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CAE(CAE) - 2023 Q2 - Quarterly Report
CAECAE(CAE)2023-11-13 16:00
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Total Assets and Financial Position - Total assets increased to 10,565.3millionasofSeptember30,2023,comparedto10,565.3 million as of September 30, 2023, compared to 10,436.5 million as of March 31, 2023[23] - Civil Aviation segment assets grew to 5,994.4millionasofSeptember30,2023,upfrom5,994.4 million as of September 30, 2023, up from 5,852.4 million as of March 31, 2023[23] - Non-current assets other than financial instruments, deferred tax assets, and employee benefits assets totaled 7,910.0millionasofSeptember30,2023,slightlyupfrom7,910.0 million as of September 30, 2023, slightly up from 7,870.4 million as of March 31, 2023[26] - Total equity increased to 4,715.9millionasofSeptember30,2023,drivenbynetincomeandchangesinothercomprehensiveincome[269][206]−Totallong−termdebtincreasedfrom4,715.9 million as of September 30, 2023, driven by net income and changes in other comprehensive income[269][206] - Total long-term debt increased from 2,800.3 million as of March 31, 2023, to 2,920.0millionasofSeptember30,2023[297]−Long−termdebtdecreasedto2,920.0 million as of September 30, 2023[297] - Long-term debt decreased to 2,941.3 million as of September 30, 2023, from 3,035.5millionasofMarch31,2023[286]−Netdebtincreasedby3,035.5 million as of March 31, 2023[286] - Net debt increased by 18.1 million compared to the previous quarter, reaching 3,184.5millionasofSeptember30,2023[203]−Thenetdebt−to−capitalratioimprovedto40.33,184.5 million as of September 30, 2023[203] - The net debt-to-capital ratio improved to 40.3% as of September 30, 2023, down from 42.5% in the same period last year[203] - Net debt-to-adjusted EBITDA ratio improved to 3.16 as of September 30, 2023, compared to 4.17 in the same period in 2022[255] - Cash and cash equivalents decreased to 181.5 million as of September 30, 2023, from 217.6millionasofMarch31,2023[286]−Cashandcashequivalentsdecreasedfrom217.6 million as of March 31, 2023[286] - Cash and cash equivalents decreased from 217.6 million as of March 31, 2023, to 181.5millionasofSeptember30,2023[297]−Accountsreceivableincreasedfrom181.5 million as of September 30, 2023[297] - Accounts receivable increased from 555.3 million as of March 31, 2023, to 601.0millionasofSeptember30,2023[297]RevenueandSegmentPerformance−TotalexternalrevenueforthesixmonthsendedSeptember30,2023,reached601.0 million as of September 30, 2023[297] Revenue and Segment Performance - Total external revenue for the six months ended September 30, 2023, reached 2,142.9 million, compared to 1,926.5millionforthesameperiodin2022[26]−UnitedStatescontributed1,926.5 million for the same period in 2022[26] - United States contributed 1,062.6 million to external revenue for the six months ended September 30, 2023, up from 1,024.6millioninthesameperiodof2022[26]−Training,software,andservicesrevenueforthesixmonthsendedSeptember30,2023,was1,024.6 million in the same period of 2022[26] - Training, software, and services revenue for the six months ended September 30, 2023, was 1,378.1 million, compared to 1,226.6millioninthesameperiodof2022[26]−RevenueforQ22024increasedby101,226.6 million in the same period of 2022[26] - Revenue for Q2 2024 increased by 10% to 1,088.5 million compared to 993.2millioninQ22023[30]−CivilAviationsegmentrevenueincreasedby13993.2 million in Q2 2023[30] - Civil Aviation segment revenue increased by 13% to 572.6 million in Q2 2024 compared to 507.2millioninQ22023[49]−DefenseandSecuritysegmentrevenuegrewby8507.2 million in Q2 2023[49] - Defense and Security segment revenue grew by 8% to 477.4 million in Q2 2024 from 442.4millioninQ22023[49]−Revenueforthesecondquarteroffiscal2024was442.4 million in Q2 2023[49] - Revenue for the second quarter of fiscal 2024 was 1,088.5 million, a 10% increase compared to the same period last year[76] - Revenue for the first six months of fiscal 2024 was 2,142.9million,an112,142.9 million, an 11% increase compared to 1,926.5 million in the same period last year[77] - Civil Aviation revenue for the first six months of fiscal 2024 was 1,112.9million,a131,112.9 million, a 13% increase compared to 987.6 million last year[77] - Defense and Security revenue for the first six months of fiscal 2024 was 949.1million,an11949.1 million, an 11% increase compared to 855.7 million last year[77] - Healthcare revenue for the first six months of fiscal 2024 was 80.9million,a380.9 million, a 3% decrease compared to 83.2 million last year[77] - Revenue for the second quarter of fiscal 2024 was 1,088.5million,comparedto1,088.5 million, compared to 993.2 million in the same period in 2023[233] - Revenue for the three months ended September 30, 2023, was 1,088.5million,comparedto1,088.5 million, compared to 993.2 million in the same period in 2022, a 9.6% increase[263] Operating Income and Profitability - Operating income for the six months ended September 30, 2023, was 230.7million,comparedto230.7 million, compared to 141.5 million in 2022, with significant growth in Civil Aviation (194.0millionvs.194.0 million vs. 163.8 million) and Defense and Security (32.0millionvs.