- Revenue of $825.6 million vs.
$722.0 million in prior year
- EPS of $0.23 ($0.24 before specific items(1)) vs.
$0.26 in prior year
- Order intake(2) of $940.8
million for 1.14x book-to-sales(2) and
$9.4 billion
backlog(2)
- Board of Directors approves 10% quarterly dividend increase
from $0.10 to $0.11 per share
- Current year results on IFRS 16 basis
MONTREAL, Aug. 14, 2019 /CNW Telbec/ - (NYSE: CAE)
(TSX: CAE) - CAE today reported revenue of $825.6 million for the first quarter of
fiscal 2020, compared with $722.0
million in the first quarter last year. First quarter net
income attributable to equity holders was $61.5 million ($0.23 per share) compared to $69.4 million ($0.26 per share) last year. Net income before
specific items(3) in the first quarter of fiscal 2020
was $63.2 million ($0.24 per share).
First quarter segment operating income(4) was
$110.9 million (13.4% of revenue)
compared with $98.5 million (13.6% of
revenue) in the first quarter of last year. Segment operating
income before specific items(5) in the first quarter of
fiscal 2020 was $113.3 million (13.7%
of revenue). All financial information is in Canadian dollars
unless otherwise indicated.
"CAE had a good start to the fiscal year with 14 percent revenue
growth, 15 percent higher operating income, and over $940 million of orders for a $9.4 billion backlog," said Marc Parent, CAE's President and Chief Executive
Officer. "Performance was led by Civil, which delivered 29 percent
operating income growth and showed continued strong demand for
CAE's innovative training solutions. The Bombardier Business
Aircraft Training Business integration is progressing well, and we
signed long-term training contracts with airline partners including
LATAM, SAS and Air Europa. In Defence, we had strong top-line
growth and lower operating income, which reflect quarterly
variability and an income growth profile more heavily weighted to
the second-half of the year. The Defence pipeline remained strong
with over $4.2 billion of bids and
proposals pending customer decisions. In Healthcare, revenue
momentum from new products and an expanded salesforce continued
into the first quarter. As we look to the remainder of the fiscal
year, our outlook for CAE's annual growth remains unchanged. In
keeping with our capital allocation priorities, and underscoring
our positive long-term view, I am pleased to announce that CAE's
Board of Directors has approved a one
cent or 10% increase to CAE's quarterly dividend, which
becomes 11 cents per share, effective
September 30, 2019. This represents
CAE's ninth consecutive dividend increase in as many years."
Summary of
consolidated results
|
|
|
|
|
|
|
|
(amounts in
millions, except operating margins and per share
amounts)
|
|
Q1-2020
|
|
|
Q1-2019
|
|
Variance
%
|
Revenue
|
$
|
825.6
|
|
$
|
722.0
|
|
14%
|
Segment operating
income (SOI)
|
$
|
110.9
|
|
$
|
98.5
|
|
13%
|
Operating
margins
|
%
|
13.4
|
|
%
|
13.6
|
|
|
SOI before specific
items
|
$
|
113.3
|
|
$
|
98.5
|
|
15%
|
Operating
margins before specific items
|
%
|
13.7
|
|
%
|
13.6
|
|
|
Net income
|
$
|
63.0
|
|
$
|
71.6
|
|
(12)%
|
Net income
attributable to equity holders of the Company
|
$
|
61.5
|
|
$
|
69.4
|
|
(11)%
|
Earnings per share
(EPS)
|
$
|
0.23
|
|
$
|
0.26
|
|
(12)%
|
Net income before
specific items
|
$
|
63.2
|
|
$
|
69.4
|
|
(9)%
|
EPS before specific
items
|
$
|
0.24
|
|
$
|
0.26
|
|
(8)%
|
Total
backlog
|
$
|
9,362.2
|
|
$
|
8,046.3
|
|
16%
|
Civil Aviation Training Solutions (Civil)
First
quarter Civil revenue was $477.6
million, up 11% compared to the same quarter last year.
