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CAE Inc. (CAE) Q3 2023 Earnings Call Transcript

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CAE Inc. (NYSE:CAE) Q3 2023 Earnings Conference Call February 14, 2023 2:00 PM ET

Company Participants

Andrew Arnovitz - Senior Vice President and Investor Relations

Marc Parent - President and Chief Executive Officer

Sonya Branco - Chief Financial Officer

Conference Call Participants

Konark Gupta - Scotiabank

James McGarragle - RBC Capital Markets

Kevin Chiang - CIBC

Cameron Doerksen - National Bank Financial

Fadi Chamoun - BMO

Tim James - TD Securities

Benoit Poirier - Desjardins Capital Markets

Matthew Lee - Canaccord Genuity

Fai Lee - Odlum Brown

Anthony Valentini - Goldman Sachs

Kristine Liwag - Morgan Stanley

Operator

Good day, ladies and gentlemen. Welcome to nan CAE Third Quarter Conference Call. Please beryllium advised that this telephone is being recorded. I would now for illustration to move nan gathering complete to Mr. Andrew Arnovitz. You whitethorn now proceed, Mr. Arnovitz.

Andrew Arnovitz

Good afternoon, everyone. Thanks for joining america connected nan call. Before we begin, I'll punctual you that today's remarks, including management's outlook and answers to questions, incorporate forward-looking statements. These forward-looking statements correspond our expectations arsenic of today, February 14, 2023, and accordingly, are taxable to change. Such statements are based connected assumptions that whitethorn not materialize and are taxable to risks and uncertainties.

Actual results whitethorn disagree materially, and listeners are cautioned not to spot undue reliance connected these forward-looking statements. A explanation of nan risks, factors, and assumptions that whitethorn impact early results is contained successful CAE's yearly MD&A disposable connected our firm website and successful our filings pinch nan Canadian Securities Administrators connected SEDAR and nan U.S. Securities and Exchange Commission connected EDGAR.

On nan telephone pinch maine this day are Marc Parent, CAE's President and Chief Executive Officer; and Sonya Branco, our Chief Financial Officer. After remarks from Marc and Sonya, we'll unfastened nan telephone to questions from financial analysts. At nan conclusion of that segment, we'll unfastened nan lines to members of nan media.

Let maine now move nan telephone complete to Marc.

Marc Parent

Thank you, Andrew, and bully day to everyone joining america connected nan call. We had beardown results successful nan 3rd quarter, driven by Civil's double-digit growth, Defense's sequential improvement, and Healthcare's accrued profitability. We besides ensured our way to early maturation by securing complete $1.2 cardinal successful full adjusted bid intake for a grounds $10.8 cardinal adjusted backlog and 1.22x book-to-sales ratio.

In Civil, we booked $713 cardinal of orders from a ample opportunities pipeline, resulting successful a 1.38x book-to-sales ratio. This is an particularly noteworthy accomplishment, considering this is connected gross that's 33% higher than past year. Orders see semipermanent commercialized aviation training agreements pinch GOL Airlines and MESA Airlines, and a multi-year business aviation training statement pinch Delux Public Charter.

We besides made fantabulous advancement pinch our formation operations package solutions, pinch notable agreements including a five-year statement pinch Ethiopian Airlines for our next-gen unit and operations head solution suite, and since nan extremity of nan quarter, an statement pinch Frontier Airlines for our next-gen operations solutions. Demand for full-flight simulators continued to beryllium beardown pinch 14 income successful nan quarter, bringing our year-to-date full to 43.

Civil's financial and operational capacity was besides beardown successful nan 3rd quarter, pinch double-digit maturation and near-record margins. We delivered 9 full-flight simulators successful nan quarter, and mean training centre utilization was 73%, up from 60% past year. Commercial aviation training request continued to beryllium strongest successful nan Americas, followed by a seasonal uptick successful Europe and past Asia, which has improved pinch nan ongoing easing of recreation restrictions successful China.

In business aviation, training request continued to beryllium robust passim our network, reflecting a precocious level of aviator training to support business craft formation activity, which continues to transcend pre-pandemic levels.

In Defense, nan starring parameter of our advancement towards a larger and much profitable business is bid intake. This quarter, we booked orders crossed domains for training and ngo support solutions weighted astatine $477 cardinal for a 1.05x book-to-sales ratio. This marks nan sixth consecutive 4th this ratio has been supra one, and situates america pinch a book-to-sales ratio of 1.25x connected a trailing 12-month basis.

Notable orders successful nan aerial domain see nan proviso of a formation training instrumentality and attraction and logistics support for nan Royal Canadian Air Force's CH-149 Cormorant search-and-rescue helicopter, nan continuation of aircrew training connected nan KC-135 Stratotanker and C-130H Hercules for nan United States Air Force, and world formation training instrumentality upgrades for nan F-16 combatant pitchy and CH53G heavy-lift carrier helicopter.

In nan Land domain, we were awarded backing for our Joint Terminal Control Training Rehearsal System solution, which builds connected nan occurrence of our erstwhile backing awards for a caller virtual training capacity for soldiers to nan U.S. Army connected nan Soldier Virtual Trainer prototype contract. We besides booked orders successful nan abstraction and cyber domains, highlighted by nan proliferation of CAE's solutions for distributed, networked and cybersecure ngo training via nan US Air Force's SCARS program. And since nan extremity of nan quarter, we booked orders successful nan oversea domain pinch our ongoing activity pinch Lockheed Martin connected nan Canadian Surface Combatant vessel program.

Defense besides continued to build connected its instauration of U.S. Army support pinch nan successful competitory re-compete for nan U.S. Army Aviation Fixed-Wing Flight Training Program, which involves a proviso of broad first and recurrent training for much than 600 U.S. Army and U.S. Air Force fixed-wing pilots annually astatine nan CAE Dothan Training Center successful Alabama.

The approximate full worth of nan guidelines statement and options is US$250 million, pinch a play of capacity done 2032. This was awarded to america pinch an effective day commencing successful our 4th fourth and accordingly, will beryllium reflected successful our adjacent 4th bid intake.

Also involving U.S. Army aviation, our premier partner connected nan U.S. Army's Future Vertical Lift, Bell Helicopter, was awarded nan FLRAA program, which will section nan V-280 Valor tiltrotor to yet switch nan long-serving UH-60 Black Hawk helicopter. Pending protestation solution connected this award, CAE will support Team Valor by delivering a scope of training devices, solutions, and courseware for Bell's family of systems.

