Good morning, ladies and gentlemen. [Foreign language] Je suis Calin Rovinescu, président du conseil d'administration de CAE. Au nom du conseil et de l'équipe de direction de CAE, j'ai le plaisir de vous souhaiter la bienvenue à cette assemblée annuelle et extraordinaire des actionnaires 2025. L'assemblée aura lieu en format hybride, ce qui permet à tous les actionnaires et aux fondés de pouvoir désigner où qu'ils se trouvent d'assister, de participer en temps réel et de voter en ligne à l'assemblée par l'intermédiaire d'une plateforme, ou de se rendre sur place pour interagir directement avec les autres actionnaires, les membres du conseil et l'équipe de direction. Les invités peuvent également y assister par l'entremise de la webdiffusion en direct. L'assemblée se déroulera en français et en anglais. You can listen to the webcast and view the presentation slides in either French or English.
If you wish to change languages, click on the language icon shown at the top right side of your screen. Now for introductions. I'm here in Montréal, Québec, au Kahnawake territory, along with members of our executive management team, namely Marc Parent, our President and Chief Executive Officer, Matthew Bromberg, our incoming President and Chief Executive Officer, Mark Hounsell, Chief Legal and Compliance Officer and Corporate Secretary, who will be acting as Secretary of this meeting. Samantha Golinski, Vice President, Public Affairs and Global Communications, will be acting as moderator with respect to any questions you may have in the room or online. Thank you to our shareholders for joining us in person and to those tuning in from elsewhere around the world. Fiscal 2025 was a year of achievement and transformation. We delivered record results and executed a leadership transition that positions CAE well for the future.
This is a pivotal moment for the company. A new era of leadership built on the strong foundation of performance that defines CAE. Before I talk about what's ahead, let me take a few minutes to discuss evolving governance at the board level. After this annual meeting, I will become Executive Chairman of CAE. In this role, in addition to responsibility for the effective functioning of the board, I will remain engaged in the development and execution of the company's strategic initiatives. Beyond that, I'll also represent CAE globally, deepening relationships with investors, governments, defense, and security partners in a world of shifting priorities and new opportunities. Matt, as our new President and CEO, will have full responsibility for the company's daily management and to develop and execute the strategy supported by the leadership team.
Together, we will focus on shaping our long-term strategy, ensuring disciplined capital allocation, and creating sustainable value for shareholders. [Foreign language] De plus, Sophie Brochu assumera un nouveau rôle à titre d'administratrice indépendante principale, renforçant les meilleures pratiques en matière de gouvernance dans le cadre de notre nouvelle structure. Je vais maintenant prendre quelques instants pour vous souhaiter la bienvenue aux nouveaux administrateurs qui se joignent à nous depuis l'assemblée générale annuelle de l'année dernière : Peter Lee de Browning West, Katherine Lehman, associée à Palladium, et Louis Têtu de Coveo. Je profite également de l'occasion pour saluer les membres de notre conseil qui ont récemment quitté leurs postes. Au nom du conseil, j'aimerais remercier Alan MacGibbon pour ses années de service et son leadership en tant qu'administrateur et président du conseil. Nous remercions également les administrateurs Peg Billson, François Olivier, et David Perkins.
[Foreign language] Ils ont tous apporté une contribution précieuse au cours de leur mandat et ont contribué à la croissance de CAE. Merci! Ces changements s'inscrivent dans la continuité des valeurs de CAE et visent à renforcer la confiance en notre avenir. Avant de poursuivre, j'ai le privilège également de reconnaître une personne dont le leadership a défini CAE pendant plus de 16 ans, Marc Parent. Au fil des ans, Marc a reçu de nombreuses récompenses de la part de l'industrie. Il a notamment été intronisé en tant que Légende vivante de l'aviation et au Panthéon de l'aviation du Canada, et a été nommé membre de l'Ordre du Canada, l'une des distinctions les plus prestigieuses au pays.
[Foreign language] Étant moi-même un ancien client de CAE par l'entremise d'Air Canada, je peux vous dire que Marc est non seulement reconnu dans les secteurs de l'aéronautique et de l'aviation, mais il est aussi profondément respecté au sein de ces milieux. During his tenure and over two decades with CAE, Marc has transformed this company from a simulator manufacturer into a global training and mission systems powerhouse. He's widely credited with instilling a deeply customer-centric culture across the organization that continues to define how CAE's 13,000 employees serve partners and stakeholders every day. Today, approximately 60% of our annual revenue comes from recurring training services. With Marc at the helm, CAE's revenue has more than tripled over the last 15 years, from CAD 1.5 billion in fiscal 2010 to CAD 4.7 billion in fiscal 2025.
During that same period, CAE's stock price rose from approximately CAD 8 to yesterday's closing of about CAD 40 per share. Including dividends, this represents a total shareholder return of over 520%. Marc has strengthened our competitive moat, championed innovation, and ensured that CAE's purpose to make the world safer was always front and center. On behalf of our board, Marc, our employees, and our shareholders, thank you for your extraordinary leadership and enduring legacy. Now, let's look to the future. I'm sure that those that are online are clapping silently as well. Now, let's look to the future. Today, we proudly welcome our new President and CEO, Matthew Bromberg, a leader ready to build on the legacy with a fresh perspective to propel CAE forward. His appointment follows a comprehensive international search.