Segment operating income was $98.6
million (20.6% of revenue) compared to $78.3 million (18.2% of revenue) in the first
quarter last year. First quarter segment operating income before
specific items was $101.0 million
(21.1% of revenue), up 29% compared to the first quarter last year.
First quarter Civil training centre utilization(6) was
76%.
During the quarter, Civil signed training solutions contracts
valued at $693.8 million, including
multi-year pilot training agreements with airlines including LATAM,
SAS and Air Europa; and a new 5-year pilot training contract with
Philippines AirAsia, which incorporates the highly innovative and
data-driven CAE RiseTM Training System. Civil sold nine
full-flight simulators (FFSs) during the quarter, including three
to Southwest Airlines for the Boeing 737MAX, one to Korean Air for
the Airbus A330, and one to Hawaiian Airlines for the Boeing
787.
The Civil book-to-sales ratio was 1.45x for the quarter and
1.54x for the last 12 months. The Civil backlog at the end of the
quarter was a $5.1 billion.
Summary of Civil
Aviation Training Solutions results
|
(amounts in
millions, except operating margins, SEU and FFSs
deployed)
|
|
Q1-2020
|
|
|
Q1-2019
|
|
Variance
%
|
Revenue
|
$
|
477.6
|
|
$
|
430.9
|
|
11%
|
Segment operating
income
|
$
|
98.6
|
|
$
|
78.3
|
|
26%
|
Operating
margins
|
%
|
20.6
|
|
%
|
18.2
|
|
|
SOI before specific
items
|
$
|
101.0
|
|
$
|
78.3
|
|
29%
|
Operating margins
before specific items
|
%
|
21.1
|
|
%
|
18.2
|
|
|
Total
backlog
|
$
|
5,090.3
|
|
$
|
4,148.2
|
|
23%
|
Simulator equivalent
unit (SEU)(7)
|
|
242
|
|
|
213
|
|
14%
|
FFSs
deployed
|
|
294
|
|
|
260
|
|
13%
|
Defence and Security (Defence)
First quarter Defence
revenue was $320.5 million, up 19%
compared to the same quarter last year and segment operating income
was $15.1 million (4.7% of revenue),
down 30% compared to the first quarter last year, reflecting
quarterly variability and an income growth profile more heavily
weighted to the second-half of the year.
During the quarter, Defence booked orders for $219.5 million, including contracts with Lockheed
Martin for C-130J simulators for the U.S. Air Force and U.S. Marine
Corps. Other notable orders include a contract with L3 MAS to
continue providing in-service support for the Royal Canadian Air
Force's CF-18 aircraft, and contracts to upgrade the German
Eurofighter and Tornado aircraft simulators. New awards also
included contracts for Naval training solutions for the Canadian
Surface Combatant program and upgrades to the Swedish Navy's Naval
Warfare Training System.
The Defence book-to-sales ratio was 0.68x for the quarter and
0.83x for the last 12 months (excluding contract options). The
Defence backlog, including options and CAE's interest in joint
ventures, at the end of the quarter was $4.3
billion. The Defence pipeline remains strong with over
$4.2 billion of bids and proposals
pending customer decisions.
Summary of Defence
and Security results
|
(amounts in
millions, except operating margins)
|
|
Q1-2020
|
|
|
Q1-2019
|
|
Variance
%
|
Revenue
|
$
|
320.5
|
|
$
|
268.3
|
|
19%
|
Segment operating
income
|
$
|
15.1
|
|
$
|
21.5
|
|
(30)%
|
Operating
margins
|
%
|
4.7
|
|
%
|
8.0
|
|
|
Total
backlog
|
$
|
4,271.9
|
|
$
|
3,898.1
|
|
10%
|
Healthcare
First quarter Healthcare revenue was
$27.5 million compared to
$22.8 million in the same quarter
last year, and first quarter segment operating loss was
$2.8 million, compared to a loss of
$1.3 million in the first
quarter last year.
