Q4 FY2023
- Revenue of $1,256.5 million
vs. $955.0 million in Q4 last year,
up 32% year-over-year
- Earnings per share (EPS) of $0.31 vs. $0.17 in
Q4 last year
- Adjusted EPS(1) of $0.35 vs. $0.29 in
Q4 last year
- Operating income of $186.6
million vs. $93.3 million in
Q4 last year
- Adjusted segment operating income(1) of
$201.9 million vs. $142.7 million in Q4 last year
- Free cash flow(1) of $172.0 million vs. $187.6
million in Q4 last year
- Adjusted order intake(1) of record
$1.5 billion for 1.17x book-to-sales
ratio(1)
Annual FY2023
- Revenue of $4.2 billion vs.
$3.4 billion last year, up 25%
year-over-year
- Diluted EPS of $0.70 vs.
$0.45 last year
- Adjusted EPS of $0.88 vs.
$0.84 last year
- Operating income of $474.0
million vs. $284.2 million
last year
- Adjusted segment operating income of $548.1 million,
up 23% vs. $444.5
million last year
- Free cash flow of $335.7
million for 120% cash conversion(1)
- Adjusted order intake of record $5.0
billion for record $10.8
billion adjusted backlog(1) and 1.20x
book-to-sales ratio
MONTREAL, May 31, 2023
/PRNewswire/ - (NYSE: CAE) (TSX: CAE) - CAE Inc. (CAE
or the Company) today reported fourth quarter fiscal 2023 revenue
of $1,256.5 million, compared
with $955.0 million last year. Fourth
quarter EPS was $0.31 compared to
$0.17 last year. Adjusted EPS was
$0.35 compared to $0.29 last year. Operating income this quarter
was $186.6 million (14.9% of
revenue(1)), compared to $93.3
million (9.8% of revenue) last year. Fourth quarter adjusted
segment operating income was $201.9
million (16.1% of revenue(1)) compared to
$142.7 million (14.9% of revenue)
last year.
Annual fiscal 2023 revenue was $4.2 billion, compared to $3.4 billion last year. Annual diluted EPS was
$0.70 compared to $0.45 in fiscal 2022. Adjusted EPS was
$0.88 this year compared to
$0.84 last year. Annual operating
income was $474.0 million (11.3% of
revenue), compared to $284.2 million
(8.4% of revenue) last year. Adjusted segment operating income was
$548.1 million (13.0% of revenue), up
23% compared to $444.5 million (13.2%
of revenue) last year. All financial information is in
Canadian dollars.
Summary of consolidated results
(amounts in millions, except per share
amounts)
|
|
FY2023
|
|
FY2022
|
|
Variance
%
|
|
Q4-2023
|
|
Q4-2022
|
|
Variance
%
|
Revenue
|
$
|
4,203.3
|
|
3,371.3
|
|
25 %
|
|
1,256.5
|
|
955.0
|
|
32 %
|
Operating
income
|
$
|
474.0
|
|
284.2
|
|
67 %
|
|
186.6
|
|
93.3
|
|
100 %
|
Adjusted segment
operating income(1)
|
$
|
548.1
|
|
444.5
|
|
23 %
|
|
201.9
|
|
142.7
|
|
41 %
|
As a % of revenue(1)
|
%
|
13.0
|
|
13.2
|
|
|
|
16.1
|
|
14.9
|
|
|
Net income attributable
to equity
|
|
|
|
|
|
|
|
|
|
|
|
|
holders of the
Company
|
$
|
222.7
|
|
141.7
|
|
57 %
|
|
98.4
|
|
55.1
|
|
79 %
|
Basic earnings per
share (EPS)
|
$
|
0.70
|
|
0.46
|
|
52 %
|
|
0.31
|
|
0.17
|
|
82 %
|
Diluted EPS
|
$
|
0.70
|
|
0.45
|
|
56 %
|
|
0.31
|
|
0.17
|
|
82 %
|
Adjusted
EPS(1)
|
$
|
0.88
|
|
0.84
|
|
5 %
|
|
0.35
|
|
0.29
|
|
21 %
|
Adjusted order
intake(1)
|
$
|
5,049.1
|
|
4,091.2
|
|
23 %
|
|
1,465.3
|
|
1,321.1
|
|
11 %
|
Adjusted
backlog(1)
|
$
|
10,796.4
|
|
9,577.5
|
|
13 %
|
|
10,796.4
|
|
9,577.5
|
|
13 %
|
(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.
|
"CAE delivered an excellent performance in the fourth quarter with
over 40 percent adjusted segment operating income growth, which led
to 23 percent growth for the year as a whole. Testament to the
quality of these results, we generated strong free cash flow, for a
1.2 times conversion of annual adjusted net income. We also
expanded our global reach and secured future growth with a record
$5.0 billion in annual orders, for a
record $10.8 billion adjusted
backlog," said Marc Parent, CAE's
President and Chief Executive Officer. "Over the course of the
year, we made significant progress to set the stage for a much
larger future business and to transform our industry through
digital technology innovation and thought leadership. In Civil, we
launched several new training centres and deployed 23 full-flight
simulators to our global network, in lockstep with the major
customer outsourcing agreements we secured in the U.S.,
Europe and Australia, and increased pilot training demand
across all segments of aviation. We also made excellent progress
fielding the next generation of our Civil digital flight services
solutions and the ongoing integration of AirCentre. Civil also
delivered strong financial performance for the year, eclipsing
prior peak annual adjusted segment operating income margins, even
before passenger traffic returns to pre-pandemic levels in key
regions. We booked a record $2.8
billion in annual Civil orders for a 1.30 times
book-to-sales ratio, demonstrating the sustained high demand for
our training and operational support solutions. In Defense, we made
good progress toward increasing the scale and profitability of the
business with a record $2.0 billion
of annual orders for a 1.10 times book-to-sales ratio. We also
continued to build a strong pipeline with some $9.3 billion of Defense bids and proposals
outstanding. Our expanded capabilities are enabling us to gradually
convert our Defense backlog with larger and more profitable
programs, exemplified by our recent key training and simulation
wins in support of U.S. Army and Air Force aviation. And in
Healthcare, we gained share in the simulation market and continued
to deliver double-digit revenue growth with our dynamic team and
highly innovative solutions. As we look ahead, we are well on track
to our targeted three-year (FY22-FY25) EPS compound growth rate in
the mid-20% range. Our recent results and the expanded set of
opportunities before us add to my conviction that we are on a clear
path to an even bigger, stronger, and more profitable CAE in the
future."
