(NYSE: CAE; TSX: CAE) - CAE today reported revenue
of $1.0 billion for the fourth quarter of fiscal year 2019, up
42% from the fourth quarter last year. Fourth quarter net income
attributable to equity holders was $122.3 million ($0.46 per share)
compared to $82.3 million ($0.31 per share) last year. Net income
before specific items in the fourth quarter was $127.5 million
($0.48 per share), which represents a 55% EPS increase over the
same period last year.
Annual fiscal 2019 revenue was $3.3 billion, up
17% from the prior year. Annual net income attributable to equity
holders was $330.0 million ($1.23 per share) compared to $346.0
million ($1.28 per share) in fiscal year 2018. Before specific
items, net income was $335.2 million ($1.25 per share) this year,
compared to $297.9 million ($1.11 per share) last year, which
represents a 13% EPS increase over the same period last year. All
financial information is in Canadian dollars.
Summary of consolidated
results
(amounts in millions, except operating margins and per share
amounts) |
|
FY2019 |
FY2018 |
Variance % |
Q4-2019 |
Q4-2018 |
Variance % |
|
|
|
Restated* |
|
|
Restated* |
|
Revenue |
$ |
3,304.1 |
2,823.5 |
17% |
1,022.0 |
720.9 |
42% |
Operating profit(7) |
$ |
480.6 |
462.8 |
4% |
170.4 |
117.5 |
45% |
Operating margins |
% |
14.5 |
16.4 |
|
16.7 |
16.3 |
|
Net income |
$ |
340.1 |
354.7 |
(4%) |
125.4 |
85.6 |
46% |
Net income attributable to
equity holders of the Company |
$ |
330.0 |
346.0 |
(5%) |
122.3 |
82.3 |
49% |
Earnings per share (EPS) |
$ |
1.23 |
1.28 |
(4%) |
0.46 |
0.31 |
48% |
Net income before specific
items |
$ |
335.2 |
297.9 |
13% |
127.5 |
82.3 |
55% |
EPS before specific items |
$ |
1.25 |
1.11 |
13% |
0.48 |
0.31 |
55% |
Total
backlog |
$ |
9,494.9 |
8,068.3 |
18% |
9,494.9 |
8,068.3 |
18% |
* Financial results reported were restated to reflect the
accounting changes required by IFRS 15.
Specific items for fiscal 2019 include the costs
arising from the acquisition and integration of Bombardier's
Business Aircraft Training (BAT) Business.
Specific items for fiscal 2018 include the net
gains on disposal of our equity interest in the joint venture
Zhuhai Xiang Yi Aviation Technology Company Limited (ZFTC) and the
remeasurement of the previously held Asian Aviation Centre of
Excellence Sdn. Bhd. (AACE) investment upon acquisition and the
impacts of the enactment of the U.S. tax reform.
“We had a strong finish to fiscal year 2019,
with fourth quarter revenue up 42% and earnings per share up 55%
compared to last year; and for the year as a whole, CAE delivered a
record performance, meeting our annual outlook, and further
establishing itself as the worldwide leader in aviation training,”
said Marc Parent, CAE’s President and Chief Executive Officer.
“Annual revenue grew 17% and earnings per share grew 13% compared
to last year, and we generated strong free cash flow. I am
especially pleased with our record $4 billion in annual orders and
$9.5 billion order backlog. Our continued success winning our
customers’ trust further validates our training strategy and adds
to the highly recurring profile of CAE’s business. In Civil, we
delivered over one million hours of aviation training during the
year and grew operating income by 13%. We also greatly expanded
CAE’s position in business aviation training with the company’s
largest-ever acquisition, making CAE the world's leading provider
of civil aviation training. Annual Civil orders totalled a record
$2.8 billion, including additional airline training outsourcings
and 78 full-flight simulator sales. In Defence, we grew annual
operating income by 9% and booked $1.1 billion in orders, including
training systems integration programs, for a record $4.5 billion
Defence backlog. As well, we acquired AOCE, which together with our
enhanced structure in the U.S., expands our market to include
higher-level security programs. And in Healthcare, our new
simulation products and expanded salesforce led to accelerated
revenue growth toward the end of the fiscal year. We recently
appointed a new Healthcare leader, with deep commercial experience
in the healthcare field, to leverage our current progress and take
the business to the next level of scale. As we look to the fiscal
year ahead, we expect CAE to build on the positive momentum in
training and to continue to deliver superior and profitable
growth.”
Civil Aviation Training Solutions
(Civil)Fourth quarter Civil revenue was $593.4 million, up
50% compared to the same quarter last year, and segment operating
income(8) was $115.5 million (19.5% of revenue) compared to $74.5
million in the fourth quarter last year. Fourth quarter Civil
segment operating income before specific items(9) was $122.3
million (20.6% of revenue), up 64% compared to the fourth quarter
last year. Fourth quarter Civil training centre utilization(10) was
75%.
Annual Civil revenue was $1.9 billion, up 15%
compared to last year, and segment operating income was $344.3
million (18.4% of revenue). Annual segment operating income before
specific items was $351.1 million (18.7% of revenue) this year and
$311.8 million (19.2% of revenue) last year, representing a 13%
increase. Annual Civil training centre utilization was 76%,
reflecting continued strong usage of existing simulators and the
recent deployment of additional simulator capacity to meet new
demand from customers.
During the quarter, Civil signed training
solutions contracts valued at a record $1.1 billion, including a
15-year exclusive pilot training contract with Avianca, and the
sale of 28 full-flight simulators (FFSs). For the year, Civil
booked orders for a record $2.8 billion, demonstrating CAE’s
increased momentum as training partner of choice. These included 78
FFS sales and comprehensive, long-term training agreements with
airlines including easyJet, CityJet, Endeavor, Air Asia and
Volaris. In business aviation, Civil won long-term training
contracts with customers worldwide, including OJets, Icon Aviation
and Windsor Jets.
