• Fourth quarter FY2026 revenue of $1,326.7 million, diluted EPS of $0.23 and adjusted EPS⁽¹⁾ of $0.42
• Full-year FY2026 revenue of $4.9 billion, diluted EPS of $0.97 and adjusted EPS of $1.20(EQNX::nobreakspace)
• Transformation plan targeting $125 million to $150 million annual transformation run-rate savings⁽¹⁾ by fiscal 2030 (fiscal year ended March 31, 2030)(EQNX::nobreakspace)
• Targeting $950 million to $1 billion of adjusted segment operating income (under our updated definition)⁽¹⁾ in fiscal 2030 with a strong cash conversion rate⁽¹⁾

MONTREAL, May 21, 2026 /CNW/ - (NYSE: CAE) (TSX: CAE) - CAE Inc. (CAE or the Company) today reported its financial results for the fourth quarter ended March(EQNX::nobreakspace)31, 2026. For more information, please refer to the Annex for Fourth Quarter and Fiscal Year 2026 available at cae.com/investors.

"We delivered solid performance overall in fiscal 2026, notwithstanding a softer civil training market and volatility in the Middle East", said Matthew Bromberg, CAE's President and CEO. "We made important strategic progress positioning CAE to capture generational growth opportunities in the defence market by forging new partnerships with major OEMs and advancing integrated training and mission rehearsal opportunities for customers seeking sovereign capabilities. We also executed a successful leadership transition, strengthening and aligning our executive team to drive greater integration and synergies across the organization, and put in place the transformation plan we are now executing.

There is significant work ahead to unlock the full value creation potential of CAE, and fiscal 2027 will be a year of disciplined execution as we strengthen the business and position it for long-term performance. We have a comprehensive transformation plan, supported by clear processes, aligned incentives, and a high-performing team. Our transformation plan is focused on three priorities: sharpening our portfolio, strengthening capital discipline, and elevating operational performance. Underlying all three priorities is an equally important objective:(EQNX::nobreakspace)reinforcing a culture of accountability, performance and execution across the organization. We believe this cultural evolution is foundational to sustaining long-term performance improvement. We are updating key operating metrics, including how we define adjusted segment operating income, adjusted net income, adjusted EPS, free cash flow and how we measure asset utilization. These changes aim to reinforce disciplined decisionâ?(EQNX::leftsinglequotation)making, while aligning incentives more closely with shareholder value creation through a greater focus on adjusted segment operating income margins, adjusted return on invested capital (ROIC), and cash conversion rate. Together, these initiatives reflect a better balance of growth with efficiency and returns.

This is a multi-year plan, with multiple initiatives already underway, and we have established the operational and financial visibility required to define long-term targets. Our transformation plan is composed of eight key workstreams and includes removing 10% of our commercial full-flight simulator fleet and relocating and optimizing more than a dozen additional full-flight simulators, which will meaningfully reduce square footage and sites.

As we execute, we are targeting $125 million to $150 million of transformation run-rate savings from these initiatives and others by fiscal 2030, while targeting fiscal 2030 adjusted segment operating income (updated definition) of $950 million to $1 billion and approximately 100% cash conversion (updated definition) over the four-year period, reflecting improved profitability and disciplined capital management. Importantly, we expect more than half of the performance improvement over this period to come from internally driven initiatives within our control, including transformation actions already underway across the business.

We are confident in our ability to deliver materially stronger performance and sustained value creation over time, positioning CAE as a growth company with stronger free cash flow, higher returns on invested capital, expanding margins, and a flexible, resilient capital structure."

Management outlook and long-term targets, updated financial measures and transformation plan update
CAE's transformation plan, announced in November 2025, reflects management's view that evolving market conditions and long-term growth opportunities require a more focused portfolio, a streamlined operating footprint and a more accountable, performance-driven culture, with a deliberate shift towards balancing growth with greater efficiency and returns from our asset base and leading market positions.

The transformation is centered on three core principles: (i) aligning the portfolio to CAE's long-term strategy and areas of competitive advantage, (ii) strengthening capital discipline by prioritizing higher-return investments and optimizing the commercial training network, and (iii) improving operational performance through better integration of people, processes, and technology. Together, these actions are intended to position CAE to deliver sustainable long-term shareholder value.

In fiscal 2027, and in conjunction with our transformation plan, we have also decided to update the composition of certain non-IFRS measures to better align our external reporting with how management measures performance internally, to provide more accurate visibility to investors and to reinforce our cash centric focus on performance. Specifically, adjusted segment operating income, adjusted net income and adjusted EPS will be updated to exclude the impact of amortization of acquired intangible assets, removing a non-cash expense that we do not consider in evaluating the return on invested capital generated through our investing activities (in fiscal 2026, this expense was $86(EQNX::nobreakspace)million), and free cash flow has been revised as of the Q4 results to include all capital expenditures and all capitalized development costs.(EQNX::nobreakspace)

For more information, please refer to the Annex for Fourth Quarter and Fiscal Year 2026 available at cae.com/investors.

