(NYSE: CAE; TSX: CAE) - CAE today reported revenue
of $722.0 million for the first quarter of fiscal year 2019,
compared with $656.2 million in the first quarter last year. First
quarter net income attributable to equity holders was $69.4 million
($0.26 per share) compared to $59.6 million ($0.22 per share)
last year.
First quarter operating profit was $98.5 million
(13.6% of revenue) compared with $91.3 million (13.9% of revenue)
in the first quarter of last year. All financial information is in
Canadian dollars unless otherwise indicated.
“CAE’s performance in the first quarter was led
by Civil, which demonstrated double-digit growth and strong
customer demand for CAE's innovative training solutions,” said Marc
Parent, CAE’s President and Chief Executive Officer. “We are making
significant inroads with our training strategy, as evidenced by 26
civil full-flight simulator sales year-to-date and a series of
recent, long-term airline training partnerships we have announced,
including Singapore Airlines, Avianca Airlines, Jetstar Japan and
Asiana Airlines. In Defence, we are also making good progress with
the acquisition of Alpha-Omega Change Engineering, which, together
with our new Proxy structure, expands our position in the US
defence market by enabling us to pursue higher-level security
programs. As we look to the remainder of the fiscal year, our
expectations for CAE’s annual growth outlook remain unchanged. In
keeping with our capital allocation priorities, and underscoring
our positive long-term view, I am pleased to announce that CAE’s
Board of Directors has approved a one cent or 11% increase to CAE’s
quarterly dividend, which becomes 10 cents per share, effective
September 28, 2018. This represents CAE’s eighth consecutive
dividend increase in as many years.”
Summary of
consolidated results |
|
|
|
|
|
|
(amounts
in millions, except per share amounts) |
|
Q1-2019 |
|
Q1-2018 |
Variance % |
|
|
|
|
|
Restated* |
|
|
Revenue |
$ |
722.0 |
$ |
656.2 |
10 |
% |
Total segment operating
income(2) |
$ |
98.5 |
$ |
91.3 |
8 |
% |
Operating
profit(3) |
$ |
98.5 |
$ |
91.3 |
8 |
% |
As a % of revenue |
% |
13.6 |
% |
13.9 |
|
|
Net income |
$ |
71.6 |
$ |
61.2 |
17 |
% |
Net income attributable
to equity holders |
|
|
|
|
|
|
of the Company |
$ |
69.4 |
$ |
59.6 |
16 |
% |
Earnings per share
(EPS) |
$ |
0.26 |
$ |
0.22 |
18 |
% |
Total
backlog |
$ |
8,046.3 |
$ |
7,590.0 |
6 |
% |
* Financial
results reported were restated to reflect the accounting changes
required by IFRS 15. |
Civil Aviation Training Solutions
(Civil)First quarter Civil revenue was $430.9 million, up
16% compared to the same quarter last year, and segment operating
income was $78.3 million (18.2% of revenue), up 14% compared to the
first quarter last year. First quarter Civil training centre
utilization(4) was 80%.
During the quarter, Civil signed training
solutions contracts valued at $499.3 million, plus additional
contracts involving joint ventures, including an exclusive
long-term pilot training agreement with Asiana Airlines which
involves the adoption of the CAE RiseTM training system. CAE RiseTM
is a digital innovation that allows instructors to deliver
standardized training in accordance with airline Standard Operating
Procedures and enables the objective assessment of pilot
competencies using live data during training sessions, and through
deep analytical insights. In addition, Civil signed a new agreement
to create a pilot training joint venture in Colombia with Avianca
Airlines and entered exclusive long-term training contracts with
Volaris and OJets. Civil sold 18 full-flight simulators (FFSs)
during the quarter to customers in all regions. Since the end of
the quarter, Civil has signed eight FFS sales, for 26 year-to-date,
and it commenced operations of the Singapore CAE Flight Training
Pte. Ltd. joint venture for pilot training.
The Civil book-to-sales(1) ratio, not including
orders won by joint ventures, was 1.16x for the quarter and 1.45x
for the last 12 months. The Civil backlog at the end of the quarter
was $4.1 billion.
