CAE today reported revenue of $923.5 million for the third quarter of fiscal 2020, compared with $816.3 million in the third quarter last year.
“CAE had strong growth in the third quarter, with 13 per cent higher revenue and 37 per cent higher operating income, and we generated over $275 million of free cash flow,” said Marc Parent, president and CEO, CAE. “Customers continued to put their trust in CAE as their training partner of choice, awarding us $1.1 billion of orders for a $9.4 billion backlog.”
Parent continues to explains CAE’s Q3 2020 performance was led by its Civil Aviation Training Solutions segment with 42 per cent operating income growth, while the Defence had 32 per cent operating income growth with secured orders in excess of revenue by 1.11 times. CAE also had double-digit revenue growth in Healthcare.
CAE Civil highlights
In CAE’s Civil segment revenue was $558.1 million, up 22 per cent compared to the same quarter last year. During the quarter, Civil delivered 12 full-flight simulators (FFSs) to customers and third quarter Civil training centre utilization was reported at 70 per cent.
During the quarter, CAE’s Civil segment signed training solutions contracts valued at $706.2 million, including a long-term pilot training agreement with JetSmart Airlines, and 17 FFSs, for 37 sales in the first nine months of the year. Since the beginning of January, Civil received orders for seven FFSs, including six for the Boeing B737MAX aircraft, bringing total current year-to-date FFS sales to 44.
During the quarter, Civil also launched new Multi-Crew Pilot License programs with easyJet and Volotea and a new cadet pilot training program with Jazz Aviation and Seneca School of Aviation called Jazz Approach. In business aviation, CAE states Civil signed several business aviation pilot training contracts with business jet operators including JetSuite, Solairus Aviation, and TAG Aviation Holdings.
CAE Defence highlights
Third quarter revenue for CAE’s Defence segment was $332.4 million, up one per cent compared to the same quarter last year and segment operating income was $31.3 million (9.4 per cent of revenue). During the quarter, CAE Defence booked orders for $367.4 million, including contracts to provide the German Navy with a training solution for the NH90 Sea Lion helicopter and to upgrade and modify the German Army’s NH90 full-mission simulators.
CAE also points to notable contracts like the next increment of a multi-year deal with the U.S. Air Force to provide C-130H aircrew training services. Defence also received orders to continue providing long-term maintenance and support services for Rotorsim, a joint venture between CAE and Leonardo, and a contract for Abrams M1A2 tank maintenance trainers for the U.S. Army.
CAE’s Defence backlog, including options and CAE’s interest in joint ventures, at the end of the quarter, was $4.2 billion. CAE states its Defence pipeline remains strong with approximately $3.8 billion of bids and proposals pending customer decisions.
As Parent described above, CAE’s free cash flow was $275.3 million for the quarter compared to $155.1 million in the third quarter last year. CAE states the increase in free cash flow results mainly from a lower investment in non-cash working capital and higher cash provided by operating activities.
Outlook for fiscal 2020
In releasing its Q3 2020 results, CAE states its outlook for the current fiscal year remains unchanged, as per its previous update on November 13, 2019. In Civil, the company operating income growth closer to 30 per cent based on year-to-date performance and a further increase in demand for its training solutions, including FFS sales and the integration of its recently acquired Bombardier BAT business, which the company describes as substantially complete.
In Defence, CAE expects modest operating income growth for the year. CAE also expects Healthcare to achieve double-digit growth for the year.