Mr. Martin Brassard reports

HEROUX-DEVTEK REPORTS SECOND QUARTER RESULTS

Heroux-Devtek Inc. has released its financial results for the second quarter ended Sept. 30, 2023. Unless otherwise indicated, all amounts are in Canadian dollars.

"Our second quarter results demonstrate continued progression toward our historical level of profitability. The hard work of our teams and the actions we've taken are bearing fruit despite the persistent challenges brought by the instability of the global aerospace supply chain," said Martin Brassard, president and chief executive officer of Heroux-Devtek.

"The expertise of our engineers and excellence of our manufacturing teams are attracting very strong demand for our services. As a result, we are well-positioned to participate in many programs across the world, that will drive our revenues for years to come," added Mr. Brassard.

Second quarter results

Consolidated sales increased 6.6 per cent to $141.5-million, from $132.7-million in the same period last year, reflecting growth in the civil market segment as well as a 4.1-per-cent positive impact of foreign exchange.

Civil sales were up 29.8 per cent to $53.6-million, mainly driven by increased deliveries for the Boeing 777 and Embraer Praetor programs. Defence sales were down 3.8 per cent to $87.9-million due to delayed deliveries for the Boeing F-18 program.

Gross profit increased to $22.5-million from $18.4-million, or 15.9 per cent of sales from 13.8 per cent last year. This is mainly due to positive impact of higher volume and pricing initiatives and was partly offset by the effects of inflation on labour and general production supplies as well as a less favourable product mix.

Operating income increased to $9.1-million from $8.6-million last year, reflecting higher volume partly offset by higher employee-related costs. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), for the same reasons, rose 12.4 per cent to $18.2-million, or 12.9 per cent of sales, from $16.2-million or 12.2 per cent last year.

Net income for the second quarter of fiscal 2024 remained relatively stable at $4.6-million, or 14 cents per diluted share, compared with $4.8-million, or 14 cents per diluted share, in the corresponding quarter last year. Adjusted net income stood at $4.6-million, or 14 cents per diluted share, up from $3.6-million, or 10 cents per diluted share, in the corresponding quarter last year.

Six-month results

Consolidated sales increased 14.3 per cent to $282.2-million, from $246.8-million in the corresponding period last year, reflecting growth in both civil and defence market segments as well as the 4.7-per-cent positive impact of foreign exchange.

Civil sales were up 35.3 per cent to $103.8-million, mainly driven by increased deliveries for the Boeing 777 and Embraer Praetor programs. Defence sales were up 4.9 per cent at $178.4-million, mainly driven by 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 program. These positive elements were partly offset by delayed deliveries for the Boeing F-18 program.

Gross profit increased to $42.6-million from $30.9-million, or to 15.1 per cent from 12.5 per cent last year as a percentage of sales. This is mainly due to positive impact of higher volume and pricing initiative and was partly offset by the effects of inflation on labour and general production supplies as well as a less favourable product mix.

Operating income increased to $16.6-million from $11.2-million last year, reflecting higher volume partly offset by higher employee-related costs. Adjusted EBITDA, for the same reasons, rose 25.1 per cent to $34.6-million, or 12.2 per cent of sales, from $27.6-million or 11.2 per cent last year.

Net income for the six-month period of fiscal 2024 stood at $8.6-million, or 25 cents per diluted share, up from $5.8-million, or 17 cents per diluted share, or up from $4.5-million, or 13 cents, on an adjusted basis in the corresponding period last year.

Liquidity and financial position

Cash flows related to operating activities represented a usage of $15.6-million in the second quarter and $27.8-million in the first six months of year, compared with $8.3-million and $20.3-million generated during the corresponding periods last year. These decreases mainly resulted from investments in inventory levels to stabilize the production system and to sustain coming sales growth.

As at Sept. 30, 2023, net debt stood at $214.2-million, an increase as compared with $165-million as at March 31, 2023, mainly as a result of the cash flow usage described above. The improved profitability over the six-month period partially offsets the effects of increasing net debt on the net debt to adjusted EBITDA ratio, which increased to 3.1 times from 2.7 times at March 31, 2023.

Conference call

Heroux-Devtek will hold a conference call to discuss these results on Friday, Nov. 10, 2023, at 8:30 a.m. 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 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 toll-free 1-888-390-0541 and entering the passcode 789338 on your phone. Local dial-in number is 1-416-764-8677. This recording will be available from Tuesday, Nov. 10, 2023, as of 11:30 a.m., until 11:59 p.m. on Friday, Nov. 17, 2023.

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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