CAE Inc

TSX:CAE

Earnings Call Transcript 2020-Q1

[Operator]

Good day, ladies and gentlemen, and welcome to the CAE first quarter conference call. Please be advised that this call is being recorded today.I would now like to turn the meeting over to Mr. Andrew Arnovitz. Mr. Arnovitz, please go ahead.

[Andrew Arnovitz, Vice President of Investor Relations & Strategy]

Good afternoon, everyone, and thank you for joining us today. Before we begin, I'd like to remind you that today's remarks, including management's outlook for fiscal year '20 and answers to questions, contain forward-looking statements.These forward-looking statements represent our expectations as of today, August 14, 2019 and accordingly are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties.Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risks, factors and assumptions that may affect future results is contained in CAE's annual MD&A available on our corporate website and in our filings with the Canadian Securities Administrators on SEDAR and on the U.S. Securities and Exchange Commission EDGAR site.On the call with me this afternoon 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 take questions from financial analysts and institutional investors. Following the conclusion of that Q&A period, we'll open the call to questions from members of the media.Let me now turn the call over to Marc.

[Marc Parent, President, CEO & Director]

Thank you, Andrew, and good afternoon to everyone joining us on the call. I'll first discuss some highlights of the quarter, and then Sonya will review the detailed financials. I'll come back at the end to talk about our outlook.CAE had a good start to the fiscal year with double-digit revenue and operating income growth and $940 million (sic) [ $941 million ] of orders for a 1.14x book-to-sales. CAE's total backlog at the end of the quarter was $9.4 billion. Performance was led by Civil, which delivered strong operating income growth and continued to add significantly to backlog. I'm especially pleased with our market momentum, winning the confidence of our airline and business jet customers with our innovative training solutions.Our Defence is more variable on a quarterly basis, and first quarter results reflect this tendency as well as an income growth profile that's more heavily weighted to the second half of the fiscal year. And in Healthcare, the revenue momentum we saw at the end of last year continued into the first quarter.Looking more closely at Civil. We booked $694 million of orders in Q1, including multiyear pilot training agreements with airlines, including the LATAM, SAS and Air Europa. We also signed 5 -- new 5-year -- 5 training contracts with Philippines' AirAsia, which incorporates our highly innovative and data-driven CAE Rise Training System. Civil sold 9 full-flight simulators during the quarter, including 3 to Southwest Airlines for the Boeing 737 Max, 1 to Korean Air for the Boeing -- for the Airbus A330 and 1 to Hawaiian Airlines for the Boeing 787.Overall, training center utilization remained strong with 76% on our network of nearly 300 full-flight simulators deployed.In Defence, we booked orders for $220 million, including contracts with Lockheed Martin for C-130J simulators for the U.S. Air Force and the U.S. Marine Corps. Other notable orders include a contract with L3 MAS to continue providing in-service support for the Royal Canadian Air Force's CF-18 fleet and contracts to upgrade the German Eurofighter and Tornado aircraft simulators.New awards also included contracts for naval training solutions for the Canadian Surface Combatant Program and upgrades to the Swedish Navy's Naval Warfare Training System.And in Healthcare, we continued to pursue larger segments of the Healthcare simulation market with our expanded sales force. We announced a new CAE Centre of Excellence for simulation-based training at ESPA-Montreal, which is an innovative healthcare education and industry partnership designed to improve patient care. We also developed and delivered a simulation solution to medical device company, Baylis Medical, to support one of its cardiovascular systems for physicians. As well, we collaborated with the Canadian Association of Schools of Nursing to develop courseware for student nurses practicing with our CAE Juno manikin.With that, I'll now turn the call over to Sonya, who will provide you a detailed look at our financial performance. I'll return at the end of the call to comment on our outlook. Sonya?

