- Revenue of $896.8 million up
21% vs. $743.8 million in Q2
FY2019
- Segment operating income(1) of $124.8 million ($126.0
million before specific items)(2) up 28% vs.
$98.7 million in Q2 FY2019
- EPS of $0.28 vs. $0.23 in Q2 FY2019
- Order intake(3) of $995.4
million for 1.11x book-to-sales(3) and
$9.2 billion
backlog(3)
- Concluded 15-year exclusive business aviation training
services agreement with Directional Aviation Capital and
acquisition of 50 percent of SIMCOM post quarter
MONTREAL, Nov. 13,
2019 /CNW Telbec/ - (NYSE: CAE) (TSX: CAE) - CAE
today reported revenue of $896.8 million for the second quarter of
fiscal 2020, compared with $743.8
million in the second quarter last year. Second quarter net
income attributable to equity holders was $73.8 million ($0.28 per share) compared to $60.7 million ($0.23 per share) last year. Net income before
specific items(4) in the second quarter of fiscal 2020
was $74.7 million ($0.28 per share before specific
items(5)).
Second quarter segment operating income was
$124.8 million (13.9% of revenue)
compared with $98.7 million (13.3% of
revenue) in the second quarter of last year. Segment operating
income before specific items in the second quarter of fiscal 2020
was $126.0 million (14.0% of
revenue). All financial information is in Canadian dollars unless
otherwise indicated.
"CAE had good growth in the second quarter, with
21 percent higher revenue and 28 percent higher operating income,
and we secured nearly $1.0 billion of
orders for a $9.2 billion backlog,"
said Marc Parent, CAE's President
and Chief Executive Officer. "Performance was led by Civil with 60
percent operating income growth and higher margins, and continued
good momentum signing long-term training agreements with our
airline partners. In business aviation, we substantially concluded
the integration of Bombardier Business Aircraft Training and I am
very pleased with its performance to date. Further strengthening
our position is our strategic partnership and exclusive 15-year
training outsourcing with Directional Aviation Capital, one of the
largest, fastest growing, and most innovative corporate aviation
service companies globally. In Defence, modest top-line growth and
lower operating income reflect order delays and the timing of
program milestones on contracts in backlog. We continue to expect a
stronger second half in Defence, a view supported by a healthy
book-to-sales ratio in the quarter and a robust pipeline. In
Healthcare, we received orders for new products that we plan to
deliver in the coming quarters, and we enhanced our position in the
large U.S. hospital market. As we look to the remainder of the
fiscal year, our overall outlook for the Company remains largely
unchanged, with a higher growth outlook in Civil offsetting lower
expected growth in Defence."
Summary of
consolidated results
|
|
|
|
|
|
|
|
|
|
|
|
(amounts in
millions, except operating margins and per share
amounts)
|
|
Q2-2020
|
|
Q2-2019
|
Variance
%
|
Revenue
|
$
|
896.8
|
$
|
743.8
|
21%
|
Segment operating
income (SOI)
|
$
|
124.8
|
$
|
98.7
|
26%
|
Operating
margins
|
%
|
13.9
|
%
|
13.3
|
|
SOI before specific
items
|
$
|
126.0
|
$
|
98.7
|
28%
|
Operating margins
before specific items
|
%
|
14.0
|
%
|
13.3
|
|
Net income
|
$
|
75.0
|
$
|
63.6
|
18%
|
Net income
attributable to equity holders of the Company
|
$
|
73.8
|
$
|
60.7
|
22%
|
Earnings per share
(EPS)
|
$
|
0.28
|
$
|
0.23
|
22%
|
Net income before
specific items
|
$
|
74.7
|
$
|
60.7
|
23%
|
EPS before specific
items
|
$
|
0.28
|
$
|
0.23
|
22%
|
Order
intake
|
$
|
995.4
|
$
|
985.9
|
1%
|
Total
backlog
|
$
|
9,238.4
|
$
|
8,667.6
|
7%
|
Civil Aviation Training Solutions
(Civil)
Second quarter Civil revenue was $529.9 million, up 35% compared to the same
quarter last year. Segment operating income was $100.2 million (18.9% of revenue) compared to
$63.3 million (16.1% of revenue) in
the second quarter last year. Second quarter segment operating
income before specific items was $101.4
million (19.1% of revenue), up 60% compared to the second
quarter last year. During the quarter, Civil delivered 18
full-flight simulators (FFSs) to customers and second quarter Civil
training centre utilization(6) was 69%.
