Good day, ladies and gentlemen, and welcome to the CAE third quarter conference call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Andrew Arnovitz. Please go ahead. Good afternoon, everyone, and thank you for joining us today. Before we begin, I'd like to remind you that today's remarks, including management's outlook and answers to questions, contain forward-looking statements. These forward-looking statements represent our expectations as of today, February eleventh, two thousand and twenty-two, and accordingly are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risks, factors, and assumptions that may affect future results is contained in CAE's annual MD&A available on our corporate website and on our filings with the Canadian Securities Administrators on SEDAR and the U.S. Securities and Exchange Commission on EDGAR. On the call with me this afternoon are Marc Parent, CAE's President and Chief Executive Officer, and Sonya Branco, our Chief Financial Officer. After remarks from Marc and Sonya, we'll take questions from financial analysts and institutional investors. Following the conclusion of that Q&A period, we'll open the call to questions from members of the media. Let me now turn the call over to Marc. Thank you, Andrew, and good afternoon to everyone joining us on the call. I'm very pleased with our third quarter performance, especially in the context of a still challenging global environment. We delivered double-digit growth, strong free cash flow, and we nearly doubled order intake compared to the third quarter of last year. On a consolidated basis, we grew revenue by 15% before the contribution of our ventilator humanitarian initiative last year. We also grew adjusted segment operating income by 16% and delivered CAD 0.19 of adjusted earnings per share. Underscoring the cash generative profile of our business, we delivered a healthy CAD 282 million of free cash flow. We also made excellent progress on the orders front, building even more forward momentum with nearly CAD 1.4 billion in orders for a book-to-sales ratio of 1.62x and a backlog of CAD 9.2 billion. In civil, we have strong performance with double-digit growth in training segment operating income, and we had margins break above 20% for the first time since the start of the pandemic. Third quarter average training center utilization was 60%, up from 50% last year and was seven percentage points higher than last quarter. To me, this is an impressive result considering the wide-ranging disparity in commercial flight activity and training demand across regions and because Omicron began to spread in the last month of the quarter. As we've been seeing since the start of the fiscal year, demand in the Americas was by far the strongest, while Europe and especially Asia-Pacific continued to lag the recovery, leaving significant headroom to return to pre-pandemic levels. In business aviation, training demand was also robust, reflecting the high level of flight activity, which was above 2019 levels in the United States and Europe. We had very strong order activity in civil in the third quarter, booking training solutions contracts valued at CAD 753 million for a 1.93 book-to-sales ratio, including 19 full-flight simulator sales. This is in sharp contrast to the 11 full-flight simulator orders that we booked for the entire fiscal year last year and brings our full-flight simulator sales for the first nine months to 33. Since the end of the quarter, we signed orders for another four, bringing the year-to-date tally to 37 full flight simulators sold. Consistent with the more advanced air travel recovery in the Americas, over 60% of the year-to-date totals are from customers in that region and include full flight simulator orders from major U.S. carriers, from actually all major U.S. carriers, including orders for multiple full flight simulators for some of the largest, United Airlines, this quarter. Our airline customers in the Americas have been adding back flight capacity and actively ramping up pilot hiring. In order to secure the training capacity that they require, they've been working with CAE as their training partner of choice, entering new long-term training agreements and acquiring additional simulators. We think this makes for a compelling preview of what an eventual broader global market recovery holds for CAE. Notable training contracts for the quarter include five year extensions of commercial aviation training agreements with Endeavor Air and Avianca, a nine year commercial aviation training agreement with Norwegian, as well as five year business aviation training agreements with Global Jet Luxembourg, XOJET, and VistaJet. In defense, we also had double-digit growth in the quarter with the contribution of L3Harris military training. As we expected, we surpassed the $30 million mark in adjusted segment operating income. I'm especially pleased with our order intake, which totaled $593 million in the quarter or a 1.39 times book-to-sales ratio and a $4.6 billion backlog. We seized on the opportunity of the temporary relaxations in pre-Omicron COVID-19 restrictions. In addition to the positive book-to-sales, we're also seeing more conversion on our defense strategy to pursue multi-domain training and mission support solutions. Orders to date included competitive prime awards, recompetes, and contract expansions across all five domains, air, land, sea, space, and cyber. In the air domain, we strengthened our international presence with the German Air Force's competitive selection to provide ab initio pilot training, replacing the 60-year incumbents. Along with this new live flight training program, we also expanded our relationship with the United States Navy's Chief of Naval Air Training or CNATRA, by adding T-45 live flight training to our instructional services contract. Beyond live flight training, we were awarded a 19-year base plus options contract from an Australian customer to provide integrated support and training on a range of strategic platforms. Other contract expansions including forward task orders on our Simulator Common Architecture Requirements and Standard or SCARS single award IDIQ, as the U.S. Air Force accelerates the integration and standardization of approximately 2,400 simulators across 300 locations. Since the end of the quarter, we've made additional notable progress to broaden our position beyond our core defense air, land, and sea programs by winning our first competitive prime contracts in cyber and space. We were selected by Canada's Department of National Defence to expand cyber intrusion detection capabilities on the Innovation for Defense Excellence and Security or IDEAS program. We were awarded our first prime simulation contract in the space