We've continued to spot a beardown attraction connected our operations and plus optimization successful nan look of nan ongoing macroeconomic challenges impacting nan defense manufacture arsenic good arsenic nan broader economy. As a consequence of these efforts, our financial capacity for Defense successful nan 4th improved sequentially, and was mostly successful statement pinch what we expected.

With that, I'll now move nan telephone complete to Sonya who will supply further specifications astir our financial performance. Sonya?

Sonya Branco

Thank you, Marc, and bully afternoon, everyone. Consolidated gross of $1,020.3 cardinal [ph] was 20% higher compared to nan 3rd 4th past year. Adjusted conception operating income was $160.6 million, compared to $112.7 cardinal successful nan 3rd 4th past year. Quarterly adjusted EPS was $0.28, compared to $0.19 successful nan 3rd 4th past year. Adjusted EPS this 4th includes an approximate $0.02 affirmative effect arsenic a consequence of gains connected nan reversal of impairment of non-financial assets pursuing their repurposing and optimization.

We incurred restructuring, integration and acquisition costs of $4.9 cardinal during nan quarter, relating mostly to nan AirCentre acquisition, and this besides includes a $9.8 cardinal impairment reversal.

Net rate provided by operating activities this 4th was $252.4 million, compared to $138 cardinal successful nan preceding 4th and $309.6 cardinal successful nan 3rd 4th of fiscal 2022. Free rate travel was $237.7 million, compared to $108.4 cardinal successful nan preceding 4th and $282.1 cardinal successful nan 3rd 4th past year.

The sequential summation was chiefly owed to a little finance successful non-cash moving superior and a higher rate provided by operating activities, while nan alteration compared to nan 3rd 4th past twelvemonth was chiefly owed to a higher finance successful non-cash moving capital, which was partially offset by higher rate provided by operating activities.

Capital expenditures totaled $63.4 cardinal this quarter, pinch astir 75% invested successful growth, to specifically adhd capacity to our Civil world training web to present connected nan semipermanent training contracts successful our backlog. Income taxation disbursal this 4th was $17.1 million, for an effective taxation complaint of 18%. The income taxation complaint was impacted by restructuring, integration and acquisition costs this quarter, and excluding these costs, nan income taxation complaint this 4th was 19%.

Our Net indebtedness position astatine nan extremity of nan 4th was astir $3.1 billion, for a nett debt-to adjusted EBITDA of 3.74x astatine nan extremity of nan quarter. This 43 basis-point betterment from past 4th puts america solidly connected way to meet our targeted leverage ratio of beneath 3x nett debt-to-adjusted EBITDA by nan mediate of adjacent fiscal year.

Net finance disbursal this 4th amounted to $48.8 million, which is up from $41.3 cardinal successful nan preceding 4th and $34.5 cardinal successful nan 3rd 4th past year. Approximately 70% of our indebtedness obligations are fixed rate, and nan accrued finance disbursal mostly reflects nan effect of higher liking rates connected our adaptable complaint indebtedness instruments. For now, we're assuming a go-forward quarterly tally complaint for this disbursal successful nan scope of nan existent quarter.

Now, turning to our segmented performance. In Civil, 3rd 4th gross was up 33% to $517.4 million, compared to nan 3rd 4th past year, and adjusted conception operating income was up 58% to $131.4 cardinal vs. nan 3rd 4th past year, for a separator of 25.4%. Our beardown year-over-year Civil capacity was chiefly owed to higher training web utilization and nan integration of AirCentre into our results, which represented astir 10% of Civil gross successful nan quarter.

In Defense, 3rd 4th gross of $452.5 cardinal was up 6% complete Q3 past year. Adjusted conception operating income was $25.4 cardinal for nan quarter, down from $32 cardinal successful nan 3rd 4th past year. The gross maturation stems from FX translator and a higher level of activity connected programs, while nan little adjusted conception operating income reflects higher costs associated pinch inflation, proviso concatenation disruptions and labour shortages. This was partially mitigated by a reversal of impairment connected an intangible plus pursuing their repurposing and optimization and costs simplification initiatives.

And successful Healthcare, 3rd 4th gross was $50.4 million, up from $32.1 cardinal successful Q3 past year, chiefly owed to accrued income of diligent simulators and centre guidance solutions. Adjusted conception operating income was $3.8 cardinal successful nan quarter, for an adjusted conception operating income separator of 7.5%, compared to a nonaccomplishment of $2.7 cardinal successful Q3 of past year.

With that, I will inquire Marc to talk nan measurement forward.

Marc Parent

Thanks, Sonya. The spot that we saw successful nan 3rd 4th gives america further assurance successful some our fiscal 2023 outlook, arsenic good arsenic our semipermanent targets. We're excited astir Civil's prospects arsenic we build connected our industry-leading position pinch nan astir innovative training and captious operations support solutions, and we expect to spot important maturation during and beyond nan ongoing world aviation marketplace recovery.

We expect continued beardown maturation successful commercialized aviation training arsenic formation capacity rises to meet recreation demand, and arsenic mobility restrictions abate successful China, which remains a cardinal driver for airlines, chiefly operating successful Asia Pacific, but besides worldwide. In business aviation, formation activity has remained supra pre-pandemic levels and we proceed to spot beardown request for business aviation aviator training.

We person been and will proceed to deploy training capacity successful lockstep pinch request successful this conception of nan market. We proceed to expect Civil capacity to beryllium strongest successful nan 4th quarter, pinch a operation involving astir doubly arsenic galore full-flight simulator deliveries arsenic successful nan 3rd quarter, which gets america to our estimate of 45-plus deliveries for nan fiscal year. We besides person much simulators coming online successful our world training network, which makes for a larger guidelines of revenue. We've done very good pinch full-flight simulator income year-to-date, and we expect to support that momentum, winning our adjacent share.

In Defense, contempt nan macroeconomic headwinds, bid delays, and imaginable U.S. fund complexities, which are expected to widen into nan adjacent fiscal year, our continued sequential growth, on pinch positively trending bookings and backlog renewals, adds to our assurance successful our multi-year view.

Defense represents a secular maturation marketplace for CAE, and we judge nan assemblage is successful nan early stages of an extended up-cycle, driven by geopolitical realities and accrued commitments to defense modernization and readiness. We're now sustaining higher bid intake, replenishing and renewing our backlog pinch caller and much profitable defense contracts. We expect this inclination to proceed and for Defense to fortify complete a multi-year play to a debased double-digit percent conception operating income separator profile.

