Héroux-Devtek Reports Fiscal 2019 Third Quarter Net Income of CA$7.4 million

Héroux-Devtek has reported that consolidated sales increased 49.0% to CA$144.5 million, compared with CA$97.0 million last year, driven by CESA and Beaver which together have contributed CA$39.6 million, as well as 8% organic growth. The company achieved higher sales in both defence and commercial aerospace markets and had a net positive impact on third-quarter sales of CA$1.6 million, resulting from year-over year fluctuations in the value of the Canadian currency versus foreign currencies.
Commercial sales increased 25.7% to CA$65.5 million, compared with CA$52.1 million last year. This was mainly driven by Beaver and CESA’s sales, increased deliveries to Boeing for the 777 and 777X programs, as well as higher business jet sales, mostly related to the ramp-up of deliveries for the Embraer 450/500 program and higher sales of spares.
Defence sales increased 76.0% to CA$79.0 million, from CA$44.9 million. This was essentially due to Beaver and CESA’s sales, higher spares requirements from the U.S. Government and higher manufacturing sales to certain civil customers. These factors were partially offset by the ramp-down of repair and overhaul (“R&O”) activities for the United States Air Force following completion of the contract.
Gross profit increased to CA$24.9 million, or 17.2% of sales, versus CA$15.8 million, or 16.3% of sales, last year. The increase was mainly driven by the impact of the Beaver and CESA acquisitions and higher throughput which led to better absorption of manufacturing costs, partially offset by exchange rate fluctuations which had a negative impact of 0.6% of sales during the quarter.
Operating income increased to CA$11.9 million, or 8.2% of sales, compared with CA$6.6 million, or 6.8% of sales, last year, reflecting mainly the Beaver and CESA contributions. This year and last year’s operating income included acquisition-related costs of $2.1 million and $0.6 million, respectively, in connection with the acquisitions of CESA and Beaver. Adjusted EBITDA, which excludes non-recurring items, also grew, reaching $22.9 million, or 15.8% of sales, compared with CA$13.6 million, or 14.0% of sales, a year ago. Financial expenses increased to CA$2.8 million, compared with CA$0.4 million last year. This variation mainly reflects the interest charge on new debt incurred to finance the CESA acquisition and higher interest rates. Last year’s financial expenses also included a CA$0.6 millon net gain on certain derivative financial instruments.
Net income for the third quarter of fiscal 2019 was CA$7.4 million compared with CA$0.6 million a year ago. Excluding non-recurring items net of taxes, adjusted net income reached CA$9.4 million versus CA$5.7 million last year.