- Revenue of $1,088.5 million
vs. $993.2 million in prior
year
- Earnings per share (EPS) of $0.18 vs. $0.14 in
prior year
- Adjusted EPS(1) of $0.27 vs. $0.19 in
prior year
- Operating income of $100.6
million vs. $102.1 million in
prior year
- Adjusted segment operating income(1) of
$138.5 million vs. $124.7 million in prior year
- Adjusted order intake(1) of $1,183.6 million for a record $11.8 billion adjusted
backlog(1)
- Net debt-to-adjusted EBITDA(1) of 3.16x vs. 3.22x
at the end of the preceding quarter
- Announced the sale of Healthcare subsequent to the end of
the quarter
MONTREAL, Nov. 14,
2023 /CNW/ - (NYSE: CAE) (TSX: CAE) - CAE Inc. (CAE
or the Company) today reported revenue of $1,088.5 million for the second quarter of fiscal
2024, compared with $993.2 million in
the second quarter last year. Second quarter EPS was $0.18 compared to $0.14 last year. Adjusted EPS in the second
quarter was $0.27 compared to
$0.19 last year.
Operating income this quarter was $100.6
million (9.2% of revenue(1)), compared to
$102.1 million (10.3% of revenue)
last year. Second quarter adjusted segment operating income was
$138.5 million (12.7% of
revenue(1)) compared to $124.7
million (12.6% of revenue) last year. All financial
information is in Canadian dollars unless otherwise indicated.
Summary of consolidated results
|
|
|
|
|
|
|
(amounts in millions, except per share
amounts)
|
|
Q2-2024
|
|
Q2-2023
|
|
Variance %
|
Revenue
|
$
|
1,088.5
|
$
|
993.2
|
|
10 %
|
Operating
income
|
$
|
100.6
|
$
|
102.1
|
|
(1 %)
|
Adjusted segment
operating income(1)
|
$
|
138.5
|
$
|
124.7
|
|
11 %
|
As a % of revenue(1)
|
%
|
12.7
|
%
|
12.6
|
|
|
Net income attributable
to equity holders of the Company
|
$
|
58.4
|
$
|
44.5
|
|
31 %
|
Earnings per share
(EPS)
|
$
|
0.18
|
$
|
0.14
|
|
29 %
|
Adjusted
EPS(1)
|
$
|
0.27
|
$
|
0.19
|
|
42 %
|
Adjusted order
intake(1)
|
$
|
1,183.6
|
$
|
1,294.6
|
|
(9 %)
|
Adjusted
backlog(1)
|
$
|
11,773.1
|
$
|
10,637.9
|
|
11 %
|
(1) This
press release includes non-IFRS financial measures, non-IFRS
ratios, capital management measures and supplementary financial
measures. These measures are not standardized financial measures
prescribed under IFRS and therefore should not be confused with, or
used as an alternative for, performance measures calculated
according to IFRS. Furthermore, these measures should not be
compared with similarly titled measures provided or used by other
issuers. Refer to the Non-IFRS and other financial measures
section of this press release for the definitions and a
reconciliation of these measures to the most directly comparable
measure under IFRS.
|
"We delivered a good performance overall in the
second quarter, with double-digit top- and bottom-line growth,
driven mainly by strong momentum in Civil and a higher contribution
from Defense compared to last year. We also further bolstered our
financial position on the path to meeting our short-term leverage
target," said Marc Parent, CAE's
President and Chief Executive Officer. "We made excellent progress
in the quarter to secure CAE's future with nearly $1.2 billion in total adjusted order intake, for
a record $11.8 billion adjusted
backlog. Orders in Civil included 15 full flight simulators,
long-term training agreements, and contracts for our next-gen crew
management and aircraft operations solutions. In Defense, we
continued to build our backlog with orders exceeding revenue in the
quarter for simulation-based training solutions and support
services. Following the end of the quarter, we announced a
definitive agreement to sell Healthcare for an enterprise value of
$311 million, a decision which better
positions CAE to efficiently allocate capital and resources to
secure growth opportunities in our large core simulation and
training markets. We are proud of CAE Healthcare's significant
contribution to patient safety and expect this to continue.
Healthcare will be well positioned to support future growth under
its excellent leadership and new ownership, focused on evolving
simulation to drive patient safety and quality outcomes. As we look
to the period ahead, we now expect Civil growth this fiscal year in
the mid- to high-teens percentage range of adjusted segment
operating income growth. The higher expected growth is based on our
strong performance across all regions year to date, including
Asia which had been lagging in the
global air travel recovery. We also have good demand visibility
given the regulated nature of aviation training. We expect Civil
performance to be weighted more to the fourth quarter, based on
planned simulator deliveries and training seasonality. In Defense,
we will continue to transform our business by replenishing our
backlog with more profitable programs and by retiring legacy
contracts, which have been most affected by inflationary
pressures. U.S. budget appropriation uncertainty is
causing delays to our expected ramp up of new programs in
backlog and to awards expected from our pipeline. As such, we
currently expect Defense second-half adjusted segment operating
income margins to remain in the mid-single-digit percentage range.
The anticipated positive inflection in Defense performance is
expected to occur during the next fiscal year, but will ultimately
depend on the duration and magnitude of delays to new programs in
the current environment. We are firmly focused on retiring legacy
contracts as soon as possible and to mitigating the cost pressures
associated with them. We remain very pleased with the accretive
margin profile on our newly awarded work, which continues to
underlie our conviction in our low double-digit margin target at
steady state. We continue to be highly encouraged by the secular
tailwinds in all segments and the growth we expect by harnessing
our global market and technology leadership, and the power of One
CAE."
Civil Aviation (Civil)
Second quarter Civil revenue
was $572.6 million vs. $507.2 million in the second quarter last year.
Operating income was $88.4 million
(15.4% of revenue) compared to $88.4
million (17.4% of revenue) in the same quarter last year.
Adjusted segment operating income was $114.3
million (20.0% of revenue) compared to $104.4 million (20.6% of revenue) in the second
quarter last year. During the quarter, Civil delivered 11
full-flight simulators (FFSs) to customers and second quarter Civil
training centre utilization was 71%.
During the quarter, Civil signed training solutions contracts
valued at $617.8 million, including a
range of long-term commercial and business aviation training
agreements and 15 FFS sales. Civil FFS orders total 37 for the
first half of the fiscal year.
Notable Civil contract awards for the quarter included 15 FFS
sales, including a multiyear purchase of six Boeing B737 Max
simulators and two previous B737 Max simulator options converted to
firm orders for Ryanair and two Airbus A320 simulators for United
Airlines. In commercial aviation Civil signed a multi-year aviation
training agreement with Delta Airlines, and in business aviation,
it signed a 2‑year training agreement with Windrose Air Jetcharter
GmbH. In Flight Operations Solutions, Civil signed long-term,
next-gen crew management and flight operations solutions agreements
with Wizz Air and Air India.
The Civil book-to-sales ratio(1) was 1.08 times for
the quarter and 1.27 times for the last 12 months. The Civil
adjusted backlog at the end of the quarter was a record
$5.9 billion.
