annual meeting of shareholders 2020 · hÉroux devtek │ annual meeting of shareholders 2020 fy17...

ANNUAL MEETING OF SHAREHOLDERS 2020

HÉROUX DEVTEK │ ANNUAL MEETING OF SHAREHOLDERS 2020 2

Gilles LabbéExecutive Chairman of the board OPENING OF THE MEETING

HÉROUX DEVTEK │ ANNUAL MEETING OF SHAREHOLDERS 2020

FORMAL AGENDA

• Opening of the meeting

• Executive Chairman & Secretary of the meeting

• Report of the Scrutineers

• Notice of Meeting

• Minutes of the Annual Meeting of Shareholders held on August 9, 2019

• Receipt of the Consolidated Financial Statements for the year ended March 31, 2020

• Election of Directors

• Appointment of the auditors and remuneration

• Management’s Presentation

• Q&A

• Closing of the meeting

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BOARD OF DIRECTORS

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Gilles LabbéExecutive Chairman of the board

Non-independent board member

since 1985

Nathalie BourqueCorporate Director and consultant

Independent board member since 2015

Member of the Audit Committee

Martin BrassardPresident and Chief Executive Officer

Non-independent board member

since 2019

Paule DoréCorporate Director

Independent board member since 2010

Chair of the Human Resources and

Corporate Governance Committee

Louis MorinPresident, Busrel Inc.

Independent Director since 2008

Chair of the Audit Committee

James J. MorrisCorporate Director and consultant

Independent director since 2013

Member of the Human resources

and Corporate Governance Committee

Brian A. RobbinsExecutive Chairman, Exco Technologies

Limited

Lead Director, independent board member

since 2000

Member of the Human Resources and

Corporate Governance Committee

Beverly WyseCorporate Director and consultant

Independent Director since 2019

Member of the Audit Committee

MANAGEMENT PRESENTATION

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FORWARD LOOKING STATEMENTS

This presentation contains forward-looking statements which are mainly about, but may not be limited to, Héroux-Devtek’s future financial

performance, expectations, objectives or possible events. The predictive nature of such statements makes them subject to risks, uncertainties

and other important factors that could cause the actual performance or events to differ materially from those expressed in or implied by such

statements.

Such factors include, but are not limited to: the effect of the ongoing COVID 19 pandemic on Héroux-Devtek’s operations, customers, supply

chain, the aerospace industry and the economy in general the impact of worldwide general economic conditions; 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; financial and operational performance of suppliers and customers; foreign exchange or

interest rate fluctuations; and the impact of accounting policies issued by international standard setters. For further details, please see the

Risk Management section of the Corporation’s MD&A. Readers are cautioned that the foregoing 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.

Héroux-Devtek provides such forward-looking statements for the purpose of assisting the reader in understanding the Corporation’s financial

performance and prospects and to present management’s assessment of future plans and operations. The reader is cautioned that such

statements may not be appropriate for other purposes.

Although management believes in the expectations conveyed by the forward-looking statements and although they 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.

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AGENDA

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Formal agenda

Gilles Labbé

Introduction

Fiscal 2020 financial results

First quarter results

Free cash flows and liquidity position

Stéphane Arsenault

Our future

Conclusion

Martin Brassard

Fiscal 2020 Highlights

Resilience in times of crisis

Restructuring initiatives

Martin Brassard

Final remarks

Gilles Labbé


Having an experienced team is a key asset in these unprecedented times.

Over the past few months, it has enabled us to act effectively, concertedly

and quickly to contain some of the effects of the pandemic.

- MARTIN BRASSARDPRESIDENT AND CEO

FISCAL 2020 HIGHLIGHTS

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FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20

FISCAL 2020 HIGHLIGHTS

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Operating results

(in millions of dollars except per share data and ratios)

Over 2/3 of Fiscal 2020 backlog

comprised of defence

market products

Funded backlogSales(in millions of dollars except per share data and ratios)

$810.0$624.0$466.0$405.0$613.0$483.9$386.6$406.5


RESILIENCE IN TIMES OF CRISIS

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2020

20192008200119901983

Oil Shock Recession Gulf War / Recession 9/11 Global Financial Crisis 737-MAX

COVID-19

LARGE COMMERCIAL AIRCRAFT DELIVERIES


DIVERSIFIED AND BALANCED FISCAL 2020 REVENUE MIX

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Transport

53.7% DEFENCE

DEFENCE / CIVIL

46.3% CIVIL

Large Jets

27.4%

5.1%

5.3%

2.85.7%

5.7%

10.0%

14.1%

23.9%

Business Jets

Regional Jets

Helicopters

Other

Helicopters

Other

Fighters

Canada

FY20 sales mix by end customer location

9.4%

United States

United

Kingdom

Spain

Rest of Europe

Other

countries

10.2%53.4%

7.8%

11.0%

8.2%

PROPRIETARY / BUILD-TO-PRINT

LONG TERM AGREEMENT

31.3%

53,4%

9,4%8,2%

11,0%

7,8%

10,2%

BY END CUSTOMER LOCATION

Build-to-print

Other

15.7%

10.8%

42.2%

Proprietary and

Life of Program

Contracts

Build-to-print

Tier 1

Build-to-print

OEM

27.4%


RESTRUCTURING INITIATIVES

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The measures we took

at the beginning of the

pandemic allowed us

to control fixed and

variable costs and

generate cash flow.

