Canadian Manufacturing

Heroux Devtek beats profit expectations as acquisitions boost bottom line

The Canadian Press

Canadian Manufacturing
Manufacturing Operations Aerospace

Acquisitions helped the aircraft parts company achieve its impressive results

LONGUEUIL, Que.—Heroux-Devtek Inc. enjoyed a 49 per cent revenue boost last quarter as a pair of acquisitions beefed up its bottom line, exceeding analyst expectations and raising its share price by 10 per cent.

The aircraft parts company’s acquisitions of Michigan-based rival Beaver Aerospace for US$23.5 million and Madrid-based landing gear-maker CESA for (euro)140 million helped push profits to $7.4 million in the quarter ended Dec. 31, the company said.

Revenue totalled $144.5 million in its third quarter, up from $97 million in the same quarter a year earlier.

The Beaver and CESA acquisitions together contributed $39.6 million, while organic growth hit eight per cent, the company said.


The surprise results sparked a spike in share price, which closed at $13.98.

Analyst Benoit Poirier of Desjardins Capital Markets called the results “stellar,” noting that the Longueuil-based company has received Boeing’s customer certification for a surface treatment process that “should allow the company to realize its full margin potential.”

Management forecast revenues of between $620 million and $650 million in 2022, which would mark a 35 per cent leap from expected revenues of roughly $465 million in 2019.

Heroux-Devtek, which was founded in the Second World War as a machine parts maker supplying the military, saw a 76 per cent year-over-year rise in revenue last quarter to $79 million from its defence segment, which Poirier expected to hit just $62 million. Commercial revenues come in at $66 million, a 25 per cent year-over-year increase.

Profits amounted to 20 cents per diluted share for the quarter ended Dec. 31 compared with a profit of $626,000 or two cents per share a year ago, the company said.

On an adjusted basis, Heroux-Devtek earned 26 cents per share for the quarter, up from 16 cents per share a year ago.

Analysts on average had expected adjusted earnings per share of 17 cents, according to Thomson Reuters Eikon.


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