CAE INC (CAE): Financial results for Q1 2027
CAE INC (CAE) furnished an SEC Form 6-K — earnings release. Press Release CAE reports first quarter fiscal 2027 results • Revenue of $1,173.4 million vs. $1,098.6 million in prior year, up 6.8% year-over-year • EPS of $0.10 vs. $0.18 in prior year and adjusted EPS (1) of $0.26 vs. $0.26 in prior year • Free cash flow (1) of $104.0 million
How this was made
The 30-second read
Why it matters
The earnings release introduces new financial data that can affect short‑term price action and informs sector positioning.
Market read
First‑time earnings disclosure for a mid‑cap aerospace firm, offering actionable insight for traders.
What to watch
The strategic review of Flightscape and training center rationalization may unlock longer‑term cost savings not yet priced in.
CAE reports first quarter fiscal 2027 revenue growth and strong free cash flow, while operating income and Civil profitability declined; fiscal 2027 outlook unchanged.
Revenue increased 6.8% and free cash flow improved to $104.0 million, supported by both Civil and Defense growth. However, IFRS operating income declined 35.1%, net income attributable to equity holders declined 45.8%, and Civil adjusted segment operating income margin fell to 16.5% from 20.2%.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenueother | $1,173.4 million | – | 6.8% |
| Cost of salesother | $830.5 million | – | – |
| Gross profitother | $342.9 million | – | – |
| Research and development expensesother | $40.3 million | – | – |
| Selling, general and administrative expensesother | $182.9 million | – | – |
| Restructuring, integration and acquisition costsother | $48.3 million | – | – |
| Operating incomeother | $86.8 million | – | (35.1%) |
| Operating income as a % of revenueother | 7.4% | – | – |
| Adjusted segment operating incomenon-GAAP | $156.6 million | – | (7.5%) |
| Adjusted segment operating income as a % of revenuenon-GAAP | 13.3% | – | – |
| Finance expense – netother | $45.5 million | – | – |
| Earnings before income taxesother | $41.3 million | – | – |
| Income tax expenseother | $8.7 million | – | – |
| Effective tax rateother | 21.1% | – | – |
| Adjusted effective tax ratenon-GAAP | 23.4% | – | – |
| Net incomeother | $32.6 million | – | – |
| Net income attributable to equity holders of the Companyother | $31.0 million | – | (45.8%) |
| EPS, basic and dilutedother | $0.10 | – | (44.4%) |
| Adjusted net incomenon-GAAP | $83.5 million | – | – |
| Adjusted EPSnon-GAAP | $0.26 | – | —% |
| Adjusted order intakeother | $1,289.6 million | – | 14.9% |
| Adjusted backlogother | $19,192.3 million | – | (1.5%) |
| Net cash provided by (used in) operating activitiesother | $175.1 million | – | – |
| Free cash flownon-GAAP | $104.0 million | – | – |
| Capital expendituresother | $51.7 million | – | (51.6%) |
| Adjusted return on invested capitalnon-GAAP | 7.5% | – | – |
| Net debtother | $2,646.2 million | – | – |
| Net debt-to-adjusted EBITDAnon-GAAP | 2.27 times | – | – |
| Cash and cash equivalentsother | $568.7 million | – | – |
| Current portion of long-term debtother | $592.6 million | – | – |
| Long-term debtother | $2,622.3 million | – | – |
| Civil Aviation operating incomeother | $61.5 million | – | (38.1%) |
| Civil Aviation adjusted segment operating incomenon-GAAP | $106.1 million | – | (13.7%) |
| Defense and Security operating incomeother | $25.3 million | – | (26.5%) |
| Defense and Security adjusted segment operating incomenon-GAAP | $50.5 million | – | 9.1% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Civil AviationHigher contribution from business training services, driven by higher utilization, partially offset higher selling, general and administrative expenses, credit-related charges on financial assets, a lower contribution from simulator sales, and lower joint-venture profitability primarily due to impacts in the Middle East. | $641.6 million | – | 5.6% |
| Defense and SecurityHigher profitability and activity on contracts in North America and program efficiencies from the completion of key program milestones, partially offset by higher selling, general and administrative expenses related to increased bid and proposal activity. | $531.8 million | – | 8.3% |
Fiscal 2027 outlook
- RevenueLow-single digit percentage growth
- NoteAdjusted segment operating income margin (1): 14.6% to 15.1%
- NoteAdjusted EPS (1): $1.21 to $1.28
- NoteCash conversion rate (1): 85% to 95%
- NoteCivil revenue expected to be flat to slightly down
- NoteDefense expected to grow at a mid-single digit rate
- NoteThe total cost of the transformation plan is anticipated to be approximately $200 million to $250 million, with approximately $100 million arising from non-cash charges.