Summary of
Civil Aviation Training Solutions results |
|
|
|
|
|
|
(amounts
in millions, except operating margins, SEU and FFSs deployed) |
|
Q1-2019 |
|
Q1-2018 |
Variance % |
|
|
|
|
|
Restated |
|
|
Revenue |
$ |
430.9 |
$ |
371.6 |
16 |
% |
Segment operating
income |
$ |
78.3 |
$ |
68.9 |
14 |
% |
Operating margins |
% |
18.2 |
% |
18.5 |
|
|
Total backlog |
$ |
4,148.2 |
$ |
3,424.4 |
21 |
% |
SEU(5) |
|
213 |
|
209 |
2 |
% |
FFSs
deployed |
|
260 |
|
269 |
(3 |
%) |
Defence and Security
(Defence)First quarter Defence revenue was $268.3 million,
up 3% compared to the same quarter last year and segment operating
income was $21.5 million (8.0% of revenue), down 10% compared to
the first quarter last year.
During the quarter, Defence booked orders for
$166.9 million. Notable wins include a contract from the U.S. Navy
to provide instruction at five Naval Air Stations to support
primary, intermediate and advanced pilot training. As well, Defence
was awarded contracts involving training for the Brunei Ministry of
Defence's S-70i Black Hawk simulator, upgrades on German Air Force
Tornado simulators, and support solutions for the Royal Canadian
Air Force's CF-18 aircraft. Since the end of the quarter, Defence
acquired Alpha-Omega Change Engineering (AOCE) to enhance CAE USA’s
core capabilities as a training systems integrator (TSI), grow its
position on enduring platforms such as fighter aircraft, and expand
the ability for CAE USA to pursue higher-level security programs in
the United States. As well, Defence was awarded a contract of over
$50 million, including options, to provide the Royal New Zealand
Air Force with CAE’s new 700MR Series flight training device for
the NH90 helicopter. The contract also includes the provision of
long-term maintenance and support services upon delivery of the
simulator in 2020.
The Defence book-to-sales ratio was 0.62x for
the quarter and 1.20x 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 $3.9 billion.
Summary of
Defence and Security results |
|
|
|
|
|
|
(amounts
in millions, except operating margins) |
|
Q1-2019 |
|
Q1-2018 |
Variance % |
|
|
|
|
|
Restated |
|
|
Revenue |
$ |
268.3 |
$ |
260.7 |
3 |
% |
Segment operating
income |
$ |
21.5 |
$ |
24.0 |
(10 |
%) |
Operating margins |
% |
8.0 |
% |
9.2 |
|
|
Total
backlog |
$ |
3,898.1 |
$ |
4,165.6 |
(6 |
%) |
HealthcareFirst quarter
Healthcare revenue was $22.8 million compared to $23.9 million in
the same quarter last year, and first quarter segment operating
loss was $1.3 million, compared to a loss of $1.6 million in
the first quarter last year.
Healthcare launched the CAE Ares emergency care
manikin during the quarter, which is designed to meet the life
support training requirements of emergency care providers
worldwide. As well, Healthcare, together with the American Society
of Anesthesiologists (ASA) launched the Anastesia SimSTAT -
Appendectomy module, the latest in a series of interactive
screen-based modules approved for Maintenance of Certification in
Anesthesiology credits.
Summary of
Healthcare results |
|
|
|
|
|
|
|
|
(amounts
in millions, except operating margins) |
|
Q1-2019 |
|
|
Q1-2018 |
|
Variance % |
|
|
|
|
|
|
Restated |
|
|
|
Revenue |
$ |
22.8 |
|
$ |
23.9 |
|
(5 |
%) |
Segment operating
income (loss) |
$ |
(1.3 |
) |
$ |
(1.6 |
) |
19 |
% |
Operating
margins |
% |
— |
|
% |
— |
|
|
|
Additional financial
highlightsFree cash flow(6) from continuing operations was
negative $85.8 million for the quarter compared to negative
$37.9 million in the first quarter last year. The decrease in
free cash flow results mainly from a higher investment in non-cash
working capital. CAE usually sees a higher level of investment in
non-cash working capital accounts during the first half of the
fiscal year and tends to see a portion of these investments reverse
in the second half.
Income taxes this quarter were $10.9 million,
representing an effective tax rate of 13%, compared to 16% for the
first quarter last year. The tax rate this quarter was lower due to
the impacts of tax audits in Canada, partially offset by a change
in the mix of income from various jurisdictions. Excluding the
effect of these tax audits, the income tax rate would have been 19%
this quarter.
Growth and maintenance capital expenditures(7)
totaled $53.1 million this quarter.
Net debt(8) at the end of the quarter was $811.5
million for a net debt-to-total capital ratio(9) of 26.0%. This
compares to net debt of $649.4 million and a net debt-to-total
capital ratio of 22.0% at the end of the preceding quarter.
