Héroux-Devtek Inc.

Q4 sales increased 18% year over year to a record $184.1 million, versus $156 million last year. Gross profit was $39.4 million, or 21.4% of sales, compared with $22.7 million, or 14.6% of sales, a year ago. Operating income rose to $27.6 million from $9.9 million; adjusted EBITDA was $33.1 million, up 68.8% from $19.6 million; adjusted net income was $16.7 million, or $0.49 per share, versus $6.2 million, or $0.18 per share. Full-year sales were $629.8 million, up 15.8%; gross profit was $111.1 million versus $73.5 million; operating income was $59.8 million versus $26.2 million; adjusted EBITDA was $92.2 million versus $61.4 million; and adjusted net income was $34.3 million, or $1.01 per share, versus $12.6 million, or $0.37 per share. Cash flow from operating activities in Q4 was $19.7 million versus $4.5 million last year, and net debt-to-EBITDA improved to 2.3x from 2.7x a year ago and 2.8x last quarter. Management did not provide formal next-quarter or full-year guidance, but said backlog was $951 million, order book was 40% higher than two years ago, and CapEx should generally run around 4% to 5% of sales, with some upside if a major new program requires ramp-up investment.

Martin Brassard framed the quarter as evidence that the company’s multi-year reset is working, citing the fourth consecutive quarter of growth in both revenue and profitability. He emphasized improved supply chain health, stabilized production, efficiency gains, and pricing actions as the drivers, and said every business unit contributed to the bottom line. His tone was upbeat but still cautious, repeatedly noting that the environment remains challenging and that execution, customers, and suppliers all matter.

Stephane Arsenault detailed the financial improvement, pointing to Q4 sales of $184.1 million, gross margin of 21.4%, adjusted EBITDA of $33.1 million, and adjusted net income of $16.7 million, or $0.49 per share. For the year, he highlighted sales of $629.8 million, adjusted EBITDA of $92.2 million, and adjusted EPS of $1.01, along with operating cash flow of $19.7 million in the quarter and leverage improving to 2.3x net debt-to-EBITDA. He also said pricing benefits will phase in over multiple fiscal years, working capital should stabilize during fiscal 2025, and CapEx is typically around 5% of sales.

Analysts focused on whether the 18% EBITDA margin was a normalized level, and management said the result reflected operating leverage and the business-reset initiatives rather than a one-off, with all business units executing to plan. Questions also centered on backlog drivers, aftermarket demand, and Boeing’s $35 million investment in the Longueuil aerospace innovation zone; management said backlog growth came from both civil and defense and that aftermarket opportunities are visible, especially in defense, but were not yet materially reflected in current results. On capital allocation, management said it is not rushing back into buybacks and wants more stable free cash flow and some additional deleveraging before being aggressive again.