Summary of Civil Aviation
results
|
(amounts in millions)
|
|
Q2-2024
|
|
Q2-2023
|
|
Variance %
|
Revenue
|
$
|
572.6
|
$
|
507.2
|
|
13 %
|
Operating
income
|
$
|
88.4
|
$
|
88.4
|
|
— %
|
Adjusted segment
operating income
|
$
|
114.3
|
$
|
104.4
|
|
9 %
|
As a % of revenue
|
%
|
20.0
|
%
|
20.6
|
|
|
Adjusted order
intake
|
$
|
617.8
|
$
|
751.1
|
|
(18 %)
|
Adjusted
backlog
|
$
|
5,903.1
|
$
|
5,457.1
|
|
8 %
|
|
|
|
|
|
|
|
Supplementary non-financial
information
|
|
|
|
|
|
|
Simulator equivalent
unit
|
|
268
|
|
252
|
|
6 %
|
FFSs in
CAE's network
|
|
331
|
|
315
|
|
5 %
|
FFS
deliveries
|
|
11
|
|
10
|
|
10 %
|
Utilization
rate
|
%
|
71
|
%
|
66
|
|
8 %
|
Defense and Security (Defense)
Second quarter Defense
revenue was $477.4 million vs.
$442.4 million in the second quarter
last year. Operating income was $9.3
million (1.9% of revenue) compared to $12.1 million (2.7% of revenue) in the same
quarter last year. Adjusted segment operating income was
$21.3 million (4.5% of revenue),
compared to $18.4 million (4.2% of
revenue) in the second quarter last year.
Defense booked orders for $527.3
million and an additional $155.5
million of unfunded contracts this quarter.
Notable Defense contract awards include a contract for
simulation-based training for the U.S. Army's key Next Generation
airborne intelligence, surveillance, and reconnaissance (ISR)
system, the High Accuracy Detection and Exploitation System
(HADES), which is based on the Bombardier Global 6000/6500 business
jet. It is also now under contract with Bell Textron to support the
U.S. Army Future Long Range Assault Aircraft program. As part of a
teaming arrangement with Bell for their Future Vertical Lift family
of systems, CAE is expected to provide maintenance training
devices, assist in the development of flight training devices, and
deliver other training products. It also received an order to
provide the U.S. Army with support services for the Advanced
Helicopter Flight Training Support Services for aircrew and
non-aircrew personnel. Defense was awarded contracts for the
modification and maintenance of F-16 training devices for the U.S.
Air Force, as well as for the upgrade of various training
devices.
The Defense book-to-sales ratio was 1.10 times for the quarter
and 0.93 times for the last 12 months (excluding unfunded backlog
totaling $155.5 million). The Defense
adjusted backlog, including unfunded contract awards and CAE's
interest in joint ventures, at the end of the quarter was a record
$5.9 billion. The Defense pipeline
remains strong with some $9.5 billion
of bids and proposals pending.
Summary of Defense and Security
results
|
(amounts in millions)
|
|
Q2-2024
|
|
Q2-2023
|
|
Variance %
|
Revenue
|
$
|
477.4
|
$
|
442.4
|
|
8 %
|
Operating
income
|
$
|
9.3
|
$
|
12.1
|
|
(23 %)
|
Adjusted segment
operating income
|
$
|
21.3
|
$
|
18.4
|
|
16 %
|
As a % of revenue
|
%
|
4.5
|
%
|
4.2
|
|
|
Adjusted order
intake
|
$
|
527.3
|
$
|
499.9
|
|
5 %
|
Adjusted
backlog
|
$
|
5,870.0
|
$
|
5,180.8
|
|
13 %
|
Healthcare
Second quarter Healthcare revenue was
$38.5 million, vs. $43.6 million in the second quarter last year.
Operating income was $2.9 million
(7.5% of revenue) compared to $1.6
million (3.7% of revenue) in the same quarter last year.
Adjusted segment operating income was $2.9
million (7.5% of revenue) compared to $1.9 million (4.4% of revenue) in the second
quarter last year.
Subsequent to the end of the quarter, CAE announced a definitive
agreement to sell its Healthcare business to Madison Industries for
an enterprise value of $311 million,
subject to customary adjustments. This transaction better positions
CAE to efficiently allocate capital and resources to secure growth
opportunities on the horizon in its much larger, core simulation
and training markets. Closing of the transaction, which is subject
to closing conditions, including customary regulatory approvals, is
expected before the end of fiscal year 2024. Sale proceeds will be
principally used to accelerate deleveraging, as well as to support
CAE's continued focus on technology advancement, market leadership
and cost optimization within its core training and simulation
markets.
Summary of Healthcare results
|
(amounts in millions)
|
|
Q2-2024
|
|
Q2-2023
|
|
Variance %
|
Revenue
|
$
|
38.5
|
$
|
43.6
|
|
(12 %)
|
Operating income
(loss)
|
$
|
2.9
|
$
|
1.6
|
|
81 %
|
Adjusted segment
operating income (loss)
|
$
|
2.9
|
$
|
1.9
|
|
53 %
|
As a % of revenue
|
%
|
7.5
|
%
|
4.4
|
|
|
Additional financial highlights
CAE incurred
restructuring, integration and acquisition costs of $37.9 million during the second quarter of fiscal
2024 relating mainly to the acquisitions of Sabre's AirCentre
airline operations portfolio and the L3Harris Technologies'
Military Training business.
Net cash provided by operating activities was $180.2 million for the quarter, compared to
$138.0 million in the second quarter
last year. Free cash flow(1) was $147.5 million for the quarter compared to
$108.4 million in the second
quarter last year. The increase was mainly due to a higher
contribution from non-cash working capital, partially offset by
lower cash provided by operating activities.
Income tax recovery this quarter amounted to $8.5 million, representing an effective tax rate
of negative 16%, compared to an effective tax rate of 24% for the
second quarter last year. The adjusted effective tax
rate(1), which is the income tax rate used to determine
adjusted net income and adjusted EPS, was nil this quarter as
compared to 24% in the second quarter of last year. The decrease in
the adjusted effective tax rate was mainly attributable to the
recognition of previously unrecognized deferred tax assets, which
had an approximate $0.05 positive EPS
impact this quarter.
Growth and maintenance capital expenditures(1)
totaled $61.9 million this
quarter.
Net debt(1) at the end of the quarter was
$3,184.5 million for a net
debt-to-adjusted EBITDA(1) of 3.16 times. This compares
to net debt of $3,166.4 million and a
net debt-to-adjusted EBITDA of 3.22 times at the end of the
preceding quarter.
Net finance expense this quarter amounted to $48.0 million, compared to $54.1 million in the preceding quarter and
$41.3 million in the second quarter
last year.
Adjusted return on capital employed(1) was 7.0% this
quarter compared to 6.6% last quarter and 5.1% in the second
quarter last year.
(1) This
press release includes non-IFRS financial measures, non-IFRS
ratios, capital management measures and supplementary financial
measures. These measures are not standardized financial measures
prescribed under IFRS and therefore should not be confused with, or
used as an alternative for, performance measures calculated
according to IFRS. Furthermore, these measures should not be
compared with similarly titled measures provided or used by other
issuers. Refer to the Non-IFRS and other financial measures
section of this press release for the definitions and a
reconciliation of these measures to the most directly comparable
measure under IFRS.
|
Environmental, Social, and Governance (ESG)
During the
quarter, CAE completed its first Ecovadis assessment. Ecovadis is
one of the leading business sustainability rating providers, used
by leading aerospace and defence OEMs and focuses on assessing the
depth and breadth of sustainability integration into a business'
processes and supply chain. This rating will strengthen CAE's
position to pursue future business opportunities and is further
testament to the maturity of its sustainability commitment and role
as a sustainability leader in its industry. CAE also proudly
launched its Crystal Excellence Award supplier recognition program.
This initiative acknowledged four deserving supplier laureates who
exemplify operational excellence and commitment to supporting CAE
on its decarbonization journey. In addition, CAE released its very
first Gender Equality report, showing its dedication to fostering
diversity and inclusivity within its organization and beyond.
