CAE, Inc. (CAE) Reports Q1 Revenues Miss

CAE, Inc. (NYSE: CAE) reported Q1 EPS of ($0.11), $0.36 worse than the analyst estimate of $0.25. Revenue for the quarter came in at $550.5 million versus the consensus estimate of $611.18 million.

• Revenue of $550.5 million down 33% vs. $825.6 million in prior year
• Segment operating loss(1) of $110.3 million ($2.1 million before specific items(2)) vs. segment operating income before specific items of $113.3 million in prior year
• EPS of negative $0.42 (negative $0.11 before specific items(3)) vs. $0.24 before specific items in prior year
• Free cash flow(4) of negative $92.7 million up from negative $102.1 million in prior year
• Order intake(5) of $417.1 million for 0.76x book-to-sales(5) and $8.6 billion backlog(5)
• Announced approximately $100 million restructuring program to yield $50 million annual savings

"The full brunt of the COVID-19 pandemic hit us during our first quarter, with sharply lower demand and major disruptions to our global operations," said Marc Parent, CAE's President and Chief Executive Officer. "At the onset of the pandemic, we acted quickly to ensure the health and safety of our employees and customers by taking extensive measures to protect the Company's financial position and preserve liquidity. CAE has shown considerable agility and resiliency, having significantly mitigated our loss position and maintained a solid financial base in the first quarter, amid the most challenging conditions our company has ever faced. In Civil, mandatory temporary facility closures and travel restrictions presented our customers and us with considerable challenges. We were also required to temporarily suspend substantially all manufacturing at our main facility. Nevertheless, we still delivered two simulators during the quarter and averaged 33 percent utilization of our training network. With more than half of our global training network either closed or at reduced operations, utilization reached a low point during the quarter in the 20 percent range. Since then, we have seen training centre utilization increase to upwards of 40 percent, as our facilities reopened, and flight crews resumed their critical training activities. In Defence and Healthcare, the pandemic also caused significant disruptions, which have hampered customer demand and our ability to deliver."

Marc Parent on CAE's outlook, "The worst of the pandemic's impacts on CAE may now indeed be behind us; however, the pace of recovery is unlikely to be linear or quick, and it will most certainly be dictated by the rate at which travel restrictions and quarantines can safely be lifted and economic activity improves. We continue to view the current fiscal year as a tale of two halves, with the first half of the year marked by lower demand and disruptions, and the second half, to potentially begin to inflect more positively. With that, we continue to expect free cash flow to turn positive in our second half of the fiscal year."

On CAE's strategic realignment for a post COVID-19 world, Parent added, "We have a deeply rooted culture of innovation and a proven ability to adapt quickly to dynamic market conditions. In Healthcare, for example, we rapidly applied the full gamut of our technical capabilities in response to the crisis and are now fielding new opportunities globally in the design, manufacture and sale of life saving ventilators. Tough times require new thinking and across our markets, we have adapted our offerings by introducing new ways to leverage virtual reality and distance learning technologies to serve our customers' critical needs. We are currently taking actions company-wide to further strengthen CAE while our end markets recover. CAE has always been a nimble, technology-intensive company—and now more than ever, we are leaning forward and discovering more ways to accelerate the long-term transformation of the way we operate. We are applying digitally immersive technologies to further differentiate our solutions and address an even wider range of our customers' most critical needs. We are also leveraging technology to drive enhanced customer experiences, and to find greater operational efficiencies. As such, in order to adjust to the current and expected level of demand for our products and services, and to enable approximately $50 million of expected annual recurring savings starting next fiscal year, we have announced a restructuring program of approximately $100 million to be carried out over the next 12 months. Our restructuring program includes the introduction and acceleration of new digitally enhanced processes and the optimization of CAE's global asset base and footprint. We are effectively managing the things we can control within this unprecedented environment and we are decidedly 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

• Nanometrics (NANO) Issues Business Update, Reports FY23 Results
• Ball Corporation (BALL) Raises Dividend, Enters 40M Share Buyback, Announces Management Changes
• WM (WM) Tops Q1 EPS by 25c