CAE Inc. (NYSE:CAE) Q1 2021 Earnings Conference Call - Final Transcript

Aug 12, 2020 • 01:30 pm ET

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CAE Inc. (NYSE:CAE) Q1 2021 Earnings Conference Call - Final Transcript

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Presentation
Executive
Marc Parent

In the first quarter, we managed to significantly mitigate our inevitable operating loss position to near breakeven on a normalized basis. We also improved our free cash flow performance compared to last year and critically, we maintain our resiliency with a solid financial base. Despite the challenging environment, we booked CAD417 million of orders in the quarter for 0.76 book-to-sales ratio and we ended the quarter with a solid CAD8.6 billion backlog.

Looking specifically at Civil, despite the major operational hurdles presented by mandatory temporary facility closures, including our training centers and main manufacturing sites, and extensive travel restrictions, we managed to deliver two full-flight simulators to airline customers in the quarter and we averaged 33% utilization of our training network. With more than half of our global training network either closed temporarily or at reduced operations, utilization reached a low point around the 20% range during the quarter. Since then, we've seen average training center utilization rise to upwards of 40% as our facilities reopened and flight crews resumed some of their critical training activities.

We also continue to book orders with Civil signing training solutions contracts valued at CAD194 million, including a contract for an Airbus A320 full-flight simulator to China Express; a four-year training agreement with Alitalia; a five-year training agreement with WAMOS Air; another five-year training agreement with long term business aviation partner, SC Aviation; and a two-year business aviation training agreement with Air Hamburg. On the OEM front, we also concluded a five-year training agreement with Boeing to support Boeing's ab initio Pilot Development Program.

We've been adapting quickly to new realities by introducing new virtual service offerings to support our customers as a response to border restrictions including remote support for the installation, acceptance and qualification of the simulators. We also recently obtained FAA and other Civil Aviation Authority approvals for virtual training in certain of our flight training organizations and we developed a remote instructor operating station solutions for live instructor interactions during training sessions. As a product of our ongoing digital innovation initiatives, we launched instructor-led online courses for aviation maintenance training and CAE Airside, a new digital community platform that provides training and career resources to pilots, which I would encourage you to visit at airside.aero.

In Defence and Healthcare, the pandemic has also caused significant disruptions, which has hampered customer demand and our ability to deliver our products and services. Notwithstanding the challenging environment, the Defence booked orders for CAD201 million, including contracts to provide the United States Air Force with upgrades and enhancements to both the KC-135 and C-130H aircrew training system programs and to continue providing a range of in-service support solutions for the Royal Canadian Air Force's CF-18 aircraft. Other notable contracts including providing Airbus Defence and Space support for the development of new and upgraded training capabilities for Germany's Eurofighter program. We also received an order to continue providing maintenance and support services for the Royal Navy's Merlin helicopter training system.

And in Healthcare, we've put