[Sonya Branco, VP of Finance & CFO]

Thank you, Marc, and good afternoon, everyone. Consolidated revenue for the first quarter was $825.6 million, up 14% compared to $722 million in the first quarter of last year. And segment operating income, before specific items, was $113.3 million, up 15% from $98.5 million last year. Quarterly net income before specific items was $63.2 million or $0.24 per share, which is 8% lower than the $0.26 we've recorded in the first quarter last year.Net finance expense for the first quarter was $34.9 million, up from $16 million in the first quarter of fiscal 2019. We had higher interest resulting from the long-term debt we issued at the end of last year to fund the acquisition of the Bombardier BAT business as well as we had a higher interest on lease liabilities because of the adoption of IFRS 16.Income taxes this quarter were $13 million, representing an effective tax rate of 17%, which is up from 13% for the first quarter last year. The higher tax rate was mainly due to the impact of tax audits in Canada last year, partially offset by a change in the mix of income from various jurisdictions.Cash provided by operating activities this quarter was up 18% to $137.8 million compared to $117.2 million in the first quarter of fiscal 2019.Free cash flow was negative $102 million in the quarter compared to negative $86 million last year. We had a higher investments related to work-in-progress inventory for simulator products to be delivered over the balance of the year, and we had lower payables. We usually see a higher investment in noncash working capital accounts in the first half of the year. And as in previous years, we expect a portion of the noncash working capital investment to reverse in the second half.Uses of cash in Q1 included funding capital expenditures for $89 million, mainly for growth and specifically to add capacity to our global training network to deliver on the long-term exclusive training contracts in our backlog. We continue to expect total capital expenditures for the year to be modestly higher than the prior by about 10% to 15%. Other uses of cash included the distribution of $25.5 million in cash dividends, and we used another $2 million to repurchase stock at a weighted average price of $34.41 per common share under the NCIB program.Our financial position continued to be solid, with a net debt of $2.3 billion at the end of the quarter, for a net debt-to-total-capital ratio of 49.4%. This reflects the issuance of the unsecured senior notes for the Bombardier BAT business acquisition and the higher usage of cash to fund working capital in the first half of the year.Since we adopted IFRS 16, effective April 1, 2019, net debt now also includes obligations under lease contracts, which were previously accounted for as operating leases and therefore not included in debt. Excluding this impact, the net debt-to-capital ratio would have been 46.3% this quarter.Return on capital employed before specific items, and excluding the impacts of IFRS 16, was 12% (sic) [ 11.9% ] this quarter, a bit lower than the 12.6% last year. As we ramp up the large Bombardier BAT business acquisition, we continue to target 13% return on capital employed by fiscal 2022.Now looking at our segment performance. In Civil, first quarter revenue was up 11% year-over-year to $477.6 million and operating income before specific items was up 29% to $101 million for a margin of 21.1%. From a mix standpoint, simulator product deliveries were lower compared to the first quarter last year as we expected, while training services growth was especially strong with our expanded capacity. On the order front, Civil book-to-sales ratio for the quarter was 1.4x (sic) [ 1.45x ] and for the trailing 12 months was 1.54x.In Defence, first quarter revenue of $320.5 million was up 19% over Q1 of last year, while operating income was down 30% to $15.1 million, for an operating margin of 4.7%. In Defence, product margins are typically higher than services, and the strong revenue growth in the first quarter was skewed to nearly 2/3 services and I'd add, mainly on new awarded service programs during the early stages of profitability ramp-up. The lower segment operating income in the first quarter reflects this mix as well as the second-half-weighted timing of product -- program milestones we plan to achieve on the higher-margin product contracts already in our backlog.The mix imbalance in the quarter also reflects some variability in the timing of new product orders we expect to conclude during the course of the year. The Defence book-to-sales ratio was 0.68x for the quarter and 0.83x for the last 12 months.Lastly, in Healthcare, we continue to ramp up scale, with a first quarter revenue of $27.5 million, which is 21% higher than the $22.8 million in Q1 of last year. Healthcare segment operating loss was $2.8 million in the quarter compared to a loss of $1.3 million in Q1 of last year, mainly because of higher investment in SG&A to support a larger business.With that, I will ask Marc to discuss the way forward.

