Good day, ladies and gentlemen. Welcome to the CAE First Quarter Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Andrew Arnovitz. You may proceed, Mr. Arnovitz. Thank you. 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, August 10th, 2022, and accordingly are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risk factors and assumptions that may affect future results is contained in CAE's annual MD&A, available on our corporate website and on our filings with the Canadian Securities Administrators at 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 the remarks from Marc and Sonya, we'll take questions from financial analysts and institutional investors, and 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. We had a mixed performance in the first quarter, with Civil delivering results in line with our view for strong annual growth and increased market share momentum. Defense results were disappointing. However, you know, coming in, you know, very well short of our expectations. The shortfall was mainly due to unanticipated discrete charges on two of our legacy programs and increased intensity of the Defense sector-wide headwinds that we're facing in this early stage of our multi-year growth journey. Now, we'd already factored into our prior outlook that the second half of the fiscal year would be stronger than the first, mainly because we're still working our way through the lag effects of a protracted period of less than one book-to-sales, and it takes time for new programs awards to ramp up. We also expected some of the additional headwinds in the first half, but they were significantly more acute than we thought they'd be. Now, order activity is the best indicator of our future growth, and despite a challenging global environment for CAE overall, we secured over CAD 1 billion in orders for a record CAD 10 billion backlog and 1.12 book-to-sales ratio. In Civil, we made excellent progress converting our large opportunities pipeline into CAD 522 million of orders for a 1.09x book-to-sales ratio. Now, these include long-term training agreements with airlines and business aircraft operators and 11 full flight simulator sales. Notable training contracts for the quarter involved several exclusive training agreements in the Americas, which add to the long list of exclusive training agreements that Civil has signed in the last year and a half with the vast majority of major airlines in the region. This quarter, they include a three-year extension to a long-term exclusive training agreement with Mesa Airlines, a five-year exclusive training agreement with United Airlines, a five-year exclusive training agreement with JetBlue, and a 10-year exclusive training agreement with another major North American airline. In the UK, Civil expanded its existing 12-year exclusive commercial aviation training agreement with Virgin Atlantic to include the Boeing 787 platform, now covering all their existing aircraft platforms under the training exclusivity. In business aviation, Civil concluded a pair of three-year training agreements with TAG Aviation Holding and the NATO Support and Procurement Agency. Civil's YoY financial and operational performance was also strong in the quarter, with double-digit growth in training revenue and adjusted segment operating income. We delivered 10 full flight simulators in first quarter average training center utilization with 71%, up from 56% last year. Training demand in the Americas continued to be strongest, followed by a much improved Europe, and is still lagging Asia-Pacific, which remained at much lower level due to travel restrictions. In business aviation, training demand continued to be robust, reflecting a sustained high level of business aircraft flight activity. Now, turning to Defense, we booked orders for training and mission support solutions valued at CAD 488 million for a 1.18x book-to-sales. Although we were expecting some key orders that push rightward this quarter, this represents a record level order intake for Defense in a first quarter. Now, we normally see some variability in quarterly Defense results, and so performance is best evaluated on an annual basis. To that point, our trailing 12-month book-to-sales ratio of 1.31x is to me a very good indication of the trend in order momentum. We continued to build on that momentum in the quarter, winning orders across all five battlespace domains. In Air domain, we entered a contract with the Netherlands Ministry of Defence to provide a training system in support of the NH90 training program. In Land, the US Army Synthetic Training Environment Cross-Functional Team awarded CAE a task order to develop a soldier virtual trainer prototype with immersive capabilities that empower soldier-led training. The point of need, meaning that is deployable. In the C domain, in partnership with Lockheed Martin, we were awarded the design support contract on Royal Canadian Navy's next generation frigates. In space, we awarded a contract from the Air Force Research Laboratory as part of the Starfish Initiative to develop prototype software that enables simulation of current and future capabilities operating across a multi-domain environment. Finally, in the cyber domain, as part of a larger team, we secured a position on the approximately $1 billion ACT-3 IDIQ contract vehicle. While Defense's order activity was generally positive in the quarter, financial performance was clearly not. The loss incurred of $21.2 million was driven mainly by unanticipated charges on a legacy CAE training program with the U.S. Navy and a legacy L3Harris military training classified U.S. program. These two discrete charges totaled $28.9 million in the quarter and result from our reassessment of cost estimates following discussions with our customers this past June. The reassessments are due in part from delays in meeting customer requirements of scope and timing, as well as a change in expectation for the expansion of the program requirements. In the case of the U.S. Navy contract, customer utilization trends have exceeded our estimates, resulting in cost growth on a firm fixed price contract, and our expectations for contract adjustments and extension at more favorable terms have changed. The program in question is the Chief of Naval Air Training, or CNATRA contract, with contract instructional services, where CAE provides classroom and simulator instructors at five naval air stations to support primary, intermediate, and advanced pilot training for the United States Navy. The second charge stems from a classified U.S. program that's also structured on a firm fixed price basis and involves the initial phases of a large, long-term opportunity. The program is a complex national defense priority, and our current work positions us well to capture significant future opportunities on the program. Now, given the nature of the work, which is performed in close quarters, COVID-19-related staff shortages of cleared professionals have been highly disruptive to the program schedule. In addition, logistics and shipping costs, which are significant for this