CAE Inc. (CAE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. [Interpreted] You can listen to the webcast and view the presentation slides in either French or English. If you wish to change languages, click on the language icon shown at the top right side of your screen. And now for introductions. I'm here in Montreal, Quebec, [indiscernible] territory, along with members of our executive management team, namely: Marc Parent, our President and Chief Executive Officer; Matthew Bromberg, our incoming President and Chief Executive Officer; Mark Hounsell, Chief Legal and Compliance Officer and Corporate Secretary, who will be acting as Secretary of this meeting. Samantha Golinski, Vice President, Public Affairs and Global Communications, will be acting as moderator with respect to any questions you may have in the room or online. Thank you to our shareholders for joining us in person and to those tuning in from elsewhere around the world. Fiscal 2025 was a year of achievement and transformation. We delivered record results and executed a leadership transition that positions CAE well for the future. This is a pivotal moment for the company, a new era of leadership built on the strong foundation of performance that defines CAE. But before I talk about what's ahead, let me take a few minutes to discuss evolving governance at the Board level. After this annual meeting, I will become Executive Chairman of CAE. In this role, in addition to responsibility for the effective functioning of the Board, I will remain engaged in the development and execution of the company's strategic initiatives. Beyond that, I'll also represent CAE globally, deepening relationships with investors, governments, defense and security partners in a world of shifting priorities and new opportunities. Matt, as our new President and CEO, will have full responsibility for the company's daily management and to develop and execute the strategy supported by the leadership team. Together, we will focus on shaping our long-term strategy, ensuring disciplined capital allocation and creating sustainable value for shareholders. During his tenure, and over 2 decades with CAE, Marc has transformed this company from a simulator manufacturer into a global training and mission systems powerhouse. He's widely credited with instilling a deeply customer-centric culture across the organization that continues to define how CAE's 13,000 employees serve partners and stakeholders every day. Today, approximately 60% of our annual revenue comes from recurring training services. With Marc at the helm, CAE's revenue has more than tripled over the last 15 years from $1.5 billion in fiscal 2010 to $4.7 billion in fiscal 2025. During that same period, CAE's stock price rose from approximately $8 to yesterday's closing of about $40 per share. And including dividends, this represents total shareholder return of over 520%. Marc has strengthened our competitive moat, championed innovation and ensured that CAE's purpose to make the world safer was always front and center. On behalf of our Board, Marc, our employees and our shareholders, thank you for your extraordinary leadership and enduring legacy. And now let's look to the future. I'm sure that those that are online are clapping silently as well. And now let's look to the future. Today, we proudly welcome our new President and CEO, Matthew Bromberg, a leader ready to build on the legacy with a fresh perspective to propel CAE forward. His appointment follows a comprehensive international search. What stood out the most for me and the Board is Matt's rare balance of IQ and EQ, a leader who combines strategic insight, operational depth and strong emotional intelligence. He also brings deep experience from leadership roles in aerospace and defense at Northrop Grumman, Raytheon and Pratt & Whitney. This distinctive blend of expertise and leadership convinced us that he is exceptionally well suited to lead CAE into its next chapter. Before I begin, I will now ask Mr. Mark Hounsell, our Corporate Secretary, to present the forward-looking statements. Mr. Hounsell?

Thanks, Calin. I'd like to remind you that today's remarks, including answers to questions contain forward-looking statements. These forward-looking statements represent our expectations as of today, August 13, 2025, and accordingly, are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risk factors and assumptions that may affect future results is contained in CAE's annual MD&A available on our corporate website and in our filings with the Canadian Securities Administrators on SEDAR+ at sedarplus.ca and with the U.S. Securities and Exchange Commission on EDGAR at sec.gov.

