Estimated reading time 4 minutes, 56 seconds.
CAE has reported financial results for the second quarter ended Sept. 30, 2013. Net income attributable to equity holders was $38.3 million ($0.15 per share) this quarter, compared to $35.6 million ($0.14 per share) last year. Revenue for the quarter was $487.5 million, compared to $506.5 million in the second quarter last year. All financial information is in Canadian dollars.
CAE’s Board of Directors has approved a one cent increase in CAE’s quarterly dividend to six cents per quarter.
“We improved operating margins during the quarter in both Civil and Military, sustaining our confidence that performance will be stronger in the second half,” said Marc Parent, CAE’s president and chief executive officer. “Our operational focus yielded strong free cash flow in the quarter of nearly $120 million, which enabled us to reduce net debt below 40 per cent of capital. We achieved a book-to-sales ratio of 1.47 on solid order intake and our backlog reached $3.9 billion. This includes a record $2.0 billion backlog in Civil, which is indicative of our sector leadership within a robust aerospace market. As a reflection of our confidence in CAE’s position and outlook, we are pleased to announce a 20 percent dividend increase.”
Civil segments
Revenue for our combined Civil segments decreased 6 per cent in the second quarter to $269.3 million compared to $285.3 million last year. Second quarter operating income was $39.0 million (14.5 per cent of revenue) compared to $45.2 million (15.8 per cent of revenue) last year.
We received 13 FFS orders in the second quarter and have since sold another five, bringing us to 33 year to date. During the quarter we signed long-term contract renewals with Jazz Aviation and Execaire for training services and we commenced training at our new centre in New Delhi, India with our joint venture partner, Interglobe, the parent of Indigo Airlines. We received $514.5 million in combined civil segment orders this quarter for a book-to-sales ratio of 1.91x. The ratio for the trailing 12 months was 1.37x. Second quarter Civil backlog was a record $1.997 billion.
Military segments
Revenue for our combined Military segments decreased 1 per cent in the second quarter to $191.1 million compared to $192.9 million last year. Combined Military operating income was $25.2 million (13.2 per cent of revenue) for the quarter, compared to $26.1 million (13.5% of revenue) last year.
We booked orders during the quarter for upgrades to the German Air Force’s Tornado simulators as well as upgrades to the U.S. Air Force’s KC-135 operational flight trainers together with an extension of our aircrew training services contract. Also with the U.S. Air Force, we signed a contract to train its 1,500 RPV pilot and sensor operators. In total, we received $174.0 million in combined military segment orders this quarter, representing a book-to-sales ratio of 0.91x. In addition to these orders are $120.6 million in negotiated options received in the quarter involving U.S. defense programs. Second quarter Military backlog was $1.94 billion and we had an additional $370.6 million of unfunded backlog.
Additional financial highlights
Income taxes this quarter were $8.4 million representing an effective tax rate of 18%, compared to 24 per cent last year. The decrease in the effective tax rate was mainly due to a change in the mix of income from various jurisdictions and an adjustment resulting from the substantively enacted reduction of the U.K. statutory tax rate. Excluding the effect of this adjustment in the quarter, the income tax expense would have been $8.9 million.
Free cash flow was positive $119.7 million this quarter. The increase from last quarter was mainly attributable to a reduction of $51.5 million in non-cash working capital. For the year to date, free cash flow was positive $108.2 million, or $216.8 million higher than the first half last year, mainly due to an increase in cash provided by operating activities and favourable changes in non-cash working capital.
Capital expenditures totaled $24.6 million this quarter with $15.2 million for growth and $9.4 million for maintenance.
Net debt was $810.4 million as at Sept. 30, 2013, compared to $897.8 million as at June 30, 2013. Our net debt-to-total capital ratio decreased to 38.7 per cent.
CAE will increase its dividend to $0.06 per share effective Dec. 31, 2013 to shareholders of record at the close of business on Dec. 16, 2013.
