CAE receives regulatory approval for normal course issuer bid
CAE has received regulatory approval to initiate a normal course issuer bid (NCIB) to buy back up to 15,932,187 of its common shares, representing approximately 5% of its total issued and outstanding shares, from May 30, 2024, to May 29, 2025. The repurchase will be conducted through the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE), among other permissible trading platforms.
RBC Dominion Securities will act as CAE's designated broker for these purchases, and an automatic share purchase plan (ASPP) will allow share repurchases even during blackout periods. As of May 16, 2024, CAE had 318,643,758 common shares outstanding. This repurchase program is part of CAE's capital allocation strategy and aims to enhance shareholder value.
- Approved NCIB allows for repurchase of up to 15,932,187 shares, enhancing shareholder value.
- Represents approximately 5% of issued and outstanding shares, reflecting a significant buyback commitment.
- RBC Dominion Securities designated as broker, ensuring professional management of the repurchase process.
- ASPP enables repurchases even during blackout periods, ensuring continuous execution.
- No repurchases in the last 12 months suggest a fresh initiative, indicating renewed focus on capital allocation.
- Repurchases depend on market conditions and management discretion, leading to uncertainty in execution.
- The cost of repurchases, including brokerage fees, may impact CAE's financials.
- Reliance on RBC Dominion Securities may concentrate risk in one broker's performance.
- Share buybacks do not directly address potential operational or market challenges faced by CAE.
Insights
CAE Inc.'s normal course issuer bid (NCIB) to repurchase up to 5% of its outstanding common shares is a significant move worth understanding from a financial perspective. Share repurchase programs can influence stock prices by reducing the number of shares available in the market, which often leads to higher earnings per share (EPS) and can bolster the stock price.
By repurchasing shares, CAE intends to return capital to shareholders, signaling confidence in its financial health and future prospects. The company's Board of Directors has suggested that this move will enhance shareholder value, a view reflected by many investors who see share buybacks as a positive indicator.
However, the effectiveness of the NCIB will depend on the market conditions and the company's ability to buy back shares at advantageous prices. It's also important to consider that using cash for repurchases means those funds are not available for other potential uses, such as reinvesting in business growth or reducing debt.
An investor should weigh these factors to determine if this capital allocation strategy aligns with their investment goals. It’s important to monitor the impact on the company’s financial statements, particularly liquidity ratios and debt levels, to ensure that the buyback doesn’t strain CAE’s financial flexibility.
The decision to pursue an NCIB (normal course issuer bid) can also be viewed through the lens of market trends and investor behavior. Share buybacks are often seen as a signal of underpriced stock, projecting a message from the management that the shares are trading below their intrinsic value. This action can create a positive sentiment and potentially attract more investors looking for value opportunities.
The approval from regulatory authorities adds credibility to the program, ensuring that CAE’s repurchase activities are within legal and compliance frameworks. It also demonstrates CAE's proactive approach in engaging with shareholders and managing its capital structure effectively.
For investors, understanding the potential market reaction is key. Historically, share buybacks can lead to short-term price increases due to the reduced supply of shares and the perceived vote of confidence from the company’s management. However, one should also consider the broader market conditions and sector performance, as these will play significant roles in the overall effectiveness of the buyback program.
The maximum number of common shares that may be repurchased under the program represents approximately five percent (
Purchases under the NCIB will be made through the facilities of the Toronto Stock Exchange ("TSX") in accordance with the TSX's applicable policies or the facilities of the New York Stock Exchange ("NYSE") in compliance with applicable NYSE rules and policies and
RBC Dominion Securities Inc. ("RBC") has agreed to act as CAE's designated broker to make purchases of common shares pursuant to the NCIB. CAE has also entered into an automatic share purchase plan ("ASPP") with RBC allowing it to purchase common shares under the NCIB when the company would ordinarily not be permitted to purchase shares due to regulatory restrictions and customary self-imposed black-out periods. Before entering a black-out period, CAE may, but is not required to, instruct RBC to make purchases under the NCIB during such a period based on parameters set by CAE in accordance with the ASPP, TSX Rules and applicable securities laws. All purchases made under the ASPP are included in computing the number of common shares purchased under the NCIB. The ASPP has been pre-cleared by the TSX and will be implemented and effective June 3, 2024. The price CAE will pay for any common shares will be the market price at the time of acquisition, plus brokerage fees. All common shares purchased pursuant to the NCIB will be cancelled.
During the period that the NCIB is outstanding, CAE does not intend to make purchases of its common shares other than by means of open market transactions or such other means as may be permitted or approved by any applicable securities regulator.
The average daily trading volume of CAE's common shares through the facilities of the TSX over the last six completed calendar months was 605,257 ("ADTV"). Accordingly, under the TSX Rules and policies, CAE is entitled on any trading day to purchase up to
As of May 16, 2024, CAE had 318,643,758 common shares issued and outstanding. CAE has not repurchased any of its common shares during the last twelve months.
The NCIB is being established as part of CAE's capital allocation strategy. The Board of Directors of CAE believes that any purchases made under the NCIB will be in the best interest of CAE and that such purchases will constitute a desirable use of funds that should enhance shareholder value.
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, maintenance technicians, airlines, business aviation operators, and defence and security forces 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 approximately 13,000 employees in more than 240 sites and training locations in over 40 countries. CAE represents more than 75 years of industry firsts – the highest-fidelity flight and mission simulators as well as 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.
This press release includes forward-looking statements, including in connection with CAE's NCIB, ASPP and future purchases of common shares pursuant to the NCIB. 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 27, 2024 and, accordingly, are subject to change after such date. Specifically, there can be no assurance as to how many shares, if any, will ultimately be acquired under CAE's NCIB. 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 27, 2024. 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 CAE's NCIB. Readers are cautioned that such information may not be appropriate for other purposes.
General Media:
Samantha Golinski, Vice President, Public Affairs & Global Communications, +1-438-805-5856, samantha.golinski@cae.com
Investor Relations:
Andrew Arnovitz, Senior Vice President, Investor Relations and Enterprise Risk Management, +1-514-734-5760, andrew.arnovitz@cae.com
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SOURCE CAE Inc.
FAQ
What is CAE's normal course issuer bid (NCIB) for 2024-2025?
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When will CAE's NCIB take place?
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What is the role of the Automatic Share Purchase Plan (ASPP) in CAE's NCIB?
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