Civil Aviation (Civil)
Fourth quarter Civil revenue
was $661.4 million, up 53% compared
to the same quarter last year. Operating income was $149.3 million (22.6% of revenue) compared to
$58.1 million (13.4% of revenue) in
the fourth quarter last year. Fourth quarter Civil adjusted segment
operating income was $162.9 million
(24.6% of revenue), compared to $96.3
million (22.3% of revenue) in the fourth quarter last year.
In the fourth quarter, Civil training centre utilization was 78%
and 17 full-flight simulators (FFSs) were delivered to
customers.
Annual Civil revenue was $2,166.4
million, up 34% compared to last year. Annual operating
income was $430.3 million (19.9% of
revenue) compared to $224.1 million
(13.9% of revenue) last year, and annual adjusted segment operating
income was $485.3 million (22.4% of
revenue) compared to $314.7 million
(19.5% of revenue) last year. For the year, Civil training centre
utilization was 72% and 46 FFSs were delivered to customers.
During the quarter, Civil signed training and operational
support solutions contracts valued at $841.5
million. These included the sale of 19 FFSs and long-term
training and digital flight services contracts, including a 5-year
Pilot License cadet training agreement with Japan Airlines, a
3-year training agreement with Aerolineas Ejecutivas S.A. de C.V.,
and a 10-year flight next-gen crew and operations manager agreement
with SkyWest Airlines. Civil also entered a joint venture with
AEGEAN, Greece's largest airline,
to establish the first advanced flight training centre in
Greece. The new centre will have
capacity for up to seven full-flight simulators and is expected to
begin pilot and cabin crew training by the end of 2023. It will be
the most advanced flight training hub in Southeastern Europe powered by green energy.
Since the end of the quarter, Civil inaugurated its Las Vegas business aviation training centre,
with capacity for up to eight FFSs, and announced plans to expand
its business aviation training network with a new Central European
facility in Vienna, Austria,
scheduled to open in the second half of calendar 2024.
For the year, Civil booked orders for a record $2.8 billion, underscoring CAE's position as the
partner of choice for airlines, business jet operators, aircraft
OEMs and pilots worldwide. These included 62 FFS sales (vs. 48 in
the prior fiscal year) and comprehensive, long-term training
agreements with customers worldwide.
The Civil book-to-sales ratio was 1.27x for the quarter and
1.30x for the last 12 months. The Civil adjusted backlog at the end
of the year was a record $5.7
billion, which is up 16% from the prior year period.
Summary of Civil Aviation results
(amounts in millions)
|
|
FY2023
|
|
FY2022
|
|
Variance %
|
|
Q4-2023
|
|
Q4-2022
|
|
Variance %
|
Revenue
|
$
|
2,166.4
|
|
1,617.8
|
|
34 %
|
|
661.4
|
|
432.7
|
|
53 %
|
Operating
income
|
$
|
430.3
|
|
224.1
|
|
92 %
|
|
149.3
|
|
58.1
|
|
157 %
|
Adjusted segment
operating income
|
$
|
485.3
|
|
314.7
|
|
54 %
|
|
162.9
|
|
96.3
|
|
69 %
|
As a % of revenue
|
%
|
22.4
|
|
19.5
|
|
|
|
24.6
|
|
22.3
|
|
|
Adjusted order
intake
|
$
|
2,827.1
|
|
2,016.5
|
|
40 %
|
|
841.5
|
|
517.0
|
|
63 %
|
Adjusted
backlog
|
$
|
5,730.8
|
|
4,919.2
|
|
16 %
|
|
5,730.8
|
|
4,919.2
|
|
16 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary non-financial
information
|
|
|
|
|
|
|
|
|
Simulator equivalent
unit
|
|
257
|
|
246
|
|
4 %
|
|
265
|
|
246
|
|
8 %
|
FFSs in CAE's
network
|
|
324
|
|
316
|
|
3 %
|
|
324
|
|
316
|
|
3 %
|
FFS
deliveries
|
|
46
|
|
30
|
|
53 %
|
|
17
|
|
7
|
|
143 %
|
Utilization
rate
|
%
|
72
|
|
60
|
|
|
|
78
|
|
69
|
|
|
Defense and Security (Defense)
Fourth quarter Defense
revenue was $536.0 million, up 14%
compared to the same quarter last year. Operating income was
$29.0 million (5.4% of revenue)
compared to $25.8 million (5.5% or
revenue) in the fourth quarter last year. Fourth quarter Defense
adjusted segment operating income was $30.5
million (5.7% of revenue), compared to $36.8 million (7.8% of revenue) in the fourth
quarter last year.
Annual Defense revenue was $1,844.2
million, up 15% over last year. Annual operating income was
$35.7 million (1.9% of revenue)
compared to $56.0 million (3.5% of
revenue) last year, and annual adjusted segment operating income
was $53.1 million (2.9% of revenue),
compared to $119.2 million (7.4% of
revenue) last year.
During the quarter, Defense booked orders for $564.7 million, bringing the full-year total to a
record $2.0 billion. New business
agreements this quarter included a U.S. Navy Foreign Military Sale
(FMS) to Korea for an MH-60R Tactical Operational Flight Trainer,
and the extension and expansion of agreements with the U.S. Army
for fixed-wing flight training and support services at the CAE
Dothan Training Center, and the U.S. Air Force for Initial Flight
Training at the CAE Pueblo Training Center. Defense was also
awarded a contract for comprehensive training and support services
under the Australian Defence Force ASIST program.