We're bidding much and we're bidding larger, pinch a pipeline of aggregate $100 million-plus programs, and a number of $1 billion-plus programs that we're bidding complete nan adjacent 3 years. We're highly focused connected execution, and arsenic we look to nan remainder of nan existent fiscal year, we expect further sequential improvements for Defense successful nan 4th quarter.

And successful Healthcare, we are connected a way to accelerate worth creation by gaining stock successful nan simulation and training market, and driving apical and bottom-line growth. We person a beardown squad and I expect to spot their affirmative momentum to continue.

Our superior allocation priorities are unchanged, pinch a attraction connected integrated investments that are made successful lockstep pinch customer demand. We're connected way to gathering our leverage target by nan mediate of adjacent fiscal year, which astatine that time, will further summation our financial flexibility. The CAE guidance and Board of Directors are besides prioritizing returning superior to shareholders successful a timely manner, which is simply a cardinal facet of our superior allocation strategy.

In summary, nan spot of our capacity successful nan 4th and our existent expectations for nan equilibrium of nan twelvemonth allows america to reiterate our outlook for mid-20% consolidated adjusted conception operating income maturation for this fiscal year. We're besides reiterating our semipermanent target of a three-year earnings-per-share compound maturation complaint successful nan mid-20% range.

With that, I convey you for your attention. We're now fresh to reply your questions

Andrew Arnovitz

Operator, we’ll now return questions from financial analysts.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] We'll now proceed pinch our first mobility connected nan statement from Konark Gupta pinch Scotia Bank. Please spell up pinch your question.

Konark Gupta

Thank you and bully day everyone. Just wanted to inquire you connected nan Civil broadside first. The margins are already backmost to nan pre-pandemic levels present successful nan fiscal Q3. Are you expecting nan margins to beryllium nearing nan highest aliases would you expect further upside arsenic Asia comes back?

Marc Parent

I'd say, look, we ever person – if I look astatine this quarter, arsenic I said successful nan remarks, we had rather a favorable operation this 4th and arsenic I've said successful nan past, that tin beryllium an important facet to margin. I retrieve asking that mobility successful Q1 erstwhile it was going nan different way. And if I look astatine – I mean, not specifically addressing your question, I'll get to it, but if you look astatine adjacent quarter, we're going to person a batch much afloat spot akin deliveries, which will play a domiciled successful nan margins because inherently, merchandise income are though profitable, they're not arsenic profitable arsenic training.

So, and we're deploying a batch of training, stuck a batch of training successful nan 4th quarter. So, you'd expect – though we still spot a very beardown capacity successful Civil, I wouldn't expect it to spot a precocious separator successful nan 4th quarter. I would for illustration to beryllium surprised, but I don't, surely don't expect it. But long-term, look, astatine nan extremity of nan day, arsenic nan marketplace comes back, arsenic you said, pinch Asia coming – I'm rather encouraged by what I spot successful Asia Pacific, and it's been nan longest resistance connected recovery. We're continuing to spot nan affirmative effects successful our recreation recovery. We're seeing successful position of utilization successful our training centers. But it's going to return immoderate time.

As we saw successful Europe and successful Americas, it takes a while for it to prime up. I deliberation we're respective quarters distant from being afloat backmost successful my opinion. But make nary mistake, erstwhile I look astatine fiscal 2025 and beyond, I deliberation we're seeing nan pieces present of a full betterment taking shape. So, if you facet that positive each nan costs savings that you're seeing travel done our results, I deliberation we tin expect that margins tin proceed to summation complete nan long-term.

Konark Gupta

Okay. That's bully for nan market. And arsenic a benignant of a follow-up. There was a caller announcement, I guess, by 1 of nan U.S. airlines, fixed they are struggling pinch aviator shortage, they're trying to trim nan number of hours required for pilots to train connected turbine engine. What does that really mean for CAE?

Marc Parent

Well, look, I deliberation I'll time off that to nan regulators, but everybody is ever focused very overmuch connected safety. So, astatine nan moment, I would show you that nan – we hardly meet nan request that's retired there, and we're successful maturation mode. So, to me, I don't spot that being a facet 1 measurement aliases different to consequence to CAE.

Konark Gupta

Okay. I admit nan color. Thank you.

Operator

Thank you very much. We'll spell to our adjacent mobility connected nan statement is from James McGarragle pinch RBC Capital Markets. Please spell ahead.

James McGarragle

Hey everyone. Hope everyone is good and congrats connected nan beardown quarter.

Marc Parent

Thanks, James.

Sonya Branco

Thank you.

James McGarragle

So, connected nan defense margins successful nan 4th and immoderate of nan semipermanent targets nan squad established astatine nan Investor Day, are you capable to thief quantify nan span betwixt those two? So, I cognize nan proviso concatenation is benignant of chartless astatine this constituent and really anyone's conjecture arsenic to erstwhile that improves, but are you capable to talk to nan items that you do person a statement of show into complete nan adjacent fewer quarters, specified arsenic perchance definite low-margin business rolling off, immoderate high-margin contracts upcoming aliases circumstantial costs savings related to [L3H] [ph] costs synergies?

Marc Parent

Well, I deliberation it's each of nan above. Look, arsenic we said before, what we're doing present is, we're fundamentally doing very good connected bid intake. You could spot for illustration six consecutive quarters now of book-to-bill is higher than 1. You person a trailing book-to-bill complete nan past 12 months of 1.25, which points to beardown growth. And nan important point astir that is nan squad pinch Dan Gelston astatine nan helm is signing contracts that are accretive to a semipermanent goal.

So, what you spot is present is pinch these orders doesn't hap overnight. And it depends if they're products aliases services, products contributing to results faster. But those contracts – those caller contracts are replacing contracts successful our backlog, immoderate of them that are resistance programs that person been very overmuch impacted by nan headwinds that we faced nan proviso chain, arsenic we said, arsenic you mentioned, and connected labor. And successful immoderate cases, though we've done very good connected bid intake, not each nan orders are created adjacent successful position of their timing.

So – but look, we person a beautiful bully statement of show of those factors. So arsenic we spell – truthful that's what allows maine to reaffirm not for Q4, for sure, and past having capable statement of show of really we're doing successful position of abatement of those factors to springiness nan optimism that I person for its continuous sequential improvements each done adjacent twelvemonth on nan measurement to our semipermanent target of double-digit maturation – double-digit profitability.

James McGarragle

Appreciate that. Thanks for nan colour and I besides wanted to inquire a mobility connected Civil and nan imaginable effect of a slowdown successful Europe. I cognize aviator trainings are regulated and that insulated from macro to a definite extent, but tin you talk to really your conversations pinch customers successful Europe are evolving fixed immoderate of nan macro headwinds successful nan region? And immoderate steps your squad is taking to hole for a imaginable slowdown successful that region? Thank you.

