CAE reports third quarter fiscal 2023 results
CAE Inc. reported significant financial growth in Q3 2023, with revenues of $1,020.3 million, a 20% increase year-over-year. Earnings per share surged to $0.25, up 213% from $0.08 last year. Operating income reached $145.9 million, marking a 123% improvement. Adjusted order intake was $1,240.1 million, leading to a record $10.8 billion adjusted backlog. The company maintains its FY2023 outlook for mid-20% consolidated adjusted segment operating income growth. The positive performance was driven by Civil's double-digit growth and a strong defense segment, despite challenges in adjusted order intake.
- Revenue of $1,020.3 million, a 20% YoY increase
- EPS rose to $0.25, up 213% from $0.08
- Operating income at $145.9 million, a 123% boost
- Adjusted backlog reached a record $10.8 billion
- Civil segment revenue increased 33% YoY to $517.4 million
- Defense segment maintained strong order intake with a 1.05 book-to-sales ratio
- Adjusted order intake decreased 10% from prior year, down to $1,240.1 million
- Defense segment adjusted operating income fell 21% YoY to $25.4 million
- Revenue of
$1,020.3 million $848.7 million - Earnings per share (EPS) of
$0.25 $0.08 - Adjusted EPS(1) of
$0.28 $0.19 - Operating income of
$145.9 million $65.5 million - Adjusted segment operating income(1) of
$160.6 million $112.7 million - Adjusted order intake(1) of
$1,240.1 million $10.8 billion - Net debt-to-adjusted EBITDA(1) of 3.74x vs. 4.17x at the end of the preceding quarter
- FY2023 outlook reiterated for mid
-20% consolidated adjusted segment operating income growth
Operating income this quarter was
Summary of consolidated results | ||||||
(amounts in millions, except per share amounts) | Q3-2023 | Q3-2022 | Variance % | |||
Revenue | $ | 1,020.3 | $ | 848.7 | 20 % | |
Operating income | $ | 145.9 | $ | 65.5 | 123 % | |
Adjusted segment operating income(1) | $ | 160.6 | $ | 112.7 | 43 % | |
As a % of revenue(1) | % | 15.7 | % | 13.3 | ||
Net income attributable to equity holders of the Company | $ | 78.1 | $ | 26.2 | 198 % | |
Basic and diluted earnings per share (EPS) | $ | 0.25 | $ | 0.08 | 213 % | |
Adjusted EPS(1) | $ | 0.28 | $ | 0.19 | 47 % | |
Adjusted order intake(1) | $ | 1,240.1 | $ | 1,377.2 | (10 %) | |
Adjusted backlog(1) | $ | 10,795.1 | $ | 9,177.2 | 18 % |
(1) This press release includes non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures. These measures are not standardized financial measures prescribed under IFRS and therefore should not be confused with, or used as an alternative for, performance measures calculated according to IFRS. Furthermore, these measures should not be compared with similarly titled measures provided or used by other issuers. Refer to the Non-IFRS and other financial measures section of this press release for the definitions and a reconciliation of these measures to the most directly comparable measure under IFRS. |
"We had strong results in the third quarter, driven by Civil's double-digit growth, Defense's sequential improvement, and Healthcare's increased profitability," said
On CAE's outlook,
Third quarter Civil revenue was
During the quarter, Civil signed training solutions contracts valued at
The Civil book-to-sales ratio was 1.38 times for the quarter and 1.29 times for the last 12 months. The Civil adjusted backlog at the end of the quarter was a record
Summary of | ||||||
(amounts in millions) | Q3-2023 | Q3-2022 | Variance % | |||
Revenue | $ | 517.4 | $ | 390.1 | 33 % | |
Operating income | $ | 117.2 | $ | 57.1 | 105 % | |
Adjusted segment operating income | $ | 131.4 | $ | 83.4 | 58 % | |
As a % of revenue | % | 25.4 | % | 21.4 | ||
Adjusted order intake | $ | 713.0 | $ | 752.5 | (5 %) | |
Adjusted backlog | $ | 5,647.6 | $ | 4,606.0 | 23 % | |
Supplementary non-financial information | ||||||
Simulator equivalent unit | 263 | 249 | 6 % | |||
FFSs in CAE's network | 323 | 312 | 4 % | |||
FFS deliveries | 9 | 7 | 29 % | |||
Utilization rate | % | 73 | % | 60 | 22 % | |
Defense and Security (Defense)
Third quarter Defense revenue was
Defense booked orders for