Since the end of the quarter, Defense was awarded a US$455 million contract to support Flight School
Training Support Services (FSTSS) at Fort Novosel, Alabama (formerly Fort Rucker) with training and simulation
solutions for initial entry-level and graduate-level rotary wing
flight training. Under the terms of the 12-year contract, CAE will
build and operate CAE-owned full-flight simulators for the CH-47F
and UH-60M platforms to meet the U.S. Army Aviation Center of
Excellence's rotary wing simulation services requirements. Located
at the U.S Army Aviation Center of Excellence, the FSTSS program
represents the world's largest helicopter simulation training
program, replacing the former Flight School XXI program, which
supported the training of approximately 3,900 Army aviators
annually.
Also involving U.S. Army Aviation, the U.S. General
Accountability Office upheld the selection of the Bell V-280 Valor
for the U.S. Army's Future Long Range Assault Aircraft (FLRAA), and
as part of Team Valor, CAE is a key partner in the future provision
of training and simulation solutions for this Next-Gen platform.
Further leveraging its prominent flight training position in lower
Alabama, Defense was competitively
awarded the U.S. Air Force's Rotary Wing, Introductory Flight
Training (IFT-R) contract, worth a maximum value of US$110.6 million over the total contract term, to
execute all Air Force initial Helicopter Flight Training. Under the
IFT-R contract, CAE will provide a comprehensive training solution
by leveraging its existing Dothan Training Center in Dothan, Alabama.
The Defense book-to-sales ratio was 1.05x for the quarter,
marking the seventh consecutive quarter with a book-to-sales ratio
above one. The book-to-sales ratio was 1.10x for the last 12
months. The Defense adjusted backlog at the end of the year was
$5.1 billion. In addition, the
Defense pipeline strengthened with some $9.3
billion of bids and proposals pending customer
decisions.
Summary of Defense and Security results
(amounts in millions)
|
|
FY2023
|
|
FY2022
|
|
Variance %
|
|
Q4-2023
|
|
Q4-2022
|
|
Variance %
|
Revenue
|
$
|
1,844.2
|
|
1,602.1
|
|
15 %
|
|
536.0
|
|
469.5
|
|
14 %
|
Operating
income
|
$
|
35.7
|
|
56.0
|
|
(36 %)
|
|
29.0
|
|
25.8
|
|
12 %
|
Adjusted segment
operating income
|
$
|
53.1
|
|
119.2
|
|
(55 %)
|
|
30.5
|
|
36.8
|
|
(17 %)
|
As a % of revenue
|
%
|
2.9
|
|
7.4
|
|
|
|
5.7
|
|
7.8
|
|
|
Adjusted order
intake
|
$
|
2,029.3
|
|
1,923.3
|
|
6 %
|
|
564.7
|
|
751.3
|
|
(25 %)
|
Adjusted
backlog
|
$
|
5,065.6
|
|
4,658.3
|
|
9 %
|
|
5,065.6
|
|
4,658.3
|
|
9 %
|
Healthcare
Fourth quarter Healthcare revenue was
$59.1 million, up 12% compared to the
same quarter last year. Operating income was $8.3 million (14.0% of revenue) compared to
$9.4 million (17.8% of revenue) in
the fourth quarter last year. Fourth quarter adjusted segment
operating income was $8.5 million
(14.4% of revenue) compared to $9.6
million (18.2% of revenue) in the fourth quarter last year.
Annual Healthcare revenue was $192.7
million, up 27% compared to last year. Annual operating
income was $8.0 million (4.2% of
revenue) compared to $4.1 million
(2.7% of revenue) last year, and annual adjusted segment operating
income was $9.7 million (5.0% of
revenue), compared to $10.6 million
last year (7.0% of revenue). Healthcare continued to deliver year
over year revenue growth with an organization focused on
operational excellence and achieving greater scale.
During the quarter, Healthcare secured a significant
multi-simulator sale that was funded by a grant from the Health
Resources & Services Administration, demonstrating continued
relevance of, and interest in, pursuing patient simulation to
improve healthcare outcomes. As an industry thought leader,
Healthcare was selected to present an immersive learning lab at the
industry's largest simulation event, the International Meeting of
Simulation in Healthcare, where it partnered with CAE's Civil
segment to deliver a session focused on the parallels between
aviation and healthcare training to elevate quality and safety.
Summary of Healthcare results
(amounts in millions)
|
|
FY2023
|
|
FY2022
|
|
Variance %
|
|
Q4-2023
|
|
Q4-2022
|
|
Variance %
|
Revenue
|
$
|
192.7
|
|
151.4
|
|
27 %
|
|
59.1
|
|
52.8
|
|
12 %
|
Operating
income
|
$
|
8.0
|
|
4.1
|
|
95 %
|
|
8.3
|
|
9.4
|
|
(12 %)
|
Adjusted segment
operating income
|
$
|
9.7
|
|
10.6
|
|
(8 %)
|
|
8.5
|
|
9.6
|
|
(11 %)
|
As a % of revenue
|
%
|
5.0
|
|
7.0
|
|
|
|
14.4
|
|
18.2
|
|
|
Technology and innovation
CAE achieved a technology
milestone during the quarter in its pursuit to revolutionize
aviation training in Civil and Defense markets. A field study was
conducted with the Japan Air Self-Defense Force (JASDF) to validate
the potential for more effective training by leveraging CAE's
latest Virtual Reality and Artificial Intelligence-enabled Digital
Solutions. The study revealed a near full grade of proficiency
score improvement across all JASDF participants. The novel solution
embedded CAE Rise, which was originally conceived for Civil
aviation, to provide more effective training through real-time
objective assessments. It also incorporated CAE's patented
biometric feedback technology, enabling instructors to modulate
complexity based on students' stress, engagement, and cognitive
workload levels.
Additional financial highlights
CAE incurred
restructuring, integration and acquisition costs of $15.3 million during the fourth quarter of fiscal
2023, relating mainly to the fiscal 2022 acquisition of Sabre's
AirCentre airline operations portfolio (AirCentre).
Net cash provided by operating activities was $180.6 million for the quarter compared to
$206.8 million in the fourth quarter
last year. Free cash flow was $172.0
million for the quarter compared to $187.6 million in the fourth quarter last year.
For the year, net cash provided by operating activities was
$408.4 million compared to
$418.2 million last year and free
cash flow was $335.7 million,
compared to $341.5 million in the
same period last year. The cash conversion rate(1) for
fiscal year 2023 was 120%.
