Latecoere Reports H1 2024 Results

About this update from Latecoere Sa

Regulatory News: Latecoere (Paris:LAT), a Tier 1 supplier to major international aircraft manufacturers, announced that the Board of Directors approved Latecoere’s financial statements for the six-month period ended June 30, 2024. André-Hubert Roussel Group Chief Executive Officer, stated : “2023 and the first half of 2024 have been a time of unprecedented challenges for the aerospace supply chain, including Latecoere. However, I am proud of the resilience and adaptability our team has shown in navigating inflationary pressures and supply chain constraints. As OEM volume growth drives increasing activity across commercial, business jet, and defense markets, we are fully committed to supporting this ramp-up while addressing the associated challenges. We continue to invest strategically in our operations, workforce, and geographic footprint to build a stronger, more competitive Latecoere. Looking ahead, we are optimistic about 2024, with expectations of increased revenue growth, a significant reduction in EBITDA losses, and marked improvements in operational free cash flow. These outcomes reflect the positive impact of our ongoing operational and commercial initiatives. While we remain mindful of the restructuring and working capital demands tied to growth, we are confident in our path forward to deliver enhanced value to our customers and stakeholders.” 1 st Half Year 2024 Results Group (€ million) June 30, 2023 June 30, 2023 - restated 1 June 30, 2024 Revenue 303,8 303,8 352,1 Reported growth 42,9% 42,9% 15,9% Recurring EBITDA (18,4) (17,6) (1,8) Recurring EBITDA margin on revenue -6,0% -5,8% -0,5% Operating free cash flows from continuing operations (59,1) (59,1) (40,9) Net Cash Flow (28,1) (28,1) (46,2) Cash and cash equivalents 45,8 45,8 38,8 Net Debt 370,3 370,3 183,5 (1) Restated data: key financial indicators for the first half of 2023 have been restated to reflect goodwill allocation adjustments under IFRS 3, recognized retrospectively in the opening balance sheets of acquired entities prepared at the acquisition date. Latecoere’s half-year financial results for 2024 reflect the general increase level of production in the aeronautical sector as a whole. Revenues amounted to €352.1 million, up €48.2 million or +16%. The increase in revenues was driven by higher production rates from OEMs, additional revenue from new business wins.and the conclusion of commercial initiatives to offset inflation. The Group reported a recurring EBITDA for the first half of 2023 of €(1.8) million, a significant improvement compared to the €(17.6) million reported in the first half of 2023. This turnaround was mainly driven by operating leverage from increased volumes, and the positive benefits coming from both operational and commercial initiatives undertaken by the Group. These positive benefits are still being offset however by continued inflationary pressures on the material cost base and ongoing supply chain disruptions during the ramp up of the operations. Latecoere’s net financial result amounted to €(9.4) million in the first half of 2024, compared with €(9.1) million in the first half of 2023. The Group’s net result for the first half of 2024 amounted to €(49.3) million, compared with €(59.6) million for the first half of 2023. Free cash flow from operations for the period amounted to €(40.9) million, mainly impacted by the negative EBITDA, an increase of working capital, (net of customer advances), to fund the revenue growth, and non-recurring costs. At the end of June 2024, cash and cash equivalent stood at €38.8 million. The net debt at the end of June 2024 stood at €183.5 million. To date, the hedging portfolio amounted to $627.1 million at an average EUR/USD rate of 1.12. Since June 30, 2024, the Group has continued to put in place hedges for 2025 and 2026 at attractive terms. Aerostructures Revenue for Latecoere’s Aerostructures Division rose by +8% on a reported basis vs 1 st half of 2023. The segment’s activity benefited from increased production rates and the benefit of commercial initiatives concluded in 2024. The division’s recurring EBITDA amounted to €(13.2) million, in line with losses generated in the first half of 2023. Despite the increase in revenue, ongoing supply chain issues impacting the organization during the ramp-up led to significant cost increases, offsetting most of the improvements coming from the additional volumes and better commercial terms and conditions. Aerostructures (€ million) June 30, 2023 June 30, 2023 - restated 1 June 30, 2024 Consolidated revenue 190,2 190,2 205,6 Reported growth 65,5% 65,5% 8,1% Inter-segment revenue 11,2 11,2 10,4 Revenue 201,4 201,4 216,0 Recurring EBITDA (11,8) (11,0) (13,2) Recurring EBITDA margin on revenue -5,9% -5,5% -6,1% (1) Restated data: key financial indicators for the first half of 2023 have been restated to reflect goodwill allocation adjustments under IFRS 3, recognized retrospectively in the opening balance sheets of acquired entities prepared at the acquisition date. Interconnection Systems Revenues of €146.5 million were up by +29% on a reported basis compared with €113.6 million in the first half of 2023. This growth is notably driven by increased volumes notably for