Defense continued to build on its foundation of
The Defense book-to-sales ratio was 1.05 times for the quarter and 1.25 times for the last 12 months (excluding contract options). The Defense adjusted backlog, including options and CAE's interest in joint ventures, at the end of the quarter was a record
Summary of Defense and Security results | ||||||
(amounts in millions) | Q3-2023 | Q3-2022 | Variance % | |||
Revenue | $ | 452.5 | $ | 426.5 | 6 % | |
Operating income | $ | 24.9 | $ | 16.5 | 51 % | |
Adjusted segment operating income | $ | 25.4 | $ | 32.0 | (21 %) | |
As a % of revenue | % | 5.6 | % | 7.5 | ||
Adjusted order intake | $ | 476.7 | $ | 592.6 | (20 %) | |
Adjusted backlog | $ | 5,147.5 | $ | 4,571.2 | 13 % | |
Healthcare
Third quarter Healthcare revenue was
During the quarter, Healthcare secured several agreements with universities and colleges for its advanced patient simulators and customizable centre management platform. It also expanded its relationship with the
Summary of Healthcare results | ||||||
(amounts in millions) | Q3-2023 | Q3-2022 | Variance % | |||
Revenue | $ | 50.4 | $ | 32.1 | 57 % | |
Operating income (loss) | $ | 3.8 | $ | (8.1) | 147 % | |
Adjusted segment operating income (loss) | $ | 3.8 | $ | (2.7) | 241 % | |
As a % of revenue | % | 7.5 | % | — | ||
Additional financial highlights
CAE incurred restructuring, integration and acquisition costs of
Net cash provided by operating activities was
Income tax expense this quarter amounted to
Growth and maintenance capital expenditures(1) totaled
Net debt(1) at the end of the quarter was
Net finance expense this quarter amounted to
Adjusted return on capital employed(1) was
(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. |
Management outlook
Since 2020, CAE has been carrying out a growth strategy which it believes will enable it to emerge from the pandemic a bigger, stronger, and more profitable company than ever before. Specifically, as a waypoint along its journey to cyclical recovery and beyond, the Company is targeting a consolidated adjusted segment operating margin of approximately
Current headwinds include remaining travel restrictions related to the global pandemic, geopolitical uncertainty, decades-high inflation, and elevated interest rates. Notwithstanding the influence on the timing and rate of market recovery these factors may have, management maintains a highly positive view of its growth potential over a multi-year period.
Expected secular trends are highly favorable for all three of the Company's core business segments. Greater desire by airlines to entrust CAE with their critical training and digital operational support and crew management needs, higher expected pilot demand and strong business jet travel demand 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 sharply increased need for the kinds of digital immersion-based synthetic solutions that draw from CAE's advances 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 the rate of Civil's recovery to pre-pandemic levels and beyond to continue to be driven in large part by the easing of remaining travel restrictions, especially in
CAE's Defense segment is on a multi-year path to becoming a bigger and more profitable business. In the last two years, Defense has established itself as the world's leading pure-play, platform agnostic, 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 the acquisition of L3H MT and the expanded capability and customer set this combination provides. This is evidenced by the trailing 12-month book-to-sales ratio of 1.25 times. Current geopolitical events have galvanized national defence priorities in the
In the near term, Defense is expected to continue working its way through the lagging effects of a protracted period of lower than one annual book-to-sales ratios – especially for its higher margin products solutions. Defense also anticipates the prevailing macroeconomic headwinds, including supply chain and labor challenges, to persist into the next fiscal year, and that order delays will continue to be a factor, particularly in light of potential
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.
