PLATFORMS FOR GROWTH

Transcription

1 PLATFORMS FOR GROWTH A n n u a l M e e t i n g o f S h a r e h o l d e r s

2 Réal Raymond Chairman of the Board

3 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 7, Receipt of the Consolidated Financial Statements for the Year Ended March 31, 2015 and of the Auditors Report 7. Substantive Issues - Introduction 8. Election of Directors 3

4 Election of directors Nathalie Bourque Corporate director Paule Doré Corporate director Jean-Louis Fontaine Vice-chairman of the Board and director, Bombardier Inc. Gilles Labbé President and Chief Executive Officer, Héroux-Devtek Inc. Louis Morin President of Busrel Inc. James J. Morris Corporate director and consultant Réal Raymond Corporate director and Chairman of the Board of Héroux-Devtek and Metro Inc. Brian A. Robbins President and Chief Executive Officer, Exco Technologies Ltd. Andrew John Stevens Corporate director 4

5 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 7, Receipt of the Consolidated Financial Statements for the Year Ended March 31, 2015 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 5

6 Gilles Labbé President and Chief Executive Officer

7 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 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. 7

8 Developing our growth platforms In fiscal 2015, we further developed our main growth platforms Strengthen our status as one of the world s leading landing gear designers and manufacturers Reach our main objective of achieving sales of about $500 million by the end of fiscal 2019 Based on existing contracts Assuming no additional acquisition 8

9 We progressed in fiscal % sales increase, to $364.9 million Full contribution from U.K. and Wichita operations Strength in the commercial market Adjusted net income of $19.4 million Healthy financial position Backlog of $459 million 9

10 Boeing 777 and 777X contract Continuing to execute our capital investment plan Provide Héroux-Devtek with a world-class infrastructure Short- and mid-term: Mainly dedicated to the Boeing contract Long-term: Leverage our ability to capture other opportunities to offer an integrated product and service offering for complete, large-scale landing gear systems 10

11 New facility in Cambridge, Ontario 11

12 New facility in Cambridge, Ontario Highly automated 108,000 square foot facility Will set new industry standards in regards to manufacturing technology We can double the size, if required John M. Cybulski Building 12

13 Investments in Laval and Springfield 13

14 Investments in Laval and Springfield New machinery and equipment, as well as certain building improvements These facilities mainly manufacture smaller, complex components Flexible manufacturing systems (FMS) to yield significant productivity gains 14

15 Investments in Strongsville and Everett 15

16 Investments in Strongsville and Everett Doubled the footprint of the Strongsville, Ohio facility Additional capacity for component finishing Leading-edge sub-assembly centre Dedicated assembly plant in Everett, Washington On-site final landing gear assembly In close proximity to Boeing s aircraft assembly plant Everett 16

17 We are progressing according to plan Machining components in most facilities Sub-assembly centre to be operational shortly The Everett facility will be ready by calendar year-end Total investment of $105 million by the end of fiscal 2016 Investment of $69 million in fiscal 2015 First shipments at the beginning of calendar

18 Developing UK and Wichita operations Focus on sharing best practices and implementing our centre of excellence model Relocation of certain key senior managers Common ERP system Upcoming combination of maintenance, repair and overhaul activities under one roof in Runcorn, UK Gradual benefits in fiscal 2016, full synergies in fiscal 2017 Ready to leverage our European platform Multi-continent, integrated offering provides value-added for OEMs 18

19 Design programs Two programs proceeded to production ramp-up in fiscal 2015 Embraer Legacy 450/500 Airbus Helicopters EC-175 Factory roll-out of Dassault Falcon 5X on June 2, 2015 Already delivering landing gear for production ramp-up Legacy 500 Falcon 5X 19

20 Design programs Other programs moving forward Saab Gripen NG Sikorsky CH-53K Target to derive 30% of sales from proprietary products by % in fiscal 2015 Should further grow in fiscal 2016 Gripen NG CH-53K 20

21 Product support Increasing base of aircraft equipped with our systems and components Investments to establish a world-class team of specialists able to provide: Technical support Spare parts Repair services to end users Moves us closer to being a one-stop, fully integrated company Products and services ranging from initial design to in-service assistance 21