The Civil book-to-sales(3) ratio was 1.87x for
the quarter and 1.48x for the last 12 months. The Civil backlog at
the end of the year was a record $5.0 billion, which is up 22% from
the prior year period.
Summary of Civil Aviation Training
Solutions results
(amounts in millions except operating margins, SEU and FFSs
deployed) |
|
FY2019 |
FY2018 |
Variance % |
Q4-2019 |
Q4-2018 |
Variance % |
|
|
|
Restated |
|
|
Restated |
|
Revenue |
$ |
1,875.8 |
1,625.3 |
15% |
593.4 |
395.3 |
50% |
Segment operating income
(SOI) |
$ |
344.3 |
330.1 |
4% |
115.5 |
74.5 |
55% |
Operating margins |
% |
18.4 |
20.3 |
|
19.5 |
18.8 |
|
SOI before specific items |
$ |
351.1 |
311.8 |
13% |
122.3 |
74.5 |
64% |
Operating margins |
% |
18.7 |
19.2 |
|
20.6 |
18.8 |
|
Total backlog |
$ |
5,039.6 |
4,131.1 |
22% |
5,039.6 |
4,131.1 |
22% |
SEU(11) |
|
218 |
206 |
6% |
224 |
212 |
6% |
FFSs
deployed |
|
286 |
255 |
12% |
286 |
255 |
12% |
Defence and Security
(Defence)Fourth quarter Defence revenue was $387.9
million, up 34% compared to the same quarter last year and segment
operating income was $50.7 million (13.1% of revenue) compared to
$36.3 million (12.5% of revenue) in the fourth quarter last year.
Before expenses related to the acquisition and integration of
Alpha-Omega Change Engineering (AOCE), Defence segment operating
income for the quarter would have been $51.7 million (13.3% of
revenue), up 42% compared to the fourth quarter last year. Annual
Defence revenue was $1,306.7 million, up 21% over last year, and
annual segment operating income was $131.5 million (10.1% of
revenue). Before the AOCE-related expenses, annual Defence segment
operating income would have been $134.8 million (10.3% of revenue),
up 9% compared to last year.
During the quarter, Defence booked orders for
$265.0 million. Notable wins include a contract with Boeing to
provide a P-8A aircraft simulator for the Royal Air Force and
simulator upgrade programs with the U.S. Navy as part of a U.S.
foreign military sale on the Royal Australian Navy's MH-60R
helicopter training systems, the Royal Canadian Air Force for their
C-130J simulators, the German Air Force for their Eurofighter
simulators, and with Lockheed Martin for C-130J full-mission
simulators for the U.S. Air Force.
For the year, Defence booked $1.1 billion in
orders including a contract for the U.S. Air Force C-130H Aircrew
Training Services program and the U.S. Navy CNATRA CIS program
involving instruction at five Naval Air Stations to support
primary, intermediate and advanced pilot training. Defence also won
a contract to provide a comprehensive training solution and
long-term training services for the Royal New Zealand Air Force
NH90 helicopter program, and a contract from General Atomics to
develop the synthetic training system for the UK Protector remotely
piloted aircraft system. In addition, through CAE USA Mission
Solutions and the acquisition of AOCE during the year, Defence
obtained several U.S. Defense contracts to provide training and
engineering support services on higher-level security programs.
The Defence book-to-sales ratio was 0.68x for
the quarter and 0.83x for the last 12 months. Defence contracts
often include contract options that extend beyond the initial
funded year of these contracts. The Defence book-to-sales ratio
including options was 1.28x for the quarter and 1.03x for the last
12 months. The Defence backlog, including options and CAE’s
interest in joint ventures, at the end of the year was a record
$4.5 billion.
Summary of Defence and Security
results
(amounts in millions except operating margins) |
|
FY2019 |
FY2018 |
Variance % |
Q4-2019 |
Q4-2018 |
Variance % |
|
|
|
Restated |
|
|
Restated |
|
Revenue |
$ |
1,306.7 |
1,083.0 |
21% |
387.9 |
290.5 |
34% |
Segment operating income |
$ |
131.5 |
123.9 |
6% |
50.7 |
36.3 |
40% |
Operating margins |
% |
10.1 |
11.4 |
|
13.1 |
12.5 |
|
Total
backlog |
$ |
4,455.3 |
3,937.2 |
13% |
4,455.3 |
3,937.2 |
13% |
HealthcareFourth quarter Healthcare revenue was
a record $40.7 million, up 16% compared to the same quarter last
year, and fourth quarter segment operating income was $4.2 million
(10.3% of revenue), compared to $6.7 million (19.1% of revenue) in
the fourth quarter last year. Annual Healthcare revenue was $121.6
million compared to $115.2 million last year, and annual segment
operating income was $4.8 million (3.9% of revenue), compared to
$8.8 million (7.6% of revenue) last year.
CAE Healthcare reached several strategic
milestones during the year, strengthening its position as the
innovation leader in simulation-based healthcare education and
training. Innovative product launches include, CAE Ares, an
emergency care manikin; Anesthesia SimSTAT Appendectomy and Robotic
Surgery modules, screen-based simulation approved by the American
Board of Anesthesiology for maintenance of certification credits;
two new Blue Phantom skills trainers for ultrasound simulation
training; and CAE Luna, an innovative infant simulator. Healthcare
broadened its market reach by expanding its sales force and entered
into several new distributor agreements across the U.S. and
internationally. On April 1, 2019, CAE appointed Rekha Ranganathan,
an experienced healthcare industry executive, as the new CAE
Healthcare group president, to achieve greater scale and return on
investment.
Summary of Healthcare
results
(amounts in millions except operating margins) |
|
FY2019 |
FY2018 |
Variance % |
Q4-2019 |
Q4-2018 |
Variance % |
|
|
|
Restated |
|
|
Restated |
|
Revenue |
$ |
121.6 |
115.2 |
6% |
40.7 |
35.1 |
16% |
Segment operating income |
$ |
4.8 |
8.8 |
(45%) |
4.2 |
6.7 |
(37%) |
Operating margins |
% |
3.9 |
7.6 |
|
10.3 |
19.1 |
|
Additional financial highlightsFree cash flow
from continuing operations was $116.8 million for the quarter
compared to $117.3 million in the fourth quarter last year. Free
cash flow for the year was $323.8 million, compared to $288.9
million in the same period last year. The cash conversion ratio for
fiscal year 2019 was 98%.