Finally, CAE raised approximately $1.3
million in its 2023 CAE-Centraide (United Way) fundraising
campaign through employee donations, fundraising activities, and a
corporate donation, in collaboration with Unifor. CAE and its
employees are extremely proud to be an integral part of the fabric
of Greater Montreal.
For more information on how CAE supports the aviation industry's
decarbonization journey and contributes to a more sustainable
future for all, the report can be downloaded at
https://www.cae.com/social-responsibility/.
Management outlook updated
CAE is pursuing a growth
strategy to become a bigger, stronger, and more profitable company.
Through accretive growth capital deployments and strong execution,
its Civil segment, the largest within CAE, continues to experience
strong growth momentum. Management continues to target a three-year
(FY22-FY25) EPS compound growth rate in the mid-20% range and
expects this to be driven by the ongoing strong Civil performance
and the multi-year transformation underway in Defense. The
realization of CAE's strategic growth objectives is expected to
result in a significantly larger base of business and a capital
structure that affords flexibility to balance further investments
in its future alongside capital returns for shareholders.
Management has a highly positive view of its growth potential
over a multi-year period, underpinned by favourable secular trends
across business segments. Greater desire by airlines to entrust CAE
with their critical training and digital operational support and
crew management needs, and higher expected pilot training demand in
commercial and business aviation are enduring positives for the
Civil business. Management believes the defence sector is in the
early stages of an extended up-cycle, driven by an increased focus
on near-peer threats, greater commitments by governments to defence
modernization and readiness in context of geopolitical events, and
a need for the kinds of digital immersion-based synthetic solutions
that draw from CAE's expertise in commercial aviation simulation
and training.
The Company expects Civil to continue growing at an above market
rate, driven by growth and recovery in air travel, increased
penetration of the existing addressable market for training and
flight services solutions, and a sustained high level of demand for
pilots and pilot training across all segments of civil aviation. In
fiscal 2024, management previously indicated an expectation for
low- to mid-teen percentage annual growth in Civil adjusted segment
operating income. Management now expects even higher growth this
year in the mid-to high-teens percentage range. Civil's expected
annual adjusted segment operating income margin percentage
continues to be in the range of fiscal 2023, as a function of a mix
of higher training and customer FFS delivery volumes and the
ongoing simulator deployments and expansions of CAE's global
training network. CAE's Civil business is experiencing a more
pronounced seasonal pattern in fiscal 2024, with performance
weighted to the second half of the year, and mostly to the fourth
quarter. In addition to continuing to grow its share of the
aviation training market and expanding its position in digital
flight services, Civil expects to maintain its leading share of FFS
sales and to deliver approximately 50 FFSs for the year to
customers worldwide, approximately half of which are slated for the
fourth quarter.
CAE's Defense segment is in the process of a multi-year
transformation, which is expected to yield a substantially bigger
and more profitable business. Defense has already become the
world's leading pure-play, platform independent, training and
simulation business, providing solutions across all five domains.
It is uniquely positioned to draw on CAE's industry-leading
training solutions in commercial aviation, and to revolutionize
training with the application of advanced analytics and
leading-edge technologies. This is expected to bring increased
potential to capture business around the world, accelerated by an
expanded capability and customer set. Defense's recent strategic
program wins, record $5.9 billion
adjusted backlog and $9.5 billion
pipeline of bids and proposals outstanding demonstrate that its
transformation strategy is bearing fruit. Over the long-term, CAE
continues to expect superior Defense growth to be driven by the
translation of its bid activity into higher-margin order intake and
execution of contracts with sustainably higher profits.
In fiscal 2024, Defense expects to continue
replenishing its backlog with larger and more profitable programs,
ramp up recently awarded contracts, and make progress concluding
its lower-margin legacy contracts. Inflationary pressures on legacy
contracts, while finite, remain the most significant factor
contributing to the current suboptimal margin performance of the
business. In addition, the prevailing U.S. government budget
appropriation uncertainty is delaying the ramp up of certain newer
and higher margin Defense programs in backlog and the conversion of
bid pipeline to orders previously expected in the fiscal year. The
cost headwinds on remaining legacy contracts, in combination with
program funding and award delays, are impacting the timing of the
anticipated positive inflection in Defense margins. Management now
expects second-half Defense adjusted segment operating income
margins to remain in the mid-single-digit percentage range. The
anticipated positive inflection in Defense performance is expected
to occur during the next fiscal year, but will ultimately depend on
the duration and magnitude of delays to new programs in the current
environment. Management continues to be highly focused on
execution and the retirement of legacy programs and mitigating the
finite cost pressures associated with them. Although it will
require some additional time to reach a positive inflection in
Defense performance, the trendlines are moving in the right
direction and the necessary factors exist to support Management's
targeted low double-digit percentage steady-state margins in
Defense.
Total capital expenditures in fiscal 2024 are
expected to be approximately $50
million higher than last fiscal year, mainly in support of a
higher amount of market-led, accretive organic investments
involving Civil aviation training network expansion, simulator
deployments, and customer training outsourcings. The Company
usually sees a higher investment in non-cash working capital
accounts in the first half of the fiscal year, and as in previous
years, management expects a portion of the non-cash working capital
investment to reverse in the second half. The Company continues to
target a 100% conversion of adjusted net income to free cash flow
for the year. The Company expects to apply a significant portion of
the net proceeds from the sale of its Healthcare division to reduce
debt. The transaction is expected to close before the end of the
current fiscal year, subject to closing conditions, including
customary regulatory approvals. Management remains focused on
making organic investments in lockstep with customer demand,
integrating and ramping up recent investments and continuing to
deleverage its balance sheet. With leverage having decreased to a
waypoint ratio of approximately three times (3x) net debt to
adjusted EBITDA, CAE is now considering reinstating
capital returns to shareholders, following the closing of its
Healthcare sale transaction. Management will continue to prioritize
a balanced approach to capital allocation, including funding
accretive growth, further strengthening its financial position, and
returning capital to shareholders. CAE expects its average adjusted
effective income tax rate for the remainder of the fiscal year to
be approximately 22%.
Management's outlook for fiscal 2024 and the above targets and
expectations constitute forward-looking statements within the
meaning of applicable securities laws, and are based on a number of
assumptions, including in relation to prevailing market conditions,
macroeconomic and geopolitical factors, supply chains and labor
markets. As the basis of its fiscal 2024 outlook, management
assumes no further disruptions to the global economy, air traffic,
CAE's operations, and its ability to deliver products and services.
Expectations are also subject to a number of risks and
uncertainties and based on assumptions about customer receptivity
to CAE's training solutions and operational support solutions as
well as material assumptions contained in this press release,
quarterly Management's Discussion and Analysis (MD&A) and in
CAE's fiscal 2023 MD&A, all available on our website
(www.cae.com), SEDAR+ (www.SEDARplus.ca) and EDGAR (www.sec.gov).
Please see the sections below entitled: "Caution concerning
forward-looking statements", "Material assumptions" and
"Material risks".
Detailed information
Readers are strongly advised to
view a more detailed discussion of our results by segment in the
MD&A and CAE's consolidated financial statements for the
quarter ended September 30, 2023,
which are available on our website (www.cae.com), SEDAR+
(www.SEDARplus.ca) and EDGAR (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 FY2024
Marc Parent, CAE President and CEO; Sonya Branco, Executive Vice President, Finance,
and CFO; and Andrew Arnovitz, Senior
Vice President, Investor Relations and Enterprise Risk Management,
will conduct an earnings conference call today at 2:00 p.m. ET. The call is intended for analysts,
institutional investors and the media. Participants can listen to
the conference by dialing + 1 877 586 3392 or +1 416 981 9024. The
conference call will also be audio webcast live at www.cae.com.