As part of this transformation plan, CAE is establishing long-term financial targets to be achieved by fiscal 2030:

CAE's transformation plan is expected to progress through a defined path, with fiscal 2027 focused on transformation and repositioning, fiscal 2028 marking a positive inflection as the benefits of these actions begin to be realized, and fiscal 2029 and beyond delivering accelerating performance and compounding value creation. Importantly, more than half of the anticipated performance improvement by fiscal 2030 is expected to be driven by transformation benefits, with the balance supported by volume growth and operating leverage.

Consistent with this trajectory, CAE targets strong cash generation reflecting improved profitability and disciplined capital management. The Company intends to maintain an investment grade credit profile, targeting net debtâ?(EQNX::leftsinglequotation)toâ?(EQNX::leftsinglequotation)adjusted EBITDA of approximately 2.5x, with flexibility to operate outside this range opportunistically, supported by strong cash generation and disciplined capital allocation. In addition,(EQNX::nobreakspace)CAE will evaluate a range of valueâ?(EQNX::leftsinglequotation)creation opportunities using a return on invested capital framework, prioritizing investments that deliver the(EQNX::nobreakspace) highest risk-adjusted returns. These could include internal investments to drive incremental organic growth beyond the transformation plan, potential acquisitions in its core markets and, absent such opportunities, the return of excess cash flow to shareholders.

The fiscal 2030 targets provided in this press release do not constitute guidance or outlook but rather represent management's current view of the Company's long-term trajectory and are meant to assist analysts, investors and shareholders in forming their respective views on the Company's strategy and in measuring progress toward its transformation objectives. The degree of uncertainty inherent in these long-term targets is considerably higher than that associated with CAE's fiscal 2027 outlook due to the longer time horizon and the greater number of variables that could affect outcomes. As such, the reader is cautioned that using this information for other purposes may be inappropriate and these measures are subject to change as conditions evolve and actual results may differ, and such differences may be material.

The fiscal 2030 targets constitute forward-looking statements and were prepared based on the same methodology and assumptions described in CAE's MD&A for the fiscal year ended March 31, 2026 and the "Forward-Looking Statements" section below and are subject to the risks and uncertainties summarized therein. The Company cautions that the assumptions used to prepare the targets, while thoughtfully considered and currently reasonable in the circumstances could prove to be incorrect or inaccurate.

Fiscal 2027 outlook
Fiscal 2027 will be an execution year, defined by actions underway to reshape the business.

These include:

• the rationalization and optimization of the commercial training network;
• the consolidation and optimization of CAE's global real estate footprint; and
• the evaluation of strategic alternatives for certain non-core businesses.

The total cost of the transformation plan is anticipated to be approximately $200 million to $250 million, with approximately $100 million arising from non-cash charges. Of the total cost, $84 million was incurred in fiscal 2026, with the majority of the balance to be incurred in fiscal 2027.

Additionally, we will incur several transformation-related costs in fiscal 2027 which we will not add-back to reported earnings and free cash flow, which have the effect of reducing the reported results from what they otherwise would have been. These costs include (i) cost inefficiencies associated with network rationalization, footprint optimization and portfolio changes, and (ii) specific investments to modernize the operating platform, including systems and processes. These actions are intended to strengthen the Company's operating foundation and enable the full realization of operational synergies over time.

The Company's fiscal 2027 outlook excludes potential divestitures, acquisitions, or new joint ventures.

In fiscal 2027, management expects consolidated revenue to increase by a low-single digit percentage, with Civil revenue expected to be flat to slightly down and Defense expected to grow at a mid-single digit rate.

On a consolidated basis, management expects fiscal 2027 adjusted segment operating income margin (updated definition)⁽¹⁾ to be 14.6% to 15.1%. This outlook reflects the combined effect of continued margin expansion in Defense, temporarily lower profitability in Civil, transformation-related actions, temporary cost inefficiencies associated with network rationalization and relocations, and elevated investment levels intended to support stronger long-term performance, with benefits expected to build progressively over time.

In Defense, CAE expects continued growth and increased profitability, supported by strong demand and adjusted backlog conversion. In Civil, performance is expected to remain below prior levels, reflecting ongoing softness in the civil aviation training market, softer demand for products, and the impact of optimization actions currently underway.

Ongoing geopolitical uncertainty in the Middle East is affecting CAE's operations and customers in the region. Currently, the Company is experiencing month-by-month operational and financial impacts associated with the conflict and undertaking mitigation actions, including the redeployment of certain training activities within its global network. Our outlook assumes that the Middle East conflict winds down in the first half of our fiscal year. Further deterioration in regional conditions, including sustained increases in fuel prices, broader effects on airline activity, customer operations, or supply chains, could result in additional pressure on performance.