contract, increased our estimated cost to complete. After a rebaseline review of the program's critical schedule elements and deliverables with the customer in June, the cost to complete were revised upwards. Due to the critical nature of this program and the strategic long-term value it holds for CAE, we're working towards meeting our commitment to the customer and positioning Defense for future work. I'd add that while we're hopeful that the customer will work with us in the future for equitable adjustments that could help to offset some of the charges taken this quarter, at the moment, we haven't included any of those in our expectations. I'd also add that we have a clear understanding of the specific issues that resulted in the charges taken on both programs. After thorough analysis, we consider that these provisions capture adequately the expected cost overruns, and I'm confident that there's no more negative surprises like this one in our backlog. Beyond the two program charges, Defense performance was still below our expectations for the quarter. Across the company, we've been managing through labor and supply chain challenges that have been consistent with what we observe in the broader economy. However, in Defense, these challenges were more acute as sector-wide staffing shortages led to less billable work on cost-plus contracts and inefficiencies on other work. Supply chain challenges were also more severe than anticipated, which pressured schedules. We also experienced delays on a few key orders we were expecting to commence work on in the quarter. Excluding the charges and impact of these additional challenges, Defense performance would have been more consistent with our expectations and the full-year plan, which also considers a more elevated level of business proposal costs as we pursue several large awards that are in our pipeline. Finally, in Healthcare, we continue to drive double-digit revenue growth with our innovative solutions. Healthcare leadership team transitioned from Heidi Wood during the quarter. We're grateful for her contribution and wish her well in her future endeavors. Healthcare is now being led on an interim basis by Jeff Evans, who is formerly head of sales and has been instrumental in driving the business' extended period of double-digit growth. Now, notable during the quarter, Healthcare has expanded its strategic relationship with the Mayo Clinic College of Medicine and Science, finalizing a partnership for its LearningS pace center management solution for Mayo's Simulation Center in Rochester, Minnesota. Healthcare also increased its presence and visibility in the U.S. through efforts supported by CARES Act funding and Mon Health System to address West Virginia's increased demand for nurses with the deployment of mobile training units. With that, I'll now turn the call over to Sonya, who will 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. Consolidated revenue of CAD 933.3 million was 24% higher compared to the first quarter last year. Adjusted segment operating income was CAD 60.9 million compared to CAD 98.4 million last year, and quarterly Adjusted net income was CAD 17.6 million or CAD 0.06 per share, compared to CAD 0.19 in the first quarter last year. This quarter's results include CAD 28.9 million in unfavorable contract profit adjustments in Defense, which accretes to a CAD 0.07 negative EPS impact. We incurred restructuring, integration, and acquisition costs of CAD 21.5 million during the quarter, including CAD 16 million related to the L3Harris military training and AirCentre acquisitions. Free cash flow was -CAD 182.4 million compared to -CAD 147.6 million in the first quarter last year. The decrease was mainly due to lower cash provided by operating activity. The decrease was partially offset by a lower investment in non-cash working capital. We usually see a high level of investment in non-cash working capital accounts during the first half of the fiscal year and tend to see a portion of these investments reverse in the second half. Growth and maintenance capital expenditures totaled CAD 73.9 million this quarter, mainly for growth and specifically to add capacity to our global training network to deliver on the long-term exclusive training contracts in our backlog. Income tax recovery this quarter was CAD 500. CAD 0.5 million for a negative effective tax rate of 16%, compared to a positive effective tax rate of 18% for the first quarter last year. The income tax rate was impacted by restructuring, integration, and acquisition costs this quarter, and excluding these costs, the income tax rate this quarter was 21%, which is a rate we use to determine the Adjusted net income of CAD 17.6 million and Adjusted EPS of CAD 0.06. Our net debt position at the end of the quarter was approximately CAD 3 billion for a net debt to Adjusted EBITDA of 4.1x at the end of the quarter. The more elevated debt ratio this quarter reflects the impact of the two non-cash charges in Defense. We continue to expect net debt to Adjusted EBITDA of below 2x within the next 15 months. Now turning to our segmented performance. In Civil, first quarter revenue was CAD 480.4 million versus CAD 432.9 million in the first quarter last year, and Adjusted segment operating income was up CAD 16.9 million from the first quarter last year to CAD 86.6 million for a margin of 18%. Our Civil performance reflects a mix of higher training revenue in the quarter, offset by lower revenue from simulator deliveries, life cycle support services, and a less favorable program mix. We also incurred higher R&D investments to support our innovation pipeline. In Defense, the first quarter revenue of CAD 413.3 million was up 43% over Q1 last year due to the integration of the L3Harris military training into our financials. Adjusted segment operating loss was CAD 21.2 million for the quarter, compared to an Adjusted segment operating income of CAD 23.7 million in the first quarter last year. The loss this quarter was driven mainly by the aforementioned contract profit adjustments and the more acute challenges than we expected, stemming from staffing shortages, supply chain pressures, and slower order awards. These additional challenges had approximately CAD 20 million dollar impact on Adjusted segment operating income. We also had higher SG&A costs for bids and proposals that were approximately CAD 6 million dollars greater than what we had in Q1 last year. The higher bid costs were expected as they're linked to our pursuit of larger opportunities pipeline, but they were more impactful given the other Defense headwinds. In Healthcare, the first quarter revenue was CAD 39.6 million, up from CAD 31.6 million last year. Adjusted segment operating loss was CAD 4.5 million in the quarter compared to an income of CAD 5 million in Q1 of last year. Last year's results included a higher level of investment tax credits, while this year we had a higher level of SG&A expenses to support growth. With that, I will ask Marc to discuss the way forward. Thanks, Sonya. As we look to the period ahead, despite the prevailing