Good day, ladies and gentlemen. Welcome to the CAE First Quarter Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Andrew Arnovitz.
You may now proceed, Mr. Arnovitz.
Thank you, Julie. 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 2018 and questions to answers, contain forward looking statements. These forward looking statements represent our expectations as of today, August 10, 2017, 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 risk factors and assumptions that may affect future results is contained in the annual MD and A available on our corporate website and in our filings with the Canadian Securities Administrators on SEDAR and the U. S. Securities and Exchange Commission.
On the
call with me this afternoon are Marc Caron, CAE's President and Chief Executive Officer and Sonia Brancou, our Chief Financial Officer. After remarks from Mark and Sonia, we will take questions from financial analysts and institutional investors. And following the conclusion of that Q and A period, we will open the call to questions from members of the media. Let me now turn the call over to Mark.
Thank you, Andrew, and good afternoon to everyone joining us on the call. I'll first discuss some highlights of the quarter and then Sonia will review the detailed financials. I'll come back at the end of the presentation to talk about the new strategic developments we announced earlier today and then I'll conclude with some comments about the way forward. Our progress to date in all three segments continues to support our full year outlook for growth and profitability. The Civil business showed very good momentum in the Q1 with strong top and bottom line growth on good utilization in our training centers.
In defense, although we didn't grow the bottom line in the quarter, I'm satisfied with our progress in view of our full year plan. Defense can be lumpy on a quarterly basis and in the Q1 we are beginning to ramp up a number of new development programs for backlog. Overall for CAE in the quarter, we grew operating profit by 10% compared with last year and we continue to enjoy strong demand from customers to our innovative training solutions. In Civil, we booked $400,000,000 in orders including 8 full flight simulators and several long term training agreements with airlines and business aircraft operators. For the quarter, Civil grew segment operating income by 15% and filled its training centers to 78% utilization.
In defense, we booked orders for $262,000,000 including a training systems integration contract with the UAE on the Predator XP. Other notable wins include an in service support contract for Canada's fixed swing search and rescue training program and contracts involving C-130J fuselage trainers for the U. S. Air Force and U. S.
Marine Corps. We're also very proud that the first cohort of U. S. Army students went through the new initial entry fixed wing course at our Alabama Training Center and successfully graduated to become Army Fixed Wing Aviators. And finally in healthcare, we had higher expenses in Q1 related to the ramp up of an expanded sales force and the launch of an important new simulator CA Juno, which becomes which begins delivery in the Q2.
We specifically designed Juno for nursing education, which represents the largest addressable market in the healthcare education market. With that, I'll now turn the call over to Sonia, who'll provide a detailed look at our financial performance. I'll return at the end of the call to comment on our outlook. Sonia?
Thank you, Mark, and good afternoon, everyone. Consolidated revenue for the Q1 was $698,900,000 and quarterly net income was $63,800,000 or $0.24 per share. This compares to $0.26 per share in the Q1 last year, which is before specific items and includes the recognition of a deferred tax item. There were still some timing differences this Q1 with respect to the recognition of revenue on our standardized commercial simulators. This resulted in deferral of approximately $0.03 of earnings per share.
For the year as a whole, we expect these timing differences to be relatively neutral as we deliver more of the standardized products. Income taxes this quarter were 14,600,000 dollars representing an effective tax rate of 18% compared to nil for the Q1 last year. Excluding the deferred tax item, the comparable tax rate last year would have been 14%. Free cash flow was typical of CAE's first half of the fiscal year as we usually have a higher level investment in non cash working capital during this period. 1st quarter free cash flow from continuing operations was negative 37,900,000 dollars compared to positive $15,500,000 last year.
As in previous years, we expect a portion of the non cash working capital investment to reverse in the second half. Uses of cash in Q1 included funding capital expenditures for $49,100,000 mainly for growth we distributed $21,000,000 in cash dividends. We used another $2,700,000 to buy back stock under the NCIB program. Now looking at our segmented performance. In Civil, we maintained a strong growth in Q1 with revenue up 11 percent year over year to $411,800,000 and operating income up 15% to $73,100,000 for a margin of 17.8%.
