CAE reaffirms EPS target for FY22-FY25: low-mid-teens percentage range

The company said, “The secular demand picture for aviation training solutions remains compelling and the Company continues to be well positioned. Management is now targeting approximately 10% Civil annual adjusted segment operating income growth for the fiscal year with performance expected to be more heavily weighted to the second half. Annual Civil adjusted segment operating income margin is now expected to be in the range of 22%-23%, with ample room to grow beyond the current year on volume, efficiencies and mix. The Civil outlook considers the known headwinds that have been affecting a portion of its commercial aviation training subsegment, which are precipitated by OEM aircraft supply chain constraints and the recent actions by some airlines to temporarily reduce pilot hiring. Underlying its outlook, CAE has taken initiatives to drive additional operational cost efficiencies that are expected to partially mitigate the effects of incrementally lower initial training demand in the short-term. The Company is also assuming some easing of commercial aircraft supply constraints and that pilot hiring will begin to resume in the second half of its fiscal year, which is consistent with current training bookings for the period. Also, it expects a continued strong performance in business aviation training, higher profitability in Flight Operations Solutions, and higher volume and profitability from full-flight simulator deliveries. Management’s Civil outlook also considers the ongoing ramp up of newer training centres and recently deployed full-flight simulators, partially offset by the more intensive SaaS conversions underway in its Flight Operations Solutions software business. Having re-baselined the Defense business and substantially accounted for the previously identified programmatic risk, management expects Defense annual revenue growth in the low- to mid-single-digit percentage range and annual Defense adjusted segment operating income margin to increase to the 6%-7% range in FY25, also with room to grow beyond the current year. Similarly, management expects annual Defense performance to be more heavily weighted to the second half. Management also expects significant Defense adjusted backlog growth in the fiscal year with the addition of large multiyear programs currently in negotiations”. The Company continues to target three-year EPS growth, FY22-FY25, in the low- to mid-teens-percentage range.