At CAE, we equip people in critical roles with the expertise and
solutions to create a safer world. As a technology company, we
digitalize the physical world, deploying software-based simulation
training and critical operations support solutions. Above all else,
we empower pilots, cabin crew, airlines, defence and security
forces and healthcare practitioners to perform at their best every
day and when the stakes are the highest. Around the globe, we're
everywhere customers need us to be with more than 13,000 employees
in approximately 250 sites and training locations in over 40
countries. CAE represents more than 75 years of industry firsts—the
highest-fidelity flight, mission and medical simulators and
training programs powered by digital technologies. We embed
sustainability in everything we do. Today and tomorrow, we'll make
sure our customers are ready for the moments that matter.
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
This
press release includes forward-looking statements about our
activities, events and developments that we expect to or anticipate
may occur in the future including, for example, statements about
our vision, strategies, market trends and outlook, future revenues,
earnings, cash flow growth, profit trends, growth capital spending,
expansions and new initiatives, including initiatives that pertain
to ESG matters, financial obligations, available liquidities,
expected sales, general economic and political outlook, inflation
trends, prospects and trends of an industry, expected annual
recurring cost savings from operational excellence programs, our
management of the supply chain, estimated addressable markets,
demands for CAE's products and services, our access to capital
resources, our financial position, the expected accretion in
various financial metrics, the expected capital returns to
shareholders, the sale of our Healthcare business (the Sale
Transaction), the anticipated benefits and expected impacts
therefrom on CAE's strategic and operational plans and financial
results, the expected terms, conditions (including receipt of
necessary regulatory approvals) and completion of the Sale
Transaction, the anticipated cash consideration therefrom and the
timing for completion thereof, our business outlook, business
opportunities, objectives, development, plans, growth strategies
and other strategic priorities, and our competitive and leadership
position in our markets, the expansion of our market shares, CAE's
ability and preparedness to respond to demand for new technologies,
the sustainability of our operations and other statements that are
not historical facts.
Since forward-looking statements and information relate to
future events or future performance and reflect current
expectations or beliefs regarding future events, they are typically
identified by words such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "likely", "may", "plan", "seek",
"should", "will", "strategy", "future" or the negative thereof or
other variations thereon suggesting future outcomes or statements
regarding an outlook. All such statements constitute
"forward-looking statements" within the meaning of applicable
Canadian securities legislation and "forward-looking statements"
within the meaning of the "safe harbor" provisions 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 14, 2023, 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. In addition, statements that "we
believe" and similar statements reflect our beliefs and opinions on
the relevant subject. These statements are based on information
available to us as of the date of this press release. While we
believe that information provides a reasonable basis for these
statements, that information may be limited or incomplete. Our
statements should not be read to indicate that we have conducted an
exhaustive inquiry into, or review of, all relevant information.
These statements are inherently uncertain, and investors are
cautioned not to unduly rely on these statements. 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 14, 2023.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 2024 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.
Material assumptions
The forward-looking statements
set out in this press release are based on certain assumptions
including, without limitation: the prevailing market conditions,
geopolitical instability, the customer receptivity to our training
and operational support solutions, the accuracy of our estimates of
addressable markets and market opportunity, the realization of
anticipated annual recurring cost savings and other intended
benefits from restructuring initiatives and operational excellence
programs, the ability to respond to anticipated inflationary
pressures and our ability to pass along rising costs through
increased prices, the actual impact to supply, production levels,
and costs from global supply chain logistics challenges, the
stability of foreign exchange rates, the ability to hedge exposures
to fluctuations in interest rates and foreign exchange rates, the
availability of borrowings to be drawn down under, and the
utilization, of one or more of our senior credit agreements, our
available liquidity from cash and cash equivalents, undrawn amounts
on our revolving credit facility, the balance available under our
receivable purchase facility, the assumption that our cash flows
from operations and continued access to debt funding will be
sufficient to meet financial requirements in the foreseeable
future, access to expected capital resources within anticipated
timeframes, no material financial, operational or competitive
consequences from changes in regulations affecting our business,
our ability to retain and attract new business, our ability to
achieve synergies and maintain market position arising from
successful integration plans relating to the L3H MT and AirCentre
acquisitions, our ability to otherwise complete the integration of
the L3H MT and AirCentre businesses acquired within anticipated
time periods and at expected cost levels, our ability to attract
and retain key employees in connection with the L3H MT and
AirCentre acquisitions, management's estimates and expectations in
relation to future economic and business conditions and other
factors in relation to the L3H MT and AirCentre acquisitions and
resulting impact on growth and accretion in various financial
metrics, the realization of the expected strategic, financial and
other benefits of the L3H MT and AirCentre acquisitions in the
timeframe anticipated, economic and political environments and
industry conditions, the accuracy and completeness of public and
other disclosure, including financial disclosure, by L3Harris
Technologies and AirCentre, the absence of significant undisclosed
costs or liabilities associated with the L3H MT and AirCentre
acquisitions, the satisfaction of all closing conditions of the
Sale Transaction, including receipt of all necessary regulatory
approvals and other consents and approvals in a timely manner and
on terms acceptable to CAE, our ability to otherwise complete the
Sale Transaction within anticipated time periods and at expected
cost levels, management's estimates and expectations in relation to
future economic and business conditions and other factors in
relation to the Sale Transaction, the realization of the expected
strategic, financial and other benefits of the Sale Transaction in
the timeframe anticipated (including receipt of expected proceeds
and intended use thereof), and fulfillment by the other parties of
their respective obligations, commitments and undertakings pursuant
to the Sale Transaction documentation. Air travel is a major driver
for CAE's business and management relies on analysis from the
International Air Transport Association (IATA) to inform its
assumptions about the rate and profile of recovery in its key civil
aviation market. Accordingly, the assumptions outlined in this
press release and, consequently, the forward‑looking statements
based on such assumptions, may turn out to be inaccurate.
Material risks
Important risks that could cause actual
results or events to differ materially from those expressed in or
implied by our forward-looking statements are set out in CAE's
MD&A for the fiscal year ended March 31,
2023, available on our website (www.cae.com), SEDAR+
(www.SEDARplus.ca) and EDGAR (www.sec.gov). 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-IFRS and other financial measures
This press
release includes non-IFRS financial measures, non-IFRS ratios,
capital management measures and supplementary financial measures.
These measures are not standardized financial measures prescribed
under IFRS and therefore should not be confused with, or used as an
alternative for, performance measures calculated according to IFRS.
Furthermore, these measures should not be compared with similarly
titled measures provided or used by other issuers. Management
believes that these measures provide additional insight into our
operating performance and trends and facilitate comparisons across
reporting periods.
Certain non-IFRS and other financial measures are provided on a
consolidated basis and separately for each of our segments (Civil
Aviation, Defense and Security and Healthcare) since we analyze
their results and performance separately.
Reconciliations and calculations of non-IFRS measures to the
most directly comparable measures under IFRS are also set forth
below in the section Reconciliations and Calculations of
this press release.
Performance measures
Operating income margin (or
operating income as a % of revenue)
Operating income margin
is a supplementary financial measure calculated by dividing our
operating income by revenue for a given period. We track it because
we believe it provides an enhanced understanding of our operating
performance and facilitates the comparison across reporting
periods.
