CAE reports first-quarter results for fiscal year 2006
August 11 2005 - 11:52AM
PR Newswire (US)
- Revenues increase 15% to $266 million - Financial reporting
enhanced with new segmentation - Continued progress on
restructuring - Renewal of committed credit facility of US$400
million and Euro 100 million MONTREAL, Aug. 11
/PRNewswire-FirstCall/ -- (NYSE: CGT; TSX: CAE) - CAE today
reported financial results for the first quarter, ended June 30,
2005. Earnings from continuing operations were $20.8 million, or
$0.08 per share, which compares to first-quarter earnings of $18.9
million or $0.08 per share in the prior fiscal year. All financial
information is in Canadian dollars. Excluding non-recurring items,
earnings from continuing operations for the quarter were $0.08 per
share which on the same basis compares to $0.04 in the first
quarter last year. Consolidated revenues from continuing operations
reached $266.0 million, compared to $230.9 million in the first
quarter last year and $262.7 million in the most recent fourth
quarter. The 15% increase in revenues compared to the year-earlier
quarter stems mainly from higher Simulation Products revenues in
both the Civil and Military segments. "First-quarter results are
positive, and are consistent with our initial outlook for the
year," said Robert E. Brown, CAE's President and CEO. "We are
encouraged by the general level of activity we see in the
commercial and business aviation markets, and we are determined to
emerge from this transition year with a solid base to benefit fully
from any market recovery." Aside from the improvements in revenues
and earnings from continued operations, Mr. Brown noted that the
underlying performance of the Company's various business groups was
solid, with consolidated operating income (EBIT) up 14% compared to
the first quarter of fiscal 2005. "We continue to make progress
with our restructuring," Mr. Brown added. "CAE's financial strategy
and position are sound, as reflected in our reduced debt load and
the recently concluded agreement for a new, committed five-year
revolving credit facility. We have implemented strict business
processes that emphasize specific financial targets, our businesses
are now organized more effectively with a clear path to improvement
and our cost structure is leaner. In addition, I am confident that
we are taking the right steps towards re- engaging our workforce."
New financial segmentation Effective April 1, 2005, following the
reorganization, CAE began reporting financial results on a newly
segmented basis - distinguishing between products and services --
to reflect the way that the business is now being managed. In
addition to be able to more effectively manage the business, it
also enables investors to evaluate performance and make informed
decisions about the Company. "We listened carefully to what
investors told us regarding the need for more disclosure and a
clearer picture of our business," Mr. Brown stated, "and we are
delivering on our commitment to communicate more effectively."
CAE's financial results are now segmented as follows: 1. Simulation
Products/Civil 2. Simulation Products/Military 3. Training &
Services/Civil 4. Training & Services/Military Business Segment
Highlights Simulation Products/Civil During the first quarter of
fiscal 2006, Simulation Products/Civil won six orders for
full-flight simulators, four of which were announced. At June 30,
2005, the segment's backlog had reached $277 million. Simulation
Products/Civil backlog generated segment operating income of $7.1
million in the first quarter, compared to $11.0 million in the
first quarter of the prior year, and a loss of $2.5 million in the
fourth quarter. The segment's operating income was 35% lower than
the first quarter last year because of the recognition in the
latter quarter of additional investment tax credits (ITC) related
to fiscal years 2000 to 2004. Excluding the additional ITC benefit,
segment operating income for the first quarter of fiscal 2006 would
actually have been $5.9 million higher than in the corresponding
quarter last year. First-quarter revenues of $60.2 million were 28%
higher than in the prior year, and 11% higher than the fourth
quarter. Performance benefited from higher order intake and by
successfully reaching important milestones on certain programs.
While these developments are positive, the Company's Simulation
Products/Civil backlog is expected to deliver lower margins over
the next several quarters. Simulation Products/Military Simulation
Products/Military concluded the quarter with $105.7 million in new
order bookings. The segment's backlog at June 30 reached $535
million, up from $511 million at the end of the fourth quarter. The
segment's operating income for the first quarter amounted to $4.8
million, and included a non-recurring charge of $1.5 million
related to the writedown of deferred bid costs (incurred
post-selection). Excluding non- recurring items, the segment's
operating income increased by $6.7 million over the first quarter
last year, and decreased by $2.5 million from the fourth quarter.