domain with a key U.S. customer. These strategic cyber and space prime contracts, along with our first US intelligence community competitive prime win in the second quarter, are great examples of how we're building our defense business for the future by establishing it as the world-leading platform-agnostic training and simulation pure play, ensuring mission readiness by integrating solutions across all five domains. Finally, in healthcare, we delivered our fourth consecutive quarter of double-digit year-over-year revenue growth, excluding the ventilators, as we ramp up our re-energized organization with a clear focus on achieving greater scale. We launched updates to expand the feature set and functionality of some of our main product solutions, including LearningSpace, our Simulation Center Management System, and Vimedix, our ultrasound education platform. We also introduced 11 new on-demand online digital courses featuring virtual simulation in collaboration with the British Columbia Institute of Technology. With that, I'll now turn the call over to Sonya, who'll provide additional details about our financial performance. I'll return at the end of the call to comment on our outlook. Sonya? Thank you, Marc, and good afternoon, everyone. We delivered double-digit year-over-year growth and strong free cash flow during the third quarter, notwithstanding the ongoing challenges of the pandemic. Our performance reflects CAE's resiliency and the strengths in some of our end markets, as well as our excellent progress to expand our reach and lower our cost structure. Consolidated revenue of CAD 848.7 million was 2% higher compared to the third quarter last year and was 15% higher, excluding the CAD 93.5 million of revenue in the third quarter last year from a contract to provide the Canadian government with ventilators as part of our COVID-19 humanitarian initiative. Adjusted segment operating income was CAD 112.7 million compared to CAD 97.2 million last year. Quarterly adjusted net income was CAD 60.7 million or CAD 0.19 per share compared to CAD 0.22 per share in the third quarter last year. We incurred restructuring, integration, and acquisition costs of CAD 47.2 million during the quarter related to the L3Harris military training acquisition and the enterprise-wide restructuring program underway. Cash provided by operating activities this quarter was up 32% to CAD 309.6 million, compared to CAD 234.8 million in the third quarter of fiscal 2021. Free cash flow was also higher at CAD 282.1 million compared to CAD 224 million in the third quarter last year. The increase was mainly due to a lower investment in non-cash working capital, partially offset by cash payments of approximately CAD 38 million related to the integration and acquisition costs of our recently acquired businesses and costs associated with our restructuring program. Growth and maintenance capital expenditures totaled CAD 76.9 million this quarter, mainly for growth and specifically to add capacity to our global training network to deliver on the long-term exclusive training contract in our backlog. Our growth CapEx is directly linked to our opportunities to invest incremental capital with attractive returns and free cash flows. With several attractive market-led expansion investment opportunities on the horizon, we continue to expect total capital expenditures to be more than CAD 250 million in fiscal 2022. Income tax expense this quarter was CAD 2.6 million for an effective tax rate of 8% compared to an effective tax rate of 0% for the third quarter last year. The income tax rate was impacted by restructuring integration and acquisition costs this quarter. Excluding these costs, the income tax rate this quarter was 20%, which is the rate used as a basis to determine the adjusted net income of CAD 60.7 million and adjusted EPS of CAD 0.19. Our net debt position at the end of the quarter was approximately CAD 2.3 billion for a net debt to total capital ratio of 36.5% and net debt to adjusted EBITDA was 3.23x at the end of the quarter. We continue to expect interest expense of about CAD 35 million as a quarterly run rate going forward. Now turning to our segmented performance. In Civil, third quarter revenue was CAD 390.1 million versus CAD 412.2 million in the third quarter last year. Adjusted segment operating income was up CAD 21.4 million over the third quarter last year to CAD 83.4 million for a margin of 21.4%. This highly improved performance was driven by higher training utilization, predominantly in the Americas and including our interest in joint ventures. Civil training services revenue was approximately 10% higher compared to the third quarter last year. The higher revenue in training was offset by lower products revenue, with the delivery of seven simulators this quarter compared to 10 last year. The lower number of scheduled deliveries in the quarter was expected and is consistent with our outlook for approximately 30 deliveries for the year. In Defense, third quarter revenue of $426.5 million was up 42% over Q3 last year. This includes $127.9 million from the integration of L3Harris military training into our financials. We indicated on the call last quarter that we would expect that segment operating income to cross into the 30 million dollar range. Indeed it did by reaching 32 million dollars for the quarter, including 19.6 million dollars from the acquisition for a margin of 7.5%. The organic Defense business grew sequentially this quarter, but remained lower compared to last year because of prior period COVID-19 impacts on orders and programs, program interruptions, particularly internationally, which have been persistent since the onset of the pandemic. In Healthcare, third quarter revenue was CAD 32.1 million, down from CAD 120.9 million in Q3 last year on a statutory basis, but was up 17% excluding the ventilator contract last year. Adjusted segment operating loss was CAD 2.7 million in the quarter compared to an income of CAD 12.9 million in Q3 of last year. The decrease from last year was mainly due to the contribution from the ventilators in the prior period and COVID-related labor disruptions and higher costs. We're also running a higher level of SG&A expenses to help accelerate top line growth with a view to sustainable scale and profitability. With that, I will ask Marc to discuss the way forward. Thanks, Sonya. As we look to the period ahead, we continue to see a clear path to emerge from the pandemic, a larger, more resilient, and more profitable CAE than ever before. Testimony to that, we're already delivering stronger financial performance, expanding and optimizing our position and booking substantial orders. Pandemic-related headwinds may persist for some