Consolidated Revenue Growth
Consolidated revenue for FY2026 was $4.9 billion, up 4% year-over-year; Q4 revenue was $1.3 billion, up 4% year-over-year.
May 21st, 2026
Summary
- Earnings Call Date:
- 2026-05-21
- Change Since:
- -8.54%
- Next Earnings Date:
- 2026-08-12
Earnings Call Sentiment
NeutralThe call balanced clear positives (notably strong Defense performance, a meaningful improvement in free cash flow, an actionable transformation plan with identified savings, and product/customer milestones) against significant near-term headwinds (Civil softness, Middle East disruptions, lower backlog, one-time transformation and network rationalization costs, and paused government R&D support). Management emphasizes execution, capital discipline and long-term targets, but FY2027 is expected to be a transitional year with lower margins and execution risk before benefits materialize toward FY2028–FY2030.
Company Guidance
CAE guided that fiscal 2027 will be a reset year with consolidated revenue expected to grow low single‑digits (Civil flat to slightly down, Defense mid‑single‑digit growth), adjusted segment operating income margin of 14.6%–15.1% (under the updated definition), adjusted EPS of $1.21–$1.28 and free cash flow conversion of 85%–95% (part of a plan to deliver 100% cumulative cash conversion over the four‑year period to FY2030). Management reaffirmed FY2030 targets of mid‑single‑digit organic revenue growth, $950M–$1.0B of adjusted segment operating income and ~100% cumulative cash conversion, driven by $125M–$150M of run‑rate structural cost savings by FY2030; the transformation carries one‑time costs of $200M–$250M (≈$100M non‑cash), of which $84M was incurred in FY2026 ($59M non‑cash). Additional context/metrics included FY2026 results (consolidated revenue $4.9B, +4%; Q4 revenue $1.3B, +4%; FY adj. segment operating income $710.7M, −3%; Q4 adj. SOI $211.8M; FY adjusted EPS $1.20; Q4 adjusted EPS $0.42; FY2026 free cash flow $473.8M, ~123% conversion), a net debt balance of $2.7B (net debt/adjusted EBITDA 2.29x), divestiture of ~8% of revenue (Flightscape ~4%–5%), a planned ~10% reduction in commercial full‑flight simulators (already retired 5 devices, closed 1 center; expect 8–10 more retirements, >300,000 sq ft removed and 4–6 center closures), and that total CapEx is expected to be approximately flat year‑over‑year in FY2027.
Strong Defense Performance
Defense revenue Q4 was $580 million (up 6% YoY) and FY2026 revenue was $2.2 billion (up 9% YoY). Q4 adjusted segment operating income for Defense was $59.4 million with a 10.2% margin; full-year Defense adjusted segment operating income was $200.2 million (9.2% margin). Book-to-sales in Defense was north of 1.11 in Q4.
Material Free Cash Flow Improvement
Under the updated free cash flow definition, FY2026 free cash flow was $473.8 million with a conversion rate of ~123% (vs. an average conversion of <50% from FY2022–FY2025), reflecting improved capital allocation and working capital management.
Clear Transformation Plan with Savings Targets
Transformation program targets $125 million–$150 million of run-rate structural cost savings by FY2030, with total one-time transformation costs of $200 million–$250 million (approximately $100 million noncash). A defined 8-workstream program and dedicated PMO are in place.
Long-Term Financial Targets and Discipline
FY2030 targets include mid-single-digit organic revenue growth, $950 million–$1.0 billion of adjusted segment operating income, and cumulative 100% free cash flow conversion over the 4-year period ending FY2030. Management is aligning incentives to free cash flow, operating margin expansion, ROIC and EPS.
Product and Customer Milestones
First FAA/EASA-qualified Boeing 777-9 full-flight simulator achieved (world's first). Expanded training footprint in India with InterGlobe (fourth advanced pilot training center in Mumbai) and signed a long-term training agreement with BOND in business aviation.
Balance Sheet and Capital Discipline
Net debt at year-end was $2.7 billion with a net debt to adjusted EBITDA ratio of 2.29x; company maintained investment-grade posture and plans disciplined capital allocation focused on ROIC.
Operator
Good day, ladies and gentlemen, and welcome to the CAE's Fourth Quarter and Full Year 2026 Financial Results and Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Andrew Arnovitz. Please go ahead, Mr. Arnovitz.
Andrew Arnovitz
Good morning, everyone, and thank you for joining us today. Before we begin, I'd like to remind you that today's remarks, including management's outlook for fiscal year 2027, our long-term fiscal 2030 financial targets and answers to questions contain forward-looking statements. These forward-looking statements represent our expectations as of today, May 22, 2026, and accordingly are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. The fiscal 2030 targets, in particular, are subject to a greater degree of uncertainty given the longer time horizon. These targets represent management's current view of the company's long-term trajectory and are meant to assist analysts and shareholders in forming their respective views on our strategy and in measuring progress toward our transformation objectives. They are based on the assumptions set out in our press release issued yesterday and are subject to the risks described therein.
A description of the material risks, factors and assumptions that may affect future results is contained in our press release issued yesterday ...
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