Income taxes this quarter were $19.3 million,
representing an effective tax rate of 13%, compared to 8% for the
fourth quarter last year. The tax rate this quarter was higher due
to the change in the mix of income from various jurisdictions and
due to a lower recognition of deferred tax assets in Europe. Also
this quarter, the company recognized deferred tax assets in Canada
that were mostly offset by tax audits. Excluding the effect of the
net deferred tax assets and the tax audits in Canada, the income
tax rate would have been 20% this quarter. On the same basis, the
income tax rate for the year would have been 19%.
Growth and maintenance capital expenditures(12)
totaled $96.2 million this quarter and $251.8 million for the
year.
Net debt(13) at the end of the year was $1,882.2
million for a net debt-to-capital ratio(14) of 43.9%. This compares
to net debt of $649.4 million and a net debt-to-total capital ratio
of 22.0% at the end of the last year. CAE issued US$450 million of
unsecured senior notes and US$150 million term loans to fund the
acquisition of Bombardier's BAT Business and to monetize its
existing future royalty obligations to the aircraft
manufacturer.
Return on capital employed was 11.9% or 12.9%
before the impacts of the recently acquired Bombardier BAT
Business, compared to 14.7% last year or 12.7% before specific
items.
CAE will pay a dividend of 10 cents per share
effective June 28, 2019 to shareholders of record at the close of
business on June 14, 2019. During fiscal year 2019, CAE paid $99.9
million in dividends to shareholders and repurchased and cancelled
a total of 3,671,900 common shares at a weighted average price of
$25.70 per common share for a total consideration of $94.4
million.
Management outlook for fiscal year 2020CAE’s
core markets benefit from secular growth and the Company expects to
continue exceeding underlying market growth in fiscal year 2020. In
Civil, the Company expects to continue building on its positive
momentum in training, increasing market share and securing new
customer partnerships with its innovative training solutions. Civil
expects operating income to grow in the upper 20 percent range on
continued strong demand for its training solutions, including
maintaining a leading share of FFS sales, and the integration of
the recently acquired Bombardier BAT Business. In Defence, the
Company expects mid to high single-digit percentage operating
income growth as it delivers from backlog and continues to win
opportunities from a large pipeline. CAE expects Healthcare to
achieve double-digit growth under its new leadership, expanded
salesforce, and the continued launch of innovative products.
Funding growth opportunities remains CAE’s top capital allocation
priority and continues to be driven by and supportive of
growing customer training outsourcings in its large core
markets. The Company prioritizes market-led capital investments
that offer sustainable and profitable growth and accretive returns
and support its strategy to be the recognized worldwide training
partner of choice. CAE currently expects total annual capital
expenditures to increase modestly, by approximately 10 to 15
percent, in fiscal 2020, primarily to keep pace with growing demand
for training services from its existing customers and to secure new
long-term customer contracts. Management’s expectations are based
on the prevailing positive market conditions and customer
receptivity to CAE’s training solutions as well as material
assumptions contained in this press release, quarterly MD&A and
in CAE’s fiscal year 2019 MD&A.
IFRS 15 - Revenue from Contracts with
CustomersEffective April 1, 2018, CAE adopted IFRS 15 -
Revenue from Contracts with Customers, which changes the way the
Company recognizes revenue for certain of its customer contracts.
The main impact of IFRS 15 to CAE is the timing of revenue
recognized for certain training devices that were previously
accounted for using the percentage-of-completion method that no
longer meet the requirements for revenue recognition over time.
Revenue for these training devices are instead recognized upon
completion. While this change impacts the timing of contract
revenue and profit recognition, there are no changes to cash flows
from the contract. The financial results reported in the press
release for the fiscal year ended March 31, 2018 have been restated
to reflect the accounting changes required by IFRS 15 as the
Company adopted the standard retrospectively this fiscal
year. For more detailed information, including the impact on
CAE’s fiscal 2018 results, refer to Note 2 of the annual
consolidated financial statements for the year ended March 31,
2019.
IFRS 16 - LeasesEffective April 1, 2019, CAE
adopted IFRS 16 - Leases, which introduces a single lessee
accounting model and eliminates the classification of leases as
either operating or finance leases. The main impact of IFRS 16 to
CAE is the recognition of a right-of-use asset and a lease
liability for substantially all leases. This will result in a
decrease of our operating lease expense and an increase of our
finance and depreciation expenses. The financial results reported
in the press release for fiscal years ended March 31, 2018 and 2019
do not reflect the accounting changes required by IFRS 16 as the
Company adopted the standard as of April 1, 2019. For more detailed
information, including the expected impacts of the transition to
IFRS 16, refer to Note 2 of the annual consolidated financial
statements for the year ended March 31, 2019, and Supplemental Q4
FY2019 Presentation.
Detailed informationReaders are
strongly advised to view a more detailed discussion of our results
by segment in the Management’s Discussion and Analysis (MD&A)
and CAE’s consolidated financial statements which are posted on our
website at www.cae.com/investors.
CAE’s consolidated financial statements and
MD&A for the year ended March 31, 2019 have been filed
with the Canadian Securities Administrators on SEDAR
(www.sedar.com) and are available on our website (www.cae.com).
They have also been filed with the U.S. Securities and Exchange
Commission and are available on their website (www.sec.gov).
Holders of CAE’s securities may also request a printed copy of the
Company's consolidated financial statements and MD&A free of
charge by contacting Investor Relations
(investor.relations@cae.com).
