ANNUAL MEETING OF SHAREHOLDERS

Transcription

1 ANNUAL MEETING OF SHAREHOLDERS August 7, 2014

2 Réal Raymond Chairman of the Board

3 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 forwardlooking statements subject to risks, uncertainties and other important factors that could cause the Company 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 Risks and Uncertainties in the Company s MD&A, but 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 Company 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 Company or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements. Unless otherwise required by applicable securities laws, the Company 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. 3

4 Agenda 1. Opening of the Meeting 2. Chairman and Secretary 3. Report of Scrutineers 4. Notice of Meeting 5. Minutes of the Annual Meeting of Shareholders Held on August 1, Receipt of the Consolidated Financial Statements for the Year Ended March 31, 2014 and of the Auditors Report 7. Substantive Issues - Introduction 8. Election of Directors 9. Appointment of the Auditors and Remuneration 10. Completion of the Formal Part of the Meeting 11. President s Report 4

5 Gilles Labbé, FCPA, FCA President and Chief Executive Officer 5

6 IN MEMORIAM John Cybulski ( ) Chairman of the Board of Héroux-Devtek from 2007 to

7 Fiscal 2014 review Largest landing gear contract in our history for the B-777 and B-777X Important strategic acquisition in the United Kingdom Progress on our landing gear design and development programs Héroux-Devtek has become a forefront player in the global landing gear market 7

8 B-777 and B-777X contract A game changer for Héroux-Devtek Now recognized as a supplier of large-scale, complete landing gear systems Same status as Messier-Bugatti-Dowty and UTAS The B-777 has the largest landing gear in commercial aviation Larger than the B-747 and the A-380 8

9 B-777 and B-777X contract Main and nose landing gear systems Manufacturing of aftermarket parts for Boeing Deliveries to begin in calendar option to extend through 2028 Most successful twin-engine, long-haul airplane 1,750 total orders (as at July 22, 2014) Current annual production of 100 aircraft Backlog of more than 550 aircraft (includes order of 150 aircraft by Emirates Airline announced at Farnborough) 9

10 Capital investment plan $90 million spanning our 2015 and 2016 fiscal years Main elements: Expansion of the existing facility network Investments in leading-edge machinery and equipment In addition to regular maintenance investments of $30 million over these fiscal years Leverage the strengths of existing centres of excellence Be more cost competitive given a high level of automation Foundation to pursue other opportunities to demonstrate our world-class capabilities in producing large landing gear systems 10

11 APPH acquisition Specialized in the design, engineering, manufacturing and aftermarket support of landing gear and hydraulic systems and assemblies for fixed and rotary wing civil and military aircraft Immediate strategic benefits Geographical expansion with four facilities in the U.K. and one in the U.S. Workforce of 400 employees Design engineering team of 40 professionals to complement our North American team Increases and diversifies our customer base Runcorn Wichita Bolton Nottingham 11

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13 APPH acquisition Specialized in the design, engineering, manufacturing and aftermarket support of landing gear and hydraulic systems and assemblies for fixed and rotary wing civil and military aircraft Immediate strategic benefits Geographical expansion with four facilities in the U.K. and one in the U.S. Workforce of 400 employees Design engineering team of 40 professionals to complement our North American team Increases and diversifies our customer base Runcorn Wichita Bolton Nottingham 13

14 APPH programs Important landing gear design programs Hawk, for BAE Systems (U.K.) The AW101 and AW159 for AgustaWestland (Italy) JAS 39 Gripen, Gripen NG, currently in development, and 340/2000 regional jet for SAAB (Sweden) C27J Spartan aircraft, for Alenia (Italy) The new EC175 aircraft, certified earlier this year, for Airbus Helicopters (France) 14

15 A perfect complement Increase revenues derived from proprietary products Greater value-added to customers and more revenue stability With APPH, proportion increased from approximately 13% to 27% objective of 30% by

16 A perfect complement Potential synergies Sharing best practices Improving productivity by implementing centre of excellence business model Cross-selling products and services, including engineering resources, to our respective customers European operations led by Mike Meshay 16

17 Market Segment Penetration (Commercial, Military) Global landing gear market #3 #3 U.T.A.S. (Goodrich) #2 #1 #4 Liebherr Messier- Bugatti- Dowty #5 #6 #5 Fokker $100 M $500 M $1 G 17

18 Design and development programs Embraer Legacy 500: certification pending Legacy 450: flight tests in progress Bombardier Aerospace Learjet 85: flight tests in progress Sikorsky CH-53K Dassault Falcon 5X APPH s design programs Gripen NG EC175: certified Legacy 500 Legacy 450 Learjet 85 CH-53K Falcon 5X 18

19 Stéphane Arsenault Chief Financial Officer 19

20 Consolidated sales (continuing operations) Fiscal years ended March 31 (in millions of Cdn $) % ch. Sales Contribution from APPH (2 months) % Currency fluctuations increased sales by $2.8 million Commercial products % Military products % 20