What stood out the most for me in the board is Matt's rare balance of IQ and EQ, a leader who combines strategic insight, operational depth, and strong emotional intelligence. He also brings deep experience from leadership roles in aerospace and defense at Northrop Grumman, Raytheon, and Pratt & Whitney. This distinctive blend of expertise and leadership convinced us that he is exceptionally well suited to lead CAE into its next chapter. [Foreign language] Matt comprend aussi ce qui rend CAE unique : nos employés et nos racines en tant qu'entreprise mondiale ayant son siège social ici au Québec. Il s'est engagé à protéger et à renforcer la culture d'excellence, d'innovation et d'orientation client de CAE, tout en adoptant le patrimoine local qui reflète notre identité. Lui et sa famille déménagent à Montréal et il apprend déjà le français, ce qui témoigne de son engagement.
[Foreign language] Matt, c'est un privilège de te présenter alors que tu te joins à notre équipe. Ton arrivée insuffle une nouvelle énergie et démontre que CAE est prête pour un avenir passionnant. Ensemble, nous allons de l'avant en misant sur nos forces et en saisissant les occasions à l'horizon. Comme vous pouvez le voir dans l'ordre du jour, nous avons quelques points à aborder aujourd'hui. Outre le dépôt de nos états financiers, quatre résolutions sont à l'étude. À la suite du vote sur ces quatre résolutions, nous annoncerons les résultats préliminaires. Immédiatement après l'ordre du jour officiel, moi-même, Marc Parent et Matthew Bromberg, nous nous adresserons à nos actionnaires afin de souligner les principales réalisations au cours de l'exercice et de parler de l'avenir de CAE Inc. Ensuite, les actionnaires auront la possibilité de poser des questions d'ordre général. Before I begin, I will now ask Mr.
Mark Hounsell, our Corporate Secretary, to present the forward-looking statements. Mr. Hounsell.
Thanks, Calin. I'd like to remind you that today's remarks, including answers to questions, contain forward-looking statements. These forward-looking statements represent our expectations as of today, August 13th, 2025, 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 CAE's annual MD&A, available on our corporate website and in our filings with the Canadian Securities Administrators on SEDAR+ at sedarplus.ca and with the U.S. Securities and Exchange Commission on EDGAR at sec.gov.
I would like to now proceed with the formal portion of today's meeting. I now call to order the annual and special meeting of the Corporation's shareholders. Mr. Mark Hounsell will act as Secretary of the meeting. Our Corporate Secretary has received the certificate of our transfer agent, Computershare Trust Company of Canada, indicating that proper notice of the meeting has been given in accordance with the Canada Business Corporations Act and the By-Laws of the Corporation. I direct that a copy of the notice with proof of service be kept by the Secretary with the records of this meeting. With the consent of this meeting, I appoint Martine Gauthier, Representative of Computershare, as scrutineer of the meeting.
CAE's by-laws provide that a quorum of shareholders is present at a meeting of shareholders if two or more persons holding not less than 25% of the shares entitled to vote at the meeting are present or represented by proxy. The scrutineer has advised that we have the necessary quorum present. I therefore now declare that this meeting is regularly called and properly constituted for the transaction of business. I'd now ask the Corporate Secretary to explain the basic features of our meeting platform and how shareholders attending the meeting virtually can vote. Mark.
Thank you, Mr. Chair. [Foreign language] Lorsque vous êtes connecté en tant qu'actionnaire ou invité, vous pouvez voir les renseignements s'afficher à l'écran. Vous pouvez lire des renseignements sur CAE et poser des questions. La diffusion se trouvera à la droite de la page. Pour visionner l'événement en mode plein écran, cliquez sur l'icône qui se trouve dans le coin supérieur droit. Si vous souhaitez poser une question, veuillez sélectionner l'onglet de messagerie et entrer votre question dans la boîte de dialogue en haut de l'écran. Cliquez sur le bouton « Envoyer » et vous devriez recevoir un accusé de réception. Vous pouvez poser vos questions en français ou en anglais. Veuillez noter que seuls les actionnaires inscrits ou les fondés de pouvoir valablement désignés sont autorisés à poser des questions.
[Foreign language] Madame Samantha Golinski suivra de près toutes les questions soumises et les transmettra au président du conseil ou aux membres de la direction appropriés. S'il y a de nombreuses questions semblables sur le même sujet, Samantha peut en choisir une ou résumer la nature des questions. Je souhaite vous rappeler que les questions doivent être dignes d'intérêt pour tous les actionnaires. Elles ne doivent pas être de nature personnelle. Les actionnaires qui assistent à l'assemblée en personne seront invités à se rendre au microphone pour poser leurs questions pendant la période de questions. Si nous ne sommes pas en mesure de répondre à votre question durant l'assemblée ou si votre question est de nature personnelle, un représentant de CAE communiquera avec vous après l'assemblée. Voting on the four resolutions will be conducted both online and in person.
Only registered shareholders or validly appointed proxy holders may vote on the four items of business. If you are attending the meeting in person and you have not already voted by proxy, you have received today with the agenda of the meeting a voting tablet. At the appropriate times, we will ask you to use the tablet to vote on each item of business. Following consideration of the last item of business, the scrutineers will tabulate the results of the votes. If you are attending the meeting online, you will see a voting icon on your screen and the resolution wording will be displayed. To vote, select one of the voting options. Your response will be highlighted. A confirmation message will appear to show that your vote has been received. To change your vote, simply select the other option.
