HÉROUX-DEVTEK REPORTS SECOND QUARTER RESULTS

Highlights

• Sales increased to $141.5 million, up 6.6% from $132.7 million a year ago
• Operating income of $9.1 million, compared to $8.6 million a year ago
• Adjusted EBITDA¹ increased to $18.2 million or 12.9% of sales, compared to $16.2 million, or 12.2% of sales a year ago
• Earnings per share remained stable at $0.14, while adjusted earnings¹ per share increased to $0.14, compared to $0.10 last year
• Cash flows related to operating activities reflect higher working capital to support operations and growth

LONGUEUIL, QC, Nov. 10, 2023 /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 second quarter ended September 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 CEO of Héroux-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 Martin Brassard.

FINANCIAL HIGHLIGHTS	Three months ended September 30,				Six months ended September 30,
(in thousands, except per share data)		2023		2022		2023		2022
Sales		$        141,499		$        132,680		$        282,196		$        246,769
Operating income		9,101		8,562		16,597		11,208
Adjusted EBITDA^1		18,221		16,216		34,578		27,642
Net income		4,628		4,799		8,598		5,764
Adjusted net income^1		4,628		3,580		8,598		4,545
Cash flows related to operating activities		(15,580)		8,264		(27,778)		20,305
Free cash flow (usage)^1		(21,424)		699		(41,967)		5,229
In dollars per share
EPS – basic and diluted		$               0.14		$               0.14		$               0.25		$               0.17
Adjusted EPS^1		0.14		0.10		0.25		0.13

_________________________________

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

SECOND QUARTER RESULTS

Consolidated sales increased 6.6% 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% positive impact of foreign exchange.

Civil sales were up 29.8% to $53.6 million, mainly driven by increased deliveries for the Boeing 777 and Embraer Praetor programs. Defence sales were down 3.8% 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% of sales from 13.8% 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, for the same reasons, rose 12.4% to $18.2 million, or 12.9% of sales, from $16.2 million or 12.2% last year.

Net income for the second quarter of fiscal 2024 remained relatively stable at $4.6 million, or $0.14 per diluted share, compared to $4.8 million or $0.14 per diluted share in the corresponding quarter last year. Adjusted net income stood at $4.6 million, or $0.14 per diluted share, up from $3.6 million or $0.10 per diluted share in the corresponding quarter last year.

SIX-MONTH RESULTS

Consolidated sales increased 14.3% 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% positive impact of foreign exchange.

Civil sales were up 35.3% to $103.8 million, mainly driven by increased deliveries for the Boeing 777 and Embraer Praetor programs. Defence sales were up 4.9% 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% from 12.5% 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% to $34.6 million, or 12.2% of sales, from $27.6 million or 11.2% last year.

Net income for the six-month period of fiscal 2024 stood at $8.6 million, or $0.25 per diluted share, up from $5.8 million, or $0.17 per diluted share, or up from $4.5 million or $0.13 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 to $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 upcoming sales growth.

As at September 30, 2023, net debt stood at $214.2 million, an increase as compared to $165.0 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 3.1x from 2.7x at March 31, 2023.

CONFERENCE CALL

Héroux-Devtek Inc. will hold a conference call to discuss these results on Friday, November 10, 2023, at 8:30 AM Eastern Time. Interested parties can join the call by dialing 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 Héroux-Devtek's website, https://investors.herouxdevtek.com/events-webcasts or at https://app.webinar.net/OBLwj2KNl8Z.

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, November 10, 2023, as of 11:30 AM, until 23:59 PM on Friday, November 17, 2023.

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.

Forward-looking statements are based on assumptions and uncertainties as well as on management's best possible evaluation of future events. 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; and the impact of accounting policies issued by international standard setters. 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 from expected results. Please see the Risk Management section under Additional Information in the Corporation's MD&A, for further details regarding the material assumptions underlying the forecasts and guidance. Such forecasts and guidance 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.

NON-IFRS FINANCIAL MEASURES

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), 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 61% 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.

Héroux-Devtek Inc., Stéphane Arsenault, Vice President and Chief Financial Officer, Tel.: [phone], [email protected]; Investor Relations, Hugo Delorme, Tel.: [phone], ext. 555, [email protected]