Wednesday, aerospace tools and equipment supplier CAE Inc. (CAE,CAE.TO), reported a decline in profit for the first quarter, hit primarily by restructuring charges. CAE said its financial results, however, showed resilience in the face of difficult market conditions with strong results from its military business offsetting lower performance in the civil business and expects the trend to continue to help it through the challenging aerospace cycle. The company also announced the retirement of its president and chief executive officer Robert Brown, effective September 30.
Brown, President and Chief Executive Officer, CAE said, "Our challenge during the first quarter was to successfully carry out a major global reorganization while maintaining the momentum of our business."
For the first quarter, the Montreal, Canada-based company's net earnings declined to C$27.2 million from C$47.3 million in the year-ago quarter. Earnings from continuing operations for the quarter decreased to C$27.2 million or C$0.11 per share from C$48.2 million or C$0.19 per share in the same quarter last year.
Results for the first quarter include a restructuring charge of C$27.2 million, primarily severance and other costs, including pension expenses.
Net earnings, excluding items, for the quarter were C$46.1 million or C$0.18 per share.
In the previous fourth quarter, CAE's net income increased to C$51.3 million or C$0.20 per share from C$35.6 million or C$0.14 per share last year.
Total revenue for the quarter under review decreased to C$383.0 million from C$392.1 million in the same quarter last year.
In the preceding fourth quarter, revenues increased to C$438.8 million from C$366.6 million in the comparable quarter last year.
Segment wise, Training & Services/Civil revenue for the first quarter rose 4% to C$114.7 million from C$110.2 million a year ago. Simulation Products/Civil revenues plunged 39% to C$83.1 million, compared to C$136.6 million a year ago. Revenue for Simulation Products/Military revenue was C$118.5 million, up 34% from C$88.4 million a year ago, while Training & Services/Military revenue advanced 17% year-over-year to C$66.7 million from C$56.9 million in the previous-year quarter.
Segment operating income for the quarter slid modestly to C$72.3 million from C$72.6 million in the same quarter last year.
Earnings before interest, depreciation, amortization and income taxes for the quarter dropped sharply to C$45.1 million or 11.8% of revenue from C$72.6 million or 18.5% of revenue last year.
CAE's consolidated backlog for the quarter increased to C$3.278 billion from C$2.847 billion in the year-ago quarter.
The company won orders of C$193.5 million in the military segment for the quarter, including a C-130J Hercules transport aircraft simulator for the U.S. Air Force Special Operations Command and upgrades to MH-60 Seahawk helicopter trainers for the U.S. Navy. CAE also signed a deal to perform major upgrades on CH-47 Chinook helicopter simulators used by the U.K. Royal Air Force.
In civil segments, CAE secured training and services contracts expected to produce revenues of nearly $58.7 million and were awarded $90.7 million in contracts for six full-flight simulators from European and Middle Eastern customers, and Bombardier, for developmental and prototype CSeries simulators.
CAE also declared a dividend of $0.03 per share payable on September 30 to stockholders of record as of the close of business on September 15, 2009.
Amongst competitors, New York-based Surveillance and aircraft modernization services provider L-3 Communications Holdings Inc. (LLL), Thursday said its second quarter profit dropped from a year ago, hurt badly by pension related expenses and absence of certain gains recorded in the prior quarter.
For the second quarter, net income attributable to L-3 common shareholders dropped to US$223 million or US$1.90 per share from US$273 million or US$2.21 per share in the same quarter a year ago. Net income was US$227 million, down from US$278 million in the year-earlier quarter. Excluding these items, earnings per share rose 16% to US$1.90 from US$1.64 in the 2008 second quarter. Revenues rose 6% to US$3.93 billion from US$3.72 billion in the prior-year quarter, surpassing Street estimates of US$3.84 billion.
In a separate statement the company announced that its president and CEO Robert Brown will retire from his post and will be succeeded by executive vice president and chief operating officer, Marc Parent. Brown will, however, continue as an advisor until the end of December 2009. During his stint at CAE, Brown was instrumental in seeing the company's annual revenue grow 77% from C$938.4 million in fiscal year 2004 to C$1.7 billion year in fiscal 2009.
Earlier, on June 29, the company announced that it would change its New York Stock Exchange ticker symbol from "CGT" to "CAE",effective July 2, 2009. CAE also trades on the Toronto Stock Exchange under the ticker symbol "CAE".
CAE is currently trading at US$7.68, up $0.46 or 6.32%, on the NYSE. CAE.TO is currently trading at C$8.40, up $0.50 or 6.33%, on a volume of 1.37 million shares on the TSX.
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