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Héroux-Devtek Reports Third Quarter Results



    --  Sales from continuing operations of $61.7 million, compared
        with $62.0 million last year
    --  Net income from continuing operations of $3.3 million, or $0.11
        per diluted share, versus $4.5 million or $0.15 per diluted
        share last year
    --  Cash and cash equivalents of $91.4 million following the
        special cash distribution to shareholders
    --  Funded backlog of $376 million
    --  Expect the fourth quarter to yield a strong sales volume

LONGUEUIL, QC, Feb. 8, 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 third quarter of fiscal 
2013 ended December 31, 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 
$233.4 million, net of related taxes and related costs. Héroux-Devtek 
retained all of its Landing Gear product line and the Magtron operations in 
Toronto. As a result of the sale transaction, the Corporation recorded a gain 
on the disposal of discontinued operations of $108.4 million, net of related 
taxes, in the nine-month period ended December 31, 2012, including a $1.3 
million gain in the third quarter resulting from favourable adjustments on 
certain transaction related costs.
    FINANCIAL HIGHLIGHTS Quarters ended December Nine months ended December
                                         31,                        31,

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

Sales from
continuing
operations           61,742           61,988 183,206            178,744

EBITDA from
continuing
operations            7,654           10,240  22,879             26,036

Operating income
from continuing
operations            4,692            6,743  13,573             15,743

Net income from
continuing
operations            3,296            4,505   9,045             10,273

  Per share -                                                      0.34
  diluted ($)          0.11             0.15    0.29

Net income from
discontinued
operations            1,289            2,405 114,547              7,246

Net income            4,585            6,910 123,592             17,519

  Per share -                                                      0.57
  diluted ($)          0.15             0.23    4.00

Weighted-average
shares outstanding
(diluted, in '000s)  31,339           30,665  30,887             30,660

"Héroux-Devtek continues to benefit from increased production rates on a 
number of large commercial aircraft and business jet programs on which it has 
significant content. Although some military orders were pushed out during the 
third quarter, we are well positioned on leading programs as evidenced by the 
award, in November 2012, of an important multi-year contract from The Boeing 
Company to manufacture the landing gear for all H-47 Chinook helicopters 
aircraft destined to the U.S. Army, beginning in the first half of calendar 
2014. Our financial position remains solid, enabling us to consider 
investments in growth initiatives and in strategic acquisitions in our core 
landing gear market," said Gilles Labbé, President and CEO of Héroux-Devtek.

THIRD QUARTER RESULTS 
Consolidated sales from continuing operations for the third quarter were $61.7 
million, relatively stable from sales of $62.0 million for the same period 
last year. Sales to the commercial aerospace market rose 21.5% to $27.6 
million led by higher production rates for large commercial aircraft, mainly 
the B-777 and B-787 programs, and certain business jet programs, as well as by 
increased aftermarket sales for regional aircraft programs and for 
Bombardier's LJ-45 and CL-415 programs. Sales to the military aerospace market 
decreased 13.1% to $34.1 million essentially due to order push-outs on certain 
programs, lower aftermarket sales resulting from delayed deliveries that are 
expected to be made up in the fourth quarter, as well as lower electronic 
enclosure and cabinet military sales at Magtron.

Fluctuations in the value of the Canadian dollar versus the US currency 
decreased third quarter sales by $1.0 million, or 1.7%, compared with last 
year, and reduced gross profit by $0.3 million, or 0.2% 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 $7.7 million, or 12.4% of sales, compared with 
$10.2 million, or 16.5% of sales, last year. This variation mainly reflects 
the under-absorption of manufacturing overhead costs from lower production 
volume resulting from order push-outs and delayed deliveries, as well as 
higher research and development expenses for the development of new 
technologies and manufacturing improvements for landing gear systems. 
Operating income from continuing operations stood at $4.7 million, or 7.6% of 
sales, versus $6.7 million, or 10.9% of sales, last year.

Net income from continuing operations amounted to $3.3 million, or $0.11 per 
diluted share, in the third quarter of fiscal 2013, versus $4.5 million, or 
$0.15 per diluted share, a year ago. Given the aforementioned adjustment to 
the gain on discontinued operations, net income reached $4.6 million, or $0.15 
per diluted share, in the third quarter of fiscal 2013.

SOLID BALANCE SHEET 
Reflecting the special distribution paid to shareholders in December 2012, 
Héroux-Devtek had cash and cash equivalents of $91.4 million, as at December 
31, 2012. At that same date, total debt was $60.8 million, including $21.9 
million drawn against the Credit Facility, but excluding net deferred 
financing costs. As a result, the Corporation's net cash position stood at 
$30.6 million at the end of the third quarter of fiscal 2013.

NINE-MONTH PERIOD RESULTS 
For the first nine months of this fiscal year, consolidated sales from 
continuing operations amounted to $183.2 million, up 2.5% from $178.7 million 
a year earlier. Currency variations had a $1.3 million negative impact on 
sales in the first nine months of fiscal 2013. EBITDA from continuing 
operations totalled $22.9 million, or 12.5% of sales, versus $26.0 million, or 
14.6% of sales, a year earlier, due to the under-absorption of manufacturing 
overhead costs, certain non-recurring costs associated with the development of 
a new landing gear system program and an increase in stock-based compensation 
expenses. Operating income from continuing operations reached $13.6 million, 
or 7.4% of sales, compared with $15.7 million, or 8.8% of sales, last year. 
Net income from continuing operations totalled $9.0 million, or $0.29 per 
diluted share, versus $10.3 million, or $0.34 per diluted share, in the prior 
year. Reflecting the net gain and net income from discontinued operations up 
to the completion of the sale transaction, net income for the first nine 
months of fiscal 2013 stood at $123.6 million, or $4.00 per diluted share.

OUTLOOK 
Conditions remain favourable in the commercial aerospace market. Large 
commercial aircraft manufacturers are proceeding with production rate 
increases on certain leading programs and delivered more aircraft in calendar 
2012 than a year earlier. 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 experience 
sustained growth over 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 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 December 31, 2012, Héroux-Devtek's funded (firm orders) backlog stood 
at $376 million, versus $378 million three months earlier, and remains well 
diversified.

"In keeping with historical trends, we expect the fourth quarter to yield a 
strong sales volume. As a result, we continue to anticipate an internal sales 
growth from continuing operations that could reach up to 5% for the current 
fiscal year ending March 31, 2013, assuming the Canadian dollar remains at 
parity versus the U.S. currency. Over the long term, Héroux-Devtek's solid 
reputation as a world-class integrated supplier of high-quality, value-added 
products and services should allow us to capture any business opportunity that 
may arise, as we leverage our strengths and know-how in the landing gear 
industry," concluded Mr. Labbé.

CONFERENCE CALL 
Héroux-Devtek Inc. will hold a conference call to discuss these results on 
Friday, February 8, 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, 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 87436260 on 
your phone. This tape recording will be available on Friday, February 8, 2013 
as of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, February 15, 
2013.

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 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. 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 readers: Complete unaudited interim condensed consolidated financial 
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.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/February2013/08/c4129.html

CO: MAISON BRISON - ENGLISH
ST: Quebec
NI: ARO ERN CONF MED 

-0- Feb/08/2013 12:00 GMT

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