Healthcare announced a new CAE Centre of Excellence for
simulation-based education at ESPA-Montreal, the first healthcare
education and industry partnership devised to impact patient care
in Quebec, Canada. As well, during
the quarter, Healthcare delivered a custom simulator to Baylis
Medical to support its cardiovascular transseptal puncture systems
for physicians. As well, it collaborated with the Canadian
Association of Schools of Nursing to develop courseware packages
for student nurses that can be practiced with the CAE Juno
manikin.
Summary of
Healthcare results
|
(amounts in
millions, except operating margins)
|
|
Q1-2020
|
|
|
Q1-2019
|
|
Variance
%
|
Revenue
|
$
|
27.5
|
|
$
|
22.8
|
|
21%
|
Segment operating
loss
|
$
|
(2.8)
|
|
$
|
(1.3)
|
|
(115)%
|
Operating
margins
|
%
|
—
|
|
%
|
—
|
|
|
Additional financial highlights
Free cash
flow(8) was negative $102.1
million for the quarter compared to negative $85.8 million in the first quarter last
year. The decrease in free cash flow results mainly from a higher
investment in non-cash working capital, partially offset by an
increase in cash provided by operating activities and lower
maintenance capital expenditures. CAE usually sees a higher level
of investment in non-cash working capital accounts during the first
half of the fiscal year and tends to see a portion of these
investments reverse in the second half.
Income taxes this quarter were $13.0
million, representing an effective tax rate of 17%, compared
to 13% for the first quarter last year. The tax rate was higher due
to the impact of tax audits in Canada last year, partially offset by a change
in the mix of income from various jurisdictions.
Net finance expense this quarter was $34.9 million, $18.9
million higher than the first quarter of fiscal 2019, mainly
from higher interest on long-term debt due to the issuance of
unsecured senior notes in the fourth quarter of fiscal 2019 to fund
the acquisition of the Bombardier BAT business, and higher interest
on lease liabilities as a result of the adoption of IFRS 16.
Growth and maintenance capital expenditures(9)
totaled $89.0 million this
quarter.
Net debt(10) at the end of the quarter was
$2,312.7 million for a net
debt-to-capital ratio(11) of 49.4%. This compares to net
debt of $1,882.2 million and a net
debt-to-capital ratio of 43.9% at the end of the preceding quarter.
Excluding the impacts of the adoption of IFRS 16, net debt would
have been $2,058.4 million this
quarter for a net debt-to-capital ratio of 46.3%.
Return on capital employed (ROCE)(12) was 11.9% this
quarter compared to 12.6% in the first quarter last year, before
specific items. Excluding the impacts of the adoption of IFRS 16,
ROCE before specific items would have been 12.0% this quarter.
CAE will pay a dividend of 11
cents per share effective September
30, 2019 to shareholders of record at the close of business
on September 13, 2019.
During the three months ended June 30,
2019, CAE repurchased and cancelled a total of 58,131 common
shares under the Normal Course Issuer Bid (NCIB), at a weighted
average price of $34.41 per common
share, for a total consideration of $2.0
million.
Management outlook for fiscal year 2020
unchanged
CAE'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.
Corporate Social Responsibility
CAE creates
significant value for customers, shareholders, and its employees.
CAE products and services contribute to improvements in aviation
safety, ensure defence forces are mission-ready, and help medical
professionals save lives-a noble purpose that is a source of pride
for CAE's more than 10,000 employees worldwide. As the largest
civil aviation training company in the world, and the only
pure‑play aviation training company, it has an unwavering customer
focus and commitment to innovation. CAE also plays an important
role developing talent in its industry. "Women account for less
than 5 percent of the global pilot pool and yet over 300,000 new
pilots will be needed in civil aviation over the next decade," said
Marc Parent. "As the aviation
training leader, we take it upon ourselves to ensure the industry
accesses the full available talent pool. Among several exciting CAE
initiatives, we launched the CAE Women in Flight scholarship to
encourage more women to consider becoming pilots." Bolstering
talent is one of CAE's top strategic priorities and the Company
continually strives to be an employer of choice, ensuring that it
engages and attracts the best people. Among several programs, CAE
launched a Diversity and Inclusion initiative aimed firstly at
gender balance. The objective is to ensure that women at CAE can
realize their full potential as equal partners with men in the
workforce and have every opportunity for advancement. CAE was
selected for the 2019 Bloomberg Gender-Equality Index, which
highlights 230 firms globally that are considered trailblazers in
their commitment to transparency in workplace gender reporting.
