Regulated information, under embargo until 7 am on Thursday 17th September 2020

Latécoère Reports H1 2020 Results

  • Decline in Group revenue and recurring EBITDA predominately due to negative impact of Covid-19 on customer production rates
  • Rapid and proactive measures taken to curtail operating costs and preserve Group liquidity
  • Negative revenue trends to persist in H2 2020, partially offset by operating efficiency improvements

Toulouse, September 17h, 2020 - Latécoère, a tier 1 partner to major international aircraft manufacturers, today announced that its Board of Directors under the Chairmanship of Pierre Gadonneix, at their meeting on September 16, 2020, adopted and authorised the publication of Latécoère's financial statements for the six-month period ended June 30, 20201.

Philip Swash, Group Chief Executive Officer, commented: "Latécoère's H1 2020 results are consistent with the challenges affecting the broader aerospace industry. The Covid-19crisis has led a number of our key customers to curtail aircraft production, which has in turn stunted the "pre-Covid"top- line growth trends we were experiencing in both Aerostructure and Interconnected Systems. We expect lower than normal production rates to prevail for the remainder of the year, negatively impacting our full year 2020 revenues."

"Although we cannot control the exogenous factors impacting our business, we have taken prudent measures since March to reduce operating costs and strengthen our liquidity. We have reduced capital expenditures and will continue to take steps to ensure our cost base is aligned with our operating environment while preserving our engineering and operational strengths. During this difficult period, we have put in place across all our facilities extensive sanitary measures to protect our employees' health. We have also made every effort to stay close to our customers at all times and believe we are well positioned to quickly regain the positive momentum we had before the Covid-19 crisis began."

A limited review of the financial statements has been performed by the statutory auditors.1

First Half Year 2020 Highlights and Financial Summary

(Limited review - € million)

H1 2020

H1 2019

Revenue

231.9

371.7

Reported growth

(37.6)%

15.9%

Growth at constant exchange rates

(36.8)%

13.1%

Recurring EBITDA *

(17.2)

28.1

Recurring EBITDA * Margin on Revenue

(7.4)%

7.6%

Recurring Operating Income

(34.0)

10.8

Recurring Operating Margin on Revenue

(14.6)%

2.9%

Non-recurring items

(34.6)

(7.9)

o/w Assets depreciation

(28.2)

-

Operating Income

(68.6)

2.9

Net Cost of debt

(1.6)

(2.7)

Other financial income/(expense)

(11.7)

(5.2)

Financial result

(13.3)

(7.9)

Income tax

(12.1)

(1.0)

Net Income

(94.0)

(5.9)

Operating free cash flow

(5.2)

(46.3)

  • Recurring EBITDA corresponds to recurring operating income before recurring amortization, depreciation and impairment losses. Details of non-recurring items are presented in the Group's accounting principles from consolidation financial statements

Latécoère's 2020 half yearly financial results reflect the overall decline in production rates across the aerospace sector. As previously indicated, the crisis had a very strong impact on the second quarter with a decline in revenue of (56.8)% at constant exchange rates in this quarter alone. Overall in H1 2020, the Group revenue decreased by (37.6)% to € 231.9 million at constant exchange rates, or (36.8)% on an organic basis with all business segments being impacted.

Latécoère H1 2020 recurring EBITDA amounted to € (17.2) million, representing a margin of (7.4)%. Latécoère H1 2020 recurring operating income amounted to € (34) million compared to € 10.8 million in the same period of 2019.

Latécoère net financial results totalled € (13.3) million in H1 2020 compared to € (7.9) million in H1 2019. Financial results include foreign exchange losses for €(9.8) million and cost of debt limited to only €(1.6) million.

The Group net income totalled € (94) million. The anticipation of a slow recovery in air traffic and the knock on effects on the Aerospace industry has led the Group to impair some assets in the Aerostructures branch for €(28.2) million and depreciate the remaining deferred tax assets still accounted for in the balance sheet for €(10.1) million.

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As a result of the strong measures taken to mitigate the effects of the crisis on Latécoère liquidity, Operating Free Cash Flow over the period was €(5.2) million compared to €(46.3) million a year ago. Net debt remained relatively stable at €(124) million including the € 60 million Prêt Garanti Etat loans announced with Q1 2020 results, versus €(115.8) million at the end of 2019, with a strong cash position of €44.5 million (vs €33.8 at the end of 2019).