Adjusted segment operating income or loss
Adjusted
segment operating income or loss is a non-IFRS financial measure
that 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
adjusted segment operating income by taking operating income and
adjusting for restructuring, integration and acquisition costs, and
impairments and other gains and losses arising from significant
strategic transactions or specific events. Impairments and other
gains and losses arising from significant strategic transactions or
specific events consist of the impairment reversal of non-financial
assets following their repurposing and optimization (as described
in Note 5 of our consolidated financial statements for the year
ended March 31, 2023) and cloud
computing transition adjustment (as described in Note 5 of our
consolidated financial statements for the year ended March 31, 2022). We track adjusted segment
operating income because we believe it provides an enhanced
understanding of our operating performance and facilitates the
comparison across reporting periods. Adjusted segment operating
income on a consolidated basis is a total of segments measure since
it is the profitability measure employed by management for making
decisions about allocating resources to segments and assessing
segment performance.
Adjusted segment operating income margin (or adjusted segment
operating income as a % of revenue)
Adjusted segment
operating income margin is a non-IFRS ratio calculated by dividing
our adjusted segment operating income by revenue for a given
period. We track it because we believe it provides an enhanced
understanding of our operating performance and facilitates the
comparison across reporting periods.
Adjusted effective tax rate
Adjusted effective tax
rate is a supplementary financial measure that represents the
effective tax rate on adjusted income. It is calculated by dividing
our income tax expense by our earnings before income taxes,
adjusting for the same items used to determine adjusted net income.
We track it because we believe it provides an enhanced
understanding of the impact of changes in income tax rates and the
mix of income on our operating performance and facilitates the
comparison across reporting periods.
Adjusted net income or loss
Adjusted net income or
loss is a non-IFRS financial 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 adjusting for restructuring, integration and
acquisition costs, and impairments and other gains and losses
arising from significant strategic transactions or specific events,
after tax, as well as significant one-time tax items. Impairments
and other gains and losses arising from significant strategic
transactions or specific events consist of the impairment reversal
of non-financial assets following their repurposing and
optimization (as described in Note 5 of our consolidated financial
statements for the year ended March 31,
2023) and cloud computing transition adjustment (as
described in Note 5 of our consolidated financial statements for
the year ended March 31, 2022). We
track adjusted net income because we believe it provides an
enhanced understanding of our operating performance and facilitates
the comparison across reporting periods.
Adjusted earnings or loss per share (EPS)
Adjusted
earnings or loss per share is a non-IFRS ratio calculated by
dividing adjusted net income or loss by the weighted average number
of diluted shares. We track it because we believe it provides an
enhanced understanding of our operating performance on a per share
basis and facilitates the comparison across reporting periods.
EBITDA and Adjusted EBITDA
EBITDA is a non-IFRS
financial measure which comprises net income or loss before income
taxes, finance expense – net, depreciation and amortization.
Adjusted EBITDA further adjusts for restructuring, integration and
acquisition costs, and impairments and other gains and losses
arising from significant strategic transactions or specific events.
Impairments and other gains and losses arising from significant
strategic transactions or specific events consist of the impairment
reversal of non-financial assets following their repurposing and
optimization (as described in Note 5 of our consolidated financial
statements for the year ended March 31,
2023) and cloud computing transition adjustment (as
described in Note 5 of our consolidated financial statements for
the year ended March 31, 2022). We
use EBITDA and adjusted EBITDA to evaluate our operating
performance, by eliminating the impact of non-operational or
non-cash items.
Free cash flow
Free cash flow is a non-IFRS financial
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, changes in enterprise resource planning (ERP)
and 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.
Liquidity and Capital Structure measures
Return on
capital employed (ROCE) and adjusted ROCE
ROCE is a non-IFRS
ratio calculated over a rolling four-quarter period by taking net
income attributable to equity holders of the Company adjusting for
net finance expense, after tax, divided by the average capital
employed. Adjusted ROCE further adjusts for restructuring,
integration and acquisition costs, and impairments and other gains
and losses arising from significant strategic transactions or
specific events. Impairments and other gains and losses arising
from significant strategic transactions or specific events consist
of the impairment reversal of non-financial assets following their
repurposing and optimization (as described in Note 5 of our
consolidated financial statements for the year ended March 31, 2023) and cloud computing transition
adjustment (as described in Note 5 of our consolidated financial
statements for the year ended March 31,
2022). We use ROCE and adjusted ROCE to evaluate the
profitability of our invested capital.
Net debt
Net debt is a capital management 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.
Net debt-to-adjusted EBITDA
Net debt-to-adjusted
EBITDA is a non-IFRS ratio calculated as net debt divided by the
last twelve months adjusted EBITDA. We use it because it reflects
our ability to service our debt obligations.
Maintenance and growth capital
expenditures
Maintenance capital expenditure is a
supplementary financial measure we use to calculate the investment
needed to sustain the current level of economic activity. Growth
capital expenditure is a supplementary financial measure we use to
calculate the investment needed to increase the current level of
economic activity. The sum of maintenance capital expenditures and
growth capital expenditures represents our total property, plant
and equipment expenditures.
Growth measures
Adjusted order
intake
Adjusted order intake is a supplementary financial
measure that represents the expected value of orders we have
received:
- For the Civil Aviation segment, we consider an item part of our
adjusted 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 Defense and Security segment, we consider an item part
of our adjusted 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.
Defense 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 adjusted order
intake when the customer has authorized the contract item and has
received funding for it;
- For the Healthcare segment, adjusted order intake is typically
converted into revenue within one year, therefore we assume that
adjusted order intake is equal to revenue.
Adjusted backlog
Adjusted backlog is a supplementary
financial 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 adjusted order
intake not yet executed and is calculated by adding the adjusted
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 legally binding Defense and
Security orders with the U.S. government that we have received but
have not yet executed and for which funding authorization has not
yet been obtained. The uncertainty relates to the timing of the
funding authorization, which is influenced by the government's
budget cycle, based on a September year-end. Options are included
in adjusted backlog when there is a high probability of being
exercised, which we define as at least 80% probable, but
multi-award indefinite-delivery/indefinite-quantity (ID/IQ)
contracts are excluded. When an option is exercised, it is
considered adjusted order intake in that period, and it is removed
from unfunded backlog and options.
Book-to-sales ratio
The book-to-sales ratio is a
supplementary financial measure calculated by dividing adjusted
order intake by revenue in a given period. We use it to monitor the
level of future growth of the business over time.
Supplementary non-financial information
definitions
Full-flight simulators (FFSs) in CAE's
network
A FFS is a full-size replica of a specific make,
model and series of an aircraft cockpit, including a motion system.
In our count of FFSs in the network, we generally only include FFSs
that are of the highest fidelity and do not include any fixed based
training devices, or other lower-level devices, as these are
typically used in addition to FFSs in the same approved training
programs.
Simulator equivalent unit (SEU)
SEU is a measure we
use to show the total average number of FFSs available to generate
earnings during the period. For example, in the case of a 50/50
flight training joint venture, we will report only 50% of the FFSs
under this joint venture as a SEU. If a FFS is being powered down
and relocated, it will not be included as a SEU until the FFS is
re-installed and available to generate earnings.
Utilization rate
Utilization rate is a measure 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.