CAE's full report can be accessed here: 2019 Annual Activity and
Corporate Social Responsibility Report.
IFRS 16 - Leases
Effective 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 change results 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 the fiscal year ended March 31,
2019 do not reflect the accounting changes required by IFRS
16 as the Company adopted the standard using the modified
retrospective application 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
interim consolidated financial statements for the quarter ended
June 30, 2019.
Detailed information
Readers 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
quarter ended June 30, 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 Q1 FY2020
Marc
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 1:30 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.
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 statements
Certain
statements made in this press release are forward-looking
statements. These statements include, without limitation,
statements relating to our fiscal 2020 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 August 14,
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
August 14, 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 assumptions
A 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 businesses
A 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 August 14, 2019, may prove to be
inaccurate. Accordingly, our actual results could differ materially
from our expectations as set forth in this news release.
Material risks
Important 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 outlook, 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 measures
This 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) 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.
(2) Order Intake and Backlog
Order 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 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.
(3) 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 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. We track it because we
believe it provides a better indication of our operating
performance and makes it easier to compare across reporting
periods.
(4) Segment operating income (SOI) is a non-GAAP
measure and is the sum of our key indicators 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 restructuring costs of
major programs that do not arise from significant strategic
transactions.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
(9) 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.
(10) 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.
(11) Net debt-to-capital is calculated as net debt
divided by the sum of total equity plus net debt.
(12) 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.
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).
Consolidated
Statement of Financial Position
|
|
|
|
(Unaudited)
(amounts in
millions of Canadian dollars)
|
June
30
2019
|
March 31
2019
|
|
|
|
|
Assets
|
|
Cash and cash
equivalents
|
$