For the current fiscal year, CAE reiterates its expectation to deliver mid
Total capital expenditures are expected to be approximately
Management's outlook for fiscal 2023 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, and the timing and degree of easing of global COVID-19-related mobility restrictions. Air travel is a major driver for CAE's business and management relies on analysis from the
Environmental, Social, and Governance (ESG)
In
To learn more about CAE's corporate sustainability roadmap and achievements, the report can be downloaded at FY22 Annual Activity and Corporate Social Responsibility Report.
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 which are posted on our website at www.cae.com/investors.
CAE's consolidated interim financial statements and MD&A for the quarter ended
Conference call Q3 FY2023
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 simulation training and critical operations support solutions. Above all else, we empower pilots, 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 more than 200 sites and training locations in over 40 countries. CAE represents 75 years of industry firsts—the highest-fidelity flight, mission, and medical simulators and personalized training programs powered by artificial intelligence. We're investing our time and resources into building the next generation of cutting-edge, digitally immersive training and critical operations solutions while keeping positive environmental, social and governance (ESG) impact at the core of our mission. 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, capital spending, expansions and new initiatives, including initiatives that pertain to ESG matters, financial obligations, available liquidities, expected sales, general economic outlook, prospects and trends of an industry, expected annual recurring cost savings from operational excellence programs, estimated addressable markets, statements relating to our acquisitions of L3H MT and AirCentre, our access to capital resources, the expected accretion in various financial metrics, expectations regarding anticipated cost savings and synergies, the strength, complementarity and compatibility of the L3H MT and AirCentre acquisitions with our existing business and teams, other anticipated benefits of the L3H MT and AirCentre acquisitions and their impact on our future growth, results of operations, performance, business, prospects and opportunities, our business outlook, objectives, development, plans, growth strategies and other strategic priorities, and our leadership position in our markets and other statements that are not historical facts.
Forward-looking statements normally contain words like believe, expect, anticipate, plan, intend, continue, estimate, may, will, should, strategy, future and similar expressions. All such forward-looking statements are made pursuant to the 'safe harbour' provisions of applicable Canadian securities laws and of the United States Private Securities Litigation Reform Act of 1995.
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
Material assumptions
The forward-looking statements set out in this press release are based on certain assumptions including, without limitation: some persistent negative impacts of the COVID-19 pandemic on our businesses, operating results, cash flows and/or financial condition, 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 recent 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 facilities, 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. 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
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