Marc Parent

Well, I deliberation I would show you is that we're not seeing a slowdown from wherever we were at. And certainly, successful Europe and successful nan Americas, definitely. And we're seeing things prime up, arsenic I mentioned successful our erstwhile mobility successful Asia Pacific. So astatine nan moment, we're successful maturation mode and we're forecasting to beryllium much for astatine slightest nan consumable future.

So, obviously, what group talk astir consequence of recession successful Europe, it surely bears watching, peculiarly arsenic a result, if it's faced pinch a imaginable power crisis, which really hasn't occurred, materialized. But look, we're watching it, but we're surely not seeing it, and we're not forecasting it anytime soon. astatine slightest arsenic a consequence of CAE.

James McGarragle

Appreciate nan colour and I’ll move nan statement over. Thank you.

Operator

We've get to our adjacent mobility connected nan line, it is from Kevin Chiang pinch CIBC. Go ahead.

Kevin Chiang

Hey, acknowledgment for taking my question. Good day everybody. Congrats connected a bully fiscal Q3 here. Maybe conscionable connected defense. In your outlook, you mentioned there's a small spot of uncertainty present pinch U.S. authorities fund appropriation issues. I'm conscionable wondering, do you spot that chiefly impacting, I guess, nan timing of awards being allocated? Or does that besides effect because I judge you are pursuing immoderate costs betterment initiatives pinch nan authorities connected conscionable fixed really ostentation has played retired here. Do these appropriation issues besides will effect nan timing of immoderate of those costs betterment initiatives for you?

Marc Parent

Look, connected nan 2nd portion of your question, connected regards to that circumstantial constituent successful nan caller DoD budget, and I would show you, we influenced this successful nary – not an insignificant way. Funding was granted circumstantial to reside inflation. That's public. And I tin show you, we're moving pinch our customers to reside nan inflationary items that person been – and I've mentioned this connected erstwhile calls that has decidedly been a factor. And that results successful – for america submitting requests for what's called equitable adjustments aliases REAs. And we've submitted rather a bit, and it's early successful nan process.

Well, I could show you, we person received immoderate mini adjustments, thing material, I would say. And so, going backmost to what I mentioned pinch regards to budgets being approved and disruptions there. To maine is, look, we could spot a prolonged continuous solution situation defense. So look, that has a imaginable for delays to caller programme starts because if you're successful that, benignant of environment, you can't person a caller programme starts. So, we're watching that. But I would show you that moreover pinch that factor, it whitethorn impact nan nonstop timing, but it doesn't alteration my position pinch regards to sequential maturation adjacent twelvemonth [in defense] [ph].

Kevin Chiang

Thank you. That’s very helpful. And possibly my 2nd mobility here. You've alluded to now nan past mates of quarters looking to return rate to shareholders, and it sounds for illustration you for illustration successful a position to supply much specifications successful nan adjacent fiscal year, but is location a model we should beryllium reasoning astir for illustration are you looking astatine a targeted payout ratio connected nan dividend aliases successful position of buyback? Are you looking to return to what you were doing pre-pandemic. Is location immoderate model you tin stock pinch america aliases is it still being contemplated astatine nan Board level still?

Sonya Branco

Yes. I deliberation arsenic we said, nan first privilege is really to de-lever. And we saw really bully advancement successful Q3, bringing down nan leverage ratio by almost half a move and proceed to beryllium connected way to our guidance. So then, we judge we'll beryllium successful a amended position to see nan return of superior to shareholders. I deliberation it's excessively soon to speak astir a model aliases shape astatine this point.

Kevin Chiang

Okay. Actually conscionable 1 past mobility for me. Just fixed nan sequential summation successful full-flight simulator deliveries expected successful nan fiscal Q4, immoderate risks astir proviso concatenation aliases each nan parts and things that you request to build and present those all, I guess, each in-house now and you're conscionable benignant of fresh to present this worldly by 4th extremity here?

Marc Parent

Well, you tin ne'er opportunity zero consequence because you ne'er cognize what tin deed you. But each those simulators are astatine customer sites arsenic we speak. So, they're built. So, it's not an issue. So, arsenic you know, we're beautiful knowledgeable astatine delivering and certifying full-flight simulator. So, I'm marking immoderate facet that I would suffice almost arsenic an enactment of God, I deliberation beautiful bully connected america getting those simulators certified. And arsenic I said, [part shorters] [ph] are nary longer a facet erstwhile you see there's astir six weeks near successful nan year.

Kevin Chiang

That’s ace helpful. Thank you very much. Congrats again.

Marc Parent

And that's by nan measurement I sewage to outcry that retired – acknowledgment to nan – outcry retired to nan hundreds of group that we person moving successful customer sites astir nan world doing that arsenic we speak. And I applaud them because they are nan heroes making this happen.

Operator

Thank you very much. We'll get to our adjacent mobility connected nan statement is from Cameron Doerksen pinch National Bank Financial. Go ahead.

Cameron Doerksen

Thanks, bully afternoon. I wonderment if you tin conscionable talk a small spot astir nan advancement that you're seeing pinch nan aerial halfway business. You've benignant of indicated a mates of caller hose awards here. It sounds for illustration you've sewage immoderate benignant of a caller next-gen solution there. Just benignant of talk astir what nan investments required, what benignant of advancement you're making pinch customers connected that caller solution and wherever nan business I conjecture has recovered to astatine this point?

Marc Parent

Well, look, nan business is doing precisely what we thought it would do, possibly moreover somewhat up astatine this very moment. Very, very happy what's happening there. I besides – and possibly I'll fto Sonya aft talk astir wherever we are investments, I would opportunity it's mostly in-line pinch what we had anticipated erstwhile we announced nan acquisition.

Look, I'm very excited astir this. And I'll talk astir it because we talked astir what our ambitions were for what is an adjacent marketplace for us. And this is playing out. This is playing out. You retrieve that we person an highly ample overlap of customers betwixt our training and simulator business and this formation services business. And we're seeing – we proceed to spot very, very precocious receptivity of our accepted customers to america being successful this market.

And it comes astatine a clip that we're seeing – look, we're seeing arsenic airlines ramp up capacity now, it's evidently very challenging times. And you tin spot from caller grounds that airlines successful galore cases, person really outgrown their exertion infrastructure, and they request to reinvest – truthful you tin beryllium good assured that we're engaged pinch each of our customers to thief them arsenic they shingle their exertion and needs of nan future, you tin beryllium judge of that.

