Your meeting is about to begin. Good morning, ladies and gentlemen, and Welcome to the Bombardier's First Quarter 2022 Earnings Conference Call. Please be advised that this call is being recorded. At this time, I'd like to turn the discussion over to Mr. Francis Richer de La Flèche, Vice President FP&A and Investor Relations for Bombardier. Please go ahead, Mr. Richer de La Flèche. Good morning, everyone, and Welcome to Bombardier's Earnings Call for the First Quarter Ended March 31st, 2022. I wish to remind you that during the course of this call, we may make projections or other forward-looking statements regarding future events or the financial performance of the corporation. There are risks that actual events or results may differ materially from these statements. For additional information on forward-looking statements and underlying assumptions, please refer to the MD&A. I'm making this cautionary statement on behalf of each speaker on this call. With me today is our President and Chief Executive Officer, Éric Martel, and our Executive Vice President and Chief Financial Officer, Bart Demosky, to review our operations and financial results for the first quarter of 2022. I would now like to turn over the discussion to Éric. Merci beaucoup, Francis. Bonjour et bienvenue à tous et à toutes. Good morning, everyone, and we're happy to have you join us today. I am delighted to share details about our strong start to the year. At high level, I can say that I'm very proud of the team's resilience as well as our ability to execute and deliver on commitments. We certainly continue to monitor factors that are straining the global economy or supply chains. Bart and I will discuss this throughout the call, but business aviation fundamentals are strong, and we remain optimistic about our ability to perform. The first quarter showed that the foundation that we have put in place is solid, and we are progressing well towards our 2025 objectives. I have spoken a lot about backlog as something that is key to being a predictable company. In Q1, that backlog grew by $1.3 billion to $13.5 billion. Our unit book-to-bill was 2.5 for the quarter. That is a testament to the strength of our product portfolio as well as our sales team's ability to be responsive all around the world. We certainly have seen this past year that economic recovery does not happen in a consistent way across all geographies. We have a global presence with solid roots in every region. That capability enabled Bombardier to adapt quickly and seize opportunities where they arise. This helps offset markets that are softened due to geopolitical tensions. Despite the situation with Russia and Ukraine, we continue to see strong demand and activities worldwide, including Europe. The United States continue to be the most significant market for our business, which is why it is important for us to have a strong presence there. This was behind our thinking when establishing Wichita as our U.S. headquarters. We indeed have a view to grow our Bombardier Defense team as well as services, but no matter through which customer lens you look, the United States is a key market, and we are committed to growing talent, creating jobs and serving civil and military requirements to the best of our ability. Overall, in Q1, we capitalize on the strong markets wherever they presented themselves. When we reset Bombardier to focus specifically on business jets, the goal was to build a predictable cost base so that when we see short or long-term market upswings, we can measure a smooth course correction and not have to make short-term trade-off on volume or price. That plan is well on track. With first quarter adjusted EBITDA reaching $167 million, which is a 36% improvement year-over-year. This is not by chance. It's how we've planned it, communicated it at our recent Investor Day, and then executed. On the Global 7500, we celebrated the delivery of aircraft 100 to VistaJet this past quarter. We continue to have excellent line of sight in terms of upcoming deliveries and the margin they will generate in line with our plan. In the field, the aircraft itself is simply exceptional and continues to set a new standard for large business jet with unmatched performance. On services, we have fully optimized our network and are now moving toward our additional capacity coming online. The first step change this year came in Singapore, where we now have the keys to a site that is four times bigger than the original site. Next, we are operationalizing expansions in London in the United Kingdom, then in Florida, where our new Miami service center is taking shape. In between these two events, we'll also be opening a brand-new facility in Melbourne, Australia. We are placing a lot of focus on supporting our customer close to their own bases. With all this traction, we are seeing the top and bottom line results we plan for when it comes to the aftermarket. The team generated $361 million in revenue in Q1, which is 34% more than Q1 2021. It's important to note that $361 million of service revenue also sets a new bar at Bombardier for a single quarter when it comes to serving business jets. Perhaps the most important metric to underscore the company's performance in Q1 is free cash flow. Our $173 million positive cash flow performance is $578 million better than last year over the same time frame. Needless to say, managing our debt proactively has given us flexibility. We have maintained our commitment to prioritize debt reduction, as demonstrated in March, when we completed a $400 million debt repayment. This focus has helped us lower carrying costs, which already contributed to the free cash upside. This was a significant contributor and was rounded out by order intake, progress payment from aircraft already in our