CAE CEO Marc Parent takes part in a news conference in Montreal, on Aug. 12, 2020.Andrej Ivanov/The Globe and Mail
CAE Inc. CAE-T chief executive officer Marc Parent is set to step aside after a 15-year run as the Canadian aviation training company tries to get its defence business back on track.
Mr. Parent will relinquish his role at the company’s annual general meeting next August, Montreal-based CAE said in a statement after markets closed Tuesday. The company said it has hired an executive search firm to find a replacement.
“Marc’s lasting impact on CAE and global aerospace is unanimously recognized by the board,” CAE chairman Alan MacGibbon said in the statement. “As we continue our succession process for the next CEO of CAE, we are fortunate to benefit from the considerable leadership depth he has built across the organization.”
Mr. Parent is widely credited with expanding CAE’s business model from that of an industrial company focused on manufacturing flight simulators to a service company that trains pilots, both civil and military. Annual revenue has nearly doubled under his tenure to $4.3-billion, and the share price has more than tripled.
But the company has hit some turbulence of late.
In May, CAE announced it would take an impairment charge of $568-million on its defence business and another $126-million in contract adjustments and asset writedowns tied to the unit. At the time, Mr. Parent called it “a disappointing but necessary step” as his team worked to improve defence profit margins.
The executive leading the defence unit left the company shortly afterward, and another executive, Nick Leontidis, stepped into the newly created role of chief operating officer overseeing defence and civil aviation. In August, chief financial officer Sonya Branco left the company to pursue other interests.
After tanking in the early months of the pandemic, CAE shares recovered their full value. But today, they’re trading at about $30 on the Toronto Stock Exchange, down about 35 per cent from their 2021 peak.
In tandem with Tuesday’s CEO announcement, CAE reported adjusted earnings per share of $0.24 on revenue of $1.14-billion, beating analysts’ forecasts. The company largely maintained its previous financial guidance for the year, also surprising analysts.
The company appears to be dealing with headwinds in the civil training business better than expected, National Bank analyst Cameron Doerksen said. Meanwhile, defence segment margins are also trending upward.
“While these [financials] signal a clear leap forward in the right direction, some questions linger in our view as the company is now without a permanent CEO and CFO,” Desjardins Capital Markets analyst Benoît Poirier said in a research note. “There is uncertainty related to how investors will react to the eventual selections.”