- Note$125 million to $150 million annual transformation run-rate savings (1) by fiscal 2030
Capital returns
- CAE repurchased and cancelled a total of 1,107,279 common shares under its normal course issuer bid (NCIB).
- The weighted average price was $35.26 per common share.
- Total consideration for the repurchases was $39.0 million.
What drove it
- Consolidated adjusted order intake was $1,289.6 million and book-to-sales was 1.10x.
- Civil signed training solutions contracts valued at $837.7 million, including 6 FFS sales.
- Civil delivered 8 full-flight simulators and Civil training centre utilization was 72.2%.
- Civil book-to-sales was 1.31 times for the quarter and Civil adjusted backlog was $8.5 billion.
- Defense booked orders for $451.9 million, for a book-to-sales ratio of 0.85 times.
- Defense adjusted backlog was $10.7 billion.
- The increase in free cash flow was mainly due to a higher contribution from non-cash working capital and lower capital expenditures.
Concerns
- Civil adjusted segment operating income margin was 16.5%, compared to 20.2% in the first quarter last year.
- Civil profitability was affected by higher selling, general and administrative expenses, credit-related charges on financial assets, lower simulator-sales contribution, and lower joint-venture profitability primarily due to impacts in the Middle East.
- Management expects Civil performance to remain below prior levels, reflecting ongoing softness in the civil aviation training market, softer demand for products, and optimization actions.
- The outlook assumes mitigation actions largely offset the Middle East conflict's impacts for the balance of fiscal 2027; intensification or deterioration could create additional pressure on performance.
- Transformation-related actions, temporary network-rationalization and relocation cost inefficiencies, and elevated investment levels are expected to affect consolidated margin.
What to watch
- Execution of the planned closure of between 4 and 6 Civil training centers and customer retention during the transition.
- Progress on the review of strategic alternatives for Flightscape.
- Civil utilization, simulator-sales contribution, Middle East operational impacts, and product demand.
- Defense backlog conversion, continued growth, and increased profitability.
- Transformation costs, with $48 million incurred in the first quarter and total costs incurred to date of $133 million, versus the anticipated approximately $200 million to $250 million total cost.
- Delivery against fiscal 2027 adjusted segment operating income margin guidance of 14.6% to 15.1% and adjusted EPS guidance of $1.21 to $1.28.
Balance sheet and cash flow
- Net cash provided by (used in) operating activities was $175.1 million, compared to negative $15.3 million in the first quarter last year.
- Free cash flow was $104.0 million, compared to negative $134.7 million in the first quarter last year.
- Capital expenditures totaled $51.7 million, compared to $106.9 million in the first quarter of fiscal 2026.
- Cash and cash equivalents were $568.7 million at June 30, 2026, compared to $552.4 million at March 31, 2026.
- Net debt was $2,646.2 million at the end of the quarter, compared to $2,681.8 million at the end of the preceding quarter.
- Net debt-to-adjusted EBITDA was 2.27 times, compared to 2.29 times at the end of the preceding quarter.
Analysis
CAE opened fiscal 2027 with revenue of $1,173.4 million, up 6.8% from $1,098.6 million. Both operating segments grew, with Civil Aviation revenue of $641.6 million, up 5.6%, and Defense and Security revenue of $531.8 million, up 8.3%. Consolidated adjusted order intake rose 14.9% to $1,289.6 million and the consolidated book-to-sales ratio was 1.10x, although adjusted backlog declined 1.5% to $19,192.3 million.
