Like hockey and maple syrup, another of the things Canada can look to with pride is its role in the aerospace industry. There is one company in particular whose fortunes have been, to borrow a hackneyed phrase, looking up.
Heroux-Devtek (T.HRX) with head offices in Longueuil, is a globally active company serving the aerospace markets from eight production facilities throughout North America. A landing gear supplier to worldwide aircraft companies, Heroux boasts it provides production capacity for programs of any size to original equipment manufacturers or Tier 1 players.
The company’s fiscal year ended on March 31, and last week came word about Heroux’s bottom line during those 12 months. Sales kicked a mite higher at $257 million, compared to the $253 million of fiscal 2012. Net income quintupled during the year to $132 million, results that included proceeds from the sale of substantially all of its Aerostructure and Industrial Products operations last August to Precision Castparts Corp. for $234.3 million.
And, there’s also lots to look forward to: officials were quoted in the company press release announcing the results that “conditions remain favourable in the commercial aerospace market.
"Large commercial aircraft manufacturers are increasing production rates for certain leading programs and are forecasting higher deliveries in calendar 2013 than a year earlier."
They did not neglect to mention that, as of the end of March, Heroux-Devtek’s firm orders backlog stood at $361 million, compared to $388 million from continuing operations at the end of fiscal 2012, "and remains well-diversified."
All was not a bowl of cherries, however; cuts in U.S. military spending cut into profits in the company’s fourth-quarter to $4.8 million or 15 cents per share in the fourth quarter, down from $5.6 million in the prior-year quarter. Sales to the military aerospace market declined 14.4% to $41.6 million as a result of manufacturing inefficiencies and lower military customer demand
The company (whose founding dates back to the darkest days of World War Two and whose past accomplishment included landing gear for the Apollo mission’s landing gear) continues a partnership with the federal government that is also worth of note.
In late March, Heroux told investors of Industry Canada’s repayable loan contribution of up to $48.9 million, to support Héroux-Devtek's engineering efforts in connection with the research and development of new technologies for complete new landing gear systems. The loan is given over a five-year term, with the contribution repayable a year after that term.
One of its most recent coups involved a multi-year contract from Boeing (NYSE: BA) to make landing gear for the H-47 Chinook medium-to-heavy-lift helicopter.
While the release expressed no dollar figure, it was reported Héroux-Devtek would fabricate the landing gear for all Chinook aircraft destined to the U.S. Army. Landing gear deliveries are scheduled to begin in the first half of 2014 and will be spread out over a five-year period.
Heroux stock may be a bargain: in the lower portion of a 52-week range of $7.23 to $13.99, shares (pardon another pun) hovered around the eight-dollar mark as Friday’s session wound down, and the month of May with it. The gulch was hit in mid-May, while the price’s peak was achieved last November.
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