In order for your vote to be properly recorded, it is important that you remain connected to the internet at all times. If you're not connected, your vote will not be recorded. The online polls are now open on all four items of business. This will give you ample time to vote while we introduce each resolution. The Chair will remind you of your choices on each item. After the last item of business, the Chair will close the poll and provide a reminder to input your vote if you have not already done so.
You should know that while each of the ballots cast today in person and online will be accounted for in the final results, proxies lodged with our registrar and transfer agent before this meeting allow the Chair, as proxy holder, to determine the outcome of each of the motions that will go to a vote today. When each item of business is completed and the ballots have been completed, as a result of the proxies received in advance of the meeting, the Chair intends to declare the motion carried or defeated, even though all the votes may not have been counted or a final report may not yet be available. In order to facilitate the flow of the meeting, the Chair has asked me, as a registered shareholder, to move all motions. The Chair will call on me at the appropriate time. Mr. Chair?
[Foreign language] Merci, Marc. Je dépose maintenant le procès-verbal de l'assemblée annuelle des actionnaires tenue le 14 août 2024. Ce procès-verbal sera consigné sur le registre des procès-verbaux de la Société. Des copies du procès-verbal seront disponibles sur demande. Le prochain point à l'ordre du jour consiste à placer devant l'assemblée les états financiers et le rapport des auditeurs pour l'exercice se terminant le 31 mars 2025, dont des exemplaires ont été distribués aux actionnaires en mai. Je réserverai les questions portant sur les états financiers de la Société au cours de la période des questions. We will now turn to the first item of business for which shareholders are asked to vote: the election of directors. The management proxy circular contains a list and biographical profile of the 13 nominees recommended for election as director.
They are as follows: Ayman Antoun , Sophie Brochu, Matthew Bromberg, Patrick Descostre, Elise Eberwein , Ian Edwards, Marianne Harrison, Peter Lee, Katherine Lehman, Mary Lou Maher, the Honorable Patrick Shanahan, Louis Têtu, and myself, Calin Rovinescu. Additional details about our board nominees are available in the proxy circular. Pursuant to resolution adopted by the Board of Directors, the number of directors has been set at 13, and 13 eligible candidates have been nominated. Mark, may I ask you to please move to elect each of the 13 nominees as directors?
I so move.
Thank you. For the election of the directors, you will see the names of the 13 nominees. For those attending the meeting in person, I would ask each shareholder or proxy holder to record his or her vote on the tablet provided by indicating whether you vote for or against in respect of each nominee. For those attending online, please scroll down to make sure you voted on all 13 nominees. To cast your vote for a nominee, please select for or against. If you do not select for or against as applicable when voting is open, your vote will not be recorded and you will be regarded as having abstained from voting. Preliminary results will be announced later today and final results will be posted on our website. The next item on the agenda is the appointment of auditors.
I will ask again Mark Hounsell to introduce a motion to appoint PricewaterhouseCoopers as auditors of the corporation to hold office until the close of the next annual meeting of shareholders and for authorization for the directors to fix their remuneration.
I so move.
For the appointment of the auditors, to cast your vote, please select for, and to withhold your vote, please select withhold. The next motion is to approve on an advisory basis our approach to executive compensation. CAE's executive compensation is fully disclosed in the proxy circular made available to all shareholders in advance of the AGM. The CAE Board of Directors believes that the company's approach to executive compensation remains appropriate and aligned with the interests of our shareholders. We value your direct feedback on our executive compensation approach, and the Board will consider the results of this vote when evaluating future compensation policies, procedures, and decisions. We will now vote on the following resolution. Resolve that the shareholders accept the approach to executive compensation disclosed in the management proxy circular. Again, I would ask Mark Hounsell to propose a motion for approval.
I so move.
To cast your vote for the approach to the executive management compensation, please select for, and to vote against, please select against. The last motion is to approve amendments to the General By-Law of CAE Inc. , as set forth in the company's 2025 management proxy circular. The by-law was last updated in 2015, ten years ago, and certain provisions no longer reflect current governance practices and shareholder expectations. The amendments were approved by the Board of Directors in April 2025 and will continue in effect only if they are approved today by ordinary resolution of the shareholders. The amendments notably serve to expand the talent pool for potential directors, limit the circumstances in which virtual-only shareholder meetings can be held, and remove certain hurdles for the nomination of directors by shareholders.
The Board of Directors believes that these amendments are in the best interests of CAE and its shareholders, are consistent with current corporate governance best practices, and address institutional investor guidelines. You can find a summary of the changes in section 2 of the management proxy circular, and the full text of the changes in Appendix E. Again, I would ask Mark Hounsell to introduce a motion to approve the resolution to approve the amendments to the General By-Law of CAE as set out in Appendix E of the management proxy circular.
I so move.
To cast your vote for the approval of the amendments, please select for, and to vote against this resolution, please select against. [Foreign language] Nous allons maintenant passer au vote. Si vous ne l'avez déjà fait, veuillez voter maintenant sur les quatre points de l'ordre du jour. Je vous laisse encore un peu de temps pour finaliser votre vote. Si vous avez déjà voté ou envoyé une procuration, vous n'avez pas besoin de faire quoi que ce soit à moins que vous souhaitiez modifier votre vote. Je déclare les scrutins maintenant clos sur ces quatre points. Je vous remercie.