time, including supply chain disruptions, employee and customer absenteeism due to COVID-19 infections, operational constraints imposed by local authorities, and intermittent border restrictions. The emergence and rapid spread of the Omicron variant this past December has certainly extended the timeline to a broad global recovery, but has not changed our position in our positive view of CAE's potential as our end markets eventually open up more broadly as we emerge from the pandemic. In Civil, a greater desire by airlines to entrust CAE with their critical training and digital operational support and crew management needs, higher expected pilot demand, and strong growth in business jet travel demand are enduring positives underpinning a secular growth market. The global recovery continues to be narrowly led by the Americas, which means significant upside remains for a more global recovery. We think the Americas provide a preview of the kind of demand to follow in other regions when conditions permit. Since the end of the quarter, we've had to contend with Omicron-related employee and customer absenteeism. However, the Americas are still strongest, and we're currently seeing some increased demand for training solutions in Europe as COVID-19-related travel restrictions begin to ease and airlines plan for what they expect will be a more robust summer travel season and beyond. As an example, easyJet just recently announced a drive to hire 1,000 new pilots over the next five years with CAE as their training partner of choice. Asia-Pacific is currently the most challenging region, with relatively low levels of flight activity and training demand as Omicron now makes its way through that region. Overall, since the end of the quarter, our training centers have been holding at about 60% average utilization levels globally. In business aviation, we remain bullish on the long term, and we believe that the market is experiencing a structural expansion with 3.3 million flights worldwide in 2021, the most on record for a single year. COVID-19 headwinds bear mentioning here as well as Omicron and quarantine requirements were disruptive to our schedule in January for both our customers and CAE instructors. We look to be back on trend, and we're seeing strong demand for training propelled by robust flight activity in the United States and Europe. In simulation products, we're encouraged by the higher projected delivery rates of new aircraft coming off manufacturers' production lines as one of the main drivers for full-flight simulator sales, of course. We're seeing higher demand, as evidenced by this quarter's full-flight simulator order intake, coming mainly from customers in the Americas and Europe, and we expect to maintain our leading share of the market. The unevenness of the global recovery is likely to continue for some time. We're ultimately in an excellent position to benefit from the multi-year cyclical market recovery that's currently underway. We continue to expect strong growth in civil for the current fiscal year overall. In defense, the paradigm shift from asymmetric to near peer threat, and a recognition of the sharply increased need for digital immersion-based synthetic solutions across all five domains in national defense are tailwinds that favor CAE's business. Given the increasing re-relevancy of training simulation, our defense unit is also on a multi-year path to becoming a larger and more profitable business. We're currently focused on the successful integration of L3Harris military training, and we're on track to fully realize their $35 million-$45 million of cost synergies that we laid out by fiscal year 2024. The pandemic continues to make international opportunities slower to materialize, but this headwind is temporary, and we have a strong pipeline with some $6.2 billion of business proposals pending customer decisions. Our increased orders in the quarter put defense on the path to achieving over 1x book-to-sales ratio for the year for the first time in the last 3 fiscal years. Our U.S. defense business was also impacted by pandemic-related employee absences in January, and it currently faces a temporary budgetary headwind on contract expansions and new program starts as a result of the continuing resolution. Defense is indeed managing through its share of ongoing challenges, but we're moving in the right direction, and we remain confident that we'll deliver strong annual growth for fiscal year 2022. Lastly, in healthcare, we're focused on achieving greater scale by gaining share in the simulation training market, and we're targeting some of the largest pools of value like nursing. Supply chain restrictions, disruptions, and staffing shortages are a near-term headwind for the business too, but we continue to expect a double-digit growth for the fiscal year, excluding the ventilator contract. On the ESG front, I want to highlight that CAE was included in the 2022 Bloomberg Gender-Equality Index for the fourth consecutive year. This award recognizes that CAE is committed to support gender equality through policy development, representation, and transparency. We're proud to continue building an inclusive workplace every day. In summary, we've been adeptly playing offense during this period of market disruption by investing organically and seizing on nine acquisitions to enhance our position and broaden our market reach. We've also strengthened CAE by permanently reducing our cost base across the enterprise. The timeline for a broad global recovery is more extended, but our actions and our performance to date give me even greater confidence that we're on the path to strong cyclical recovery and secular growth as our markets eventually open and we all emerge from the pandemic. We're delivering on what we said we would do, and I expect CAE to continue driving higher levels of profitability on a significantly larger base of business, and with a post-pandemic capital structure that will allow us to sustain ample flexibility to further invest in our future. Our opportunity set continues to look very attractive, and I've never been as confident about CAE's future as I am today. With that, I thank you for your attention, and we're now ready to answer your questions. Thank you. Thank you, Marc. Oh, I'm sorry. Sorry, operator. Before we open the lines to questions, I want to highlight that Marc last month was honored with one of the world's most prestigious aviation awards, having been named Industry Leader of the Year by the Living Legends of Aviation. We're very proud of him and how this reflects positively on all of us at CAE, so please do join me in congratulating Marc. We'd now be pleased to take questions from analysts and institutional investors. Our first