $5.00 PER SHARE
On November 8, 2012, the Board of Directors of Héroux-Devtek approved a 
special cash distribution to shareholders of $5.00 per common share, or $160.0 
million based on up to 32 million common shares, to be paid on December 19, 
2012 to shareholders of record on November 20, 2012. Subject to shareholders' 
approval, the distribution would consist of a partial reduction and repayment 
of the Corporation's issued capital of $2.70 per share ($86.4 million), and of 
a dividend of $2.30 per share ($73.6 million). If the capital reduction is not 
approved by the shareholders, the special distribution will consist of a 
special dividend of $5.00 per share. 
The Board determined that the special distribution represents an appropriate 
use of Héroux-Devtek's financial resources following the completion of the 
sale transaction, as it provides shareholders with an adequate return on their 
investment, while allowing the Corporation to maintain a solid financial 
position. The Board decided to retain financial resources to ensure adequate 
funding of expected capital and other investments and potential opportunities 
for future growth, including strategic acquisitions. On a pro forma basis, 
Héroux-Devtek would have cash and cash equivalents of $131.2 million, after 
giving consideration to the special distribution, and a net cash position of 
$51.1 million. The Board will periodically review Héroux-Devtek's cash 
position and capital requirements and evaluate available alternatives to 
enhance shareholder value. 
A Special Meeting of Shareholders will be held on December 18, 2012 to approve 
the proposed capital reduction and repayment. Full details of the special 
distribution and proposed capital reduction and repayment, including a summary 
description of the principal Canadian federal income tax considerations 
applicable to shareholders in connection with the special distribution, will 
be included in the management proxy circular that will be mailed to 
shareholders on or about November 26, 2012. 
OUTLOOK
Conditions remain favourable in the commercial aerospace market. Large 
commercial aircraft manufacturers are proceeding with production rate 
increases on certain leading programs and are forecasting higher deliveries 
for calendar 2012. New orders remain solid and backlogs represent 
approximately seven years of production at current rates. The business jet 
market continues to see positive signs and shipments should increase in 
calendar 2012, followed by sustained growth in subsequent 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 remains uncertain, as governments address their 
deficits, but the Corporation's diversified military portfolio, balanced 
between new component manufacturing and aftermarket products and services, 
should lessen its exposure to defense budget cutbacks. 
As at September 30, 2012, Héroux-Devtek's funded (firm orders) backlog stood 
at $378 million, versus $385 million three months earlier, and remains well 
diversified. 
"Looking ahead, Héroux-Devtek will focus on leveraging its strengths and 
know-how in the landing gear industry. In so doing, we will further enhance 
our status as a world-class organization in our major markets. The 
Corporation's balance sheet will remain healthy after the special 
distribution, enabling us to consider other strategic acquisitions and 
investments that would enhance our product portfolio and provide new 
technology. For the current fiscal year ending March 31, 2013, we continue to 
anticipate an internal sales growth from continuing operations of 
approximately 5%, assuming the Canadian dollar remains at parity versus the 
U.S. currency," concluded Mr. Labbé. 
CONFERENCE CALL
Héroux-Devtek Inc. will hold a conference call to discuss these results on 
Friday, November 9, 2012 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 36922346# on 
your phone. This tape recording will be available on Friday, November 9, 2012 
as of 12:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, November 
16, 2012. 
PROFILE
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 is the world, 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. 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. 
FORWARD-LOOKING STATEMENTS
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. 
NON-IFRS MEASURES
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   Complete unaudited interim condensed consolidated financial
readers:  statements and Management's Discussion & Analysis are available 
      on Héroux-Devtek's website at 
      www.herouxdevtek.com. 
From: Héroux-Devtek Inc. Gilles Labbé President and Chief Executive 
Officer Tel.: (450) 679-3330 
Contact: Héroux-Devtek Inc. Réal Bélanger Executive Vice-President and 
Chief Financial Officer Tel.: (450) 679-3330  MaisonBrison Martin Goulet, 
CFA Tel.: (514) 731-0000  
SOURCE: HEROUX-DEVTEK INC. 
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CO: MAISON BRISON - ENGLISH
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-0- Nov/09/2012 12:05 GMT
 
 
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