[Marc Parent, President, CEO & Director]

Thanks, Sonya. We continue to see good momentum with our training strategy, which is supported by secular growth trends across all of our markets and underpin CAE's investment thesis.In Civil, market fundamentals remain supportive, with long-term passenger traffic growth and an expanding global in-service fleet of aircraft. Civil aviation is a highly regulated industry, and the aviation safety imperative underscores the criticality of pilot training. This also -- it also brings to bear the essential role that CAE plays in helping to maintain the safety of the global air transportation system.We're a pure-play aviation training company that's well defined as an innovation leader. Our airline customers face ever more complex challenges that require new approaches and comprehensive solutions. We have the largest and broadest global training network, coupled with market-leading simulation products and support. And as we look ahead, we expect to see more airline outsourcing opportunities materialize from the large pipeline of long-term training partnerships.With worldwide demand for approximately 300,000 new first officers forecast for the next decade, CAE is increasingly the partner of choice offering the industry's most comprehensive Cadet-to-Captain training solutions, and we do this on a global scale. We're actively taking a leadership role to ensure that our industry has the qualified pilots it requires.With women accounting for only 5% of all commercial pilots, we're determined to draw in the full available talent pool. Among several other initiatives underway, the CAE Women In Flight scholarship program encourages women to become professional pilots. We recently announced the launch of a cadet pilot training program, where CAE will train more than 700 new professional pilots over the next 10 years for Southwest Airlines as part of their Destination 225 program. Our collaboration with Southwest is yet another great example of our commitment to source, train and maintain pilots to support the industry's demand over the long term.For Civil overall, we continue to expect operating income to grow in the upper 20% range on continued strong demand for our training solutions, including maintaining a leading share of full-flight simulator sales and the integration of the first full year of the Bombardier business aircraft business.We expect to complete the integration of this business over the coming quarters, and we continue to expand our market addressability with the operators of the nearly 5,000 Bombardier business jets worldwide.In Defence, we're continuing to pursue a large market, with over $4.2 billion of Defence proposals in the hands of customers' pending decisions. Like civil aviation, defense forces around the world also face the challenge of training and maintaining sufficient numbers of critical personnel, specifically pilots. I remain encouraged by the large pipeline of opportunities to support our Defence customers, and we expect to continue winning our fair share by building on our successes as a training systems integrator.As in previous years, the full year will be more representative of the Defence segment performance. We continue to expect Defence to generate mid- to high single-digit percentage operating income growth this year as we deliver from backlogs and continue to win orders.And finally, in Healthcare, I'm pleased that our new products and strengthened [ front-end ] organization are bearing fruit and confident that this will continue. For the year, we expect double-digit percentage growth, and we remain confident of the long-term prospects for Healthcare to become a more material part of CAE.In summary, we remain on track to deliver on CAE's growth outlook for the year, with the benefit of an increasingly recurring base of business and markets with significant headroom for CAE to expand its shares, and we look forward to superior top and bottom line growth in the years ahead.Before I conclude, I want to thank Kate Stevenson, who retired from CAE's Board of Directors today. Kate is stepping down, having reached her 12-year term limit. During her tenure as a director, CAE has transformed itself to become the world's largest civil aviation training company. I also want to welcome Marianne Harrison, who was appointed today as a new CAE director. Marianne is President and CEO of the John Hancock Life Insurance Company and is a chartered accountant and fellow of the profession. She brings a wealth of financial and strategic acumen to the role, and we look forward to benefiting from her insight and good governance.With that, I thank you for your attention, and we're now ready to answer your questions.

[Andrew Arnovitz, Vice President of Investor Relations & Strategy]

Thank you. Operator, we're now ready to take questions from financial analysts and members of the financial community.

[Operator]

[Operator Instructions] And our first question is from Kevin Chiang with CIBC.

[Kevin Chiang]

Maybe just turning to Civil. I was wondering if we were to back out the Bombardier training acquisition, what would have organic revenue growth, both on the operating income line and the revenue line, looked like? Or maybe conversely, what did BAT contribute to both those line items, both Civil revenue and Civil operating income, if you could share that?

[Marc Parent, President, CEO & Director]

Well, I think if you're trying to maybe back out, which I assume is to back out the benefits of the Bombardier Business Aircraft Training business. I'll start by saying that, that business is going very well and the integration, if anything, is going ahead of plan. I was quite happy with that. And I think when you look at the numbers, I think what we could tell you is that business is performing very well organically. The training business itself is going, as we expected, by double digits, top and bottom line. What you -- when you look at the results, I would ask you to bear in mind that in the quarter, we delivered a lot more -- less simulators in the quarter, mainly it's just because of the timing of the deliveries to the customers. We delivered 5 in the quarter relative to 12 last year. And as you know, with the way we account for those, we only account for them at delivery. So I think going back to the question, organically, the business is performing very well.