During the quarter, Civil signed training
solutions contracts valued at $602.9
million, including new long-term pilot training agreements
with Sunwing Airlines, Loganair and Flightworks. Civil also sold 11
FFSs during the quarter, for 20 sales in the first half of the
year. To address the growing global demand for new pilots, Civil
launched a new cadet pilot training program to train more than 700
new professional pilots over the next 10 years for Southwest
Airlines Destination 225° program. Following the end of the
quarter, Civil signed a long-term exclusive training agreement with
easyJet to train more than 1,000 new easyJet cadet pilots on a
Multi-Crew Pilot License program. In business aviation, Civil
entered a strategic partnership with Directional Aviation Capital
and its affiliates as part of an exclusive 15-year training
outsourcing agreement. As part of the agreement, CAE acquired a
fifty-percent stake in SIMCOM Holdings, Inc., post quarter.
The Civil book-to-sales ratio was 1.14x for the
quarter and 1.45x for the last 12 months. The Civil backlog at the
end of the quarter was a record $5.1
billion.
Summary of Civil
Aviation Training Solutions results
|
|
(amounts in
millions, except operating margins, SEU, FFSs deployed and FFS
deliveries)
|
|
Q2-2020
|
|
Q2-2019
|
Variance
%
|
Revenue
|
$
|
529.9
|
$
|
393.1
|
35%
|
Segment operating
income
|
$
|
100.2
|
$
|
63.3
|
58%
|
Operating
margins
|
%
|
18.9
|
%
|
16.1
|
|
SOI before specific
items
|
$
|
101.4
|
$
|
63.3
|
60%
|
Operating margins
before specific items
|
%
|
19.1
|
%
|
16.1
|
|
Order
intake
|
$
|
602.9
|
$
|
575.3
|
5%
|
Total
backlog
|
$
|
5,124.8
|
$
|
4,310.8
|
19%
|
Simulator equivalent
unit (SEU)(7)
|
|
243
|
|
215
|
13%
|
FFSs
deployed
|
|
299
|
|
264
|
13%
|
FFS
deliveries
|
|
18
|
|
5
|
260%
|
Defence and Security (Defence)
Second
quarter Defence revenue was $336.5
million, up 5% compared to the same quarter last year and
segment operating income was $26.0
million (7.7% of revenue), down 24% compared to the second
quarter last year, reflecting delays in the timing of orders and
Defence's progress on programs in backlog, and an income growth
profile more heavily weighted to the second-half of the year.
During the quarter, Defence booked orders for
$362.1 million, including the U.S.
Air Force for KC-135 aircrew training services and simulator
upgrades and modifications on its KC-135 training devices.
Additionally, CAE will continue to provide fixed-wing flight
training and support services to the U.S. Army at the CAE Dothan
Training Centre and upgrades on MH-60 Seahawk helicopter simulators
and T-44C aircrew training services to the U.S. Navy. Other notable
orders include a contract with Boeing for upgrades on P-8A
simulators, a contract to upgrade the German Eurofighter and
Tornado aircraft simulator, and a contract for Abrams M1A2 tank
maintenance trainers for the U.S. Army. As well, Defence entered a
collaboration with Leonardo to offer integrated helicopter training
solutions in the U.S. government market.
The Defence book-to-sales ratio was 1.08x for the
quarter and 0.81x 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 $4.1 billion. The Defence pipeline remains strong
with approximately $4.0 billion of
bids and proposals pending customer decisions.
