LONGUEUIL, QUEBEC--(Marketwired - May 25, 2016) -

Fourth quarter highlights:

• Sales of $117.5 million, up 10.8% from $106.1 million last year
• 30.3% increase in adjusted¹ EBITDA to $20.7 million, or 17.6% of sales, versus 15.0% of sales a year ago
• Adjusted¹ net income rose 21.9% to $9.1 million, or $0.25 per share, compared to $7.5 million, or $0.21 per share last year
• Capital investment plan essentially completed in preparation for the Boeing 777 and 777X contract

Fiscal 2016 highlights:

• Sales of $406.8 million, up 11.5% from $364.9 million last year
• 34.1% increase in adjusted¹ EBITDA to $64.1 million, or 15.7% of sales, versus 13.1% of sales in fiscal 2015
• Adjusted¹ net income rose 42.4% to $27.7 million, or $0.77 per share, compared to $19.4 million, or $0.55 per share last year
• Important long-term agreements signed in fiscal 2016, including two landing gear systems design mandates

Héroux-Devtek Inc. (TSX:HRX), ("Héroux-Devtek" or the "Corporation"), a leading international manufacturer of aerospace products, today reported its results for the fourth quarter and fiscal year ended March 31, 2016. Unless otherwise indicated, all amounts are in Canadian dollars.

"In the last fiscal year, Héroux-Devtek methodically executed its business strategy and gained additional recognition as a world-class organization in its core landing gear market. We generated strong financial results, while achieving significant progress on our growth platforms. At year-end, we had essentially completed our capital investment plan in preparation for the Boeing 777 and 777X contract and final assembly of the pre-production shipset will be completed in the current quarter. During fiscal 2016, Héroux-Devtek was also awarded new design contracts that widened its market reach, renewed important long-term agreements, and further enhanced its ability to support existing products in the aftermarket. In recognition of the superior quality of its products and on-time deliveries, our Laval facility has just received a Top Supplier Award by Lockheed Martin Aeronautics for its contribution to the F-35 program, which reflects the talent and dedication of our team," said Gilles Labbé, President and CEO of Héroux-Devtek.

FOURTH QUARTER RESULTS

Consolidated sales reached $117.5 million, compared with $106.1 million in the fourth quarter of fiscal 2015. This 10.8% increase reflects higher sales to the defence aerospace market, while year-over-year fluctuations in the value of the Canadian currency versus foreign currencies increased fourth-quarter sales by $9.8 million.  

Commercial sales were $54.3 million, up 2.3% from $53.1 million last year. Excluding a $4.4 million year-over-year favourable currency effect, the net decrease stems from lower customer requirements on certain business jet programs, as well as lower production rates on the Airbus 330/340 and certain regional jet programs. These factors were partially offset by higher aftermarket sales in support of the Saab 340 program, as well as greater content and a higher production rate for the Boeing 787 aircraft.

Defence sales increased 19.3% from $53.0 million to $63.2 million. Excluding a $5.4 million year-over-year currency effect, the net increase reflects higher manufacturing sales to civil customers, in part due to the catch-up on certain programs, and greater repair and overhaul sales to the U.S. Air Force. These factors were partially offset by lower spare parts requirements from the U.S. government and lower engineering sales.

Gross profit reached $22.2 million, or 18.9% of sales, compared with $17.3 million, or 16.3% of sales, last year. The increase reflects a better product mix, the lower under-absorption of costs and favourable year-over-year currency fluctuations equivalent to 0.4% of sales. Adjusted EBITDA stood at $20.7 million, or 17.6% of sales, compared with $15.9 million, or 15.0% of sales, a year ago. Last year's adjusted EBITDA excluded non-recurring charges of $13.2 million for the settlement of a litigation and restructuring charges.

Adjusted net income was $9.1 million, or $0.25 per share, in the fourth quarter of fiscal 2016, versus $7.5 million, or $0.21 per share, in the fourth quarter of fiscal 2015, excluding non-recurring charges of $9.1 million, net of taxes.

FISCAL 2016 RESULTS

For the fiscal year ended March 31, 2016, consolidated sales totalled $406.8 million, representing an increase of 11.5% from fiscal 2015 sales of $364.9 million. Year-over-year fluctuations in the value of the Canadian currency versus foreign currencies increased fiscal 2016 sales by $40.8 million. Commercial sales rose 18.8% to $206.5 million and grew 6.9% net of currency variations. In addition to the aforementioned factors, the increase reflects higher revenues from the sale of landing gear designed by Héroux-Devtek due to the ramp up of the Embraer Legacy 450/500 program. Defence sales increased 4.8% to $200.3 million, but decreased 5.7% net of currency variations. In addition to the factors mentioned above, the decline resulted from certain delayed deliveries with the U.S. government and lower throughput in the U.K.