backlog, service growth, and overall margin expansion. In short, we are in good position to run the business and allocate capital where it is strategically most beneficial. Keeping a balance between debt repayment and product investment is something I am keeping a close eye on. As we mentioned at Investor Day, we are targeting $600 million of capital flexibility, and we are well on our way to building a company that has the ability to to deliver and to make strategic moves when the time is right. I will leave the remaining details regarding our maturity runways and repayment for Bart to cover in detail. Now, returning to free cash flow, I do want to emphasize that if you look at the first quarter's performance, again, our free cash flow guidance for 2022 of greater than $50 million, we are clearly tracking well to our free cash flow guidance for 2022. We are opting to take a few months to measure the impact of the current global geopolitical and market context to carefully assess the true size of any potential upside. We will look to reassess our free cash flow guidance later this year. With regards to the various risks when it comes to selling and delivering airplane, we are indeed seeing limited exposure in terms of meeting our plan. The team has successfully shifted to areas where demand is strong. Business jet utilization has remained at the above 2019 levels we began to see last year. The good news is that the signs are beginning to point to a through-step change for our industry versus a limited post-pandemic bump. What's more encouraging is that the aggregate volumes are outperforming previous years, with some areas still experiencing fluctuation, slower development, or full lockdowns. For example, when we look at Bombardier-specific flying, we saw a 20% overall rise in hours in March alone versus 2021, despite limiting flying due to restrictions related to the war in Ukraine, as well as the bulk of flying stop in China due to the pandemic. Supply chain will remain very actively on our radar. We have been very proactive on this front, and we continue to deploy our people to the field to assess the situation firsthand. This has been a successful formula and allowed us to overcome potential hurdles through planning. As the pressure continues, we will maintain vigilance. We are, however, confident in our delivery profile. With the backlog where it's currently at, a lot of what we need to make the plan is within our control. One thing is for sure, the Challenger 3500 is already shaping up to be a top performer, as were its predecessor. We are excited and on track for deliveries this year and smoothly managing the transition from the Challenger 350. The plane has already secured high-profile Red Dot Award that speaks to the quality of our designers. Our design have set the standard for a long time, and I am delighted they continue to be recognized on the biggest stages. Overall, our plan is on track for 2022. We have a strong momentum in key surging markets, and our products continue to set Bombardier apart. I am now delighted to turn the call over to Bart to provide some more color on where we stand with our strong start of the year. Bart? Thank you, Éric, and good morning, everyone. Let me open by saying I am very pleased with the strong results we released this morning. To summarize, the strategies we launched last year are paying off, and their effect is beginning to compound. Thanks to this, we have started the year with a strong first quarter and see a clear path to achieving both our 2022 guidance as well as our 2025 objectives. Some of the highlights of the first quarter include positive free cash flow generation of $173 million, growing our backlog by $1.3 billion, year-over-year EBITDA margin expansion of 420 basis points, a 34% year-over-year increase in our aftermarket revenues, reaching our targeted unit cost on the Global 7500 program, and securing an incremental $30 million of annual cash interest savings by repaying $400 million of debt. Overall, our strategic priorities are progressing well. On the Global 7500, margins are expanding rapidly year-over-year, mainly as a result of delivering on our 20% unit cost reduction between the 50th and 100th aircraft. Looking ahead, there is still meaningful margin expansion to come on this aircraft, and we remain on track to more than double its EBITDA contribution by 2025 compared to 2021. Our cost reduction plan is also well on track to produce $115 million of incremental savings this year, bringing our total recurring savings to $250 million when we include the portion that already materialized in 2021. Our aftermarket business revenues increased by 34% year-over-year, outpacing the growth in flight hours over the same period. Our expansion plan is on track with our Singapore and London facilities now starting to ramp up and construction on our sites in Miami and Melbourne on schedule to come into service later this year. Lastly, we are ahead of plan in terms of debt reduction. Overall, our gross debt has reduced by $3.4 billion since the start of last year, and annual cash interest costs have come down by more than $250 million. I am very pleased with our progress to date, and as we continue to generate free cash flow in excess of our needs, we plan to put it towards debt reduction. With that, let's move on to our Q1 results, which continued to build on our strong performance from last year. First, total revenues for the quarter reached $1.2 billion as a result of 21 aircraft deliveries and $361 million in aftermarket revenues. Looking at manufacturing, we delivered 5 fewer aircraft year-over-year, resulting in approximately $182 million lower revenues as compared to the same period last year. The 21 deliveries, including 9 Global 7500 aircraft, were in line with our expectations