question comes from Kevin Chiang of CIBC. Please go ahead. Hi, thanks for taking my question, and I echo Andrew's congratulations there, Marc. Maybe if I could start with the civil margin performance. As you noted, you know, first time during the pandemic, north of 20% despite utilization still Tracking below pre-pandemic levels. If I look at it quarter-over-quarter, it looks like incremental margins were about 65%. Just trying to get a sense of, you know, where you think the margin trajectory goes here as utilization, you know, get back to kind of pre-pandemic levels of 70%-75%. You know, could this be a mid-20s SOI margin business given all that you've done, you know, within the mix of revenue there? I had trouble catching the last part of your question, Kevin, but I think I get the gist, and maybe I'll try it and you let me know if I've answered it. Look, I think I'm very pleased, obviously, with the margin performance that we had in the quarter in Civil, you know, 21.4% margin driven by essentially similar revenue that we had last year. Maybe just I'll pause on that. When you look at the revenue, it looks like it's slightly down relative to last year for good reasons of the mix, the environment, the fact that we had lower deliveries in our products. Remember that we don't consolidate JV revenue, and that's not an insignificant number, and that's because of accounting. If you were to add back the JV revenue, what you'd be seeing is training revenue is up about 10% year over year. Coming back to the margin, look, I'm, as I said, pretty happy about that. You're going, like, 18%, I think, to 21%, 21.4. I think what you're seeing there is first of all, the mix of business. You have business aircraft, which I've always said is an attractive margin profile. We have a very good, very nice position in market and business aircraft. Business aircraft's doing great. You're seeing that transpire. You're seeing commercial aviation training in the U.S. doing pretty well. Really, in a big way, what you're seeing is our cost savings, which are structural, coming through the numbers. That's what you're seeing. Of course, we've always said that we fully expect that, you know, on margins, because of all those reasons, that margins going forward should track higher than we've achieved in the past. I think our peak civil margin was just about 22% historically. I would certainly expect to blow through that on a sustained basis. I mean, obviously, one quarter doesn't make a year, and we're variable, but to me, that would be the trend as you get more utilization. No, that's helpful. I think the last thing I'll add, of course, I said it in the remarks, is all of that is achieved on a pretty narrowly led recovery that's really United States. I think that's why you sense my confidence and excitement as the broader recovery, across the globe, you know, comes to bear. No, that makes sense. Just turning to defense, I just wanted to clarify something. If I look at, you know, at the time that you acquired the L3Harris military training business, if memory serves me correctly, I think at that time you had called out, you know, EBITDA margins of roughly 15%, I think. If I look at, you know, what those margins look like since you've acquired it looks like they've held them pretty well, whereas your legacy margins have tracked about half, if not a little bit below pre-pandemic levels. It sounds like you're attributing it to primarily a lot of international restrictions. Is that primarily the reason for the underperformance in margins, and you need to see these, you know, travel restrictions get eliminated before they can, you know, get back to 10%? Or is there anything else kind of holding those margins back? Well, I think there's a few things in there. I mean, you're absolutely correct as we've cited. The defense business is not immune to COVID, both in the L3Harris business, particularly in the international side of that business. I mean, the international portion of L3Harris business, so the one we've inherited through our acquisitions, is lower than our organic business, but it's still affected nonetheless. It's seen its share of impact there, as you couldn't travel to a lot of those locations. We've also seen some effects, as I mentioned, of the continuing resolution in the United States that prevents us from having new program starts or expansion of our existing programs. That has definitely been a headwind, and we hope to see that being resolved pretty quickly. I could point to contracts that we're on, like I mentioned, the SCARS contract in the United States and the GBSD, the Ground Based Strategic Deterrent contract that we're on in the United States for our L3Harris business, our ex L3Harris business. Those are big contracts and, you know, because you have the CR, continuing resolution, I mean, the contractors themselves, if I think about the prime contractor on GBSD, are not able to make progress in enlarging that contract, so that affects us. I don't know, I think maybe, Sonya, you wanna add anything to that? Yeah. I'd probably kind of talk about the organic-based business and what we talked about, and this is still the case, the base business, first of all, it did sequentially increase both top and bottom line since last quarter. As you know, our organic business has a higher proportion of international business, and as Marc just talked, that's the one that's been the most disrupted by COVID, especially international product programs, so a couple which are usually higher margins for us. First, interrupting execution of existing backlogs, you know, so in certain regions where contract execution is slowed or even stopped. As restrictions lift and programs can restart, that will help advance on both revenue and contribution. Also the impact of delays in order intake, especially on the international side. We've gone several years, at least definitely since pandemic, with book to sales less than one, as contracts are selected, et cetera, but not necessarily moved to awarded. Now we've seen some good advancement in the quarter with the book to sales on the international side going above one. As those take traction, whether it is the restrictions lifted, and we secure those delayed orders, on the product and international side, and then on, of course, some layer on the continued synergies that we're starting to ramp up with the acquisitions, these will contribute to growing both on the top line and the profitability. That's helpful. Maybe just last one for me. You know, I appreciate you know the pipeline of opportunities you see in healthcare, and I think there are a lot of you know synergies with your core competency in terms of what you're trying to do there. But maybe explain to