CAE reports third quarter fiscal 2021 results

  • Revenue of $832.4 million up 18% vs. second quarter and down 10% vs. third quarter last year
  • EPS of $0.18 ($0.22 before specific items(1)) vs. negative $0.02 ($0.13 before specific items) in the second quarter and $0.37 ($0.37 before specific items) in the third quarter last year
  • Operating profit(2) of $82.9 million vs. $28.2 million in the second quarter and $154.9 million in the third quarter last year
  • Segment operating income before specific items(3) of $97.2 million vs. $79.3 million in the second quarter and $157.2 million in the third quarter last year
  • Net cash provided by operating activities of $234.8 million vs. $45.6 million in the second quarter and $322.1 million in the third quarter last year
  • Positive free cash flow(4) of $224.0 million vs. $44.9 million in the second quarter and $275.3 million in the third quarter last year
  • Issued $495.3 million in common equity and announced three acquisitions: Flight Simulation Company B.V., TRU Simulation + Training Canada Inc., and Merlot Aero Limited

CAE today reported revenue of $832.4 million for the third quarter of fiscal 2021, compared with $923.5 million in the third quarter last year. Third quarter net income attributable to equity holders was $48.8 million ($0.18 per share) compared to $97.7 million ($0.37 per share) last year. Net income before specific items(5) in the third quarter of fiscal 2021 was $60.0 million ($0.22 per share) compared to $99.4 million ($0.37 per share) last year. 

Operating profit this quarter was $82.9 million (10.0% of revenue), compared to $154.9 million (16.8% of revenue) in the third quarter of fiscal 2020. Restructuring costs of $14.3 million were recorded this quarter whereas there were no restructuring costs in the third quarter of fiscal 2020. Third quarter segment operating income before specific items was $97.2 million (11.7% of revenue) compared with $157.2 million (17.0% of revenue) last year. Backlog(6) remains solid at $7.8 billion. All financial information is in Canadian dollars unless otherwise indicated.Summary of consolidated results

(amounts in millions, except operating margins and per share amounts) Q3-2021 Q3-2020Variance %
Revenue$832.4 $923.5 (10%)
Operating profit$82.9 $154.9 (46 %)
Segment operating income(7) (SOI)$97.2 $154.9 (37%)
Segment operating margins%11.7 %16.8  
SOI before specific items$97.2 $157.2 (38 %)
Segment operating margins before specific items%11.7 %17.0  
Net income$49.7 $99.8 (50 %)
Net income attributable to equity holders of the Company$48.8 $97.7 (50%)
Basic and diluted earnings per share (EPS)$0.18 $0.37 (51%)
Net income before specific items$60.0 $99.4 (40 %)
EPS before specific items$0.22 $0.37 (41%)
Order intake(6)$710.7 $1,106.6 (36%)
Total backlog$7,820.1 $9,434.3 (17 %)

“CAE’s performance continued to strengthen sequentially in the third quarter, demonstrated by 69% higher earnings per share and a near five-fold increase in free cash flow to $224.0 million, underscoring the resiliency of our business,” said Marc Parent, CAE’s President and Chief Executive Officer. “We are managing well through a challenging period and making important progress to significantly enhance CAE’s position for future growth. We bolstered our financial resources with the issuance of $495 million of common equity and we strengthened and expanded our market position with a succession of three acquisitions.” 

On CAE’s outlook, Marc Parent added, “The pandemic continues to be a global reality and the resumption of CAE’s recovery remains highly dependent on the timing and rate at which travel restrictions and quarantines can eventually be safely lifted and normal activities resume in our end markets. Looking beyond, given our recent investments and future potential opportunities to deploy growth capital, we are confident CAE will emerge from this period in a position of even greater strength.” Civil Aviation Training Solutions (Civil)

Civil training centre utilization(8) is well below pre-pandemic levels; however, remains stable with the second quarter, which was already much-improved compared to the lows seen at the outset of the pandemic. This reflects the benefits of a highly regulated aviation industry and the fundamental requirement for aviation training. It also shows the ongoing effects on air travel demand resulting from persistent mobility and border restrictions brought by the pandemic. In the months since the onset of the pandemic, business aviation has been experiencing a more rapid recovery than commercial. COVID-19 continued to negatively affect Civil training revenues during the quarter with a significant decrease in training services demand as a result of the reduction in airlines’ global operations, disruption to the global air transportation environment and diminished air passenger travel. While most CAE locations are operating, certain training locations have recently had to curtail operating activities temporarily as local authorities implement measures to contain the spread of COVID-19. Training centre utilization remained stable at an average of 50 percent for the quarter. Since the beginning of January, Civil training centre utilization has continued to average at approximately this level. 

Third quarter Civil revenue was $412.2 million, up 13% compared to the preceding quarter, and down 26% compared to the third quarter last year. Operating profit was $48.4 million compared to $15.5 million in the second quarter and $123.0 million last year. Segment operating income before specific items was $62.0 million (15.0% of revenue) compared to $51.9 million (14.2% of revenue) in the second quarter and $123.4 million (22.1% of revenue) in the third quarter last year. During the quarter, Civil delivered 10 full-flight simulators (FFSs)(9) to customers. 

During the quarter, Civil signed training solutions contracts valued at $329.3 million, including contracts for three FFSs sales. Notable training contracts for the quarter include a five-year business aviation training agreement with Bundeswehr in Germany, a five-year pilot training agreement with cargo airline, MasAir, a five-year pilot training agreement with TUI Airways, a five-year exclusive pilot training agreement with Iberia, Líneas Aéreas de España, a two-year pilot training agreement with LOT Polish Airlines, and a five-year housing agreement with Virgin Atlantic Airways. 

During the quarter, CAE announced a succession of three acquisitions, involving Flight Simulation Company B.V., Merlot Aero Limited, and TRU Simulation + Training Canada Inc. The combination of these acquisitions strengthens Civil’s core position in pilot training and expands its suite of solutions for aviation customers into the growing market for digitally-enabled crew optimization services. 

The Civil book-to-sales ratio(6) was 0.80x for the quarter and 0.83x for the last 12 months. The Civil backlog at the end of the quarter was $4.2 billion. Summary of Civil Aviation Training Solutions results

(amounts in millions, except operating margins, SEU, FFSs and FFS deliveries) Q3-2021 Q3-2020Variance %
Revenue$412.2 $558.1 (26%) 
Operating profit$48.4 $123.0 (61%) 
Segment operating income$62.0 $123.0 (50%) 
Segment operating margins%15.0 %22.0  
SOI before specific items$62.0 $123.4 (50%) 
Segment operating margins before specific items%15.0 %22.1  
Order intake$329.3 $706.2 (53%) 
Total backlog$4,198.1 $5,263.0 (20%) 
Simulator equivalent unit (SEU)(10)  245  252 (3%) 
FFSs in CAE’s network(9) 320  303 6% 
FFS deliveries 10  12 (17%) 

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