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Héroux-Devtek reports fiscal 2014 first quarter results


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

Net income                                     2,814            6,204

  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 million resulting 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 of lower 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 reflects an 
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.

OUTLOOK
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.

CONFERENCE CALL 
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.

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. 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.

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.

 

 

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: Héroux-Devtek Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2013/01/c2835.html

CO: Maison Brison - English
ST: Quebec
NI: ARO FIN ERN CONF 

-0- Aug/01/2013 11:00 GMT

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