05:20 PM EDT, 05/21/2024 (MT Newswires) -- CAE Inc. ( CAE ) last seen down 8.8% in after hours New York trading after the company said after close on Tuesday said will taking charges in its fiscal fourth-quarter results because of the performance of its defense business.

The flight-simulator company it will take a $568-million charge in a write down of goodwill, as well as $90.3 million for unfavorable adjustments and a $35.7-milion charge to write down "related intangible assets" in its fiscal fourth-quarter, which will be released on May 27.

"Because our Defense performance has fallen well short of our expectations, we have taken measures to re-baseline the business, including a leadership reorganization and further targeted operational changes at the segment and corporate executive management levels. The impairments and the accelerated risk recognition on the Legacy Contracts are a disappointing but necessary step to account for the programmatic risks we previously identified and provide a clearer path to margin improvement," chief executive Marc Parent said in a release.

CAE announced the appointment of Nick Leontidis to the new position of Chief Operating Officer (COO) as part of a senior leadership reorganization as it moves to drive additional synergies between CAE's Defense & Security business and its Civil Aviation business. Leontidis was previously CAE's Group President, Civil Aviation. As COO, he will have overall responsibility for both of CAE's Civil and Defense business segments.

At the consolidated level, CAE said it generated over $400 million of free cash flow for a 1.5 times cash conversion rate of net income and further solidified its financial position. Net debt-to-adjusted EBITDA was 3.17 times at the end of the quarter and net debt-to-adjusted EBITDA excluding Legacy Contracts was 2.89 times at the end of the same period. CAE added it expects "improved results going forward", supported by continued growth in Civil and from the structural and organizational improvements in Defense and a growing backlog of high-quality, profitable programs.

The company updated its fiscal 2024 outlook to reflect preliminary unaudited financial results, the timing of Civil FFS deliveries, and the re-baselining of its Defense business. The previous outlook for Civil included an expectation for mid- to high-teens percentage annual adjusted segment operating income growth, and management currently expects 13% growth, mainly because some of the planned full-flight simulator (FFS) deliveries moved into fiscal 2025.

In fiscal 2024, CAE said, Civil delivered 47 FFSs instead of the approximately 50 it had expected. This timing difference is due to customer requests to postpone deliveries because their facilities were not yet ready to receive the FFSs as originally planned. Management's expectations for a record annual and fourth quarter Civil adjusted segment operating margin remains consistent with its previous outlook.

For Defense, management previously expected that it would accelerate the retirement of risks associated with the Legacy Contracts and substantially retire them over a period of six to eight quarters. The expected Legacy Contract retirement period remains unchanged. However, it said, the recognition of risks associated with them have been accelerated by virtue of the associated profit adjustments and asset impairments that have been recorded in the fourth quarter.

CAE shares were last seen down US$1.75 to US$18.08 after hours. They closed down C$0.59 too C$27.06 on the Toronto Stock Exchange.