CAE Inc ((TSE:CAE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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CAE Inc.’s latest earnings call conveyed an optimistic outlook, underscored by impressive financial metrics and strategic achievements. The company reported record free cash flow and backlog, with significant growth in both the Civil and Defense segments. Strategic partnerships further bolstered their position. However, challenges in the commercial aviation training market and increased finance expenses were noted as areas of concern.
Record Free Cash Flow and Backlog
The earnings call revealed that CAE Inc. achieved a record $410 million in free cash flow and secured $2.2 billion in new orders. This drove the adjusted backlog to a record high of $20.3 billion, showcasing the company’s robust financial health.
Civil Segment Growth
The Civil segment experienced substantial growth, with revenues increasing by 21% year-over-year to $752.6 million. The total Civil adjusted backlog reached a record $8.8 billion, marking a 44% increase from the previous year, highlighting the segment’s strong performance.
Defense Segment Performance
In the Defense segment, CAE recorded $707 million in orders, achieving a book-to-sales ratio of 1.5x. The defense-adjusted backlog hit a record $11.5 billion, up 104% year-over-year. The segment’s operating income also grew significantly, increasing by 88% to $39.2 million.
Strategic Partnerships and Innovations
CAE secured over $60 million in orders through strategic partnerships with major airlines. Notably, Turkish Airlines became a customer for CAE’s next-generation software solutions. The company also inaugurated its first air traffic services training center in collaboration with NAV Canada.
Recognition and Awards
The company’s commitment to excellence was recognized as CAE was named one of Canada’s Top 100 Employers for the third consecutive year and was included in Forbes Canada’s Best Employers list for 2025.
Commercial Aviation Training Softness
The commercial aviation training market in the Americas faced unexpected softness. Modest pilot hiring and training booking deferrals by airlines, due to aircraft supply chain challenges, were key factors contributing to this softness.
Higher Net Finance Expense
CAE reported a rise in net finance expenses, which increased to $56.6 million this quarter from $52.4 million last year. The increase was largely due to higher lease liabilities and additional borrowings.
Delayed Ramp-up in Civil Aviation
The anticipated ramp-up in commercial aircraft deliveries is taking longer than expected, which has affected initial training demand in the Americas. Consequently, the growth in adjusted segment operating income was slightly below earlier projections.
Forward-Looking Guidance
Looking ahead, CAE Inc. remains focused on maintaining its record financial performance. The company reported $1.5 billion in Civil segment orders, with a two-times book-to-sales ratio, and ended the quarter with a record $8.8 billion adjusted backlog, up 44% year-over-year. The Defense segment recorded $707 million in orders with a 1.5x book-to-sales ratio, and a record $11.5 billion adjusted backlog, up 104% year-over-year. The company continues to prioritize deleveraging, with a net debt position of approximately $3.4 billion and a net debt to adjusted EBITDA ratio of 3.36x.
In conclusion, CAE Inc.’s recent earnings call reflects a strong financial performance and strategic growth, particularly in the Civil and Defense segments. Despite challenges in commercial aviation training and increasing finance expenses, the company remains resilient with a significant backlog and strategic partnerships poised to drive future growth.