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 (
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 interim financial statements for the quarter ended
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 interim financial statements for the quarter ended
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.
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 interim financial statements for the quarter ended
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 least80% 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.
Reconciliations and Calculations
Reconciliation of adjusted segment operating income (loss)
Defense | ||||||||
(amounts in millions) | and Security | Healthcare | Total | |||||
Three months ended | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Operating income (loss) | $ 117.2 | $ 57.1 | $ 24.9 | $ 16.5 | $ 3.8 | $ (8.1) | $ 145.9 | $ 65.5 |
Restructuring, integration and acquisition costs | 11.2 | 26.3 | (6.3) | 15.5 | — | 5.4 | 4.9 | 47.2 |
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 | — |
Adjusted segment operating income (loss) | $ 131.4 | $ 83.4 | $ 25.4 | $ 32.0 | $ 3.8 | $ (2.7) | $ 60.6 | $ 112.7 |
Reconciliation of adjusted net income and adjusted EPS
Three months ended | |||||||
(amounts in millions, except per share amounts) | 2022 | 2021 | |||||
Net income attributable to equity holders of the Company | $ 78.1 | $ 26.2 | |||||
Restructuring, integration and acquisition costs, after tax | 4.0 | 34.5 | |||||
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 | — | |||||
Adjusted net income | $ 89.2 | $ 60.7 | |||||
Average number of shares outstanding (diluted) | 318.3 | 318.7 | |||||
Adjusted EPS | $ 0.28 | $ 0.19 | |||||
Reconciliation of free cash flow
Three months ended | ||||||||||
(amounts in millions) | 2022 | 2021 | ||||||||
Cash provided by operating activities* | $ 158.7 | $ 99.2 | ||||||||
Changes in non-cash working capital | 93.7 | 210.4 | ||||||||
Net cash provided by operating activities | $ 252.4 | $ 309.6 | ||||||||
Maintenance capital expenditures | (16.1) | (18.1) | ||||||||
Change in ERP and other assets | (10.8) | (10.1) | ||||||||
Proceeds from the disposal of property, plant and equipment | 0.3 | 0.2 | ||||||||
Net payments to equity accounted investees | (2.0) | (19.5) | ||||||||
Dividends received from equity accounted investees | 13.9 | 20.0 | ||||||||
Free cash flow | $ 237.7 | $ 282.1 | ||||||||
* 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 | |||||||
(amounts in millions, except net debt-to-EBITDA ratios) | 2022 | 2021 | |||||
Operating income | $ 380.7 | $ 238.5 | |||||
Depreciation and amortization | 333.7 | 308.1 | |||||
EBITDA | $ 714.4 | $ 546.6 | |||||
Restructuring, integration and acquisition costs | 85.0 | 169.5 | |||||
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 | $ 822.6 | $ 716.1 | |||||
Net debt | $ 3,073.0 | $ 2,310.5 | |||||
Net debt-to-EBITDA | 4.30 | 4.23 | |||||
Net debt-to-adjusted EBITDA | 3.74 | 3.23 | |||||
Reconciliation of capital employed and net debt
As at | As at | |||||
(amounts in millions) | 2022 | 2022 | ||||
Use of capital: | ||||||
Current assets | $ | 2,178.8 | $ | 2,148.6 | ||
Less: cash and cash equivalents | (191.6) | (346.1) | ||||
Current liabilities | (2,240.4) | (2,091.2) | ||||
Less: current portion of long-term debt | 220.9 | 241.8 | ||||
Non-cash working capital | $ | (32.3) | $ | (46.9) | ||
Property, plant and equipment | 2,352.8 | 2,129.3 | ||||
Intangible assets | 4,040.1 | 3,796.3 | ||||
Other long-term assets | 1,700.7 | 1,504.6 | ||||
Other long-term liabilities | (533.5) | (596.6) | ||||
Capital employed | $ | 7,527.8 | $ | 6,786.7 | ||
Source of capital: | ||||||