Conference call Q4 and full FY2019Marc Parent,
CAE President and CEO; Sonya Branco, Vice President, Finance, and
CFO; and Andrew Arnovitz, Vice President, Strategy and Investor
Relations will conduct an earnings conference call today at 1:00
p.m. ET. The call is intended for analysts, institutional investors
and the media. Participants can listen to the conference by
dialling + 1 877 586 3392 or +1 416 981 9024. The
conference call will also be audio webcast live for the public at
www.cae.com. The “Supplemental Q4 FY2019 Presentation” to accompany
management’s discussion of CAE’s fourth quarter and full fiscal
year 2019 results can be downloaded from our website at
www.cae.com/investors.
CAE is a global leader in training for the civil
aviation, defence and security, and healthcare markets. Backed by a
record of more than 70 years of industry firsts, we continue to
help define global training standards with our innovative
virtual-to-live training solutions to make flying safer, maintain
defence force readiness and enhance patient safety. We have the
broadest global presence in the industry, with over 10,000
employees, 160 sites and training locations in over 35 countries.
Each year, we train more than 220,000 civil and defence
crewmembers, including more than 135,000 pilots, and thousands of
healthcare professionals worldwide.
Caution concerning limitations of summary earnings press
release
This summary earnings press release contains
limited information meant to assist the reader in assessing CAE’s
performance but it is not a suitable source of information for
readers who are unfamiliar with CAE and is not in any way a
substitute for the Company’s financial statements, notes to the
financial statements, and MD&A reports.
Caution concerning forward-looking
statementsCertain statements made in this press release
are forward-looking statements. These statements include, without
limitation, statements relating to our fiscal 2019 financial
guidance (including revenues, capital investment and margins) and
other statements that are not historical facts. Forward-looking
statements describe future expectations, plans, results or
strategies and normally contain words like "believe\", "expect",
"anticipate", "plan", "intend", "continue", "estimate", "may",
"will", "should", "strategy", "future" and similar expressions. All
such forward-looking statements are made pursuant to the 'safe
harbour' provisions of applicable Canadian securities laws and of
the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements require us to make
assumptions and are subject to inherent risks and uncertainties
associated with our business which may cause actual results in
future periods to differ materially from results indicated in
forward-looking statements. While these statements are based on
management's expectations and assumptions regarding historical
trends, current conditions and expected future developments, as
well as other factors that we believe are reasonable and
appropriate in the circumstances, readers are cautioned not to
place undue reliance on these forward-looking statements as there
is a risk that they may not be accurate. The forward-looking
statements contained in this press release describe our
expectations as of May 17, 2019 and, accordingly, are subject to
change after such date. Except as required by law, we disclaim any
intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise. The forward-looking information and statements contained
in this press release are expressly qualified by this cautionary
statement. Except as otherwise indicated by CAE, forward-looking
statements do not reflect the potential impact of any special items
or of any dispositions, monetizations, mergers, acquisitions, other
business combinations or other transactions that may occur after
May 17, 2019. The financial impact of these transactions and
special items can be complex and depends on the facts particular to
each of them. We therefore cannot describe the expected impact in a
meaningful way or in the same way we present known risks affecting
our business. Forward-looking statements are presented in this
press release for the purpose of assisting investors and others in
understanding certain key elements of our expected fiscal 2020
financial results and in obtaining a better understanding of our
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes. The value of
capital investments expected to be made by CAE in fiscal 2020
assumes that capital investments will be made in accordance with
our current annual plan. However, there can be no assurance that
such investment levels will be maintained with the result that the
value of actual capital investments made by CAE during such period
could materially differ from current expectations.
Material assumptionsA number of
economic, market, operational and financial assumptions were made
by CAE in preparing its forward-looking statements for fiscal 2020
and beyond contained in this news release, including, but not
limited to certain economic and market assumptions including:
modest economic growth and stable interest rates in fiscal 2020; a
sustained level of competition in civil, defence and healthcare
markets; no material financial, operational or competitive
consequences of changes in regulations affecting our business; and
a continued positive defence market.
Assumptions concerning our
businessesA number of assumptions concerning CAE’s
business were also made in the preparation of its forward-looking
statements for fiscal 2020 and beyond contained in this news
release, including, but not limited to factors including:
maintenance of CAE’s leading market share in civil simulator sales,
pricing, product deliveries to customers, and CAE’s ability to
increase market share in training.
The foregoing assumptions, although considered
reasonable by CAE on May 17, 2019, may prove to be inaccurate.
Accordingly, our actual results could differ materially from our
expectations as set forth in this news release.
Material risksImportant risk
factors that could cause our assumptions and estimates to be
inaccurate and actual results or events to differ materially from
those expressed in or implied by our forward-looking statements,
including our fiscal 2020 financial guidance and management
outlook, are set out in CAE’s MD&A for the year ended
March 31, 2019 filed by CAE with the Canadian Securities
Administrators (available at www.sedar.com) and with the U.S.
Securities and Exchange Commission (available at www.sec.gov). The
fiscal year 2019 MD&A is also available at www.cae.com. The
realization of our forward-looking statements, including our
ability to meet our fiscal 2020 financial guidance, essentially
depends on our business performance which, in turn, is subject to
many risks. Accordingly, readers are cautioned that any of the
disclosed risks could have a material adverse effect on our
forward-looking statements. We caution that the disclosed list of
risk factors is not exhaustive and other factors could also
adversely affect our results.
Non-GAAP and other financial
measuresThis press release includes non-GAAP and other
financial measures. Non-GAAP measures are useful supplemental
information but may not have a standardized meaning according to
GAAP. These measures should not be confused with, or used as an
alternative for, performance measures calculated according to GAAP.
They should also not be used to compare with similar measures from
other companies. Management believes that providing certain
non-GAAP measures provides users with a better understanding of our
results and trends and provides additional information on our
financial and operating performance.
(1) Net income before specific items is a
non-GAAP measure we use as an alternate view of our operating
results. We calculate it by taking our net income attributable to
equity holders of the Company from continuing operations and adding
back restructuring costs, integration costs, acquisition costs and
other gains and losses arising from significant strategic
transactions as well as significant one-time tax items. We track it
because we believe it provides a better indication of our operating
performance and makes it easier to compare across reporting
periods.