Before the deferral impact on the recognition of standardized products, Civil revenue and operating income would have been $452,000,000 $83,700,000 respectively for a margin of 18.5%. On the order front, the Civil book to sales ratio for the quarter was 0.97x and for the trailing 12 month period it was 1.07x. Civil backlog at the end of the quarter was $3,200,000,000 In Defense, the Q1 revenue was up 2% over Q1 last year to $263,200,000 while operating income was down 7% to $26,300,000 for an operating margin of 10%. The quarterly variability we often see in defense is driven by product service mix and the timing on reaching certain program milestones. In the Q1, profitability was impacted by the kickoff of a number of new programs won late in the last fiscal year, which involves R and D expenses as part of their start up.
To name a few, these included the Canadian fixed wing search and rescue training program, the UAE Naval Training Centre and training systems for the Predator XP and Predator Guardian UAVs. As well, the business units faced an additional headwind this quarter in the form of higher SG and A expenses. Specifically, the share based payment expense was $17,500,000 compared to $8,700,000 last year. The increase was driven by the sharp appreciation of CA's shares and the mark to market fair value revaluation of our existing long term share based payment plans. Approximately 40% of this total expense was allocated to Defense.
The Defense book to sales was 1x for the quarter and 1.31x for the last 12 months. Defense backlog at the end of the quarter was 4,100,000,000 dollars And finally, in healthcare, 1st quarter revenue was $23,900,000 compared to $22,700,000 in Q1 last year. Healthcare segment operating loss was $1,600,000 in the quarter compared to a loss of $100,000 last year. The loss in the quarter results from higher initial expenses associated with expansion of our sales force and the development and launch of our new product CAE Juno. With that, I will ask Mark to discuss the way forward.
Thanks, Sonya.
Our outlook for growth this year remains unchanged and I continue to be encouraged by the positive response that we get from customers to CAE's innovative solutions. Underscoring our confidence in the way forward, CA's Board of Directors approved this morning a $0.01 increase to our quarterly dividend, which becomes $0.09 per share effective September 29. This marks our 7th dividend increase in the last 7 years. In Civil, pilot train demand continues to be well supported by high rates of commercial passenger traffic and continued stable aircraft utilization in Business Aviation. This past June at the Paris Air Show, CAE released its first ever CAE airline pilot demand outlook, our 10 year forecast for global pilot demand.
A compelling takeaway from this report is the need for 255,000 new airline pilots over the next 10 years. Another important consideration highly relevant for airlines and CAE is that half the pilots will fly the world's commercial aircraft in 10 years' time haven't yet started to train. These dynamics underscore the considerable value of our comprehensive cadet to captain solutions. CAE's broad global offering enables unmatched flexibility to adapt and evolve our solutions to fit our customers' needs. To that point, I'm very pleased with the new strategic developments we announced this morning involving airlines in Asia.
We signed a memorandum of understanding with Singapore Airlines to establish a joint venture to be operated out of the airlines Singapore Airlines Training Center near Changi Airport. This marks an important evolution in our relationship with 1 of the world's premier carriers. Once underway, the joint venture will serve the training needs for Singapore Airlines and SIA Group Subsidiaries, SIA Cargo, Silk Care and Scoot, as well as other operators in the ASEAN region. We also concluded a transaction with China Southern Airlines, whereby China Southern has acquired our share of the Zhuhai Flight Training Center or ZFTC for US96 $1,000,000 The evolution of this relationship means that CAE now has the flexibility to address the broader market in China and the ASEAN region as well. As part of this transaction, China Southern will outsource the CAE 3rd party airline training being conducted at ZFTC.
And in addition, we'll continue to serve China Southern as their partner for training service support, ABBY initial pilot training and for their simulation equipment needs. Also in response to reports by the media, we confirmed today that CAE and AirAsia are in advanced discussions to negotiate a sale and purchase agreement for CAE to buy AirAsia's 50% share of the Asian Aviation Center of Excellence Joint Venture or ACE. Our relationship with AirAsia began in 2000 and 4 and once a definitive agreement is reached, it would expand with an exclusive contract to fully outsource the fulfillment of all AirAsia Group's training requirements, including current and future affiliates in support of all the aircraft types that it operates for an extended period. What these developments have in common is that they serve to align our capital with our strategic priorities. They also closely correspond with our investment criteria for accretive growth in support of CAE's 13% return on capital target within the next 2 to 4 years.