−32.0 million vs. -18.2 million)[51] - Adjusted segment operating income for the six months ended September 30, 2023, was 283.6million,upfrom283.6 million, up from 185.6 million in 2022, driven by strong performance in Civil Aviation (233.3millionvs.233.3 million vs. 191.0 million)[51] - Adjusted segment operating income for Civil Aviation increased by 9% to 114.3millioninQ22024from114.3 million in Q2 2024 from 104.4 million in Q2 2023[49] - Adjusted segment operating income for Defense and Security rose by 16% to 21.3millioninQ22024from21.3 million in Q2 2024 from 18.4 million in Q2 2023[49] - Q2 2024 revenue was 1,088.5million,withagrossprofitof1,088.5 million, with a gross profit of 303.1 million (27.8% of revenue), and operating income of 100.6million(9.2100.6 million (9.2% of revenue)[55] - Gross profit for the first six months of fiscal 2024 was 609.0 million (28.4% of revenue), up from 506.5million(26.3506.5 million (26.3% of revenue) last year[79] - Adjusted segment operating income margin was 20.0% in Q2-2024, compared to 22.0% in Q1-2024[93] - Adjusted earnings before income taxes for the three months ended September 30, 2023, were 90.5 million, compared to 83.4millioninthesameperiodin2022[227]−AdjustedEBITDAforthelasttwelvemonthsendedSeptember30,2023,was83.4 million in the same period in 2022[227] - Adjusted EBITDA for the last twelve months ended September 30, 2023, was 1,007.1 million, up from 766.3millioninthesameperiodin2022,a31.4766.3 million in the same period in 2022, a 31.4% increase[255] - EBITDA and adjusted EBITDA are used to evaluate operating performance by eliminating non-operational or non-cash items[310] Net Income and Earnings Per Share (EPS) - Net income attributable to equity holders rose by 31% to 58.4 million from 44.5millioninthesameperiodlastyear[30]−AdjustedEPSgrewby4244.5 million in the same period last year[30] - Adjusted EPS grew by 42% to 0.27 from 0.19inQ22023[30]−AdjustednetincomeforQ22024was0.19 in Q2 2023[30] - Adjusted net income for Q2 2024 was 87.4 million, with adjusted EPS of 0.27,comparedto0.27, compared to 61.5 million and 0.19inQ22023[55]−NetincomeforQ22024was0.19 in Q2 2023[55] - Net income for Q2 2024 was 61.1 million, with EPS attributable to equity holders of 0.18(basic)and0.18 (basic) and 0.18 (diluted)[55] - Net income for the six months ended September 30, 2022, was 50.0million,withtotalcomprehensiveincomeof50.0 million, with total comprehensive income of 216.5 million[60] - Net income for the six months ended September 30, 2023, was 123.7million,withtotalcomprehensiveincomeof123.7 million, with total comprehensive income of 108.1 million[269] - Net income for the second quarter of fiscal 2024 was 61.1million,comparedto61.1 million, compared to 46.3 million in the same period in 2023[233] - Adjusted EPS for the second quarter of fiscal 2024 was 0.27,comparedto0.27, compared to 0.19 in the same period in 2023[233] - Adjusted net income for the three months ended September 30, 2023, was 87.4million,comparedto87.4 million, compared to 61.5 million in the same period in 2022, representing a 42.1% increase[254] - Net income attributable to equity holders of the Company for the six months ended September 30, 2023, was 123.7million,upfrom123.7 million, up from 46.2 million in the same period in 2022, a 167.7% increase[263] - Net income for the six months ended September 30, 2023, increased to 128.9million,upfrom128.9 million, up from 50.0 million in the same period in 2022[284] - Total comprehensive income for the six months ended September 30, 2023, was 108.1million,comparedto108.1 million, compared to 216.5 million in the same period in 2022[284] Cash Flow and Capital Expenditures - Free cash flow increased by 36% to 147.5millioncomparedto147.5 million compared to 108.4 million in Q2 2023[30] - Total capital expenditures for the six months ended September 30, 2023, were 224.8million,comparedto224.8 million, compared to 202.8 million in 2022, reflecting increased investments in Civil Aviation (156.5millionvs.156.5 million vs. 174.4 million) and Defense and Security (62.9millionvs.62.9 million vs. 21.9 million)[51] - Net cash provided