(2) Earnings per share (EPS) before
specific items is a non-GAAP measure calculated by excluding
restructuring costs, integration costs, acquisition costs and other
gains and losses arising from significant strategic transactions as
well as significant one-time tax items from the diluted earnings
per share from continuing operations attributable to equity holders
of the Company. The effect per share is obtained by dividing these
restructuring costs, integration costs, acquisition costs and other
gains, net of tax, as well as one-time tax items by the average
number of diluted shares. We track it because we believe it
provides a better indication of our operating performance on a per
share basis and makes it easier to compare across reporting
periods.
(3) Order Intake and BacklogOrder intake is a
non-GAAP measure that represents the expected value of orders we
have received:
- For the Civil Aviation Training Solutions segment, we consider
an item part of our order intake when we have a legally binding
commercial agreement with a client that includes enough detail
about each party’s obligations to form the basis for a contract.
Additionally, expected future revenues from customers under
short-term and long-term training contracts are included when these
customers commit to pay us training fees, or when we reasonably
expect the revenue to be generated;
- For the Defence and Security segment, we consider an item part
of our order intake when we have a legally binding commercial
agreement with a client that includes enough detail about each
party’s obligations to form the basis for a contract. Defence and
Security contracts are usually executed over a long-term period but
some of them must be renewed each year. For this segment, we only
include a contract item in order intake when the customer has
authorized the contract item and has received funding for it;
- For the Healthcare segment, order intake is typically converted
into revenue within one year, therefore we assume that order intake
is equal to revenue.
The book-to-sales ratio is the total orders
divided by total revenue in a given period.
Total backlog is a non-GAAP measure that
represents expected future revenues and includes obligated backlog,
joint venture backlog and unfunded backlog and options:
- Obligated backlog represents the value of our order intake not
yet executed and is calculated by adding the order intake of the
current period to the balance of the obligated backlog at the end
of the previous fiscal year, subtracting the revenue recognized in
the current period and adding or subtracting backlog adjustments.
If the amount of an order already recognized in a previous fiscal
year is modified, the backlog is revised through adjustments;
- Joint venture backlog is obligated backlog that represents the
expected value of our share of orders that our joint ventures have
received but have not yet executed. Joint venture backlog is
determined on the same basis as obligated backlog described
above;
- Unfunded backlog represents firm Defence and Security orders we
have received but have not yet executed and for which funding
authorization has not yet been obtained. Options are included in
backlog when there is a high probability of being exercised, but
indefinite-delivery/indefinite-quantity (IDIQ) contracts are
excluded. When an option is exercised, it is considered order
intake in that period and it is removed from unfunded backlog and
options.
(4) Free cash flow is a non-GAAP measure that
shows us how much cash we have available to invest in growth
opportunities, repay debt and meet ongoing financial obligations.
We use it as an indicator of our financial strength and liquidity.
We calculate it by taking the net cash generated by our continuing
operating activities, subtracting maintenance capital expenditures,
investment in other assets not related to growth and dividends paid
and adding proceeds from the disposal of property, plant and
equipment, dividends received from equity accounted investees and
proceeds, net of payments, from equity accounted investees.
(5) Cash conversion rate is a non-GAAP financial measure we use
to assess our performance in cash flow generation and as a basis
for evaluating our capitalization structure. We calculate it by
dividing free cash flow by net income before specific items.
(6) Return on capital employed (ROCE) is a
non-GAAP measure we use to evaluate the profitability of our
invested capital. We calculate this ratio over a rolling
four-quarter period by taking net income attributable to equity
holders of the Company excluding net finance expense, after tax,
divided by the average capital employed.
(7) Operating profit is an additional GAAP
measure that shows us how we have performed before the effects of
certain financing decisions, tax structures and discontinued
operations. We track it because we believe it makes it easier to
compare our performance with previous periods, and with companies
and industries that do not have the same capital structure or tax
laws.
(8) Segment operating income (SOI) is a non-GAAP
measure and is the sum of our key indicator of each segment’s
financial performance. Segment operating income gives us an
indication of the profitability of each segment because it does not
include the impact of any items not specifically related to the
segment’s performance. We calculate total segment operating income
by taking the operating profit and excluding the impact of
restructuring, integration and acquisition costs.
(9) Segment operating income before specific
items further excludes restructuring costs, integration costs,
acquisition costs and other gains and losses arising from
significant strategic transactions. We track it because we believe
it provides a better indication of our operating performance and
makes it easier to compare across reporting periods.
(10) Utilization rate is one of the
operating measures we use to assess the performance of our Civil
simulator training network. While utilization rate does not
perfectly correlate to revenue recognized, we track it, together
with other measures, because we believe it is an indicator of our
operating performance. We calculate it by taking the number of
training hours sold on our simulators during the period divided by
the practical training capacity available for the same period.
(11) Simulator equivalent unit (SEU) is an
operating measure we use to show the total average number of FFSs
available to generate earnings during the period.
(12) Maintenance capital expenditure is a
non-GAAP measure we use to calculate the investment needed to
sustain the current level of economic activity. Growth capital
expenditure is a non-GAAP measure we use to calculate the
investment needed to increase the current level of economic
activity.
(13) Net debt is a non-GAAP measure we use to
monitor how much debt we have after taking into account cash and
cash equivalents. We use it as an indicator of our overall
financial position, and calculate it by taking our total long-term
debt, including the current portion of long-term debt, and
subtracting cash and cash equivalents.
(14) Net debt-to-capital is calculated as net
debt divided by the sum of total equity plus net debt.
For non-GAAP and other financial measures
monitored by CAE, please refer to CAE’s MD&A filed with the
Canadian Securities Administrators available on our website
(www.cae.com) and on SEDAR (www.sedar.com).
