Héroux-Devtek completes the acquisition of CESA and update its guidance

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Héroux-Devtek Inc. (TSX: HRX) (“Héroux-Devtek” or the  “Corporation”),  a  leading  international  manufacturer  of  aerospace  products,  is  pleased  to announce that it has successfully completed the acquisition of Compañia Española de Sistemas Aeronáuticos, S.A. (“CESA”), a subsidiary of Airbus SE (PA: AIR) for a purchase price of 137 million  euros  (approximately  $206  million)  enterprise  value,  including  CESA’s  net  outstanding debt of 23 million euros (approximately $35 million), subject to customary closing adjustments.


“We are very pleased to have completed this acquisition which is the largest in our history and represents an important milestone in our international expansion,” said Héroux-Devtek President

&  CEO,  Gilles  Labbé.  “CESA  will  allow  us  to  increase  our  market  presence  in  Europe,  gain important  content  on  several  key  aircraft  programs  and  leverage  customer  relationships  with

Airbus and other key customers. We are honoured to welcome the CESA team to the Héroux- Devtek family.”


“The acquisition also expands Héroux-Devtek’s product and service offering into the actuation and hydraulic systems and adds new technology, such as electromechanical actuation, to our portfolio. Our product mix will also evolve with 42% of revenues being generated from proprietary products,”  continued  Mr.  Labbé.  “Partnered  with  the  complementary  addition  of  Beaver’s expertise in ball screws, we see great opportunity to grow the business in the actuation market, which is significantly larger than the landing gear market,” he concluded.


“We look forward to continuing our close business relationship with CESA, which remains a key supplier for Airbus,” said Fernando Alonso, Head of Military Aircraft at Airbus Defence and Space. “CESA and its employees are set to benefit from the new strategic owner’s strong industrial plan over the coming years.”


The  transaction  was  funded  through  a  combination  of  a  $50  million  seven-year  unsecured subordinated term loan provided by Fonds de solidarité FTQ, the Corporation’s revolving credit facility and available cash on hand. In connection with this acquisition, the Corporation’s credit facility was amended, increasing the borrowing limit to $250 million from $200 million.


Headquartered in Madrid, Spain, CESA is a leading European provider of fluid mechanical and electromechanical systems for the aerospace industry. Its main product lines include actuation and hydraulic systems as well as landing gear products. CESA provides an integrated product and   service   offering   comprised   of   design   and   development   engineering,   certification, manufacturing, assembly and fleet support to a broad range of customers and aircraft programs. It operates a 366,000 square foot state-of-the-art industrial complex in Madrid, as well as another facility in Seville. CESA employs a skilled workforce of approximately 300 employees.



Management  is  updating  its  sales  guidance  for  fiscal  2019  to  reflect  the  CESA  acquisition. Management now expects sales for fiscal 2019 to be in the range of $460 million to $470 million, representing an increase of approximately 20% over last year. Capital expenditures are expected to be approximately $20 million.


Management  is  also  issuing  new  long-term sales  growth  guidance  reflecting  both  the  Beaver acquisition completed last July and the CESA acquisition. Management expects fiscal 2022 sales in the range of $620 million to $650 million.


Please  see  “Forward-Looking  Statements”  below  for  further  details  regarding  the  material assumptions underlying the foregoing guidance.


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