So, I afloat expect that we're going to beryllium portion of nan solution complete time. And it's not going to beryllium a near-term P&L effect because astatine nan moment, we're focused connected integration. And remember, successful this, benignant of business, it's benignant of like, I usage a word for illustration an ERP implementations return extended periods of time, but erstwhile you person them, you person them for an extended play of clip arsenic well.

So look, I'm very happy pinch [indiscernible]. The next-gen solution is each astir Software arsenic a Service versus bequest on-premises. We person a pipeline. That pipeline is growing. It's going to return time, but I'm very happy astir really we're progressing here.

Sonya Branco

Yes. I'll conscionable adhd connected nan finance part. So, to elaborate on, Marc, we're seeing nan ramp up. We're seeing it travel through. That represents astir 10% of Civil's gross this quarter. So, that's very good. In position of investments, we ne'er laid retired nan nonstop amount, but it's successful nan tens of millions, but – and has started since nan acquisition and is portion of nan investments that you spot done nan results.

Cameron Doerksen

Okay. That’s awesome color. If I could compression successful a 2nd one, conscionable quickly connected nan defense side. Now that Canada has formally signed a statement for nan F-35. Can you update america on, I guess, what your anticipation is for nan training solution for that and really you deliberation you're positioned for that?

Marc Parent

Well, I deliberation we're well-positioned, obviously, because – I mean, that's what we do. We do it astir nan world each azygous day. We talked astir the, for example, signing F-35, that we won different F-16 statement recently. So, we cognize really to do this. We've done an F-18 and mostly of fighters retired location successful nan world. So, I could show you, I personally and members of my squad are successful discussions pinch each levels of authorities successful Canada and pinch nan customers successful nan United States.

We've met pinch nan F-35 associated programme agency who supply guidance support for nan F-35 program. And we're assured that they'd beryllium highly receptive to a connection by Canada to embed further training and simulation capacity successful Canada's home F-35 program. And I was encouraged by nan truth that erstwhile nan Canadian authorities announced nan F-35, they announced that simulation-based training will beryllium done that Airforce guidelines [indiscernible] and Cold Lake.

So, I deliberation it's a earthy for CAE to beryllium progressive here. And look, I deliberation this is simply a generational infinitesimal for Canada's nationalist security, I deliberation Canada has chosen good successful position of nan combatant for men and women successful azygous and for Canada's nationalist sovereignty. But present galore cleanable jobs successful Canadian innovations astatine [indiscernible]. Canada needs to prehend this opportunity of nan finance we're making here. And we can't spend to miss this unsocial opportunity to create and protect nan adjacent procreation of aerospace dollars successful Canada [indiscernible] arsenic well. We're portion of that, and I afloat expect america to beryllium portion of that.

Cameron Doerksen

Okay. That’s great. Thanks very much.

Operator

Thank you. Our adjacent mobility connected nan statement is from Fadi Chamoun pinch BMO. Go ahead.

Fadi Chamoun

Good afternoon. Thanks for taking my question. Marc, if business aviation formation hours extremity up being down 5%, 10% this twelvemonth because of nan system aliases successful nan adjacent 12 months, I guess, is location levers wrong CAE based on, benignant of nan caller acquisitions you've done and your positioning connected [one of nan program] [ph] to proceed to turn successful that broadside of nan business?

Marc Parent

Absolutely, Fadi. Look, nan fleet is still growing. The magnitude of caller aviator demand, we tin – we person problem gathering it now. I tin show you, you cognize I'm a pilot. I tin spot it myself, but our training centers, want to exaggerate, we can't find a parking abstraction 7 days a week. So, I'm not overly concerned astir a flimsy driblet successful nan formation hours. I mean, we're seeing a very, very basking marketplace for business dense training.

We're continuing to adhd capacity. Our Las Vegas training halfway has conscionable travel online. So is Singapore. Savanna will beryllium online adjacent year. We person a training halfway Orlando opening up pinch our JV partner, Directional Capital, which is our SIMCOM training halfway opening up successful Orlando. And I tin show you that we person request focused for coming into those training centers. So, I'm not excessively worried astir that conscionable dropped successful formation hours that could occur.

Fadi Chamoun

Okay. That’s awesome color. The 2nd follow-up mobility is really connected defense. I mean, we person six quarters now of description successful position of nan bid levels and nan outlook is affirmative for that to continue. When do we commencement to really acquisition this, benignant of request momentum into nan separator pinch a greater, benignant of influence. Is this much of a fiscal 2025 communicative aliases fiscal 2024? Just trying to understand nan trajectory of really these headwinds from proviso concatenation and operation successful nan backlog, benignant of travel disconnected versus returning to a much normal separator successful that segment?

Marc Parent

Well, look, it's going to beryllium dependable progress. That's what I see. The headwinds that we spot – I mean arsenic you will imagine, we're not sitting connected our hands not doing thing astir it. We're doing thing astir it, but it takes time. It takes clip to prosecute people. It takes clip for them successful nan defense assemblage to get nan due information clearances that we request for them to beryllium capable to execute connected immoderate of nan programs we have. This is going to return respective quarters to abate and it gets, but it gets amended each quarter.

We cognize what parts we request connected nan contracts that we have. But erstwhile you request – erstwhile you get caller contracts, you request caller parts, okay? Now we get amended astatine forecasting those things, but it's still an rumor because nan proviso concatenation is not arsenic accelerated arsenic it erstwhile was. And astatine nan aforesaid time, we're factoring imaginable delays successful orders because of things for illustration I talked about, nan U.S. defense procurement. But make nary mistake.

I'm seeing dependable improvements successful our business successful position of we're managing it. We person a very happy pinch – successful position of nan execution of our programs and nan level of contingency successful those programs that we have, execute them well. As you know, location was a facet successful Q1. And I mentioned that it has not happened successful [17 years] [ph]. I don't spot that happening again. Not pinch nan rigor that we put into it.

So look, I expect – erstwhile you talk astir erstwhile we retrieve backmost to debased double digits. Look, it's going to beryllium – we're connected that roadworthy Fadi. And I deliberation that you're going to spot that complete nan adjacent mates of years to get into it.

Fadi Chamoun

Great. Thank you.

Operator

Thank you very much. We'll get to our adjacent mobility connected nan statement is from Tim James pinch TD Securities. Go ahead.