macroeconomic headwinds and added Defense sector-related challenges, we continue to see a clear multi-year path to becoming a larger, more resilient, and more profitable CAE. In Civil, our outlook is as bright as ever. We're in the early stages of an upcycle with near record margins with plenty of room to grow beyond that. We've invested both organically and inorganically to expand our training network globally, leveraging our position as the world's largest Civil aviation training company. A greater desire by airlines to trust CAE with their critical training in digital operational support and crew management needs, acute pilot demand, and strong business jet travel demand are enduring positives underpinning a secular growth market. Now, the unevenness of the global recovery is likely to continue for some time, but 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 this fiscal year, driven by high demand for pilot training, as evidenced by robust full flight simulator sales and exclusive long-term training agreements we've secured in recent quarters with virtually all major airlines in the Americas. We're poised to continue growing market share from an expanded pipeline of Civil training opportunities, and I believe these successes provide a compelling blueprint for what a broader global market recovery holds for CAE. In Defense, despite the additional challenges that we encountered in the quarter, the positive long-term outlook that we shared at our Investor Day in June is unchanged. We're on a multi-year journey to become bigger and more profitable, and the first and more critical link in that chain involves winning orders. Our record order intake last year and for the first quarter confirm that we're indeed on the right path to growth. Critically, the orders that we won over the last year and a half bear a profitability profile that's consistent with our long-term view to returning to a low double-digit margin in Defense. Furthermore, our record $9 billion of Defense bids and proposals is the result of bidding more and bidding larger. An important element of our strategy involves strengthening our strategic relationships with OEMs, and the memorandum of understanding we signed last month with Boeing is a great example of how the major OEMs recognize CAE's unique expertise in training. We agreed to expand our international teaming and supplier networks to provide solutions that support both customer and regional development. The external environment for Defense remains largely favorable, with some near-term headwinds having become more acute, but we believe temporary. Current geopolitical events have galvanized national Defense priorities in the United States and across NATO, and we expect increased spending and specific prioritization on Defense readiness to translate into additional avenues for CAE to support our Defense customers in the years ahead. Although somewhat counterintuitive, the immediate priority on operational needs is actually contributing to training program award delays in the short term. Taking all these factors into consideration, we're lowering our expectations for Defense for the current fiscal year to account for the two U.S. program charges that we just incurred and to reflect the more acute sector-wide headwinds that we're now experiencing, namely supply chain pressures, labor shortages, and a slower Defense contracting environment. We had previously indicated our expectation for a back half-weighted performance in Defense this fiscal year as we managed through the effect of a protracted period of less than one-times book-to-sales and begin to ramp up new orders in the second half. The initial Defense headwinds have made this weighting even more pronounced, and we expect them to largely continue into the next quarter and then gradually abate during the course of the fiscal year. As the year progresses, we expect to be able to partially offset these impacts through new internal cost reductions and efficiency initiatives that are currently underway. Lastly, in Healthcare, the long-term potential continues for it to become a more material and profitable business within CAE as it gains share in the Healthcare simulation and training market and continues to build on its double-digit revenue growth momentum. For CAE overall, we're reducing our outlook for the current fiscal year to mid-20% consolidated Adjusted segment operating income growth from the mid-30s previously, which largely reflects our revised expectation for Defense. We greatly enhanced our position and expanded our addressable market over the last couple of years, and I have complete confidence in our team's ability to maintain a strong order momentum and drive superior and sustainable growth in profits over the long term. Broadly speaking, the underlying trend lines of our multi-year progress are very much intact, and my conviction in CAE's long-term growth outlook is resolute. As such, we continue to target a three-year earnings per share compound growth rate in the mid-20% range. With that, I thank you for your attention, and we're now ready to answer your questions. Thanks, Marc. Operator, we'll now open the line to members of the investment community for their questions. Thank you. If you would like to register a question, please press the one four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. Once again, to register a question, please press the one four on your telephone. One moment, please, for the first question. Our first question comes from Kevin Chiang with CIBC. Please proceed. Hi. Thanks for taking my question, and good afternoon, everybody. Maybe I could dig into some of the details you gave in terms of what happened in Defense. Marc, it sounds like you're confident that it's, you know, the provisions you've taken only relate to these two contracts. I guess, you know, historically, when we look at these type of issues, you know, a lot of times it ends up being a lot more systemic than just one or two contracts. Maybe you can give us a sense of, you know, why you're confident that the issues that you found are isolated to these two contracts. Maybe what made these two contracts unique, and why it's not more systemic in your backlog, and maybe any changes in your bidding process that might have occurred as a result of maybe this reevaluation. Yeah. Maybe I'll take it in two parts, Kevin. Look, you know, I'll be the first one to tell you that the performance in the quarter certainly doesn't meet our expectations or my expectations for Defense business as a whole. Look, I'll start with maybe the specific charges that we took. Again, I'm not happy with them. These were surprises to us that occurred in June as a discrete customer-led events that caused us to recognize these. You know, we rebaselined both programs following the customer discussions we had in June. I think we've taken an appropriate approach going forward and having to recognize the charges we took. To give you a little bit more color on them, just to tell you that, you know, I feel pretty darn confident that, you know, we could isolate