CAE INC 6-K 2012
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CAE reports third quarter financial results for fiscal year 2012
Q3 revenue up 10% and net income attributed to equity holders up 18% compared to prior year Q3 earnings per share of C$0.18 compared to C$0.15 in prior year Combined Civil segment Q3 operating margin of 20.6% and combined Military of 16.6%
Montreal, Canada, February 8, 2012 – (NYSE: CAE; TSX: CAE) – CAE today reported financial results for the third quarter ended December 31, 2011. Net income attributable to equity holders of the company was C$45.6 million (C$0.18 per share) this quarter, up 18% compared to C$38.5 million (C$0.15 per share) last year. All financial information is in Canadian dollars.
Revenue for the quarter was $453.1 million, 10% higher than $410.8 million in the third quarter last year. Third quarter operating profit(1) was $77.5 million, or 17.1% of revenue.
“We are pleased with our financial performance this quarter with stronger margins in both our civil and defence business units,” said Marc Parent, CAE’s President and Chief Executive Officer. “The level of civil aviation market activity remains high in all regions and our order intake reflects our strong competitive position. Although procurement delays in defence continue to make predicting the timing of orders a challenge, we won contracts with key defence customers during the quarter. As well, we remain encouraged by the range of global opportunities in our pipeline.”
Revenue for our combined Civil segments increased 13% in the third quarter to $203.7 million compared to $179.9 million last year. Operating profit was $42.0 million (20.6% of revenue) compared to $32.1 million (17.8% of revenue) last year. Revenue for the first nine months increased 18% to $625.5 million compared to $529.7 million last year. Year-to-date operating profit was $129.5 million (20.7% of revenue), compared to $100.0 million (18.9% of revenue) last year.
Our civil market activity continued to be strong across all regions in the third quarter. We sold 11 full-flight simulators, bringing our nine month total orders to 30, which exceeds the total number we sold all of last year. We also signed training services contracts expected to generate $122.2 million in future revenue, including an exclusive long term agreement with flydubai in the United Arab Emirates. We also broadened our footprint in South East Asia with the announcement of a training joint venture with Cebu Pacific Air in the Philippines.
We received $234.6 million in combined civil segment orders this quarter representing a book-to-sales ratio of 1.15x. The ratio for the last 12 months was 1.24x.
Revenue for CAE’s combined Military segments increased 1% in the third quarter to $222.3 million compared to $219.8 million last year. Third quarter operating profit was $36.9 million (16.6% of revenue), compared to $39.5 million (18.0% of revenue) last year. Revenue for the first nine months increased 4% to $630.2 million compared to $608.6 million last year. Year-to-date operating profit was $96.5 million (15.3% of revenue), compared to $109.3 million (18.0% of revenue) last year.
During the quarter, CAE was awarded contracts for Tornado jet maintenance trainers for the German Air Force and UK Royal Air Force, and we received additional contract options for P-8A Poseidon simulators for Boeing and the US Navy. In terms of aftermarket opportunities, we won upgrade work for Canadian Forces simulators involving the CC-130H Hercules aircraft and the CH-146 Griffon helicopter. In Asia, we were awarded contracts to provide support services for an AW139 helicopter simulator in Malaysia and a multi-year, helicopter training services contract with another key customer in the region.
Combined Military orders in the quarter totaled $124.1 million for a book-to-sales ratio of 0.56x. The ratio for the last 12 months was 0.89x. In addition to CAE’s combined military backlog(2) of $2.0 billion at December 31, 2011, CAE’s unfunded military backlog(3) was $269.4 million.
New Core Markets
Revenue for New Core Markets was $27.1 million compared to $11.1 million last year. Operating loss was $1.4 million, compared to a loss of $1.3 million last year.
CAE Healthcare received endorsement for its ultrasound e-Learning curriculum and seminars from the Canadian Critical Care Society and the simulation centre we manage at Université de Montréal received accreditation from
The Royal College of Physicians and Surgeons of Canada. During the quarter we sold patient simulators, courseware, and centre management systems to customers in North America, Eastern Europe, and the Middle East.