the A320 program and from the benefit of commercial initiatives concluded in 2024. Recurring EBITDA for the Interconnection Systems division reached €11.4 million, a turnaround from the €(6.6) million from the prior year, reflecting operating leverage from volume increase, tight costs control and better commercial terms and conditions achieved with customers. Interconnection Systems (€ million) June 30, 2023 June 30, 2023 - restated 1 June 30, 2024 Consolidated revenue 113,6 113,6 146,5 Reported growth 16,3% 16,3% 28,9%         Inter-segment revenue 1,3 1,3 1,0 Revenue 114,9 114,9 147,4 Recurring EBITDA (6,6) (6,6) 11,4 Recurring EBITDA margin on revenue -5,7% -5,7% 7,7% (1) Restated data: key financial indicators for the first half of 2023 have been restated to reflect goodwill allocation adjustments under IFRS 3, recognized retrospectively in the opening balance sheets of acquired entities prepared at the acquisition date. 2024 outlook 2023 and H1 2024 were challenging periods for the aerospace supply chain industry in general and for Latecoere in particular. These challenges continue to persist throughout 2024, with inflationary pressures and challenges arising from operating within a constrained aerospace supply chain. OEM volume growth for commercial, business jet and defense market sub-segments continues to improve overall revenue, but the ramp-up in activity results in challenges and cost pressures for the whole industry. To alleviate these challenges, Latecoere continues to invest in its operating platform, people and geographic footprint, creating a more resilient business model better positioned to grow with customer requirements. Latecoere's outlook for FY 2024 includes: Increased revenue growth; Significant reduction in EBITDA losses, resulting from the realization of operational and commercial initiatives, an improving supply chain situation and increased activity across key commercial, business jet and defense market sub-segments and; A significant improvement in operational free cash flow reflecting the improvements in operational and commercial initiatives partially offset by restructuring costs, increased working capital due to sales growth and key investments to strengthen Latecoere's competitive position. Significant Events in the period On Sunday February 4, 2024, a fire broke out at the Latecoere elementary parts production site in Hermosillo, Mexico. The Hermosillo fire department extinguished the blaze with no injuries. Damage was limited to the surface treatment and painting building. Machining and sheet metal operations were unaffected. Latecoere set up a dedicated team to deal with the consequences of this incident. To date, the estimated financial impact is -€2.7million mainly composed as follows: Inventory write-downs of €4.1 million; Depreciation of damaged industrial assets for around €1.4 million ; Insurance profit received in advance for €5 million ; Postponed deliveries of the B787 program from February 2024 to May 2024, while the supply chain was reorganized, resulting in additional production costs. A claim has been filed with the Group’s insurance companies to cover the property damage suffered and business interruption operating losses. The financial consequence of these events, including receiving a down payment from the insurance coverage, has been fully recognized in the financial statements for the half year period ended June 30, 2024. Post-closing events None to report. About Latecoere As a Tier 1 partner to major industrial OEMs (Airbus, BAE Systems, Boeing, Bombardier, Dassault Aviation, Embraer, Honda Aircraft Company, Lockheed Martin, Raytheon Technologies, Thales), Latecoere serves the aerospace sector with innovative solutions for a sustainable world. The Group operates in all segments of the aerospace industry (commercial, regional, business, defense, space), in two business areas: Aerostructures: doors, fuselage, wings and empennage, connecting rods and customer service; Interconnection systems: wiring, avionics furniture, on-board equipment, electronic products and customer service. At December 31, 2023, the Group employed 5,497 people in 14 countries. Latecoere is listed on Euronext Paris - Compartment B, ISIN Code: FR001400JY13 - Reuters: AEP.PA - Bloomberg: AT.FP Appendices Half-Year Consolidated financial statements (IFRS) Consolidated Income statement In thousands of euros June 30, 2024 June 30. 2023* Sales figures 352 081 303 797 Other operating income 1 742 5 684 Stocked production 16 804 -3 398 Purchases and external charges -227 282 -199 901 Personnel expenses -139 946 -123 441 Taxes -4 542 -3 360 Depreciation, amortization and impairment -18 550 -21 922 Net additions to operating provisions -4 914 4 012 Net additions to current assets -2 339 440 Other products 4 457 2 333 Other expenses -1 560 -4 533 OPERATING INCOME RECURRING -24 048 -40 289 Other non-recurring operating income 6 485 10 771 Other non-current operating expenses -15 648 -21 806 OPERATING INCOME -33 211 -51 324 Cost of net financial debt -6 210 -8 823 Foreign exchange gains and losses -1 079 1 027 Unrealized gains and losses on derivative financial instruments -57 -40 Other financial income and expense -2 089 -1 354 FINANCIAL RESULT -9 435 -9 190 Income tax -6 674 -148 NET INCOME FROM