by operating activities for the six months ended September 30, 2023, was 130.9million,comparedtoanetcashusedof130.9 million, compared to a net cash used of 24.6 million in the same period last year[63] - Property, plant, and equipment expenditures for the six months ended September 30, 2023, were 152.5million,anincreasefrom152.5 million, an increase from 142.5 million in the same period last year[63] - Property, plant and equipment increased by 50.7millionfromlastquarter,mainlyduetoforeignexchangeratemovementsandcapitalexpenditures[173]−Cashusedinnon−cashworkingcapitalforthesixmonthsendedSeptember30,2023,was50.7 million from last quarter, mainly due to foreign exchange rate movements and capital expenditures[173] - Cash used in non-cash working capital for the six months ended September 30, 2023, was 112.6 million, compared to 230.3millioninthesameperiodin2022[276]−Interestpaidincreasedto230.3 million in the same period in 2022[276] - Interest paid increased to 97.0 million for the six months ended September 30, 2023, from 92.6millioninthesameperiodin2022[293]−Incometaxespaidincreasedto92.6 million in the same period in 2022[293] - Income taxes paid increased to 39.6 million for the six months ended September 30, 2023, from 20.7millioninthesameperiodin2022[293]DebtandFinancing−Thecompanyissued20.7 million in the same period in 2022[293] Debt and Financing - The company issued 400.0 million of unsecured senior notes in June 2023, bearing interest at 5.541% per annum, with a maturity date in June 2028[57] - Finance expense for the six months ended September 30, 2023, was 110.5million,drivenbylong−termdebt(110.5 million, driven by long-term debt (80.9 million) and lease liabilities (12.0million)[58]−Thecompanycompletedaprivateofferingof12.0 million)[58] - The company completed a private offering of 400.0 million in unsecured senior notes at 5.541% interest, maturing in June 2028[204] - Total debt increased by 46.8millioncomparedtothepreviousquarter,primarilyduetoforeignexchangeratemovementsandleaseliabilityadditions[201]−Thecompanymanagesanuncommittedreceivablepurchasefacilityofupto46.8 million compared to the previous quarter, primarily due to foreign exchange rate movements and lease liability additions[201] - The company manages an uncommitted receivable purchase facility of up to 400.0 million, renewed annually[203] Backlog and Contracts - Adjusted backlog grew by 11% to 11,773.1millionfrom11,773.1 million from 10,637.9 million in Q2 2023[30] - Adjusted backlog increased by 5% compared to the last quarter, mainly due to foreign exchange movements[86][87] - Civil Aviation segment secured contracts expected to generate 617.8millioninrevenue,including15full−flightsimulatorssoldinthequarter[92]−Adjustedbacklogincreasedto617.8 million in revenue, including 15 full-flight simulators sold in the quarter[92] - Adjusted backlog increased to 5,903.1 million in Q2-2024, up from 5,764.8millioninQ1−2024[93]−Adjustedbacklogincludesobligatedbacklog,jointventurebacklog,andunfundedbacklog,representingexpectedfuturerevenues[312]ForeignExchangeandTaxImpact−Net(gain)lossonforeigncurrencyexchangedifferencesforthesixmonthsendedSeptember30,2023,was5,764.8 million in Q1-2024[93] - Adjusted backlog includes obligated backlog, joint venture backlog, and unfunded backlog, representing expected future revenues[312] Foreign Exchange and Tax Impact - Net (gain) loss on foreign currency exchange differences for the six months ended September 30, 2023, was 1.4 million, compared to a loss of 7.7millioninthesameperiodof2022[27]−Other(gains)andlossesforthesixmonthsendedSeptember30,2023,totaled7.7 million in the same period of 2022[27] - Other (gains) and losses for the six months ended September 30, 2023, totaled (5.3) million, compared to (5.6)millioninthesameperiodof2022[27]−Foreignexchangetranslationincreasedrevenueby(5.6) million in the same period of 2022[27] - Foreign exchange translation increased revenue by 32.6 million and net income by 3.6millioninQ22024comparedtoQ22023,withayear−to−dateincreaseof3.6 million in Q2 2024 compared to Q2 2023, with a year-to-date increase of 70.9 million in revenue and 8.5millioninnetincome[54]−AdjustedincometaxexpenseforthesixmonthsendedSeptember30,2023,was8.5 million in net income[54] - Adjusted income tax expense for the six months ended September 30, 2023, was 12.1 million, compared to 25.2millioninthesameperiodin2022[227]−AdjustedeffectivetaxrateforthesixmonthsendedSeptember30,2023,was725.2 million in the same period in 2022[227] - Adjusted effective tax rate for the six months ended September 30, 2023, was 7%, compared to 23% in the same period in 2022[227] - The company recorded an income tax