me, like, when you have an incremental dollar of capital, why healthcare would be an appropriate place to put that versus what you're seeing within civil and defense? It just feels like, you know, you got better scale in those businesses. You can generate, I would imagine, better incremental returns. I guess explain to me why a dollar to healthcare would make sense versus the other two. Well, I think the first thing I'd point to, other than the fact that we continue to strongly believe in that healthcare will become a more material part of CAE in the not too distant future, that I'm quite confident of that. I think the thing I would point to specifically the question of capital deployment is that the business is largely self-funding. I think essentially all is self-funding. It's the question that you ask, there is really no decision to be made with regards to that. Okay. That's it for me. Thank you very much. Thank you. Thank you. The next question comes from Konark Gupta of Scotiabank. Please go ahead. Thanks, good afternoon, everyone, and congrats, Marc, on your accomplishments. Thanks. Maybe my first question, just following on the back of Kevin's question on Civil margin. Obviously, you saw a pretty strong performance here. I understand there's business jet training, which is higher yielding, and then cost savings as well flowing through. Anything sort of non-recurring in nature you would think are not you know going to recur again in Q4 or the future quarters you saw in Q3 perhaps that you can speak to? No. No, nothing recurring. No, Konark, this is just really, you know, I think a step up in operations, really, you know, a 35% increase in SOI on 60, still 60% utilization and lower delivery. It's really the mix. You see the operating leverage that's coming from that increase in utilization and the cost savings. I think there's no non-recurring items, just strong performance on the civil side. It's all good stuff, Konark. No, I was just kind of, like, more curious about, you know, seasonality in the business, right? Obviously, I know you have probably business jet training, it's stronger in the fourth quarter, and then it kind of drops off in the first half, right, sequentially. Like, does business jet make seasonality actually more pronounced in margins because of, you know, these dynamics? I think, well, we still have the normal seasonality, although it's not as pronounced this year just because there's so much disruption across areas. Look, it's too early to say, but I wouldn't expect so. I would, well, based on the mix that we have, I don't expect that we'll see a profound change. At least I don't see any so far. Would you add anything? Well, I would just caution that, you know, there is always volatility on quarter-to-quarter margins, right, because of the mix and so on. We always kinda give it a view on an annual basis. You know, I think there's no significant ups or downs there. Okay. No, that's helpful. Thanks. A couple of things on defense side of things. It rebounded sequentially, certainly, with both margins and revenue. I think last quarter, Sonya, I think you probably would have mentioned that, you know, you expect something in the 30s shortly and then eventually in the 40s in terms of SOI. What's your visibility now with the kind of recent order intake and defense? Does it give you more confidence in that 40+ SOI number shortly, or are you still think that's still ways out? I think a great performance on the order intake, and of course, that gives you confidence to build on future growth. What we like is that it's both on the U.S. and international side, both over 1 times. Like we spoke about it last quarter. We expect to be in the thirties in Q3. Then, you know, based on a few factors, securing delayed orders, especially on the product international side, as restrictions lift enough and consistently to be able to advance programs that we have in backlog and then layering on the synergies, that gives us kind of line of sight at around 40. Now, great order intake, but it does take a while to ramp up these orders. The average life of these orders are over several years. Yes, it's great at refill of the backlog, gives us better confidence for the quarter, but we'll see a lot of that ramp up, maybe just the start of that ramp up in Q4 and the rest for the upcoming years. Hey, Konark, one thing I want just to point out there, going back to your previous question there, or at least the first part of this question, is that biz jet training is usually the strongest for us in our Q4. I don't expect that to change. The one thing, as I mentioned, we were impacted like most everybody else in January with a lot of instructors off with the COVID-related sickness. You know, we're having a strong quarter, and we're back on trend. That's helpful, Marc. Actually, on the defense, I wanted to ask you another question on L3Harris. It showed some sequential improvement in margins. I'm just kind of wondering, is there some seasonality to that margin, or was there any synergies that you kind of realized early on? Yes, on the synergies. We're starting to see synergies come through. I guess what I would say is, I've always said in defense, it is no different. 1 quarter does not make a year. It's always been lumpy. I really expect it to remain lumpy, but you are seeing some synergies come through. Yeah. I'll just add, Marc, you know, we're ramping up the integration efforts. There were some redundancies actions, consolidation efforts, et cetera. You're starting to see some of those synergies flow through. Depending on where those synergies lie, because they could lie in the organic or the inorganic basis, it will drive some volatility. In this case, it fell more on the inorganic side. To Marc's point, that can drive some volatility in the quarters and so on between. Essentially, that's the synergy starting to come through. Great. Appreciate it, Bella. Thank you. Thank you. The next question comes from Fadi Chamoun of BMO. Please go ahead. Good afternoon, and thanks for taking my question. Again, around the margin, Sonya, you know, you were talking about 65% incremental margin this quarter. Is there a reason why you can't sustain this level of incremental margin going forward? I'm just kinda triangulating a little bit. You still have low utilization, travel recovery is still in the early stage, and that training network typically have very high incremental margin. Is that the right framework to think about the aviation business in the next two years as you kinda move up that utilization curve? We're also saying we see, obviously, the mix from business jets, which helps on the margins, and that mix will vary, especially as we hopefully see CAE appreciating on the margins