CAE, Inc. (CAE) Tops Q4 EPS by 21c, Revenues Beat

CAE, Inc. (NYSE: CAE) reported Q4 EPS of $0.46, $0.21 better than the analyst estimate of $0.25. Revenue for the quarter came in at $977.3 million versus the consensus estimate of $611.18 million.

• Strong annual performance despite COVID-19 impact in Q4
• Annual revenue up 10% to $3.6 billion
• Annual segment operating income(1) of $537.1 million ($590.4 million before specific items(2)) up 12% vs. $480.6 million in prior year (up 21% vs. $487.4 million before specific items)
• Annual EPS of $1.16 ($1.34 before specific items(3)) vs. $1.23 (up 7% vs. $1.25 before specific items) in prior year
• Q4 revenue down 4% to $977.3 million
• Q4 segment operating income of $146.5 million ($193.9 million before specific items) down 14% vs. $170.4 million in prior year (up 9% vs. $177.2 million before specific items)
• Q4 EPS of $0.29 ($0.46 before specific items) vs. $0.46 ($0.48 before specific items) in prior year
• $3.8 billion annual order intake(4), including 49 Civil FFSs, and $9.5 billion order backlog(4)
• Annual free cash flow(5) of $351.2 million for 98% cash conversion(6)
• CAE Air1 ventilator in final stages of certification by health authorities

"While leading CAE toward what would have been another record year, the COVID-19 pandemic hit us in our fourth quarter. Our first response was to ensure the health and safety of our employees and customers, and this continues to be our top priority. I am extremely proud of CAE's employees worldwide, who daily, through even the most extreme conditions, take to heart the continuity of our customers' critical operations, and earn the privilege of being their training partner of choice," said Marc Parent, CAE's President and Chief Executive Officer. "Our employees went beyond the call of duty in the fight against COVID-19 by bringing forward the idea to develop a critical care ventilator. It took just 11 days for 12 CAE engineers and scientists to develop a prototype, and now more than 500 of our employees are delivering on a contract with the Government of Canada to manufacture 10,000 ventilators to help save lives. The CAE Air1 ventilator is in the final stages of certification by health authorities. This is a true testament to the social impact CAE and its employees have, and it underscores the Company's culture of innovation."

Marc Parent added, "Turning to our results, notwithstanding the impact of COVID-19 headwinds on what is typically our best quarter of the year, we achieved strong performance overall in fiscal 2020, with double-digit revenue growth, 21% operating income growth, and 7% higher earnings per share. I am especially pleased with our 98% conversion of net income to free cash flow, which underscores the cash-generative profile of CAE's world-leading training solutions. In Civil, we exceeded our annual outlook with 37% higher operating income, and annual orders totaling $2.5 billion, including additional airline training outsourcings and 49 full-flight simulator sales. In Defence, we anticipated a strong fourth quarter to reach our annual outlook for modest growth. While we achieved this on revenue, we came up short on operating income which was down 13%, mainly on lower than expected progress on program milestones and delays in securing new orders in the face of the COVID-19 pandemic. We booked $1.2 billion of defence orders during the year, for a $4.1 billion Defence backlog, which provides CAE with a good measure of diversification. And in Healthcare, we were on track for double-digit annual revenue growth until the last quarter, where it too was negatively affected by COVID-19, as medical and nursing school customers went into lockdowns, and hospital customers focused their attention on the healthcare crisis."

The COVID-19 pandemic is a crisis of unprecedented speed and magnitude with respect to the disruption it has caused to daily life. The global air transportation environment and air passenger travel have been especially impacted, and CAE has seen a material disruption to its operations. CAE has implemented several flexible measures to protect the Company's financial position and preserve liquidity, including the reduction of capital expenditures and R&D investments in fiscal 2021, strict cost containment measures, salary freezes, salary reductions, reduced work weeks and temporary layoffs, as well as a suspension of the common share dividend and share repurchase plan. CAE is a global leader, and the long-term outlook for the Company remains highly compelling, with increased potential for long-term partnerships and outsourcings, and the resumption of above-market rates of growth. In the short-term; however, the Company expects the pandemic to have a significantly negative impact on performance.

Marc Parent on CAE's outlook, "As we look to the fiscal year ahead, we believe it will be a tale of two halves, with the first-half of the year marked by sharply lower demand and major disruptions to our operations, and the second-half, slightly more positive as markets potentially begin to reopen and travel restrictions ease. For the year overall, we expect a material decrease in operational and financial performance. Much uncertainty persists with respect to the duration and severity of the market downturn, and while COVID-19 may not have been foreseeable, our business is resilient by design. We entered this pandemic from a position of strength, with a global leading market position, a balanced business with recurring revenue streams, and a solid financial position. We have taken decisive yet flexible actions to help protect our people and operations over the short-term and to give us the necessary agility to resume long-term growth when global air travel eventually returns. We realize that it may be some time before things get back to normal, and based on our scenario analysis, we have the liquidity to weather the storm with upwards of $2 billion in cash and available credit. CAE is a highly innovative company with over seven decades of industry firsts under its belt. At the same time as we manage through the pandemic, we are focused on the future, and I expect we will ultimately be stronger for it."

For earnings history and earnings-related data on CAE, Inc. (CAE) click here.

You May Also Be Interested In

• CAE announces the final 2026 Meeting Board of Directors election results and welcomes Bruce Ross to its Board of Directors
• Star Equity Holdings (STRR) Misses Q2 EPS by 8c
• Evogene chairman to address dissident shareholders on results call