|
322.0
|
$
|
446.1
|
Accounts
receivable
|
535.5
|
496.0
|
Contract
assets
|
546.1
|
523.5
|
Inventories
|
590.2
|
537.0
|
Prepayments
|
57.3
|
57.4
|
Income taxes
recoverable
|
40.5
|
33.6
|
Derivative financial
assets
|
31.0
|
19.3
|
Total current
assets
|
$
|
2,122.6
|
$
|
2,112.9
|
Property, plant and
equipment
|
1,968.7
|
2,149.3
|
Right-of-use
assets
|
402.7
|
—
|
Intangible
assets
|
2,028.5
|
2,027.9
|
Investment in equity
accounted investees
|
309.9
|
312.1
|
Deferred tax
assets
|
70.4
|
71.0
|
Derivative financial
assets
|
15.5
|
12.8
|
Other
assets
|
494.0
|
479.5
|
Total
assets
|
$
|
7,412.3
|
$
|
7,165.5
|
|
|
|
Liabilities and
equity
|
|
|
Accounts payable and
accrued liabilities
|
$
|
797.7
|
$
|
883.8
|
Provisions
|
24.3
|
28.7
|
Income taxes
payable
|
22.5
|
25.7
|
Contract
liabilities
|
717.8
|
670.2
|
Current portion of
long-term debt
|
199.1
|
264.1
|
Derivative financial
liabilities
|
8.4
|
17.0
|
Total current
liabilities
|
$
|
1,769.8
|
$
|
1,889.5
|
Provisions
|
27.3
|
36.3
|
Long-term
debt
|
2,435.6
|
2,064.2
|
Royalty
obligations
|
139.9
|
136.2
|
Employee benefits
obligations
|
260.2
|
212.6
|
Deferred gains and
other liabilities
|
265.4
|
267.0
|
Deferred tax
liabilities
|
146.6
|
147.0
|
Derivative financial
liabilities
|
1.4
|
2.7
|
Total
liabilities
|
$
|
5,046.2
|
$
|
4,755.5
|
Equity
|
|
|
Share
capital
|
$
|
666.8
|
$
|
649.6
|
Contributed
surplus
|
26.6
|
24.8
|
Accumulated other
comprehensive income
|
162.5
|
199.0
|
Retained
earnings
|
1,431.3
|
1,457.9
|
Equity attributable
to equity holders of the Company
|
$
|
2,287.2
|
$
|
2,331.3
|
Non-controlling
interests
|
78.9
|
78.7
|
Total
equity
|
$
|
2,366.1
|
$
|
2,410.0
|
Total liabilities
and equity
|
$
|
7,412.3
|
$
|
7,165.5
|
Consolidated
Income Statement
|
|
|
(Unaudited)
|
Three months
ended
June 30
|
(amounts in
millions of Canadian dollars, except per share
amounts)
|
2019
|
2018
|
|
|
Revenue
|
$
|
825.6
|
$
|
722.0
|
Cost of
sales
|
581.9
|
503.3
|
Gross
profit
|
$
|
243.7
|
$
|
218.7
|
Research and
development expenses
|
31.9
|
31.3
|
Selling, general and
administrative expenses
|
113.3
|
102.7
|
Other gains –
net
|
(0.3)
|
(5.2)
|
After tax share in
profit of equity accounted investees
|
(12.1)
|
(8.6)
|
Operating
profit
|
$
|
110.9
|
$
|
98.5
|
Finance expense –
net
|
34.9
|
16.0
|
Earnings before
income taxes
|
$
|
76.0
|
$
|
82.5
|
Income tax
expense
|
13.0
|
10.9
|
Net
income
|
$
|
63.0
|
$
|
71.6
|
Attributable
to:
|
|
|
Equity holders of the
Company
|
$
|
61.5
|
$
|
69.4
|
Non-controlling
interests
|
1.5
|
2.2
|
Earnings per share
attributable to equity holders of the Company
|
|
|
Basic and
diluted
|
$
|
0.23
|
$
|
0.26
|
Consolidated
Statement of Comprehensive (Loss) Income
|
|
|
(Unaudited)
|
Three months
ended
June 30
|
(amounts in
millions of Canadian dollars)
|
2019
|
2018
|
|
|
|
Net
income
|
$
|
63.0
|
$
|
71.6
|
Items that may be
reclassified to net income
|
|
|
Foreign currency
differences on translation of foreign operations
|
$
|
(69.3)
|
$
|
(20.8)
|
Reclassification to