Return on capital employed(10) was 14.6%
compared to 10.7% last year. Excluding the impacts of fiscal 2018
income tax recovery related to the U.S. tax reform and net gains on
strategic transactions relating to our Asian joint-ventures, ROCE
would have been 12.6% this quarter.
CAE's Board of Directors has approved an 11%
increase to CAE's quarterly dividend, which becomes 10 cents per
share, payable September 28, 2018 to shareholders of record at the
close of business on September 14, 2018.
During the three months ended June 30, 2018, CAE
repurchased and cancelled a total of 267,100 common shares under
the Normal Course Issuer Bid (NCIB), at a weighted average price of
$24.42 per common share, for a total consideration of $6.5
million.
Management outlook for growth in fiscal
2019 unchanged (IFRS 15 adjusted basis)CAE’s core markets
benefit from secular growth and the Company expects to exceed
underlying market growth in fiscal year 2019. In Civil, the Company
expects to continue generating low double-digit percentage
operating income growth as current momentum for its innovative
training solutions translates into market share gains and new
training customer partnerships. As well, Civil expects to maintain
its leadership position in FFS sales. In Defence, the Company
continues to expect mid to high single-digit percentage operating
income growth as it delivers from backlog and continues to win
opportunities from a large pipeline. CAE expects Healthcare to
resume double-digit growth this year with its broader market reach,
expanded offering, and the continued launch of innovative products.
The Company expects revenue and profit to be weighted to the second
half of the fiscal year, owing to the impact of the adoption of
IFRS 15 as it relates to simulator product deliveries, and a
five-week work disruption which preceded the successful negotiation
of a new collective agreement of a four-year term and one year
option with CAE’s manufacturing employees in Canada. The Company is
currently working to accelerate production to mitigate the impact
of this action. CAE continues to prioritize measured and profitable
growth investments, and commensurate with the current increased
scale and a higher level of opportunity for market-led investments
offering accretive returns and free cash flows, it expects total
capital expenditures to be approximately $200 million in fiscal
2019. The deployment of growth capital will continue to be driven
by and supportive of growing customer training outsourcings.
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 2018
MD&A.
IFRS 15 - Revenue from Contracts with
CustomersEffective April 1, 2018, CAE adopted IFRS 15 -
Revenue from Contracts with Customers, which changes the way the
Company recognizes revenue for certain of its customer contracts.
The main impact of IFRS 15 to CAE is the timing of revenue
recognized for certain training devices that were previously
accounted for using the percentage-of-completion method that no
longer meet the requirements for revenue recognition over time.
Revenue for these training devices are instead recognized upon
completion. While this change impacts the timing of contract
revenue and profit recognition, there are no change to cash flows
from the contract. The financial results reported in the press
release for the fiscal year ended March 31, 2018 have been restated
to reflect the accounting changes required by IFRS 15 as the
Company adopted the standard retrospectively this fiscal year. For
more detailed information, including the impact on CAE’s fiscal
2018 results, refer to Note 2 of the interim consolidated financial
statements for the quarter ended June 30, 2018.
Detailed informationReaders are
strongly advised to view a more detailed discussion of our results
by segment in the Management’s Discussion and Analysis (MD&A)
and CAE’s consolidated financial statements which are posted on our
website at www.cae.com/investors.
CAE’s consolidated financial statements and
MD&A for the quarter ended June 30, 2018 have been filed with
the Canadian Securities Administrators on SEDAR (www.sedar.com) and
are available on our website (www.cae.com). They have also been
filed with the U.S. Securities and Exchange Commission and are
available on their website (www.sec.gov). Holders of CAE’s
securities may also request a printed copy of the Company's
consolidated financial statements and MD&A free of charge by
contacting Investor Relations (investor.relations@cae.com).
Conference call Q1 FY2019Marc
Parent, CAE President and CEO; Sonya Branco, Vice President,
Finance, and CFO; and Andrew Arnovitz, Vice President, Strategy and
Investor Relations will conduct an earnings conference call today
at 1:30 p.m. ET. The call is intended for analysts, institutional
investors and the media. Participants can listen to the conference
by dialling + 1 877 586 3392 or +1 416 981 9024. The
conference call will also be audio webcast live for the public at
www.cae.com.
