CAE reports positive cash flow, adjusted profit as training rebounds

(Reuters) - Canada's CAE Inc CAE.TO on Tuesday reported positive cash flow and earned a surprise adjusted quarterly profit, as client usage of its civil aviation training centers rebounded since the start of COVID-19, lifting shares as much as 7.4%.

Montreal-based CAE expects a stronger second half of the fiscal year, compared with the first, and to generate positive free cash flow for the full year.

CAE, the world’s largest civil aviation training specialist, sees opportunities with the now-grounded Boeing 737 MAX when the jet resumes flying.

Reuters reported on Monday that the U.S. Federal Aviation Administration (FAA) is set to lift its grounding order on the plane as early as Nov 18.

“With regards to MAX orders, we are booking them now,” CAE Chief Executive Marc Parent told reporters. “The lion’s share of the simulators for the MAX have been won by CAE, and I suspect we are going to continue to do well there.”

CAE said civil training center utilization more than doubled since the low point of the first quarter, driven by business aviation. But deliveries of flight simulators fell to 10 units in the quarter from 18 units a year earlier, as COVID-19 hit demand.

CAE expects 35 to 40 civil simulator deliveries this fiscal year.

Demand for CAE's simulators is linked to new aircraft deliveries by plane makers Boeing Co BA.N and Airbus AIR.PA, which are seeing lower sales amid a slump in air travel.

CAE reported free cash flow of C$44.9 million ($34.5 million) for the second quarter ended Sept. 30, and an adjusted profit of C$34.2 million. Including C$51.1 million in restructuring costs, the company would have recorded a quarterly loss.

The stock was up 5.23% by early afternoon.

On an adjusted basis, CAE earned 13 Canadian cents per share in the quarter, beating analysts’ expectation of a loss of 2 Canadian cents per share, according to IBES data from Refinitiv.

Reporting By Allison Lampert in Montreal, Ankit Ajmera and Sanjana Shivdas in Bengaluru; Editing by Sriraj Kalluvila, Maju Samuel and Jonathan Oatis