Q2 FY2027
Filed Nov 12, 2026CAE Q2 FY2027: revenue down 2.6% and GAAP EPS down to $0.18, while adjusted EPS rose to $0.33 and fiscal 2027 adjusted EPS and adjusted segment margin outlooks were raised
Adjusted EPS (+17.9%), adjusted segment operating income (+1.5%), free cash flow ($179.9 million vs $109.8 million) and the raised adjusted outlook point to improvement. GAAP EPS (-21.7%), GAAP operating income (-26.3%), revenue (-2.6%) and the Civil segment's margin compression point the other way.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Adjusted EPS (fiscal 2027, raised to $1.28 to $1.35 from $1.21 to $1.28) | $1.21 to $1.28 | Q2 2027 adjusted EPS $0.33; full-year actual not yet reported | n/a |
| Adjusted segment operating income margin (fiscal 2027, raised to 14.9% to 15.4% from 14.6% to 15.1%) | 14.6% to 15.1% | Q2 2027 adjusted segment operating income margin 14.9%; full-year actual not yet reported | n/a |
| Revenue (fiscal 2027, low-single digit percentage growth, unchanged) | Low-single digit percentage growth | Q2 2027 revenue $1,204.7 million, down 2.6% year-over-year; full-year actual not yet reported | n/a |
| Cash conversion rate (fiscal 2027, 85% to 95%, unchanged) | 85% to 95% | Not reported for Q2 2027 as a stand-alone figure; full-year actual not yet reported | n/a |
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue (Q2 2027)GAAP | $1.20B | – | (2.6 %) |
| Revenue (six months ended September 30, 2026)GAAP | $2.38B | – | – |
| Gross profit (Q2 2027)GAAP | $339.9M | – | – |
| Gross profit (six months ended September 30, 2026)GAAP | $682.8M | – | – |
| Cost of sales (Q2 2027)GAAP | $864.8M | – | – |
| Research and development expenses (Q2 2027)GAAP | $33M | – | – |
| Selling, general and administrative expenses (Q2 2027)GAAP | $163.1M | – | – |
| Restructuring, integration and acquisition costs (Q2 2027)GAAP | $42.6M | – | – |
| Restructuring, integration and acquisition costs (six months ended September 30, 2026)GAAP | $90.9M | – | – |
| Operating income (Q2 2027)GAAP | $114.4M | – | (26.3 %) |
| Operating income margin (Q2 2027)GAAP | 9.5% of revenue | – | – |
| Operating income (six months ended September 30, 2026)GAAP | $201.2M | – | – |
| Finance expense - net (Q2 2027)GAAP | $44.6M | – | – |
| Income tax expense (Q2 2027)GAAP | $9.1M | – | – |
| Effective tax rate (Q2 2027)GAAP | 13.0% | – | – |
| Net income attributable to equity holders of the Company (Q2 2027)GAAP | $58.6M | – | (20.7 %) |
| Net income attributable to equity holders of the Company (six months ended September 30, 2026)GAAP | $89.6M | – | – |
| EPS, basic and diluted (Q2 2027)GAAP | $0.18 | – | (21.7 %) |
| EPS, basic and diluted (six months ended September 30, 2026)GAAP | $0.28 | – | – |
| Adjusted EPS (Q2 2027)non-GAAP | $0.33 | – | 17.9 % |
| Adjusted net income (Q2 2027)non-GAAP | $107.4M | – | – |
| Adjusted segment operating income (Q2 2027)non-GAAP | $179.3M | – | 1.5 % |
| Adjusted segment operating income margin (Q2 2027)non-GAAP | 14.9% of revenue | – | – |
| Adjusted effective tax rate (Q2 2027)non-GAAP | 18.7% | – | – |
| Adjusted order intake (Q2 2027)non-GAAP | $1.17B | – | 1.6 % |
| Adjusted backlog (end of Q2 2027)non-GAAP | $19.58B | – | (0.3 %) |
| Net cash provided by operating activities (Q2 2027)GAAP | $215.5M | – | 0.7 % |
| Net cash provided by operating activities (six months ended September 30, 2026)GAAP | $390.6M | – | – |
| Free cash flow (Q2 2027)non-GAAP | $179.9M | – | 63.8 % |
| Capital expenditures (Q2 2027)GAAP | $48.9M | – | (54.6 %) |
| Adjusted return on invested capital (Q2 2027, rolling four quarters)non-GAAP | 7.7% | – | – |
| Net debt-to-adjusted EBITDA (end of Q2 2027)non-GAAP | 2.16x | – | – |