CAE is a global leader in training for the civil
aviation, defence and security, and healthcare markets. Backed by a
record of more than 70 years of industry firsts, we continue to
help define global training standards with our innovative
virtual-to-live training solutions to make flying safer, maintain
defence force readiness and enhance patient safety. We have the
broadest global presence in the industry, with over 9,000
employees, 160 sites and training locations in over 35 countries.
Each year, we train more than 120,000 civil and defence crewmembers
and thousands of healthcare professionals worldwide.
Caution concerning limitations of
summary earnings press releaseThis summary earnings press
release contains limited information meant to assist the reader in
assessing CAE’s performance but it is not a suitable source of
information for readers who are unfamiliar with CAE and is not in
any way a substitute for the Company’s financial statements, notes
to the financial statements, and MD&A reports.
Caution concerning forward-looking
statementsCertain statements made in this press release
are forward-looking statements. These statements include, without
limitation, statements relating to our fiscal 2019 financial
guidance (including revenues, capital investment and margins) and
other statements that are not historical facts. Forward-looking
statements are typically identified by future or conditional verbs
such as anticipate, believe, expect, and may. 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.
Forward-looking statements, by their very nature, are subject to
inherent risks and uncertainties and are based on several
assumptions, both general and specific, which give rise to the
possibility that actual results or events could differ materially
from our expectations expressed in or implied by such
forward-looking statements and that our business outlook,
objectives, plans and strategic priorities may not be achieved. As
a result, we cannot guarantee that any forward-looking statement
will materialize and we caution you against relying on any of these
forward-looking statements. The forward-looking statements
contained in this press release describe our expectations as of
August 14, 2018 and, accordingly, are subject to change after such
date. Except as may be required by Canadian securities laws, we do
not undertake any obligation to update or revise any
forward-looking statements contained in this news release, whether
as a result of new information, future events or otherwise. Except
as otherwise indicated by CAE, forward-looking statements do not
reflect the potential impact of any special items or of any
dispositions, monetizations, mergers, acquisitions, other business
combinations or other transactions that may occur after August 14,
2018. 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 2019
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 2019
assumes that capital investments will be made in accordance with
our current annual plan. However, there can be no assurance that
such investment levels will be maintained with the result that the
value of actual capital investments made by CAE during such period
could materially differ from current expectations.
Material assumptionsA number of
economic, market, operational and financial assumptions were made
by CAE in preparing its forward-looking statements for fiscal 2019
contained in this news release, including, but not limited to
certain economic and market assumptions including: modest economic
growth and moderately rising interest rates in fiscal 2019; a
sustained level of competition in civil, defence & healthcare
markets; no material financial, operational or competitive
consequences of changes in regulations affecting our business; and
a continued positive defence market.
Assumptions concerning our
businessesA number of assumptions concerning CAE’s
business were also made in the preparation of its forward-looking
statements for fiscal 2019 contained in this news release,
including, but not limited to factors including: maintenance of
CAE’s market share in civil simulator sales in the face of price
competition and CAE’s ability to increase market share in
training.
The foregoing assumptions, although considered
reasonable by CAE on August 14, 2018, may prove to be inaccurate.
Accordingly, our actual results could differ materially from our
expectations as set forth in this news release.
Material risksImportant risk
factors that could cause our assumptions and estimates to be
inaccurate and actual results or events to differ materially from
those expressed in or implied by our forward-looking statements,
including our fiscal 2019 financial guidance, are set out in CAE’s
MD&A for the year ended March 31, 2018 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 2018 MD&A is also available at
www.cae.com. The realization of our forward-looking statements,
including our ability to meet our fiscal 2019 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
measuresThis press release includes non-GAAP and other
financial measures. Non-GAAP measures are useful supplemental
information but may not have a standardized meaning according to
GAAP. These measures should not be confused with, or used as an
alternative for, performance measures calculated according to GAAP.
They should also not be used to compare with similar measures from
other companies. Management believes that providing certain
non-GAAP measures provides users with a better understanding of our
results and trends and provides additional information on our
financial and operating performance.
(1) Order Intake and BacklogOrder intake is a
non-GAAP measure that represents the expected value of orders we
have received:
- For the Civil Aviation Training Solutions segment, we consider
an item part of our order intake when we have a legally binding
commercial agreement with a client that includes enough detail
about each party’s obligations to form the basis for a contract.