21 Operating profitability (continuing operations) Fiscal years ended March 31 (in millions of Cdn $, except per share data) Adjusted EBITDA As a % of sales % % Non-recurring items: acquisition-related costs of $5.0 million and $1.9 million of restructuring charges, before taxes Adjusted net income EPS basic and diluted

22 Healthy financial position As at March 31, 2014 (in millions of Cdn $, except per share data) Cash and cash equivalents Per share Long-term debt Credit Facility used Net debt Net debt / equity 0.43:1 Credit Facility increased to $200 million at the end of the fiscal year Can be increased by another $75 million, subject to lenders consent Extended by three years to March

23 Fiscal 2015 first quarter results Quarters ended June 30 (in millions of Cdn $, except per share data) % ch. Sales Contribution from APPH % Currency fluctuations increased sales by $2.0 million Commercial products % Military products % Adjusted EBITDA % As a % of sales 12.0% 12.3% Adjusted net income % EPS basic and diluted

24 Fiscal 2015 first quarter results As at June 30, 2014 (in millions of Cdn $, except per share data) Cash and cash equivalents Per share Issuance of 4,255,871 common shares as part of a public offering and private placements Net proceeds of $47.9 million used to repay the credit facility Long-term debt Credit Facility used Net debt / equity 0.19:1 24

25 Outlook Full-year contribution from APPH On a basis comparable to last year, sales should be relatively stable Internal sales growth in the commercial market Internal sales decrease in the military market Second-quarter results are usually weaker Seasonal factors We are confident with regards to our long-term growth Favourable outlook in most of our markets 25

26 Commercial aerospace market Large commercial aircraft market should maintain its momentum Revenue-Passenger-Kilometer should grow 5.9% in 2014 (IATA) Boeing forecasts an annual average traffic increase of 5% over the next 20 years Commercial aviation is resilient 4 recessions 2 financial crisis 2 Gulf wars SARS outbreak One petroleum shock 9-11 events All had temporary effects, but none impaired the long-term progression The growing wealth of emerging nations is the driving force 26

27 Air trips per person per year Travel grows with income 5.00 Income per capita Source: Boeing 2014 Current Market Outlook 27

28 Worldwide fleet to double in 20 years 40,000 42,180 30,000 20,000 10,000 20,910 21,270 Growth 58% 15,500 Replacement 42% 5,410 Fleet retained Source: Boeing 2014 Current Market Outlook 36,770 28

29 Large commercial aircraft deliveries and backlogs 36,770 aircraft average of more than 1,800 per year Order backlog (June 30, 2014) 29

30 Business jet market Market is recovering Shipments increased by 12% in the first half of 2014 (GAMA) 4.0% increase in aircraft movements in the U.S. over the last 12 months Decrease in used jets for sale as a percentage of the fleet Growth expected to be sustained over up to five years Corresponds with the ramp-up of our design and development programs Legacy 450 and 500 Learjet 85 Dassault 5X Business Aircraft Shipments Source: Teal Group 30

31 Military aerospace market Market to remain difficult U.S. Department of Defense proposed funding for fiscal 2015 similar to enacted levels for fiscal 2014 Funding requests beyond 2015 exceed planned budget limits, which implies spending may remain tight APPH reduces exposure to the U.S. military market OEM customers in the U.K., Sweden, France and Italy Provides a good balance between new component manufacturing and aftermarket products and services 31

32 Our objective Sales of $500 million within five years Based on current contracts, including the B-777 and B-777X contract starting in calendar 2017 Full contribution and growth of European operations Ramp-up of design programs Increased production of large commercial aircraft as planned by manufacturers Recovery in the business jet market Stable military market beyond fiscal

33 Renewal of two contracts Viking Air Limited - 4 years Manufacturing of the nose landing gear for the Twin Otter Series 400 aircraft Total sales of approximately $20 million, including spare parts Initial design of the landing gear in the 1960s Twin Otter Bell Helicopter 5 years Manufacturing of components and assemblies for the Bell 206B, 206L, 212, 407, 412 aircraft and the new Bell 505 Jet Ranger X helicopter Total value could exceed $46 million Bell

34 New contract announcement Five-year agreement with The Boeing Company to manufacture torque tubes for the 787 Dreamliner New business for Héroux-Devtek Further strengthens our business relationship with Boeing Production of the 787 Dreamliner is ramping up B-787 Current rate of 10 aircraft per month could reach 12 aircraft in 2016 and 14 aircraft by the end of the decade 34

35 In conclusion Major achievements of the last fiscal year broadened our known competencies, our network and our product and service portfolio World-class company, firmly established as a proven integrated supplier of value-added products and services We must execute to reach and surpass our objectives Create value for our shareholders Thanks to: Our employees for their dedication and respect of corporate values Our business partners, customers and suppliers for their support Our shareholders for your trust in our company 35

36 Question period 36

37 ANNUAL MEETING OF SHAREHOLDERS August 7, 2014