| Net debt (end of Q2 2027)non-GAAP | $2.53B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Civil AviationOperating income was $61.3 million (9.4% of revenue) compared to $108.7 million (16.2% of revenue). Adjusted segment operating income was $103.9 million (15.9% of revenue) compared to $124.1 million (18.5%). The company said the decrease was mainly due to a lower contribution from simulator sales, primarily from contracts accounted for on progress toward completion, and lower contribution from sales of simulator capacity structured as finance lease arrangements, and also due to higher SG&A. The company said a higher contribution from business training services, driven by higher utilization, partially offset this. Adjusted order intake $580.6 million (-2.1%); adjusted backlog $8,292.0 million (-2.2%); 11 FFS delivered; utilization 65.0% vs 61.9%. Book-to-sales 0.89 times for the quarter. | $652.3M | – | (2.6 %) |
| Defense and SecurityOperating income was $53.1 million (9.6% of revenue) compared to $46.6 million (8.2%). Adjusted segment operating income was $75.4 million (13.6% of revenue) compared to $52.6 million (9.3%), a 43.3% increase. The company said the increase was mainly due to higher profitability from products recognized upon delivery and increased profitability on contracts in North America, and also due to recognition of $11 million in investment tax credits identified and claimed in the current period in respect of prior years. Adjusted order intake $586.0 million (+5.4%); adjusted backlog $11,284.7 million (+1.1%); booked orders $586.0 million, book-to-sales 1.06 times for the quarter and 1.03 times for the last 12 months. | $552.4M | – | (2.5 %) |
Fiscal 2027 (fiscal year ending March 31, 2027), outlook provided as at November 11, 2026 outlook
- RevenueLow-single digit percentage growth (unchanged); Civil revenue flat to slightly down; Defense mid-single digit growth
- NoteAdjusted segment operating income margin: 14.9% to 15.4% (raised from 14.6% to 15.1%)
- NoteAdjusted EPS: $1.28 to $1.35 (raised from $1.21 to $1.28)
- NoteCash conversion rate: 85% to 95% (unchanged)
- NoteTotal transformation plan cost: approximately $200 million to $250 million, with approximately $100 million non-cash; $42.6 million incurred in Q2 2027 and $175.3 million to date
- NoteTransformation run-rate savings: $125 million to $150 million annually (company says it remains on track)
- NoteDefense: company expects higher year-over-year profitability for the full year
- NoteCivil: company expects full-year profitability to remain below prior-year levels
Capital returns
- Share repurchases in Q2 2027 under the normal course issuer bid: 1,908,861 common shares repurchased and cancelled at a weighted average price of $35.12 per share, total consideration $67.1 million.
- Year-to-date repurchases through the end of Q2 2027: the press release states approximately 3.0 million shares for $106.1 million. The statement of changes in equity prints 3,016,140 shares repurchased and cancelled for $107.5 million (retained earnings $85.0 million, share capital $22.5 million). The cash flow statement prints repurchase and cancellation of common shares of $(106.1) million for six months ended September 30, 2026, compared with $(2.3) million a year earlier.
- The release does not print a dividend amount for the quarter or period.
- The company states that proceeds from the Flightscape sale are intended for funding its transformation, supporting growth in core businesses, and returning capital to shareholders. The release does not quantify any allocation.
What drove it
- The company attributes the Civil adjusted segment operating income decline mainly to lower contribution from simulator sales (contracts on progress toward completion and simulator capacity sold as finance leases) and higher SG&A, partly offset by higher business training utilization.
- The company attributes the Defense adjusted segment operating income increase mainly to higher profitability from products recognized upon delivery and North America contract profitability, and also to $11 million of investment tax credits claimed in the current period for prior years.
- The company attributes lower Q2 finance expense mainly to lower long-term debt interest reflecting lower borrowings during the period.