The scrutineer's preliminary report indicates that 80.88% of the eligible shares have been voted at this meeting. The results with respect to the election of the directors are: a substantial majority of the votes cast at the meeting were voted in favor of the 13 nominees named in the management proxy circular, with each nominee receiving in excess of 91.65% in favor. The result with respect to the appointment of the auditors is 90.31% voted in favor of PricewaterhouseCoopers. The result with respect to the advisory vote on the approach to executive compensation is 95.15% in favor of the resolution, and the result with respect to the vote on the approval of the amendments to the General By-Law is 98.07% voted in favor of the resolution. Final detailed results will be publicly available on sedarplus.ca in the coming days. Mr. Chair?
Thank you, Mark. I'll now provide a review of fiscal 2025 and highlight our key moments. Before I do so, let's watch CAE's end-of-year video, a short video capturing everything we've achieved this year and the exciting vision we're building for the future. Let's now take a moment to reflect on the year that just passed. Fiscal 2025 was one of the most significant years in CAE's history, a year that strengthened our foundation and prepared us for long-term growth. We delivered record revenue of CAD 4.7 billion, up 10% from last year. Adjusted segment operating income reached CAD 732 million, up 33% from the CAD 550 million in fiscal 2024, highlighting the strength of our core performance. Free cash flow was CAD 814 million, increasingly disciplined capital management in action. Our adjusted backlog reached CAD 20.1 billion, up 66%, giving us unmatched visibility and long-term stability.
These results reflect a balanced business model and solid execution across both civil aviation and defense and security, diversification between markets supported by powerful long-term tailwinds. Looking at civil aviation, air travel continues to expand worldwide. The two largest aircraft manufacturers hold a combined backlog of more than 17,500 aircraft, and the global fleet is expected to nearly double over the next two decades. CAE estimates that 300,000 new pilots will be needed globally in the next ten years. That scale of demand creates both responsibility and opportunity for CAE. Our civil business delivered revenue of CAD 2.7 billion, up 11%, and adjusted segment operating income of CAD 581.5 million, up 6%. Civil adjusted backlog reached a record CAD 8.8 billion, reinforcing our position as the world's leading training provider.
[Foreign language] Pour répondre à la demande, nous avons augmenté la capacité opérationnelle de plusieurs centres de formation récemment ouverts, lancé notre nouveau centre de formation des services de la circulation aérienne à Montréal en partenariat avec NAV CANADA, renouvelé un partenariat à long terme avec Flexjet et augmenté notre participation dans SIMCOM pour renforcer notre offre sur les marchés à forte croissance. Nous avons également élargi notre capacité de formation sur l'avion Embraer E2 en déployant un simulateur de vol pour soutenir les flottes en Europe, au Moyen-Orient et en Afrique, et nous avons annoncé la formation des pilotes sur l'appareil E2 à Montréal pour Porter Airlines.
[Foreign language] Dans le domaine de l'aviation d'affaires, nous avons ouvert notre premier centre de formation en Europe centrale, à Vienne, renforçant ainsi notre engagement à rapprocher la formation de l'endroit où nos clients se trouvent et élargissant notre offre de formation sur des appareils tels que le Gulfstream G550 et le Pilatus PC-24. Sur le plan technologique, nous avons déployé la nouvelle image de marque de nos solutions numériques pour les opérations aériennes, soit FlightScape, propulsé par CAE, offrant des informations en temps réel qui aident les compagnies aériennes à optimiser leurs activités et à réduire leurs coûts liés aux perturbations. Nous avons lancé une nouvelle fonction appelée le tableau de tâches unifié, qui apporte encore plus d'efficacité et de visibilité aux activités des compagnies aériennes. Nous avons également annoncé un partenariat à long terme avec Allegiant et renouvelé des ententes avec Spirit Airlines et Air India.
[Foreign language] Nos activités de formation pour l'aviation d'affaires ont continué de croître en Amérique du Nord et en Europe, reflétant la vigueur soutenue du secteur et la valeur du réseau mondial de CAE et de ses outils de formation avancés. Now, let's shift gears to defense and security. Defense markets are in the early stages of a generational investment cycle. Across NATO and allied nations, governments are increasing budgets to modernize forces and strengthen mission readiness with initiatives like the EU's ReArm strategy. Notably, here in our core home market of Canada, where we are the nation's leading defense partner, we see a powerful, renewed momentum. Canada is set to reach 2% of GDP on defense spending this year, five years ahead of schedule, and has committed to spending 5% of its GDP by 2030.
Similarly, NATO as a whole is now discussing targets as high as 5% in response to increased security concerns. Clearly, simulation and integrated training solutions are at the core of these strategies, and CAE is well positioned to lead. This segment delivered one of its strongest years ever. Revenue reached CAD 2 billion, up 8%, and adjusted segment operating income improved significantly. Testimony to the generational investment and our strong position in the market, our adjusted backlog doubled, surging to CAD 11.3 billion. That's clear momentum in a sector undergoing transformation. At the center of this success is the CAD 11.2 billion Future Aircrew Training, or FAcT, program in Canada, awarded to SkyAlyne, our joint venture with KF Aerospace, marking the largest contract in CAE's history. This program will define aircrew training for the Royal Canadian Air Force for decades.
Furthermore, we were named a strategic partner for Canada's Future Fighter Lead-In Training program, a reflection of CAE's role in preparing the next generation of fighter pilots. We also advanced collaboration with Saab on the Canadian Patrol Submarine Project to ensure mission and operational readiness of the Royal Canadian Navy. Beyond Canada, we expanded our leadership in the U.S. with wins such as flight training services for the U.S. Air Force on KC-135 aircraft, U.S. Army's Flight School Training Support Services contract, and continued progress on the Simulator's Common Architecture Requirements and Standards program. These programs position CAE at the heart of two of the largest defense training initiatives in North America. Internationally, we were awarded a contract by the Italian Air Force to deliver a training system on MQ-9A Reaper and extended our partnership with Sikorsky on advanced technologies such as magnetic anomaly detection.