Tim James

Thanks. Good afternoon. Thank you for taking my questions. My first question, I guess, I conscionable want to return really to that past topic, Marc, I'm conscionable wondering if you could remark connected aliases qualify immoderate peculiar pinch points successful nan proviso concatenation that are much problematic than others? Any benignant of peculiar parts aliases aspects of nan proviso concatenation that are a small spot much problematic. And I'll unfastened it up to either your civilian business aliases your defense business.

Marc Parent

Well, I deliberation I'd commencement disconnected by saying it hasn't really been a facet connected our Civil business and chiefly because we've done a bully occupation complete nan years to creation a merchandise that is highly repeatable, highly standard. And our teams successful world sourcing, for example, successful operations person done a very, very bully occupation forecasting and being capable to get those parts. So, I deliberation that's been nan case. In defense, look, I deliberation nan rumor is, I would opportunity qualify immoderate azygous part. It's fundamentally longer lead times connected galore parts. That's what really is nan facet here.

Obviously, we've had issues for illustration everybody has connected nan physics parts, those benignant of things. But today, it's really longer lead times, repeating myself connected inventory galore parts and what that trim does, it's not only nan truth that you missed nan portion itself is it's nan truth that successful nan meantime, you either can't advancement connected that statement aliases you're having to do workarounds and activity astir is inherently inefficient you person possibly group being idle aliases installations they're having to activity astir them. They truthful causing delays.

So each those things origin inefficiencies that weighs down connected our margins. And it has, I would say, a double effect because traditionally, we are capable to execute contracts and get up of ourselves to execute nan programs faster and therefore, make efficiencies. And we're successful nan contrary business correct now. And nan aforesaid effect pinch labor, you don't needfully person nan package engineers that you request because of immoderate of nan factors I talked astir nan clip to get them nan clip to get them fundamentally certified pinch nan correct clearances they need.

Now that gets that is getting amended because obviously, request successful nan high-tech marketplace for package engineers, circumstantial has cooled. So we are a spot of a use of that. We're seeing that. But it's going to return a fewer quarters for that to abate – to nan grade that we get backmost to nan margins that we person targeted successful our semipermanent defense business.

Tim James

Okay, that’s very helpful. Thank you. My 2nd question, I'm conscionable wondering if location are immoderate areas of your civilian business, either connected nan business aviation broadside aliases nan commercialized side, wherever you deliberation pricing is peculiarly beardown arsenic we beryllium present coming owed to nan incredible, benignant of request conditions and really quickly aerial recreation has ramped up. And therefore, pockets of pricing that could travel nether unit erstwhile we get past this very beardown ramp-up play aliases do you deliberation arsenic immoderate of nan different areas that still stay weak, specified arsenic China, et cetera, possibly benignant of dress up for immoderate of that imaginable moderation successful pricing, aliases do you not spot immoderate benignant of peculiarly beardown pricing astatine this point?

Marc Parent

Well, I deliberation I'd commencement by saying that successful our Civil business, successful a ample part, let's say, nan training business is semipermanent training contracts. And that's our circumstantial strategy, arsenic you know. And they typically are fixed percent aliases CPI-based escalators that are built in. So, that has a moderating effect going up and going down, right? So, you don't really spot large spikes. We person been capable to walk connected immoderate of nan inflationary aspects that we've seen complete clip erstwhile statement renewals travel up.

And don't forget, our business – our imagination ever has been, and it's nan measurement we run is to delight our customers. And nan correlator to that is, we don't bulge them erstwhile nan marketplace is going up, and they don't begrudge america a adjacent margin. So, I deliberation each of that comes retired to opportunity that I'm rather comfortable successful nan outlook that is fixed pinch regards to margins successful civilian going forward.

Tim James

Okay. Thank you very much.

Operator

Thank you. We will to our adjacent mobility connected nan line. It is from Benoit Poirier from Desjardins Capital Markets. Go ahead.

Benoit Poirier

Good day everyone. Just based connected your comments connected nan betterment trajectory for defense margin. Would it beryllium adjacent to opportunity that precocious azygous digits adjacent twelvemonth mightiness beryllium a spot excessively optimistic and mid-single digits would beryllium much realistic?

Marc Parent

I'm not going to springiness you nan specifics astatine this time, Benoit. I want to say, arsenic I said, we're moving done nan headwinds that we – and that we're going to proceed to spot betterment going guardant connected a sequential basis, for sure.

Benoit Poirier

Okay. That’s great. And looking astatine wellness attraction superior employed was mostly level versus past quarter, really should we expect superior employed to germinate aliases to beryllium deployed going guardant for wellness care? And do you spot immoderate opportunities to monetize these assets fixed nan rich | valuation and each nan spin-off that we've seen recently, Marc?

Marc Parent

Well, look, I deliberation successful wellness care, we're focused connected translating to awesome apical statement occurrence that we're seeing. I mean you look astatine nan gross this 4th and nan – which is historical, it's translating into bottommost line. I'm judge you've noticed that. We're rather happy pinch that. Six quarters successful a statement of beautiful beardown maturation astatine nan apical line, 2 consecutive quarters affirmative side. And we person a awesome team.

I would opportunity we person Jeff Evans astatine nan helm of nan business. He's built a very beardown team, [indiscernible] we person nan strongest squad we've ever had successful wellness care, and they're difficult charging, they're winning successful nan marketplace and that's what we're focused on. And healthcare is still funding. So, that's a trajectory that we're on, Benoit.

Benoit Poirier

Okay. That’s great. And pinch respect to Asia Pacific, wherever are you successful position of betterment versus pre-pandemic level? Are you backmost to halfway done beneath aliases still supra the…?

Marc Parent

Well, I wouldn't opportunity halfway through, look, really would I qualify it? We're successful nan debased 70% utilization successful that astir correct now. It does person seasonal variations. I'll springiness you immoderate possibly information points. In position of simulator deliveries aliases orders typically anterior to nan pandemic, we typically waste possibly 6 to 8 full-flight simulators a twelvemonth to China, okay. And I would opportunity complete nan past mates of years, we've only sold 2 aliases 3 successful total. So that gives you an thought successful position of simulator sets.

The much near-term betterment comes successful training. And that chiefly because we don't person immoderate training centers successful China, but it's each nan training centers that we person successful nan region. Of course, we person a batch of training centers successful nan region. The anchor customers that we train successful those regions, a batch of their – a bully proportionality of their flights are successful and retired of China. So, arsenic that recovers, we spot nan utilization successful our training centers ramp up. I expect that to materialize complete nan adjacent fewer quarters arsenic nan betterment takes hold.

