CAE (CAE) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 revenue increased 6% year-over-year to $1.07 billion, with strong demand in Civil markets and robust growth in business aviation training, while commercial aviation training faced regional softness.

• Defense business achieved record order intake and backlog, highlighted by a major 25-year Canadian contract, and showed progress on margin improvement.

• The healthcare business was divested in FY2024, with financials reclassified as discontinued operations.

• CAE leverages advanced technologies and benefits from secular growth drivers, including rising demand for aviation professionals and increased defense spending.

• Management is executing cost optimization and restructuring, targeting $20 million in annual run-rate cost savings by next fiscal year.

Financial highlights

• Consolidated revenue rose 6% year-over-year to $1.07 billion in Q1 FY2025; FY24 revenue was $4.3 billion, with 57% from civil aviation and 43% from defense.

• Adjusted segment operating income was $134.2 million, down from $143.3 million a year ago; adjusted EBITDA for FY24 was $918.4 million.

• Adjusted EPS was $0.21, compared to $0.24 in Q1 last year; EPS from continuing operations declined to $0.15.

• Free cash flow improved to -$25.3 million from -$110.3 million year-over-year.

• Adjusted backlog increased by 77% from FY22 to Q1 FY25, reaching a record $17.0 billion, mainly due to the $11.2 billion Canadian FACT contract.

Outlook and guidance

• Civil segment expects ~10% annual adjusted segment operating income growth in FY2025, with margins between 22%-23%, weighted to the second half.

• Defense segment margin is expected to rise to 6%-7%, with growth weighted to the second half; annual revenue growth expected in low- to mid-single digits.

• CapEx outlook for FY2025 adjusted to the low end of the previously indicated range.

• Targeting 100% conversion of adjusted net income to free cash flow for the year.

• Three-year EPS growth (FY22–25) targeted in the low- to mid-teens percentage range.