Mr. Martin Brassard reports

HEROUX-DEVTEK REPORTS FIRST QUARTER RESULTS

Heroux-Devtek Inc. has released its financial results for the first quarter ended June 30, 2023.

"We are proud of our performance this quarter, as we delivered sales totalling $141-million, bringing our trailing 12-month total to $570-million. Fulfilling orders at a steady pace remains a challenge in this environment, and this quarter's success is the direct result of the improvements we put in place over the past year. Our teams have managed a substantial surge in demand, positioning us to further improve our results and expand our market share. I would like to thank every employee for their professionalism and dedication," said Martin Brassard, president and chief executive officer of Heroux-Devtek.

Mr. Brassard added: "We are well positioned for upcoming opportunities in both the civil and defence market segments. While our order book is already healthy, our customers have many projects, and we will continue to support them as they pursue their growth."

First-quarter results

Consolidated sales increased 23.3 per cent to $140.7-million, from $114.1-million in the same period last year, reflecting growth in both the civil and defence market segments as well as the 5.5-per-cent positive impact of foreign exchange.

Civil sales were up 41.8 per cent to $50.2-million, mainly driven by increased deliveries for the Boeing 777 and Embraer Praetor programs. Defence sales were also up 15.1 per cent at $90.5-million due to the alignment of operations to better deliver while facing the challenges of the current environment as well as the ramp-up of deliveries for the Sikorsky CH-53K.

Gross profit increased to $20.1-million from $12.5-million, or from 11.0 per cent last year to 14.3 per cent as a percentage of sales. This is mainly due to higher volume and was partly offset by the year-over-year effects of inflation on labour and general production supplies, as well as a 0.3-per-cent negative impact of foreign exchange.

Operating income increased to $7.5-million from $2.6-million last year, reflecting higher volume partly offset by an increase in selling and administrative expenses driven by higher employee-related costs, as well as the $1.0-million year-over-year negative impact of foreign exchange. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), for the same reasons, rose 43.2 per cent to $16.4-million, or 11.6 per cent of sales, from $11.4-million, or 10.0 per cent, last year.

Net income for the first quarter of fiscal 2024 stood at $4-million, or 12 cents per diluted share, up from $1.0-million, or three cents per diluted share, in the corresponding period last year.

Liquidity and financial position

Cash flows related to operating activities represented a usage of $12.2-million in the first quarter, compared with $12.0-million generated during the corresponding period last year. This decrease resulted from last year's proceeds of $11.3-million from the unwinding of cross-currency interest rate swaps, an unfavourable seasonal variation in accounts receivable and accounts payable compared with last year, and the strategic investment in inventory levels made to stabilize the production system and sustain future sales growth.

As at June 30, 2023, net debt stood at $187.5-million, an increase compared with $165.0-million as at March 31, 2023, mainly as a result of the cash flow usage described herein. The improved profitability this quarter compared with last partly offset the effect of increased net debt on the net-debt-to-adjusted-EBITDA ratio, which therefore increased slightly to a multiple of 2.8 compared with a multiple of 2.7 at March 31, 2023.

Conference call

Heroux-Devtek will hold a conference call to discuss these results on Tuesday, Aug. 8, 2023, at 11 a.m. ET. Interested parties can join the call by dialling 1-888-390-0549 (North America) or 1-416-764-8682 (overseas). The conference call and accompanying presentation can also be accessed via live webcast at Heroux-Devtek's website.

If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-888-390-0541 (toll-free) and entering passcode 886811 on your phone. The local dial-in number is 1-416-764-8677. This recording will be available from Tuesday, Aug. 8, 2023, as of 2 p.m. ET until 11:59 p.m. ET on Tuesday, Aug. 15, 2023.

Annual meeting of shareholders

Heroux-Devtek will hold its annual meeting of shareholders on Tuesday, Aug. 8, 2023, at 10 a.m. ET in a virtual format. All details to access the annual meeting are also available on the corporation's website.

About Heroux-Devtek Inc.

Heroux-Devtek 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 sectors. Approximately 94 per cent of the corporation's sales are outside of Canada, including about 61 per cent in the United States. The corporation's head office is located in Longueuil, Que., with facilities in Canada, the United States, the United Kingdom and Spain.

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