Summary of Defence
and Security results
|
|
(amounts in
millions, except operating margins)
|
|
Q2-2020
|
|
Q2-2019
|
Variance
%
|
Revenue
|
$
|
336.5
|
$
|
320.3
|
5%
|
Segment operating
income
|
$
|
26.0
|
$
|
34.1
|
(24%)
|
Operating
margins
|
%
|
7.7
|
%
|
10.6
|
|
Order
intake
|
$
|
362.1
|
$
|
380.2
|
(5%)
|
Total
backlog
|
$
|
4,113.6
|
$
|
4,356.8
|
(6%)
|
Healthcare
Second quarter Healthcare
revenue was $30.4 million compared to
$30.4 million in the same quarter
last year, and second quarter segment operating loss was
$1.4 million, compared to segment
operating income of $1.3 million
in the second quarter last year. Healthcare had higher expenses in
the second quarter this year to support the pursuit of a larger
business and the launch of new products.
Healthcare launched the Vimedix 3.0 ultrasound
simulator with more realistic anatomy and modern user interface. As
well, Healthcare, together with the American Society of
Anesthesiologists, launched a new Anesthesia SimSTAT module, the
latest in a series of interactive screen-based modules approved for
Maintenance of Certification in Anesthesiology credits. In response
to increased regulations in the U.S. involving hospitals and the
growing imperative on patient safety, Healthcare further expanded
its reach in the hospital segment by entering a group purchasing
agreement with Premier, a leading healthcare improvement company,
uniting an alliance of approximately 4,000 U.S. hospitals and
health systems and approximately 175,000 other providers and
organizations.
Summary of
Healthcare results
|
|
(amounts in
millions, except operating margins)
|
|
Q2-2020
|
|
Q2-2019
|
Variance
%
|
Revenue
|
$
|
30.4
|
$
|
30.4
|
—%
|
Segment operating
(loss) income
|
$
|
(1.4)
|
$
|
1.3
|
(208%)
|
Operating
margins
|
%
|
—
|
%
|
4.3
|
|
Additional financial highlights
Free
cash flow(8) was negative $7.1
million for the quarter compared to positive $137.7 million in the second quarter last
year. Cash provided by operating activities increased compared to
the second quarter last year, while free cash flow decreased,
mainly from a higher investment in non-cash working capital
accounts. Notably, this reflects the timing of cash flows involving
accounts payable and contract liabilities, and higher inventory
from recent strategic investments in simulator advanced builds to
pre-empt customer demand that CAE anticipates for certain simulator
products. CAE usually sees a higher level of investment in non-cash
working capital accounts during the first half of the fiscal year
and it expects to see a significant portion of these investments
reverse in the second half.
Income taxes this quarter were $15.5 million, representing an effective tax rate
of 17%, compared to 19% for the second quarter last year. The tax
rate was lower due to a change in the mix of income from various
jurisdictions.
Net finance expense this quarter was $34.3 million, $14.4
million higher than the second 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 because of the adoption of IFRS
16.
Growth and maintenance capital
expenditures(9) totaled $58.8
million this quarter.
Net debt(10) at the end of the quarter
was $2,442.8 million for a net
debt-to-capital ratio(11) of 51.0%. This compares to net
debt of $2,312.7 million and a net
debt-to-capital ratio of 49.4% at the end of the preceding quarter.
Excluding the impacts of the adoption of IFRS 16, net debt would
have been $2,158.5 million this
quarter for a net debt-to-capital ratio of 47.5%.
Return on capital employed (ROCE)(12)
was 11.5% this quarter compared to 12.8% in the second quarter last
year, before specific items. Excluding the impacts of the adoption
of IFRS 16, ROCE before specific items would have been 11.7% this
quarter.
CAE will pay a dividend of 11 cents per share effective December 31, 2019 to shareholders of record at
the close of business on December 13,
2019.
During the three months ended September 30, 2019, CAE repurchased and cancelled
a total of 533,600 common shares under the Normal Course Issuer Bid
(NCIB), at a weighted average price of $34.06 per common share, for a total
consideration of $18.2 million.
