Héroux-Devtek reports fiscal 2014 second quarter results


    --  Sales from continuing operations of $56.4 million, versus $57.7
        million last year
    --  Net income from continuing operations stable at $2.6 million
    --  Cash and cash equivalents of $92.7 million, equivalent to $2.94
        per share, as at September 30, 2013
    --  Funded backlog of $347 million
    --  Signature of a Memorandum of Agreement with Boeing during the
        quarter to supply complete landing gear systems for the 777
        program

LONGUEUIL, QC, Nov. 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 second quarter of 
fiscal 2014 ended September 30, 2013. Unless otherwise indicated, all amounts 
are in Canadian dollars. Net income from discontinued operations for the 
three- and six-month periods ended September 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 
and the gain from the sale of discontinued operations.

"The strength of the commercial aerospace market was Héroux-Devtek's main 
driver in the second-quarter of fiscal 2014, as sales in this market rose 
nearly 10%. However, uncertainty in the U.S. military market with reduced base 
defense budget funding and the ongoing sequestration resulted in a marked 
decline in sales of military products. More importantly, the main highlight of 
the quarter was the signature, by our wholly-owned subsidiary HDI Landing Gear 
USA Inc., of a Memorandum of Agreement ("MOA") with Boeing to supply complete 
landing gear systems for the B-777 program. A multi-year contract is expected 
to be signed before the end of calendar 2013 and would be the largest contract 
ever for our landing gear operations. This landmark achievement represents a 
major step up for Héroux-Devtek in the global supply chain, as it provides a 
solid foundation to leverage in our quest to sustain long-term growth," said 
Gilles Labbé, President and CEO of Héroux-Devtek.
                                                                       

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

(in thousands of
dollars, except per
share data)           2013              2012    2013               2012

Sales from
continuing
operations          56,402            57,684 119,374            121,464

EBITDA from
continuing
operations           6,254             6,989  14,001             15,260

Net income from
continuing
operations           2,584             2,645   5,398              5,591

  Per share -
  diluted ($)         0.08              0.09    0.17               0.18

Net income from
discontinued
operations               -           110,000       -            113,258

Net income           2,584           112,645   5,398            118,849

  Per share -
  diluted ($)         0.08              3.64    0.17               3.86

Weighted-average
shares outstanding
(diluted, in '000s) 31,688            30,985  31,678             30,824


Consolidated sales from continuing operations amounted to $56.4 million, down 
slightly from $57.7 million in the second quarter of fiscal 2013. Sales to the 
commercial aerospace market increased 8.8% to $27.0 million resulting from new 
actuator business with Boeing on the B-777 program and production rate 
increases on the B-777 and A-320 programs, partially offset by lower 
aftermarket sales on the Bombardier CL-415 program. Sales to the military 
aerospace market declined 10.6% to $29.4 million due to lower customer demand 
on certain programs, mainly the B-2, Global Hawk, F-15 and C-17, partially 
offset by new business with Boeing on the CH-47 Chinook helicopter program. 
Lower military sales also reflect a weak U.S. military market due to reduced 
base defense budget funding and the continued sequestration situation. 
Fluctuations in the value of the Canadian currency versus the US currency 
increased second-quarter sales by $0.4 million but had a negative effect of 
$0.2 million, or 0.3% of sales, on gross profit compared with last year's 
second 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. 
Gross profit was relatively stable, both in monetary terms and as a percentage 
of sales, as a higher under-absorption of manufacturing overhead costs 
resulting from lower military customer requirements was offset by a reduction 
in non-quality costs. Meanwhile, selling and administrative expenses rose 
mainly due to higher R&D expenses and professional fees, including those 
related to the B-777 MOA. As a result, earnings before interest, taxes, 
depreciation and amortization ("EBITDA") from continuing operations totalled 
$6.3 million, or 11.1% of sales, compared with $7.0 million, or 12.1% of 
sales, last year. 
Net income from continuing operations was stable at $2.6 million, or $0.08 per 
diluted share, in the second quarter of fiscal 2014, versus $2.6 million, or 
$0.09 per diluted share, in the second quarter of fiscal 2013. In the second 
quarter of fiscal 2014, the Corporation recorded a favourable adjustment of 
deferred income tax liabilities of $0.9 million. 
FINANCIAL POSITION REMAINS HEALTHY
As at September 30, 2013, Héroux-Devtek's balance sheet remained healthy with 
cash and cash equivalents of $92.7 million, or $2.94 per share. At that same 
date, total debt was $62.2 million, including $22.7 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 $30.5 million as at September 30, 2013. 
SIX MONTHS RESULTS
For the first six months of fiscal 2014, consolidated sales from continuing 
operations reached $119.4 million, versus $121.5 million a year earlier. 
Currency variations increased sales by $0.2 million, but reduced gross profit 
by $0.4 million in the first six months of fiscal 2014. EBITDA from continuing 
operations stood at $14.0 million, or 11.7% of sales, compared with $15.3 
million, or 12.6% of sales, a year earlier. Net income from continuing 
operations totalled $5.4 million, or $0.17 per diluted share, versus $5.6 
million, or $0.18 per diluted share, in the prior year. 
OUTLOOK 
Conditions remain favourable in the commercial aerospace market. Large 
commercial aircraft manufacturers continue to proceed with production rate 
increases 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, key 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. Given the uncertainty 
regarding the duration of sequestration, the Corporation may continue to be 
affected by U.S. defense cutbacks beyond the current fiscal year, despite 
having a diversified military portfolio, balanced between new component 
manufacturing and aftermarket products and services, that should lessen this 
impact. 
As at September 30, 2013, Héroux-Devtek's funded (firm orders) backlog stood 
at $347 million, versus $361 million at the beginning of the fiscal year, and 
remains well diversified. The decline is essentially attributable to the 
weakness of the U.S. military market. 
"Through its solid reputation as a world-class provider of integrated 
services, Héroux-Devtek is well positioned to seize opportunities that will 
arise in the landing gear market. In the short-term, the joint effect of U.S. 
military spending restrictions, the persistent sequestration and the 
government shutdown in October, will further impact consolidated sales for the 
fiscal year ending March 31, 2014, which we now expect to be slightly lower 
than last year, offsetting robust commercial aerospace activity that should 
yield sales growth of approximately 10% in this market. Given the weak 
military market, we mustproactivelyoptimize our asset utilization and 
adapt supply to demand, as evidenced by the workforce reduction announced 
earlier this week. Over the long run, Héroux-Devtek's financial strength is a 
key factor to shareholder value creation, as capital will be deployed, 
internally and through strategic acquisition, in initiatives that will further 
enhance our product and service offering," concluded Mr. Labbé. 
CONFERENCE CALL 
Héroux-Devtek Inc. will hold a conference call to discuss these results on 
Friday, November 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, 
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 74423839 on 
your phone. This tape recording will be available on Friday, November 8, 2013 
as of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, November 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. The Corporation also 
manufactures electronic enclosures, heat exchangers and cabinets for suppliers 
of 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 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. 
From: 
Héroux-Devtek Inc. Gilles Labbé President and Chief Executive Officer Tel.: 
(450) 679-3330 
Contact: 
Héroux-Devtek Inc. Stéphane Arsenault Chief Financial Officer Tel.: (450) 
679-3330 
MaisonBrison Martin Goulet, CFA Tel.: (514) 731-0000 
To view this news release in HTML formatting, please use the following URL: 
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CO: Maison Brison - English
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-0- Nov/08/2013 12:00 GMT
 
 
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