Additionally, expected future revenues from customers under
short-term and long-term training contracts are included when these
customers commit to pay us training fees, or when we reasonably
expect the revenue to be generated;
- For the Defence and Security segment, we consider an item part
of our order intake when we have a legally binding commercial
agreement with a client that includes enough detail about each
party’s obligations to form the basis for a contract. Defence and
Security contracts are usually executed over a long-term period but
some of them must be renewed each year. For this segment, we only
include a contract item in order intake when the customer has
authorized the contract item and has received funding for it;
- For the Healthcare segment, order intake is typically converted
into revenue within one year, therefore we assume that order intake
is equal to revenue.
The book-to-sales ratio is the total orders
divided by total revenue in a given period.
Total backlog is a non-GAAP measure that
represents expected future revenues and includes obligated backlog,
joint venture backlog and unfunded backlog and options.
- Obligated backlog represents the value of our order intake not
yet executed and is calculated by adding the order intake of the
current period to the balance of the obligated backlog at the end
of the previous fiscal year, subtracting the revenue recognized in
the current period and adding or subtracting backlog adjustments.
If the amount of an order already recognized in a previous fiscal
year is modified, the backlog is revised through
adjustments.
- Joint venture backlog is obligated backlog that represents the
expected value of our share of orders that our joint ventures have
received but have not yet executed. Joint venture backlog is
determined on the same basis as obligated backlog described
above.
- Unfunded backlog represents firm Defence and Security orders we
have received but have not yet executed and for which funding
authorization has not yet been obtained. Options are included in
backlog when there is a high probability of being exercised, but
indefinite-delivery/indefinite-quantity (IDIQ) contracts are
excluded. When an option is exercised, it is considered order
intake in that period and it is removed from unfunded backlog and
options.
(2) Total segment operating income is a non-GAAP
measure and is the sum of our key indicator of each segment’s
financial performance. Segment operating income gives us an
indication of the profitability of each segment because it does not
include the impact of any items not specifically related to the
segment’s performance. We calculate total segment operating income
by taking the operating profit and excluding the impact of
restructuring, integration and acquisition costs.
(3) Operating profit is an additional GAAP
measure that shows us how we have performed before the effects of
certain financing decisions, tax structures and discontinued
operations. We track it because we believe it makes it easier to
compare our performance with previous periods, and with companies
and industries that do not have the same capital structure or tax
laws.
(4) 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
directly 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.
(5) 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.
(6) 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.
(7) 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.
(8) Net debt is a non-GAAP measure we use to
monitor how much debt we have after taking into account liquid