I would like to now proceed with the formal portion of today's meeting. I now call to order the Annual and Special Meeting of the corporation's shareholders. Mr. Mark Hounsell will act as Secretary of the meeting. Our Corporate Secretary has received the certificate of our transfer agent, Computershare Trust Company of Canada, indicating that proper notice of the meeting has been given in accordance with the Canada Business Corporations Act and the bylaws of the corporation. I direct that a copy of the notice with proof of service be kept by the secretary with the records of this meeting. With the consent of this meeting, I appoint Martine Gauthier, representative of Computershare as scrutineer of the meeting. CAE's bylaws provide that a quorum of shareholders is present at a meeting of shareholders if 2 or more persons holding not less than 25% of the shares entitled to vote at the meeting are present or represented by proxy. The scrutineer has advised that we have the necessary quorum present. I therefore now declare that this meeting is regularly called and properly constituted for the transaction of business. I'd now ask the Corporate Secretary to explain the basic features of our meeting platform and how shareholders attending the meeting virtually can vote. Mark?

Thank you, Mr. Chair. [Interpreted] Voting on the 4 resolutions will be conducted both online and in person. Only registered shareholders or validly appointed proxy holders may vote on the 4 items of business. If you are attending the meeting in person and you have not already voted by proxy, you have received today with the agenda of the meeting a voting tablet. At the appropriate times, we will ask you to use the tablet to vote on each item of business. Following consideration of the last item of business, the scrutineers will tabulate the results of the votes. If you are attending the meeting online, you will see a voting icon on your screen and the resolution wording will be displayed. To vote, select one of the voting options. Your response will be highlighted. A confirmation message will appear to show that your vote has been received. To change your vote, simply select the other option. In order for you to vote -- for your vote to be properly recorded, it is important that you remain connected to the Internet at all times. If you're not connected, your vote will not be recorded. So now the online polls are now open on all 4 items of business. This will give you ample time to vote while we introduce each resolution. The Chair will remind you of your choices on each item. After the last item of business, the Chair will close the poll and provide a reminder to input your vote if you have not already done so. You should know that while each of the ballots cast today in person and online will be accounted for in the final results. Proxies lodged with our registrar and transfer agent before this meeting allow the Chair as proxy holder to determine the outcome of each of the motions that will go to a vote today. When each item of business is completed and the ballots have been completed, as a result of the proxies received in advance of the meeting, the Chair intends to declare the motion carried or defeated even though all the votes may not have been counted or a final report may not yet be available. In order to facilitate the flow of the meeting, the Chair has asked me as a registered shareholder, to move all motions. The Chair will call on me at the appropriate time. Mr. Chair?

[Interpreted] We will now turn to the first item of business for which shareholders are asked to vote, the election of directors. The management proxy circular contains a list and biographical profile of the 13 nominees recommended for election as director. They are as follows: Ayman Antoun; Sophie Brochu; Matthew Bromberg; Patrick Decostre; Elise Eberwein; Ian Edwards; Marianne Harrison; Peter Lee; Katherine Lehman; Mary Lou Maher; The Honorable Patrick Shanahan; Louis Tetu and myself, Calin Rovinescu. Additional details about our Board nominees are available in the proxy circular. Pursuant to resolution adopted by the Board of Directors, the number of directors has been set at 13 and 13 eligible candidates have been nominated. Mark, may I ask you to please move to elect each of the 13 nominees as directors?

I so move.

Thank you. So for the election of the directors, you will see the names of the 13 nominees. For those attending the meeting in person, I would ask each shareholder or proxy holder to record his or her vote on the tablet provided by indicating whether you vote for or against in respect of each nominee. For those attending online, please scroll down to make sure you voted on all 13 nominees. To cast your vote for a nominee, please select for or against. If you do not select for or against as applicable when voting is open, your vote will not be recorded, and you will be regarded as having abstained from voting. Preliminary results will be announced later today, and final results will be posted on our website. [Voting]

The next item on the agenda is the appointment of auditors. I will ask again Mark Hounsell to introduce a motion to appoint PricewaterhouseCoopers as auditors of the corporation to hold office until the close of the next Annual Meeting of Shareholders and for authorization for the directors to fix their remuneration.

I so move.