Adaptation plan

The Group has taken swift action to mitigate the effects of the Covid-19 crisis, including reducing its overseas workforce by 35% in 2020. As a result, the Group booked one-time restructuring costs totalling €1.6 million for the period and anticipates additional one-time costs in the second half as it completes the restructuring of its operations outside of France.

Purchasing programs have also been scaled back in line with the subdued activity, decreasing by more than (40)% of raw materials, supplies expenses, and sub-contracting expenses. Work-in-progress and inventories have thus stabilized over the period at €176.3 million versus €179.8 at the end of 2019. Working Capital has also improved strongly to €176.5 million at the end of June versus €208.6 million in December 2019.

Capital expenditures have been reduced by (60)% to €6.4 million in H1 2020 compared to €16.2 million in H1 2019.

Despite the crisis, the Group intends to continue to invest in its future and will maintain its R&T efforts in 2020 at a level of €5.5 million similar to 2019. The 14% decrease in R&T expenses seen in H1 2020 at €2.5 million compared to H1 2019 (€2.9 million) is largely due to phasing of expenses on some programs.

Aerostructures

Revenue in Latécoère's Aerostructures division declined (41.7)% at constant exchange rates, or (42.7)% as reported for the first half of 2020. Revenue totalled € 123.5 million compared to € 215.3 million for the same period in 2019, in large part due to a €70 million reduction in production rates in the second quarter alone as a result of the temporary stoppage of our customers' production. The year-over-year Aerostructures revenue comparison is also affected by higher production rates in Q1 2019 as Latécoère insourced production of primary parts after the default of a supplier.

Recurring EBITDA in the division was €(9.1) million compared to €16.2 million in H1 2019, with the decline in production rates partially offset by a reduction in operating costs in response to Covid-19.

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Aerostructures

H1 2020

H1 2019

(Limited review - € million)

Consolidated Revenue

123.5

215.3

Growth at constant exchange rates

(41.7)%

14.5%

Inter-segment Revenue

11.1

8.9

Revenue

134.6

224.2

Recurring EBITDA*

(9.1)

16.2

Recurring EBITDA* Margin on Revenue

(6.8)%

7.2%

Recurring Operating Income

(17.7)

8.7

Recurring Operating Margin on Revenue

(13.1)%

3.9%

  • Recurring EBITDA corresponds to recurring operating income before recurring amortization, depreciation and impairment losses. Details of non-recurring items are presented in the Group's accounting principles from consolidation financial statements

Interconnection Systems

The Interconnection Systems revenue of €108.5 million represents a (30.2)% decline at constant exchange rates and (30.7)% on a reported basis compared to €156.4 million in H1 2019. Consistent with the commercial pressure impacting the sector, approximately €35 million of this decline is attributable to production rate declines compounded by the decrease in development activity in the Mitsubishi Aircraft SpaceJet M90 program noted in Q1 as well as a decline in Kitting and Service activities.

Recurring EBITDA for Interconnection Systems was € (8.2) million compared to €11.9 million in H1 2019 affected similarly by the decline in production rates.

Due to the health crisis in Mexico and France, the closing of the acquisition of Bombardier Interconnection Systems activities has been delayed and is now anticipated to take place in the last quarter of the year. In a depressed environment, this acquisition is key to help the Group strengthen and diversify its business development on new platforms and in the North American market.

Interconnection Systems

H1 2020

H1 2019

(Limited review - € million)

Consolidated Revenue

108.5

156.4

Growth at constant exchange rates

(30.2)%

11.3%

Inter-segment Revenue

0.5

1.0

Revenue

108.9

157.4

Recurring EBITDA*

(8.2)

11.9

Recurring EBITDA * Margin on Revenue

(7.5)%

7.5%

Recurring Operating Income

(16.4)

2.1

Recurring Operating Margin on Revenue

(15.0)%

1.3%

  • Recurring EBITDA corresponds to recurring operating income before recurring amortization, depreciation and impairment losses. Details of non-recurring items are presented in the Group's accounting principles from consolidation financial statements

4

FY 2020 Outlook

Latécoère does not anticipate an improvement in market conditions during the second half of 2020 as high uncertainty remains as to the duration and intensity of the Covid-19 pandemic and its impact on the commercial aerospace sector. As a result, it expects FY 2020 revenues to decline by approximately (40)% compared to FY 2019. In the second half of the year, Latécoère will continue to deploy the necessary adaptation measures to adjust its activity to the slow recovery in air traffic expected in the coming years.