The decline from the fourth quarter is the result of lower revenue
volume, and differences in the mix of programs as well as their
advancement in the quarter. Simulation Products / Military revenues
amounted to $72.7 million and were 30% higher than the first
quarter last year, owing primarily to the NH90 program. Revenues
declined by 10% from the fourth quarter, due mainly to delays on
certain programs. Training & Services/Civil Training &
Services/Civil concluded the quarter with new agreements for a
combined value of $80 million. At June 30, the segment's backlog
reached $832 million, up from $830 million at the end of the fourth
quarter. The segment's operating income for the first quarter
amounted to $16.9 million, representing a 63% and a 27% increase
over the first and fourth quarters last year. Training &
Services / Civil operates within a mainly fixed cost structure and
incremental revenue above a certain level provides significant
leverage to profitability. The segment's operating income was
favourably impacted by a 2% increase in revenue per simulator,
combined with a 4% reduction in costs per simulator compared to the
prior year. In addition, profitability was enhanced by a $2.3
million reduction in amortization expenses following the asset
impairment effected last fiscal year. Revenues amounted to $83.8
million, 5% and 6% higher than the first and fourth quarters last
year. More specifically, revenues from "wet" training increased by
10% in the first quarter. Two additional simulators became active
in CAE's training network, contributing to higher sequential
revenues. The first quarter is usually seasonally strong as flight
crews train in preparation for the subsequent busy summer travel
period. Demand was comparatively robust in the first quarter this
year compared to last year, which is commensurate with the general
increase in demand for air travel. Training & Services/Military
Training & Services/Military concluded the quarter with $88
million in new order bookings, a significant increase over the $23
million booked in the prior quarter. The segment's backlog at June
30 reached $904 million. The segment's operating income for the
first quarter amounted to $2.0 million, 67% and 52% lower than
first and fourth quarters last year. Both decreases are
attributable to the writedown of post-selection costs. Without the
impact of this non-recurring item, the segment's operating income
would have been $6.4 million, or 5% and 52% higher than the first
and fourth quarters last year. The underlying increases in
profitability are the result of efficiency gains on certain
services programs. Revenues for the first quarter amounted to $49.3
million, which were similar to the first and fourth quarters last
year. Cash flow and financial position CAE's free cash flow,
defined as net cash provided by continuing operations less capital
expenditures including capitalized costs, and dividends paid, plus
sale and leaseback proceeds, was -$2.1 million for the quarter,
compared to -$50.3 million in the prior year period. Net cash
provided by continuing operating activities totalled $21.8 million
compared to $3.7 million the prior year period. CAE's net debt,
defined as long-term debt less cash and cash equivalents, was
$282.3 million on June 30, keeping the Company well within its new
borrowing covenants. After the quarter end, CAE concluded an
agreement for a new, committed five-year revolving credit facility
of US$400 million and Euro 100 million, which replaced its facility
due to expire in April 2006. The new facility has comparable terms
and conditions to the former, maintains CAE's borrowing flexibility
and recognizes the Company's normal use of operating lease and
project financings. Additional consolidated financial results
First-quarter consolidated earnings before interest and taxes
(EBIT) from continuing operations, reached $35.9 million or 13.5%
of revenues, compared to $31.5 million or 13.6% of revenues, in the
first quarter last year and a loss of $0.7 million in the fourth
quarter. The consolidated backlog from continuing operations at
June 30 remained stable at $2.5 billion. Capital expenditures for
the quarter amounted to $21.5 million compared to $46.8 million in
first quarter last year. Capital expenditures are expected to
remain in the range of $135 million in fiscal year 2006.
Non-recurring items Excluding non-recurring items, earnings per
share from continuing operations for the first quarter were $0.08
which on the same basis compares to $0.04 in the first quarter last
year. Reported first-quarter results include an after-tax writedown
of $5.1 million in post-selection project costs related mainly to
the change in procurement approach of the British Army's Armoured
Vehicle Training Service (AVTS) program. Restructuring charges of
$0.7 million after tax were incurred during the quarter and while
significant amounts remain under the restructuring exercise, such
expenses can only be recognized as they are incurred. A
foreign-exchange gain of $6.7 million after tax was triggered in
the quarter, following a reduction in the Company's investment in
some of its self-sustaining subsidiaries. The first quarter of the
previous fiscal year benefited from the recognition of $10.1
million after tax from additional ITCs related to previous years. A
more detailed discussion of business segment highlights,
re-segmented historical performance and summary of non-recurring
items can be found in the Management Discussion & Analysis
posted on CAE's website at http://www.cae.com/financialsQ1 .
Investor Conference and Webcast CAE will host a conference today at
1:00 p.m. EDT for analysts, institutional investors and the media.
North American participants can listen to the conference by
dialling 1-800-387-6216 or 514-861-6560. Overseas participants can
dial +800-7664-7664 or 1-514-861-6560. The conference and
accompanying slide presentation will also be Webcast live for the
public at http://www.cae.com/ . CAE is a leading provider of
simulation and modelling technologies as well as integrated
training services for commercial and business aviation, and defence
customers worldwide. The Company has annual revenues of
approximately C$1 billion, with operations and training facilities
in 17 countries on five continents. 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 of any dispositions, monetizations, mergers, acquisitions,
other business combinations or other transactions that may be
announced or that may occur after the date hereof. For a
description of risks that could cause actual results or events to
differ materially from current expectations, please refer to the
section entitled "Risk Factors" in CAE Inc.'s Annual Information
Form for the year ended March 31, 2005 filed with the Canadian
securities commissions (available at http://www.cae.com/ or on
SEDAR at http://www.sedar.com/) and with the U.S. Securities and
Exchange Commission under Form 40-F (available on EDGAR at
http://www.sec.gov/), as updated in CAE's fiscal 2006 First Quarter
MD&A dated August 11, 2005, under the section entitled
"Business Risks And Uncertainties". The forward-looking statements
contained in this news release represent our expectations as of
August 11, 2005 and, accordingly, are subject to change after such
date. However, we disclaim any intention or obligation to update
any forward-looking statements, whether as a result of new
information or otherwise. > DATASOURCE: CAE INC. CONTACT: On the
Web: http://www.cae.com/; Media contacts: Nathalie Bourque, Vice
President, Global Communications, (514) 734-5788, ; Anne von
Finckenstein, Manager, Public Relations, (514) 340-5370, ; Investor
relations: Andrew Arnovitz, Director, Investor Relations, (514)
734-5760,
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