For the appointment of the auditors, to cast your vote, please select for. And to withhold your vote, please select withhold. [Voting]

The next motion is to approve on an advisory basis, our approach to executive compensation. CAE's executive compensation is fully disclosed in the proxy circular made available to all shareholders in advance of the AGM. The CAE Board of Directors believes that the company's approach to executive compensation remains appropriate and aligned with the interests of our shareholders. We value your direct feedback on our executive compensation approach, and the Board will consider the results of this vote when evaluating future compensation policies, procedures and decisions. We will now vote on the following resolution: Resolved that the shareholders accept the approach to executive compensation disclosed in the management proxy circular. Again, I would ask Mark Hounsell to propose a motion for approval.

I so move.

To cast your vote for the approach to the executive management compensation -- for the approach to the executive management compensation, please select for and to vote against, please select against. [Voting]

The last motion is to approve amendments to the general bylaws of CAE Inc. as set forth in the company's 2025 management proxy circular. The bylaw was last updated in 2015, 10 years ago, and certain provisions no longer reflect current governance practices and shareholder expectations. The amendments were approved by the Board of Directors in April 2025 and will continue in effect only if they are approved today by ordinary resolution of the shareholders. The amendments notably serve to expand the talent pool for potential directors, limit the circumstances in which virtual-only shareholder meetings can be held and remove certain hurdles for the nomination of directors by shareholders. The Board of Directors believes that these amendments are in the best interest of CAE and its shareholders are consistent with current corporate governance best practices and address institutional investor guidelines. You can find a summary of the changes in Section 2 of the management proxy circular and the full text of the changes in Appendix E. Again, I would ask Mark Hounsell to introduce a motion to approve the resolution to approve the amendments to the general bylaws of CAE as set out in Appendix E of the management proxy circular.

I so move.

To cast your vote for the approval of the amendments, please select for and to vote against this resolution, please select against. [Voting]

[Interpreted] The scrutineers' preliminary report indicates that 80.88% of the eligible shares have been voted at this meeting. The results with respect to the election of the directors are a substantial majority of the votes cast at the meeting were voted in favor of the 13 nominees named in the management proxy circular, with each nominee receiving in excess of 91.65% in favor. The result with respect to the appointment of the auditors is 90.31% voted in favor of PricewaterhouseCoopers. The result with respect to the advisory vote on the approach to executive compensation is 95.15% in favor of the resolution. And the result with respect to the vote on the approval of the amendments to the general bylaw is 98.07% voted in favor of the resolution. Final detailed results will be publicly available on sedarplus.ca in the coming days. Mr. Chair?

Thank you, Mark. I'll now provide a review of fiscal 2025 and highlight our key moments. But before I do so, let's watch CAE's end of year video, a short video capturing everything we've achieved this year and the exciting vision we're building for the future. [Presentation]

