CAE Inc. reported third quarter fiscal 2026 revenue of $1,252.1 million, compared with $1,223.4 million in the prior-year quarter. Earnings per share were $0.34 versus $0.53 in the prior year, while adjusted EPS was $0.34 versus $0.29. Net debt-to-adjusted EBITDA was 2.30x, which the company stated was ahead of its fiscal year-end target of 2.50x.

Matthew Bromberg, President and Chief Executive Officer, said the quarter reflected continued progress as CAE begins the stages of its transformation plan. He noted that Civil performance was lower year-on-year, while cash flow was strong and Defence performance improved, including an adjusted segment operating income margin above 10% for the first time in over six years.

Consolidated performance

Operating income for the quarter was $195.8 million (15.6% of revenue), compared with $262.6 million (21.5% of revenue) in the prior-year quarter, which included a gain on the fair value remeasurement of SIMCOM. Third quarter adjusted segment operating income was $195.8 million (15.6% of revenue) compared with $190.0 million (15.5% of revenue) last year.

Net income attributable to equity holders was $108.9 million, compared with $168.6 million in the prior year. Free cash flow was $411.3 million for the quarter, compared with $409.8 million in the same period last year.

Civil segment: deliveries, utilisation and order activity

Civil revenue was $717.2 million versus $752.6 million in the prior-year quarter. Civil operating income was $141.8 million (19.8% of revenue), compared with $223.4 million (29.7% of revenue) last year. During the quarter, Civil delivered 15 full-flight simulators (FFSs) to customers, and third quarter Civil training centre utilisation was 71%.

CAE stated that Civil signed training solutions contracts valued at $572.4 million during the quarter, including 10 FFS sales. The Civil book-to-sales ratio was 0.80 times for the quarter, and the Civil adjusted backlog at quarter-end was $8.2 billion.

The company said it has completed its portfolio review and identified non-core assets representing approximately 8% of revenue, and will pursue divestitures where economics, structure and timing support value creation. It also said it has begun optimising its Civil training network, including a reduction in capital expenditures, and intends to remove approximately 10% of deployed commercial airline simulators and relocate additional devices to improve utilisation and returns.

Defence segment: revenue growth and margin improvement

Defence revenue was $534.9 million, up from $470.8 million in the prior-year quarter. Defence operating income was $54.0 million (10.1% of revenue) versus $39.2 million (8.3% of revenue) last year. Defence booked orders of $571.1 million for a book-to-sales ratio of 1.07 times. Defence adjusted backlog at the end of the quarter was $11.0 billion, including unfunded contract awards and CAE’s interest in joint ventures.

CAE said it expects to provide specific longer-range targets when reporting fiscal year-end results in May.