assets such as 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.
(9) Net debt-to-capital is calculated as net
debt divided by the sum of total equity plus net debt.
(10) 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).
ContactsInvestor
Relations:Andrew Arnovitz, Vice President, Strategy and
Investor Relations 1-514-734-5760, andrew.arnovitz@cae.com
Media: Hélène V. Gagnon,
Vice President, Public Affairs and Global Communications
1-514-340-5536, helene.v.gagnon@cae.com
Consolidated Statement of Financial
Position
|
June 30 |
March 31 |
April 1 |
(amounts
in millions of Canadian dollars) |
2018 |
2018 |
2017 |
|
|
Restated |
Restated |
Assets |
|
|
|
Cash and cash
equivalents |
$ |
500.1 |
$ |
611.5 |
$ |
504.7 |
Accounts
receivable |
474.1 |
452.0 |
450.1 |
Contract assets |
467.5 |
439.7 |
348.5 |
Inventories |
545.7 |
516.1 |
549.0 |
Prepayments |
51.3 |
50.0 |
63.8 |
Income taxes
recoverable |
52.4 |
40.7 |
25.6 |
Derivative financial assets |
16.9 |
13.3 |
23.4 |
Total current
assets |
$ |
2,108.0 |
$ |
2,123.3 |
$ |
1,965.1 |
Property, plant and
equipment |
1,818.9 |
1,803.9 |
1,582.6 |
Intangible assets |
1,050.8 |
1,055.6 |
944.0 |
Investment in equity
accounted investees |
252.2 |
242.7 |
375.8 |
Deferred tax
assets |
58.0 |
61.2 |
42.9 |
Derivative financial
assets |
10.3 |
11.5 |
16.0 |
Other assets |
492.7 |
482.0 |
471.3 |
Total assets |
$ |
5,790.9 |
$ |
5,780.2 |
$ |
5,397.7 |
Liabilities and
equity |
|
|
|
Accounts payable and
accrued liabilities |
$ |
654.8 |
$ |
666.9 |
$ |
686.1 |
Provisions |
28.7 |
32.1 |
43.2 |
Income taxes
payable |
14.1 |
15.3 |
9.6 |
Deferred revenue |
10.7 |
10.0 |
11.4 |
Contract
liabilities |
641.6 |
679.5 |
593.4 |
Current portion of
long-term debt |
119.2 |
52.2 |
51.9 |
Derivative financial liabilities |
19.7 |
18.1 |
15.5 |
Total current
liabilities |
$ |
1,488.8 |
$ |
1,474.1 |
$ |
1,411.1 |
Provisions |
38.6 |
39.5 |
39.1 |
Long-term debt |
1,192.4 |
1,208.7 |
1,203.5 |
Royalty
obligations |
144.4 |
140.8 |
138.5 |
Employee benefits
obligations |
198.6 |
200.6 |
157.7 |
Deferred gains and
other liabilities |
214.7 |
229.9 |
217.8 |
Deferred tax
liabilities |
193.4 |
184.7 |
213.0 |
Derivative financial
liabilities |
4.4 |
4.4 |
4.7 |
Total liabilities |
$ |
3,475.3 |
$ |
3,482.7 |
$ |
3,385.4 |
Equity |
|
|
|
Share capital |
$ |
639.1 |
$ |
633.2 |
$ |
615.4 |
Contributed
surplus |
24.7 |
21.3 |
19.4 |
Accumulated other
comprehensive income |
222.0 |
260.3 |
191.1 |
Retained
earnings |
1,356.8 |
1,314.3 |
1,126.2 |
Equity attributable to
equity holders of the Company |
$ |
2,242.6 |
$ |
2,229.1 |
$ |
1,952.1 |
Non-controlling
interests |
73.0 |
68.4 |
60.2 |
Total equity |
$ |
2,315.6 |
$ |
2,297.5 |
$ |
2,012.3 |
Total liabilities and equity |
$ |
5,790.9 |
$ |
5,780.2 |
$ |
5,397.7 |
Consolidated Income Statement
Three months ended June
30 |
|
|
|
|
|
|
(amounts
in millions of Canadian dollars, except per share
amounts) |
|
2018 |
|
|
2017 |
|
|
|
|
|
|
Restated |
|
Revenue |
$ |
722.0 |
|
$ |
656.2 |
|
Cost of
sales |
503.3 |
|
452.5 |
|
Gross
profit |
$ |
218.7 |
|
$ |
203.7 |
|
Research and
development expenses |
31.3 |
|
32.3 |
|
Selling, general and
administrative expenses |
102.7 |
|
94.8 |
|
Other (gains) losses –
net |
(5.2 |
) |
0.3 |
|
After tax share in
profit of equity accounted investees |
(8.6 |
) |
(15.0 |
) |
Operating profit |
$ |
98.5 |
|
$ |
91.3 |
|
Finance
expense – net |
16.0 |
|
18.2 |
|
Earnings before
income taxes |
$ |
82.5 |
|
$ |
73.1 |
|
Income
tax expense |
10.9 |
|
11.9 |
|
Net
income |
$ |
