CAE Shares Surge After Q1 Results: 'Secular Tailwinds In All Segments'

CAE Inc. CAE reported first-quarter FY24 sales growth of 13% year-over-year to $784.91 million, beating the consensus of $762.48 million.

Adjusted EPS was $0.18 beating the consensus estimate of $0.16.

Adjusted segment operating income increased 138% Y/Y to C$145.1 million, and the margin expanded to 13.8% versus 6.5% in 1Q23.

Adjusted Order intake fell 4% Y/Y, and Backlog grew 12% Y/Y to C$11.18 billion.

Sales by segments: Civil Aviation C$540.3 million (+12% Y/Y); Defense and Security C$471.76 million (+14% Y/Y); and Healthcare C$42.4 million (+7% Y/Y).

Gross profit rose 31.3% to C$305.9 million, and margin expanded by 406 bps to 29%. The operating income increased 230.2% Y/Y to C$130.1 million, and the margin expanded by 812 bps to 12.3%.

The civil segment signed training and operational support solutions contracts valued at C$730.2 million during the quarter.

Net debt-to-adjusted EBITDA of 3.22x vs. 3.41x at the end of the preceding quarter.

Net cash used in operating activities was C$49.3 million for the quarter, compared to C$162.6 million in 1Q23. Free cash flow was negative C$104.9 million.

"As we look to the period ahead, we continue to be highly encouraged by the secular tailwinds in all segments and the growth we expect by harnessing our global market and technology leadership and the power of One CAE," said CEO Marc Parent.

For FY24, the company expects Defense to continue growing its Backlog with larger and more profitable programs while simultaneously working its way through a critical mass of lower-margin legacy contracts.

Price Action: CAE shares are trading 7.11% higher at $23.65 at the last check Wednesday.

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