These wins were not just contracts; they're strengthening our role as a trusted partner in the modernization of allied defense forces. What makes this performance even more significant is that we achieved it while improving margins through disciplined execution, creating a solid foundation for the sustainable growth in defense and security. [Foreign language]Passons maintenant à l'innovation et au développement durable, deux piliers de la stratégie de CAE. Nous avons déployé CAE Connect, notre application destinée aux clients, à plus de 5 500 utilisateurs de l'aviation d'affaires, créant ainsi le plus grand écosystème de formation connecté de l'industrie. CAE Prodigy, notre système visuel de prochaine génération, a commencé à être livré à des clients cette année. Par ailleurs, notre application immersive pour Apple Vision Pro est désormais reconnue comme un exemple phare d'informatique spatiale dans le domaine de l'aviation, utilisée pour aider les pilotes à se familiariser avec le poste de pilotage.
[Foreign language] Le chef de la direction d'Apple, Tim Cook, et le chef de la direction financière d'Apple l'ont reconnu lors de la dernière conférence téléphonique sur leurs résultats, ce qui témoigne de son impact. Le développement durable est également au cœur de notre raison d'être. Au cours de l'exercice 2025, nous avons fait progresser notre feuille de route en matière de décarbonisation, qui a été validée par la Science-Based Targets Initiative, et nous avons lancé le programme CAE Résilient ensemble pour mobiliser les fournisseurs et les aligner sur nos engagements climatiques. Nous avons également mis en œuvre de nouveaux processus pour suivre leurs progrès et intégrer le développement durable dans les décisions d'affaires. Nous commençons à miser sur le prix interne du carbone, un processus qui nous aide à tenir compte du coût environnemental ainsi que du coût financier de ces investissements importants à long terme.
[Foreign language] Nos initiatives nous ont valu d'être reconnues parmi les entreprises les plus durables du monde et comme la meilleure entreprise de défense au Canada. Aujourd'hui, le développement durable n'est plus seulement une question de conformité, c'est un avantage concurrentiel qui crée de la valeur pour notre entreprise. What's next? The fundamentals remain strong and enduring. Civil aviation is buoyed by structural demand for pilots and aircraft. Defense spending continues to grow as allied nations prioritize readiness and modernization. Technology and sustainability give CAE an edge and ensure we remain relevant and have a positive impact in an evolving world. In the coming year, we'll continue to prioritize disciplined capital deployment, reducing leverage toward our target ratio and generating strong free cash flow that supports both strategic investment and returning value to shareholders. In defense and security, we will leverage our global diversification.
With programs underway in Canada, the U.S., and across allied nations, CAE is well positioned to deliver integrated, interoperable training solutions that support modernization across multiple domains. To our 13,000 employees, thank you for your commitment and professionalism. Your expertise and dedication make our success possible. CAE is stronger than ever, and the future is ours to shape. Marc, thank you for your vision and leadership. The floor is now yours.
Morning everyone. [Foreign language] Bonjour et merci à Calin pour cette présentation et bienvenue à tous et merci d'être là aujourd'hui. Diriger CAE au cours des 16 dernières années a été vraiment l'honneur de ma carrière, même l'honneur de ma vie, je vous dirais. Une période marquée par des décisions qui étaient audacieuses, un engagement indéfectible envers notre mission, notre noble mission. En 2009, quand j'ai assumé ce rôle, on avait un objectif très clair : libérer le plein potentiel de CAE et en favoriser l'évolution. Aujourd'hui, comme en témoignent nos résultats, CAE est un chef de file mondial. On est animé par l'innovation, puis sa raison d'être et surtout la force de nos 13,000 employés à travers la planète. La transformation qu'on a effectuée, ce n'est pas le fruit du hasard.
[Foreign language] Ça s'est produit grâce à la discipline, à une exécution rigoureuse et à l'orientation stratégique qui a toujours défini le succès de CAE. Au cours de ces années et dans le domaine de l'aviation civile et de la défense, on a bâti une entreprise qui est véritablement équilibrée et on le voit dans nos résultats. En prenant de l'expansion dans les nouveaux marchés partout à travers le globe, en lançant des solutions qui sont révolutionnaires, comme en témoigne Tim Cook pour le ramener quand on parle, quand le PDG d'Apple mentionne une compagnie dans son appel pour les résultats. Je pense qu'on peut témoigner qu'on est révolutionnaire en termes de notre approche technologique. Et surtout en renforçant nos bases financières et opérationnelles. On a fait de CAE, qui fabriquait des simulateurs en 2009, un partenaire mondial incontesté dans le domaine des systèmes de formation et des missions.
Looking back, to me, what makes this journey so remarkable is how we relentlessly invested, adapted, and innovated through change, through disruption, through crises, always keeping performance and safety as our North Star. We exist, and it is our noble mission to make the world safer. A noble mission that goes beyond business metrics and underscores the unparalleled responsibility that we carry every single day. Our customers, as always, have been at the heart of everything that we do, and it is our secret sauce. Satisfying customers, delighting customers, growing with them for the long term, creating enduring, deep relationships that have allowed us to understand their needs, anticipate the challenges, deliver the solutions to them before they even ask.