Benoit Poirier

Okay. Thank you very overmuch for nan questions.

Operator

Thank you. We'll get to our adjacent mobility connected nan statement from Matthew Lee pinch Canaccord Genuity. Please spell ahead.

Matthew Lee

Hey, bully afternoon. Happy Valentine’s Day. On nan Civil side, erstwhile I deliberation astir caller pilots coming done [indiscernible] training, is that a higher-margin programme and a separator use than accustomed yearly aviator training? And possibly you tin quantify benignant of nan maturation you're seeing successful [indiscernible] conscionable fixed really galore pilots request to beryllium trained correct now?

Marc Parent

It's really a lower-margin business than – erstwhile we look astatine our mix, it's connected nan little end. It's really nan – we look astatine what that drives it, it drives expanding capacity successful our training halfway network. And it's portion of our offering to airlines, which is very important. Airlines are looking for pilots, they request pilots. And CAE has I think, nan largest web of aviator training centers successful nan world. And we don't fundamentally return group disconnected nan street. I mean we only do it for airlines themselves. So, it's an important portion of nan offering that we springiness nan hose arsenic a complete solution, -- but if I return it by itself, it would be, if you like, little than nan mean separator that we get successful our civilian business.

Matthew Lee

That’s very helpful. And past connected nan defense side, you pointed retired that delayed orders coming to fruition arsenic a imaginable separator driver. Are those contracts people precocious separator pinch much merchandise successful nan mix? Or is location different logic why those orders successful peculiar are affirmative for margins?

Marc Parent

I would opportunity that – I wouldn't opportunity each because sometimes it'll spell strategic, but nan awesome mostly of nan contracts that we're signing and we're bidding coming are accretive to our nonsubjective of debased double-digit margins successful liking business.

Matthew Lee

Okay. That’s very helpful. I’ll walk nan line.

Operator

Thank you. We’ll move to adjacent mobility connected nan statement from Fai Lee pinch Odlum Brown. Please spell ahead.

Fai Lee

Hi, it’s Fai from Odlum. Marc, you mentioned that CAE has submitted a petition for adjacent adjustments. And I'm conscionable wondering if you tin remark connected nan process, for example, are location group deadlines for nan customer to respond backmost to you? Is it a negotiated process? What happens to nan customer said nary – do you person for illustration an expertise to entreaty nan decision.

Marc Parent

Well, it's lawsuit by case. It depends connected what I mean by that is sometimes, nan petition for equitable accommodation whitethorn beryllium submitted to nan authorities itself and sometimes to an intermediary, which we statement pinch connected behalf of nan government. So again, lawsuit by case, we do person to, arsenic you mightiness expect, we do person to make our lawsuit and a batch of archiving related to that, but we person that documentation. We are putting those cases forward. There is nary circumstantial clip statement for them to recovery.

As I said, 1 point that encourages maine very overmuch is and arsenic I said previously, we had a batch to do pinch it ourselves, our authorities affairs group successful Washington did a very bully occupation connected this that successful caller DoD budget, location is backing specifically granted to reside ostentation successful nan industry. So, we're moving pinch our customers and moving to hole our ain claims pinch regards to that accrued budget. So, but again, there's nary timing connected that, but I afloat expect immoderate of that will travel fruition.

Fai Lee

Okay. And would you picture nan remainder aliases nan consequence has been reasonable aliases conversations for illustration they haven't been unreasonable. Have they?

Marc Parent

No, I don't deliberation there's anybody being unreasonable, but you person to make your case. But yes, we person made our case. We person simulators that were virtually delivering crossed nan state successful 1 contract. It's astir 180 carrier trucks pinch equipped guards crossing successful nan United States that were bid erstwhile state was $2 a gallon, but we each cognize that not state is not $2 a gallon anymore. So, you could conscionable ideate that conscionable connected that ground alone, you say, well, let's beryllium adjacent here. That's not precisely a 2%, benignant of earthy maturation successful nan statement and they're receptive to that benignant of thing.

Fai Lee

And past my 2nd question, backmost successful Q1, what are nan charges that you took pinch for a Navy contract, I judge it was [indiscernible] that expired and person been extended? And if I retrieve correctly, you were hoping to person it re-contracted successful amended terms. I'm conscionable wondering, has that happened? Has it been re-contracted connected amended terms? Or are you still waiting?

Marc Parent

We're still waiting connected that one. And to me, we can't really talk astir that. I mean, successful nan extremity it's a statement that we've submitted nan bid and they haven't selected anybody arsenic acold arsenic I know.

Fai Lee

Okay. Thank you.

Operator

Okay. Thank you very much. And we'll proceed to our adjacent mobility connected nan statement from Anthony Valentini pinch Goldman Sachs. Go ahead.

Anthony Valentini

Hey all. Thanks truthful overmuch for taking my mobility [indiscernible]. I'm looking astatine nan utilization rates successful nan 73% present successful nan quarter, comparing that backmost to pre-pandemic levels, and it looks for illustration you guys are really astatine aliases successful immoderate cases supra wherever you were. I'm funny successful position of really you guys deliberation done for illustration nan superior allocation process of really precocious that number tin go, right? Because I deliberation location needs to beryllium immoderate benignant of slack successful nan system. And erstwhile you get to that number, immoderate it is, really you deliberation done putting caller simulators into your network, if that makes sense?

Marc Parent

Yes. Look, nan short reply is, arsenic we said successful nan remarks, we deploy superior and fastener measurement pinch demand. You tin good ideate because we're nan marketplace leader present and person been for a agelong time, some successful simulators and simulator-based training, we cognize nan marketplace very well, and we cognize our customers very well, and we're successful changeless speech pinch them some successful nan hose assemblage and nan business aviation sector.

So, we person a beautiful bully and informed thought of really overmuch request will beryllium required because remember, it's a regulated market. People – there's a – you tin conscionable look astatine really galore flights group expect to make, really galore deliveries are coming retired of nan OEMs, and you will beryllium capable to found what is nan request demand crossed nan world approximately.

So, that's really we deploy it. And we – successful position of what is nan applicable capacity, look, I'll show you, I was our training halfway successful Minneapolis astir 3 weeks ago, wherever we are anchor customers are immoderate of nan largest location carriers successful nan United States, for illustration Endeavor, for example. And I tin show you, our training centers location are operating supra 100%. And teams are doing a awesome job.

So, erstwhile you talk astir applicable capacity, you tin get up location and you tin prolong it erstwhile you request too. And that's I judge you maine to support nan training of location carriers successful nan United States correct now, they request america to beryllium operating astatine that level. So, we tin do it. So, there's elasticity location now successful applicable reasons.