71.6 |
|
$ |
61.2 |
|
Attributable to: |
|
|
Equity holders of the
Company |
$ |
69.4 |
|
$ |
59.6 |
|
Non-controlling interests |
2.2 |
|
1.6 |
|
Earnings per
share attributable to equity holders of the Company |
|
|
Basic and
diluted |
$ |
0.26 |
|
$ |
0.22 |
|
Consolidated Statement of Comprehensive
Income
Three months ended June
30 |
|
|
|
|
|
|
(amounts
in millions of Canadian dollars) |
|
2018 |
|
|
2017 |
|
|
|
|
|
|
Restated |
|
Net income |
$ |
71.6 |
|
$ |
61.2 |
|
Items that may
be reclassified to net income |
|
|
Foreign
currency differences on translation of foreign
operations |
$ |
(20.8 |
) |
$ |
(8.8 |
) |
Reclassification to income of foreign currency
differences |
(3.3 |
) |
(0.7 |
) |
Net
(loss) gain on cash flow hedges |
(8.4 |
) |
7.7 |
|
Reclassification to income of gains on cash flow hedges |
2.4 |
|
1.2 |
|
Net
(loss) gain on hedges of net investment in foreign operations |
(9.7 |
) |
12.2 |
|
Income taxes |
3.9 |
|
(1.1 |
) |
|
$ |
(35.9 |
) |
$ |
10.5 |
|
Items that will
never be reclassified to net income |
|
|
Remeasurement of defined benefit pension plan obligations |
$ |
4.2 |
|
$ |
(27.2 |
) |
Income
taxes |
(1.1 |
) |
7.2 |
|
|
$ |
3.1 |
|
$ |
(20.0 |
) |
Other
comprehensive loss |
$ |
(32.8 |
) |
$ |
(9.5 |
) |
Total comprehensive income |
$ |
38.8 |
|
$ |
51.7 |
|
Attributable to: |
|
|
Equity holders of the
Company |
$ |
34.2 |
|
$ |
51.2 |
|
Non-controlling interests |
4.6 |
|
0.5 |
|
Consolidated Statement of Changes in Equity
|
|
Attributable to equity holders of the Company |
|
|
|
|
|
|
Three months ended June 30, 2018(amounts in millions of Canadian
dollars,except number of shares) |
|
Number of shares |
|
|
Common sharesStated value |
|
|
Contributed surplus |
|
|
Accumulated other comprehensive income |
|
|
Retained earnings |
|
|
Total |
|
|
Non-controlling interest |
|
Total equity |
|
Balances, beginning of period (restated) |
|
267,738,530 |
|
$ |
633.2 |
|
$ |
21.3 |
|
$ |
260.3 |
|
$ |
1,314.3 |
|
$ |
2,229.1 |
|
$ |
68.4 |
$ |
2,297.5 |
|
Net income |
|
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
69.4 |
|
$ |
69.4 |
|
$ |
2.2 |
$ |
71.6 |
|
Other comprehensive
(loss) income |
|
— |
|
— |
|
— |
|
(38.3 |
) |
3.1 |
|
(35.2 |
) |
2.4 |
(32.8 |
) |
Total comprehensive (loss) income |
|
— |
|
$ |
— |
|
$ |
— |
|
$ |
(38.3 |
) |
$ |
72.5 |
|
$ |
34.2 |
|
$ |
4.6 |
$ |
38.8 |
|
Stock options
exercised |
|
313,350 |
|
5.5 |
|
(0.7 |
) |
— |
|
— |
|
4.8 |
|
— |
4.8 |
|
Optional cash purchase
of shares |
|
647 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
— |
|
Common shares
repurchased and cancelled |
|
(267,100 |
) |
(0.6 |
) |
— |
|
— |
|
(5.9 |
) |
(6.5 |
) |
— |
(6.5 |
) |
Share-based
compensation expense |
|
— |
|
— |
|
4.1 |
|
— |
|
— |
|
4.1 |
|
— |
4.1 |
|
Stock dividends |
|
35,566 |
|
1.0 |
|
— |
|
— |
|
(1.0 |
) |
— |
|
— |
— |
|
Cash dividends |
|
— |
|
— |
|
— |
|
— |
|
(23.1 |
) |
(23.1 |
) |
— |
(23.1 |
) |
Balances, end of period |
|
267,820,993 |
|
$ |
639.1 |
|
$ |
24.7 |
|
$ |
222.0 |
|
$ |
1,356.8 |
|
$ |
2,242.6 |
|
$ |
73.0 |
$ |
2,315.6 |
|
|
|
Attributable to equity holders of the Company |
|
|
|
|
|
|
Three
months ended June 30, 2017 (amounts in millions of Canadian
dollars, except number of shares) |
|
Number of shares |
|
|
Common sharesStated value |
|
|
Contributed surplus |
|
|
Accumulated other comprehensive income |
|
|
Retained earnings |
|
|
Total |
|
|
Non-controlling interest |
|
Total equity |
|
Balances, beginning of period (restated) |
|
268,397,224 |
|
$ |
615.4 |
|
$ |
19.4 |
|
$ |
191.1 |
|
$ |
1,126.2 |