as well. You're right. We're starting to see the operating leverage on the utilization kinda flow through, and also a big chunk, a significant part of cost savings. Now, the slope on those cost savings will start to slope, but it'll just kinda continue to help on the operating margin, so on the operating leverage rather. You know, I think it's a very good performance. You know, like Marc said, we see this with volume contributing to exceeding prior pre-pandemic peaks. Don't forget, Fadi, of course, that the future revenue will include a greater proportion of full flight simulator deliveries and ab initio kind of work or cargo aviation kind of work. That is a different margin profile. You can't obviously, you know, consider it's all a training revenue. Yes to your incremental margin, but certainly not straight line, right? Okay. That's helpful. The follow-up question is on the air mobility market, the eVTOL market, I guess. You're dabbling in it. You have some partnerships kinda coming through right now. I'm just trying to understand, like, what exactly you're helping these partners like, I guess you've got Jaunt and a couple of others. What exactly are we involved with these partners in terms of helping them part of the training, I guess, going into these big launches? And too, what does this market look like three to five years down the road? Does it look like more business aviation where you're providing full turnkey solutions? If you have any color around what kind of size market are you potentially looking at over the medium longer term? Yeah. Thanks for the question. I think, Fadi, the first thing I would object to is the word dabbling. We're not dabbling in this market. We definitely intend to be a major player in this market. I think it's a very exciting market. I've said that before. I think, you know, it's a market that will materialize, you know, before anybody thinks it does because it's so compelling. In the history of aviation, I'm a bit of a history buff, as I think you know, especially in aviation specifically. What has always stimulated the growth of aviation is new power plant technology. What you have here is new power plant technology, specifically distributed, electric, power plants and the immense software, systems that permits you to have these very complex vehicles that are inherently unstable to be able to be economically produced. That's why you see a plethora, a large number of these companies coming through to produce vehicles of all types to serve this air mobility market. We perceive we're not picking winners and losers here in this market. What we're doing is we're getting involved. By the way, it's not yesterday we became involved. I went to a major invitation-only conference about four years ago in this market that was held in Texas, where all of the players at that time were getting together and really saw the potential for this market. Short answer to going back to your question is that I certainly believe that this market is going to be needing about over 60,000 pilots over the next 10 years. There's no way that these pilots that are gonna fly these vehicles are not going to have to train to a high level in order to operate in the airspace that we have today, in congested airspace, because by definition, these vehicles will fly in and around cities, so they are gonna have to be trained. What you see is us positioning ourselves as the company we are. We can help, first of all, define the kind of training infrastructure and kind of training standards that will be required by training these pilots of these vehicles, working with the companies, working with the regulators, and offering the service. As you say, it may be a business aircraft type construct, or it may be involving us selling devices. It will be a combination of both. It is being defined today just as this market is being defined today. You know, make no mistake, I fully expect us at CAE to be a major part of that market. Okay. That's great. You know, maybe the last question. You mentioned about kind of how the aviation demand had been led by North America, U.S., I guess, in particular. Wouldn't kinda a pickup in travel in Asia and some of these markets that still are behind in the recovery be more attractive to you because you tend to do a little bit more wet training or a little bit more turnkey solution in those markets? I think if you have a look at the overall market for us in training, we've seen business aviation itself, you know, training doing very, very well. Of course, you know that's all wet, so that's very good. The rest of the world, I think when the recovery comes back in Asia Pacific, we tend to do, you know, on average, a bit more wet in that region. I think I would point to training in commercial aircraft as a whole. Today, Asia Pacific is operating, you know, at about 50% of where it was in pre-pandemic. There's a lot of recovery left to have in that market. Definitely, I think that any expansion going back to normal 2019 levels, whether it be wet or dry, is going to be good for CAE. Whether it be Europe, whether it be Asia Pacific, again, look back at what's happening in the U.S. In the U.S. today, it's a narrowbody-led recovery. People are scrambling to train their pilots. They're buying more simulators. If you look at the recovery in the simulators that we've had just this year relative to last year, it's quite impressive, largely driven by the United States and some in Europe. Imagine that rolling over into Europe and Asia Pacific, and I think there's a large potential for that. I think that leads us to where our asset base is. Today, about 33% of our simulators or about, you know, 54 simulator equivalent units are in the Americas. In Europe, they're about 44%, about 72. In Asia Pacific, 36. What's interesting, though, is, you know, as we talked about during the pandemic, we moved simulators, a lot of simulators, and we launched a lot of simulators to go where we thought, you know, using the Gretzky analogy, where the puck was going. Where the puck was going, where training demand will be. No surprises, being led by the United States. If you look at going into next year, where our simulators are, we're gonna have about the same number, an absolute number of simulator equivalent units in the Americas as in Europe. We're seeing we're shifting our asset base to where the demand is. I think that's gonna be pretty attractive. That's impressive, especially considering that we acquired FSC in Amsterdam, so inherently we've added a lot of simulators in Europe itself. The fact that we're to be on par, I think is, you know, a very good move that we've made, guaranteeing the future for us. Okay. Thank you. I appreciate the color, Marc. Operator? Thank