CAE reports second quarter fiscal 2022 results

  • Revenue of $814.9 million up 16% vs. $704.7 million in prior year
  • EPS of $0.04 vs. negative $0.02 in prior year
  • Adjusted EPS(1) of $0.17 vs. $0.13 ($0.03 excluding COVID-19 government support programs(2)) in prior year
  • Operating income(3) of $39.2 million vs. $28.2 million in prior year
  • Adjusted segment operating income(4) of $90.7 million vs. $79.3 million ($44.1 million excluding COVID-19 government support programs(5)) in prior year
  • Orders(6) of $871.4 million for $8.8 billion backlog(6) and 1.07x book-to-sales ratio(6)
  • Announced agreement post quarter to acquire Sabre’s AirCentre airline operations portfolio

Montreal, Canada, November 11, 2021 – (NYSE: CAE; TSX: CAE)

CAE today reported revenue of $814.9 million for the second quarter of fiscal 2022, compared with $704.7 million in the second quarter last year. Second quarter net income attributable to equity holders was $14.0 million ($0.04 per share) compared to a loss of $5.2 million (negative $0.02 per share) last year. Adjusted net income(7) in the second quarter of fiscal 2022 was $53.2 million ($0.17 per share) compared to $34.2 million ($0.13 per share) last year.

Operating income this quarter was $39.2 million (4.8% of revenue), compared to $28.2 million in the second quarter of fiscal 2021. Second quarter adjusted segment operating income was $90.7 million (11.1% of revenue) compared to $79.3 million last year. Adjusted segment operating income excluding COVID-19 government support programs was $90.7 million (11.1% of revenue) compared to $44.1 million last year. All financial information is in Canadian dollars unless otherwise indicated.Summary of consolidated results

(amounts in millions, except per share amounts)Q2-2022Q2-2021Variance %
Revenue$ 814.9 $ 704.7 16 %
Operating income39.2 $ 28.2 39 % 
Adjusted segment operating income (SOI)90.7 $ 79.3 14 % 
As a % of revenue% 11.1 % 11.3  
Adjusted SOI excluding COVID-19 government support programs$ 90.7 $ 44.1 106 % 
As a % of revenue% 11.1 % 6.3  
Net income (loss)$ 17.2 $ (6.0)387 % 
Net income (loss) attributable to equity holders of the Company14.0 $ (5.2)369 % 
Basic and diluted earnings (loss) per share (EPS)$ 0.04 $ (0.02)300 % 
Adjusted net income53.2 $ 34.2 56 % 
Adjusted EPS0.17 $ 0.13 31 % 
Adjusted net income excluding COVID-19 government support programs (8)53.2 $ 8.4 533 % 
Adjusted EPS excluding COVID-19 government support programs0.17 $ 0.03 467 % 
Order intake871.4 $ 667.8 30 % 
Total backlog8,827.9 $ 8,296.2 6 % 

“Our year over year growth in the second quarter was driven by the strengthening of our Civil training business, the continued ramp up of structural cost saving initiatives, and the integration of the L3 Harris Military Training business in our Defence results,” said Marc Parent, CAE’s President and Chief Executive Officer. “Overall, we delivered 16% year over year revenue growth and $0.17 of adjusted earnings per share. We also booked $871 million in orders for a book-to sales ratio of 1.07 times and concluded the quarter with an $8.8 billion backlog. In Defence, we closed the acquisition of L3 Harris Military Training in the quarter and it delivered solid revenue with a double-digit margin. We had lower organic performance in Defence this quarter, reflecting delays in orders and program execution, particularly internationally, largely due to the pandemic. And in Healthcare, I am encouraged by our third consecutive quarter of year over year revenue growth in our core, as we pursue scale and profitability with an expanded organization.”    

On CAE’s outlook, Parent added, “While COVID-related impacts continue to affect all of our business units, we increasingly see a clearer path to recovery and a larger, more resilient, and more profitable CAE in the future. Specifically, we are currently targeting to reach a consolidated adjusted segment operating margin of approximately 17% by the time our markets are generally recovered, with steady room for further improvement thereafter. We expect to reach this level of profitability on a significantly larger base of business with a post-pandemic capital structure that will allow us to sustain ample flexibility to further invest in our future. We continue to play offence during this period of disruption, as evidenced by our recent announcement of the proposed acquisition of Sabre’s AirCentre business, which marks our ninth accretive acquisition since the pandemic began. As business conditions continue to improve further, we look to extend this posture as it relates to both organic and inorganic growth investment.”