Current portion of long-term debt | $ | 220.9 | $ | 241.8 | ||
Long-term debt | 3,043.7 | 2,804.4 | ||||
Less: cash and cash equivalents | (191.6) | (346.1) | ||||
Net debt | $ | 3,073.0 | $ | 2,700.1 | ||
Equity attributable to equity holders of the Company | 4,373.4 | 4,009.7 | ||||
Non-controlling interests | 81.4 | 76.9 | ||||
Capital employed | $ | 7,527.8 | $ | 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 Section 5 of CAE's MD&A for the quarter ended
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
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.
Consolidated Income Statement
(Unaudited) | Three months ended | Nine months ended | |||||||
(amounts in millions of Canadian dollars, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||||
Revenue | $ | 1,020.3 | $ | 848.7 | $ | 2,946.8 | $ | 2,416.3 | |
Cost of sales | 722.3 | 606.2 | 2,142.3 | 1,732.4 | |||||
Gross profit | $ | 298.0 | $ | 242.5 | $ | 804.5 | $ | 683.9 | |
Research and development expenses | 30.2 | 31.7 | 103.1 | 85.9 | |||||
Selling, general and administrative expenses | 138.1 | 117.5 | 411.2 | 345.5 | |||||
Other (gains) and losses | (6.7) | (6.3) | (12.3) | (16.1) | |||||
Share of after-tax profit of equity accounted investees | (14.4) | (13.1) | (33.9) | (33.2) | |||||
Restructuring, integration and acquisition costs | 4.9 | 47.2 | 49.0 | 110.9 | |||||
Operating income | $ | 145.9 | $ | 65.5 | $ | 287.4 | $ | 190.9 | |
Finance expense – net | 48.8 | 34.5 | 126.3 | 98.1 | |||||
Earnings before income taxes | $ | 97.1 | $ | 31.0 | $ | 161.1 | $ | 92.8 | |
Income tax expense (recovery) | 17.1 | 2.6 | 31.1 | (0.1) | |||||
Net income | $ | 80.0 | $ | 28.4 | $ | 130.0 | $ | 92.9 | |
Attributable to: | |||||||||
Equity holders of the Company | $ | 78.1 | $ | 26.2 | $ | 124.3 | $ | 86.6 | |
Non-controlling interests | 1.9 | 2.2 | 5.7 | 6.3 | |||||
Earnings per share attributable to equity holders of the Company | |||||||||
Basic and diluted | $ | 0.25 | $ | 0.08 | $ | 0.39 | $ | 0.28 | |
Consolidated Statement of Comprehensive Income
(Unaudited) | Three months ended | Nine months ended | |||||||
(amounts in millions of Canadian dollars) | 2022 | 2021 | 2022 | 2021 | |||||
Net income | $ | 80.0 | $ | 28.4 | $ | 130.0 | $ | 92.9 | |
Items that may be reclassified to net income | |||||||||
Foreign currency exchange differences on translation of foreign operations | $ | 18.6 | $ | (22.7) | $ | 310.5 | $ | (10.9) | |
Net gain (loss) on hedges of net investment in foreign operations | 30.3 | 2.2 | (113.0) | (5.3) | |||||
Reclassification to income of gains on foreign currency exchange differences | (3.8) | (1.1) | (6.2) | (4.3) | |||||
Net (loss) gain on cash flow hedges | (4.7) | 9.5 | (10.2) | (8.2) | |||||
Reclassification to income of losses (gains) on cash flow hedges | 9.5 | (12.1) | (11.5) | (12.0) | |||||
Income taxes | (0.2) | 2.5 | 12.2 | 3.0 | |||||
$ | 49.7 | $ | (21.7) | $ | 181.8 | $ | (37.7) | ||
Items that will never be reclassified to net income | |||||||||
Remeasurement of defined benefit pension plan obligations | $ | 8.8 | $ | (20.9) | $ | 55.7 | $ | 15.2 | |
Income taxes | (2.4) | 5.6 | (14.9) | (3.9) | |||||
$ | 6.4 | $ | (15.3) | $ | 40.8 | $ | 11.3 | ||
Other comprehensive income (loss) | $ | 56.1 | $ | (37.0) | $ | 222.6 | $ | (26.4) | |
Total comprehensive income (loss) | $ | 136.1 | $ | (8.6) | $ | 352.6 | $ | 66.5 | |
Attributable to: | |||||||||
Equity holders of the Company | $ | 133.9 | $ | (10.4) | $ | 343.1 | $ | 60.4 | |
Non-controlling interests | 2.2 | 1.8 | 9.5 | 6.1 | |||||
Consolidated Statement of Financial Position
(Unaudited) | |||||||