these programs. Because you would imagine, and just, you know, taking a step back a second when you get impacts such as we've seen here, it forces a complete review of everything in your portfolio. You would have expected me to do that. Just to go back on the programs. On the first one, on the Navy training contract, CNATRA, this is where, you know, customer demand has really outpaced our expectations. I mean, we train, you know, as I said in the remarks, we train at five naval air stations, one of them being Corpus Christi. The Navy has been training at a very high rate, higher and, to be very frankly, higher than we bid at. We bid this years ago. It's a legacy contract. We had put cost reduction measures in place to improve the profitability on that program. What's happened now is they're shrinking time to realize the benefit because the contract, you know, comes to an end at the end of this fiscal year. You ask, "Well, you know, how could that be?" What happened here is that we had very good reason to believe this. We anticipated that the customer would have extended this particular contract at updated terms. As I said, there's less than nine months left in the period of performance. Yet somewhat to us, very surprisingly, we have yet to get an RFP, which frankly, as I said, is pretty counterintuitive given the very high customer usage to date. I mean, they're really training very hard. Now, given the shortened period of performance, we just have no runway left to take account of any equitable adjustments, any measures that we've taken to reduce costs. There's just not enough time. We had to take the charges. Now, we haven't factored that these any extension of contract, which I fully intend to happen. That's one to stay tuned on, but we haven't taken any benefit of it. I think we've taken a conservative, prudent approach here. Now, on the other contract, on the classified contract that I mentioned, this is really initial work on a, I would tell you, an area of opportunity for us where that really got impacted by COVID-19 most recently. You know, again, I don't like the cost scope on that program, but I can tell you that I, because of, you know, what's happening here, I was on site on that program just, you know, less than two weeks ago. You know, I like to be able to look in the whites of the eyes of program managers, of engineers, of people working on a program. I feel very confident about the rebaseline program. I can promise you that this team is extremely diligent and will be even more so in evaluations of the schedule, and not only this program, in all of our programs. You know, not just to validate, if I go back to this program itself, not just to validate our cost estimates, which we've done, but to make sure that we're positioning ourselves to capture the long-term opportunity that this program sets up on this program. Because it, as you know, as I intimated in my remarks, the follow-on work on this contract is very large. I'm talking an order of magnitude here with the potential for very attractive margins when it reaches a mature state of production. Look, I mean, we again, I'm not happy with performance, but look, none of this to me changes our long-term outlook for the Defense business that we outlined, for example, at the Investor Day. Our orders that you've seen have been outstanding. We're tracking some very large opportunities. And with respect to the, you know, short-term cost impacts, we have put a number of very specific actions in place, you know, already to address the challenges in each category, whether it be manpower, whether it be parts, you know, any other factors affecting us. I can tell you personally, you know, in my 35 years in the aerospace industry, having managed very large programs in the past, you know, full aircraft developer programs, I've seen this kind of thing before. You know, big work, you know, introduces its very, very specific challenges. I can tell you, I'm all over it. The team's all over it. You're gonna see us making progress in the margin rates in the coming efforts as those efforts take hold, and that's what we've reflected in our outlook. That's helpful color. Maybe just, like, you just had an Investor Day, you know, let's call it, in the middle of the quarter, in the middle of the previous quarter. I guess these issues weren't evident at that time, I guess, just to state the obvious. You know, when you reviewed from the outlook at that point in time. I guess, at what point did you realize that you have to start taking these provisions? Late June. Okay. That's when it happened. Yes, it did come as a surprise. Okay. I don't like surprises. You don't like surprises. We don't like surprises. Okay. That's what happened. As I said, as I highlighted in the remarks, the discrete charges, they're non-cash. They're one-time in nature. We've rebaselined every program in the portfolio. We've taken very specific actions on the rest of our programs. So yeah, I'm quite confident going forward. If I expand it, look, and even, and I'm sure the follow-on question might be that, and I think we've intimated in the remarks that even if you take those two charges out, the three charges, the profitability of our Defense business in the quarter is still very low. I think we expected that. We expected that. Now, we tell you, I didn't expect that much, to be very frank with you. We knew it would be back half. If it wasn't for the charges that we've taken here, I think we largely could have probably maintained our outlook. You know, what we've had here, we just can't. I could expand upon that. No, that's super helpful. I'll leave it there. Thank you for taking my question. Thanks. Our next question comes from Fadi Chamoun with BMO. Please proceed. Yes. Thank you. Good afternoon. I guess I got a couple of questions. One is the guidance for mid-20% EBIT growth, if we're assuming Civil is still on track to be mid-30% EBIT growth, really implies a very strong performance in the Defense in the next nine months. Like, you would have to be doing almost 45% growth in EBIT in Defense in the next nine months to basically be in that mid-20% EBIT performance for the year. I just want to make sure I'm understanding this because excluding the charges, the underlying profitability in Defense was only 2%, and you seem to suggest that, you know, the headwind that kind of pressured that margin will continue at least into the second quarter. Well, it'll gradually abate, but we're still gonna see it in the second quarter. As I said, we see, you know, more of a substantial uplift in the second half, which has always been our, you know, our outlook, but, you know, in a pronounced way. I think, look, I'm not gonna break it down from a sector standpoint, Fadi. We purposely did not do that. You would expect, I think that when you have, you know, issues like we had in the quarter, we are adopting a company-wide effort on this. It's not, you know, we are taking actions that not only affect the Defense business, but the business as a whole to maintain the profitability growth profile that we've indicated