Management outlook for fiscal year 2020
revised
Management's outlook for CAE in fiscal year 2020
remains largely unchanged, with a higher growth outlook in Civil
expected to offset lower expected growth in Defence. 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 now
expects operating income growth closer to 30 percent (previously
upper 20 percent range) on the basis of a strong first-half
performance and a further increase in demand for its training
solutions, including maintaining its leading share of FFS sales,
and the successful integration of its recently acquired Bombardier
BAT business, which is substantially complete. In Defence, the
Company now expects modest operating income growth for the year
(vs. the previous outlook for mid to high single-digit percentage
growth). This revised view considers the Defence group's
performance in the first half of the fiscal year, current
expectations for reaching profit milestones on programs in backlog,
and the expected timing of new contract awards from what continues
to be 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 continues to expect total annual capital expenditures to be
approximately 10 to 15 percent higher, 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. Furthermore, CAE adopted this
year, ethical principles for the responsible use of data analytics
to better manage risks associated with the increasing use of
emerging technologies. The adoption of these principles affirms our
commitment to adhere to the highest standards of ethical conduct in
our dealings with employees, customers and all other stakeholders
in our ecosystem. The principles are also a commitment to go beyond
what is legally required to protect CAE's and its stakeholders'
data. CAE also plays an important role developing talent in its
industry. With women accounting for less than 5 percent of the
global pilot pool, CAE, as the aviation training leader worldwide,
is a major advocate for gender diversity in aviation. The Company
works to ensure the industry accesses the full available talent
pool to help address the need for over 300,000 new pilots in civil
aviation over the next decade. Among several exciting CAE
initiatives, CAE developed the CAE Women in Flight scholarship,
which together with its dynamic women ambassadors, help to
encourage more women to consider the pilot profession.
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
September 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 September 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 Q2 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 1:00 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.
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 November 13,
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
November 13, 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 November 13,
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) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(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)
|
September
30
|
March 31
|
(amounts in
millions of Canadian dollars)
|
2019
|
2019
|
|
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