[Kevin Chiang]

Okay. That's helpful. Actually, do you have a sense? Is the idea to basically deliver a similar number of simulators for the full year '20 as fiscal 2019?

[Marc Parent, President, CEO & Director]

Yes.

[Kevin Chiang]

Yes. Okay. And then a bit of a nitpicky question. But utilization was down about 4 points year-over-year. Just wondering what drove that. Was it a mix issue because you had folded in the Bombardier assets? Or was it -- is there something else at play there to drive that 4-point decline?

[Marc Parent, President, CEO & Director]

I think that -- the main issue that drives that is, first of all, I'll say the utilization's quite high. And what you're not seeing there, to your question, is because we deployed about -- from about 260 to 294 in the past year, with several of those deployed in the last 2 quarters. So what you're just basically seeing is just a ramp-up of sims that have just been put in. They're [ operating low, ] but the network itself is [ operating ] very, very high utilization.

[Kevin Chiang]

Okay. That's great color. And maybe just more of a clarification point. I did not see it in your MD&A, so I apologize if it's there. Did you provide -- or did the impact of IFRS 16 have any material impact on the reported EBIT relative to the year-over-year comp? Was it -- I don't think I saw it in the MD&A.

[Sonya Branco, VP of Finance & CFO]

So Kevin, I don't think, on the whole, it did not have a material impact on the SOI or EPS. It's a little bit of a [ headwind. ] But for the year, what we had said last quarter is that we'd have a bit of a headwind of that $0.01 to EPS for the year.Now in the comparison year-to-year, I think on the balance sheet, it's where you'd see the most impact with the increase on the right-of-use assets and the debt. But we've kind of -- we've given you the metrics adjusted for the IFRS 16 elements on the balance sheet.

[Operator]

Our next question is from Cameron Doerksen with National Bank.

[Cameron Doerksen, Analyst]

Just really 2 quick ones for me. Sonya, you mentioned or talked about the working capital investment in Q1. It does seem as though that it was sort of larger than what we would normally see in the Q1 significant working capital investment. Was there anything unusual in Q1 that would have driven that?

[Sonya Branco, VP of Finance & CFO]

No. Nothing overly unusual. I mean we always usually see a negative free cash flow investment in working cap in Q1, in fact, for H1. What we -- what I called out in the remarks was a higher level of work-in-progress simulators. So these are simulators that are going to production [ tech ] to clients. And given that we had lower deliveries this quarter, hence they didn't turn into revenue and of course, AR and cash flow. We expect those to be delivered over the next few quarters, so really just a question of timing.

[Cameron Doerksen, Analyst]

Okay though. That's great. And just sort of secondly, just really had some modeling questions. Just maybe talk about the depreciation run rate. Would the number that we saw in Q1, is that actually a good run rate to use kind of on a quarterly basis for the full year?

[Sonya Branco, VP of Finance & CFO]

I think, yes, it's quite indicative. Ultimately, you have 2 factors in there. You have the impact of IFRS 16 and the added depreciation because the assets are now on balance sheet and of course, the impact of the intangibles from the acquisitions from last year, mainly the Bombardier business jet training acquisition. So I think you can use that as a good run rate.

[Operator]

And our next question is from Konark Gupta with Scotiabank.

[Konark Gupta, Analyst]

So on the Civil side, I just wanted to touch base on the margin side. Can you hear me okay, Andrew?

[Andrew Arnovitz, Vice President of Investor Relations & Strategy]

Yes, we hear you loud and clear. Just go ahead.

[Konark Gupta, Analyst]

So on the Civil side, the margins look pretty strong. And I guess Bombardier acquisition helped there. So I just wanted to understand, this is 21% in Q1 and it's already pretty strong. And seasonally, you always have second half much stronger. So what are your expectations around the Civil segment margin for the full year? Can we see something like 22%, 23%? Is that a possibility over time?

[Marc Parent, President, CEO & Director]

Well, I think that -- Hi, Konark. I think what you're seeing, again, in the Q1 in terms of the margin is the proportion that's coming from training, which is higher margin and profits. You'll remember, I was saying, when answering Kevin's question, that we only did deliver 5 simulators in the quarter versus 12 last year. So although it's good margins, and [ probably, ] it's not as good as service, as training, so I think you're seeing a bit of that. And I think, for the full year, I think we continue to just guide to absolute operating income goals rather than margins, notwithstanding, I think margin will be good.