in our outlook. The other thing I would tell you is that, you know, I talked about some of the orders. Although we've done really, I would say, really well in the quarter on orders, and especially on Defense orders, I think we've said in the past that not all orders are created equal. There's some orders that we really, frankly, totally expected to happen in Q1 that did not happen. Now, some of those orders, we have won them subsequently, I can tell you. Those turn into because more, you know, the ones I'm talking about, which convert into, you know, revenue faster is product orders. Therefore, when you take all of that into consideration, you will get to the outlook that I talked about. Okay. You know, maybe the follow-up is, I mean, you've always run a very kind of fixed cost contract business in the Defense. I think the majority of your revenues are fixed contract business. We've never really had these types of, you know, contract issues in the past. Is there like what's different that happened kinda recently to kinda make these, you know, cost performance deviate so much from your assumption? I guess you gave some explanation on the U.S. Navy contract. But is there anything changing in how the business is being awarded or the risk profile that you're taking on these contracts that, you know, increases the risk of margin in Defense? Or is this just a unique one-time kinda event here? No, look, I think you're right. Look, first of all, you're absolutely right that we haven't seen this before. Again, all the time I've been at CAE, we have never seen this magnitude of impact in one quarter. No, you're absolutely right. We haven't had a habit of running out of contingency on a program like that. As I mentioned before, the CNATRA, which is part of the charge, very specific in nature, and because the contract not being renewed at the time that we thought it would, we still think it would. That's one factor. Just maybe give you an idea, you talked about the Firm-Fixed-Price. About 80% of our contracts are Firm-Fixed-Price. Now, that's actually, you know, that's a much better picture than we were, you know, when we were before the L3Harris transaction. Now, I wouldn't be overly perturbed by that number because remember, there's a lot of service contracts in there. Service contract, we have very, very high predictability. All of the others, as I talked about, you know, again, you get an event like this, it forces you. I'm not saying that we weren't, you know, monitoring the programs before, but clearly there's an extra level of scrutiny that occurs when a program like this happens. You know, we, when we look at the contract, you know, the fixed price contract that we have for, you know, this classified program that I visited just a couple weeks ago, this is a very complex program. We inherited this contract through the acquisition of L3Harris. Would I wish that this contract, which is a development program, had been bid differently as, you know, as not a firm-fixed-price contract? Yes, I would have. Do I think we could have done a better job, I think in hindsight, of seeing that the fact that we had literally over 60 very highly cleared personnel working on this contract that were off on COVID for a long time and finding it very hard to replace them because they're cleared personnel. Could we have seen this thing better in hindsight? I would tell you yes. I would tell you the measures that we put in place for increased level of program management oversight at all levels of the company are there. You know, I'm pretty confident. In terms of extra factors, what's changed, you know, I would tell you that what's changed is that what you see, I mean, we're not alone in this case. You see across the industry, labor shortages, supply chain pressures, contracting delays, but and that's impacted our results significantly. We anticipate some of those, they're worse than we thought. Now, one of them is labor. Now, when I look at our labor hiring in the last couple of months, we have reversed the curve. Actually, we're on the positive trend now. We have the labor we need to be able to execute the contracts per the assumptions that we've made. Maybe I'll stop there, Fadi. Okay. Appreciate it. Thank you. Our next question comes from Cameron Doerksen with National Bank Financial. Please proceed. Yeah, thanks very much. I guess a question on the Healthcare business. I mean, I appreciate it's still pretty small, but, you know, there's been, I guess, maybe this is not the right term, but a bit of a revolving door on leadership of that business. You know, I'm just wondering if you can maybe, you know, talk about the change there. Why should investors think that this business is now gonna be on track to ultimately getting to more consistent profitability? Well, you know, what can I say, Cameron? It's I absolutely, you know, understand this is a show me story. What I would tell you it is, the show me starts with six consecutive quarters of double-digit revenue growth. Now, that has to translate into bottom line growth. I've said it before, and it's true, continues to be true, that we've invested substantially in R&D and SG&A, meaning sales force, to be able to regain the result that we have. I would tell you the change that we had in leadership of Healthcare has gone very well. I've not got a comment, although I will agree with you that we have had somewhat of a revolving door at Healthcare. Cannot debate that with you. I can tell you that I'm very, very happy with the performance of Jeff Evans, who's leading the business at the moment. He's acting as interim at the moment, but I can tell you I'm very satisfied with the performance so far. I would tell you that Jeff himself, who's a 19-year veteran of GE HealthCare, have been running large P&Ls for GE, he is the architect of or the main architect as head of sales for the run-up in revenue that you've seen. I can tell you as well that we've taken significant steps to improve the profitability profile by reducing costs in the business. You've heard me say before, and continues to be true, the profitability of the products that we have in Healthcare are very good, are very good. We are suffering, and perhaps this is not surprising. We are suffering from inefficiencies because we have a high degree of part shortages. What you have is, if you were to go into our facility down in Sarasota, which I've been, you know, quite a few times, you would see basically, you know, three-quarters built products, medical mannequins, for example. Then when we get the parts, we complete them, we take them out of storage, we put the parts in, we retest them, and we ship them. You can imagine that causes a lot of inefficiencies over time. You know, basically quality issues, all kinds of issues that are not great for your profitability profile. I'm quite confident that a lot of those are abating themselves. I'm quite happy with the way forward, and I think you'll see some progress in the quarters to come. Yeah, I agree, Marc. It's a great summary. I'll just add a little bit of additional color on some drivers