Latécoère does not intend to publish Q3 revenues this year and is re-evaluating the practice of quarterly revenue reporting on an ongoing basis.

_________________________________________________________________________________

About Latécoère

Latécoère is a tier 1 partner to major international aircraft manufacturers (Airbus, Embraer, Dassault, Boeing, Bombardier and Mitsubishi Aircraft), in all segments of the aeronautical market (commercial, regional, corporate and military aircraft), specializing in two fields:

  • Aerostructures (58% of total revenue): fuselage sections and doors.
  • Interconnexion systems (42% of total revenue): onboard wiring, electrical harnesses and avionics bays.

At 30 June 2020, Latécoère employed 4,714 people in 13 different countries. Latécoère, a French corporation (société anonyme) with capital of €189,637,036 divided into 94,818,518 shares with a par value of €2, is listed on Euronext Paris - Compartment B. ISIN codes: FR0000032278 - Reuters: LAEP.PA - Bloomberg: LAT.FP

Taddeo

Michael Henson / Investor Relations +44 (0) 7551 720441

Pierre-Jean Le Mauff / Media Relations +33 (0)7 77 78 58 67 teamlatecoere@taddeo.fr

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Appendix - Table of content

Glossary

Profit & Loss

Balance Sheet

Cash Flow Statement

6

Glossary

Growth at constant exchange rate

The Group measures the growth of its revenue exclusive of EUR/USD currency impacts to help understand revenue trends in its business.

The impact of exchange rate is offset by applying a constant EUR/USD exchange rate for the concerned periods.

Organic Growth

Organic growth excludes EUR/USD currency impacts (by applying a constant exchange rate for the periods considered) and by applying a constant Group structure. The constant Group structure is obtained by:

  • Eliminating revenues of companies acquired during the period,
  • Adding to the previous period full-year revenues of companies acquired in the previous period,
  • Eliminating revenues of companies sold during the current or comparable periods.

Recurring operating income

In order to better reflect the current economic performance, the Group uses a sub-total named "recurring operating income" which excludes from operating income, non-recurring items (income or expenses) which are inherently difficult to predict due to their unusual, irregular or non-recurring nature. Details of non-recurring items are presented in the Group's accounting principles from consolidation financial statements.

EBITDA

EBITDA corresponds to operating income before depreciation, amortization, and impairment losses.

Recurring EBITDA

Recurring EBITDA corresponds to recurring operating income before recurring amortization, depreciation and impairment losses. Details of non-recurring items are presented in the Group's accounting principles from consolidation financial statements.

Operating free cash flow

Operating free cash flow corresponds to cash flow from operating activities and from investing activities excluding income tax paid.

Recurring Operating free cash flow

Recurring Operating free cash flow corresponds to operating cash flow excluding non-recurring items from operating activities and investing activities. Details of non-recurring items are presented in the Group's accounting principles from consolidation financial statements.

Net debt

Net debt corresponds to loans and bank borrowings (over one year) and loans and bank borrowings (less than one year) which include factoring and bank overdrafts less cash and cash equivalents. Net debt also includes financial debt from finance lease contracts.

Backlog

The backlog corresponds to firm orders published by OEMs (Original Equipment Manufacturers) and are not yet recognized in revenue.

7

Profit & Loss

('000 EURO)

June 30, 2020

June 30, 2019

Revenue

231 917

371 736

Other operating revenue

306

305

Change in inventory : work-in-progress & finished goods

-6 751

5 255

Raw material, Other Purchases & external charges

-148 475

-250 964

Personnel expenses

-94 285

-105 730

Taxes

-3 927

-5 926

Amortization

-16 727

-17 298

Net operating provisions charges

870

711

Depreciation of current assets

-4 519

4 712

Other operating income

10 539

8 952

Other operating expenses

-2 915

-939

RECURRING OPERATING INCOME

-33 967

10 814

Other non-recurring operating income and expenses

-34 627

- 7 869

OPERATING INCOME

Net Cost of debt

Foreign Exchange gains/losses

Change in fair value of financial derivative instruments Other financial incomes and expenses

