Acquisition of APPH Investor Presentation February 3, 2014

Transcription

1 Acquisition of APPH Investor Presentation February 3, 2014

2 Forward-Looking Statements In the interest of providing shareholders and potential investors with information regarding Héroux Devtek, including management s assessment of future plans and operations, certain statements in this presentation are forward looking statements subject to risks, uncertainties and other important factors that could cause the Corporation s actual performance to differ materially from those expressed in or implied by such statements. Such factors include, but are not limited to: the impact of general economic conditions, particularly in Canada and the United States; 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; foreign exchange or interest rates fluctuations; stock market volatility; and the impact of accounting policies issued by Canadian, US and international standard setters. Some of these factors are further discussed under the heading Risks and Uncertainties in the Corporation's most recent MD&A and under the heading Risk Factors of the Corporation's most recent Annual Information Form both available on the Corporation's website and at Readers are cautioned that the 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. Although the Corporation believes that the expectations conveyed by the forward looking statements are based on information available to it on the date such statements were made, there can be no assurance that such expectations will prove to be correct. All subsequent forward looking statements, whether written or orally attributable to the Corporation or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes no obligation, to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. 2

3 Key Transaction Terms Transaction Value US$124M enterprise value Net of approximately US$4.0M cash-on-hand 10x 2013 Adjusted EBITDA multiple Financial Impact Immediately accretive to EPS and FCF per share Sharing of best practices expected to yield synergies over time Financing Fully financed with cash-on-hand (US$55M) and existing credit facility (US$69M) Pro forma net funded debt to EBITDA ratio of 1.5x (excl. government loans) Timing Closing effective immediately 3

4 Strategically Compelling Transaction Expand Scale and Scope Expand geographical footprint into the European market Diversify client base and program exposure Acquire significant content on several leading programs Strong Fit with Héroux s Growth Strategy Provides Long-Term Value Creation Opportunities Increase contribution from proprietary / design authority content Acquire additional R&D, engineering expertise and know-how in landing gear and hydraulic systems Enhance exposure to higher margin aftermarket sales (spare parts & MRO Services) Cross-selling opportunities to combined client base Sharing of best practices and improved productivity will lead to cost synergies Pro forma company better positioned to develop European-based programs The acquisition of APPH brings significant and immediate strategic benefits to Héroux-Devtek 4

5 APPH Key Highlights Tier-one supplier of landing gear and hydraulic systems, focused on small and mid-sized systems US$77M of revenues and US$12.5M of Adjusted EBITDA in 2013 Sales are split approximately 50% / 50% between military and commercial 4 facilities in the UK (Bolton, Nottingham and 2 in Runcorn), and 1 in the US (Wichita) for a total of 216,000 sq. feet Diversified customer base with limited exposure to HDI s current clients Operated as a subsidiary of BBA Aviation, a publicly-listed company based in the UK Currently employs 390 people, including a team of 40 design engineers Substantially all employees are to remain with HDI Michael Meshay, previously VP & General Manager of HDI s Industrial division has been appointed Managing Director of APPH Key customers include: BAE Systems, Airbus Helicopters, AgustaWestland, and SAAB 2013 Revenue by Region North America 23% RoW 7% Mainland Europe 20% United Kingdom 50% 5

6 APPH Divisions Overview OEM & Hydraulics MRO / Spares Filters ~37% of Total Revenue ~58% of Total Revenue ~5% of Total Revenue Designs and manufactures landing gear and hydraulic systems for commercial and military aircraft Produces nose and main landing gears, steering units, uplocks and downlocks, powerpacks, reservoirs, retraction and extension actuators, as well as complete hydraulic systems and individual assemblies for the latter Specializes in the maintenance, repair and overhaul of APPH designed and manufactured landing gear, flight controls and hydraulic system components Performs limited MRO of third-party landing gear Also offers services such as diagnosis, modification and spares support Designs, develops, manufactures, assembles and tests filtration products for fluid applications 200+ airlines and air forces in more than 100 countries use APPH s filters 6

7 Key Customers and Platform Overview Hawk Servo Actuators Hydraulics Jetstream 31/32/41 EC175 C-27J Main AW101 AW159 KC390 Components Advance Light Helicopter Hydraulics Powerpacks CitationJet Throttle Quadrants Latches & Catches Gripen NG Saab 340/2000 JAS 39 Gripen Military & Civil Engines Filters 7

8 Extend Geographical Reach 1 Engineering, Assembly, Plating & Test United Kingdom North America Design, assembly & test of landing gear and hydraulic systems, including plating facility that provides a range of chrome, nickel and cadmium plating, non-destructive testing, painting and finishing Total area: 70,000 sq. feet 2 Runcorn European Service Centre Repair and overhaul support for all landing gear and hydraulic products Total area: 20,000 sq. feet 3 Nottingham Component Manufacture High precision machining facility producing complex components and sub-assemblies such as pistons, axles and cylinders for landing gear systems, aero engine impeller casings, engine mounts Total area: 48,000 sq. feet 4 Bolton 4 1 Runcorn 2 3 Nottingham Bolton Filters Facility Design, manufacture and testing of filters Total area: 15,000 sq. feet 5 HDI Headquarters HDI Locations 5 Wichita Laval Saint-Hubert Scarborough Kitchener Cleveland Springfield Wichita US Service Centre Longueuil Development and certification, repair and overhaul of hydraulic systems for commercial/general aviation Manufactures power packs, accumulators, reservoirs, actuators and valves, throttle quadrants catches and latches Total area: 63,000 sq. feet including adjacent site 8

9 By Product By Segment Pro Forma Revenue Mix Héroux-Devtek LTM Total Revenue: C$255M APPH LTM Total Revenue: US$77M Combined Company LTM Total Revenue: C$340M (1) Commercial 46% Military 54% Commercial 44% Military 56% Commercial 46% Military 54% 18% 5% Proprietary Products 11% 6% Built-to-Print 32% 15% 17% 15% Proprietary Products 25% Aftermarket 17% 46% 10% OEM Built-to-Print 89% 71% 22% Proprietary Products 68% Built-to-Print 75% 58% Héroux-Devtek moves toward its objective to grow its Proprietary Products content to 30% by 2020 (1) APPH total revenue converted at USD/CAD exchange rate of

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