222.5
|
$
|
446.1
|
Accounts
receivable
|
|
520.7
|
|
496.0
|
Contract
assets
|
|
567.7
|
|
523.5
|
Inventories
|
|
577.5
|
|
537.0
|
Prepayments
|
|
60.0
|
|
57.4
|
Income taxes
recoverable
|
|
50.8
|
|
33.6
|
Derivative financial
assets
|
|
14.3
|
|
19.3
|
Total current
assets
|
$
|
2,013.5
|
$
|
2,112.9
|
Property, plant and
equipment
|
|
1,976.0
|
|
2,149.3
|
Right-of-use
assets
|
|
408.0
|
|
—
|
Intangible
assets
|
|
2,028.3
|
|
2,027.9
|
Investment in equity
accounted investees
|
|
312.1
|
|
312.1
|
Deferred tax
assets
|
|
79.1
|
|
71.0
|
Derivative financial
assets
|
|
16.2
|
|
12.8
|
Other
assets
|
|
487.3
|
|
479.5
|
Total
assets
|
$
|
7,320.5
|
$
|
7,165.5
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
741.5
|
$
|
883.8
|
Provisions
|
|
23.0
|
|
28.7
|
Income taxes
payable
|
|
30.0
|
|
25.7
|
Contract
liabilities
|
|
667.4
|
|
670.2
|
Current portion of
long-term debt
|
|
231.3
|
|
264.1
|
Derivative financial
liabilities
|
|
10.9
|
|
17.0
|
Total current
liabilities
|
$
|
1,704.1
|
$
|
1,889.5
|
Provisions
|
|
28.2
|
|
36.3
|
Long-term
debt
|
|
2,434.0
|
|
2,064.2
|
Royalty
obligations
|
|
129.9
|
|
136.2
|
Employee benefits
obligations
|
|
278.6
|
|
212.6
|
Deferred gains and
other liabilities
|
|
249.9
|
|
267.0
|
Deferred tax
liabilities
|
|
142.2
|
|
147.0
|
Derivative financial
liabilities
|
|
2.3
|
|
2.7
|
Total
liabilities
|
$
|
4,969.2
|
$
|
4,755.5
|
Equity
|
|
|
|
|
Share
capital
|
$
|
669.7
|
$
|
649.6
|
Contributed
surplus
|
|
26.9
|
|
24.8
|
Accumulated other
comprehensive income
|
|
126.5
|
|
199.0
|
Retained
earnings
|
|
1,446.7
|
|
1,457.9
|
Equity attributable
to equity holders of the Company
|
$
|
2,269.8
|
$
|
2,331.3
|
Non-controlling
interests
|
|
81.5
|
|
78.7
|
Total
equity
|
$
|
2,351.3
|
$
|
2,410.0
|
Total liabilities
and equity
|
$
|
7,320.5
|
$
|
7,165.5
|
Consolidated
Income Statement
|
|
|
|
(Unaudited)
|
Three months
ended
September 30
|
Six months
ended
September 30
|
(amounts in
millions of Canadian dollars, except per share
amounts)
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
Revenue
|
$
|
896.8
|
$
|
743.8
|
$
|
1,722.4
|
$
|
1,465.8
|
Cost of
sales
|
660.1
|
542.3
|
1,242.0
|
1,045.6
|
Gross
profit
|
$
|
236.7
|
$
|
201.5
|
$
|
480.4
|
$
|
420.2
|
Research and
development expenses
|
35.8
|
29.1
|
67.7
|
60.4
|
Selling, general and
administrative expenses
|
98.0
|
87.9
|
211.3
|
190.6
|
Other gains –
net
|
(11.5)
|
(9.4)
|
(11.8)
|
(14.6)
|
After tax share in
profit of equity accounted investees
|
(10.4)
|
(4.8)
|
(22.5)
|
(13.4)
|
Operating
profit
|
$
|
124.8
|
$
|
98.7
|
$
|
235.7
|
$
|
197.2
|
Finance expense –
net
|
34.3
|
19.9
|
69.2
|
35.9
|
Earnings before
income taxes
|
$
|
90.5
|
$
|
78.8
|
$
|
166.5
|
$
|
161.3
|
Income tax
expense
|
15.5
|
15.2
|
28.5
|
26.1
|
Net
income
|
$
|
75.0
|
$
|
63.6
|
$
|
138.0
|
$
|
135.2
|
Attributable
to:
|
|
|
|
Equity holders of the
Company
|
$
|
73.8
|
$
|
60.7
|
$
|
135.3
|
$
|
130.1
|
Non-controlling
interests
|
1.2
|
2.9
|
2.7
|
5.1
|
Earnings per share
attributable to equity holders of the Company
|
|
|
|
Basic
|
$
|
0.28
|
$
|
0.23
|
$
|
0.51
|
$
|
0.49
|
Diluted
|
$
|
0.28
|
$
|
0.23
|
$
|
0.51
|