and reflect our production schedule as we prepare to transition our production over from the Challenger 350 to the Challenger 3500 and ramp up Global 5500 and 6500 deliveries later this year. As Éric mentioned, this quarter also marked the end of production for our Learjet platform as the final 3 aircraft came off the assembly line. Our aftermarket business continues to grow with revenues at $361 million, up by $92 million year-over-year. This improvement is the result of growing market share and strong fleet flight activity. Moving to earnings, total adjusted EBITDA was $167 million, representing a 36% improvement year-over-year. Our adjusted EBITDA margin of 13.4% has significantly expanded versus Q1 of last year. Adjusted EBIT stood at $73 million for an adjusted EBIT margin of 5.9%. The main drivers of our margin expansion are consistent with our strategic priorities as we saw higher aftermarket contributions, margin expansion of our Global 7500, and continued progress on our cost structure. Moving to free cash flow, we saw a cash generation of $173 million in the quarter, which was better than originally planned. This cash generation is the result of strong earnings, reduced interest expense, and positive net working capital, where inventory buildup and a decrease in our payables were more than offset by an approximately $500 million increase in customer advances. Our backlog was bolstered by a 2.5 times unit book-to-bill and now stands at $13.5 billion, an increase of $1.3 billion since the start of the year. Bombardier has clearly demonstrated its ability to consistently generate positive free cash flow, having now done so for 4 consecutive quarters. As we continue to build earnings, reduce interest costs, maintain a strong backlog, and manage working capital, it is clear that we have meaningful cash generation potential ahead of us. Moving to our full year outlook, our strong performance in the first quarter of this year has put us in a great place to meet our 2022 guidance. Clearly, we are ahead of plan on free cash flow at this early stage of the year. We will continue to focus on executing the things that we control as we monitor the current geopolitical and market context. Our full year expectations for CapEx remain in the $200 million-$300 million range, and our plan to ramp up inventories to support higher 2023 deliveries is also unchanged. Looking to our other metrics now, we continue to expect deliveries of more than 120 aircraft for the full year. Supply chain remains a key monitoring item, but we have been very proactive since last year and have good visibility on the materials we need to meet our delivery targets. We expect deliveries in Q2 and Q3 to be relatively flat year-over-year, followed by a strong output in Q4. From an EBITDA standpoint, we are on track to meet our 2022 guidance of greater than $825 million. Our strategic pillars will continue to progress. We have clear visibility on customer pricing given our sold-out 2022 production, and most material costs are already locked in. Our aftermarket business performed extremely well in Q1, but we will continue to monitor if the conflict in Ukraine and resulting sanctions begin to impact fleet flight hours. As of now, we do not see major signs of slowdowns. Consolidated EBITDA will continue to improve in Q2, but EBITDA margins may slightly retract as the growth in deliveries will change our revenue mix towards new aircraft. To conclude, we have started the year on strong footing and are confident in maintaining our performance despite the current volatility. The longer-term plan we shared in February remains on track as we continue to focus on becoming a more predictable and profitable business aviation company. With that, thank you very much, and let me turn it back over to Francis to begin the Q&A. Thanks, Bart. I'd like to remind you that the Bombardier Investor Relations team is available following the call and in the coming days to answer any questions you may have. With that, we'll open it up for questions. Operator? Thank you. We'll now take questions from the telephone lines. If you have a question and you're using a speakerphone, please mute your handset before making your selection. If you have a question, please press star one on your device's keypad. To cancel the question, please press star two. Please press star one at this time if you have a question. There will be a brief pause while participants register. Thank you for your patience. The first question is from Konark Gupta from Scotiabank. Please go ahead. Thanks, operator. Good morning, everyone, and congrats on a good quarter here. Maybe my first question, or actually the only question, at this point, is on free cash flow, Bart. You know, if I look back historically, at least in the last couple of decades or so, I don't think Bombardier has put out positive free cash flow in Q1. I understand that the order activity was pretty strong. What I want to try to understand is, you know, where you are or where the business is with respect to the leverage right now and the production rate, et cetera. What is a good book-to-bill ratio to kind of suggest that the free cash flow will not turn negative and, you know, the seasonally weaker quarters like Q1, Q2? In other words, you know, like if it had not been a 2.5 times unit book-to-bill ratio and was something like 1 times book-to-bill ratio, would you still have had a positive free cash flow, or it would be back to seasonality? Yeah. Good question, Konark, and good morning. Let me just reiterate a couple of things. First, we are ahead of plan this year on free cash flow. I did mention that we had very strong working capital performance. The 2.5 book-to-bill certainly helped. We did have headwinds, though, as we're using more inventory as we ramp