Parent concluded, “Our opportunity set continues to look very attractive, and I’ve never been as excited about CAE’s future as I am today.” Civil Aviation Training Solutions (Civil)

Second quarter Civil revenue was $362.1 million, stable compared to the second quarter last year on higher utilization in the Americas, and only five full-flight simulators (FFSs)(9) deliveries compared to 10 in the second quarter last year. Operating income was $49.9 million compared to $15.5 million in the same quarter last year. Adjusted segment operating income was $65.3 million (18.0% of revenue) compared to $51.9 million (14.2% of revenue) in the second quarter last year. Adjusted segment operating income excluding COVID-19 government support programs, of which there was none this quarter, was also $65.3 million (18.0% of revenue) compared to $34.2 million (9.4% of revenue) in the same quarter last year. During the quarter, Civil training centre utilization(10) was 53%, and since the end of the quarter, average training centre utilization has been trending to upwards of 60% globally.

During the quarter, Civil signed training solutions contracts valued at $408.9 million, including contracts for nine FFSs sales, bringing the first half FFS sales to date to 14. Notable training contracts for the quarter include a five-year aircraft maintenance training partnership agreement with Air Canada, a three-year exclusive agreement with Brussels Airlines, a five-year agreement with Envoy Air, a four-year agreement with PGA Portugalia, and a 5-year agreement with Alaska Airlines. In response to higher customer demand in business aviation training, following the quarter, Civil announced the expansion of its business aviation footprint with the introduction of a new flight-training location in Las Vegas, Nevada. The centre is expected to open in the summer of 2022 and will be Civil’s first west coast training facility in the U.S.

Civil’s digital ecosystem solution has also been selected by Innotech-Execaire Aviation Group (IEAG) to improve efficiency of their operations, marking IEAG as the launch partner for CAE’s innovative suite of digital services in the business aviation market. Furthermore, Civil announced a strategic partnership with BETA Technologies to design and develop a best-in-class pilot and maintenance technician training program for the ALIA eVTOL aircraft, as well as announced a new relationship with Starr Insurance Companies for a first of its kind program that combines a rigorous training regimen and insurance for single-pilot jet owners.

The Civil book-to-sales ratio was 1.13x for the quarter and 0.92x for the last 12 months. The Civil backlog at the end of the quarter was $4.3 billion.

In a move to accelerate Civil’s digital strategy and SaaS solutions, CAE announced an agreement following the quarter to acquire Sabre’s AirCentre airline operations portfolio (AirCentre) – a highly valuable suite of flight and crew management and optimization solutions. The agreement, which is valued at US $392.5 million excluding post-closing adjustments, includes the Sabre AirCentre product portfolio, related technology and intellectual property as well as the transfer of AirCentre’s highly talented workforce. The closing of the transaction is expected in the first quarter of calendar 2022 and is subject to customary conditions and regulatory approvals.Summary of Civil Aviation Training Solutions results

(amounts in millions, except SEU, FFSs)Q2-2022Q2-2021Variance %
Revenue$ 362.1 $ 364.5 (1 %)
Operating income49.9 $ 15.5 222 %
Adjusted segment operating income (SOI)65.3 $ 51.9 26 %
As a % of revenue% 18.0 14.2  
Adjusted SOI excluding COVID-19 government support programs$ 65.3 $ 34.2 91 %
As a % of revenue% 18.0 % 9.4  
Order intake$ 408.9 $ 353.3 16 %
Total backlog$ 4,263.2 $ 4,399.4 (3 %)
Simulator equivalent unit (SEU)(11) 245 251 (2 %)
FFSs in CAE’s network (9)312 308 1 %
FFS deliveries10 (50 %)
Utilization rate% 53 % 49 8 %

CAE is a high technology company, at the leading edge of digital immersion, providing solutions to make the world a safer place. Backed by a record of more than 70 years of industry firsts, we continue to reimagine the customer experience and revolutionize training and operational support solutions in civil aviation, defence and security, and healthcare. We are the partner of choice to customers worldwide who operate in complex, high-stakes and largely regulated environments, where successful outcomes are critical. As a testament to our customers’ ongoing needs for our solutions, over 60 percent of CAE’s revenue is recurring in nature. We have the broadest global presence in our industry, with more than 11,000 employees, 180 sites and training locations in over 35 countries.