Features Military Procurements
CAE posts 18% raise in Q3 profits

Feb. 9, 2012, Montreal – Flight training firm CAE Inc. saw profits grow by 18
per cent in its latest quarter as strong demand for civil aerospace
training and simulators offset weaker military results than a year
ago.

The Montreal-based company said it earned $45.6 million, or 18
cents per share in its third quarter, up from $38.5 million, or 15
cents per share in the same period of 2010. Adjusting for one-time
items, profits were 17 cents per share.

Revenue grew 10 per cent to $453.1 million.

CAE was expected to earn 17 cents per share in adjusted profits
on $468 million of revenues in the third quarter, according to
analysts polled by Thomson Reuters.

Chief executive Marc Parent said he was pleased that margins
increased in both civil and defence business units from the second
quarter.

"The level of civil aviation market activity remains high in all
regions and our order intake reflects our strong competitive
position," he said in a news release.

"Although procurement delays in defence continue to make
predicting the timing of orders a challenge, we won contracts with
key defence customers during the quarter."

In its civil segment, revenue grew by 13 per cent to $203.7
million compared to $179.9 million last year. Operating profit was
$42 million, compared to $32.1 million last year.

CAE said it sold 11 full-flight simulators during the
quarter and also signed training services contracts expected to
generate $122.2 million in future revenue, including an exclusive
long term agreement with Flydubai in the United Arab Emirates.

In its military segments, revenue increased by one per cent to
$222.3 million, compared to $219.8 million last year. Operating
profit was $36.9 million, down slightly from $39.5 million last
year.

The Montreal-based company has suggested that its military
segment revenues will grow by low single digits this fiscal year.

Benoit Poirier of Desjardins Capital Markets said the military
margins were higher than forecast and should provide some relief to
investors.

"Our sense is that there was some uncertainty about military
margins going into the quarter," he wrote in a report.

CAE has a solid military backlog with a good pipeline of
international opportunities but the numbers were down from the prior
quarter.

"Delays in government funding for certain programs remain a
concern," added Michael Willemse of CIBC World Markets.

With the $100 million in orders announced in mid-January, CAE has
generated about $440 million in new military order activity since
the beginning of the fiscal year.

CAE's health-care simulation segment remains small, but is
expected to take advantage of attractive growth opportunities.

Segment revenues increased to $27.1 million from $11.1, but the
loss increased by $100,000 to $1.4 million.

Founded in 1947, it has 32 civil aviation, military and
helicopter training centres around the world and trains more than
80,000 crew members.

The company had annual revenues last year exceeding $1.6 billion
and employs more than 7,500 people at more than 100 sites and
training locations in more than 20 countries.

On the Toronto Stock Exchange, CAE's shares increased one per
cent to $10.96 in morning trading.