Once completed, these transactions will offer us enhanced flexibility to further strengthen our position in China and the ASEAN region, which are the fastest growing commercial airline markets in the world. These are indeed exciting times for CAE and our Civil business as we look to grow our share of the large global aviation training market. Our outlook for the year remains unchanged and we continue to expect Civil to generate low double digit percentage operating income growth as we earn a greater share of wallet in training and maintain our leadership in simulator sales. In defense, we have a solid backlog and we expect to continue winning our fair share of programs from an active bid pipeline of over $3,600,000,000 The market is supported by the positive fundamentals of increased defense spending and an emphasis on mission readiness, which is a fundamental driver for training. We're very well positioned to continue growing our share in the large training systems integration market with our unique comprehensive training solutions.
Our outlook for mid to high single digit growth in defense this year on both top and bottom line remains unchanged and we continue to be bullish about CAE's long term prospects in this market. And finally, in healthcare, we're focusing on some of the largest value pools in the market like simulation based education and training for nursing. We continue to expect healthcare to resume growth this year on higher sales from our pipeline and the launch of new products, which will put us on a course for long term double digit growth. As we've said before, the key to our success here is higher volume. And with innovative new products like CAE Juno that we launched this quarter and our expanded sales force, we're confident we can access a larger share of the market.
In summary, we're experiencing a high level of activity in all segments of our business and we're on a quest to deliver on our outlook for the year. With that, I thank you for your attention and we're now ready to answer your questions.
Thank you, Marc. Operator, we'll now take questions from investors and financial analysts.
Thank you, sir. Our first question comes from the line of Turan Ketiwala with Scotiabank. You may proceed with your question.
Yes, good afternoon. Thank you for taking my question. I just want to I had a quick one about, I guess, can you talk a little bit about what the incremental would be required for some of these new relationships, I guess, with AirAsia buyout as well as with Singapore Airlines?
Hi, Cheren. So one of those transactions with AirAsia is still very much an active deal. So I think you'd understand that we wouldn't want to comment. Other than the as we said, they are in line with the criteria that we set for ourselves for accretive return and a target of 13% of return on capital over the medium term. Now with Singapore Airlines, we are at the MOU stage, but the expectation on the investment will be about $20,000,000 to $25,000,000 by each of the partners.
But in our case, we'd be contributing assets.
Okay. That's helpful. Thank you. And then I guess, I know you talked about the return.
And that is so I wouldn't expect this to be a matter of new capital, but rather kind of portfolio shaking. I would look at it that way.
No, understood. So you had the $96,000,000 from the Zhuhai, right?
That's right.
Okay. I guess, would you be booking a gain on that Zhuhai sale?
There will be a gain on divestiture. We are finalizing that to get an extent of the gain with all the post closing adjustments. And so we'll be finalizing that and reporting it out in Q2.
Great. Okay. And maybe if I just ask one more in terms of is this China Southern, is this sort of a one off? Or are you seeing kind of more airlines looking at maybe taking it back in house?
No, it's not. To me, look, I think just look at what we're happening is 3 deals together, Turan. I mean, look at, for example, AirAsia, what you see and I've had this conversation directly with the CEO, Tony Fernandez at AirAsia, I think it's very positive. When you look at it, what they're doing there and of course, we're still at the MOU stage, but I think, I mean, they and he has already been pretty vocal on this is they're so confident in the training that's being provided by CA, the joint venture that not only do they now have a high quality training operation for all of AirAsia and its affiliates and affiliates to come, but they have an opportunity, if you like, to monetize the value that they've created. And so for us, this is a nice story.
And in exchange, I think that we're looking at an expanded contract. Again, we get short on details right now because we haven't finalized it, but I see this as a good story. And both of these deals together and to a certain extent, Singapore Airlines, I think the thing to remember of this is that it gives us now, if you like, unfettered access to the markets in ASEAN and in China, where we had exclusivity agreements with both of those airlines. So you can so I think this is a good news story. In fact, I'm very happy with it.
Okay. Thank you very much, Mark. That's helpful.
Our next question comes from the line of Cameron Doerksen with National Bank Financial. You may proceed with your question.