up production, so it's fairly balanced. I think if we see ourselves moving forward with a book-to-bill of one or better, that's a place where we're probably closer to break even on free cash flow in Q1 because it tends to be a lower delivery quarter. Hopefully that helps answer the question. It does. Thank you. Okay. Thank you, Konark. Thank you. The next question is from Benoit Poirier from Desjardins Capital Markets. Please go ahead. Yes. Good morning, everyone, and congratulations for the good results. Just looking at the aftermarket revenues, obviously strong performance, up 34%. Could you provide some color on whether this growth should further accelerate given the opening of new location? And maybe if you could provide an update on the openings of the new service center this year, that would be great. Perfect. Maybe good morning, Benoit. Thanks for attending. Clearly, you know, we're extremely happy, you know, that this has been something we've been working on since day one, you know, in terms of growing, and that's part of our plan, growing the revenue line of our service center. I think our strategy is very clear. We are executing on it. I think on top of it, you know, what clearly is helpful right now is the fact that the airplane are flying. You know, we said 24%, depending on what month you're looking at in the first quarter, if you compare the pre-pandemic number at the same period. I would say on this, the stars are clearly aligned for us. You know, we've put the capability in place. We have the parts. We've grown our inventory on parts last year in anticipation of that market demand coming up, and growing this year. We have the capacity on the parts side, but we also have the capacity on the service center side with the expansion. I just mentioned earlier, we've just quadrupled the size of our facility in Singapore that we built it like few years ago. We actually are gonna get a – we're starting to ramp up in London as we speak. We have Florida and Australia coming into service mid this year. Again, the market momentum is accelerating things right now. Clearly it's been exactly how it's been planned. The market is of course helping us to accelerate that growth, but I think that we saw that coming and we've put in place the infrastructure, either having the parts available and the parts inventory available, or having the service center in place and shaping up. Okay. That's great color, Éric. With respect to your pre-owned aircraft opportunity, could you discuss about the contribution that we've seen so far, especially given the favorable market environment for pre-owned? I would say we are extremely pleased. You know, we launched a program sometime last year. The team executed extremely well in the first year. Now this business is growing for us. I would say the biggest challenge is to have airplane, because availability of airplane is challenging. The airplane that we are able to bring in, our team has done an amazing job in being able to create value on those airplane for the customer. You know, as an OEM, there's a lot of things we can do, and we're clearly uniquely placed to enhance the pre-owned experience, you know, that the customer has. We are actively right now participating in this market. As I said, the pre-owned level is fairly low right now, probably the lowest in the last 20 years at about 3%. Clearly we are capitalizing on our ability to create value for the customer on those airplane, and so far we've been extremely successful doing so last year, and it did continue in Q1, and we have good view for the rest of the year also. Okay, thank you very much for the time. Merci, Benoit. Thank you. Thank you. The next question is from Steven Trent from Citigroup. Please go ahead. Good morning, gentlemen, and thanks very much for taking my question. Just a real quick one from me. I was intrigued to see what you guys had mentioned about, you know, the very low used, pre-owned inventory. From a structural perspective, do you see any possibility that those inventory levels kind of remain naturally lower for some time, considering, you know, commercial airlines shifting away from first and business class service? Yeah, this is a great question, Steven, and thanks for asking it. You know, what we do foresee right now is, you know, we had an extremely solid first quarter. You know, Q2 remains very strong. The activity level, the flying remains strong. We do foresee that, you know, we all read the same news every day. You know, there is, you know, the probability of the war expanding, you know. Of course, in Europe, there is the inflation also. We do foresee that this could, you know, a bit temper for the rest of the year, you know, that possibility. What we see in terms of maybe keeping or slightly increasing maybe the inventory of airplane. One phenomenon that we've started to see this year is because of the pricing being amazingly good right now on pre-owned airplane. We've seen some airplane coming to the market, you know, with someone having the intention to sell the airplane at a higher value right now. The challenge here is most of the OEM have nothing to replace the airplane in the short term, so people are hesitant. We've seen that phenomenon of airplane coming to the market. The reality is that if that's happening, there is the demand that remains very strong, and we've seen those airplane like not being in more than a couple of days on the market. I would say right now, if it's happening, it's still turning pretty fast because of the low level at 3%. Anticipating, you know, the normal in our industry is around 10. That's where it usually and traditionally will be. When it goes up to 14, we don't like it because it's too much. Under 10, it's pretty healthy. Of course, at 3, it's the lowest record. There's