Reconciliations and Calculations
Reconciliation of
adjusted segment operating income (loss)
|
|
Defense
|
|
|
|
|
(amounts in millions)
|
Civil
Aviation
|
and
Security
|
Healthcare
|
|
Total
|
Three months ended September 30
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
Operating
income
|
$
88.4
|
$
88.4
|
$ 9.3
|
$
12.1
|
$ 2.9
|
$ 1.6
|
$
100.6
|
$
102.1
|
Restructuring,
integration and acquisition costs
|
25.9
|
16.0
|
12.0
|
6.3
|
—
|
0.3
|
37.9
|
22.6
|
Adjusted segment
operating income
|
$
114.3
|
$
104.4
|
$
21.3
|
$
18.4
|
$ 2.9
|
$ 1.9
|
$
138.5
|
$
124.7
|
Reconciliation of adjusted net income and adjusted
EPS
|
|
|
|
|
Three months ended
|
|
|
|
September 30
|
(amounts in millions, except per share
amounts)
|
|
|
|
|
2023
|
|
2022
|
Net income attributable
to equity holders of the Company
|
|
$
58.4
|
|
$
44.5
|
Restructuring,
integration and acquisition costs, after tax
|
|
|
|
|
29.0
|
|
17.0
|
Adjusted net
income
|
|
|
|
|
$
87.4
|
|
$
61.5
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding (diluted)
|
|
|
|
|
319.2
|
|
318.4
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
|
|
|
$
0.27
|
|
$
0.19
|
Calculation of adjusted effective tax rate
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
September 30
|
(amounts in millions, except effective tax
rates)
|
|
|
|
|
|
|
2023
|
|
2022
|
Earnings before income
taxes
|
|
|
|
|
|
|
$
52.6
|
|
$
60.8
|
Restructuring,
integration and acquisition costs
|
|
|
|
|
|
|
37.9
|
|
22.6
|
Adjusted earnings
before income taxes
|
|
|
|
|
|
|
$
90.5
|
|
$
83.4
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
|
|
|
|
|
|
(8.5)
|
|
14.5
|
Tax impact on
restructuring, integration and acquisition costs
|
|
|
|
|
|
|
8.9
|
|
5.6
|
Adjusted income tax
expense
|
|
|
|
|
|
|
$ 0.4
|
|
$
20.1
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
|
|
|
|
(16 %)
|
|
24 %
|
Adjusted effective tax
rate
|
|
|
|
|
|
|
— %
|
|
24 %
|
Reconciliation of free cash flow
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
September 30
|
(amounts in millions)
|
|
|
|
|
|
|
|
2023
|
|
2022
|
Cash provided by
operating activities*
|
|
|
|
|
|
|
|
$
113.1
|
|
$ 138.0
|
Changes in non-cash
working capital
|
|
|
|
|
|
|
|
67.1
|
|
—
|
Net cash provided by
operating activities
|
|
|
|
|
|
$
180.2
|
|
$ 138.0
|
Maintenance capital
expenditures
|
|
|
|
|
|
|
|
(22.9)
|
|
(15.0)
|
Change in ERP and other
assets
|
|
|
|
|
|
(7.6)
|
|
(5.5)
|
Proceeds from the
disposal of property, plant and equipment
|
|
|
|
|
|
0.2
|
|
0.5
|
Net payments to equity
accounted investees
|
|
|
|
|
|
(12.9)
|
|
(9.6)
|
Dividends received from
equity accounted investees
|
|
|
|
|
|
|
|
10.5
|
|
—
|
Free cash
flow
|
|
|
|
|
|
|
|
$
147.5
|
|
$ 108.4
|
* before changes in
non-cash working capital
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDA, adjusted EBITDA, net debt-to-EBITDA
and net debt-to-adjusted EBITDA
|
|
|
Last twelve months ended
|
|
|
|
September 30
|
(amounts in millions, except net debt-to-EBITDA
ratios)
|
|
|
|
|
2023
|
|
2022
|
Operating
income
|
|
|
|
|
$
563.2
|
|
$ 300.3
|
Depreciation and
amortization
|
|
|
|
|
361.0
|
|
325.3
|
EBITDA
|
|
|
|
|
$
924.2
|
|
$ 625.6
|
Restructuring,
integration and acquisition costs
|
|
|
|
|
73.1
|
|
127.3
|
Impairments and other
gains and losses arising from
|
|
|
|
|
|
|
|
significant strategic
transactions or specific events:
|
|
|
|
|
|
|
|
Impairment reversal of
non-financial assets
|
|
|
|
|
|
|
|
following their
repurposing and optimization
|
|
|
|
|
9.8
|
|
—
|
Cloud computing
transition adjustment
|
|
|
|
|
—
|
|
13.4
|
Adjusted
EBITDA
|
|
|
$
1,007.1
|
|
$ 766.3
|
|
|
|
|
|
|
|
|
Net debt
|
|
|
|
|
$
3,184.5
|
|
$
3,194.6
|
|
|
|
|
|
|
|
|
Net
debt-to-EBITDA
|
|
|
|
|
3.45
|
|
5.11
|
Net debt-to-adjusted
EBITDA
|
|
|
|
|
3.16
|
|
4.17
|
Reconciliation of capital employed and net debt
|
|
|
As at September 30
|
As at March
31
|
(amounts in millions)
|
|
|
|
2023
|
|
2023
|
Use of capital:
|
|
|
|
|
|
|
Current
assets
|
|
|
$
|
2,280.9
|
$
|
2,235.0
|
Less: cash and cash
equivalents
|
|
|
|
(181.5)
|
|
(217.6)
|
Current
liabilities
|
|
|
|
(2,424.3)
|
|
(2,246.7)
|
Less: current portion
of long-term debt
|
|
|
|
424.7
|
|
214.6
|
Non-cash working
capital
|
|
|
$
|
99.8
|
$
|
(14.7)
|
Property, plant and
equipment
|
|
|
|
2,445.0
|
|
2,387.1
|
Intangible
assets
|
|
|
|
4,046.7
|
|
4,050.8
|
Other long-term
assets
|
|
|
|
1,792.7
|
|
1,763.6
|
Other long-term
liabilities
|
|
|
|
(483.8)
|
|
(565.4)
|
Capital
employed
|
|
|
$
|
7,900.4
|
$
|
7,621.4
|
Source of capital:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
|
$
|
424.7
|
$
|
214.6
|
Long-term
debt
|
|
|
|
2,941.3
|
|
3,035.5
|
Less: cash and cash
equivalents
|
|
|
|
(181.5)
|
|
(217.6)
|
Net debt
|
|
|
$
|
3,184.5
|
$
|
3,032.5
|
Equity attributable to
equity holders of the Company
|
|
|
|
4,632.9
|
|
4,507.7
|
Non-controlling
interests
|
|
|
|
83.0
|
|
81.2
|
Capital
employed
|
|
|
$
|
7,900.4
|
$
|
7,621.4
|
For non-IFRS and other financial measures monitored by CAE, and
a reconciliation of such measures to the most directly comparable
measure under IFRS, please refer to Section 9 of CAE's MD&A for
the quarter ended September 30, 2023
(which is incorporated by reference into this press release)
available on our website (www.cae.com), SEDAR+ (www.SEDARplus.ca)
and EDGAR (www.sec.gov).
