HÉROUX-DEVTEK REPORTS FIRST QUARTER RESULTS

Highlights

• Sales increased to $174.0 million, up 23.7% from $140.7 million a year ago
• Operating income increased to $19.4 million, compared to $7.5 million a year ago
• Adjusted EBITDA¹ increased to $29.6 million or 17.0% of sales, compared to $16.4 million, or 11.6% of sales a year ago
• Earnings per share and adjusted earnings per share¹ increased to $0.37 and $0.39 compared to $0.12 last year
• Cash flows related to operating activities increased to $9.9 million compared to a usage of $12.2 million last year
• Subsequent to the quarter end, Héroux-Devtek entered into a definitive agreement to be acquired by Platinum Equity

LONGUEUIL, QC, Aug. 6, 2024 /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 first quarter ended June 30, 2024. Unless otherwise indicated, all amounts are in Canadian dollars.

"We have delivered another good quarterly performance thanks to the resilience of our teams in coping with the challenges of the current production environment. More than ever, I would like to extend my gratitude to our employees for their hard work and dedication, and to all our customers and business partners for their unwavering trust. The commitment of our employees and our excellence in execution will allow us to continue building Héroux-Devtek in both the civil and defence markets," said Martin Brassard, President and CEO of Héroux-Devtek.

FINANCIAL HIGHLIGHTS	Three months ended June 30,
(in thousands, except per share data)		2024		2023
Sales		$        173,997		$        140,697
Operating income		19,419		7,496
Adjusted EBITDA1		29,558		16,357
Net income		12,545		3,970
Adjusted net income1		13,520		3,970
Cash flows related to operating activities		9,859		(12,198)
Free cash flow (usage)1		1,210		(20,543)
In dollars per share
EPS – basic and diluted		$               0.37		$               0.12
Adjusted EPS1		0.39		0.12

_________________________________________

1 This is a non-IFRS measure. Please refer to the "Non-IFRS Financial Measures" section at the end of this press release.

FIRST QUARTER RESULTS

Consolidated sales increased 23.7% to $174.0 million, from $140.7 million in the same period last year, largely due to the strategies the Corporation implemented over the past two years.

Defence sales were up 20.1% to $108.7 million mainly due to higher aftermarket business for legacy programs as well as higher deliveries for the Lockheed Martin F-35 program, partly offset by lower deliveries for the Sikorsky CH-53K program. Civil sales were up 30.1% to $65.3 million, mainly driven by increased deliveries for the Boeing 777 and Embraer E2 programs.

Gross profit increased to $35.6 million or 20.5% of sales from $20.1 million or 14.3% last year, mainly as a result of the positive impact of higher volume and pricing initiatives.

Operating income increased to $19.4 million or 11.2% of sales from $7.5 million or 5.3% of sales last year, mainly reflecting higher volume and margin combined with the 1.3% year over year positive impact of foreign exchange. Adjusted EBITDA, for the same reasons, rose 80.7% to $29.6 million, or 17.0% of sales, from $16.4 million or 11.6% of sales last year.

Net income for the first quarter of fiscal 2025 increased to $12.5 million, or $0.37 per diluted share, and adjusted net income stood at  $13.5 million or $0.39 per diluted share, both compared to $4.0 million or $0.12 per diluted share in the corresponding quarter last year.

LIQUIDITY AND FINANCIAL POSITION

Cash flows related to operating activities reached $9.9 million in the first quarter compared to a $12.2 million usage during the corresponding period last year, mainly driven by higher volume and profitability.

As at June 30, 2024, net debt stood at $209.8 million, relatively stable as compared to $209.9 million as at March 31, 2024. The net debt to adjusted EBITDA ratio decreased to 2.0x from 2.3x at March 31, 2024 mainly due to the improved profitability over the quarter compared to last year.

ANNUAL MEETING OF SHAREHOLDERS
Héroux-Devtek will hold its Annual Meeting of Shareholders Tuesday, August 6, 2024, at 10:00 a.m. local time in virtual format. Participants who wish to attend the Annual Meeting will be able to join the webcast at https://web.lumiagm.com/493942374. All the details to access the Annual Meeting are also available on the Corporation's website.

DEFINITIVE AGREEMENT TO BE ACQUIRED BY PLATINUM EQUITY
On July 11, 2024, the Corporation announced that it had entered into an arrangement agreement with an affiliate of Platinum Equity Advisors, LLC (the "Purchaser"), a U.S. based private equity firm, pursuant to which the Purchaser will acquire all the issued and outstanding common shares of the Corporation, other than the shares to be rolled over by members of senior management of the Corporation, for $32.50 in cash per share, representing a total enterprise value of approximately $1.35 billion, subject to customary closing conditions (the "Transaction"). The Transaction will be implemented by way of a plan of arrangement under the Business Corporations Act (Québec) and is expected to close before the end of the Corporation's current fiscal year ending March 31, 2025. The conditions set forth in the arrangement agreement include the receipt of required shareholder approval, the approval of the Superior Court of Québec, and regulatory approvals and clearances in Canada, the United States, the United Kingdom and Spain. The special meeting of shareholders of the Corporation to approve the Transaction will be held on September 6, 2024. The Transaction is not subject to any financing condition. Additional information regarding the Transaction will be included in the information circular that the Corporation will file on SEDAR+ and mail to its shareholders in the coming days.

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, including sales volume and profitability and, those relating to regulatory, shareholder and Court approvals and the anticipated timing of completion of the Transaction. These statements 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.

Forward-looking statements are based on assumptions and on management's best possible evaluation of future events and are subject to risks, uncertainties and other important factors that could cause the Corporation's actual performance to differ materially from expected results expressed in or implied by such statements. Such factors include, but are not limited to customers, supply chain, the aerospace industry and the economy in general; the impact of other worldwide geopolitical and 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; the impact of accounting policies issued by international standard setters; the possibility that the Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, required regulatory, shareholder and Court approvals and other conditions to the closing of the Transaction or for other reasons; the failure to complete the Transaction which could negatively impact the price of the shares or otherwise affect the business of the Corporation; the dedication of significant resources to pursuing the Transaction and the restrictions imposed on the Corporation while the Transaction is pending; the uncertainty surrounding the Transaction that could adversely affect the Corporation's retention of customers and business partners; and the occurrence of a material adverse effect leading to the termination of the arrangement agreement. For further details, please see the Risk Management section under Additional Information in the Corporation's MD&A. 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 materially from expected results. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

NON-IFRS FINANCIAL MEASURES
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 sectors. Approximately 94% of the Corporation's sales are outside of Canada, including about 57% 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.

Copyright 2024 Canada NewsWire