a view that it could go up slightly, but it's not gonna be significant between now and the end of the year, maybe a couple of percentage point. Okay, that's super helpful. Let me leave it there and then thanks very much. Thank you so much. Thank you. The next question is from Fadi Chamoun from BMO. Please go ahead. Mr. Chamoun, your line is open. Good morning. Was on mute, sorry about that. Congrats on the good results, obviously. Just a couple of questions for me. Bart, you said second and third quarter deliveries would be flat, kinda flattish, I guess, year-over-year. Was that including the Learjet deliveries of last year? Like, what's the base for flat? Is it just the medium and large? No. Yeah, good morning, Fadi, and thank you. Great to hear from you. Year-over-year being flat, it refers to the whole basket of all aircraft. It's not excluding anything. Effectively you're growing the medium and large year on year in the third- That's absolutely. Second quarter. Absolutely, we've That's correct. Yeah. We're replacing what were Learjet deliveries with Challenger and Globals. Absolutely. Okay. Then the other related comment you mentioned on EBITDA margin being lower than the second quarter versus the first quarter. What's driving that? Because it feels like if you're gonna be up in deliveries in the medium and large in the second versus the second last year, I'm not quite sure why EBITDA margin would be coming off versus what we saw in Q1. The margin will be impacted a little bit by mix in terms of the split between globals and challengers. We are delivering more aircraft. That in relation to the contribution from aftermarket is what will cause, we believe, the margin to be a little bit lower than it was in Q1. On a growth trajectory overall, year-over-year. Are you expecting this services business to be a little bit lighter in the second quarter versus the first quarter? No, no. It's more a case where, if you look at the contribution from aftermarket in Q1 and just, you know, roughly multiply that by four, that brings us to approximately our guidance for the aftermarket this year. It's not a lower contribution from them. It's a higher contribution from aircraft. Keep in mind, we have not yet fully reached our EBITDA contribution on the 7500s. We're still working through some aircraft that were sold in the launch phase, and it's sort of not yet at full pricing. As we've got more aircraft revenue relative to aftermarket revenue, that's what'll cause the margin percentage to come down a little bit for the quarter. Okay. That's great color. Maybe the last question from me. I'm not sure what you're prepared to make in terms of remark about the Alstom arbitration. Maybe help us understand the scope of this kind of dispute and potential financial implication. If you have anything that can help us understand kind of what's happening on that front, that would be great. Thank you. Yeah. I think, Fadi, of course, you're aware, we did receive a notification from Alstom on April 25th. This is a confidential arbitration process, as dictated by the SPA. We can't comment further right now, and since the matter is confidential, and that's the agreement we have with Alstom. At this stage, we cannot speculate on any amount or outcome of what it may bring. There's a lot of work that needs to take place. We will get back to you if we must disclose any information at the right time. You know, it's not unusual in a deal of this magnitude and this complexity that this is taking place. You know, at the right time, if anything is ever needs to be disclosed, we'll do it at the right time. Okay, great. Thank you. Thank you, Fadi. Thank you, Fadi. Thank you. The next question is from Myles Walton from UBS. Please go ahead. Thanks. Good morning. I was wondering if you could give some color context to geographic strength in the order book, maybe customer type strength in the order book of the 50 orders you have. Any way to quantify for us the pricing improvement environment, maybe the level of discounting that's not taking place that was taking place 12 or 18 months ago? Thanks. Thanks, Myles, for the question. Éric here. You know, clearly the gross order, as we said, has been very solid in Q1, you know, with 58 units roughly if you do the math. North America was still the leading region with a big contribution to that. I have to say that despite everything going on right now with Ukraine and Russia, Western Europe, we did remain extremely solid. We've seen, you know, actually some nice pickup also happening in Asia, not something that, you know, we've seen last year. Right now it's interesting to see that, you know, that region is, you know, with the reopening as an example of some of the limitation we had, as an example, in Singapore. We can see the traffic slowly but surely taking place. There's still a lot to do in that region. We've seen also Middle East and Africa being busy. Overall, it's coming from pretty much everywhere, even including Latin America. I would say that the top driver for us have been North America, Western Europe, and Asia in this quarter. Yeah. Myles- My- On pricing, you wanna comment on that? Yeah, Myles, if I can maybe add just a comment on pricing. We've seen through last year, through most of last year and the first quarter of this year and coming into Q2, a very strong and healthy pricing environment. Pricing has actually been a little bit ahead of cost inflation, so it's a bit of a net tailwind for 2022. I think as Éric has pointed out many times, this demonstrates the value of having a very strong backlog. Over our plan period, over the next few years, our expectation is that pricing and inflation will roughly offset. Here in 2022, we're seeing some benefit from price growth relative to cost inflation. Hopefully, that helps. That's