Consolidated Income Statement
(Unaudited)
|
|
|
Three months
ended
September
30
|
|
Six months
ended
September
30
|
(amounts in millions
of Canadian dollars, except per share amounts)
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
|
$
|
1,088.5
|
$
|
993.2
|
$
|
2,142.9
|
$
|
1,926.5
|
Cost of
sales
|
|
|
785.4
|
|
719.6
|
|
1,533.9
|
|
1,420.0
|
Gross
profit
|
|
$
|
303.1
|
$
|
273.6
|
$
|
609.0
|
$
|
506.5
|
Research and
development expenses
|
|
|
34.6
|
|
32.2
|
|
73.7
|
|
72.9
|
Selling, general and
administrative expenses
|
|
|
148.2
|
|
128.0
|
|
287.9
|
|
273.1
|
Other (gains) and
losses
|
|
|
(3.9)
|
|
(3.2)
|
|
(5.3)
|
|
(5.6)
|
Share of after-tax
profit of equity accounted investees
|
|
|
(14.3)
|
|
(8.1)
|
|
(30.9)
|
|
(19.5)
|
Restructuring,
integration and acquisition costs
|
|
|
37.9
|
|
22.6
|
|
52.9
|
|
44.1
|
Operating
income
|
|
$
|
100.6
|
$
|
102.1
|
$
|
230.7
|
$
|
141.5
|
Finance expense –
net
|
|
|
48.0
|
|
41.3
|
|
102.1
|
|
77.5
|
Earnings before
income taxes
|
|
$
|
52.6
|
$
|
60.8
|
$
|
128.6
|
$
|
64.0
|
Income tax (recovery)
expense
|
|
|
(8.5)
|
|
14.5
|
|
(0.3)
|
|
14.0
|
Net
income
|
|
$
|
61.1
|
$
|
46.3
|
$
|
128.9
|
$
|
50.0
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
|
$
|
58.4
|
$
|
44.5
|
$
|
123.7
|
$
|
46.2
|
Non-controlling
interests
|
|
|
2.7
|
|
1.8
|
|
5.2
|
|
3.8
|
Earnings per share
attributable to equity holders of the Company
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.18
|
$
|
0.14
|
$
|
0.39
|
$
|
0.15
|
Consolidated Statement of Comprehensive Income
(Unaudited)
|
|
|
Three months
ended
September
30
|
|
Six months
ended
September
30
|
(amounts in millions
of Canadian dollars)
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
income
|
|
$
|
61.1
|
$
|
46.3
|
$
|
128.9
|
$
|
50.0
|
Items that may be
reclassified to net income
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange differences on translation of foreign
operations
|
|
$
|
71.7
|
$
|
235.6
|
$
|
(26.1)
|
$
|
291.9
|
Net loss on hedges of
net investment in foreign operations
|
|
|
(29.1)
|
|
(99.7)
|
|
(1.6)
|
|
(143.3)
|
Reclassification to
income of gains on foreign currency exchange differences
|
|
|
—
|
|
(2.2)
|
|
(0.1)
|
|
(2.4)
|
Net loss on cash flow
hedges
|
|
|
(14.3)
|
|
(13.8)
|
|
(0.9)
|
|
(5.5)
|
Reclassification to
income of losses (gains) on cash flow hedges
|
|
|
2.5
|
|
(5.1)
|
|
3.1
|
|
(21.0)
|
Income
taxes
|
|
|
3.3
|
|
8.9
|
|
(4.0)
|
|
12.4
|
|
|
$
|
34.1
|
$
|
123.7
|
$
|
(29.6)
|
$
|
132.1
|
Items that will
never be reclassified to net income
|
|
|
|
|
|
|
|
|
|
Remeasurement of
defined benefit pension plan obligations
|
|
$
|
33.4
|
$
|
(15.2)
|
$
|
12.0
|
$
|
46.9
|
Income
taxes
|
|
|
(8.9)
|
|
4.0
|
|
(3.2)
|
|
(12.5)
|
|
|
$
|
24.5
|
$
|
(11.2)
|
$
|
8.8
|
$
|
34.4
|
Other comprehensive
income (loss)
|
|
$
|
58.6
|
$
|
112.5
|
$
|
(20.8)
|
$
|
166.5
|
Total comprehensive
income
|
|
$
|
119.7
|
$
|
158.8
|
$
|
108.1
|
$
|
216.5
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
|
$
|
116.0
|
$
|
154.3
|
$
|
103.2
|
$
|
209.2
|
Non-controlling
interests
|
|
|
3.7
|
|
4.5
|
|
4.9
|
|
7.3
|
Consolidated Statement of Financial Position
(Unaudited)
|
September
30
|
March 31
|
(amounts in millions
of Canadian dollars)
|
|
|
2023
|
2023
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
181.5
|
$
|
217.6
|
Accounts
receivable
|
|
|
656.9
|
|
615.7
|
Contract
assets
|
|
|
650.7
|
|
693.8
|
Inventories
|
|
|
655.8
|
|
583.4
|
Prepayments
|
|
|
75.8
|
|
64.1
|
Income taxes
recoverable
|
|
|
46.2
|
|
48.3
|
Derivative financial
assets
|
|
|
14.0
|
|
12.1
|
Total current
assets
|
|
$
|
2,280.9
|
$
|
2,235.0
|
Property, plant and
equipment
|
|
|
2,445.0
|
|
2,387.1
|
Right-of-use
assets
|
|
|
443.6
|
|
426.9
|
Intangible
assets
|
|
|
4,046.7
|
|
4,050.8
|
Investment in equity
accounted investees
|
|
|
554.7
|
|
530.7
|
Employee benefits
assets
|
|
|
59.1
|
|
51.1
|
Deferred tax
assets
|
|
|
159.1
|
|
125.1
|
Derivative financial
assets
|
|
|
6.9
|
|
9.2
|
Other non-current
assets
|
|
|
569.3
|
|
620.6
|
Total
assets
|
|
$
|
10,565.3
|
$
|
10,436.5
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
997.5
|
$
|
1,036.7
|
Provisions
|
|
|
24.4
|
|
26.7
|
Income taxes
payable
|
|
|
21.9
|
|
21.1
|
Contract
liabilities
|
|
|
932.0
|
|
905.7
|
Current portion of
long-term debt
|
|
|
424.7
|
|
214.6
|
Derivative financial
liabilities
|
|
|
23.8
|
|
41.9
|
Total current
liabilities
|
|
$
|
2,424.3
|
$
|
2,246.7
|
Provisions
|
|
|
18.1
|
|
20.1
|
Long-term
debt
|
|
|
2,941.3
|
|
3,035.5
|
Royalty
obligations
|
|
|
110.8
|
|
119.4
|
Employee benefits
obligations
|
|
|
89.9
|
|
91.9
|
Deferred tax
liabilities
|
|
|
77.6
|
|
129.3
|
Derivative financial
liabilities
|
|
|
10.9
|
|
6.5
|
Other non-current
liabilities
|
|
|
176.5
|
|
198.2
|
Total
liabilities
|
|
$
|
5,849.4
|
$
|
5,847.6
|
Equity
|
|
|
|
|
|
Share
capital
|
|
$
|
2,251.8
|
$
|
2,243.6
|
Contributed
surplus
|
|
|
55.9
|
|
42.1
|
Accumulated other
comprehensive income
|
|
|
137.9
|
|
167.2
|
Retained
earnings
|
|
|
2,187.3
|
|
2,054.8
|
Equity attributable to
equity holders of the Company
|
|
$
|
4,632.9
|
$
|
4,507.7
|
Non-controlling
interests
|
|
|
83.0
|
|
81.2
|
Total
equity
|
|
$
|
4,715.9
|
$
|
4,588.9
|
Total liabilities
and equity
|
|
$
|
10,565.3
|
$
|
10,436.5
|
Consolidated Statement of Changes in Equity
(Unaudited)
|
|
Attributable to equity