of the variability. You know, there is some R&D funding investment tax credits that go through Healthcare as well as the rest of the business. And these things can be lumpy. Last year was actually a tailwind. This quarter was actually a headwind. You know, in the larger organization, that doesn't have a lot of impact, but on Healthcare that's a much smaller P&L, these kind of variabilities have a larger impact on the QoQ. In addition to everything that Marc just walked through, there is. We have to consider a little bit of, I guess, a non-routine variability coming from R&D investment tax credits. Okay. No, great. Appreciate the additional information. I'll leave it at one question. Thanks very much. Thank you. Our next question comes from Konark Gupta with Scotiabank. Please proceed. Good afternoon, and thanks for taking my question. Just wanted to follow up on the Defense mix here. Just trying to understand, Marc, how do these two adjusted contracts impact the margin mix for Defense segment over the next three quarters as well as your long-term outlook for double-digit margin? Well, I think the first thing I'll tell you is, as I said in your remarks, that, you know, although we bid them that way, we're quite confident the rebaselining of the programs that we've won, you know, all the programs that we've won in recent times, certainly since we've had the new organization in place under Daniel Gelston, the profitability profile of that backlog supports, you know, our objective of low double-digit margins in Defense. That's the first thing I would tell you. I would tell you as well that, you know, we have a very firm handle on the inefficiencies and other, you know, impacts that we had that affect the profitability of our business. I'm talking. I'm taking the two program charges aside for one second. I'm just saying the inherently low, you know, percentage of profitability in Defense in this quarter just results from, again, the inefficiencies that we had, you know, on labor, on parts. You know, sometimes lead times on parts have doubled. Doubled. The cost themselves have changed and introduced, you know, all kinds of inefficiencies that you would get on overtime, things like that. Now, again, I would say that, and again, I get a bit repeating myself, that we had always anticipated that the first couple of quarters of this year in Defense would be challenging for some of these factors that we could see. What I would say is that we're worse than we anticipated. It took us longer to get back and hire clear personnel than we thought. Part shortages impact us more than we thought. We have a pretty good handle on it and quite confident in that these factors, as they affect us, will abate in the second half. And again, leading into Defense contribution to the outlook that we've given. The other factor I would say as well is if you look at the amount of business proposal money. Now our bid proposal costs this quarter are up very materially as we track some very large opportunities in our bid pipeline. And we talked about some of this in our Investor Day. Now, it's not very different from our internal expectations that we would bid higher. Some of these programs, I can tell you a couple of big Canadian programs, came at the same time in the quarter, and we cannot afford not to bid them. They are so large. That causes a disproportionate amount of business proposal costs in this quarter, which, you know, is not necessarily going to be the same as we go throughout the year. Just again, to help you understand the quantum here, the expenses on bigger proposals roughly, again, doubled over last year and are up, you know, pretty much the same thing this year. What you're seeing here is the pre-work that we're doing to capture the opportunities that Dan Gelston outlined at our Investor Day. We're attacking those hard, and I think all of that answers your question as where are we going in Defense and in terms of its profitability. That's great. I appreciate the details and transparency, Marc. Thank you. Our next question comes from Benoit Poirier with Desjardins Capital Markets. Please proceed. Yes. Thank you very much, and, good afternoon, everyone. Just to come back to Healthcare, given the favorable valuation for healthcare companies these days and in light of the performance, would you consider potentially divesting these assets and just searching for a new leader? What are the qualifications that you're looking for in terms of a new leader for Healthcare? Well, I'll take your second one is basically a leader that's going to drive the profitability growth of our Healthcare business, going to basically make it a more sizable contribution and accretive contribution to CAE's results. That's the minimum threshold for that. As I said before, I think so far, Jeff Evans is demonstrating to me that that is the case. You know, there's more to see on that front. Look, as I said before, I am very confident in how Healthcare fits into CAE's overall portfolio, and it very much supports our noble mission. There's substantial synergies across our organization in terms of, you know, facilities, in terms of people and technologies. It's part of our portfolio, and there's no thought about changing that. Okay. Just looking at the Civil EBIT margin that came in below our expectation, on the back of a higher utilization rate and lower equipment deliveries where margins tend to be lower. Could you provide more color on what's putting pressure on margin, whether it's more equipment, commercial business shift, and how we should expect Civil margins to bounce back throughout the year? Well, look, I would tell you that, you know, Civil has certainly met my expectations. I think I've said this many times before, Benoit, in any part of our business, I wouldn't look at this quarter-to-quarter. But having said that, I'm very bullish and very satisfied of what I see in the Civil business in the quarter. Of course, you know, the indicators lead to the outlook. You look at the orders, you look at training utilization is 71%. That is, you know, prior to COVID, we would have said that's a pretty good utilization. We're seeing, as you look at the results, you know, and I'm sure you are, you look at the results with a fine-tooth comb, you're seeing that, you know, the cost reductions translate into a result. I mean, we're already, you know, even at this 18%, that may be down to your expectation, but don't look at it quarter for quarter because utilization, we said it before, is not a perfect measure. You know, you always have product mix that's maybe less favorable in a quarter. This quarter, we had higher R&D expenses to support some of our innovations, like for example, eVTOLs, like we spoke about that yesterday. So in this quarter, it's really the mix, and I fully expect, you know, you might look at next quarter, it might be the other way around. Look, I remain very firm that this business is going to realize strong results in the future, and our results, to me, what I see supports that. Very bullish. Okay. Thanks for the color, Marc. Operator, we don't