Whether they were airlines, pilots, business jet operators, defense and security forces, regulators, governments, it's always been a true privilege to serve our customers as their trusted partner, and it was our vision to help them prepare for the moments that matter most. Today, CAE is stronger than ever with the fundamentals and the resilience to deliver value for the long term. I want to thank sincerely our instructors, our engineers, our technicians, our support staff, and everyone in between around the world for their dedication, their grit, their belief, and passion for what we do. As I always like to say, without our employees, we're merely a collection of buildings with logos on it. You put our employees anywhere in the world, you have CAE. That's what we are.
As I hand over the torch this morning to Matt Bromberg, someone I've known and observed and admired for the last 15 years, because we are both from the industry on both sides, both from aerospace and defense, civil defense, I do so with great confidence. Matt brings the experience, the vision, the leadership, and the emotional intelligence that this company needs for what's next. He understands the responsibility and the scale of the opportunity ahead, and I am very, very confident that he will carry CAE forward with the same sense of purpose that has always guided us. [Foreign language] Ça ne se dit pas ici aujourd'hui d'un message d'adieu, mais bien d'un nouveau chapitre. CAE fait toujours partie de qui je suis et je vais continuer de me réjouir de son succès. Merci de m'avoir donné l'occasion de diriger cette fantastique entreprise.
Now it's time to start the next leg of the journey. There's nobody person to take the yoke over for me, and that's Matt Bromberg. Matt, over to you.
[Foreign language] Merci, Marc. Merci beaucoup. It's an honor to follow you and build on everything you've achieved. [Foreign language] Bonjour tout le monde. It's a privilege to speak to you today for the first time as CAE's incoming President and CEO, a role I'll formally assume following this meeting. CAE is an extraordinary company with a proud history and a clear sense of purpose, a company I've admired for my entire career. First, I want to thank the board for their confidence and Calin for your partnership. I look forward to working alongside the board and Calin, and Calin is Executive Chairman. His insight and experience will be invaluable. I also want to thank Marc Parent once more for his partnership in this transition. Over the past few months, Marc has not only shared his insight but truly opened the doors of CAE's inner workings.
He introduced me to the teams behind the scenes where the execution happens. He walked me through the critical decisions that have shaped this company and partnered closely with me to ensure a smooth handoff. Marc, your leadership over 16 years has made CAE a company admired around the world, and I am grateful for the guidance you've given me throughout this transition. Since joining CAE in June, I've been listening and learning. I've had the privilege to join the Paris Air Show, which is the largest aviation and aerospace event in the world. What really impressed me is that every conversation, every conversation with partners, suppliers, and other stakeholders, and most importantly, our customers, they consistently spoke to CAE's professionalism, their technical leadership, and their customer focus. I've met teams in Montréal and across the world, engaged with customers and partners, and joined strategic discussions with leadership.
Everywhere I've been, I've seen the same qualities: professionalism, pride, and a deep commitment to excellence. It reminds me why I chose to join this company: a mission that matters and people who care about delivering it. My focus now is on understanding where we can go further. That means building on what works, continuing to improve operational performance, and to keep innovating. We will focus on operational efficiency and capital allocation and on generating strong cash flow, and we will create sustainable value for our shareholders. I see the real potential to leverage our advanced defense technologies more broadly across CAE's portfolio, including commercial aviation. At the same time, we can drive greater efficiency by applying commercial best practices within our defense business. The cross-pollination of innovation and efficiency can unlock new value, enhance customer outcomes, and support higher returns.
As we focus on efficiency, we will relentlessly maintain our commitment to our customers, to quality, and to safety. With my background in defense, including service as a U.S. Navy submarine officer, I understand how critical CAE's role is in mission readiness for allied forces. That is not only a responsibility, but it's an extraordinary opportunity and one that I care deeply about. [Foreign language] Et oui, j'apprends déjà le français. I am looking forward also to calling Montréal home. It's one of the world's greatest aerospace hubs, one of the world's greatest cities, and I'm learning it's one of the world's greatest communities. My family and I are excited to be here. To our employees, thank you for the warm welcome. You are CAE's strength. To our customers and partners, thank you for your trust. We will keep earning it. To our shareholders, thank you for your confidence.
I'm committed to creating sustainable value through strong execution and smart growth. This is an exciting time for CAE. We have a clear mission, solid fundamentals, and the talent to capture the opportunities ahead. It is my honor, my absolute honor, to lead this next phase, and I look forward to what we will accomplish together. Merci.
Thank you very much, Matt. [Foreign language] Nous allons maintenant passer aux questions des actionnaires inscrits et des fondés de pouvoir. Pour ceux qui sont présents en personne, avant de poser votre question, veuillez vous rendre à un microphone, vous identifier en tant qu'actionnaire ou fondé de pouvoir et préciser votre nom. Si vous assistez à l'assemblée en ligne, veuillez soumettre vos questions en ligne si ce n'est déjà fait.
[Foreign language] Comme nous l'avons mentionné précédemment, vous pouvez sélectionner l'icône de messagerie dans le coin inférieur de votre écran et entrer votre question ou votre commentaire dans la boîte de dialogue qui se trouve dans le coin inférieur gauche de votre écran. Samantha, procédons maintenant aux questions. Est-ce que nous avons des questions de la part des actionnaires?
[Foreign language] Merci, Monsieur le Président. Nous allons commencer avec les questions dans la salle. Thank you, Mr. Chairman. We will start with questions from the audience. I see we have someone at the microphone. Please go ahead.