Income tax expense this quarter was $33.3
million, representing an effective tax rate of 25%, compared
to an effective tax rate of 6% in the fourth quarter last year. The
income tax rate was impacted by restructuring, integration and
acquisition costs, and excluding these costs, as well as the cloud
computing transition adjustment last year, the income tax rate used
to determine adjusted net income and adjusted EPS was 24% this
quarter as compared to 15% in the fourth quarter of last year.
Growth and maintenance capital expenditures(1)
totaled $62.9 million this quarter
and $268.8 million for the year,
mainly in support of accretive growth opportunities to expand the
Civil global aviation training network.
Net debt(1) at the end of the year was $3,032.5 million for a net debt-to-adjusted
EBITDA(1) of 3.41 times. This compares to net debt of
$3,073.0 million, for a net
debt-to-adjusted EBITDA of 3.74 times at the end of the preceding
quarter.
Net finance expense this quarter amounted to $51.4 million, compared to $48.8 million in the preceding quarter and
$32.5 million in the fourth quarter
last year. The increased finance expense relative to both prior
periods mainly reflects the impact of higher interest rates on our
variable rate debt instruments and an increased level of borrowing
under credit facilities.
Adjusted return on capital employed (ROCE)(1) was
5.7% this quarter compared to 5.5% last quarter and 6.2% in the
fourth 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)
This quarter,
CAE finalized its five-year ESG roadmap and associated
implementation plan, the details of which, along with additional
information related to CAE's ESG performance during fiscal 2023,
will be released in the Company's Annual Activity and
Sustainability report at the end of June. This past February, CAE
held an in-person Supply Chain Forum for its key strategic
suppliers. A number of CAE's executives and leaders were on hand to
offer perspectives on CAE's sustainability journey, share best
practices, and engage in training sessions and workshops to elevate
the proficiency level of the participants on carbon footprint and
climate change. CAE's decarbonization journey is linked to that of
its suppliers and the Company is determined to collaborate with
them for maximum impact. In the same vein, CAE joined the
International Aerospace Environmental Group (IAEG), a group of
aerospace and defence OEMs aimed at fostering sustainable growth of
the industry through responsible practices. IAEG develops common
standards for evaluating the ESG performance of industry suppliers.
By participating in the IAEG, CAE will contribute to the
harmonization of ESG requirements for suppliers across the
aerospace and defence sector. CAE was also admitted to the Climate
Group's RE100, a collective of 400 global companies most committed
to the use of renewable energy worldwide. CAE's admission to this
group is a further testament to the seriousness of its achievements
and commitments toward renewable energy.
To learn more about CAE's corporate sustainability roadmap and
achievements, the report can be downloaded at
https://www.cae.com/social-responsibility/.
Management outlook for fiscal year 2024
CAE has been
carrying out 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, recently eclipsed 2019 profitability levels, even
before a full recovery in passenger traffic in key regions, and it
continues to experience strong growth momentum. The Company is well
on track to its targeted three-year (FY22-FY25) EPS compound growth
rate in the mid-20% range, which it expects to be driven by the
ongoing strong Civil performance, the multi-year transformation
underway in Defense, and higher scale and profitability in
Healthcare. The realization of CAE's growth strategy is expected to
result in a significantly larger base of business, with a capital
structure that affords ample flexibility to balance further
investments in its future alongside capital returns for
shareholders.
Management maintains its highly positive view of its growth
potential over a multi-year period. While some macro-level
headwinds persist in the general economy (geopolitics, inflation,
financing costs), expected secular trends are highly favorable
across all of CAE's 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
geopolitical tensions and increased commitments by governments to
defence modernization and readiness. Tailwinds that favour CAE's
Defense business include the shift in national defence priorities
to an increased focus on near-peer threats and the recognition of
the increased need for the kinds of digital immersion-based
synthetic solutions that draw from CAE's expertise in commercial
aviation simulation and training. Healthcare is poised to leverage
opportunities presented by high demand for nurses and increased
opportunities for medical simulation.
The Company expects Civil to continue growing at an above market
rate, driven by the remaining stages of cyclical recovery in
Asia and a sustained high level of
demand for pilots and pilot training across all segments of civil
aviation. In fiscal 2024, management expects low- to mid-teen
percentage annual growth in Civil adjusted segment operating
income, with margins in the current range, driven by higher
training and customer FFS delivery volumes and the ongoing
simulator deployments to expand CAE's global training network.
CAE's Civil business is expected to experience a more typical
seasonal pattern in fiscal 2024, with performance weighted more
heavily to the second half of the year. 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 three-quarters of
which are slated for the second half.
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. To date, Defense has transformed to
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
innovations in commercial aviation to transform 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 wins, record adjusted backlog,
$9.3 billion pipeline of bids and
proposals outstanding and trailing 12-month book-to-sales ratio of
1.10 times demonstrate that its transformation strategy is bearing
fruit. Current geopolitical events have galvanized national defence
priorities in the U.S. and across NATO, and management expects
increased spending and specific prioritization on defence readiness
to translate into additional opportunities for CAE in the years
ahead.
In fiscal 2024, Defense expects to continue renewing its backlog
with larger and more profitable programs, while simultaneously
working its way through a critical mass of lower-margin legacy
contracts. Management remains highly focused on execution, and for
the fiscal year, it expects Defense to see continued year over year
performance improvements on a quarterly basis, with a heavier
weighting to the second half, consistent with its historical
seasonality. External considerations that may bear influence on the
near-term for Defense include order delays, which could potentially
be a factor this year in light of U.S. government budget
appropriation uncertainty. At the same time, Defense expects to see
a further easing of the acute supply chain and labour challenges it
had been facing over the last year. 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 Healthcare, management sees potential to accelerate value
creation as it gains share in the healthcare simulation and
training market and continues to build on its top- and bottom-line
growth momentum.
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. Consistent with its
growth investment priorities and non-cash working capital
assumptions for fiscal 2024, the Company expects a quarterly
finance expense run rate of approximately $50 million — at least for the first half of the
year. Management remains focused on making organic investments in
lockstep with customer demand, integrating and ramping up recent
investments and continuing to make progress deleveraging its
balance sheet. CAE continues to expect net debt-to-adjusted EBITDA
to decrease to a ratio of below three times by the middle of the
fiscal year, at which time it expects to be in position to consider
reinstating capital returns to shareholders. CAE expects its annual
effective income tax rate to be approximately 22%.