Profitability was materially lower on an IFRS basis. Operating income was $86.8 million, or 7.4% of revenue, versus $133.8 million, or 12.2% of revenue, in the prior-year quarter. The current period included $48.3 million of restructuring costs, while the prior-year period included $14.0 million of executive management transition costs. Adjusted segment operating income declined to $156.6 million from $169.3 million, and its margin fell to 13.3% from 15.4%. Net income attributable to equity holders was $31.0 million and EPS was $0.10, compared with $57.2 million and $0.18, respectively. Adjusted EPS was unchanged at $0.26.
Civil was the principal profitability pressure point. Its adjusted segment operating income declined to $106.1 million from $123.0 million and adjusted margin declined to 16.5% from 20.2%. Management cited higher selling, general and administrative expenses, credit-related charges, lower simulator-sales contribution, and lower joint-venture profitability primarily related to the Middle East. Higher business training-services contribution and utilization of 72.2% provided an offset. Defense adjusted segment operating income increased to $50.5 million from $46.3 million, with adjusted margin of 9.5% versus 9.4%, supported by North American contract activity and program efficiencies.
Cash generation and leverage improved. Net cash provided by operating activities was $175.1 million, compared with negative $15.3 million, and free cash flow was $104.0 million, compared with negative $134.7 million. Capital expenditures declined to $51.7 million from $106.9 million. Net debt ended the quarter at $2,646.2 million, versus $2,681.8 million at the preceding quarter-end, and net debt-to-adjusted EBITDA was 2.27 times versus 2.29 times. CAE also repurchased and cancelled 1,107,279 common shares for $39.0 million.
The fiscal 2027 outlook is unchanged: low-single digit percentage revenue growth, adjusted segment operating income margin of 14.6% to 15.1%, adjusted EPS of $1.21 to $1.28, and cash conversion of 85% to 95%. Management expects Civil revenue to be flat to slightly down and Defense to grow at a mid-single digit rate. The outlook incorporates ongoing Civil softness, Middle East uncertainty, transformation activity, network rationalization and elevated investment, while anticipating progressive benefits over time. Transformation costs are anticipated to be approximately $200 million to $250 million, including approximately $100 million of non-cash charges; $48 million was incurred in the first quarter and total costs incurred to date were $133 million.
Management, verbatim
Q1 results were aligned with our plans. Civil revenues were up 5.6% year-over-year, though profitability was down, as expected.
Matthew Bromberg, President and CEO
Defense delivered another strong quarter with revenues up 8.3% and continued year-over-year adjusted segment operating income margin expansion.
Matthew Bromberg, President and CEO
Our fiscal 2027 outlook remains unchanged.
Matthew Bromberg, President and CEO
Not in the filing
stated, not guessed- Gross profit margin was not explicitly reported.
- Fiscal 2027 guidance for operating expenses was not reported.
- Fiscal 2027 guidance for tax rate was not reported.
- Dividend information was not reported.
- A previous-release outlook was not provided, so prior-guidance comparisons are unavailable.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
CAE Inc. is a Canadian‑based aerospace and defense company listed on Nasdaq (CAE) and TSX (CAE). The Form 6‑K filing provides its first official Q1 FY2027 earnings release.
Ticker impact
CAE Inc. filed a Form 6‑K reporting Q1 FY2027 results with revenue up 6.8% YoY and EPS down to $0.10, marking the first public disclosure of these numbers.
Potential short‑term downside pressure on the day of release, with possible rebound if guidance remains unchanged.
The release provides fresh financial metrics that differ from prior expectations, a typical catalyst for immediate price movement.
Market effects
Aviation and defense sector may see broader scrutiny as CAE's mixed results highlight cost pressures and Middle‑East conflict impacts.
North American aerospace stocks could experience modest volatility following the release.
Limited to investors tracking aerospace and defense equipment manufacturers.
Counterpoint
Despite EPS decline, the unchanged outlook and strong cash flow could make the stock a buy on valuation.
Key entities
- ExecutiveMatthew Bromberg
President and CEO of CAE, quoted in the release.
