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Q4 Highlights
LONGUEUIL, QC, May 18, 2023 /CNW/ - Héroux-Devtek Inc. (TSX: HRX) ("Héroux-Devtek" or the "Corporation"), a leading international manufacturer of aerospace products and the world's third-largest landing gear manufacturer, today reported its financial results for the fourth quarter and fiscal year ended March 31, 2023. Unless otherwise indicated, all amounts are in Canadian dollars.
"During the fourth quarter, we continued to improve our financial performance, generating $156 million of sales for a total of $297 million during the last six months of the fiscal year. We continue to have strong relationships with our customers, as evidenced by our funded backlog of $864 million in orders. Our main challenge is to deliver on those orders steadily and efficiently while the operating environment remains complex", said Martin Brassard, President and CEO of Héroux-Devtek.
"Fiscal 2023 was a year of adjustment for the aerospace industry, as demand for civil products rebounded from a severe drop over the last two years. At Héroux-Devtek, our priority remains stabilizing our production system through a reliable supply chain and increased automation in our plants. We will also continue to improve our processes and our pricing structure with our customers and suppliers. We are confident that these measures will return our profitability to higher levels," added Mr. Brassard.
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1 This is a non-IFRS measures. Please refer to the "Non-IFRS Measures" section at the end of this press release. |
FINANCIAL HIGHLIGHTS | Three months ended | Twelve months ended March 31, | ||
(in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 |
Sales | $ 155,978 | $ 147,459 | $ 543,622 | $ 536,087 |
Operating income | 9,879 | 11,463 | 26,198 | 44,758 |
Adjusted EBITDA1 | 19,595 | 22,149 | 61,366 | 83,049 |
Net income | 6,288 | 11,459 | 13,825 | 32,140 |
Adjusted net income1 | 6,288 | 13,158 | 12,606 | 33,839 |
Cash flows related to operating activities | 4,518 | 10,016 | 30,060 | 63,166 |
Free cash flow (usage)1 | (8,740) | 6,843 | (1,718) | 45,894 |
in dollars per share | ||||
Diluted earnings per share | $ 0.18 | $ 0.33 | $ 0.40 | $ 0.90 |
Adjusted EPS1 | 0.18 | 0.38 | 0.37 | 0.95 |
As at | March 31, | March 31, 2022 | ||
Funded backlog2 | $ 864,000 | $ 682,000 | ||
1.Non-IFRS financial measure. Refer to the Non-IFRS financial measures section for definitions and reconciliations to the most comparable IFRS measures. |
2. Represents firm orders. |
FOURTH QUARTER RESULTS
Throughput improved for a third consecutive quarter, reaching $156.0 million, up from $140.9 million last quarter and $147.5 million last year. Civil sales were up 28.9%, mainly driven by increased deliveries for the Boeing 777, Embraer Praetor and Falcon 6X programs, while defence sales were relatively stable at $107.1 million. Foreign exchange had a $6.0 million positive impact on sales compared to last fiscal year.
Gross profit as a percentage of sales decreased from 17.6% last year to 14.6%, mainly due to inefficiencies resulting from production system disruptions and inflation, while government relief measures partly compensated for last year's COVID-19 disruptions, bearing a 0.7% positive impact on gross profit (none this year).
Operating income decreased to $9.9 million, or 6.3% of sales, from $11.5 million, or 7.8% of sales last year, reflecting lower gross profit, partly offset by the positive effect of foreign exchange fluctuations representing 1.0% of sales.
Earnings per share decreased to $0.18 compared to $0.33 last year.
FISCAL 2023 RESULTS
Consolidated sales reached $543.6 million, up from $536.1 last fiscal year, including a $9.2 million positive impact of foreign exchange. Defence sales totaled $372.9 million, down 3.6% compared to last year, while civil sales were up 14.3% to $170.7 million, mainly driven by increased deliveries for the Boeing 777, Embraer Praetor and Falcon 6X programs.
Gross profit totaled $73.5 million or 13.5% compared to $91.1 million or 17.0% of sales last year. The decrease was caused by the same unfavourable factors listed for the three-month period, while government relief measures partly compensated for last year's COVID-19 disruptions, bearing a 1.4% positive impact on gross profit (none this year).