income of foreign currency differences
|
(1.9)
|
(3.3)
|
Net gain (loss) on
cash flow hedges
|
12.5
|
(8.4)
|
Reclassification to
income of (losses) gains on cash flow hedges
|
(0.7)
|
2.4
|
Net gain (loss) on
hedges of net investment in foreign operations
|
22.5
|
(9.7)
|
Income
taxes
|
(0.8)
|
3.9
|
|
$
|
(37.7)
|
$
|
(35.9)
|
Items that will
never be reclassified to net income
|
|
|
Remeasurement of
defined benefit pension plan obligations
|
$
|
(43.6)
|
$
|
4.2
|
Net loss on financial
assets carried at fair value through OCI
|
(0.1)
|
—
|
Income
taxes
|
11.5
|
(1.1)
|
|
$
|
(32.2)
|
$
|
3.1
|
Other
comprehensive loss
|
$
|
(69.9)
|
$
|
(32.8)
|
Total
comprehensive (loss) income
|
$
|
(6.9)
|
$
|
38.8
|
Attributable
to:
|
|
|
Equity holders of the
Company
|
$
|
(7.1)
|
$
|
34.2
|
Non-controlling
interests
|
0.2
|
4.6
|
Consolidated
Statement of Changes in Equity
|
|
|
|
(Unaudited)
|
Attributable to
equity holders of the Company
|
|
Three months ended
June 30, 2019 (amounts in millions of Canadian
dollars,except number of shares)
|
Number of
shares
|
Common
shares Stated
value
|
Contributed
surplus
|
Accumulated other
comprehensive
income
|
Retained
earnings
|
Total
|
Non-controlling
interests
|
Total
equity
|
Balances, beginning
of period
|
265,447,603
|
$
|
649.6
|
$
|
24.8
|
$
|
199.0
|
$
|
1,457.9
|
$
|
2,331.3
|
$
|
78.7
|
$
|
2,410.0
|
Impact of adopting
IFRS 16
|
—
|
—
|
—
|
—
|
(27.5)
|
(27.5)
|
—
|
(27.5)
|
Balances, April 1,
2019
|
265,447,603
|
$
|
649.6
|
$
|
24.8
|
$
|
199.0
|
$
|
1,430.4
|
$
|
2,303.8
|
$
|
78.7
|
$
|
2,382.5
|
Net income
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
61.5
|
$
|
61.5
|
$
|
1.5
|
$
|
63.0
|
Other comprehensive
loss
|
—
|
—
|
—
|
(36.5)
|
(32.1)
|
(68.6)
|
(1.3)
|
(69.9)
|
Total comprehensive
(loss) income
|
—
|
$
|
—
|
$
|
—
|
$
|
(36.5)
|
$
|
29.4
|
$
|
(7.1)
|
$
|
0.2
|
$
|
(6.9)
|
Stock options
exercised
|
833,180
|
16.2
|
(1.9)
|
—
|
—
|
14.3
|
—
|
14.3
|
Optional cash
purchase of shares
|
408
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Common shares
repurchased and cancelled
|
(58,131)
|
(0.1)
|
—
|
—
|
(1.9)
|
(2.0)
|
—
|
(2.0)
|
Share-based
compensation expense
|
—
|
—
|
3.7
|
—
|
—
|
3.7
|
—
|
3.7
|
Stock
dividends
|
30,420
|
1.1
|
—
|
—
|
(1.1)
|
—
|
—
|
—
|
Cash
dividends
|
—
|
—
|
—
|
—
|
(25.5)
|
(25.5)
|
—
|
(25.5)
|
Balances, end of
period
|
266,253,480
|
$
|
666.8
|
$
|
26.6
|
$
|
162.5
|
$
|
1,431.3
|
$
|
2,287.2
|
$
|
78.9
|
$
|
2,366.1
|
(Unaudited)
|
Attributable to
equity holders of the Company
|
|
Three months ended
June 30, 2018
(amounts in
millions of Canadian dollars,except number of
shares)
|
Number of
shares
|
Common
shares
Stated
value
|
Contributed
surplus
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
|
Non-controlling
interests
|
Total
equity
|
Balances, beginning
of period
|
267,738,530
|
$
|
633.2
|
$
|
21.3
|
$
|
260.3
|
$
|
1,314.3
|
$
|
2,229.1
|
$
|
68.4
|
$
|
2,297.5
|
Net income
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
69.4
|
$
|
69.4
|
$
|
2.2
|
$
|
71.6
|
Other comprehensive
(loss) income