Hi, my name is Magali Boulé . I'm a shareholder and an employee at CAE. You briefly talked about this during the meeting, but I would like to better understand the role of the Executive Chair and how you will collaborate with Matthew Bromberg in the next year, please.
Thank you very much for your question. We have established already a great partnership, Matthew and myself, working together these last few months. The idea is that Matthew is the President and Chief Executive Officer and has responsibility for the running of the company. As Executive Chair, my responsibilities, in addition to chairing the board and the governance responsibilities that come typically with being a Chairman of a board, I will also stay involved with the long-term strategy, capital allocation, which is a very important topic for many of our investors, with some of the key stakeholders like governments, especially as we evolve our strategy on defense. As you saw, there's a big emphasis on governments in Canada, Europe, and the United States, and with some of our investors. That is the way we expect to see each other.
We will see more of each other than you would typically see of a non-Executive Chair. I think I look forward to a fantastic working relationship to make sure it's highly successful.
Thank you.
Thank you for your question.
Thank you, Mr. Chair. The next question comes from the online platform, from shareholder Loic Samuel-Sanquartier, and it reads as follows: How will the newly imposed American tariffs on Canada impact CAE?
Thank you for the question. We are quite well positioned on the tariff dynamic as of right now. Of course, it continues to evolve, as you know and as everybody reads about on an almost daily basis. Approximately 70% of the work that CAE does is in-country and therefore not subject to tariff. In addition, the key product of CAE, being the simulators, are subject to the USMCA and therefore exempt under those provisions as that agreement now stands. Of course, that agreement is subject to negotiation. We all know that. As of right now, CAE is extremely well positioned on the tariff situation compared to many other Canadian companies. I don't know, Marc, if you want to comment further on that.
No, I think you've covered it. I mean, the only thing I would add is, of course, we have a peripheral effect with regards to the general economy, but that's obviously a second-order effect.
Thank you.
[Foreign language] Merci beaucoup. Pour rappel, si vous avez des questions dans la salle, veuillez vous avancer au micro. Je vois que nous avons une question dans la salle. N'oubliez pas de vous nommer également. Merci.
[Foreign language] Bonjour à tous. Je suis actionnaire de CAE. J'aimerais, j'ai remarqué tantôt que vous parliez de formation au niveau des drones. Je vois très bien vers quoi on s'en va présentement. Il y a des développements militaires qui se font, des nouveaux développements militaires qui se font. Quels sont vos objectifs relativement à ça?
[Foreign language] Excellente question. Donc, pour les drones, c'est quelque chose que CAE Inc. a déjà commencé. Il y a des activités. Je vais demander à M. Parent de commenter un peu ce qu'on fait à date. C'est certain que l'avenir de la défense et les batailles qu'on voit dans des endroits comme l'Ukraine et la Russie, surtout, mais évidemment également dans le Moyen-Orient, les batailles se font par des drones. Les drones, il faut entraîner les pilotes de la même façon, ce n'est pas plus compliqué que des avions qui ont des pilotes physiques. C'est quelque chose où CAE Inc. va continuer à œuvrer et augmenter le niveau d'activité. Marc, peut-être que vous pouvez commenter ce qu'on fait à date dans ce domaine.
[Foreign language] Ce que je pourrais commenter, c'est que ça fait plusieurs années, plus qu'une dizaine d'années, que CAE est chef de file dans la formation pour ce qu'on appelle des avions qui ne sont pas pilotés. Comme exemple, le MQ-9 Predator qu'on a vu, qu'on a le Canada a choisi justement de General Atomics, qui va être déployé au Canada pour la mission qui est faite par un drone, un drone de grande ampleur, évidemment un Reaper. Et ça, on ne le fait pas seulement au Canada, mais on le fait, exemple, on le fait dans plusieurs pays à travers le monde. On vient juste de vendre un autre simulateur pour le Reaper en Italie. D'ailleurs, on est le partenaire de choix, OK, de General Atomics qui fabrique ce drone-là partout internationalement.
[Foreign language] Je pourrais dire aussi que dans le passé, pendant sept ans, on avait le contrat, on a entraîné presque tous les pilotes de United States Air Force et certaines agences d'intelligence américaines pour piloter ces drones-là. Fait que c'est ce qu'on a fait. On a de l'expertise, on a de la recherche et du développement qui se poursuit. On reste proche de nos clients. Fait que, évidemment, à mesure que la nature de des activités militaires, des combats, se font, OK, il va y avoir des besoins de formation, puis nous, CAE va être au rendez-vous.
No, it's an excellent question and it's something CAE is going to be very, very present in the future of.
[Foreign language] Il n'y a pas seulement le militaire, il y a aussi le civil, notamment au niveau de la surveillance de la frontière ou peut-être la prospection, ça peut servir là.
[Foreign language] Absolument, absolument. Puis dans l'Arctique, c'est certain qu'il va y avoir une prolifération de ces plateformes-là. Puis encore une fois, je vais laisser à peut-être que Matt a une opinion là-dessus, le sujet du côté des drones, à moins de l'audio n'y a pas là. Non, c'est certain qu'il va y avoir une utilisation prolifère, qui va se proliférer de ces appareils qui sont, qui ont ça en pilote. Puis je pense que CAE va être très bien choisi.
[Foreign language] Merci, merci pour votre question. Samantha?
Merci. The next question comes from the online platform, from shareholder Ariane Etier, and reads as follows: You've talked about the opportunities we currently see in defense. When will that translate into revenue for CAE?
