Canadian Manufacturing

Heroux-Devtek bidding on new commercial landing gear deals

Firm bidding on new deals in effort to nearly double full-year revenues to $500 million within five years

MONTREAL—Heroux-Devtek Inc. says it is bidding on several contracts to supply landing gear for commercial aircraft, part of the Quebec-based aerospace company’s effort to nearly double its full-year revenues to $500 million within five years.

CEO Gilles Labbe was coy about specifics of the new contract opportunities, only saying they were for helicopters and other smaller types of aircraft.

Heroux-Devtek reported a profit of $3.3 million or nine cents per share for the quarter ended Sept. 30, up from $2.6 million or eight cents per share a year ago.

Revenue totalled $84.1 million in what was the company’s fiscal second quarter, up from $56.4 million a year ago due to a $23.5-million contribution from APPH Ltd., acquired in February, and a $1.5-million gain from the weaker Canadian dollar.

Excluding acquisition and restructuring costs, the company beat expectations with an adjusted profit of $3.8 million or 11 cents per share for the quarter, up from $2.8 million or nine cents per share in the prior year.

Heroux-Devtek was expected to earned 10 cents per share on $77.8 million of revenues, according to analysts polled by Thomson Reuters.

The company, based near Montreal in Longueuil, Que., makes landing gear and other aircraft equipment for both military and commercial aircraft.

It’s benefiting from the acquisition of APPH for $128 million and the ramp up of work for Boeing Co. and Embraer S.A., a Brazilian rival of Bombardier that makes a range of smaller passenger jets for commercial airlines.

Heroux-Devtek is also spending $90 million over two years, including $58 million this year, to build a plant in Cambridge, Ont., and equip several Canadian and American facilities with the tools to make full landing gears for the Boeing 777 and 777X—two large commercial passenger jets.

The company said it expects stable sales for the full year as gains in commercial aerospace will be offset by lower sales to the military aerospace market.

But with the civil aerospace market for commercial and business aircraft growing, Labbe said the company can achieve its $500-million sales target, despite ongoing military budget challenges.

“This objective can be achieved without further acquisitions,” Labbe told analysts.

During the quarter, commercial aerospace sales increased 39 per cent to $37.5 million due to the contribution from APPH, higher production rates for the Boeing 777 and 787 aircraft and the entry into production of the Embraer Legacy 450/500.

Military sales reached $46.6 million, up 58.6 per cent due to APPH and higher sales volumes on the F-35 Joint Strike Fighter and CH-47 helicopter programs.

Analyst Cameron Doerksen of National Bank Financial said the results were positive and support the company’s long-term revenue target.

“We also expect margin improvement as volumes increase as new proprietary programs ramp up production and as the company fully integrates the APPH operations,” he wrote in a report.

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