This outlook is provided as at May 21, 2026, to assist analysts, investors and shareholders in forming their respective views on CAE's expected performance for the fiscal year ending March 31, 2027. This outlook constitutes forwardâ?(EQNX::leftsinglequotation)looking information and is based on multiple estimates and assumptions, including those set out in the "Forward-Looking Statements" section below, and are subject to the risks and uncertainties summarized therein. As such, the reader is cautioned that using this information for other purposes may be inappropriate and these measures are subject to change as conditions evolve and actual results may differ, and such differences may be material. The Company cautions that the assumptions used to prepare the outlook could prove to be incorrect or inaccurate.

Consolidated results for fiscal 2026⁽¹⁾
Fourth quarter fiscal 2026 revenue was $1,326.7(EQNX::nobreakspace)million, an increase compared to $1,275.4 million last year. Fourth quarter diluted EPS was $0.23 compared to $0.42 last year. Adjusted EPS was $0.42 compared to $0.47 last year. Operating income this quarter was $127.4 million (9.6% of revenue⁽¹⁾), compared to $239.9 million (18.8% of revenue) last year. This period's operating income included restructuring costs of $84.4 million. Last year's operating income included costs related to shareholder matters of $10.6 million and executive management transition costs of $8.3(EQNX::nobreakspace)million. Fourth quarter adjusted segment operating income was $211.8 million (16.0% of revenue⁽¹⁾) compared to $258.8 million (20.3% of revenue) last year.

Annual fiscal 2026 revenue was $4.9(EQNX::nobreakspace)billion, an increase compared to $4.7 billion last year. Annual diluted EPS was $0.97 compared to $1.27 in fiscal 2025. Annual adjusted EPS was $1.20 this year compared to $1.21 last year. Annual operating income was $612.3 million (12.5% of revenue), compared to $729.2 million (15.5% of revenue) last year. This period's operating income included executive management transition costs of $14.0(EQNX::nobreakspace)million and restructuring, integration and acquisition costs of $84.4(EQNX::nobreakspace)million. Last year's operating income included the gain on fair value remeasurement of SIMCOM of $72.6 million, costs related to shareholder matters of $10.6(EQNX::nobreakspace)million, executive management transition costs of $8.3 million and restructuring, integration and acquisition costs of $56.5(EQNX::nobreakspace)million. Adjusted segment operating income was $710.7 million (14.5% of revenue) compared to $732.0 million (15.5% of revenue) last year. All financial information is in Canadian dollars unless otherwise indicated.

Summary of consolidated results

Civil Aviation (Civil)
Fourth quarter Civil revenue was $746.7 million, an increase of 3% compared to the same quarter last year. Operating income was $88.0 million (11.8% of revenue) compared to $197.4 million (27.1% of revenue) in the fourth quarter last year. Fourth quarter Civil adjusted segment operating income was $152.4 million (20.4% of revenue), compared to $208.4 million (28.6% of revenue) in the fourth quarter last year. In the fourth quarter, Civil training centre utilization was 73% and 17 full-flight simulators (FFSs) were delivered to customers.

Annual Civil revenue was $2,741.6 million, up 1% compared to last year. Annual operating income was $437.9(EQNX::nobreakspace)million (16.0% of revenue) compared to $605.3 million (22.3% of revenue) last year, and annual adjusted segment operating income was $510.5 million (18.6% of revenue) compared to $581.5 million (21.5% of revenue) last year. For the year, Civil training centre utilization was 70% and 52 FFSs were delivered to customers.

During the quarter, Civil signed training and operational support solutions contracts valued at $965.2 million. These included the sale of 20 FFSs and long-term training and digital flight services contracts.

For the year, Civil booked orders for $2.6 billion, including 42 FFS sales (vs. 56 in the prior fiscal year) and comprehensive, long-term training agreements with customers worldwide.

The Civil book-to-sales ratio was 1.29x for the quarter and 0.96x for the last 12 months. The Civil adjusted backlog at the end of the year was $8.4 billion, which is 5% lower from the prior year period.

Summary of Civil Aviation results

Defense and Security (Defense)
Fourth quarter Defense revenue was $580.0 million, an increase of 6% compared to the same quarter last year. Operating income was $39.4 million (6.8% of revenue), compared to an operating income of $42.5 million (7.8% of revenue) in the fourth quarter last year. Fourth quarter Defense adjusted segment operating income was $59.4(EQNX::nobreakspace)million (10.2% of revenue), compared to $50.4 million in the fourth quarter last year.

Annual Defense revenue was $2,172.4 million, 9% higher compared to last year. Annual operating income was $174.4 million (8.0% of revenue) compared to $123.9 million (6.2% of revenue) last year, and annual adjusted segment operating income was $200.2 million (9.2% of revenue), compared to $150.5 million (7.5% of revenue) last year.

During the quarter, Defense booked orders for $646.1 million, bringing the full-year total to $2.4 billion.

The Defense book-to-sales ratio was 1.11x for the quarter and 1.10x for the last 12 months. The Defense adjusted backlog at the end of the year was $10.8 billion.

Summary of Defense and Security results

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