great. Just one quick follow-up, if I could. The fleet buyers, are you seeing any effects of pilot shortages in their order books to you, or is that not something that's affecting their pull of airplanes? Thanks again. Yeah. It's a good question, Myles. We hear a lot about, you know, pilot shortages, and I'm sure you're reading the same news we do. Overall, I have not seen any limitation right now from the fleet operators. A very competitive market, of course, for pilot. I think the fleet operator right now, you know, the, they're taking all the airplane they've ordered, and they anticipate to do so moving forward. Thanks again. Thank you. Thank you. The next question is from Seth Seifman from JPMorgan. Please go ahead. Yes, thanks very much, and good morning. I wonder if you could update us on kind of your expectations and the labor situation at, I think it's the Dorval and Saint-Laurent. There's a contract rejected recently and, you know, and also how you're thinking about labor more broadly in this more inflationary environment. You know, I think. Thank you, Seth, for the question. We are clearly in an inflationary environment. This we all recognize that. I think, you know, if you're referring to the vote we had in Saint-Laurent, Dorval a couple of weeks ago, we were already back to the table a couple of days later, so there is no major tension there. Everybody is back to work. You know, we do enjoy the good relationship we have with the union and this group of employees, which have been amazing. We are working on sorting out the situation, you know, very shortly. As I said, the day-to-day operations continue. I think you may have seen also there was a communiqué from the leaders of the union last week saying that, you know, we're back to the table and things are progressing well. We do remain confident right now that we will reach a positive outcome shortly. Okay. Great. Thanks. Then, you know, maybe specifically, I don't think from this supplier there should be all that much impact on Bombardier, but you know, there was some commentary during this earnings period about titanium shortages affecting engine deliveries for business jets. As we think about the ecosystem more broadly, you know, is that something where you guys are seeing any increased risk? No. But you know, it's impacting all industries right now, the supply chain challenges. As I said earlier, we do continue to manage that situation very proactively. That's how we've been doing it over the last two years and even before. We have Bombardier staff at key supplier. We have no material impact right now expected this year. We have a pretty good line of sight for what we need and where the material is right now. The long lead time production gives capacity to adjust any disruption also, and we've been using that. We've raised the inventory also in some area for certain key parts, just to make sure that, you know, we're not facing too much issue. Yes, there's some stress out there clearly in the supply chain, but so far, you know, we've been doing well at Bombardier. The logistics are less complex also on our side because the majority of our supply comes from North America. Great. Thanks very much and good quarter. Thank you. Thank you, Seth. Thank you. Thank you. The next question is from Cai von Rumohr from TD Cowen. Please go ahead. Yes, thank you for taking the question. Your services aftermarket, what percent of those sales are from parts, and how much are the total services margins above your average adjusted EBITDA of 13.4%? Yeah. Clearly, I'm sure you'll understand, Cai, we don't disclose the margin for our business segment, of course. You know, our strong performance was fueled by, I would say, many fronts. First of all, the market demand and limited capacity supported pricing, and you know, was there, and we were very busy. The ability also to pass the cost increase so far has been, of course, supportive of us improving that margin and getting that business in pretty good shape. You know, the variable costs are pretty stable. You know, so far, we are managing this in different cycle. The potential also for increasing growth as market share increase is there. That's what we've been capitalizing on. Of course, you know, we have an infrastructure today. We are in a growth mode. We've put the inventory in place already so that we can, you know, bank into that market now. We're extremely pleased with the performance, you know, with $361 million, which is a 34% year-over-year improvement. And the Q1 flight hours, as I said earlier, so far are pretty much in Q1 about 23% better on the Bombardier fleet. Expansion benefits to that are contributing, expanding those benefits are clearly contributing to our solid performance in this quarter. Thank you. Bart, I think you said, you know, you can multiply first quarter services revenues by 4. Could you give us some color as to the pattern of services revenues over the year you expect? Because with your facilities coming on stream at mid-year, one would think that they would trend up. Yeah, it's a good question, Cai, and thank you. The two incremental facilities that'll be coming on stream, Miami and our facility in Australia, are later in the second half of the year. They won't be big contributors to this year. We'll continue to see ramp up, or we expect to, in 2023 and beyond once we have all the facilities up and running. It does take a bit of time, several quarters, you know, maybe a year and a half to fully ramp up a new facility. Those facilities will start to make more contributions in 2023 and beyond. What's the pattern? I mean, why? I mean, because the flight hours seem to be still increasing. Is it basically just- Well, yeah, that's a great point, Cai. From a forecasting point of view, we're forecasting stable