recovery of 16.2 million in the second quarter of fiscal 2024 due to the recognition of previously unrecognized deferred tax assets[270] - Average exchange rate for the U.S. dollar to Canadian dollar in the second quarter of fiscal 2024 was 1.34, compared to 1.30 in the same period in 2023[233] Strategic Initiatives and Business Transactions - The company announced the sale of its Healthcare business for an enterprise value of 311million,expectedtoclosebeforetheendoffiscalyear2024[31]−ThecompanyannouncedadefinitiveagreementtosellitsHealthcarebusiness,withthetransactionexpectedtoclosebeforetheendoffiscalyear2024[67][70]−ThecompanyannouncedadefinitiveagreementtosellitsHealthcarebusinesstoMadisonIndustriesforanenterprisevalueof311 million, expected to close before the end of fiscal year 2024[31] - The company announced a definitive agreement to sell its Healthcare business, with the transaction expected to close before the end of fiscal year 2024[67][70] - The company announced a definitive agreement to sell its Healthcare business to Madison Industries for an enterprise value of 311 million, expected to close before the end of fiscal year 2024[257] - The company announced a definitive agreement to sell its Healthcare business to Madison Industries for an enterprise value of 311million,expectedtoclosebeforetheendoffiscalyear2024[304]−Thecompany′sstrategicpillarsincludeefficientgrowth,revolutionizingtrainingandcriticaloperations,technologyandmarketleadership,andskillsandculture[68]−Thecompany′sU.S.DefenseandSecurityoperationscompletedtheinitialphaseofimplementationofanewERPsystemduringthefirstsixmonthsoffiscal2024[232]PensionandEmployeeBenefits−Thecompanyrecognizedasettlementgainof311 million, expected to close before the end of fiscal year 2024[304] - The company's strategic pillars include efficient growth, revolutionizing training and critical operations, technology and market leadership, and skills and culture[68] - The company's U.S. Defense and Security operations completed the initial phase of implementation of a new ERP system during the first six months of fiscal 2024[232] Pension and Employee Benefits - The company recognized a settlement gain of 5.4 million from an annuity purchase transaction in June 2023[28] - The company transferred pension obligations associated with certain retired members of Canadian defined benefit pension plans to a third-party insurer for 163.5millioninJune2023[28]−ThecompanytransferredpensionobligationsforcertainretiredmembersofCanadiandefinedbenefitpensionplanstoathird−partyinsurer,reducingfuturepensionliabilitygrowth[205]−TheOmnibusIncentivePlanwasapproved,allowingequityawardsintheformofstockoptions,RSUs,andPSUs,with10,000,000sharesreservedforissuance[208]ResearchandDevelopment−ResearchanddevelopmentexpensesforthesixmonthsendedSeptember30,2023,were163.5 million in June 2023[28] - The company transferred pension obligations for certain retired members of Canadian defined benefit pension plans to a third-party insurer, reducing future pension liability growth[205] - The Omnibus Incentive Plan was approved, allowing equity awards in the form of stock options, RSUs, and PSUs, with 10,000,000 shares reserved for issuance[208] Research and Development - Research and development expenses for the six months ended September 30, 2023, were 73.7 million, compared to $72.9 million in the same period in 2022[263] Financial Instruments and Fair Value - The fair value of derivative instruments is calculated as the present value of estimated future cash flows using appropriate interest rate yield curves and forward foreign exchange rates[294] - The fair value of long-term debts is estimated based on discounted cash flows using current interest rates for instruments with similar risks and remaining maturities[294] - The fair value of financial instruments is determined using observable market data, with Level 2 inputs being the primary source for valuation[301][302] - No significant changes were observed in Level 3 financial instruments during the six months ended September 30, 2023[303] Disclosure Controls and Procedures - The company maintains disclosure controls and procedures to ensure material information is communicated to key executives in a timely manner[231] - The company's disclosure controls and procedures were deemed effective as of September 30, 2023[279] Market Analysis and Assumptions - The company relies on IATA analysis to inform assumptions about the recovery rate in the civil aviation market[307] Shareholder Information - Weighted average number of common shares outstanding for diluted earnings per share calculation was 318,927,011 for the six months ended September 30, 2023[289]