CAE Stock

CAE Inc. (CAE) operates as a high-technology company.

Operations

The company provides digitally immersive training and operational support solutions to three markets globally:

The civil aviation market includes major commercial airlines, regional airlines, business aircraft operators, civil helicopter operators, aircraft manufacturers, third-party training centres, flight training organizations, maintenance repair and overhaul organizations (MRO), and aircraft finance leasing companies.

The defence and security market includes defence forces, original equipment manufacturers (OEMs), government agencies, and public safety organizations worldwide.

The healthcare market includes hospital and university simulation centres, medical and nursing schools, paramedic organizations, defence forces, medical societies, public health agencies, and OEMs.

Civil Aviation Market

The company provides comprehensive training solutions for flight, cabin, maintenance and ground personnel in commercial, business and helicopter aviation; a complete range of flight simulation training devices; ab initio pilot training and crew sourcing services; and end to end digitally enabled crew management, training operations solutions and optimization software.

Defense and Security Market

The company is a platform agnostic, global training and simulation pure play focusing on ensuring mission readiness by integrating systems and solutions across all five domains for government organizations responsible for public safety.

Healthcare Market

The company offers healthcare students and clinical professionals integrated education and training solutions, including interventional and imaging simulations, curricula, audiovisual debriefing solutions, centre management platforms and patient simulators.

Innovation and Research and Development (R&D)

The company digitalizes the physical world, deploying simulation training and critical operations support solutions to the civil aviation, defence and security, and healthcare markets globally. Its full-spectrum solutions are helping deliver more immersive and effective products, services, and solutions; and empower pilots, airlines, defence and security forces, and healthcare practitioners to perform at their best every day and when the stakes are the highest.

Production and Services

The company provides comprehensive solutions involving products and services to equip people in critical roles with the expertise and solutions to create a safer world.

Production

The company’s manufacturing and assembly facilities are located in Montreal, Canada; Arlington, Tampa, Tucson and Sarasota in the U.S.; and Stolberg, Germany.

Most of the company’s manufacturing and integration activities for Civil and Defense are conducted at its facilities in Montreal, with some integration and update related work also being conducted at the Tampa, Arlington, Tucson and Stolberg sites. The Arlington, Tampa and Tucson facilities conduct military systems integration and testing activities for simulation equipment destined for the U.S. military-related contracts. Following the L3Harris Technologies Military Training business (L3H MT) acquisition, the operation teams focused on the integration of the Arlington and Tucson sites delivering on the committed synergies.

The primary manufacturing and integration activities for Healthcare products are conducted at the company’s facilities in Sarasota.

Investments, such as manufacturing automation equipment, supply chain logistics tools and artificial intelligence continue to improve the company’s manufacturing efficiency and agility, as well as to augmenting the accuracy of supply chain decision making.

Services

The company provides a range of technical support services to Civil and Defense simulator operators, including parts replacement and repairs, installations, relocations, upgrades and technical training. Customers use its technical services to answer questions, troubleshoot and receive advice. This extends to service visits by the company’s engineers to assist in customer maintenance and repair activities. Defense and Civil upgrade services are not restricted to its products as the company can upgrade most other manufacturers’ simulators. The company’s services are offered either in conjunction with a sale of a simulator, through maintenance contracts or individual orders. The company’s service business provides opportunities to influence the upgrade of installed full flight simulators while providing valuable insights into customer training needs.

With the acquisitions of Merlot Aero Limited (Merlot), RB Group and AirCentre (Sabre’s AirCentre airline operations portfolio) completed in FY2021 (fiscal 2021, which refers to the period from April 1, 2020 to March 31, 2021) and FY2022 (fiscal 2022, which refers to the period from April 1, 2021 to March 31, 2022), the company also provides robust end-to-end flight operations and optimization software solutions, helping airlines and business aviation operators make optimal data-driven decisions across their entire flight operations.

In Defense, CAE provides a range of training support services, such as contractor logistics support, maintenance services, classroom instruction and simulator training at over 145 sites around the world.

CAE also provides analytical and engineering services that leverage modeling and simulation and other advanced technologies to develop innovative solutions to the company’s clients’ most complex challenges. CAE offers clients a range of services and subject matter expertise, including human factors and human system integration, capability-based planning, advanced synthetic environments, cybersecurity, system and software engineering for Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance and electronic warfare systems, training systems and services, integrated information environments, and in-service support for fleet operations and maintenance.

Acquisitions

On April 1, 2021, the company acquired the remaining 79% equity interest in the RB Group, a leading provider of fully integrated solutions that modernize the way airlines and business aircraft operators interact with their crew. This acquisition further supports CAE’s expansion into digital flight crew management in the company’s goal to drive additional software-enabled Civil aviation services.

On June 10, 2021, the company acquired GlobalJet Services, a provider of aviation maintenance training that is recognized around the world for its services for both business and helicopter sectors. This acquisition expands the company’s aircraft platform addressability in the maintenance training market through world-class, regulatory approved training programs.

On July 2, 2021, the company acquired L3Harris Technologies Military Training business (L3H MT), which includes Link Simulation & Training, Doss Aviation and AMI. Link Simulation & Training is one of the leading providers of military training solutions in the U.S., Doss Aviation is the provider of initial flight training to the United States Air Force, and AMI is a design and manufacturing facility for simulator hardware. The acquisition expands the company’s position as a platform-agnostic training systems integrator by diversifying its training and simulation leadership in the air domain, complementing land and naval training solutions, and enhancing the company’s training and simulation capabilities in space and cyber.

On February 28, 2022, the company acquired Sabre’s AirCentre airline operations portfolio (AirCentre), a suite of flight crew management and optimization solutions. The transaction provides the company with the Sabre AirCentre product portfolio, related technology and intellectual property, as well as the transfer of its highly talented workforce. The acquisition further expands the company’s reach across its broad customer base beyond pilot training and establishes ourselves as a technology leader in the growing market for industry-leading, digitally enabled flight and crew operations solutions.

Strategy

The company’s strategies include high degree of recurring business; industry leader with a strong competitive moat; headroom in large markets; technology and industry thought leader; potential for compound growth and superior returns over the long-term; culture of innovation, empowerment, excellence and integrity; and excellent and diverse team with a unique social impact on safety.

Intellectual Property

The company’s patent portfolio includes 255 active patents and 124 pending applications.

Seasonality

The Civil segment’s equipment sales to airlines are affected by the cycles of expansion and contraction of the entire commercial airline industry, as well as the availability of credit and general economic conditions. Demand for training services is to a lesser extent, also affected by the longer wave cycles of the commercial airline industry. The Civil segment experiences a significant degree of seasonality; in times of peak travel (holiday periods, etc.) airline and business jet pilots are often too busy flying aircraft to attend training sessions. Healthcare is subject to the irregular timing of orders by hospitals, universities, government entities and defence forces.

History

The company was founded in 1947. It was incorporated in 1947 under the laws of Canada by letters patent. The company was formerly known as Canadian Aviation Electronics Ltd. and changed its name to CAE Industries Ltd. in 1965. Further, the company changed its name to CAE Inc. in 1993.