- The company attributes the lower adjusted effective tax rate mainly to a change in the mix of income across jurisdictions.
- The company attributes the free cash flow increase mainly to lower capital expenditures ($48.9 million vs $107.6 million).
- Outlook raise: the company says the adjusted EPS and margin raise reflect the stronger operating outlook, lower expected finance expense and a lower effective tax rate, and increased confidence in the second-half plan.
- Flightscape: agreement announced in October 2026 to sell Flightscape to SITA for US$500 million; the company expects closing in the first half of calendar 2027.
- Mitigation of Middle East conflict effects: the company says redeploying certain training activities across its global network has so far mitigated direct operational impacts.
Concerns
- GAAP operating income fell 26.3% to $114.4 million and GAAP EPS fell 21.7% to $0.18, with restructuring, integration and acquisition costs of $42.6 million in the quarter.
- Revenue declined 2.6% to $1,204.7 million, and Civil revenue declined 2.6% to $652.3 million.
- Civil adjusted segment operating income margin fell to 15.9% from 18.5%, and Civil GAAP operating income fell 43.6%.
- The company says full-year Civil profitability is still expected to remain below prior-year levels, reflecting lower revenue, network optimization actions and elevated investment.
- Civil adjusted backlog fell 2.2% to $8,292.0 million and Civil book-to-sales was 0.89 times for the quarter.
- Total transformation costs are expected at $200 million to $250 million, with $175.3 million incurred to date and the majority of the remainder expected in fiscal 2027.
- The company warns that an intensification of the Middle East conflict, sustained higher fuel prices, or disruptions to airline activity, customer operations or supply chains could add pressure on performance.
- The company states it is exploring a potential transition from IFRS to U.S. GAAP, to be applied to the fourth quarter and fiscal year ending March 31, 2027 on a full retrospective basis, if adopted.
What to watch
- Full-year fiscal 2027 delivery against the raised adjusted EPS range of $1.28 to $1.35 and adjusted segment operating income margin of 14.9% to 15.4%, given that the company says the second half must deliver the plan.
- Whether Civil margins recover, given the company's expectation that full-year Civil profitability remains below prior-year levels.
- Closing of the Flightscape sale to SITA for US$500 million, expected in the first half of calendar 2027, and the use of proceeds.
- Remaining transformation costs and progress toward the $125 million to $150 million of annual run-rate savings.
- Civil and Defense adjusted order intake and backlog trends, including the Defense unfunded backlog timing that the company ties to the U.S. government budget cycle.
- Outcome of the potential IFRS to U.S. GAAP transition evaluation.
- The Analyst and Investor Day on February 25, 2027, where the company says it will provide further details on strategy, transformation and growth.
Balance sheet and cash flow
- Cash and cash equivalents: $570.5 million at September 30, 2026 vs $552.4 million at March 31, 2026.
- Total assets: $11,088.3 million at September 30, 2026 vs $11,147.8 million at March 31, 2026.
- Total equity: $5,519.5 million at September 30, 2026 vs $5,388.1 million at March 31, 2026.
- Long-term debt (non-current): $2,571.1 million at September 30, 2026 vs $2,982.2 million at March 31, 2026.
- Current portion of long-term debt: $534.0 million at September 30, 2026 vs $252.0 million at March 31, 2026.
- Net debt: $2,534.6 million at end of Q2 2027, vs $2,646.2 million at end of the preceding quarter and $3,186.5 million a year earlier.
- Six months ended September 30, 2026: net cash provided by operating activities $390.6 million (vs $198.7 million); property, plant and equipment expenditures $(90.4) million (vs $(194.5) million); repayment of long-term debt $(134.5) million (vs $(220.6) million); repayment of lease liabilities $(43.7) million (vs $(33.5) million).
- Free cash flow reconciliation Q2 2027: changes in non-cash working capital were a $45.1 million inflow in Q2 2027 vs $27.9 million in Q2 2026, within net cash provided by operating activities of $215.5 million.