Contacts
Investor Relations:
Andrew Arnovitz, Vice President, Strategy and Investor Relations
1-514-734-5760, andrew.arnovitz@cae.com
Media:
Hélène V. Gagnon, Vice President, Public Affairs and Global
Communications 1-514-340-5536, helene.v.gagnon@cae.com
Consolidated Statement of Financial
Position
|
March 31 |
|
March 31 |
|
April 1 |
(amounts in millions of Canadian dollars) |
2019 |
|
2018 |
|
2017 |
|
|
Restated |
|
Restated |
Assets |
|
|
|
Cash and cash equivalents |
$ |
446.1 |
|
$ |
611.5 |
|
$ |
504.7 |
Accounts receivable |
496.0 |
|
452.0 |
|
450.1 |
Contract assets |
523.5 |
|
439.7 |
|
348.5 |
Inventories |
537.0 |
|
516.1 |
|
549.0 |
Prepayments |
57.4 |
|
50.0 |
|
63.8 |
Income taxes recoverable |
33.6 |
|
40.7 |
|
25.6 |
Derivative financial assets |
19.3 |
|
13.3 |
|
23.4 |
Total current
assets |
$ |
2,112.9 |
|
$ |
2,123.3 |
|
$ |
1,965.1 |
Property, plant and
equipment |
2,149.3 |
|
1,803.9 |
|
1,582.6 |
Intangible assets |
2,027.9 |
|
1,055.6 |
|
944.0 |
Investment in equity accounted
investees |
312.1 |
|
242.7 |
|
375.8 |
Deferred tax assets |
71.0 |
|
61.2 |
|
42.9 |
Derivative financial
assets |
12.8 |
|
11.5 |
|
16.0 |
Other
assets |
479.5 |
|
482.0 |
|
471.3 |
Total assets |
$ |
7,165.5 |
|
$ |
5,780.2 |
|
$ |
5,397.7 |
|
|
|
|
Liabilities and
equity |
|
|
|
Accounts payable and accrued
liabilities |
$ |
872.2 |
|
$ |
666.9 |
|
$ |
686.1 |
Provisions |
28.7 |
|
32.1 |
|
43.2 |
Income taxes payable |
25.7 |
|
15.3 |
|
9.6 |
Deferred revenue |
11.6 |
|
10.0 |
|
11.4 |
Contract liabilities |
670.2 |
|
679.5 |
|
593.4 |
Current portion of long-term
debt |
264.1 |
|
52.2 |
|
51.9 |
Derivative financial liabilities |
17.0 |
|
18.1 |
|
15.5 |
Total current
liabilities |
$ |
1,889.5 |
|
$ |
1,474.1 |
|
$ |
1,411.1 |
Provisions |
36.3 |
|
39.5 |
|
39.1 |
Long-term debt |
2,064.2 |
|
1,208.7 |
|
1,203.5 |
Royalty obligations |
136.2 |
|
140.8 |
|
138.5 |
Employee benefits
obligations |
212.6 |
|
200.6 |
|
157.7 |
Deferred gains and other
liabilities |
267.0 |
|
229.9 |
|
217.8 |
Deferred tax liabilities |
147.0 |
|
184.7 |
|
213.0 |
Derivative financial
liabilities |
2.7 |
|
4.4 |
|
4.7 |
Total liabilities |
$ |
4,755.5 |
|
$ |
3,482.7 |
|
$ |
3,385.4 |
Equity |
|
|
|
Share capital |
$ |
649.6 |
|
$ |
633.2 |
|
$ |
615.4 |
Contributed surplus |
24.8 |
|
21.3 |
|
19.4 |
Accumulated other
comprehensive income |
199.0 |
|
260.3 |
|
191.1 |
Retained earnings |
1,457.9 |
|
1,314.3 |
|
1,126.2 |
Equity attributable to equity
holders of the Company |
$ |
2,331.3 |
|
$ |
2,229.1 |
|
$ |
1,952.1 |
Non-controlling interests |
78.7 |
|
68.4 |
|
60.2 |
Total equity |
$ |
2,410.0 |
|
$ |
2,297.5 |
|
$ |
2,012.3 |
Total liabilities and equity |
$ |
7,165.5 |
|
$ |
5,780.2 |
|
$ |
5,397.7 |
Consolidated Income Statement
|
Three months ended |
|
Twelve months ended |
|
|
March 31 |
|
March 31 |
|
(amounts in millions of Canadian dollars, except per share
amounts) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
Restated |
|
|
Restated |
|
|
|
|
|
|
Revenue |
$ |
1,022.0 |
|
$ |
720.9 |
|
$ |
3,304.1 |
|
$ |
2,823.5 |
|
Cost of
sales |
734.0 |
|
483.9 |
|
2,362.6 |
|
1,945.6 |
|
Gross
profit |
$ |
288.0 |
|
$ |
237.0 |
|
$ |
941.5 |
|
$ |
877.9 |
|
Research and development
expenses |
9.9 |
|
22.8 |
|
101.4 |
|
114.9 |
|
Selling, general and
administrative expenses |
123.2 |
|
112.3 |
|
415.2 |
|
380.8 |
|
Other gains – net |
(5.2 |
) |
(4.3 |
) |
(22.3 |
) |
(37.4 |
) |
After tax share in profit of
equity accounted investees |
(10.3 |
) |
(11.3 |
) |
(33.4 |
) |
(43.2 |
) |
Operating profit |
$ |
170.4 |
|
$ |
117.5 |
|
$ |
480.6 |
|
$ |
462.8 |
|
Finance
expense – net |
25.7 |
|
24.2 |
|
80.9 |
|
77.2 |
|
Earnings before income
taxes |
$ |
144.7 |
|
$ |
93.3 |
|
$ |
399.7 |
|
$ |
385.6 |
|
Income
tax expense |
19.3 |
|
7.7 |
|
59.6 |
|
30.9 |
|
Net income |
$ |
125.4 |
|
$ |
85.6 |
|
$ |
340.1 |
|
$ |
354.7 |
|
Attributable to: |
|
|
|
|
Equity holders of the
Company |
$ |
122.3 |
|
$ |
82.3 |
|
$ |
330.0 |
|
$ |
346.0 |
|
Non-controlling interests |
3.1 |
|
3.3 |
|
10.1 |
|
8.7 |
|
|
$ |
125.4 |
|
$ |
85.6 |