CONTINUING OPERATIONS -49 319 -60 663 NET INCOME FROM DISCONTINUED OPERATIONS   1 086 NET INCOME -49 319 -59 576 (*) Restated data: key financial indicators for the first half of 2023 have been restated to reflect Avcorp goodwill allocation adjustments under IFRS 3, recognized retrospectively Half-Year Consolidated Balance sheet In thousands of euros June 30, 2024 Dec. 31, 2023 Goodwill 17 970 17 970 Intangible assets 125 664 132 422 Property, plant and equipment 109 525 113 421 Other financial assets 6 407 6 151 Deferred taxes 1 660 3 078 Derivative financial instruments 579 3 618 Other long-term assets 12 8 TOTAL NON-CURRENT ASSETS 261 817 276 669 Inventories and work-in-progress 239 012 215 622 Trade and other receivables 142 602 116 540 Tax receivables 10 621 11 810 Derivative financial instruments 653 3 710 Other current assets 4 550 4 647 Cash and cash equivalents 39 433 85 423 TOTAL CURRENT ASSETS 436 871 437 751 TOTAL ASSETS 698 689 714 420 In thousands of euros June 30, 2024 Dec. 31, 2023 Capital 124 968 124 968 Additional paid-in capital 327 251 327 251 Treasury stock -448 -440 Other reserves -286 626 -294 134 Derivative financial instruments - effective portion -11 455 1 532 Net income / loss for the period -49 319 6 159 ISSUED CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY 104 370 165 335 NON-CONTROLLING INTERESTS 0 0 TOTAL SHAREHOLDERS' EQUITY 104 371 165 335 Borrowings and financial liabilities 93 694 183 186 Repayable advances 20 636 20 694 Commitments to employees 12 133 12 429 Non-current provisions 9 352 33 229 Deferred taxes 7 376 7 826 Derivative financial instruments 10 176 1 097 Other non-current liabilities 1 671 6 853 TOTAL NON-CURRENT LIABILITIES 155 037 265 312 Borrowings and bank overdrafts 146 088 34 808 Repayable advances 2 464 2 254 Current provisions 32 229 1 151 Trade and other payables 186 731 173 070 Tax payable 4 067 5 597 Contract liabilities 18 765 25 720 Other current liabilities 42 344 36 974 Derivative financial instruments 6 593 4 200 TOTAL CURRENT LIABILITIES 439 280 283 774 TOTAL LIABILITIES 594 317 549 086 TOTAL EQUITY AND LIABILITIES 698 689 714 420 Half-Year Consolidated cash flow statement In thousands of euros June 30. 2024 June 30. 2023* (*)Net income for the period -49 319 -58 153 Adjustment for :     Depreciation and provisions 26 018 9 676 Elimination of revaluation gains/losses (fair value) 57 40 (Gains)/losses on asset disposals 3 170 2 896 Other non-cash items 1 357 -1 299 Other (*) 3 159 778 CASH FLOW AFTER COST OF NET DEBT AND TAX -15 558 -46 064 Of which cash flow from discontinued operations   -11 106 Income tax expense 6 674 675 Cost of debt 6 209 8 823 CASH FLOW FROM OPERATIONS BEFORE COST OF DEBT AND TAX -2 675 -36 566 Change in inventories net of provisions (**) -25 014 18 886 Change in trade and other receivables net of provisions (**) -29 713 -27 788 Change in trade and other payables (**) 12 633 478 Tax paid -3 044 -2 676 CASH FLOW FROM OPERATING ACTIVITIES -47 813 -47 664 Of which cash flow from operating activities related to discontinued operations   -2 578 Impact of changes in scope of consolidation   0 Acquisitions of tangible and intangible fixed assets (including change in fixed asset suppliers) (***) -13 228 -19 320 Acquisition of financial assets 414 0 Change in loans and advances 1 426 1 781 Disposal of property, plant and equipment and intangible assets 1 414 1 075 Dividends received 0 0 CASH FLOW FROM INVESTING ACTIVITIES -9 974 -16 464 Of which cash flow from investing activities related to discontinued operations   -598 Capital increase 0 0 Purchase or sale of treasury shares -8 9 Bond issues 24 988 51 753 Loan repayments -422 -1 849 Repayment of lease obligations -5 285 -5 374 Interest paid -6 268 -8 595 Cash flow from repayable advances 150 -74 Other flows from financing activities -1 556   CASH FLOW FROM FINANCING ACTIVITIES 11 598 35 871 +/- impact of exchange rate fluctuations -93 145 CHANGE IN NET CASH AND CASH EQUIVALENTS -46 281 -28 113 Of which net cash from discontinued operations 0 -3 176 Opening cash and cash equivalents (net of bank overdrafts) 85 102 73 897 Closing cash and cash equivalents (net of bank overdrafts) 38 821 45 784 (1) This item consists solely of calculated income and expenses relating to share-based payments. (2) In June 2023, changes in inventories net of provisions were impacted by €14.3m by changes in inventories relating to the Bombardier business. Changes in trade and other receivables are impacted by -4.1 M€ and changes in trade and other payables by 1.6 M€. The impact on operating cash flow is shown on the line 'Of which cash flow from operating activities related to discontinued operations'. (3) Total purchases of property, plant and equipment and intangible assets differ from the total presented in note 6 due to the inclusion of changes in fixed asset suppliers and the impact of new leases which have no impact on cash flow. In 2023, the earn-out paid by the Mades entity has been reclassified under “Other cash flows from financing activities”. (*) Restated data: key financial indicators for the first half of 2023 have been restated to reflect adjustments to the allocation of Avcorp goodwill under IFRS 3, accounted for retrospectively. 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