Canada's Magellan Aerospace Q4 revenue rises 16%; net income falls on environmental provision

Overview

• Canada aerospace component supplier's Q4 revenue grew 15.6% yr/yr

• Adjusted EBITDA for Q4 rose 20% yr/yr

• Net income for Q4 fell 33% yr/yr due to environmental remediation provision

Outlook

• Magellan says commercial aerospace supply chain recovery continues but vulnerabilities remain

• Company sees strong defense market demand due to increased global defense spending

• Magellan says industry outlook is cautious due to supply chain issues and geopolitical risks

Result Drivers

• VOLUME GAINS - Higher sales volumes, contract rehabilitations, and favorable product mix boosted gross profit, partially offset by higher material costs

• GEOGRAPHIC GROWTH - Canadian revenue rose on higher casting, engine part, and defense product sales; U.S. revenue grew on Boeing aircraft parts; European revenue increased on Airbus parts and favorable FX

• ENVIRONMENTAL PROVISION -Company recorded a $12.1 mln (pre-tax) environmental remediation provision related to a former site

Company press release: ID:nBw1YmWBba

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 1 "strong buy" or "buy", 1 "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$20.15, about 2.7% below its March 26 closing price of C$20.70

• The stock recently traded at 17 times the next 12-month earnings vs. a P/E of 14 three months ago

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