Yes, thanks very much. I just wanted to maybe follow on with the questions on the, I guess, portfolio readjustment in Asia. Maybe just firstly on the AirAsia. I know, again, it's still not a done deal, but can you
maybe just describe how this would
be an expansion, I mean, beyond just you taking the 50% you don't own? Is it the fact that you're not doing all of the training currently in that operation for AirAsia and this would be basically expansion to all of their pilot training?
Well, I think that we are currently already doing their training. The training is outsourced. Now we're not doing all the training for all the affiliates and that will become part of the deal. We you will know that I mean AirAsia is going to be is one of the airlines that's expanding the most in the world actually, and they're going to be taking a lot of airplanes over the next few years. So between the growth of AirAsia itself and the fact now that we are even though we will be continuing to doing AirAsia's training because they have full confidence in us and we have this such a fantastic relationship built since 2004 that we'll have a long term training contract for them and their affiliates, which of course and I should point out that in their case, it's not only flight crews, it's maintenance technicians, it's flight attendants, it's actually even manager training that we do there.
But we now have access to all the other airlines in the region that since now it's only CE, in some cases, it's maybe slightly more attractive for them to become trained with us. And we don't have any exclusivity in the region that we've had in the past. So clearly, you would expect this to be growth.
Okay. And maybe just secondly, I guess, just on the sale of the Chime Southern JV. You've mentioned that it helps you maybe address the China market more broadly. Can you just maybe explain how that is the case? I mean, were you restricted in pursuing other airlines in China?
And do you have to do you think you have to have a physical presence in China to address some of the pilot training demand there?
Well, look, I think that we continue we serve the training market in China, for example, center in Hong Kong. But I mean, I think what's to go reflect on the whole story is we've built a great operation, a very successful operation with China Southern called ZFTC. We're very happy. I think this deal is win win. And in the case this was our 1st joint venture in training.
We changed our strategy over the years, especially in the last 3 years, where we're very focused on trading. China Southern wants to as we said in the press release, I think China Southern wants to focus on training as they want to just concentrate on their own operation. They're not interested in running this as a profit operation, a profit to make profit, if you like. We will continue to deliver the 3rd party training as part of the agreement in the excess capacity China Southern. And clearly, I don't want to say too much, but clearly, we did have a factual, we did have an exclusivity.
Again, it was the first one in China. We did have an exclusivity. Now we don't. So clearly, China is a big market and it will be one of the largest markets, the probably largest market in the world. So you would expect that we will want to, yes, at some point set up shop there.
I would consider that very highly likely before too long.
Okay. Very good. Thanks very much.
Our next question comes from the line of Fadi Chamoun with BMO Capital Markets. You may proceed with your question.
Yes. Good afternoon. So I want to go back to this Asian strategic changes there. So is it fair to say that you see approach those 2 JVs with the high one and Air Asia one to change the structure because you wanted to open the market and remove that exclusivity. Is that how we approach this?
No. We have an ongoing dialogue with this airlines over the years. I mean, in the case of specific events that in the case of AirAsia, I think the fact of the matter is, is that the CEO, I guess, the airline itself wants monetize assets that they have had. I think they've done it with other parts of their portfolio. I think their travel agency programs they've done.
And here, again, I'm just quoting the straight conversation I had with Tony Fernandes, in their case that they wanted, they saw an opportunity to monetize the value that we both have created together in this training center. And for us, not we get a very highly valued asset and we get a long term training agreement out of this with China Southern sorry, with AirAsia. In the case of China Southern, I mean, we had a point in our relationship that in our Gen venture where we were basically we're coming in to a 15 year point in relationship where we had the conversation, do we continue as we go and or not. And I think that joint ventures in the end, you'll know it's really how are the interests of the parties aligned. Are you strategically aligned?
And as I mentioned, this was our first training joint venture that we had. It was the first one in CAE's portfolio. At the time, we're a products company and we've sold and it's been very highly successful. We've created to a very highly to quote the CEO of or President of China Southern, a very highly successful pilot training facility, it's been a great outlet for CAE products. We sold all of the simulators that are in that training center.
And so going forward, I think the interest of China Southern and ours are going the way that where our strategy is. And China Southern wants to concentrate on its training as a cost center, whereas we want to run a profitable profit making operation as of course as we do in the rest of the business. And so it was a good time to go the way our respective way in that sense. But at the same time, it's an evolution of the relationship. As I said, we're going to sell excess capacity at ZFTC.