(amounts in millions of Canadian dollars) | 2022 | 2022 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 191.6 | $ | 346.1 | |||
Accounts receivable | 616.0 | 556.9 | |||||
Contract assets | 629.2 | 608.3 | |||||
Inventories | 598.8 | 519.8 | |||||
Prepayments | 74.4 | 56.7 | |||||
Income taxes recoverable | 57.6 | 33.2 | |||||
Derivative financial assets | 11.2 | 27.6 | |||||
Total current assets | $ | 2,178.8 | $ | 2,148.6 | |||
Property, plant and equipment | 2,352.8 | 2,129.3 | |||||
Right-of-use assets | 393.6 | 373.0 | |||||
Intangible assets | 4,040.1 | 3,796.3 | |||||
Investment in equity accounted investees | 515.2 | 454.0 | |||||
Employee benefits assets | 28.9 | — | |||||
Deferred tax assets | 119.1 | 117.4 | |||||
Derivative financial assets | 12.3 | 10.5 | |||||
Other non-current assets | 631.6 | 549.7 | |||||
Total assets | $ | 10,272.4 | $ | 9,578.8 | |||
Liabilities and equity | |||||||
Accounts payable and accrued liabilities | $ | 917.3 | $ | 975.1 | |||
Provisions | 26.1 | 36.7 | |||||
Income taxes payable | 38.2 | 22.7 | |||||
Contract liabilities | 971.9 | 788.3 | |||||
Current portion of long-term debt | 220.9 | 241.8 | |||||
Derivative financial liabilities | 66.0 | 26.6 | |||||
Total current liabilities | $ | 2,240.4 | $ | 2,091.2 | |||
Provisions | 20.0 | 20.6 | |||||
Long-term debt | 3,043.7 | 2,804.4 | |||||
Royalty obligations | 125.6 | 126.0 | |||||
Employee benefits obligations | 89.6 | 109.7 | |||||
Deferred tax liabilities | 106.1 | 93.7 | |||||
Derivative financial liabilities | 7.6 | 1.0 | |||||
Other non-current liabilities | 184.6 | 245.6 | |||||
Total liabilities | $ | 5,817.6 | $ | 5,492.2 | |||
Equity | |||||||
Share capital | $ | 2,242.7 | $ | 2,224.7 | |||
Contributed surplus | 41.2 | 38.6 | |||||
Accumulated other comprehensive income | 146.8 | (31.2) | |||||
Retained earnings | 1,942.7 | 1,777.6 | |||||
Equity attributable to equity holders of the Company | $ | 4,373.4 | $ | 4,009.7 | |||
Non-controlling interests | 81.4 | 76.9 | |||||
Total equity | $ | 4,454.8 | $ | 4,086.6 | |||
Total liabilities and equity | $ | 10,272.4 | $ | 9,578.8 | |||
Consolidated Statement of Changes in Equity
(Unaudited) | Attributable to equity holders of the Company | |||||||||||||||
Nine months ended | Common shares | Accumulated other | ||||||||||||||
(amounts in millions of Canadian dollars, | Number of | Stated | Contributed | comprehensive | Retained | Non-controlling | Total | |||||||||
except number of shares) | shares | value | surplus | income | earnings | Total | interests | equity | ||||||||
Balances as at | 317,024,123 | $ | 2,224.7 | $ | 38.6 | $ | (31.2) | $ | 1,777.6 | $ | 4,009.7 | $ | 76.9 | $ | 4,086.6 | |
Net income | — | $ | — | $ | — | $ | — | $ | 124.3 | $ | 124.3 | $ | 5.7 | $ | 130.0 | |
Other comprehensive income | — | — | — | 178.0 | 40.8 | 218.8 | 3.8 | 222.6 | ||||||||
Total comprehensive income | — | $ | — | $ | — | $ | 178.0 | $ | 165.1 | $ | 343.1 | $ | 9.5 | $ | 352.6 | |
Exercise of stock options | 835,392 | 18.0 | (2.5) | — | — | 15.5 | — | 15.5 | ||||||||
Share-based payments expense | — | — | 5.1 | — | — | 5.1 | — | 5.1 | ||||||||
Transactions with non-controlling interests | — | — | — | — | — | — | (5.0) | (5.0) | ||||||||
Balances as at | 317,859,515 | $ | 2,242.7 | $ | 41.2 | $ | 146.8 | $ | 1,942.7 | $ | 4,373.4 | $ | 81.4 | $ | 4,454.8 | |
Attributable to equity holders of the Company | ||||||||||||||||
Nine months ended | Common shares | Accumulated other | ||||||||||||||
(amounts in millions of Canadian dollars, | Number of | Stated | Contributed | comprehensive | Retained | Non-controlling | Total | |||||||||
except number of shares) | shares | value | surplus | income | earnings | Total | interests | equity | ||||||||