When we specify 100% for airlines, get you a small spot elaborate here, but that's 6,000 hours a year, which is 16 hours a day. So, that's what we see a applicable limit. But again, we're doing higher than that. So, there's flat. If nan request is there, that's what we do. And erstwhile we get to those benignant of levels, well, yes, what? In Minneapolis, location was a bunch of bully good tractor trailers aliases backhaul is building 2 caller simulator guidelines successful Minneapolis, while I was location because clearly, request is there. And we unafraid semipermanent contracts. We're not speculative connected really we deploy that capital.

Anthony Valentini

I'm funny really agelong nan lead times are erstwhile you determine you request to adhd a simulator to a facility? How overmuch clip does it return for you guys to build that SIM and past present it to beryllium up and running?

Marc Parent

It depends connected wherever it's going. And that's nan large factor. But typically, if we make a determination connected an hose a emblematic simulator, it's astir apt 1 we built before. It's typically betwixt 12 and 14 months, I would say.

Anthony Valentini

Last 1 for maine connected defense. You highlighted a early vertical lift. I'm curious, and I'm judge you person hundreds if not thousands of contracts, but wherever does that benignant of rank successful position of nan ample programs that you have? And should we beryllium reasoning done that contracts being negotiated successful nan aged strategy aliases nan caller one, which is that benignant of targeting nan double-digit percent margins? The caller one...

Marc Parent

Does that [indiscernible] question?

Anthony Valentini

Yes. And past conscionable really – successful position of rank how…

Marc Parent

It's a ample contract. But I said successful nan remarks that we person a batch of contracts that we're bidding successful a $100 cardinal range, and we person a batch of contracts successful nan $1 cardinal scope complete nan adjacent 3 years. This is 1 of nan ones that clarified successful nan 2nd class of $1 cardinal without getting specific. So, it's a ample opportunity complete time, but it's not nan only one. So, it doesn't disproportionately impact my position connected nan fortunes we would person adjacent year. It's important, but it's decidedly not nan only one.

Operator

We'll get our adjacent mobility connected nan statement is from Kristine Liwag from Morgan Stanley. Please spell ahead.

Kristine Liwag

Good day everyone. I conscionable want to travel up connected a aviator shortage and for illustration nan bigger picture. I mean pre COVID aviator shortage is already an rumor and past nan mandatory retirements coming up successful nan U.S. will apt exacerbate nan issue. I mean, erstwhile you look astatine nan programs that your customers are undertaking, for illustration nan [indiscernible] and things for illustration that, really overmuch of these actions lick for illustration nan bigger shortage problem? And if not, what should they beryllium doing to support manufacture growth? Because it conscionable seems for illustration there's not capable urgency successful position of actions that they should beryllium taking. So, I conscionable want to get an thought of really overmuch you deliberation that benignant of solved up actions today? And if not, really do you deliberation that gets resolved?

Marc Parent

Look, I deliberation it's going to return time. It's going to return finance – pilots are not nan only rumor that you're facing nan manufacture correct now. I mean it's been exacerbated by nan truth that nan manufacture was highly finely honed earlier nan pandemic , past we went backmost to [gold] [ph]. And so, we've been gradually rebuilding that manufacture each portion of it. So, pilots are 1 portion of it that important parts of 1 we play successful a very large way. And we're doing our portion by helping our customers.

We've been deploying caller request successful position of formation schoolhouse activity. We've been signing halfway contracts pinch them. We're operating our training centers arsenic mentioned connected nan erstwhile reply astatine levels that are connected hurdle astatine slightest surely successful nan United States correct now. So look, I deliberation it's going to return time, it's going to return investment. And that's why I deliberation successful position of our business, I deliberation it's going to beryllium a bully business for a play of time. I'm rather assured successful adjacent fewer years successful civilian aviation.

Kristine Liwag

Yes. It conscionable seems for illustration there's nary urgency. If I could sneak a 2nd 1 on...

Marc Parent

I would show you – Sorry to interrupt you, I would show you that if you were talking pinch immoderate of nan hose CEOs that I talked to a [indiscernible], but sorry, spell ahead, Kristine.

Kristine Liwag

If I could inquire different 1 connected M&A. When you look astatine what you've acquired complete nan years, portion of that was attributed to your occurrence successful immoderate of your competitors fundamentally feeding their territory backmost to you. If specified opportunities beryllium retired there, would you see levering up nan equilibrium expanse moreover much today? I mean immoderate of those out, are location moreover immoderate assets disposable for waste that you could consolidate for illustration you've done successful nan past decade? And if so, to what leverage are you comfortable?

Marc Parent

Sonya, won't fto me. No seriously. Seriously. You spot – we're focused connected deleveraging correct now. We don't spot immoderate gaps successful our portfolio. We did very good during nan pandemic make nan play agency during nan downturn. I deliberation you've seen that we've done rather a bully occupation of deleveraging successful this quarter. I spot that continuing on successful nan past that we said that we'll get to a level 3.

So look, we ne'er passed up nan opportunity that would beryllium that's excessively bully to pass. But I deliberation we've done a bully job. And that's – we're focused connected deleveraging correct now, looking to commencement returning rate to shareholders and proceed to beryllium nan 1 privilege is to proceed to turn successful lockstep pinch request and that's mostly inorganic.

Kristine Liwag

Great. Well, convey you Marc.

Marc Parent

So operator, that's each nan clip we person for financial analysts. I'd now inquire you to unfastened nan queue to members of nan media, if location are immoderate questions.

Operator

Certainly. [Operator Instructions] And we do person a mobility queued up from [Stephane Rolland] [ph]. [Foreign Language]

Unidentified Analyst

[Foreign Language]

Marc Parent

[Foreign Language]

Unidentified Analyst

[Foreign Language]

Marc Parent

[Foreign Language]

Unidentified Analyst

[Foreign Language]

Marc Parent

[Foreign Language]

Unidentified Analyst

[Foreign Language]

Marc Parent

[Foreign Language]

Unidentified Analyst

[Foreign Language]

Marc Parent

[Foreign Language] Operator, if location are nary much questions from members of nan media, I want to convey each participants, investors, and members of nan media. [Indiscernible] I would for illustration to punctual everyone that a transcript of today's telephone will beryllium posted later coming connected CAE's website. Thank you.

Operator

Thank you very much. And that does reason nan telephone for today. We convey you for your information arsenic you disconnect your lines. Have a bully time everyone.

Editor: Naga



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