$
|
0.48
|
Consolidated
Statement of Comprehensive Income
|
|
|
|
(Unaudited)
|
Three months
ended
September 30
|
Six months
ended
September 30
|
(amounts in
millions of Canadian dollars)
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
Net
income
|
$
|
75.0
|
$
|
63.6
|
$
|
138.0
|
$
|
135.2
|
Items that may be
reclassified to net income
|
|
|
|
Foreign currency
differences on translation of foreign operations
|
$
|
(18.7)
|
$
|
(65.3)
|
$
|
(88.0)
|
$
|
(86.1)
|
Reclassification to
income of foreign currency differences
|
(10.0)
|
(12.6)
|
(11.9)
|
(15.9)
|
Net (loss) gain on
cash flow hedges
|
(3.0)
|
12.7
|
9.5
|
4.3
|
Reclassification to
income of (losses) gains on cash flow hedges
|
(2.4)
|
(1.8)
|
(3.1)
|
0.6
|
Net (loss) gain on
hedges of net investment in foreign operations
|
(12.6)
|
8.3
|
9.9
|
(1.4)
|
Income
taxes
|
10.6
|
0.8
|
9.8
|
4.7
|
|
$
|
(36.1)
|
$
|
(57.9)
|
$
|
(73.8)
|
$
|
(93.8)
|
Items that will
never be reclassified to net income
|
|
|
|
Remeasurement of
defined benefit pension plan obligations
|
$
|
(16.8)
|
$
|
28.9
|
$
|
(60.4)
|
$
|
33.1
|
Net loss on financial
assets carried at fair value through OCI
|
—
|
(0.1)
|
(0.1)
|
(0.1)
|
Income
taxes
|
4.5
|
(7.7)
|
16.0
|
(8.8)
|
|
$
|
(12.3)
|
$
|
21.1
|
$
|
(44.5)
|
$
|
24.2
|
Other
comprehensive loss
|
$
|
(48.4)
|
$
|
(36.8)
|
$
|
(118.3)
|
$
|
(69.6)
|
Total
comprehensive income
|
$
|
26.6
|
$
|
26.8
|
$
|
19.7
|
$
|
65.6
|
Attributable
to:
|
|
|
|
Equity holders of the
Company
|
$
|
25.5
|
$
|
25.1
|
$
|
18.4
|
$
|
59.3
|
Non-controlling
interests
|
1.1
|
1.7
|
1.3
|
6.3
|
Consolidated
Statement of Changes in Equity
|
|
|
|
(Unaudited)
|
Attributable to
equity holders of the Company
|
|
Six months ended
September 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
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
135.3
|
$
|
135.3
|
$
|
2.7
|
$
|
138.0
|
Other comprehensive
loss
|
—
|
|
—
|
|
—
|
|
(72.5)
|
|
(44.4)
|
|
(116.9)
|
|
(1.4)
|
|
(118.3)
|
Total comprehensive
(loss) income
|
—
|
$
|
—
|
$
|
—
|
$
|
(72.5)
|
$
|
90.9
|
$
|
18.4
|
$
|
1.3
|
$
|
19.7
|
Stock options
exercised
|
981,405
|
|
19.6
|
|
(2.4)
|
|
—
|
|
—
|
|
17.2
|
|
—
|
|
17.2
|
Optional cash
purchase of shares
|
981
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Common shares
repurchased and cancelled
|
(591,731)
|
|
(1.5)
|
|
—
|
|
—
|
|
(18.7)
|
|
(20.2)
|
|
—
|
|
(20.2)
|
Share-based
compensation expense
|
—
|
|
—
|
|
4.5
|
|
—
|
|
—
|
|
4.5
|
|
—
|
|
4.5
|
Additions to
non-controlling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1.5
|
|
1.5
|
Stock
dividends
|
59,028
|
|
2.0
|
|
—
|
|
—
|
|
(2.0)
|
|
—
|
|
—
|
|
—
|
Cash
dividends
|
—
|
|
—
|
|
—
|
|
—
|
|
(53.9)
|
|
(53.9)
|
|
—
|
|
(53.9)
|
Balances, end of
period
|
265,897,286
|
$
|
669.7
|
$
|
26.9
|
$
|
126.5
|
$
|
1,446.7
|
$
|
2,269.8
|
$
|
81.5
|
$
|
2,351.3
|
(Unaudited)
|
Attributable to
equity holders of the Company
|
|
Six months ended
September 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
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
130.1
|
$
|
130.1
|
$
|
5.1
|
$
|
135.2
|
Other comprehensive
(loss) income
|
—
|
|
—
|
|
—
|
|
(95.1)
|
|
24.3
|
|
(70.8)