Operating income fell to $26.2 million, or 4.8% of sales, from $44.8 million, or 8.3% of sales last year, reflecting lower gross profit.
Earnings per share decreased to $0.40, or $0.37 when adjusted for the gain on achievement of commercial objectives related to the sale of Bolton, compared to $0.90 on a diluted basis or $0.95 when adjusted for a legal ruling last year.
FINANCIAL POSITION
As at March 31, 2023, net debt stood at $165.0 million, an increase from $152.1 million a year prior. Net debt to adjusted EBITDA1 ratio rose to 2.7:1 from 1.8:1 a year ago. The higher net debt to EBITDA1 ratio reflects our investment in inventory made to stabilize our production system as well as lower profitability year-on-year.
CONFERENCE CALL
Héroux-Devtek Inc. will hold a conference call to discuss these results on Thursday, May 18, 2023, at 8:30 AM Eastern Time. Interested parties can join the call by dialling 1-888-390-0549 (North America) or 1-416-764-8682 (overseas). The conference call can also be accessed via live webcast on Héroux-Devtek's website at https://investors.herouxdevtek.com/events-webcast. The Company's consolidated financial statements and Management's Discussion & Analysis will be available in the Investors section of the Corporation's website: https://investors.herouxdevtek.com/annual-reports.
If you are unable to call in at this time, you may access a tape-recording of the meeting by calling toll-free 1–888–390-0541 and entering the passcode 879912 on your phone. Local dial-in number is 416-764-8677. This recording will be available from Thursday, May 18, 2023, as of 11:30 AM, until 23:59 PM on Thursday, May 25, 2023.
FORWARD-LOOKING STATEMENTS
Except for historical information provided herein, this press release contains information and statements of a forward-looking nature concerning the future performance of the Corporation.
Forward-looking statements are based on assumptions and uncertainties as well as on management's best possible evaluation of future events. Such factors include, but are not limited to customers, supply chain, the aerospace industry and the economy in general; the impact of other worldwide general economic conditions; industry conditions including changes in laws and regulations; increased competition; the lack of availability of qualified personnel or management; availability of commodities and fluctuations in commodity prices; financial and operational performance of suppliers and customers; foreign exchange or interest rate fluctuations; and the impact of accounting policies issued by international standard setters. Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements.
As a result, readers are advised that actual results may differ from expected results. Please see the Economic Outlook section under Overview of the Business, as well as the Risk Management section under Additional Information in the Corporation's MD&A for the fourth quarter and fiscal year ended March 31, 2023, for further details regarding the material assumptions underlying the forecasts and guidance. Such forecasts and guidance are provided for the purpose of assisting the reader in understanding the Corporation's financial performance and prospects and to present management's assessment of future plans and operations, and the reader is cautioned that such statements may not be appropriate for other purposes.
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1 This is a non-IFRS measures. Please refer to the "Non-IFRS Measures" section at the end of this press release. |
NON-IFRS FINANCIAL MEASURES
Earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income, adjusted earnings per share and free cash flow are financial measures not prescribed by International Financial Reporting Standards ("IFRS") and are not likely to be comparable to similar measures presented by other issuers. Management considers these to be useful information to assist investors in evaluating the Corporation's profitability, liquidity and ability to generate funds to finance its operations. Refer to Non-IFRS financial measures section under Operating Results in the Corporation's MD&A for definitions of these measures and reconciliations to the most comparable IFRS measures.
ABOUT HÉROUX-DEVTEK
Héroux-Devtek Inc. (TSX: HRX) is an international company specializing in the design, development, manufacture, repair and overhaul of aircraft landing gear, hydraulic and electromechanical actuators, custom ball screws and fracture-critical components for the Aerospace market. The Corporation is the third-largest landing gear company worldwide, supplying both the defence and commercial market segments. Approximately 94% of the Corporation's sales are outside of Canada, including about 58% in the United States. The Corporation's head office is located in Longueuil, Québec with facilities in Canada, the United States, the United Kingdom and Spain.
SOURCE Héroux-Devtek Inc.