We're going to continue to be their partner for Avenue Steel Pilot Training and equipment, so and support. So again, I think it's great win win for both airlines for both parties.
Okay, great. But it also means that those 2 airlines, that Asia and China are basically not really interested in participating in the profit of the JV. They want to run the training and we've in the past saw that this is like a big selling point when you approach an airline to outsource their training. Is that not the case?
Well, it continues to be I think it continues to be a strong selling point. I just emphasize the fact that we're just doing it with Singapore Airlines, which is one of the premier carriers in the world. And I would disagree with you in the case of AirAsia or just point out that they're monetizing their assets. So they're taking the value that is being created not only now, but in the future, they're monetizing that value now. And I think at the same time, they continue to retain the same service that they have with us, which is the train that we provide.
And we get a long term contract. So to me, that sets a great precedent for our business.
Yes. So thanks for that color. But one more quick one for Sonia. So the Zohai is probably a negative in terms of the contribution from the high going away and then Asia, I guess, positive. Like, is all of this big sort of a wash as far as the guidance goes for this year or?
Yes, it is. So we're maintaining our outlook. Now there is a positive contribution from Zhuhai that would go away. But with these deals upcoming, they would relatively offset.
Okay.
And if you're looking for color, I won't give you exact numbers. Out of Zhuhai, it was a dry lease operation that we ran. And so if we take just that dry lease operation, so no consideration for sales of simulators, which I remind you will now consolidate at 100% instead of $0.50 But if you take just the training operation on a run rate basis, it's $0.04 a share. So for this year's half year, so you can assume that $0.02 a share is lost from that. So clearly, we're maintaining our outlook.
So we think it's going to be made up.
Okay, great. Thank you very much.
Our next question comes from the line of Benoit Poirier from Desjardins Capital Markets. You may proceed with your question.
Thank you very much and good afternoon. Just to come back on the previous discussion, I was wondering if those discussions are mostly with emerging markets? Or do you see kind of a trend across airlines outside of Asia, Mark?
No, I don't think the dynamics have changed. These so the discussions are very opportune for airlines that don't have the infrastructure, such as we've never created the infrastructure or we started with them from the beginning and their carriers are taking on a lot of aircraft. So I don't think the dynamics have changed much.
Okay, perfect. And with respect to the proceeds that you're going to be receiving, the US96 $1,000,000 do you intend to place those proceeds in the coming year? Or it will take some time before you kind of use them?
Well, we'd expect to be using a portion of those proceeds in the upcoming AirAsia transaction. So to the point that we're essentially a portfolio shaping in our view.
Okay. Okay. And those transaction would expect they will be closing in Q2. Is that fair?
So the Zhuhai divestiture closed today as of August 10, and it is we're ongoing in discussions with AirAsia.
Okay, perfect. And now if we look at Elkare, obviously, margins were below expectation. Just wondering about the implication of the simulator Juno implementation. How should we be thinking about the margins going forward? Just wondering if the this particular simulator has lower margin or it's basically ramping up volume that gives you confidence that margins will rebound?
No, I think it's exactly that. No, the simulator, we don't we're not anticipating as low margin. What you're seeing mainly in the quarter is all the costs associated with the development ramp up and launch of Juno, which together just those costs alone, Q1 is about $1,700,000 And yes, I mean, the key here as I said in my preamble, the whole it's all about volume here. The products in healthcare by themselves, there's not a product in there that doesn't have a good gross margin and Juno is no exception right off the bat. So we can be halfway successful in our ambitions of selling more, which we very much believe that we will through because the market is there.
We've increased we've got great product for the market, been very well received and we've got the sales force to do it. So and we're ready to produce it. So that's where the expansion in revenue and earnings will come from.
Okay. And when you say that you remain confident to grow LKAR, are you talking both in terms of top line and operating income for the year, Mark? Well, per outlook. Yes, for the outlook for healthcare, yes.
Yes, we mean both.
Okay. Perfect. And last one for me. There's a lot of discussion around M and A activity between UTC, Rockwell, Collins. So any thoughts, Mark, on how this could impact CAE and valuation multiples?