|
|
1.2
|
|
(69.6)
|
Total comprehensive
(loss) income
|
—
|
$
|
—
|
$
|
—
|
$
|
(95.1)
|
$
|
154.4
|
$
|
59.3
|
$
|
6.3
|
$
|
65.6
|
Stock options
exercised
|
447,050
|
|
8.1
|
|
(1.1)
|
|
—
|
|
—
|
|
7.0
|
|
—
|
|
7.0
|
Optional cash
purchase of shares
|
1,326
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Common shares
repurchased and cancelled
|
(1,686,700)
|
|
(4.0)
|
|
—
|
|
—
|
|
(39.7)
|
|
(43.7)
|
|
—
|
|
(43.7)
|
Share-based
compensation expense
|
—
|
|
—
|
|
5.0
|
|
—
|
|
—
|
|
5.0
|
|
—
|
|
5.0
|
Stock
dividends
|
74,783
|
|
2.0
|
|
—
|
|
—
|
|
(2.0)
|
|
—
|
|
—
|
|
—
|
Cash
dividends
|
—
|
|
—
|
|
—
|
|
—
|
|
(48.8)
|
|
(48.8)
|
|
—
|
|
(48.8)
|
Balances, end of
period
|
266,574,989
|
$
|
639.3
|
$
|
25.2
|
$
|
165.2
|
$
|
1,378.2
|
$
|
2,207.9
|
$
|
74.7
|
$
|
2,282.6
|
Consolidated
Statement of Cash Flows
|
|
|
|
(Unaudited)
|
|
|
Six months ended
September 30
|
|
|
(amounts in
millions of Canadian dollars)
|
2019
|
2018
|
|
|
|
Operating
activities
|
|
|
Net income
|
$
|
138.0
|
$
|
135.2
|
Adjustments
for:
|
|
|
Depreciation and
amortization
|
149.2
|
100.8
|
After tax share in
profit of equity accounted investees
|
(22.5)
|
(13.4)
|
Deferred income
taxes
|
12.8
|
15.4
|
Investment tax
credits
|
(6.0)
|
(1.9)
|
Share-based
compensation
|
11.3
|
3.0
|
Defined benefit
pension plans
|
9.0
|
9.4
|
Other non-current
liabilities
|
(19.0)
|
(12.6)
|
Derivative financial
assets and liabilities – net
|
(8.0)
|
(6.7)
|
Other
|
25.6
|
11.0
|
Changes in non-cash
working capital
|
(313.7)
|
(93.7)
|
Net cash (used in)
provided by operating activities
|
$
|
(23.3)
|
$
|
146.5
|
Investing
activities
|
|
|
Business
combinations, net of cash and cash equivalents acquired
|
$
|
(9.2)
|
$
|
(33.5)
|
Additions to
property, plant and equipment
|
(147.8)
|
(94.0)
|
Proceeds from
disposal of property, plant and equipment
|
0.4
|
2.3
|
Additions to
intangibles
|
(48.4)
|
(37.6)
|
Net payments to
equity accounted investees
|
—
|
(9.7)
|
Dividends received
from equity accounted investees
|
8.6
|
7.1
|
Other
|
1.5
|
4.0
|
Net cash used in
investing activities
|
$
|
(194.9)
|
$
|
(161.4)
|
Financing
activities
|
|
|
Net proceeds from
borrowing under revolving unsecured credit facilities
|
$
|
197.9
|
$
|
—
|
Proceeds from
long-term debt
|
16.2
|
75.1
|
Repayment of
long-term debt
|
(108.8)
|
(61.2)
|
Repayment of lease
liabilities
|
(39.6)
|
(5.6)
|
Dividends
paid
|
(53.9)
|
(48.8)
|
Issuance of common
shares
|
17.2
|
7.0
|
Repurchase of common
shares
|
(20.2)
|
(43.7)
|
Other
|
(1.4)
|
(0.3)
|
Net cash provided
by (used in) financing activities
|
$
|
7.4
|
$
|
(77.5)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
$
|
(12.8)
|
$
|
(14.8)
|
Net decrease in
cash and cash equivalents
|
$
|
(223.6)
|
$
|
(107.2)
|
Cash and cash
equivalents, beginning of period
|
446.1
|
611.5
|
Cash and cash
equivalents, end of period
|
$
|
222.5
|
$
|
504.3
|
Supplemental
information:
|
|
|
Interest
paid
|
$
|
62.3
|
$
|
30.2
|
Interest
received
|
5.0
|
7.9
|
Income taxes
paid
|
18.1
|
17.2
|
View original
content:http://www.prnewswire.com/news-releases/cae-reports-second-quarter-fiscal-2020-results-300957478.html
SOURCE CAE INC.