Balances as at | 293,355,463 | $ | 1,516.2 | $ | 22.5 | $ | 58.1 | $ | 1,543.7 | $ | 3,140.5 | $ | 72.3 | $ | 3,212.8 | |
Net income | — | $ | — | $ | — | $ | — | $ | 86.6 | $ | 86.6 | $ | 6.3 | $ | 92.9 | |
Other comprehensive (loss) income | — | — | — | (37.5) | 11.3 | (26.2) | (0.2) | (26.4) | ||||||||
Total comprehensive (loss) income | — | $ | — | $ | — | $ | (37.5) | $ | 97.9 | $ | 60.4 | $ | 6.1 | $ | 66.5 | |
Issuance of common shares upon conversion of | ||||||||||||||||
subscription receipts | 22,400,000 | 677.2 | 12.5 | — | — | 689.7 | — | 689.7 | ||||||||
Exercise of stock options | 1,227,885 | 30.5 | (4.0) | — | — | 26.5 | — | 26.5 | ||||||||
Share-based payments expense | — | — | 6.6 | — | — | 6.6 | — | 6.6 | ||||||||
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 | 316,983,348 | $ | 2,223.9 | $ | 37.6 | $ | 35.4 | $ | 1,641.6 | $ | 3,938.5 | $ | 76.0 | $ | 4,014.5 | |
Consolidated Statement of Cash Flows
(Unaudited) | ||||||
Nine months ended | ||||||
(amounts in millions of Canadian dollars) | 2022 | 2021 | ||||
Operating activities | ||||||
Net income | $ | 130.0 | $ | 92.9 | ||
Adjustments for: | ||||||
Depreciation and amortization | 252.8 | 229.6 | ||||
Impairment (reversal) of non-financial assets – net | (4.0) | 33.7 | ||||
Share of after-tax profit of equity accounted investees | (33.9) | (33.2) | ||||
Deferred income taxes | (0.3) | (18.1) | ||||
Investment tax credits | 0.4 | (21.4) | ||||
Share-based payments expense | (5.7) | 3.3 | ||||
Defined benefit pension plans | 6.2 | 10.0 | ||||
Other non-current liabilities | (13.5) | (32.8) | ||||
Derivative financial assets and liabilities – net | 9.4 | 8.1 | ||||
Other | 23.0 | 40.4 | ||||
Changes in non-cash working capital | (136.6) | (101.1) | ||||
Net cash provided by operating activities | $ | 227.8 | $ | 211.4 | ||
Investing activities | ||||||
Business combinations, net of cash acquired | $ | (6.4) | $ | (1,384.8) | ||
Acquisition of investment in equity accounted investees | — | (4.3) | ||||
Property, plant and equipment expenditures | (205.9) | (197.5) | ||||
Proceeds from disposal of property, plant and equipment | 4.8 | 8.1 | ||||
Advance payments for property, plant and equipment | (30.1) | — | ||||
Intangible assets expenditures | (89.9) | (64.4) | ||||
Net payments to equity accounted investees | (10.5) | (19.9) | ||||
Dividends received from equity accounted investees | 20.3 | 20.6 | ||||
Other | (5.0) | (2.4) | ||||
Net cash used in investing activities | $ | (322.7) | $ | (1,644.6) | ||
Financing activities | ||||||
Net proceeds from borrowing under revolving credit facilities | $ | 8.6 | $ | — | ||
Proceeds from long-term debt | 22.1 | 422.4 | ||||
Repayment of long-term debt | (55.7) | (60.9) | ||||
Repayment of lease liabilities | (62.1) | (75.5) | ||||
Net proceeds from the issuance of common shares | 15.5 | 695.5 | ||||
Other | (1.8) | (3.0) | ||||
Net cash (used in) provided by financing activities | $ | (73.4) | $ | 978.5 | ||
Effect of foreign currency exchange differences on cash and cash equivalents | $ | 13.8 | $ | (7.9) | ||
Net decrease in cash and cash equivalents | $ | (154.5) | $ | (462.6) | ||
Cash and cash equivalents, beginning of period | 346.1 | 926.1 | ||||
Cash and cash equivalents, end of period | $ | 191.6 | $ | 463.5 | ||
View original content:https://www.prnewswire.com/news-releases/cae-reports-third-quarter-fiscal-2023-results-301746336.html
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FAQ
What are CAE's Q3 2023 revenue and earnings results?
How did CAE's adjusted order intake perform in Q3 2023?
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