FISCAL 2020 FINANCIAL RESULTS

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Consolidated sales

$613.0 M

26.7%

2019

$483.9 M

Civil sales

$283.7 M

20.1%

2019

$236.3 M

Defence sales

$329.3 M

33.0%

2019

$247.6 M

12.2% Fuelled by acquisitions and a

organic growth

Exceeded

Fiscal 2020 sales

guidance of

$600 M to $610 M



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$85.8M

FY20 Non-Cash

Impairment Charges

$(30.1)

FY20

$37.2

FY19

Operating income (loss)

$(1.38)

FY20

$0.73

FY19

Earnings Per Sharebasic and diluted (loss)

FY20 non-cash

impairment

charges of $2.36



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Adjusted EBITDA*

$96.2 M

15.7%

FY20

$74.2 M

15.3%

FY19

$22.0 M

*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 “Non-IFRS measures” slide on page 23 for further details.

$1.00

FY20

$0.84

FY19

Adjusted EPS*

19.0%



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Maintaining strong cash flows(in millions of dollars)

Cash Flows Related to Operating Activities Free Cash Flow*

(In m

illio

ns o

f dolla

rs)

0

25

50

75

100

FY17 FY18 FY19 FY20

$56 $33 $56 $51 $70 $59 $53 $30

Generated

free cash flows of

$173 M over the past 4 years



Q1 FINANCIAL HIGHLIGHTS

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Consolidated sales

$128.3 M

10.5%

Q1-FY20

$143.4 M

Civil sales

$49.9 M

25.9%

Q1-FY20

$67.4 M

Defence sales

$78.4 M

3.2%

Q1-FY20

$76.0 M

Defence sales

accounted for

61% of our

consolidated

revenues

Decrease in

civil demand


Q1 FINANCIAL HIGHLIGHTS

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$1.4 M

Q1-FY21*

$10.4 M

Q1-FY20

Operating income

$(0.04)

Q1-FY21

$0.18

Q1-FY20

Loss/earnings per share

Reduction in sales

caused by COVID-19

$20.5 M

16.0%

Q1-FY21

$24.2 M

16.9%

Q1-FY20

Gross profit

$18.4 M

14.3%

Q1-FY21

$21.5 M

15.0%

Q1-FY20

Adjusted EBITDA*

$0.09

Q1-FY21

$0.19

Q1-FY20

Adjusted EPS*

Includes $6.0 million of non-recurring

restructuring charges recorded in Q1 of FY21


$232.2M

FREE CASH FLOWS AND LIQUIDITY POSITION

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$15.5 M

Q1-FY21

$3.7 M

Q1-FY20

Cash flows related to operating activities

Drew $60 M on our

credit facilities on April 1st

As of June 30, we had

$205 M in available liquidity

June 30, 2019 Sept 30, 2019 Dec 31, 2019 Mar 31, 2020 June 30, 2020

Net Debt over the last 4 quarters

$269.6M $256.8M$264.7M $246.9M

$200M

$233.2M


OUR FUTURE

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Strong financial position1

Diversified profile 2

Focus on new business

development and growth

initiatives

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Growing backlog in the

defence sector3

Employee resilience 5


NON-IFRS FINANCIAL MEASURES

Adjusted EBITDA

Operating Income excluding amortization expense and non-recurring items.

Adjusted Operating income

Operating income excluding non-recurring items.

Adjusted net income

Net income excluding non-recurring items net of taxes.

Adjusted earnings per share

Diluted earnings per share calculated on the basis of adjusted net income.

Free cash flow

Cash flows related to operating activities, less additions to property, plant and

equipment and net increase in finite-life intangible assets.

Refer to the Corporation’s MD&A for further details

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The information included

in this presentation

contains certain financial

measures that are not

prescribed by

International Financial

Reporting Standards

(“IFRS”) and are not likely

to be comparable to

similar measures

presented by other

issuers.


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ANNUAL MEETING OF SHAREHOLDERS 2020

annual meeting of shareholders 2020 · hÉroux devtek │ annual meeting of shareholders 2020 fy17...

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