flight hours. That's maybe a bit of a conservative way of forecasting, but for our own purposes and the way we look at it, we're looking at a stable flight hour activity for the rest of the year. Thank you very much. Okay, thanks, Cai. Thank you, Cai. Thank you. The next question is from Noah Poponak from Goldman Sachs. Please go ahead. Hi, good morning, everyone. Good morning, Noah. Just staying there. You're assuming in the guidance stable flight activity sequentially from this first quarter here or year-over-year to Q2 to Q4 versus Q2 to Q4 of last year? Stable from Q1 onwards for the rest of the year. Okay. Okay. We saw flight activity up 24%, and we think that from a forecasting point of view is we have that stable throughout the rest of the year. Got it. Can you maybe update us on lead times? You know, how far out into the future are you sold into the supply line by aircraft type? Yeah. I'm sure you understand why I'm not disclosing exactly those lead time, but we are exactly where we like to be. You know, there is a zone. There's a minimum backlog that we're protecting. And also there's a maximum backlog, which, where we reach that maximum backlog, this is where the rate increase discussion falls into place because, you know, we don't wanna be too far, you know, if we don't wanna lose market share. There is a zone of a minimum number of months and a maximum number of months for every program, because every program has different perspective. But we're in a good place today where we are exactly in that zone. In the one that we were also a little bit exceeding the maximum, we are taking the measure by increasing the rate to bring back, you know, the number of months of where it needs to be. That's how we need to manage that moving forward. Now that we are in that zone, our target is to keep it there. We're taking the measure to leave it at the right place and have the right backlog on every single program. We're there right now, which we are very pleased with. Okay. I mean, you know, I think that was how you've been describing it for a little while now, and the bookings keep coming in quite strong. It would seem like they would be pushing you to the high end. Although, I guess you also have plans to raise production. Yes. I'm not entirely sure how to square all that. Yeah. Yeah. Clearly, you know, we already communicated that we're thinking of next year being 15%-20% higher than this year. Right. You know, we haven't talked about 2024, but you know, with the type of backlog we are looking at right now, let's say that so far, 2024 looks good too. Okay. How much different is the pricing that you're pulling into the backlog right now versus the pricing that you're delivering right now? It depends by aircraft. If you, Noah, think about the platforms that have been around for a while, pricing continues to grow. Backlog for 2022, pricing for 2023 would be a bit higher, and aircraft we're selling into 2024 are higher again. On the 7500, we've just reached our unit cost. The contribution there on a unit cost side of things is now optimal. We'll expect to have pricing increases starting. Well, actually it's happening now, and continuing in the months to come, such that we expect the EBITDA margin contribution of that aircraft to double from where it is today by 2025. It really depends on which platform we're looking at. Okay. Very helpful. Thanks a lot. Okay. Thank you. Thank you, Noah. Thank you. The next question is from Ron Epstein from Bank of America. Please go ahead. Yeah, maybe just a couple quick ones. What are your plans for your debt level, call it by end of year and maybe by the end of next year? Well, Ron, great question. Good morning. So as we announced today, I mean, we've already reduced gross debt by $3.4 billion since 2021. Which has brought our cash interest expense down quite significantly, $250 million a year. From a longer-term target, we have not changed our guidance there. We're targeting net leverage of approximately 3.5 times by 2025. That obviously implies continuing to pay down debt or build cash on the balance sheet between now and 2025. What I would say beyond 2025 is that 3 times is where we get to given our plan and executing on that plan. We do believe that something lower than 3 times will be the optimal ultimate target. We just have not landed on what that is. Got it. On the aftermarket business, I mean, right now across the industry, we're seeing demand for maintenance repair and overhaul surging. When that normalizes out, what percentage of your business do you expect aftermarket to be? I think, Ron, it's Éric here. Thanks for the question. Clearly, I think our plan laid out. You remember we said that business was $1.2 billion per year of revenue. Our plan brings us in 2025 to about $2 billion revenue. That's the growth we do foresee right now is there. We've put the infrastructure, the inventory of parts to be able to do that. So far, you know, we've been delivering on that plan. We're growing our market share from 30-something to about 50% of, and I'm talking just about the 5,000 business jet of Bombardier flying out there. Our market share is gonna be bigger. The market is growing at the same time. Both together, we're gonna be bringing our revenue from $1.2 billion to $2 billion, which at the end should be around 27%-28% of our revenue overall. Got it. Maybe just one quick detail on supply chain. You talked a little bit about some things like engines and so on and so forth. What are you seeing on avionics? My understanding is, due to you know the microelectronic supply chain being pretty tight, are you guys seeing any issues on sourcing avionics? Yeah. The answer is no. It's not on my radar right now, and usually, it's a good sign if it's not on my radar. I, you know, so far, the avionics supplier