22 Nomination and prestigious award Nomination of Martin Brassard as Vice-President and Chief Operating Officer With Héroux-Devtek for more than 20 years Natural leader with a comprehensive knowledge of our industry and its strategic interests Quebec Health and Safety award in the large corporations category Positively reflects on the entire organization Congratulations to our team 22

23 Stéphane Arsenault Chief Financial Officer

24 Consolidated sales Fiscal years ended March 31 (in millions of Cdn $) % ch. Sales Additional contribution from UK and Wichita Internal sales growth % + 3.5% Currency fluctuations increased sales by $13.0 million Commercial products Excluding UK and Wichita % % Defence products Excluding UK and Wichita % - 7.3% 24

25 Operating profitability Fiscal years ended March 31 (in millions of Cdn $, except per share data) Adjusted EBITDA * As a % of sales Adjusted net income * EPS basic and diluted Weighted average shares outst. (diluted, in million) % % * This is a non-ifrs financial measure which does not have a standardized meaning prescribed by IFRS and may therefore not be comparable to similar measures presented by other issuers. Refer to the Corporation s MD&A for further details. 25

26 Fiscal 2016 first quarter results Quarters ended June 30 (in millions of Cdn $, except per share data) % ch. Sales % Currency fluctuations increased sales by $7.9 million Commercial products % Defence products % Adjusted EBITDA * As a % of sales % % % Adjusted net income * EPS basic and diluted % * Refer to slide 25 for a definition of non-ifrs measures. 26

27 Healthy financial position (in millions of Cdn $, except ratios) June 30, 2015 March 31, 2015 Cash and cash equivalents Long-term debt * Credit Facility used (authorized amount of $200 million) Net debt Net debt / equity ratio 0.38:1 0.27:1 * Including current portion, but excluding net deferred financing costs. 27

28 Outlook Fiscal 2016 sales growth of approximately 10% Growth in excess of 10% in the commercial market Defence market should record a slight increase Second quarter results are usually weaker Seasonal factors We are confident to reach our long-term objectives Favourable outlook in most of our markets 28

29 Commercial aerospace market Large commercial aircraft market to further grow Revenue-Passenger-Kilometres should grow 6.7% in calendar 2015 (IATA) Above historical average of 5.0% 20-year average traffic growth forecast Boeing: 4.9% ; Airbus: 4.6% Despite many unfavourable events over the past decades, the long-term trend has always been upwards Increasing importance of emerging nations is the driving force 29

30 Growing importance of emerging markets Passager traffic (RPKs) billions Other Middle East China Asia (excl. China) Europe North America Source: Boeing 2015 Current Market Outlook 30

31 Worldwide fleet to double in 20 years 43,560 40,000 30,000 21,960 Growth 58% 20,000 10,000 21,600 16,090 Replacement 42% 38,050 Fleet retained 5, Source: Boeing 2015 Current Market Outlook 31

32 Record deliveries and backlogs 38,050 aircraft average of 1,900 per year Order backlog (June 30, 2015) 32

33 Business jet market 6.5% increase in shipments in calendar 2014 (GAMA) Positive leading indicators 2.8% increase in U.S. business aircraft movements in the last 12 months Low proportion of used jets for sale Production ramp-up of new models for which we have designed the landing gear Embraer Legacy 450/500 Dassault Falcon 5X Business Aircraft Shipments Sources: GAMA, Teal Group 33

34 Defence aerospace market Market remains uncertain Sequestration cuts eliminated through U.S. Government s 2015 fiscal year Proposed defence funding above budget limits for fiscal 2016 through 2020 Threat of further sequestration if no agreement is reached Modest market recovery over the short term We have a solid presence on both sides of the Atlantic UK operations provide access to existing and new programs in Europe 34

35 We are confident about reaching our objectives Annual sales of approximately $500 million by fiscal 2019 Based on existing contracts, including the start-up of the B-777 and B-777X contract Assumes no additional acquisitions Growth of our European operations Ramp-up of our design programs 35

36 In conclusion We are entering the most exciting phase in our history We have achieved a lot, but the best is yet to come Growing presence within the global industry s elite as an integrated provider of value-added products and services Our success is related to the skills, passion and dedicated of our talented team We are grateful to our business partners for their constant support Thank you, shareholders, for your confidence 36

37 Questions & Answers

38 THANK YOU