Management's outlook for fiscal year 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.sedar.com) 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 year
ended March 31, 2023, which are available on our website
(www.cae.com), SEDAR (www.sedar.com) 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 Q4 and full FY2023
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, 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 May 31, 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 May 31, 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, and the absence of significant
undisclosed costs or liabilities associated with the L3H MT and
AirCentre acquisitions. 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. For additional
information, including with respect to other assumptions underlying
the forward-looking statements made in this press release, refer to
the applicable reportable segment in CAE's MD&A for the year
ended March 31, 2023 available on our
website (www.cae.com), SEDAR (www.sedar.com) and EDGAR
(www.sec.gov).
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.sedar.com) 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), cloud
computing transition adjustment (as described in Note 5 of our
consolidated financial statements for the year ended March 31, 2022) and impairments and other gains
and losses incurred in relation to the COVID-19 pandemic (as
described in Note 7 of our consolidated financial statements for
the year ended March 31, 2021). 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 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), cloud computing transition adjustment (as described
in Note 5 of our consolidated financial statements for the year
ended March 31, 2022) and impairments
and other gains and losses incurred in relation to the COVID-19
pandemic (as described in Note 7 of our consolidated financial
statements for the year ended March 31,
2021). 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.
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.
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), cloud computing transition adjustment (as described
in Note 5 of our consolidated financial statements for the year
ended March 31, 2022) and impairments
and other gains and losses incurred in relation to the COVID-19
pandemic (as described in Note 7 of our consolidated financial
statements for the year ended March 31,
2021). We use EBITDA and adjusted EBITDA to evaluate our
operating performance, by eliminating the impact of non-operational
or non-cash items.
Cash conversion rate
Cash conversion rate is a
non-IFRS ratio calculated by dividing free cash flow by adjusted
net income. We use it to assess our performance in cash flow
generation and as a basis for evaluating our capitalization
structure.
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), cloud computing transition
adjustment (as described in Note 5 of our consolidated financial
statements for the year ended March 31,
2022) and impairments and other gains and losses incurred in
relation to the COVID-19 pandemic (as described in Note 7 of our
consolidated financial statements for the year ended March 31, 2021). 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
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
|
|
|
|
|
|
|
|
|
|
|
Defense
|
|
|
|
|
(amounts in millions)
|
Civil
Aviation
|
and
Security
|
Healthcare
|
|
Total
|
Three months ended March 31
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
Operating
income
|
$
149.3
|
$
58.1
|
$
29.0
|
$
25.8
|
$ 8.3
|
$ 9.4
|
$
186.6
|
$
93.3
|
Restructuring,
integration and acquisition costs
|
13.6
|
26.6
|
1.5
|
9.2
|
0.2
|
0.2
|
15.3
|
36.0
|
Impairments and other
gains and losses arising from
|
|
|
|
|
|
|
|
|
significant strategic
transactions or specific events:
|
|
|
|
|
|
|
|
|
Cloud computing
transition adjustment
|
—
|
11.6
|
—
|
1.8
|
—
|
—
|
—
|
13.4
|
Adjusted segment
operating income
|
$
162.9
|
$
96.3
|
$
30.5
|
$
36.8
|
$ 8.5
|
$ 9.6
|
$
201.9
|
$
142.7
|
|
|
Defense
|
|
|
|
|
(amounts in millions)
|
Civil
Aviation
|
and
Security
|
Healthcare
|
|
Total
|
Years ended March 31
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
Operating
income
|
$
430.3
|
$
224.1
|
$
35.7
|
$
56.0
|
$ 8.0
|
$ 4.1
|
$
474.0
|
$
284.2
|
Restructuring,
integration and acquisition costs
|
52.0
|
79.0
|
10.6
|
61.4
|
1.7
|
6.5
|
64.3
|
146.9
|
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
|
3.0
|
—
|
6.8
|
—
|
—
|
—
|
9.8
|
—
|
Cloud computing
transition adjustment
|
—
|
11.6
|
—
|
1.8
|
—
|
—
|
—
|
13.4
|
Adjusted segment
operating income
|
$
485.3
|
$
314.7
|
$
53.1
|
$
119.2
|
$ 9.7
|
$
10.6
|