-68 594

2 945

-1 599

-2 667

-9 830

-1 298

-755

- 3 876

-1 111

-48

FINANCIAL RESULTS

-13 295

-7 890

Income tax

-12 128

-968

NET RESULT FOR THE PERIOD

-94 016

-5 913

  • Of which, Owners of the parent
  • Of which, non-controlling interests

-94 016

-5 913

0

0

8

Balance Sheet

ASSETS

('000 EURO)

June 30, 2020

June 30, 2019

Intangible assets

72 256

77 799

Tangible assets

135 482

173 043

Other financial assets

3 499

3 698

Deferred tax assets

226

10 279

Financial non-current assets

391

1 020

Other non-current assets

215

168

TOTAL NON-CURRENT ASSETS

212 069

266 007

Inventories

176 312

179 757

Accounts receivable

86 397

157 839

Tax receivable

15 972

16 003

Financial derivate instruments

2 519

1 897

Other current assets

2 745

2 232

Cash & Cash Equivalents

44 451

33 790

TOTAL CURRENT ASSETS

328 396

391 518

TOTAL ASSETS

540 465

657 525

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LIABILITIES & EQUITY

('000 EURO)

June 30, 2020

June 30, 2019

Share capital

189 637

189 637

Share premium

213 658

213 658

Treasury stock

-547

-1 842

Other reserves

-187 290

-147 486

Derivates future cash flow hedges

-21 567

-21 883

Group net result

-94 016

-32 864

EQUITY ATTRIBUTABLE TO PARENTS OWNERS

99 874

199 220

NON CONTROLLING INTERESTS

0

0

TOTAL EQUITY

99 874

199 220

Loans and banks borrowings

100 904

98 190

Refundable Advances

22 285

22 824

Employee benefits

21 347

20 400

Non-current provisions

7 432

8 876

Deferred tax liabilities

23

12

Financial derivative instruments

1 500

8 205

Other non-current liabilities

2 298

4 638

TOTAL NON-CURRENT LIABILITIES

155 790

163 146

Loans and bank borrowings (less than 1 year)

67 583

51 366

Refundable Advances

2 580

2 634

Current provisions

3 619

1 997

Accounts payable

116 095

146 292

Income tax liabilities

1 666

1 918

Contracts liabilities

41 254

43 609

Other current liabilities

2 314

4 055

Financial derivative instruments

49 691

43 288

TOTAL CURRENT LIABILITIES

284 801

295 159

TOTAL LIABILITIES

440 591

458 305

TOTAL EQUITY & LIABILITIES

540 465

657 525

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Cash Flow Statement

('000 EURO)

June 30, 2020

June 30, 2019

Net result for the period

-94 016

-5 913

Ajustement related to non-cash activities :

Depreciation and provisions

46 445

16 362

Fair value gains/losses

755

3 876

Net (gains)/losses on disposal assets

71

-81

Other non-cash items

1 874

667

CASH FLOWS AFTER COST OF DEBT AND INCOME TAXES

-44 871

14 911

Income taxes

12 128

968

Net Cost of debt

1 593

2 669

CASH FLOWS BEFORE COST OF DEBT AND INCOME TAX

-31 150

18 548

Changes in inventories net of provisions

-3 841

-10 150

Changes in client and other receivables net of provisions

69 795

-35 642

Changes in suppliers and other payables

-33 759

-2 939

Income tax paid

-1 248

-4 025

CASH FLOWS FROM OPERATING ACTIVITIES

-23

-34 208

Effect of changes in group structure

0

113

Purchase of tangible and intangible assets (including changes in payables to fixed

-6 494

-16 251

asset suppliers)

Purchase of financial assets

0

0

Increase (decrease) in loans and advances made

57

-91

Proceeds from sales of tangible and intangible assets

1

84

Dividends received

0

3

CASH FLOWS FROM INVESTING ACTIVITIES

-6 436

- 16 142

Proceeds from issue of shares

0

0

Purchase or disposal of treasury shares

1296

-4 676

Proceeds from borrowings

60 000

10 000

Repayment of borrowings

0

0

Repayments of lease liabilities

-2 816

-1 503

Financial interest paid

-1 448

-2 605

Dividends paid

0

0

Flows from refundable advances

-594

-803

Other flows from financing operation

-38 538

-72

CASH FLOW FROM FINANCING ACTIVITIES

17 900

341

Effects of exchange rate changes

-777

103

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

10 664

-49 906

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Latécoère SA published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2020 07:39:05 UTC