you. If I could just interject for a second here. We still have quite a few people on the line, wishing to ask questions, and we'd like to get to all of them if we can. Maybe at this point, we would restrict to one or two-part questions just so that everybody gets a chance. Thank you. The next question comes from Cameron Doerksen of National Bank Financial. Please go ahead. Yeah, thanks. Good afternoon. I'll stick to one question. You know, obviously we've got maybe a little more visibility, you know, today on how the airlines are gonna recover. Maybe there's certainly some markets that are a little more uncertain. I guess maybe given that, you know, greater visibility by many airlines, can you talk a little bit about what you're seeing on, I guess, the potential for outsourcing? You know, I think one of the issues the last couple of years is that airlines just didn't know what their fleets were gonna look like and, you know, when the market was gonna recover. You know, as I said, there's probably a little more visibility today. I'm wondering if any of those kind of talks around outsourcing deals have picked up at all. Well, there's definitely, again, a high volume of conversations occurring, and there's some contracts occurring, and you're seeing that as a testimony to the amount of simulators that we've deployed in the United States specifically. You know, I was pointing in an answer to Fadi's question, the fact that we've been increasing the number of simulators, you know, quite substantially in the United States and all. Some of that is for business aviation, which is growing. You know, another large part of that is for the commercial aviation training network. All of those simulators are going essentially to either new airlines that are starting, which are going straight to an outsourcing model, or to airlines, including legacy carriers that are currently trusting CAE with long-term contracts for training. That's not de facto a complete outsourcing, but is definitely a different trend that you see where airlines have to, in order to be able to secure the training need that they have on an acute basis, they're willing to, and they're seeing the attractiveness of going into long-term contracts with us. That is a difference. There is continuing conversation and, you know, I would say that we're certainly not in a steady state. I mean, with yeah, there was maybe better than we were, you know, last year, but Omicron has, you know, turned a bit of a monkey wrench into, you know, any kind of steady state in the airline business right now. Okay. No, that's helpful. Thanks very much. Thank you. The next question comes from Kristine Liwag of Morgan Stanley. Please go ahead. Hey, thanks. Marc, you know, our domestic U.S. air traffic had a very steep recovery. If global air traffic follows a similarly steep recovery, let's say second half of the year, I mean, we don't know, but should it happen, can you discuss any labor or supply chain constraints that could slow down your ability to meet a potentially roaring demand? Because with the footprint that you have there, it sounds like it should be a pretty good year should we see that air traffic come in. I don't see it. I don't see any. Certainly, I don't see any kind of parts related issues that way. Labor, I don't see it. I think that we're well-positioned. You know, we spent a lot of time during the pandemic, especially the first year. If you go back to some of the things I was saying in the beginning, I said we would take advantage of the period that we have of lower demand, at lower demand environment to optimize our training network, and that's where you see a lot of recurrent and permanent cost reduction coming through. We also said that we keep our powder dry. Powder dry meaning that, I said it right from the beginning, people are not going to give up the freedom they have to travel. We see that. We saw it. We see that, certainly, in the domestic flying in the United States. We're going to see that. I see no structural, you know, reason that, you know, we will not benefit from that recovery. When that timeline is, certainly, I think the Omicron has likely extended that recovery timeline maybe, but that'll be measured in months, certainly not in years. Call us very confident in the long term. Thanks, Marc. If I could squeeze a second question on the MAX here. I mean, in December, we finally saw the Airworthiness Directive from the CAAC, paving the return to service on the MAX. Are you seeing any acceleration in training activity on the MAX from China? Well, we're definitely seeing training for the MAX. Training for the MAX is at high levels. It has been for a while on the return to service. Even before the return to service, as you know, people could see you know, the airplane is going to go back into the sky. I would just say it's a high level of activity, and I foresee that continuing as more and more MAXs are being delivered. Thanks, Marc. In China, I think what you'll see is that'll manifest itself largely in full flight simulator sales. Thank you. The next question comes from Benoit Poirier of Desjardins Capital Markets. Please go ahead. Good afternoon, congratulations, Marc, for your prestigious award. Marc, we've seen some M&A among the airlines with Spirit and Frontier. Any thoughts on whether M&A could slow down or accelerate outsourcing? Well. Would you foresee more M&A activity among the airlines, Marc? Well, I'm not going to predict it. I'll let you know, inevitably, you know, whatever that kind of event happens, it's usually a catalyst for us to have a discussion with them because the airline itself is looking for new ways of doing things. I think to me, that's where I would leave it. I, you know, I can't be a predictor of how much M&A they would have, but certainly there's a lot of opportunity in the airline business today. Perversely, it continues to be a number, quite a number of new airline starts, and that's good opportunity for us as well because, you know, we offer a ready-made, international, you know, actually global network of training solutions. Offering them a solution that was never there before. I think that's good for us. Okay, that's great. My follow-up is for Sonya. You provided great color about the booking for defense, the fact that it's been spread out on the global scale. Anything particular to highlight on what drove the big change in momentum during the quarter? For the free cash flow generation, was there anything unusual in the quarter, or should we expect another strong fourth quarter? I'll start on the free cash flow. I think it's just very, very strong performance in the quarter with CAD 282 million. That's on strong operational performance, and as you know, it's