[Andrew Arnovitz, Vice President of Investor Relations & Strategy]

The only thing I would add to that is as we said when we introduced the Bombardier business jet training business is that, that would have the effect of about 100 to 150 basis points of margin accretion.

[Konark Gupta, Analyst]

Okay. That's good. And I just want to clarify, was there any impact of Boeing's 737 Max in the Civil segment? Because, obviously, they're still grounded and airlines are not taking deliveries right now. So is there any reduction in training in Max and if there's an offset in training other aircraft types?

[Marc Parent, President, CEO & Director]

Not really. There's not much of an impact for us, positive or negative. I think, in the quarter, that materiality, I think we continue to deliver Max sims. I think we'll deliver, for this quarter, 8 or -- how much we think we'll deliver? Probably -- yes, we expect to deliver probably 8 737s in the next quarter. So we already delivered a bunch, so that's not slowing down. You saw we sold 4 Max simulators in Q1, which is about what you would expect when you're considering the number of aircraft that have been sold on orders. Bottom line it's not really materially affecting our results one way or another right now.

[Konark Gupta, Analyst]

Okay. That is good color. And then lastly, on Defence. So I think there was a note in the MD&A that you had some dilutive impact of fair value revaluation of share-based payments. So can you clarify what is that? And is that nonrecurring in nature, or can we expect something in the next quarter as well?

[Sonya Branco, VP of Finance & CFO]

Well, it's not indicative of a continued run rate. There was a bit of a timing spike in the quarter because of the appreciation or the steep appreciation of the share -- in the long-term incentive plans, would get mark-to-market with the share price. So there was a bit of a steeper timing on those costs for the quarter.

[Konark Gupta, Analyst]

Okay. That's great. And do European services programs continue to show weakness, I think, in the Defense side. Any thoughts there, Marc, why Europe is weak here, is it a particular program you see, or it's general market weakness?

[Marc Parent, President, CEO & Director]

Where do you see European market?

[Sonya Branco, VP of Finance & CFO]

In the MD&A.

[Marc Parent, President, CEO & Director]

In the MD&A. Okay. Well, I think [ maybe ] would talk about timing on orders. I think the whole situation that you see with regards and why we backed up -- what we said -- we said that the year would be back end-loaded and we're seeing it. When you look at the -- what we've done this quarter on Defence, you have about 2/3 of our revenue in the quarter coming in from services, which is lower margins, and the programs going through were still in the early stages of the profitability ramp-up. And we just haven't been able to make the progress in the quarter on certain programs either because we weren't able to achieve the milestones that we needed to be able to book a good portion of revenue for a variety of reasons. I'll give you one. The aircraft program is not a reach their milestone, so we can't reach ours. So we don't have a -- the information we need, whatever. And a lot of times, all you need to do is [ to miss ] the end of the quarter. That [ said ] it moves to the next quarter. And some orders that we expected to get were delayed, and we're getting them later. So I think in terms of Europe itself, it's not a European phenomenon, it's timing. The only other thing I'd tell you is that in terms of backing up our optimism of why it's back end-loaded is that, of course, we know what the backlog is and we have a pretty good idea of when we'll be able to achieve the milestones in which we book revenue and earnings. And also, we need to -- we always need to win, continue to win orders in a year, particularly on products, because a portion will materialize in the year. We're pretty confident of that, about that, because the great majority, over 90%, are what we need to generate from orders that we don't have in our hands right now, we've already been selected. So it's not a question of whether we'll win or not, it's just the uncertainty of when exactly is the training -- is the contract that we sign. So we don't [ actually ] control all of that, but we've made some pretty fair assumptions that we feel confident about, that which gives us -- those 2 factors give us the confidence, having done an exhaustive detailed analysis, of course, of why we feel comfortable with the outlook that we've maintained.

[Operator]

And our next question is from Benoit Poirier with Desjardins Capital Markets.

[Benoit Poirier]

Just to come back on the Defence margins. You seem quite confident that the revenue mix will be more favorable going through the second half. Could you maybe provide some color with respect to how much of the products, the revenues are already booked in the backlog right now or whether you need still to gain a lot of business to achieve this milestone?

