CAE Q1 Revenue Falls Short of Estimates, Defense Segment Shows Strong Growth

CAE, a Canadian flight simulator company, missed its revenue estimates for Q1 due to a weaker civil aviation segment, which is expected to grow in the mid-single-digit percentage range due to slower pilot hiring. The defense segment posted an 83% increase in operating income. Shares fell 11% to C$36.29. CAE's new CEO, Matthew Bromberg, sees opportunities to boost the defense segment this year.

Montreal-based CAE Inc. (NYSE: CAE) (TSX: CAE) reported its first-quarter fiscal 2026 results, with adjusted earnings per share (EPS) of C$0.21, slightly exceeding analyst estimates of C$0.20. Revenue of C$1.1 billion came in just below the consensus forecast of C$1.12 billion. The company’s shares dipped 1% following the results as investors weighed the slight revenue miss against improved profitability.

The aerospace training and simulation provider delivered a 2% year-over-year (YoY) revenue increase, with strong performance in the Defense segment offsetting challenges in the Civil Aviation division. Operating income jumped 23% to C$133.8 million, while adjusted segment operating income rose 10% to C$147.8 million, representing 13.5% of revenue compared to 12.5% in the same quarter last year.

The Defense and Security segment was the standout performer, with operating income surging 83% YoY to C$34.4 million and adjusted segment operating income climbing 45% to C$40.2 million. The segment’s adjusted operating margin improved significantly to 8.2% from 5.7% a year earlier.

Civil Aviation revenue increased 3% to C$607.7 million, though training center utilization declined to 71% from 76% in the prior year. The segment delivered 8 full-flight simulators during the quarter, unchanged from last year.

CAE maintained its outlook for fiscal 2026, expecting Civil’s adjusted segment operating income to grow in the mid-single-digit percentage range, while Defense is projected to deliver low-double-digit percentage annual growth with an operating margin between 8% and 8.5%.

The company also announced a leadership transition, with Matthew Bromberg set to succeed Marc Parent as President and CEO on August 13, 2025.

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References:
[1] https://www.investing.com/news/earnings/cae-reports-solid-first-quarter-with-defense-strength-offsetting-civil-headwinds-93CH-4186523
[2] https://seekingalpha.com/news/4484799-cae-targets-2_5x-net-debt-to-adjusted-ebitda-by-fiscal-year-end-amid-leadership-transition