We're already seeing it translating into revenue. I think it's an extremely important question and understanding why we like the portfolio of both civil and defense. Defense tends to be longer in terms of the contracts coming into place, but also longer duration and therefore providing a stable revenue stream for a longer period of time. You've seen this past quarter and last year, the very strong results of that are starting to show. The revenue is there. It's not as if we're developing a business for only future revenue, but it does take longer for these contracts to come into place. When we talk about some of these opportunities, for example, in Canada, there is a lead time, there's a procurement process, they have to select an aircraft type that is, for example, the future fighter aircraft.
They have to go through, the governments have to go through processes like that. That does take a bit of time, but the revenues are coming in, and once they're in, they're there for a long period of time. As I say, I underscore, that's why I like the balanced portfolio approach of both civil and defense.
Thank you, Mr. Chair. I do not see any more questions. Go ahead.
Hi, my name is Tata Nori. I'm a shareholder. I just drove from a campsite, so I'm sorry.
That's OK. Welcome.
I come very differently from you guys. So I have a question on the two segments. I look at the profitability of the civil compared to defense, and defense has always been lower, at least in the last four or five years. I'm just curious, what is the reason behind this? In the appointment of the new CEO and his background, you are from a defense background mainly. So I'm assuming that CAE wants to continue to focus and strengthen the defense segment. I just want to understand the reasons behind the lower profitability and how you can improve in the future. Thank you.
Let me start and turn it over to you, Matt. Inherently, you know, the difference between profitability in civil and defense is, to a certain extent, by nature.
The type of contracts and type of customers that you have tend, a lot of times, on the defense side, you get government contracts, and there'll be, depending on the type of contracts, you'll have limitations with regards to how much profit you can actually make. On the other hand, what you get out of that, you get guaranteed contracts for a long period of time. You will offset that limitation if you have enough profitability. Having said that, what we are doing extremely well on civil. I think the margins of CAE are at the very high end of what you see anywhere in civil aerospace. In defense, we put a target out there of getting to 10%. We've said that's more of a waypoint, not a destination, because you can do better. I mean, we'll walk before you can run.
We haven't put a timeline on that, but we're executing very well. I think as you get more revenue, and going back to the previous question about when that translates into revenue, look at the backlog. We have a record backlog. We've more than doubled that backlog in the last very short period of time to CAD 20 billion in defense. That is going to, or in civil as a whole, at CAD 11 billion in defense. That is going to materialize, and inherently, that absorbs more overhead in the company, and inherently, that will transform into higher profitability. Maybe you want to take it from here, Matt?
Thank you, Marc. I've spent about half my career in defense and half of it in commercial aviation. My point of view standing on the doorstep of the job is based on that experience. There's a huge opportunity to leverage both. You leverage the defense business, the technologies, the investment that is often shared between the company and the government, and actually, they're very good customers. You use that technology to grow in your commercial side, and you want to leverage the commercial cost structure, infrastructure efficiency to make your defense contracts better. That's why a shared business makes sense. Sitting here on the doorstep day one of CAE, I look forward to getting inside and seeing what we can do.
OK.
Thank you.
Thank you. Can I ask a couple more?
One more, please, because we're actually coming towards the end. Thank you very much. One last question.
One more, just on capital allocation. You have a very stable global top business, but your credit rating is BBB- with a negative outlook. I'm just wondering why the credit rating is not, I don't know, as strong as your business might be. Thank you.
Go ahead, Marc.
Look, I think I'm not going to speak for the credit agencies, but I think that we look at your track record that we have. You've seen us basically achieve the deleveraging targets that we set out last year. We've deleveraged quite a lot and actually beat the objectives that we have, even at the same time of completing a pretty major acquisition last year of Simcom. We've set out targets with regard to deleveraging this year to reach our target 2.5 x by the end of the year. I personally am quite confident that the rating agencies will see that progress and, you know, we'll see the light of day.
I'll just add that, again, it's a very excellent question, as was your first. This is a situation where the company takes its objectives. Now, you know, I, as Chair, Executive Chair, this deleveraging objective is one that is a major area of focus. The rating agencies look to see as to, A, are you achieving it? Are you on your path to achieving that deleveraging objective? How quickly are you achieving it? Do they believe it can stay at that target once you've achieved it, or does it slip again? Part of it is proving the case out, and I think we're extremely well positioned to continue down that path to these deleveraging targets, which is 2.5 x by the end of the year.
Thank you. We are at time, and I don't see any more questions on the platform.
Thank you very much. We are now reaching the conclusion of the meeting. I'd like to extend our sincere thanks to the management team for your strong leadership and dedication. Your efforts have driven our success and set the stage for continued growth and many of the other things that we've talked about here. I also wish to extend our appreciation to all CAE employees for your continued dedication and professionalism. Your contributions are instrumental to our success, and we commend your commitment to excellence as we move forward together. To our shareholders, thank you for your ongoing support and confidence in our mission to make the world safer. The board values the input and insights of our investors. We appreciate the importance of engaging with our shareholders to better understand their views, concerns, and priorities related to our business operations, performance, and executive compensation programs.
We look forward to continued dialogue. CAE's excellent reputation, strong technical capabilities, longstanding customer relationships, and global presence position us for continued success and value creation. This officially concludes the meeting. On behalf of CAE, thank you for having participated. Until we meet again, we wish good health to you, your families, and your communities. The meeting is now terminated. Thank you very much.