CAE Mining added new customers for its geological modeling, data management, and mine planning systems including Silver Lake Resources and Optiro in Australia and Exploraciones Mineras Parreña in Mexico.
Additional financial highlights
Income taxes this quarter were $15.2 million representing an effective tax rate of 25%, compared to 29% last year. The decrease was mainly due to the settlement of a tax audit in Canada as well as a change in the mix of income from various jurisdictions.
Free cash flow(4) was $46.2 million this quarter owing to a favourable change in non-cash working capital compared to last year and more cash provided by continuing operations.
Capital expenditures totalled $44.1 million this quarter, including $25.3 million in support of our growth initiatives and the balance for maintenance.
Net debt(5) was $593.9 million as at December 31, 2011 compared with $618.8 million as at September 30, 2011. The decrease of $24.9 million was mainly due to favourable foreign exchange movements.
CAE will pay a dividend of $0.04 per share on March 30, 2012 to shareholders of record at the close of business on March 15, 2012.
You will find a more detailed discussion of our results by segment in the Management’s Discussion and Analysis
(MD&A) as well as in our consolidated interim financial statements which are posted on our website at www.cae.com/Q3FY12.
CAE’s unaudited consolidated interim financial statements and management’s discussion and analysis for the quarter ended December 31, 2011 have been filed with the Canadian securities commissions and are available on our website (www.cae.com) and on SEDAR (www.sedar.com). They have also been filed with the U.S. Securities and Exchange Commission and are available on their website (www.sec.gov).
Conference call Q3 FY2012
CAE will host a conference call focusing on fiscal year 2012 third quarter financial results today at 1:00 p.m. ET. The call is intended for analysts, institutional investors and the media. Participants can listen to the conference by dialling + 1 877 586-3392 or + 1 416 981-9024. The conference call will also be audio webcast live for the public at www.cae.com.
CAE is a global leader in modeling, simulation and training for civil aviation and defence. The company employs more than 7,500 people at more than 100 sites and training locations in over 25 countries. Through CAE’s global network of 34 civil aviation, military and helicopter training centres, the company trains more than 80,000 crewmembers yearly. CAE’s business is diversified, ranging from the sale of simulation products to providing comprehensive services such as training and aviation services, professional services and in-service support. The company applies its simulation expertise and operational experience to help customers enhance safety, improve efficiency, maintain readiness and solve challenging problems. CAE is now leveraging its simulation capabilities in new markets such as healthcare and mining. www.cae.com
Certain statements made in this news release, including, but not limited to, statements that are not historical facts, are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. These statements do not reflect the potential impact of any non-recurring or other special items or events that are announced or completed after the date of this news release, including mergers, acquisitions, or other business combinations and divestitures.
You will find more information about the risks and uncertainties associated with our business in the MD&A section of our annual report and annual information form for the year ended March 31, 2011. These documents have been filed with the Canadian securities commissions and are available on our website (www.cae.com), on SEDAR (www.sedar.com) and a free copy is available upon request to CAE. They have also been filed with the U.S. Securities and Exchange Commission under Form 40-F and are available on EDGAR (www.sec.gov). The forward-looking statements contained in this news release represent our expectations as of February 8, 2012 and, accordingly, are subject to change after this date. We do not update or revise forward-looking information even if new information becomes available unless legislation requires us to do so. You should not place undue reliance on forward-looking statements.
(1) Operating profit is a non-GAAP measure that shows us how we have performed before the effects of certain financing decisions and tax structures. We track operating profit 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.
(2) Backlog is a non-GAAP measure that represents the expected value of orders we have received but have not yet executed.
(3) Unfunded backlog is a non-GAAP measure that represents firm military orders we have received but have not yet executed for which funding authorization has not yet been obtained. We include unexercised options with a high probability that they will be exercised, but exclude indefinite-delivery/ indefinite-quantity (IDIQ) contracts.
(4) Free cash flow is a non-GAAP measure that shows us how much cash we have available to build the business, 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, other assets not related to growth and dividends paid and adding proceeds from disposal of property, plant and equipment.
(5) 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.
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Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
The total of retained earnings and other reserves for the nine months ended December 31, 2011 was $523.1 million ($414.5 million as at December 31, 2010).