|
—
|
—
|
—
|
(38.3)
|
3.1
|
(35.2)
|
2.4
|
(32.8)
|
Total comprehensive
(loss) income
|
—
|
$
|
—
|
$
|
—
|
$
|
(38.3)
|
$
|
72.5
|
$
|
34.2
|
$
|
4.6
|
$
|
38.8
|
Stock options
exercised
|
313,350
|
5.5
|
(0.7)
|
—
|
—
|
4.8
|
—
|
4.8
|
Optional cash
purchase of shares
|
647
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Common shares
repurchased and cancelled
|
(267,100)
|
(0.6)
|
—
|
—
|
(5.9)
|
(6.5)
|
—
|
(6.5)
|
Share-based
compensation expense
|
—
|
—
|
4.1
|
—
|
—
|
4.1
|
—
|
4.1
|
Stock
dividends
|
35,566
|
1.0
|
—
|
—
|
(1.0)
|
—
|
—
|
—
|
Cash
dividends
|
—
|
—
|
—
|
—
|
(23.1)
|
(23.1)
|
—
|
(23.1)
|
Balances, end of
period
|
267,820,993
|
$
|
639.1
|
$
|
24.7
|
$
|
222.0
|
$
|
1,356.8
|
$
|
2,242.6
|
$
|
73.0
|
$
|
2,315.6
|
Consolidated
Statement of Cash Flows
|
|
|
|
(Unaudited)
|
|
|
Three months ended
June 30
|
|
|
(amounts in
millions of Canadian dollars)
|
2019
|
2018
|
|
|
|
Operating
activities
|
|
Net income
|
$
|
63.0
|
$
|
71.6
|
Adjustments
for:
|
|
Depreciation and
amortization
|
73.8
|
48.8
|
After tax share in
profit of equity accounted investees
|
(12.1)
|
(8.6)
|
Deferred income
taxes
|
13.0
|
12.4
|
Investment tax
credits
|
(9.4)
|
(2.7)
|
Share-based
compensation
|
1.9
|
(5.1)
|
Defined benefit
pension plans
|
4.3
|
3.0
|
Other non-current
liabilities
|
(4.2)
|
(7.7)
|
Derivative financial
assets and liabilities – net
|
(7.0)
|
(1.5)
|
Other
|
14.5
|
7.0
|
Changes in non-cash
working capital
|
(197.8)
|
(147.8)
|
Net cash used in
operating activities
|
$
|
(60.0)
|
$
|
(30.6)
|
Investing
activities
|
|
|
Business
combinations, net of cash and cash equivalents acquired
|
$
|
(7.5)
|
$
|
—
|
Additions to
property, plant and equipment
|
(89.0)
|
(53.1)
|
Proceeds from
disposal of property, plant and equipment
|
0.4
|
2.3
|
Additions to
intangibles
|
(22.7)
|
(18.0)
|
Net proceeds from
(payments to) equity accounted investees
|
0.7
|
(6.1)
|
Net cash used in
investing activities
|
$
|
(118.1)
|
$
|
(74.9)
|
Financing
activities
|
|
|
Net proceeds from
borrowing under revolving unsecured credit facilities
|
$
|
192.0
|
$
|
—
|
Proceeds from
long-term debt
|
9.0
|
66.9
|
Repayment of
long-term debt
|
(100.8)
|
(39.0)
|
Repayment of lease
liabilities
|
(25.4)
|
(2.7)
|
Dividends
paid
|
(25.5)
|
(23.1)
|
Issuance of common
shares
|
14.3
|
4.8
|
Repurchase of common
shares
|
(2.0)
|
(6.5)
|
Other
|
(0.3)
|
(0.2)
|
Net cash provided
by financing activities
|
$
|
61.3
|
$
|
0.2
|
Effect of foreign
exchange rate changes on cash and cash
equivalents
|
$
|
(7.3)
|
$
|
(6.1)
|
Net decrease in
cash and cash equivalents
|
$
|
(124.1)
|
$
|
(111.4)
|
Cash and cash
equivalents, beginning of period
|
446.1
|
611.5
|
Cash and cash
equivalents, end of period
|
$
|
322.0
|
$
|
500.1
|
Supplemental
information:
|
|
|
Interest
paid
|
$
|
14.5
|
$
|
7.6
|
Interest
received
|
2.3
|
4.1
|
Income taxes
paid
|
10.2
|
11.5
|
View original
content:http://www.prnewswire.com/news-releases/cae-reports-first-quarter-fiscal-2020-results-and-10-dividend-increase-300901589.html
SOURCE CAE INC.