Analysis
CAE reported second quarter fiscal 2027 revenue of $1,204.7 million, down 2.6% from $1,236.6 million a year earlier. Civil revenue was $652.3 million (down from $670.0 million) and Defense revenue was $552.4 million (down from $566.6 million). Adjusted order intake rose 1.6% to $1,166.6 million, led by Defense (up 5.4%), while Civil adjusted order intake fell 2.1% to $580.6 million. Adjusted backlog was $19,576.7 million, down 0.3%. The book-to-sales ratio for Civil was 0.89 times for the quarter and 1.07 times for the last twelve months, and for Defense 1.06 times for the quarter and 1.03 times for the last twelve months.
Profitability diverged by line. GAAP operating income fell 26.3% to $114.4 million, and the release shows $42.6 million of restructuring, integration and acquisition costs in the quarter. Adjusted segment operating income rose 1.5% to $179.3 million, and the adjusted segment margin improved to 14.9% from 14.3%. Within the segments, Defense adjusted segment operating income rose 43.3% to $75.4 million, which the company attributes partly to $11 million of investment tax credits for prior years. Civil adjusted segment operating income fell 16.3% to $103.9 million, and its margin fell to 15.9% from 18.5%. The company attributes the Civil decline mainly to lower simulator sales contribution and higher SG&A, partly offset by higher business training utilization.
Below the operating line, GAAP net income attributable to equity holders fell 20.7% to $58.6 million and GAAP EPS fell to $0.18 from $0.23. Adjusted EPS rose 17.9% to $0.33 from $0.28. The release reconciles the difference mainly to restructuring costs and acquisition-related amortization. Finance expense fell to $44.6 million from $56.9 million, and the Q2 effective tax rate was 13.0% against 22.7% a year earlier, with the adjusted rate at 18.7% against 22.9%.
Cash generation was stronger. Free cash flow was $179.9 million against $109.8 million, which the company attributes mainly to lower capital expenditures of $48.9 million (down from $107.6 million). Net debt fell to $2,534.6 million from $2,646.2 million in the prior quarter, and net debt to adjusted EBITDA was 2.16 times, down from 2.27 times. Share repurchases continued, with 1,908,861 shares bought in Q2 for $67.1 million and about 3.0 million shares for $106.1 million year to date.
On guidance, management raised fiscal 2027 adjusted EPS to $1.28 to $1.35 from $1.21 to $1.28, and raised the adjusted segment margin to 14.9% to 15.4% from 14.6% to 15.1%. Revenue growth guidance is unchanged at low-single digits, with Civil flat to slightly down and Defense growing at a mid-single-digit rate. The company says Civil full-year profitability will remain below prior year, while Defense profitability is expected to be higher. The release also discloses the expected $500 million US sale of Flightscape to SITA, expected to close in the first half of calendar 2027, and a Middle East conflict risk the company says it is mitigating.
Management, verbatim
We delivered another solid quarter in Q2, with improved adjusted profitability, strong free cash flow and continued progress on our transformation priorities,
Matthew Bromberg, President and CEO, CAE
Defense delivered another strong quarter, with double-digit year-over-year growth in adjusted segment operating income and continued underlying margin expansion.
Matthew Bromberg, President and CEO, CAE
Not in the filing
stated, not guessed- Q1 fiscal 2027 (prior quarter) results are not printed in this release, so no prior-quarter figures are shown for income statement lines.
- Prior-year year-over-year percentage changes for gross profit, cost of sales, R&D, SG&A, restructuring, six-month revenue, six-month operating income, six-month net income and six-month EPS are not printed.
- Gross margin percentage is not printed for any period.
- Prior-year percentage change for finance expense, income tax expense, adjusted net income and net cash from operations is not printed.
- Prior-year adjusted segment operating income margin change in basis points is not printed.
- Six-month free cash flow is not printed.
- Dividends paid or declared are not printed in this release.
- Full-year fiscal 2027 actual results are not yet reported, so guidance verdicts cannot be assessed.
- Cash conversion rate for Q2 2027 is not printed as a stand-alone figure.
- Share price reaction, consensus estimates and analyst expectations are not contained in the document.
- Flightscape sale: the purchase price adjustment terms, the book gain or loss, and the amount of proceeds after tax are not printed.
- Revenue split of Civil and Defense for prior quarter is not printed.
- Transformation cost split by segment is only partly printed (Civil $26.5 million and Defense $16.1 million for restructuring, integration and acquisition costs in Q2).
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.