|
$ |
340.1 |
|
$ |
354.7 |
|
Earnings per share
attributable to equity holders of the Company |
|
|
|
|
Basic |
$ |
0.46 |
|
$ |
0.31 |
|
$ |
1.24 |
|
$ |
1.29 |
|
Diluted |
$ |
0.46 |
|
$ |
0.31 |
|
$ |
1.23 |
|
$ |
1.28 |
|
Consolidated Statement of Comprehensive
Income
|
Three months ended |
|
Twelve months ended |
|
|
March 31 |
|
March 31 |
|
(amounts in millions of
Canadian dollars) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
Restated |
|
|
Restated |
|
|
|
|
|
|
Net income |
$ |
125.4 |
|
$ |
85.6 |
|
$ |
340.1 |
|
$ |
354.7 |
|
Items that may be reclassified to net
income |
|
|
|
|
Foreign currency differences on translation of foreign
operations |
$ |
(64.4 |
) |
$ |
119.2 |
|
$ |
(12.6 |
) |
$ |
78.1 |
|
Reclassification to income of foreign currency differences |
(5.3 |
) |
(2.3 |
) |
(23.2 |
) |
(26.6 |
) |
Net loss on cash flow hedges |
15.8 |
|
(20.6 |
) |
(6.9 |
) |
(0.3 |
) |
Reclassification to income of gain (loss) on cash flow hedges |
1.4 |
|
5.5 |
|
2.1 |
|
(0.6 |
) |
Net gain (loss) on hedges of net investment in foreign
operations |
7.7 |
|
(13.3 |
) |
(20.0 |
) |
15.2 |
|
Income taxes |
(6.4 |
) |
(0.4 |
) |
2.2 |
|
2.1 |
|
|
$ |
(51.2 |
) |
$ |
88.1 |
|
$ |
(58.4 |
) |
$ |
67.9 |
|
Items that will never be reclassified to net
income |
|
|
|
|
Remeasurement of defined benefit pension plan obligations |
$ |
(14.3 |
) |
$ |
11.0 |
|
$ |
4.2 |
|
$ |
(33.0 |
) |
Net gain on financial assets carried at fair value through OCI |
— |
|
0.1 |
|
— |
|
0.1 |
|
Income taxes |
3.8 |
|
(2.9 |
) |
(1.1 |
) |
8.9 |
|
|
$ |
(10.5 |
) |
$ |
8.2 |
|
$ |
3.1 |
|
$ |
(24.0 |
) |
Other comprehensive (loss)
income |
$ |
(61.7 |
) |
$ |
96.3 |
|
$ |
(55.3 |
) |
$ |
43.9 |
|
Total comprehensive income |
$ |
63.7 |
|
$ |
181.9 |
|
$ |
284.8 |
|
$ |
398.6 |
|
Attributable to: |
|
|
|
|
Equity holders of the Company |
$ |
61.9 |
|
$ |
177.6 |
|
$ |
271.8 |
|
$ |
391.1 |
|
Non-controlling
interests |
1.8 |
|
4.3 |
|
13.0 |
|
7.5 |
|
Consolidated Statement of Changes in Equity
|
|
Attributable to equity holders of the Company |
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(amounts in millions of
Canadian dollars, except number of shares) |
|
Number ofshares |
|
|
|
Statedvalue |
|
|
|
Contributedsurplus |
|
|
|
Accumulated othercomprehensiveincome |
|
|
|
Retainedearnings |
|
|
|
Total |
|
|
|
Non-controllinginterests |
|
|
Totalequity |
|
Balances at April 1, 2017 (Restated) |
|
268,397,224 |
|
|
$ |
615.4 |
|
|
$ |
19.4 |
|
|
$ |
191.1 |
|
|
$ |
1,126.2 |
|
|
$ |
1,952.1 |
|
|
$ |
60.2 |
|
|
$ |
2,012.3 |
|
Net income |
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
346.0 |
|
|
$ |
346.0 |
|
|
$ |
8.7 |
|
|
$ |
354.7 |
|
Other
comprehensive income (loss) |
|
— |
|
|
— |
|
|
— |
|
|
69.2 |
|
|
(24.1 |
) |
|
45.1 |
|
|
(1.2 |
) |
|
43.9 |
|
Total comprehensive
income |
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
69.2 |
|
|
$ |
321.9 |
|
|
$ |
391.1 |
|
|
$ |
7.5 |
|
|
$ |
398.6 |
|
Stock options exercised |
|
1,246,575 |
|
|
18.7 |
|
|
(3.0 |
) |
|
— |
|
|
— |
|
|
15.7 |
|
|
— |
|
|
15.7 |
|
Optional cash purchase of
shares |
|
1,967 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Common shares repurchased and
cancelled |
|
(2,081,200 |
) |
|
(4.9 |
) |
|
— |
|
|
— |
|
|
(39.9 |
) |
|
(44.8 |
) |
|
— |
|
|
(44.8 |
) |
Share-based compensation
expense |
|
— |
|
|
— |
|
|
4.9 |
|
|
— |
|
|
— |
|
|
4.9 |
|
|
— |
|
|
4.9 |
|
Dividends to non-controlling
interests |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.6 |
) |
|
(2.6 |
) |
Additions to non-controlling
interests |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.3 |
|
|
3.3 |
|
Stock dividends |
|
173,964 |
|
|
4.0 |
|
|
— |
|
|
— |
|
|
(4.0 |
) |
|
— |
|
|
— |
|
|
— |
|
Cash dividends |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(89.9 |
) |
|
(89.9 |
) |
|
— |
|
|
(89.9 |
) |
Balances at March 31, 2018 (Restated) |
|
267,738,530 |
|
|
$ |
633.2 |
|
|
$ |
21.3 |
|
|
$ |
260.3 |
|
|
$ |
1,314.3 |
|
|
$ |
2,229.1 |
|
|
$ |
68.4 |
|
|
$ |
2,297.5 |
|
Net income |
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