holders of the Company
|
|
|
|
|
Six months ended
September 30, 2023
|
|
Common
shares
|
|
|
Accumulated
other
|
|
|
|
|
|
|
|
|
(amounts in millions
of Canadian dollars,
|
|
Number of
|
|
Stated
|
Contributed
|
comprehensive
|
Retained
|
|
|
Non-controlling
|
|
Total
|
except number of
shares)
|
|
shares
|
|
value
|
|
surplus
|
income
|
|
earnings
|
|
Total
|
|
interests
|
|
equity
|
Balances as at
March 31, 2023
|
|
317,906,290
|
$
|
2,243.6
|
$
|
42.1
|
$
|
167.2
|
$
|
2,054.8
|
$
|
4,507.7
|
$
|
81.2
|
$
|
4,588.9
|
Net income
|
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
123.7
|
$
|
123.7
|
$
|
5.2
|
$
|
128.9
|
Other comprehensive
(loss) income
|
|
—
|
|
—
|
|
—
|
|
(29.3)
|
|
8.8
|
|
(20.5)
|
|
(0.3)
|
|
(20.8)
|
Total comprehensive
(loss) income
|
|
—
|
$
|
—
|
$
|
—
|
$
|
(29.3)
|
$
|
132.5
|
$
|
103.2
|
$
|
4.9
|
$
|
108.1
|
Exercise of stock
options
|
|
364,268
|
|
8.2
|
|
(1.3)
|
|
—
|
|
—
|
|
6.9
|
|
—
|
|
6.9
|
Equity-settled
share-based payments expense
|
|
—
|
|
—
|
|
15.1
|
|
—
|
|
—
|
|
15.1
|
|
—
|
|
15.1
|
Transactions with
non-controlling interests
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3.1)
|
|
(3.1)
|
Balances as at
September 30, 2023
|
|
318,270,558
|
$
|
2,251.8
|
$
|
55.9
|
$
|
137.9
|
$
|
2,187.3
|
$
|
4,632.9
|
$
|
83.0
|
$
|
4,715.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity
holders of the Company
|
|
|
|
|
Six months ended
September 30, 2022
|
|
Common
shares
|
|
|
Accumulated
other
|
|
|
|
|
|
|
|
|
(amounts in millions
of Canadian dollars,
|
|
Number of
|
|
Stated
|
Contributed
|
comprehensive
|
Retained
|
|
|
Non-controlling
|
|
Total
|
except number of
shares)
|
|
shares
|
|
value
|
|
surplus
|
income
|
|
earnings
|
|
Total
|
|
interests
|
|
equity
|
Balances as at
March 31, 2022
|
|
317,024,123
|
$
|
2,224.7
|
$
|
38.6
|
$
|
(31.2)
|
$
|
1,777.6
|
$
|
4,009.7
|
$
|
76.9
|
$
|
4,086.6
|
Net income
|
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
46.2
|
$
|
46.2
|
$
|
3.8
|
$
|
50.0
|
Other comprehensive
income
|
|
—
|
|
—
|
|
—
|
|
128.6
|
|
34.4
|
|
163.0
|
|
3.5
|
|
166.5
|
Total comprehensive
income
|
|
—
|
$
|
—
|
$
|
—
|
$
|
128.6
|
$
|
80.6
|
$
|
209.2
|
$
|
7.3
|
$
|
216.5
|
Exercise of stock
options
|
|
828,352
|
|
17.8
|
|
(2.5)
|
|
—
|
|
—
|
|
15.3
|
|
—
|
|
15.3
|
Equity-settled
share-based payments expense
|
|
—
|
|
—
|
|
4.1
|
|
—
|
|
—
|
|
4.1
|
|
—
|
|
4.1
|
Transactions with
non-controlling interests
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5.0)
|
|
(5.0)
|
Balances as at
September 30, 2022
|
|
317,852,475
|
$
|
2,242.5
|
$
|
40.2
|
$
|
97.4
|
$
|
1,858.2
|
$
|
4,238.3
|
$
|
79.2
|
$
|
4,317.5
|
Consolidated Statement of Cash Flows
(Unaudited)
|
|
|
|
|
Six months ended
September 30
|
|
|
|
|
|
|
(amounts in millions
of Canadian dollars)
|
|
|
|
2023
|
|
2022
|
Operating
activities
|
|
|
|
|
|
|
Net income
|
|
|
$
|
128.9
|
$
|
50.0
|
Adjustments
for:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
183.4
|
|
164.5
|
Share of after-tax
profit of equity accounted investees
|
|
|
|
(30.9)
|
|
(19.5)
|
Deferred income
taxes
|
|
|
|
(39.2)
|
|
(3.4)
|
Investment tax
credits
|
|
|
|
(2.3)
|
|
(5.2)
|
Equity-settled
share-based payments expense
|
|
|
|
15.1
|
|
4.1
|
Defined benefit
pension plans
|
|
|
|
1.1
|
|
7.4
|
Other non-current
liabilities
|
|
|
|
(4.8)
|
|
(11.0)
|
Derivative financial
assets and liabilities – net
|
|
|
|
(18.2)
|
|
27.6
|
Other
|
|
|
|
10.4
|
|
(8.8)
|
Changes in non-cash
working capital
|
|
|
|
(112.6)
|
|
(230.3)
|
Net cash provided by
(used in) operating activities
|
|
|
$
|
130.9
|
$
|
(24.6)
|
Investing
activities
|
|
|
|
|
|
|
Business combinations,
net of cash acquired
|
|
|
$
|
—
|
$
|
(6.4)
|
Property, plant and
equipment expenditures
|
|
|
|
(152.5)
|
|
(142.5)
|
Proceeds from disposal
of property, plant and equipment
|
|
|
|
3.6
|
|
4.5
|
Intangible assets
expenditures
|
|
|
|
(72.3)
|
|
(60.3)
|
Net payments to equity
accounted investees
|
|
|
|
(25.6)
|
|
(8.5)
|
Dividends received from
equity accounted investees
|
|
|
|
17.1
|
|
6.4
|
Other
|
|
|
|
(1.3)
|
|
(5.0)
|
Net cash used in
investing activities
|
|
|
$
|
(231.0)
|
$
|
(211.8)
|
Financing
activities
|
|
|
|
|
|
|
Net (repayment of)
proceeds from borrowing under revolving credit
facilities
|
|
|
$
|
(279.5)
|
$
|
138.3
|
Proceeds from long-term
debt
|
|
|
|
417.5
|
|
14.9
|
Repayment of long-term
debt
|
|
|
|
(33.5)
|
|
(47.9)
|
Repayment of lease
liabilities
|
|
|
|
(44.7)
|
|
(31.7)
|
Net proceeds from the
issuance of common shares
|
|
|
|
6.9
|
|
15.3
|
Other
|
|
|
|
—
|
|
(0.1)
|
Net cash provided by
financing activities
|
|
|
$
|
66.7
|
$
|
88.8
|
Effect of foreign
currency exchange differences on cash and cash
equivalents
|
|
|
$
|
(2.7)
|
$
|
4.7
|
Net decrease in cash
and cash equivalents
|
|
|
$
|
(36.1)
|
$
|
(142.9)
|
Cash and cash
equivalents, beginning of period
|
|
|
|
217.6
|
|
346.1
|
Cash and cash
equivalents, end of period
|
|
|
$
|
181.5
|
$
|
203.2
|
Contacts
Investor Relations:
Andrew Arnovitz, Senior Vice
President, Investor Relations and Enterprise Risk Management,
1-514-734-5760, andrew.arnovitz@cae.com
Media:
Samantha
Golinski, Vice President, Public Affairs and Global
Communications, 514-341-2000 ext 7939,
samantha.golinski@cae.com
View original
content:https://www.prnewswire.com/news-releases/cae-reports-second-quarter-fiscal-2024-results-301987567.html
SOURCE CAE Inc.