CAE (CAE) Q3 2026 earnings summary

Executive summary

• Q3 FY26 revenue increased 2% year-over-year to CAD 1.25 billion ($1,252.1 million), with adjusted segment operating income up 3% to CAD 195.8 million; net income attributable to equity holders fell 35% to $108.9 million, and EPS declined 36% to $0.34 per share.

• Transformation plan underway, focusing on portfolio optimization, capital discipline, operational excellence, divestiture of non-core assets (~8% of revenue), and rationalization of about 10% of commercial airline simulators.

• Early benefits from the transformation include improved free cash flow, reduced CapEx, and achieving deleveraging targets ahead of schedule; net debt-to-adjusted EBITDA improved to 2.30x, surpassing the 2.5x target.

• Leadership transition announced: Ryan McLeod to become CFO, succeeding interim CFO Constantino Malatesta; CEO transition completed in August 2025.

Financial highlights

• Q3 consolidated revenue was CAD 1.25 billion, up 2% year-over-year; adjusted segment operating income rose 3% to CAD 195.8 million (15.6% margin); adjusted EPS increased 17% to $0.34.

• Net income attributable to equity holders fell 35% year-over-year to $108.9 million; operating income declined 25% due to the absence of prior-year one-time gains.

• Free cash flow was stable at CAD 411.3 million; CapEx totaled CAD 50.6 million, with 75% for growth.

• Net finance expense decreased to $54.1 million; effective tax rate was 21%, down from 29% last year.

• Adjusted backlog stood at $19.2 billion, down 5% year-over-year; adjusted order intake at $1,143.5 million, down 48%.

Outlook and guidance

• Civil segment annual adjusted operating income expected to be mid-single digit percentage lower than FY25, with margin in the 20% range; Defense segment annual adjusted operating income projected to grow over 20%, with margin around 8.5%.

• Full-year CapEx expected to be over 10% lower than last year, with civil CapEx down about 30% year-over-year.

• Cash conversion rate projected at ~150% of adjusted net income; annual effective tax rate expected at ~25%.

• Transformation plan evaluation phase to be completed by year-end, with specific long-term targets to be provided in May.