Magellan Aerospace Q1 revenue up 9.3% on Europe boost

Overview

• Canada aerospace components maker's Q1 revenue rose 9.3% yr/yr

• Q1 adjusted EBITDA increased 35.4% yr/yr

• Gross profit gains driven by volume, price increases and favorable product mix

Outlook

• Company expects sustained growth in defense aerospace amid rising global defense spending

• Magellan sees cautiously optimistic commercial aerospace outlook, supported by strong Airbus and Boeing backlogs

• Company cites supply chain and geopolitical risks as ongoing challenges for aerospace markets

Result Drivers

• EUROPEAN GROWTH - Higher revenues for narrow and wide body aircraft parts and MRO services drove a 20.6% yr/yr increase in European sales, aided by favorable currency movements

• VOLUME, PRICE AND MIX - Gross profit gains were attributed to higher sales volumes, price increases and a favorable product mix, partly offset by increased input costs

• FOREIGN EXCHANGE IMPACT - Foreign exchange gains contributed to higher adjusted EBITDA, offset in part by increased administrative expenses

Company press release: ID:nBwZbY6ma

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 3 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the aerospace & defense peer group is "buy"

• Wall Street's median 12-month price target for Magellan Aerospace Corp is C$28.50, about 5.8% above its May 8 closing price of C$26.93

• The stock recently traded at 19 times the next 12-month earnings vs. a P/E of 17 three months ago

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