hear you. Operator, are you still there? Hello? Thank you. Our next question comes from the line of Benoit Poirier of Desjardins Capital Markets. Please proceed with your question. Okay. Thank you very much. Our next question comes from the line of Tim James of TD Securities. Please proceed with your question. Thanks. Good afternoon, everyone. I just wanna change the discussion a little bit here, although sticking with kind of the Defense side of the business. Marc, I'm just wondering if you could kind of update us on any evidence that you are seeing of growing demand for virtual military training over live or just new applications, you know, in the simulation industry that support the secular growth story for simulation-based training. I'm thinking of aviation, more specifically. Hello? Pardon me. This is Frank. I can introduce the next question from Tim James from TD Securities. Yes, go ahead. Okay. Can you hear me okay, Marc? Yeah. Sorry, we don't know what happened there, Tim. We just got radio silence for a while, and we thought we lost the line. All right. Actually, we did. I worded my question. Okay, go ahead. I worded my question so well. I don't know if I can do it as well again here. I'm wondering if you can update us on any evidence you are seeing, whether it's in this most recent quarter or maybe the last couple of quarters, of growing demand for virtual military training, you know, relative to live, or just new applications for simulation and the technology that support, you know, that secular growth story for simulation-based training. I'm thinking of aviation more specifically. When you say aviation specifically, well, can you just expand on that? What do you mean there? Well, I mean, military aviation training as opposed to some of the other sort of fields, other domains that you've gotten involved in in recent years. I'm just thinking specifically of aviation applications. Well, I would tell you, look, the trend that we've seen, increased use of simulation for training in the military continues, and continues to increase for very real reasons. What does the military do and when they're not in operations is they train for operation? That's all that they do in order to maintain readiness. They need to do that in an environment where, you know, costs are always an issue. Costs are an issue. There is still, you know, plenty of room to grow the use of simulation-based training, not only I would say using full flight simulators, but using new technologies, and I think maybe that's where you're intimating to, which we are investing in significantly and are deploying in some cases, to, like, for example, AR/VR, as just an example. One of the contracts that we announced this quarter is goes to that point where we're actually developing using AR/VR, a deployable trainer for people to be able to train, you know, when they're in operations or even down to a local sheriff's office of, you know, doing, for example, what they would have done in a gunnery range. Rather than having a full gunnery range with real guns, for example, you can do it virtually, and you can do it deployed. That's just one example. There's plenty of that to go, and some of the. You know, when I look at some of the very big real opportunities that are in our pipeline, represent that. Again, I would point to you at the macro level, look at the bid pipeline. The amount of bids that we have out there has increased quite substantially, and the orders that, you know, are at, you know, five-year highs in terms of our, you know, if I look at our book-to-bill, it's the highest bid out of 12-month trailing, you know, trailing basis, which is, I say, always look at that, look at the 12-month trailing basis on our order intake. It's the highest it's been in five years. I think that's demonstrating where we're going here in growth and Defense. Okay. That's helpful. Thank you. My only question, just turning to the AirCentre acquisition. At the time of the transaction, it was indicated that sort of pre-pandemic, that was a $150 million, I believe it was annual revenue business and about $55 million in EBITDA, US as well. How should we think about kind of the or would we be wildly off if we kind of thought about that business as contributing a similar amount sort of today at this point, if we think about the first quarter? Is there anything, you know, specifically different relative to kind of pre-pandemic? Is it simply lagging kind of as the rest of the commercial aviation business as relative to sort of pre-pandemic? I'm just trying to get a bit of a sense for what the contribution is in the quarter. No, look, I'll ask Sonya if she wants to tell you what the contribution is. I would personally tell you it's still very early in the integration. We're still, you know, basically, you know, in the very early innings, on that, but we're on track. I feel very, very comfortable. The reaction of customers, specifically airlines. I had, you know, meetings with airlines, specifically, most recently at Farnborough. They're very happy with CAE doing this business. You yourself could tell, and we read it every single day, right, about the amount of inefficiencies that are out there, you know, gates, baggage handlers, pilots, you know, air crew being in the right locations with airplanes. That's all things that our software solutions are offered to help manage and optimize for greater efficiency. You know, heaven knows that that's going to be, and we're seeing an increased demand for, you know, CAE in this field. I'm very optimistic in this regard. Again, the integration is on track, and everything that we said in terms of how this business should contribute to CAE, to me, is right on track. I'll just add, you know, for the quarter itself, it was not necessarily overly significant, but we're working through the integration on track and expect us to ramp up nicely through the fiscal year. Now, you know, those benchmarks on pre-COVID are an indication of what this business can do at a more recovery rate and before even us adding to the investment and elevating this with our bundled sales. Ultimately, as the recovery plays out, we're very confident we can get to those numbers and even beat them as the recovery grows over the next couple of years. Great. Thank you very much. Our next question comes from Noah Poponak with Goldman Sachs. Please proceed. Hi, everyone. Hi. Hey. The two programs that took a charge in Defense, when were those contracts written? When did those programs start? Well, they're legacy contracts. We took over one, the one that we call the classified program was signed 2018 or so. That's CNATRA. I mean, we took over that contract when we acquired L3Harris. The CNATRA contract was a legacy CAE contracts 2018. I know that for sure. Okay. What actually cost more? Where was the cost overrun? Well, in the case of CNATRA, specifically, as I said, you know, this is a contract specifically where the customer is training it more than we bid it on. It's as simple as that, okay? We had cost mitigations and other actions to make, you know, lessen the impact