CAE Stock Slides After Q2 Results, Clocks 16% Revenue Growth

CAE Inc CAE reported second-quarter FY22 revenue growth of 16% year-over-year to C$814.9 million.
Sales by segments: Civil Aviation Training Solutions C$362.1 million (-1% Y/Y); Defence and Security C$417.9 million (+38% Y/Y); and Healthcare C$34.9 million (-6% Y/Y).
Order intake for the quarter increased by 30% Y/Y to C$871.4 million, and the total backlog increased by 6% Y/Y to C$8.83 billion.
The Civil book-to-sales ratio was 1.13x for the quarter and 0.92x for the last 12 months, and the Civil backlog was C$4.3 billion.
Adjusted EPS improved to C$0.17 from C$0.13 in 2Q21.
The gross margin expanded by 83 bps to 27.9%. The operating income increased 39% Y/Y to C$86.2 million, and the margin expanded by 81 bps to 4.8%.
Adjusted segment operating income stood at C$90.7 million, and the margin for the quarter was 11.1%.
Net cash provided by operating activities was C$30.9 million for the quarter, compared to C$45.6 million a year ago. Free cash flow was C$19.4 million.
"Our year over year growth in the second quarter was driven by the strengthening of our Civil training business, the continued ramp up of structural cost saving initiatives, and the integration of the L3 Harris Military Training business in our Defence results," said CEO Marc Parent.
"Specifically, we are currently targeting to reach a consolidated adjusted segment operating margin of approximately 17% by the time our markets are generally recovered, with steady room for further improvement thereafter," CEO added.
The company recently announced an agreement to acquire Sabre Corp's SABR AirCentre airline operations portfolio.
Price Action: CAE shares are trading lower by 8.69% at $30.44 on the last check Thursday.

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