Latecoere Reports FY 2023 Results

Latecoere delivers strong growth in 2023 and continues to face challenging supply chain & inflationary pressures

   -- 
 Strong 2023 revenue growth of +33% to EUR622.3 million as the business 
      continues to ramp-up production to support customer demand 
 
 
   -- 
 Recurring EBITDA loss of (EUR18.6) million, reflecting continuing 
      inflationary pressures and a challenging global supply chain 
 
 
   -- 
 Good performance from all businesses acquired over the past 24 months 
      with integration efforts progressing well 
 
 
   -- 
 Successful reconfiguration of the capital structure with EUR124 million 
      rights issue and EUR183 million debt cancellation 
 
 
   -- 
 Annual General Meeting scheduled on 30th December 2024 
 
TOULOUSE, France--(BUSINESS WIRE)--November 25, 2024-- 

Regulatory News:

Latecoere (Paris:LAT) ("the Group"), a leading tier one partner to major international aircraft manufacturers publishes its financial results and financial statements for the twelve-month period ended December 31, 2023, approved by the Board of Directors.

The business has continued its solid growth trajectory from 2022, as the industry recovers from the COVID crisis. The business has focused on optimizing operational production for customers despite a difficult environment, a fragile supply chain with many suppliers, particularly in the aerostructures segment, struggling to ramp up, and significant inflation, particularly on wages, raw materials and energy.

André-Hubert Roussel, the recently appointed Group Chief Executive Officer, stated: "2023 was a challenging year for Latecoere and for the aerospace supply chain in general. However, we continued to strengthen our operations by keeping our teams heavily focused on quality and on-time delivery (OTD), resolving supply challenges and progressing with our previously announced industrial transfers and related restructurings.

As part of our overall strategy, we are specifically focused on:

   -- 
 investing in our people and organization structure including several 
      key appointments bringing greater operational expertise to the team; 
 
 
   -- 
 improving operational performance; 
 
 
   -- 
 strengthening our operating platform through transformative investments 
      to optimize our cost structure; 
 
 
   -- 
 effectively integrating and growing the strategic investments in assets 
      made in 2021 and 2022; and 
 
 
   -- 
 concluding outstanding contractual items with OEMs. 
 

By focusing on navigating the current supply chain headwinds, and driving our operational transformation, we expect to continue to strengthen our business as we fully benefit from the ongoing recovery within the aerospace and defense industry. This execution of our strategy has contributed towards recent commercial contract wins within both our Aerostructures and Interconnection Systems businesses in North America and Europe, with both existing and new clients."

2023 Financial Highlights(1,6)

 
Group                                2022 
 (EUR million)           2022     restated(4)  S1 restated(4)    S2     2023 
    Revenue              468,3      466,8          303,8       318,5    622,3 
Reported growth          39,4%      39,4%          42,9%       22,9%    32,9% 
Organic growth 2         16,5%      17,0%          15,2%       19,8%    17,5% 
    Recurring 
     EBITDA(3)           (8,5)      (5,7)          (17,6)      (1,1)   (18,6) 
Recurring EBITDA 
 margin on revenue       -1,8%      -1,2%          -5,8%       -0,3%    -3,0% 
    Operating free 
     cash flows from 
     continuing 
     operations         (173,2)    (173,2)         (59,1)      (59,1)  (118,2) 
    Net Cash Flow       (203,7)    (203,7)         (28,1)       39,3    11,2 
    Cash and cash 
     equivalents         73,9        73,9           45,8        85,1    85,1 
    Net Debt(5)          297,1      297,1          370,3       125,2    125,2 
----------------------  -------  ------------  --------------  ------  ------- 
(1) The 2023 Financial highlights are derived from consolidated financial 
statements prepared under IFRS as of 31 December 2023 and being audited with 
an expected finalization on 6(th) December 2024 
(2) Growth at constant exchange rates and scope of consolidation: Organic 
growth is obtained by neutralizing the effect of the EUR/USD exchange rate 
(use of a constant exchange rate for the periods concerned) and by applying a 
constant scope of consolidation (neutralization of the impact of 
acquisitions/disposals). 
(3) Recurring EBITDA corresponds to current operating income before 
depreciation, amortization and impairment of current tangible and intangible 
assets. Directors of the Group acknowledge that Recurring EBITDA is a non-GAAP 
measure but consider that this measure gives a meaningful representation of 
the Group's operating results from continuing operations as it is used both 
internally and in the Aerospace sector more broadly. 
(4) Restated data: the 2022 and H1 2023 Financial highlights have been 
restated to reflect purchase accounting adjustments under IFRS 3, recognized 
retrospectively in the opening balance sheets of the acquired entities 
prepared at the acquisition date. 
(5) Net Debt is presented excluding consideration of the Better Fortune clause 
(Retour à Meilleure Fortune) mechanism. 
6. The management of Latecoere has confirmed the Group's ability to continue 
its business as a going concern for at least the next twelve months from the 
balance sheet date and the date of publication of the financial statements for 
the year ended December 31, 2023, whilst maintaining a close management of the 
group's available liquidity. 
 