a very cash generative business. It's also driven with a solid non-cash working capital reversal in the quarter with over CAD 200 million of reversal. That's really continued persistent focus on working capital, improved collections, conversion of work in progress into AR and cash, and a reflection of higher orders. Higher orders come in with milestone payments and deposits on contract. That contributes to a really good performance of free cash flow. That's despite, you know, continued cash payments on the restructuring program, which was about CAD 38 million in the quarter. So nothing unusual, just strong performance and good reversal of warranty cap. You know, we've guided to continued 100% free cash flow conversion of net income to free cash flow. Now, on your first question, I didn't quite hear on the defense side. Just in defense, there's been a big change in the booking for defense. I was curious to get more color about what drove the big change, positive tone in terms of booking, with respect to defense, Sonya. Well, maybe I can answer that, Benoit. Look, it's the big pipeline of orders that we've talked about, the bids that we have that are waiting for customers to pull the trigger. Really, that's. You see a lot of that. We took advantage, especially internationally, where, you know, right before we call them, we had a period of time there we could finally start traveling, and people were willing to meet us. I can tell you, we took our international teams, took the opportunity to really go after it and fill the pipeline, and they did, you know. I talked about a defense book-to-bill above one. I can tell you it's well above one. I think they did a very nice job. That reverses the trend that we've had that are largely caused by COVID, that of the, of, you know, the orders gap in that segment, particularly internationally. In the US, look, I think it's just good work by our teams. Great work by our teams. I love the orders. As I said it in my, in the, in my remarks that are coming across on all five domains, the first prime contracts in the space domain, the first prime contract in cyber on top of the great wins, like, for example, the ab initio win that we had there for doing all the training for the Luftwaffe in Germany, beating a 60-year incumbent. I think it's great work by the teams in defense and working in collaboration. I would say, for example, on that last contract with their colleagues in the civil. They're leveraging the full power of, you know, what we like to call as One CAE. Thank you very much for the time. Thank you. Thank you. The next question comes from Tim James, TD Securities. Please go ahead. Thanks very much. Good afternoon, everyone. Marc, congratulations on that fantastic award. It's a real accomplishment. Having said that, I'm gonna save some time here. Actually, all my questions have been answered, so thank you. Well, thank you, Tim. Appreciate it. Thank you. you. The next question is from Anthony Valentini of Goldman Sachs. Please go ahead. Hey, y'all. You got Anthony Valentini on for Noah today. Thanks for the time. My first question is on the 10% training growth that you guys put out inclusive of the JVs. I think it's super helpful and, you know, the investment community is gonna welcome that metric going forward. I'm curious what that looked like over the last few quarters, if you can provide it and even, like, sequentially, I think would be really helpful. My second part for Marc, I'm just curious what you think the next catalyst is gonna be here for the global recovery, specifically in Asia. I know that you mentioned the new variant, but I know we've been having, you know, kind of this conversation on these calls for the last few quarters now. Is it a matter of us just learning or just in Asia, like us, learning to live with, you know, the pandemic, or is it an event like the end of the Olympics? Your color there would be great. Thanks. Look, I think it's just basically lifting of COVID restrictions. I mean, the real impediment to travel and overall revenue for us in training is not largely because people are afraid of getting on airplanes. It's because the people can't go anywhere or they have to wait, like, for example, in Asia-Pacific, in some cases, still up to 21 days, you know, of having to quarantine after you come back. That makes you gotta be, you know, you gotta wanna travel when you have something like that. To me, it's all tied to the lifting of those restrictions. The great news is I think that, you know, we're seeing, for example, I don't know where, you know, where you are. I think you're in New York, but I mean, here in Quebec, I mean, we're seeing lifting of all, you know, essentially all restrictions here in Quebec by the end of March. I think that's a very positive news. Doesn't do much for air travel, but I mean, it's an indication. We're seeing European countries, literally one by one, basically calling an end to restrictions. That's gonna be the catalyst. Ultimately, I think that's what we got to see in Asia-Pacific. And, you know, I'm not a government employee, I can't tell you when that's gonna happen, but I inherently, I know it will happen. Barring any new variants, hopefully not. But I mean, I'm optimistic that, we're on a good trend here. Okay. Hello, Anthony? Marc. Okay. Yeah. Yeah. The first part of my question. Oh, it's another- Uh- Yeah, you have another question, yeah, on the JV revenue. I think Sonya can give it. Yeah. 10%, including the contributions for JV. I don't necessarily have the last quarter on hand because there's a couple of different elements. What I would say is higher because obviously you see the utilization, and we saw a really nice ramp up on certain regions where we have joint ventures, but we can get back to you with the numbers. Okay, great. Thank you. Great. Operator, it looks like we've run out the hour. I do want to still use a couple of minutes, if we can, for members of the media, if there are any questions. For members of the media. As a reminder, via the phone lines, you may press the one followed by the four on your telephone keypad to register a question or comment. Once again, the one followed by the four. The first question comes from Stéphane Rolland of La Presse Canadienne. Please go ahead. [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] Excellent. [Non-English content] [Non-English content] Okay. Operator, we'll conclude the call at this time as we've overrun the hour. I want to thank all participants again for joining us today. [Non-English content]. I would remind you that the transcript of the call can be found on CAE's website at cae.com. Thank you. This does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Thank you and have a good day.