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Heroux-Devtek Q2 Sales Fall, Profit Rises

Heroux-Devtek (HRX) improved its results in the second quarter of 2022, but the pandemic continues to take toll.

The Canadian company based in Longueuil, Quebec, specializes in the manufacture and repair of various industrial, energy, and aerospace components. (See Insiders’ Hot Stocks on TipRanks)

Sales & Earnings

Consolidated sales decreased 4.2% to C$131.3 million in the second quarter, down from C$137.1 million in the prior-year quarter. Defence sales rose 9.1% to C$94 million, while Civil sales decreased 17.4% to C$37.3 million.

The company earned an operating income of C$12 million in Q2 2022, compared to C$7.1 million in Q2 2021. Adjusted EBITDA amounted to C$21.2 million (16.1% of sales), compared with C$21.2 million (15.5% of sales) last year.

Net income was C$7.5 million (C$0.21) in Q2 2022, compared to a profit of C$3.8 million (C$0.11) in Q2 2021. On an adjusted basis, earnings increased from C$0.17 to C$0.21 per share.

Management Commentary

Heroux-Devtek president and CEO Martin Brassard said, “For the second half of the fiscal year, we will remain focused on executing our plan and continue pursuing new business and growth opportunities; these may be either via acquisitions or by furthering our already strong relationships with OEMs. In that regard, we are pleased to have extended our contract with Boeing for the 777 and 777X until 2030 and to have been chosen by Lockheed Martin for its next generation of defence aircraft.”

Wall Street’s Take

Last month, TD Securities analyst Tim James maintained a Buy rating on HRX with a C$24 price target. This implies 29.7% upside potential.

As Tim James is the only analyst to have offered a 12-month price target for HRX in the last three months, the average Heroux-Devtek price target is C$24.

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