CAE (CAE) Q2 2027 earnings summary

Executive summary

• Q2 revenue was $1,204.7M, down 2.6% YoY; adjusted segment operating income rose 1.5% to $179.3M and adjusted EPS increased to $0.33 from $0.28.

• Free cash flow rose to $179.9M from $109.8M; higher adjusted profitability and stronger Defense margins supported raised FY27 adjusted EPS and margin guidance.

Financial highlights

• Reported operating income fell to $114.4M from $155.3M, including $42.6M of Q2 restructuring, integration and acquisition costs; net income attributable to equity holders was $58.6M vs. $73.9M.

• Q2 gross profit increased 6.5% to $339.9M; gross margin was 28.2% vs. 25.8%.

• H1 revenue increased 1.8% to $2,378.1M; adjusted segment operating income was $335.9M vs. $346.0M.

• H1 operating cash flow rose to $390.6M from $198.7M; H1 free cash flow was $283.9M vs. a $24.9M use of cash, partly reflecting working-capital and CapEx timing.

• Q2 finance expense declined to $44.6M from $56.9M, and the adjusted effective tax rate fell to 18.7% from 22.9%.

Outlook and guidance

• FY27 adjusted segment operating income margin guidance rose to 14.9%–15.4% from 14.6%–15.1%; adjusted EPS guidance increased to $1.28–$1.35 from $1.21–$1.28.

• FY27 revenue outlook remains low-single-digit growth: Civil flat to slightly down and Defense mid-single-digit growth; cash conversion guidance remains 85%–95%.

• Defense is expected to deliver higher full-year profitability; Civil profitability is expected below prior-year levels, with stronger H2 performance and more simulator deliveries in Q4.

• Transformation costs are projected at $200M–$250M, including ~$100M non-cash; $175.3M had been incurred through Q2, with $125M–$150M of annual run-rate savings targeted by FY30.

• FY27 outlook assumes Middle East mitigation remains effective; Flightscape sale proceeds and closing remain subject to conditions and approvals.