CAE shares surge as Q4 results beat expectations despite dip in profits

MONTREAL – CAE’s shares hit a new 52-week high Thursday after the flight simulator and training company reported better-than-expected results.

Shares in the Montreal-based company peaked at $11.37 in early trading on the Toronto Stock Exchange before giving up some of its gains to trade for $11.25, up 65 cents.

CAE (TSX:CAE) said it earned $43.8 million or 17 cents per share for the period ended March 31, down from $53.2 million, or 21 cents per share a year ago.

However, excluding $10.1 million of restructuring, integration and acquisition costs, it earned $53.9 million or 21 cents per share.

Revenue in what was the company’s fourth quarter grew to $587.9 million from $506.7 million last year.

The provider of training equipment and services for the civil aviation and defence markets was expected on average to earn 18 cents per share in adjusted profits on $585.2 million of revenues, according to analysts polled by Thomson Reuters.

For the financial year ended March 31, it earned $139.4 million or 54 cents per share on $2.1 billion in revenue, compared with $180.3 million or 70 cents per share on $1.8 billion in revenue the previous year.

Adjusted income was $190.7 million or 74 cents per share, four cents above analyst forecasts and the results a year ago.

Its order backlog reached a record $4.1 billion.

“Our results for the quarter and the year reflected our integration of new businesses and restructuring of civil and military operations,” stated CEO Marc Parent.

CAE sold 10 full-flight simulators in the quarter and met its outlook by selling 35 full flight civil simulators last year.

“With continued high levels of aircraft deliveries, we expect strong demand for civil full-flight simulators again in fiscal 2014.

The company’s civil segment earned an operating profit of $54.1 million on a 54 per cent increase in revenues to $331.6 million, while its military operations saw its operating profit fall to $29.4 million from $45.6 million a year ago, on a 15 per cent drop in revenues to $227.3 million.

Analyst Cameron Doerksen of National Bank Financial said the results were “modestly ahead of forecast.”

The analyst said civil margins were a little soft as it suffered from the integration of Oxford Oxford Aviation, an airline pilot training company that CAE acquired last year, and the rampup of new simulator training centres.

Doerksen said he expects the lower civil training margins to continue for a couple of more quarters.

Despite lower military revenues, margins beat forecasts amid uncertainty over U.S. defence budget spending.

“We believe that a robust pipeline for new contracts remains and expect relatively flat military results in fiscal 2014,” he wrote in a report.

CAE employs about 8,000 people at more than 100 sites and training locations in approximately 30 countries.