of, you know, that, I would tell you, misbid at the time. Now, I can tell you we don't bid that way now. You know, we have. You know, in the past couple of years, we've refined, you know, how we look at risks and how we bid military programs. This is one specifically that because this situation where we were, where the customer is still utilizing those training assets at five bases at a much higher level of demand that was anticipated at the time. You know, that's what we're facing here. Now, again, we put mitigating factors in, reduction, the ability to improve efficiency to improve that program. We fully expected that the contract, we get an RFP to be able to extend that contract or to renew that contract because it ends in about less than nine months. Now, that, as I said, somewhat very surprisingly and counter-intuitive because of the fact that they're using it so high. Basically, not only did we not get the contract renewal, but the IDIQ, I'm getting a bit technical on this, the IDIQ number, was changed. In which case, basically what it says is we had no additional period of performance in which for our cost reductions or other, you know, measures that we put in place to improve the profitability of that program, you know, to take hold. We just ran out of time. Basically, you have to recognize, you know, the loss at that point, and that's what happened. Now, do I think that you know that contract you know will go forward? The Navy needs this training. It's going to happen. To me, we haven't baked in any upside on that, but again, stay tuned on that one. If those two, you know, are categorized as misbid, the way you run the business today, you don't bid that way. Correct. What percentage of the revenue base at this point is, you know, exposed to possibly having been misbid? Well, I would tell you that, you know, as I said before, when you get, you know, something like this, you take very specific actions. Again, I'm not going to say we weren't looking at our programs before. Of course, we were. You know, we've taken some very, you know, specific actions, including, I would tell you, the establishment of a centralized program management organization, a center of excellence, if you will. You know, this was always part of our L3Harris merger integration plan, but, you know, we've accelerated to bolster, you know, basic company program, company-wide program excellence. We have rebaselined and you know triggered a complete top-down review of our portfolio, you know, on all of our programs to make sure that we have the right staffing, the right contractual provisions, and maximum visibility and transparency to make sure we don't get surprised again. I'm never going to say never, okay? But what I would tell you, though, is that all the programs, including the ones that were bid prior, have been looked at to make sure that we have the right provisions and the right cost estimates and the right assumptions that we don't get surprised. That's what we put in place. Marc, that review is complete or that review is in process? No, that review is complete. Did I hear you correctly earlier, committing to a 10% operating margin in this business in your fiscal 2024, or did I hear that incorrectly? No, no, you didn't hear me say that. You've heard me say, I believe that, you know, if not, I will stand corrected, that our target for this business is low double-digit returns in D&S. If I look at the programs that we've signed up that in our backlog, they support that goal, that backlog supports that goal. Now, we obviously have to execute them. Yeah. That's where the measures that we've taken, you know, this centralized program management organization, for example, gives me that confidence. Again, I think as I said before, I've seen this kind of thing before, running major programs. You know, when you get this kind of, you know, impact, you just do things just slightly different. I would tell you, we've got this, and I feel very confident about the team in place at Defense to make it happen. Got it. Okay. Thank you. Thank you. Operator, thank you. We're now going to use the last minute or so that we have here, unfortunately, not a lot of time, to open the call to members of the media, if there are any questions. As a reminder to register a question, please press the one four. We have a question from Allison Lampert with Reuters. Please proceed. Thanks, guys. Marc, you talked a bit about some of the supply chain challenges you've had. Could you be a little bit more specific? Have you seen issues with shortages of semiconductors? Yes, we have. In fact, that's been especially acute, actually, surprisingly, in our Healthcare business. I say surprisingly, and that's where we have the highest concentration, I think, on one, you know, in an individual mannequin, of chips which had a specific shortage. But we've seen it. Now, I would tell you that I think overall, we've managed it pretty well. It's not just chips, but it's really what we're seeing across the board. It's that lead times for parts have extended, in some cases, literally more than doubled, which makes it not only the issue of the impact of the parts themselves not being there at the time that we need them, but that, you know, obviously, that wreaks havoc to schedules. In order for us to maintain schedules, you know, we have to do all kinds of things like, for example, paying expedite charges for parts. We have to, you know, conduct overtime. We have to conduct out-of-sequence work, which introduce all kinds of inefficiencies. Maybe I'll just stay in there, Allison. Okay, fair enough. Just to follow up, what kind of demand are you seeing for MAX 10 simulators? For what simulators? I'm sorry. MAX 10. Boeing MAX 10. MAX 10. Pardon. Oh, the MAX. I'm sorry, the MAX. Okay. No, look, I think demand for the simulator for the MAX aircraft overall. I'm not gonna basically break it down to MAX 8 or MAX 10. They're very strong, and it's part of the, you know, backlog that we've signed in simulator orders over the past, as well as training that we've signed in the last 12 months. Okay. Just to follow up on semiconductors, would you say that the shortages you're seeing now are more acute on the chip side, whether it's in aviation specifically than in the past? Because we've seen historically more on the auto side than in aviation. Look, I can't comment about the other industries in detail except for what I read in your newspaper. What I'd tell you is, look, the impacts have been real for us. You know, as I said, we know where they are. We know what our bill of materials is, and we know when we need the parts to support our schedule. We have harmonized schedules for those parts that support, you know, the forecast that we have, you know, that we presented that we take to support the forecast that we have today. Okay, thank you. Great. Operator, that's all the time we have for today. I wanna thank all of our participants for joining us on the call and remind you that a transcript will be available on CAE's website. Thank you. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day.