$
548.1
|
$
444.5
|
Reconciliation of adjusted net income and adjusted EPS
|
|
|
|
Three months ended
|
|
Years ended
|
|
|
March 31
|
March 31
|
(amounts in millions, except per share
amounts)
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income attributable
to equity holders of the Company
|
|
$
98.4
|
|
$
55.1
|
|
$
222.7
|
|
$ 141.7
|
Restructuring,
integration and acquisition costs, after tax
|
|
|
|
12.5
|
|
27.1
|
|
49.4
|
|
110.0
|
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, after tax
|
|
|
|
—
|
|
—
|
|
7.1
|
|
—
|
Cloud computing
transition adjustment, after tax
|
|
|
|
—
|
|
9.8
|
|
—
|
|
9.8
|
Adjusted net
income
|
|
|
|
$
110.9
|
|
$
92.0
|
|
$
279.2
|
|
$ 261.5
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding (diluted)
|
|
|
|
318.7
|
|
318.5
|
|
318.4
|
|
312.9
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
|
|
$
0.35
|
|
$
0.29
|
|
$
0.88
|
|
$
0.84
|
Reconciliation of free cash flow
(amounts in millions)
|
FY2023
|
|
FY2022
|
|
Q4-2023
|
|
Q4-2022
|
Cash provided by
operating activities*
|
$
522.9
|
|
$
395.7
|
|
$
158.5
|
|
$
83.2
|
Changes in non-cash
working capital
|
(114.5)
|
|
22.5
|
|
22.1
|
|
123.6
|
Net cash provided by
operating activities
|
$
408.4
|
|
$
418.2
|
|
$
180.6
|
|
$
206.8
|
Maintenance capital
expenditures
|
(62.8)
|
|
(55.4)
|
|
(14.8)
|
|
(16.1)
|
Change in ERP and other
assets
|
(45.6)
|
|
(37.4)
|
|
(14.9)
|
|
(10.4)
|
Proceeds from the
disposal of property, plant and equipment
|
5.7
|
|
8.4
|
|
0.9
|
|
0.3
|
Net (payments to)
proceeds from equity accounted investees
|
(10.9)
|
|
(19.4)
|
|
(0.4)
|
|
0.5
|
Dividends received from
equity accounted investees
|
40.9
|
|
27.1
|
|
20.6
|
|
6.5
|
Free cash
flow
|
$
335.7
|
|
$
341.5
|
|
$
172.0
|
|
$
187.6
|
* 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
|
|
|
|
|
March 31
|
(amounts in millions, except net debt-to-EBITDA
ratios)
|
|
|
|
|
2023
|
|
2022
|
Operating
income
|
|
|
|
|
$
474.0
|
|
$ 284.2
|
Depreciation and
amortization
|
|
|
|
|
342.2
|
|
310.5
|
EBITDA
|
|
|
|
|
$
816.2
|
|
$ 594.7
|
Restructuring,
integration and acquisition costs
|
|
|
|
|
64.3
|
|
146.9
|
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
|
|
|
|
|
$
890.3
|
|
$ 755.0
|
|
|
|
|
|
|
|
|
Net debt
|
|
|
|
|
$ 3,032.5
|
|
$
2,700.1
|
|
|
|
|
|
|
|
|
Net
debt-to-EBITDA
|
|
|
|
|
3.72
|
|
4.54
|
Net debt-to-adjusted
EBITDA
|
|
|
3.41
|
|
3.58
|
Reconciliation of capital employed and net debt
|
As at March 31
|
|
As at March
31
|
(amounts in millions)
|
2023
|
|
2022
|
Use of capital:
|
|
|
|
Current
assets
|
$
2,235.0
|
|
$
2,148.6
|
Less: cash and cash
equivalents
|
(217.6)
|
|
(346.1)
|
Current
liabilities
|
(2,246.7)
|
|
(2,091.2)
|
Less: current portion
of long-term debt
|
214.6
|
|
241.8
|
Non-cash working
capital
|
$
(14.7)
|
|
$
(46.9)
|
Property, plant and
equipment
|
2,387.1
|
|
2,129.3
|
Intangible
assets
|
4,050.8
|
|
3,796.3
|
Other long-term
assets
|
1,763.6
|
|
1,504.6
|
Other long-term
liabilities
|
(565.4)
|
|
(596.6)
|
Capital
employed
|
$
7,621.4
|
|
$
6,786.7
|
Source of capital:
|
|
|
|
Current portion of
long-term debt
|
$
214.6
|
|
$
241.8
|
Long-term
debt
|
3,035.5
|
|
2,804.4
|
Less: cash and cash
equivalents
|
(217.6)
|
|
(346.1)
|
Net debt
|
$
3,032.5
|
|
$
2,700.1
|
Equity attributable to
equity holders of the Company
|
4,507.7
|
|
4,009.7
|
Non-controlling
interests
|
81.2
|
|
76.9
|
Capital
employed
|
$
7,621.4
|
|
$
6,786.7
|
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 Sections 3.7 and 3.9 of CAE's
MD&A for the year ended March 31,
2023 (which is incorporated by reference into this press
release) available on our website (www.cae.com), SEDAR
(www.sedar.com) and EDGAR (www.sec.gov).
Consolidated Income Statement
|
|
Three months
ended
|
|
Years
ended
|
|
|
March
31
|
|
March
31
|
(amounts in millions
of Canadian dollars, except per share amounts)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
1,256.5
|
$
|
955.0
|
$
|
4,203.3
|
$
|
3,371.3
|
Cost of
sales
|
|
894.7
|
|
683.4
|
|
3,037.0
|
|
2,415.8
|
Gross
profit
|
$
|
361.8
|
$
|
271.6
|
$
|
1,166.3
|
$
|
955.5
|
Research and
development expenses
|
|
40.0
|
|
34.9
|
|
143.1
|
|
120.8
|
Selling, general and
administrative expenses
|
|
149.7
|
|
143.6
|
|
560.9
|
|
489.1
|
Other (gains) and
losses
|
|
(10.5)
|
|
(20.9)
|
|
(22.8)
|
|
(37.0)
|
Share of after-tax
profit of equity accounted investees
|
|
(19.3)
|
|
(15.3)
|
|
(53.2)
|
|
(48.5)
|
Restructuring,
integration and acquisition costs
|
|
15.3
|
|
36.0
|
|
64.3
|
|
146.9
|
Operating
income
|
$
|
186.6
|
$
|
93.3
|
$
|
474.0
|
$
|
284.2
|
Finance expense –
net
|
|
51.4
|
|
32.5
|
|
177.7
|
|
130.6
|
Earnings before
income taxes
|
$