|
$ |
1,952.1 |
|
$ |
60.2 |
|
$ |
2,012.3 |
|
Net income |
|
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
59.6 |
|
$ |
59.6 |
|
$ |
1.6 |
|
$ |
61.2 |
|
Other
comprehensive income (loss) |
|
— |
|
|
— |
|
|
— |
|
|
11.6 |
|
|
(20.0 |
) |
|
(8.4 |
) |
|
(1.1 |
) |
(9.5 |
) |
Total comprehensive
income (loss) |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
11.6 |
|
$ |
39.6 |
|
$ |
51.2 |
|
$ |
0.5 |
|
$ |
51.7 |
|
Stock options
exercised |
|
745,050 |
|
|
11.2 |
|
|
(1.8 |
) |
|
— |
|
|
— |
|
|
9.4 |
|
|
— |
|
9.4 |
|
Optional cash purchase
of shares |
|
647 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
Common shares
repurchased and cancelled |
|
(123,300 |
) |
|
(0.3 |
) |
|
— |
|
|
— |
|
|
(2.4 |
) |
|
(2.7 |
) |
|
— |
|
(2.7 |
) |
Share-based
compensation expense |
|
— |
|
|
— |
|
|
3.2 |
|
|
— |
|
|
— |
|
|
3.2 |
|
|
— |
|
3.2 |
|
Stock dividends |
|
23,214 |
|
|
0.5 |
|
|
— |
|
|
— |
|
|
(0.5 |
) |
|
— |
|
|
— |
|
— |
|
Cash dividends |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(21.0 |
) |
|
(21.0 |
) |
|
— |
|
(21.0 |
) |
Balances, end of period (restated) |
|
269,042,835 |
|
$ |
626.8 |
|
$ |
20.8 |
|
$ |
202.7 |
|
$ |
1,141.9 |
|
$ |
1,992.2 |
|
$ |
60.7 |
|
$ |
2,052.9 |
|
Consolidated Statement of Cash Flows
Three months ended June
30 |
|
|
|
|
|
|
(amounts
in millions of Canadian dollars) |
|
2018 |
|
|
2017 |
|
Operating
activities |
|
|
|
|
Restated |
|
Net income |
$ |
71.6 |
|
$ |
61.2 |
|
Adjustments for: |
|
|
Depreciation of property, plant and equipment |
30.7 |
|
31.2 |
|
Amortization of intangible and other assets |
18.1 |
|
22.4 |
|
After tax
share in profit of equity accounted investees |
(8.6 |
) |
(15.0 |
) |
Deferred
income taxes |
12.4 |
|
(3.5 |
) |
Investment tax credits |
(2.7 |
) |
(3.1 |
) |
Share-based compensation |
(5.1 |
) |
(1.3 |
) |
Defined
benefit pension plans |
3.0 |
|
2.6 |
|
Amortization of other non-current liabilities |
(7.7 |
) |
(12.4 |
) |
Derivative financial assets and liabilities – net |
(1.5 |
) |
(6.4 |
) |
Other |
7.0 |
|
6.2 |
|
Changes in non-cash
working capital |
(147.8 |
) |
(101.1 |
) |
Net cash used in operating activities |
$ |
(30.6 |
) |
$ |
(19.2 |
) |
Investing
activities |
|
|
Capital expenditures
for property, plant and equipment |
(53.1 |
) |
(49.1 |
) |
Proceeds from disposal
of property, plant and equipment |
2.3 |
|
5.1 |
|
Additions to
intangibles |
(18.0 |
) |
(11.1 |
) |
Net payments to equity
accounted investees |
(6.1 |
) |
— |
|
Dividends received from
equity accounted investees |
— |
|
17.1 |
|
Net cash used in investing activities |
$ |
(74.9 |
) |
$ |
(38.0 |
) |
Financing
activities |
|
|
Proceeds from long-term
debt |
66.9 |
|
8.7 |
|
Repayment of long-term
debt |
(39.0 |
) |
(7.4 |
) |
Repayment of finance
lease |
(2.7 |
) |
(3.6 |
) |
Dividends paid |
(23.1 |
) |
(21.0 |
) |
Issuance of common
shares |
4.8 |
|
9.4 |
|
Repurchase of common
shares |
(6.5 |
) |
(2.7 |
) |
Other |
(0.2 |
) |
(0.4 |
) |
Net cash provided by (used in) financing
activities |
$ |
0.2 |
|
$ |
(17.0 |
) |
Effect of foreign exchange rate changes on cash and
cash equivalents |
$ |
(6.1 |
) |
$ |
1.4 |
|
Net decrease in
cash and cash equivalents |
$ |
(111.4 |
) |
$ |
(72.8 |
) |
Cash and cash
equivalents, beginning of period |
611.5 |
|
504.7 |
|
Cash and cash equivalents, end of period |
$ |
500.1 |
|
$ |
431.9 |
|
Supplemental
information: |
|
|
Interest
paid |
$ |
7.6 |
|
$ |
7.8 |
|
Interest
received |
4.1 |
|
3.4 |
|
Income taxes paid |
11.5 |
|
7.0 |
|
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