Gross profit for fiscal 2016 amounted to $74.3 million, equivalent to 18.3% of sales, compared with $59.2 million, or 16.2% of sales, in fiscal 2015. This improvement reflects the factors listed above, including favourable year-over-year currency fluctuations equivalent to 1.5% of sales. Adjusted EBITDA reached $64.1 million, representing 15.7% of sales, up from $47.8 million, or 13.1% of sales, last year. Finally, adjusted net income was $27.7 million, or $0.77 per share, versus $19.4 million, or $0.55 per share, in the prior year.

FINANCIAL POSITION 

As at March 31, 2016, Héroux-Devtek's balance sheet remained healthy with cash and cash equivalents of $19.3 million, while total long-term debt was $147.2 million, including the current portion, but excluding net deferred financing costs. Long-term debt includes $70.7 million drawn against the Corporation's authorized Credit Facility of $200.0 million. As a result, the Corporation's net debt position stood at $128.0 million as at March 31, 2016, while the net-debt-to equity ratio was 0.39:1, stable compared with three months earlier.

UPDATE ON THE BOEING 777 AND 777X CONTRACT

During fiscal 2016, Héroux-Devtek made significant progress towards meeting the requirements of the long-term contract to supply The Boeing Company ("Boeing") with complete landing gear systems for the Boeing 777 and 777X aircraft. At the end of the fiscal year, manufacturing and assembly work was being carried out at all facilities involved on the contract. The Corporation also made further progress on the customer qualification and approval process of its new surface treatment equipment at the finishing sub-assembly centre in Strongsville, Ohio, which management expects to be completed in the second quarter of fiscal 2017.

Management is confident that final assembly of the pre-production shipset will be completed as planned in the first quarter of fiscal 2017, and that production requirements associated to deliveries scheduled to begin in early calendar 2017 will be met. As at March 31, 2016 the Corporation had made capital investments of $105 million, representing approximately 95% of the total investment associated to this contract.

OUTLOOK

Conditions remain mostly favourable in the commercial aerospace market. In the large commercial aircraft sector, Boeing and Airbus are proceeding with production rate adjustments ahead of introducing certain more fuel efficient aircraft variants on several leading programs through calendar 2019. Their backlogs remain strong, representing approximately eight and ten years of production at current rates, respectively. In the business jet market, the current and future production ramp-up of models for which Héroux-Devtek has designed the landing gear should provide sustained growth for the Corporation for several years. In the defence aerospace market, a budget agreement provides additional funding through the U.S. government's 2017 fiscal year, but uncertainty remains beyond that period given the need to address the deficit. The Corporation's U.K. operations provide Héroux-Devtek with a more geographically diversified defence portfolio, which reduces its relative exposure to the U.S. market. The balance between new component manufacturing and aftermarket products and services in the Corporation's defence portfolio and its leading program content also promote more stability.

As at March 31, 2016, Héroux-Devtek's funded (firm orders) backlog stood at $460 million, versus $459 million at the beginning of the fiscal year.

"Looking ahead, Héroux-Devtek is well-positioned to further enhance its reach in the global landing gear market driven by its fully-integrated world-class capabilities and proven ability to execute large-scale mandates. Our management, engineering and operational teams are focussed on executing our strategic plan, which we believe will create lasting value for shareholders. We are generating constant progress towards our stated objective of achieving annual sales of $500 million during fiscal 2019 and for the fiscal year ending March 31, 2017, we anticipate sales to reach approximately $420 million," concluded Mr. Labbé.

CONFERENCE CALL

Héroux-Devtek Inc. will hold a conference call to discuss these results on Wednesday, May 25, 2016 at 10:00 AM Eastern Time. Interested parties can join the call by dialling 1-877-223-4471 (North America) or 1-647-788-4922 (overseas). The conference call can also be accessed via live webcast at Héroux-Devtek's website, www.herouxdevtek.com/investor-relations/events or www.gowebcasting.com/7461.

If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-800-585-8367 and entering the passcode 86856803 on your phone. This tape recording will be available on Wednesday, May 25, 2016 as of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Wednesday, June 1, 2016.

PROFILE

Héroux-Devtek Inc. (TSX:HRX) is an international company specializing in the design, development, manufacture and repair and overhaul of landing gear and actuation systems and components for the Aerospace market. The Corporation is the third largest landing gear company worldwide, supplying both the commercial and defence sectors of the Aerospace market with new landing gear systems and components, as well as aftermarket products and services. The Corporation also manufactures hydraulic systems, fluid filtration systems and electronic enclosures. Approximately 80% of the Corporation's sales are outside Canada, including about 55% 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, Cambridge and Toronto, Ontario; Springfield and Strongsville, Ohio; Wichita, Kansas; Everett, Washington; and Runcorn, Nottingham and Bolton, United Kingdom.

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"), adjusted EBITDA, adjusted net income and adjusted earnings per share 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 under Operating Results in the Corporation's MD&A for definitions of these measures and reconciliations to the most comparable IFRS measures.

Note to readers: Complete audited consolidated financial statements and Management's Discussion & Analysis are available on Héroux-Devtek's website at www.herouxdevtek.com.