|
135.2
|
$
|
60.8
|
$
|
296.3
|
$
|
153.6
|
Income tax
expense
|
|
33.3
|
|
3.7
|
|
64.4
|
|
3.6
|
Net
income
|
$
|
101.9
|
$
|
57.1
|
$
|
231.9
|
$
|
150.0
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
$
|
98.4
|
$
|
55.1
|
$
|
222.7
|
$
|
141.7
|
Non-controlling
interests
|
|
3.5
|
|
2.0
|
|
9.2
|
|
8.3
|
Earnings per share
attributable to equity holders of the Company
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.31
|
$
|
0.17
|
$
|
0.70
|
$
|
0.46
|
Diluted
|
$
|
0.31
|
$
|
0.17
|
$
|
0.70
|
$
|
0.45
|
Consolidated Statement of Comprehensive Income
|
|
Three months
ended
|
|
Years
ended
|
|
|
March
31
|
|
March
31
|
(amounts in millions
of Canadian dollars)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
income
|
$
|
101.9
|
$
|
57.1
|
$
|
231.9
|
$
|
150.0
|
Items that may be
reclassified to net income
|
|
|
|
|
|
|
|
|
Foreign currency
exchange differences on translation of foreign
operations
|
$
|
20.6
|
$
|
(90.5)
|
$
|
331.1
|
$
|
(101.4)
|
Net gain (loss) on
hedges of net investment in foreign operations
|
|
0.4
|
|
21.1
|
|
(112.6)
|
|
15.8
|
Reclassification to
income of gains on foreign currency exchange differences
|
|
(0.2)
|
|
(0.4)
|
|
(6.4)
|
|
(4.7)
|
Net (loss) gain on
cash flow hedges
|
|
(3.8)
|
|
2.2
|
|
(14.0)
|
|
(6.0)
|
Reclassification to
income of losses (gains) on cash flow hedges
|
|
6.0
|
|
5.0
|
|
(5.5)
|
|
(7.0)
|
Income
taxes
|
|
(2.3)
|
|
(5.0)
|
|
9.9
|
|
(2.0)
|
|
$
|
20.7
|
$
|
(67.6)
|
$
|
202.5
|
$
|
(105.3)
|
Items that will
never be reclassified to net income
|
|
|
|
|
|
|
|
|
Remeasurement of
defined benefit pension plan obligations
|
$
|
18.5
|
$
|
110.4
|
$
|
74.2
|
$
|
125.6
|
Net loss on financial
assets carried at fair value through OCI
|
|
—
|
|
(0.1)
|
|
—
|
|
(0.1)
|
Income
taxes
|
|
(4.8)
|
|
(29.5)
|
|
(19.7)
|
|
(33.4)
|
|
$
|
13.7
|
$
|
80.8
|
$
|
54.5
|
$
|
92.1
|
Other comprehensive
income (loss)
|
$
|
34.4
|
$
|
13.2
|
$
|
257.0
|
$
|
(13.2)
|
Total comprehensive
income
|
$
|
136.3
|
$
|
70.3
|
$
|
488.9
|
$
|
136.8
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
$
|
132.5
|
$
|
69.4
|
$
|
475.6
|
$
|
129.8
|
Non-controlling
interests
|
|
3.8
|
|
0.9
|
|
13.3
|
|
7.0
|
Consolidated Statement of Financial Position
|
|
March 31
|
March 31
|
(amounts in millions
of Canadian dollars)
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
217.6
|
$
|
346.1
|
Accounts
receivable
|
|
|
615.7
|
|
556.9
|
Contract
assets
|
|
|
693.8
|
|
608.3
|
Inventories
|
|
|
583.4
|
|
519.8
|
Prepayments
|
|
|
64.1
|
|
56.7
|
Income taxes
recoverable
|
|
|
48.3
|
|
33.2
|
Derivative financial
assets
|
|
|
12.1
|
|
27.6
|
Total current
assets
|
|
$
|
2,235.0
|
$
|
2,148.6
|
Property, plant and
equipment
|
|
|
2,387.1
|
|
2,129.3
|
Right-of-use
assets
|
|
|
426.9
|
|
373.0
|
Intangible
assets
|
|
|
4,050.8
|
|
3,796.3
|
Investment in equity
accounted investees
|
|
|
530.7
|
|
454.0
|
Employee benefits
assets
|
|
|
51.1
|
|
—
|
Deferred tax
assets
|
|
|
125.1
|
|
117.4
|
Derivative financial
assets
|
|
|
9.2
|
|
10.5
|
Other non-current
assets
|
|
|
620.6
|
|
549.7
|
Total
assets
|
|
$
|
10,436.5
|
$
|
9,578.8
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
1,036.7
|
$
|
975.1
|
Provisions
|
|
|
26.7
|
|
36.7
|
Income taxes
payable
|
|
|
21.1
|
|
22.7
|
Contract
liabilities
|
|
|
905.7
|
|
788.3
|
Current portion of
long-term debt
|
|
|
214.6
|
|
241.8
|
Derivative financial
liabilities
|
|
|
41.9
|
|
26.6
|
Total current
liabilities
|
|
$
|
2,246.7
|
$
|
2,091.2
|
Provisions
|
|
|
20.1
|
|
20.6
|
Long-term
debt
|
|
|
3,035.5
|
|
2,804.4
|
Royalty
obligations
|
|
|
119.4
|
|
126.0
|
Employee benefits
obligations
|
|
|
91.9
|
|
109.7
|
Deferred tax
liabilities
|
|
|
129.3
|
|
93.7
|
Derivative financial
liabilities
|
|
|
6.5
|
|
1.0
|
Other non-current
liabilities
|
|
|
198.2
|
|
245.6
|
Total
liabilities
|
|
$
|
5,847.6
|
$
|
5,492.2
|
Equity
|
|
|
|
|
|
Share
capital
|
|
$
|
2,243.6
|
$
|
2,224.7
|
Contributed
surplus
|
|
|
42.1
|
|
38.6
|
Accumulated other
comprehensive income
|
|
|
167.2
|
|
(31.2)
|
Retained
earnings
|
|
|
2,054.8
|
|
1,777.6
|
Equity attributable to
equity holders of the Company
|
|
$
|
4,507.7
|
$
|
4,009.7
|
Non-controlling
interests
|
|
|
81.2
|
|
76.9
|
Total
equity
|
|
$
|
4,588.9
|
$
|
4,086.6
|
Total liabilities
and equity
|
|
$
|
10,436.5
|
$
|
9,578.8
|
Consolidated Statement of Changes in Equity
|
|
Attributable to equity
holders of the Company
|
|
|
|
|
|
|
|
Common
shares
|
|
Accumulated
other
|
|
|
|
|
|
Non-
|
|
|
(amounts in millions
of Canadian dollars,
|
|
Number of
|
Stated
|
Contributed
|
comprehensive
|
|
Retained
|
|
|
controlling
|
|
Total
|
except number of
shares)
|
|
shares
|
value