Well, you'd be better placed to tell me about that. But I don't see it affect us right now. I mean, they play the game when they are.
Okay, perfect. Thanks for the time.
Our next question comes from the line of Chris Murray with AltaCorp Capital. You may proceed with your question.
Thanks folks. Just maybe cleaning up a couple of other housekeeping questions. Sonia, can you just kind of walk us through the calculation of the stock based comp? It would have been something I would have thought there would have been kind of a quarterly accrual for, but if
you can just explain why
we had such a big jump in the quarter that would be great?
Sure. And you're right, there is a quarterly accrual and that's what's driving that expense. So the expense that you see really the sharp appreciation in the share price and the speed of that appreciation. So in just 1 quarter, there was a significant appreciation. And so you have that basket of all the existing plans, which include many years of outstanding units and plans, which were revalued all in 1 quarter to a mark to market with the revised the updated share price.
So what this does is resulted in unusually higher expense in just 1 quarter and resulted in year on year $9,000,000 headwind to both business units.
Okay. So should we think about like if we look at
the magnitude of change between, I guess, the end of March and the end of June, that $9,000,000 would kind of be the sensitivity based on the change in stock price. So should we just be starting to bake that into your SG and A comp? Is that the right way to think about it?
There's various variables to that compensation and so share price is one of them. So that's not the only one. So I don't think that would be an absolutely best measure. So while it would be indicative, I don't think you can kind of do just a straight up regression on that.
Okay, fair enough. And then Mark, maybe another question, a little more longer term strategically. Boeing came out towards the end of July and talked about the fact that it wanted to make a significant move into developing its own avionics suite. And as part of that, driving more aftermarket, I mean, one of the things certainly that's always been great, Boeing's been at times a competitor, times a customer, times a supplier. So it's always interesting to see how this one evolves.
But do you foresee any longer term impacts in their decision to essentially take over the cockpit in its entirety?
No. I think the impact would if any, would be more towards the manufacturer of those type of equipment.
Yes. I guess I'm just thinking about like does that give them a leg up in future simulator design or avionics or almost shut you out of markets as they design their own stuff as they try to build more aftermarket support and services?
No, I wouldn't think so. I think the and look, the fact, as you mentioned, is Boeing is both a competitor and a partner, and we are a very good supplier. And like for example, we provide all of the simulators for them for the P8 Poseidon Airpath, which is a militarized 737. So no, I don't see that dynamic changing long term.
Okay, great. Thank you, folks.
Thank you. Operator, we'll conclude the Q and A session for investors at this point. If there are any other participants on the line who have more questions, I'll be available after the call. At this point, I would like to open the line to members of the media should there be any questions there.
Thank you. Our next question comes from the line of Peter Dijkmeier with IHS IHS Markit. You may proceed with your question.
Yes, good afternoon. I'm wondering if we could drill down a bit into the defense items. In particular, I'm wondering about if we could get an update on what's happening on your naval training facility that you guys are setting up, I believe, in Qatar? And whether or not you see that as a platform to develop further opportunities in the naval sector and whether this is a material thing that we should be thinking about when looking at your overall defense numbers going forward?
Well, I think we've made no secret that we have capabilities beyond air. So I think it is an important contract that we had with the Qatar Navy. It builds on a contract we had that we delivered last year for the Swedish Navy. And yes, we are bidding to provide training capacity both in the equipment and in services to navies around the world and because we see it as a good market. For example, here in Canada that the Canadian military is going to be upgrading its fleets over the next few years.
So I think clearly we wouldn't want to put ourselves forward. And by the way, I think you had a mistake and I repeat it, it's not Qatar, it's the UAE Navy.
Pardon me.
Yes. But so yes, so I think naval is it's in our portfolio and it's something that we have definitely had capabilities that are just carry over from our air experience both in products and services. So I think we provided a lot of value and that's what we were able to bring forward for the Navy in the UAE and I think that will continue going forward.
And how is that going in the UAE? What stage are
we at right now? Are you is
that center operational or is that
No, no. We just won the contract recently. We're in the startup phases. One of the programs that Sonia talked about with regards to where in the heavy R and D phase right now.
Okay. Thank you. Operator, if there are no more
a transcript of today's call is available on CAE's website at cae.com.
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.