330.0 |
|
|
$ |
330.0 |
|
|
$ |
10.1 |
|
|
$ |
340.1 |
|
Other
comprehensive (loss) income |
|
— |
|
|
— |
|
|
— |
|
|
(61.3 |
) |
|
3.1 |
|
|
(58.2 |
) |
|
2.9 |
|
|
(55.3 |
) |
Total comprehensive (loss)
income |
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(61.3 |
) |
|
$ |
333.1 |
|
|
$ |
271.8 |
|
|
$ |
13.0 |
|
|
$ |
284.8 |
|
Stock options exercised |
|
1,231,600 |
|
|
21.1 |
|
|
(2.9 |
) |
|
— |
|
|
— |
|
|
18.2 |
|
|
— |
|
|
18.2 |
|
Optional cash purchase of
shares |
|
2,459 |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
0.1 |
|
Common shares repurchased and
cancelled |
|
(3,671,900 |
) |
|
(8.8 |
) |
|
— |
|
|
— |
|
|
(85.6 |
) |
|
(94.4 |
) |
|
— |
|
|
(94.4 |
) |
Share-based compensation
expense |
|
— |
|
|
— |
|
|
6.4 |
|
|
— |
|
|
— |
|
|
6.4 |
|
|
— |
|
|
6.4 |
|
Dividends to non-controlling
interests |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.7 |
) |
|
(2.7 |
) |
Stock dividends |
|
146,914 |
|
|
4.0 |
|
|
— |
|
|
— |
|
|
(4.0 |
) |
|
— |
|
|
— |
|
|
— |
|
Cash dividends |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(99.9 |
) |
|
(99.9 |
) |
|
— |
|
|
(99.9 |
) |
Balances at March 31, 2019 |
|
265,447,603 |
|
|
$ |
649.6 |
|
|
$ |
24.8 |
|
|
$ |
199.0 |
|
|
$ |
1,457.9 |
|
|
$ |
2,331.3 |
|
|
$ |
78.7 |
|
|
$ |
2,410.0 |
|
Consolidated Statement of Cash Flows
Years ended March 31 |
|
|
(amounts in millions of Canadian dollars) |
2019 |
|
2018 |
|
|
|
Restated |
|
Operating
activities |
|
|
Net income |
$ |
340.1 |
|
$ |
354.7 |
|
Adjustments for: |
|
|
Depreciation of property, plant and equipment |
137.6 |
|
120.8 |
|
Amortization of intangible and other assets |
79.6 |
|
78.8 |
|
After tax share in profit of equity accounted investees |
(33.4 |
) |
(43.2 |
) |
Deferred income taxes |
(23.1 |
) |
(33.9 |
) |
Investment tax credits |
8.2 |
|
(6.8 |
) |
Share-based compensation |
9.3 |
|
23.1 |
|
Defined benefit pension plans |
14.8 |
|
7.6 |
|
Amortization of other non-current liabilities |
(30.3 |
) |
(32.8 |
) |
Derivative financial assets and liabilities – net |
(5.8 |
) |
7.8 |
|
Gain on disposal of interest in investment |
— |
|
(14.3 |
) |
Remeasurement of investment, net of reorganization and other
costs |
(3.7 |
) |
(4.0 |
) |
Other |
1.9 |
|
(10.9 |
) |
Changes in non-cash working
capital |
35.2 |
|
(43.6 |
) |
Net cash provided by operating activities |
$ |
530.4 |
|
$ |
403.3 |
|
Investing
activities |
|
|
Business combinations, net of
cash and cash equivalents acquired |
$ |
(827.8 |
) |
$ |
(124.4 |
) |
Net proceeds from disposal of
interests in investment |
— |
|
117.8 |
|
Addition of assets through the
monetization of royalties |
(202.7 |
) |
— |
|
Capital expenditures for
property, plant and equipment |
(251.8 |
) |
(173.9 |
) |
Proceeds from disposal of
property, plant and equipment |
2.7 |
|
27.0 |
|
Additions to intangibles |
(86.6 |
) |
(47.3 |
) |
Net payments to equity
accounted investees |
(37.7 |
) |
(11.5 |
) |
Dividends received from equity
accounted investees |
22.0 |
|
37.6 |
|
Other |
2.7 |
|
5.7 |
|
Net cash used in investing activities |
$ |
(1,379.2 |
) |
$ |
(169.0 |
) |
Financing
activities |
|
|
Proceeds from long-term
debt |
955.3 |
|
37.8 |
|
Repayment of long-term
debt |
(72.7 |
) |
(33.4 |
) |
Repayment of finance
lease |
(22.0 |
) |
(25.0 |
) |
Dividends paid |
(99.9 |
) |
(89.9 |
) |
Issuance of common shares |
18.3 |
|
15.7 |
|
Repurchase of common
shares |
(94.4 |
) |
(44.8 |
) |
Other |
5.7 |
|
(2.9 |
) |
Net cash provided by (used in) financing
activities |
$ |
690.3 |
|
$ |
(142.5 |
) |
Effect of foreign
exchange rate changes on cash and cash equivalents |
$ |
(6.9 |
) |
$ |
15.0 |
|
Net (decrease) increase in cash and cash
equivalents |
$ |
(165.4 |
) |
$ |
106.8 |
|
Cash and cash
equivalents, beginning of period |
611.5 |
|
504.7 |
|
Cash and cash equivalents, end of period |
$ |
446.1 |
|
$ |
611.5 |
|
Supplemental information: |
|
|
Interest paid |
$ |
55.2 |
|
$ |
56.0 |
|
Interest received |
14.9 |
|
12.9 |
|
Income taxes paid |
34.0 |
|
36.4 |
|
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