have been performing extremely well for us. Great. Thank you. Thank you. Thank you. The next question is from George Shapiro from Shapiro Research. Please go ahead. Good morning. I was wondering, given the strong orders in the first quarter, are you raising what you had said in the earlier about deliveries being up 15%-20% next year? Yeah, we talked about 15%-20% more airplane in 2023. That's what we've disclosed, I guess it was at the last earnings call. Yeah. Are you considering raising that given how strong the first quarter orders were? Not at this stage. I think eventually we'll give a precise guidance, you know, for next year. You know, in our industry, it takes time, depending on which program, you know, from the day you make the decision to have the line increase, you're talking about very often 12-18 months, depending on which program. Of course, with the condition of the supply chain right now, we are being prudent. We wanna make sure we deliver on time and we don't pay penalties and that we continue to amaze our customer with the first thing being delivering the airplane on time and a good product. We are monitoring. We've already made decisions last year, which are starting to, we're gonna see the benefit of those rate increases next year in 2023. You know, we're gonna make the decision that we have to make this year, as I said earlier, trying to keep the backlog to a certain number or amount without going lower than a minimum and higher than the maximum we're targeting. Okay. A follow-up, can you provide the mix of orders that went to fractionals versus the traditional buyer? Has that changed over the last year? Not really. I think, you know, for us fleet operator, as we've been very successful, you know, they like the reliability of our product. They like the cost of operation of our product. We've been, over the years, extremely successful. You know, we feel pretty confident today that we have solid backlog with these guys. It's a portion, a certain portion of our backlog, but of course, we've been growing quite a bit the individual customer in the last couple of months. We're at the right place in terms of mix. We've said earlier, I think in Q1, 83% of the orders came from traditional customer. Is that 83% different than what it was, say, a year ago? No, it's pretty much in line with what it's been. It varies by a couple of percentage point, but that's roughly what it is overall. Okay, thanks very much. Thank you. Thanks, George. Operator, we have time for one last question. Thank you. The next question will be from David Strauss from Barclays. Please go ahead. Great. Thanks for fitting me in. Bart, in terms of your free cash flow guidance for the year, you know, the current guidance, does that assume a one-time book-to-bill for the full year? Yeah. Good morning, David. It assumes a book-to-bill of about 1.1 for the full year with the very strong order intake in Q1. Obviously, we're currently tracking better than that, so there's potential for upside. As we've highlighted earlier on in the call, we wanna take a few months here to really see what comes of the current geopolitical tensions, et cetera, before we consider any guidance adjustments. Okay. In terms of the delivery cadence through the course of the year, was Q1 in line with your expectation in terms of the 21 deliveries? You know, is the back end loading, you know, what sounds like a big Q4, is that really driven by, you know, certification and initial deliveries of the Challenger 3500? Yeah. No, but clearly, David, it was the plan from the start to have a lower Q1 in terms of number of delivery at 21. Yes, we're ramping up, it was the plan as we transition from, you know, the 350 to the 3500. There was some adjustment on the line rate, and that was the plan. We already guided that, I think, last earnings call. We said that Q1 was gonna be lower, but the number of delivery for the year, we are very confident that will be greater than 120 as we guided in the last earnings call. Okay. The last one I had. Bart, in terms of your escalation clauses in your, you know, customer contracts, do you feel like you're fully protected or from, you know, from inflation, or do you have any sort of caps, you know, in terms of the in terms of how much pricing can escalate in terms of out year, you know, deliveries? What's baked into those contracts? Yeah, David, good question. There certainly are caps and sharing mechanisms throughout our contracts with our supply chain. They're largely CPI linked, so we're well protected there. We do hedge both ourselves directly and through our supply chain on commodities, but definitely where we purchase directly. We do still see and anticipate strong pricing across both our aircraft and in the aftermarket relative to cost inflation. This year, we see it as a net positive. In future years, we see it as a wash, and so a maintaining of margins going forward. Right now, though, we're in good shape. All right. Appreciate it. Okay. Thank you, David. Thank you. Thank you. This concludes the question and answer session. I'd like to turn the meeting back over to Mr. Éric Martel. Thank you again everyone for joining us today. As you could see, we are off to a great start of the year. Our team has been able to build on our strong performance last year and our momentum from last year. In this quarter, which was one of the best in our books, we've proven once more that we know how to make the most of opportunities when they present themselves and how to manage the unexpected. From bringing in new orders to capitalizing on the world-class aftermarket service we provide, we are steadily marching ahead towards our 2025 goals and sometime even sprinting ahead. Thank you all for attending this call. Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.