CAE Inc. (NYSE:CAE) Q1 2020 Earnings Conference Call - Final Transcript

Aug 14, 2019 • 01:30 pm ET


CAE Inc. (NYSE:CAE) Q1 2020 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the CAE First Quarter Conference Call. [Operator Instructions]

I would now like to turn the meeting over to Mr. Andrew Arnovitz. Mr. Arnovitz, please go ahead.

Andrew Arnovitz

Good afternoon, everyone, and thank you for joining us today. Before we begin, I'd like to remind you that today's remarks, including management's outlook for fiscal year '20 and answers to questions contain forward-looking statements. These forward-looking statements represent our expectations as of today, August 14, 2019 and accordingly are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties.

Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risk factors and assumptions that may affect future results is contained in CAE's annual MD&A available on our corporate website and in our filings with the Canadian Securities Administrators on SEDAR and on the US Securities and Exchange Commission EDGAR site.

On the call with me this afternoon are Marc Parent, CAE's President and Chief Executive Officer and Sonya Branco, our Chief Financial Officer. After remarks from Marc and Sonya, we'll take questions from financial analysts and institutional investors. Following the conclusion of that Q&A period, we'll open the call to questions from members of the media.

Let me now turn the call over to Marc.

Marc Parent

Thank you, Andrew and good afternoon to everyone joining us on the call. I'll first discuss some highlights of the quarter, and then Sonya will review the detailed financials. I'll come back at the end to talk about our outlook. CAE had a good start to the fiscal year with double-digit revenue and operating income growth and CAD940 million of orders for a 1.14 times book-to-sales. CAE's total backlog at the end of the quarter was CAD9.4 billion. Performance was led by Civil, which delivered strong operating income growth and continued to add significantly to backlog. I'm especially pleased with our market momentum, winning the confidence of our airline and business customers with our innovative training solutions.

Our Defence is more variable on a quarterly basis, and first quarter results reflect this tendency, as well as an income growth profile that's more heavily weighted to the second half of the fiscal year. And in Healthcare, the revenue momentum we saw at the end of last year, continued into the first quarter.

Looking more closely at Civil, we booked CAD694 million of orders in Q1, including multi-year pilot training agreement with airlines, including the LATAM, SAS and Air Europa. We also signed five -- new five-year -- five training contracts with Philippines' AirAsia, which incorporates our highly innovative and data-driven CAE Rise Training System. Civil sold nine full-flight simulators during the quarter, including three to Southwest Airlines for the Boeing 737MAX, one to Korean Air for the Boeing -- for the Airbus A330 and one to Hawaiian Airlines for the Boeing 787. Overall, training center utilization remained strong with 76%