Core Insights - The company reported a solid third quarter for fiscal 2026, with defense performance offsetting weaker civil aviation activity [6] Financial Performance - Civil segment revenue declined 5% to CAD 717.2 million, with adjusted operating income falling 6% to CAD 141.8 million, resulting in a 19.8% margin [1] - Consolidated revenue rose 2% year over year to CAD 1.25 billion, with adjusted segment operating income increasing 3% to CAD 195.8 million, and adjusted earnings per share rising to CAD 0.34 from CAD 0.29 [5] - Defense revenue increased 14% to CAD 534.9 million, with adjusted operating income rising 38% to CAD 54 million, achieving a 10.1% margin [8] Debt and Cash Flow - Net debt at the end of the quarter was approximately $2.8 billion, with a net debt to adjusted EBITDA ratio of 2.3x, surpassing the previous goal of 2.5x [2] - Net cash flow from operating activities was CAD 407.6 million, while free cash flow was $411.3 million, slightly higher than the previous year [3] Transformation Plan - The company is undergoing a multi-phase transformation plan focused on portfolio sharpening, capital discipline, and operational performance improvement [6][12] - CAE has identified non-core assets representing about 8% of revenue for potential divestiture, with strategic alternatives being explored [13] - A shared services outsourcing initiative has been launched to modernize finance and HR processes, aiming for reduced administrative costs [15] Market Outlook - The outlook for civil aviation has softened, with expectations of a mid-single-digit percentage decline in annual adjusted segment operating income, while defense adjusted segment operating income growth is raised to over 20% year over year [9][11] - Training center utilization decreased to 71% from 76% a year earlier, with plans to rationalize the simulator network to improve capacity and utilization [7][14] Recent Developments - Recent program wins include a partnership with Saab on the GlobalEye platform and a contract for Australia's Future Air Mission Training System valued at over $270 million [16] - The company had a successful Singapore Airshow, signing agreements totaling more than $160 million [16] - Leadership changes include the appointment of Ryan McLeod as CFO, with the evaluation phase of the transformation plan expected to be completed by May [17]