[Marc Parent, President, CEO & Director]

I don't -- I'll turn it over to -- I don't think we can give the amount of -- in absolute terms, but the confidence comes from what I was just saying there. [ So the color now ] is that the amount of uncertainty we would have with regards to the products ordered that we need to get this here is -- what the confidence we get is because we're selected. We're already selected on over 90% of those orders. So we're going to get that business. So the only uncertainty that remains is when you're actually going to sign the contract.So I mean, we're not totally, obviously, in control of that, right, the customers, that can handle the customers as well as ourselves. But the assumptions we've made are based on very good [ intelligence ] because these things are near term. The other thing as well is that doesn't include the fact that the orders that we haven't been selected on but we have a very strong backlog of pipeline I should say, we got $4.2 billion of proposals that are out there that are awaiting decision. So some orders that potentially that we'll win, that would just add to the confidence that we have of meeting the outlook that we have. So those are reasons we're confident. And I'll tell you, Benoit, we saw this last year, and we saw this [ here ] before as well. And I think we're kind of at the same place, except that I would say that we're -- if I just sort of compare it to last year, we're picking up this earlier in the year, so I think it gives us even more time to materialize the outlook that we have.

[Sonya Branco, VP of Finance & CFO]

And if I just -- and just to add to your question on how we make it up, this order intake, but -- we have a very detailed plan to make up the advancement on the product programs during the course of the year, but more weight on the second half. But -- and given the higher margins of these programs, the contribution is disproportionate and will make up on the operating income and the margin.

[Benoit Poirier]

Okay. That's great color. And related to the Boeing 737 Max there. There's a lot of discussion on whether there will be a requirement for additional training. So I was wondering if you could maybe provide some color about what would you expect in the next 12 to 24 months and how much 737 Max simulators do you have in your backlog right now.

[Marc Parent, President, CEO & Director]

Well, I think that, look, we'll have to wait and see what the regulators say when the airplanes start coming back, when they're cleared for flying in the various jurisdictions. I mean we sold the great majority of the simulators that are out there. We certainly expect to continue to be successful like we have on the rest of our platforms.So I think it's a wait and see. And clearly, there's going to be a lot of training to be done when the simulators -- when the aircraft are cleared. So I would see pent-up demand there when airlines start to fly. That I would expect, so -- but I have no color more than anybody else does on what the authorities will ultimately decide on what training is done on what simulator.

[Benoit Poirier]

Okay. That's perfect. And on the civil aviation side, Marc, you mentioned that you expect more outsourcing of opportunities with the airlines. So are there any particular region where you expect to see to be more active? And in terms of simulators order, do you still feel confident that you can achieve a 60-plus this year in terms of booking?

[Andrew Arnovitz, Vice President of Investor Relations & Strategy]

Benoit, it's Andrew. Actually, what we've said, as we've said in previous years, is that we'll maintain a leading share. I think what I would look to is aircraft deliveries which are still -- at a relatively high rate, ex the temporary setback in Max deliveries, and that it relates certain level of -- sustained high level of demand for full-flight simulators. So what that will precisely be, I guess, will become clearer as the year progresses. But we see a pretty good run rate.

[Benoit Poirier]

Okay. That's great. And on the Healthcare, we saw a nice pickup in revenues. Margin, negative, but I assume it's typical seasonality, so do you still feel confident that the double-digit growth can also be achieved on the operating income side?

[Marc Parent, President, CEO & Director]

Yes, absolutely. We're quite encouraged with the programs that our new leader, Rekha Ranganathan, is making with her team and the experience that she brings from her senior leadership -- or senior levels in Philips and other companies. So definitely, we're seeing the momentum there, and I would expect that to continue.

[Operator]

[Operator Instructions]

[Andrew Arnovitz, Vice President of Investor Relations & Strategy]

Operator, if there are no more questions from members of the financial community, we'll conclude this part of the session and open the lines for questions from members of the media.

[Operator]

There are no other questions on the phone lines from participants, sir.

[Andrew Arnovitz, Vice President of Investor Relations & Strategy]

Okay then. Well, I'll thank all participants for joining us this afternoon and remind you that a transcript of today's call will be made available on CAE's website at cae.com. Thank you.

[Operator]

And ladies and gentlemen, that concludes the call for today. We thank you for your participation. Everyone, have a great rest of your day. You may disconnect your line.