|
surplus
|
income
|
|
earnings
|
|
Total
|
interests
|
|
equity
|
Balances as at March
31, 2021
|
|
293,355,463
|
$
|
1,516.2
|
$
|
22.5
|
$
|
58.1
|
$
|
1,543.7
|
$
|
3,140.5
|
$
|
72.3
|
$
|
3,212.8
|
Net income
|
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
141.7
|
$
|
141.7
|
$
|
8.3
|
$
|
150.0
|
Other comprehensive
(loss) income
|
|
—
|
|
—
|
|
—
|
|
(104.1)
|
|
92.2
|
|
(11.9)
|
|
(1.3)
|
|
(13.2)
|
Total comprehensive
(loss) income
|
|
—
|
$
|
—
|
$
|
—
|
$
|
(104.1)
|
$
|
233.9
|
$
|
129.8
|
$
|
7.0
|
$
|
136.8
|
Issuance of common
shares upon conversion of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subscription
receipts
|
|
22,400,000
|
|
677.2
|
|
12.5
|
|
—
|
|
—
|
|
689.7
|
|
—
|
|
689.7
|
Exercise of stock
options
|
|
1,268,660
|
|
31.3
|
|
(4.2)
|
|
—
|
|
—
|
|
27.1
|
|
—
|
|
27.1
|
Share-based payments
expense
|
|
—
|
|
—
|
|
7.8
|
|
—
|
|
—
|
|
7.8
|
|
—
|
|
7.8
|
Transfer of realized
cash flow hedge losses related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to business
combinations
|
|
—
|
|
—
|
|
—
|
|
14.8
|
|
—
|
|
14.8
|
|
—
|
|
14.8
|
Transactions with
non-controlling interests
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.4)
|
|
(2.4)
|
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
|
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
222.7
|
$
|
222.7
|
$
|
9.2
|
$
|
231.9
|
Other comprehensive
income
|
|
—
|
|
—
|
|
—
|
|
198.4
|
|
54.5
|
|
252.9
|
|
4.1
|
|
257.0
|
Total comprehensive
income
|
|
—
|
$
|
—
|
$
|
—
|
$
|
198.4
|
$
|
277.2
|
$
|
475.6
|
$
|
13.3
|
$
|
488.9
|
Exercise of stock
options
|
|
882,167
|
|
18.9
|
|
(2.6)
|
|
—
|
|
—
|
|
16.3
|
|
—
|
|
16.3
|
Share-based payments
expense
|
|
—
|
|
—
|
|
6.1
|
|
—
|
|
—
|
|
6.1
|
|
—
|
|
6.1
|
Transactions with
non-controlling interests
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(9.0)
|
|
(9.0)
|
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
|
Consolidated Statement of Cash Flows
Years ended
March 31
|
|
|
|
|
|
|
(amounts in millions
of Canadian dollars)
|
|
|
|
2023
|
|
2022
|
Operating
activities
|
|
|
|
|
|
|
Net income
|
|
|
$
|
231.9
|
$
|
150.0
|
Adjustments
for:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
342.2
|
|
310.5
|
Impairment (reversal)
of non-financial assets – net
|
|
|
|
(2.4)
|
|
41.8
|
Share of after-tax
profit of equity accounted investees
|
|
|
|
(53.2)
|
|
(48.5)
|
Deferred income
taxes
|
|
|
|
10.4
|
|
(32.4)
|
Investment tax
credits
|
|
|
|
(5.4)
|
|
(27.5)
|
Share-based payments
expense
|
|
|
|
(10.3)
|
|
6.4
|
Defined benefit
pension plans
|
|
|
|
4.8
|
|
13.7
|
Other non-current
liabilities
|
|
|
|
(15.9)
|
|
(65.9)
|
Derivative financial
assets and liabilities – net
|
|
|
|
(2.5)
|
|
11.3
|
Other
|
|
|
|
23.3
|
|
36.3
|
Changes in non-cash
working capital
|
|
|
|
(114.5)
|
|
22.5
|
Net cash provided by
operating activities
|
|
|
$
|
408.4
|
$
|
418.2
|
Investing
activities
|
|
|
|
|
|
|
Business combinations,
net of cash acquired
|
|
|
$
|
(6.4)
|
$
|
(1,883.7)
|
Acquisition of
investment in equity accounted investees
|
|
|
|
—
|
|
(4.3)
|
Property, plant and
equipment expenditures
|
|
|
|
(268.8)
|
|
(272.2)
|
Proceeds from disposal
of property, plant and equipment
|
|
|
|
5.7
|
|
8.4
|
Advance payments for
property, plant and equipment
|
|
|
|
(30.1)
|
|
—
|
Intangible assets
expenditures
|
|
|
|
(126.4)
|
|
(90.6)
|
Net payments to equity
accounted investees
|
|
|
|
(10.9)
|
|
(19.4)
|
Dividends received from
equity accounted investees
|
|
|
|
40.9
|
|
27.1
|
Other
|
|
|
|
(4.7)
|
|
(2.4)
|
Net cash used in
investing activities
|
|
|
$
|
(400.7)
|
$
|
(2,237.1)
|
Financing
activities
|
|
|
|
|
|
|
Net proceeds from
borrowing under revolving credit facilities
|
|
|
$
|
44.5
|
$
|
344.6
|
Proceeds from long-term
debt
|
|
|
|
31.2
|
|
429.1
|
Repayment of long-term
debt
|
|
|
|
(161.0)
|
|
(132.1)
|
Repayment of lease
liabilities
|
|
|
|
(83.4)
|
|
(89.5)
|
Net proceeds from the
issuance of common shares
|
|
|
|
16.3
|
|
696.1
|
Other
|
|
|
|
(0.2)
|
|
7.4
|
Net cash (used in)
provided by financing activities
|
|
|
$
|
(152.6)
|
$
|
1,255.6
|
Effect of foreign
currency exchange differences on cash and cash equivalents
|
|
|
$
|
16.4
|
$
|
(16.7)
|
Net decrease in cash
and cash equivalents
|
|
|
$
|
(128.5)
|
$
|
(580.0)
|
Cash and cash
equivalents, beginning of year
|
|
|
|
346.1
|
|
926.1
|
Cash and cash
equivalents, end of year
|
|
|
$
|
217.6
|
$
|
346.1
|
Contacts
Investor Relations:
Andrew Arnovitz, Senior Vice
President, Investor Relations and Enterprise Risk Management,
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-fourth-quarter-and-full-fiscal-year-2023-results-301838554.html
SOURCE CAE INC.