Full Year 2023 Financial Highlights Commentary

Group revenue reached EUR622.3 million for 2023, compared with EUR466.8 million in 2022, an increase of EUR155.5 million or +32.9% increase.

2023 organic revenue growth, at constant exchange rates and perimeter scope, amounted to a EUR75 million increase or +17.5%, as a result of higher production rates, most notably from the B787 program recovery in Aerostructures and A350 and ATR programs in Interconnection Systems.

The Group also benefited over the period from the contribution of acquired activities made in 2022, with a full year revenue benefit of these acquisitions realized in 2023. This perimeter effect amounted to +EUR88 million when comparing 2023 revenues to those reported in 2022.

In addition, Group revenue benefited from favorable currency effect of EUR19 million for the FY2023, as compared to a favorable currency effect of EUR25.5 million in 2022.

The Group reported a recurring EBITDA of (EUR18.6) million for 2023, a deterioration of (EUR12.9) million vs 2022 Restated. This deterioration was mainly due to:

   -- 
 significant cost over-runs arising from supply chain constraints, 
      resulting in higher conversion and freight costs; 
 
 
   -- 
 inflationary pressures in 2023, resulting from further increases in 
      material and labour costs, not fully recovered from customers. 
 

Net Cash flow for the period amounted to EUR11.2 million, reflecting the successful rights issue of EUR124.4 million offsetting Operating free cash-flow losses from continuing operations of EUR118.2 million: plus cash flow from discontinued operations of EUR7.6 million.

Operating free cash flow from continuing operations amounting to cash flow losses of EUR118.2 million reflects the recurring EBITDA losses of EUR18.6 million plus:

   -- 
 non-recurring costs of EUR35.7 million related to the ongoing transfers 
      of work and related restructuring; 
 
 
   -- 
 further investments of EUR19.5 million into capital expenditures, 
      particularly in North America and; 
 
 
   -- 
 EUR30.3 million investment into net working capital supporting the 
      increase in the OEM demand requirements. 
 

At the end of December 2023, cash and cash equivalent stood at EUR85.1 million, improving by EUR11.2 million from December 31, 2022. The net debt at the end of December 2023 stood at EUR125.2 million following debt cancellation of EUR183 million.

Aerostructures Divisional Commentary

2023 revenues for Latecoere's Aerostructures Division rose by +47.1% to EUR381 million compared with EUR256.1 million in 2022. At constant exchange rates and perimeter scope, 2023 revenues rose by EUR48.4 million (19.5%). The segment's activity benefited from OEM production rate recovery, notably on the B787 program. Full-year contribution of the acquisitions made in 2022 to 2023 revenues is EUR93.7 million compared to EUR15.8 million in 2022 (the post-acquisition period from November 7, 2022).

The division's recurring EBITDA amounted to (EUR18.8) million, a deterioration of EUR19 million compared with 2022, due primarily to significant inflation, multiple supply chain challenges and related cost over runs adversely impacting performance. This was compounded by protracted customer negotiations on inflation pass through, particularly impacting H2 2023.

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