Let's now take a moment to reflect on the year that just passed. Fiscal 2025 was one of the most significant years in CAE's history, a year that strengthened our foundation and prepared us for long-term growth. We delivered record revenue of $4.7 billion, up 10% from last year. Adjusted segment operating income reached $732 million, up 33% from the $550 million in fiscal 2024, highlighting the strength of our core performance. Free cash flow was $814 million, increasingly disciplined capital management in action. And our adjusted backlog reached $20.1 billion, up 66%, giving us unmatched visibility and long-term stability. These results reflect a balanced business model and solid execution across both Civil Aviation and Defense & Security, diversification between markets supported by powerful long-term tailwinds. Looking at civil aviation, air travel continues to expand worldwide. The 2 largest aircraft manufacturers hold a combined backlog of more than 17,500 aircraft, and the global fleet is expected to nearly double over the next 2 decades. CAE estimates that 300,000 new pilots will be needed globally in the next 10 years. That scale of demand creates both responsibility and opportunity for CAE. Our Civil business delivered revenue of $2.7 billion, up 11% and adjusted segment operating income of $581.5 million, up 6%. Civil adjusted backlog reached a record $8.8 billion, reinforcing our position as the world's leading training provider. [Interpreted] Now let's shift gears to Defense and Security. Defense markets are in the early stages of a generational investment cycle. Across NATO and allied nations, governments are increasing budgets to modernize forces and strengthen mission readiness with initiatives like the EU's rearm strategy. Notably, here in our core home market of Canada, where we are the nation's leading defense partner, we see a powerful renewed momentum. Canada is set to reach 2% of GDP on defense spending this year, 5 years ahead of schedule and has committed to spending 5% of its GDP by 2030. Similarly, NATO as a whole is now discussing targets as high as 5% in response to increased security concerns. Clearly, simulation and integrated training solutions are at the core of these strategies, and CAE is well positioned to lead. This segment delivered one of its strongest years ever. Revenue reached $2 billion, up 8% and adjusted segment operating income improved significantly. Testimony to the generational investment and our strong position in the market, our adjusted backlog doubled, surging to $11.3 billion. That's clear momentum in a sector undergoing transformation. At the center of this success is the $11.2 billion. Future Aircraft Training or FAcT program in Canada awarded to SkyAlyne, our joint venture with KF Aerospace, marking the largest contract in CAE's history. This program will define aircrew training for the Royal Canadian Air Force for decades. Furthermore, we were named a strategic partner for Canada's Future Fighter Lead-in Training program, a reflection of CAE's role in preparing the next generation of fighter pilots. We also advanced collaboration with Saab on the Canadian Patrol Submarine Project to ensure mission and operational readiness of the Royal Canadian Navy. Beyond Canada, we expanded our leadership in the U.S. with wins such as flight training services for the U.S. Air Force on KC-135 aircraft, U.S. Army's Flight School Training Support Services contract and continued progress on the simulators common architecture requirements and standards program. These programs position CAE at the heart of 2 of the largest defense training initiatives in North America. Internationally, we were awarded a contract by the Italian Air Force to deliver training system on MQ-9A Reaper and extended our partnership with Sikorsky on advanced technologies such as Magnetic Anomaly Detection. And these wins were not just contracts. They're strengthening our role as a trusted partner in the modernization of allied defense forces. What makes this performance even more significant is that we achieved it while improving margins through disciplined execution, creating a solid foundation for the sustainable growth in Defense and Security. So what's next? The fundamentals remain strong and enduring. Civil aviation is buoyed by structural demand for pilots and aircraft. Defense spending continues to grow as allied nations prioritize readiness and modernization. Technology and sustainability give CAE an edge and ensure we remain relevant and have a positive impact in an evolving world. In the coming year, we'll continue to prioritize disciplined capital deployment, reducing leverage toward our target ratio and generating strong free cash flow that supports both strategic investment and returning value to shareholders. In Defense & Security, we will leverage our global diversification. With programs underway in Canada, the U.S. and across allied nations, CAE is well positioned to deliver integrated, interoperable training solutions that support modernization across multiple domains. To our 13,000 employees, thank you for your commitment and professionalism. Your expertise and dedication make our success possible. CAE is stronger than ever, and the future is ours to shape. Marc, thank you for your vision and leadership. The floor is now yours.

Good morning, everyone. [Interpreted] So looking back, to me, what makes this journey so remarkable is how we relentlessly invested, adapted and innovated through change, through disruption, through crises, always keeping performance and safety as our North Star. We exist, and it is our noble mission to make the world safer. Our noble mission goes beyond business metrics and underscores the unparalleled responsibility that we carry every single day. And our customers has always been at the heart of everything that we do, and it is our secret sauce, not satisfying customers, delighting customers, growing with them for the long term, creating enduring deep relationships that have allowed us to understand their needs, anticipate the challenges, deliver the solutions to them before they even ask. Whether they were airlines, pilots, business, jet operators, defense and security forces, regulators, governments, it's always been a true privilege to serve our customers as their trusted partner, and it was our vision to help them prepare for the moments that matter most. Today, CAE is stronger than ever with the fundamentals and the resilience to deliver value for long term. So I want to thank sincerely our instructors, our engineers, our technicians, our support staff and everyone in between around the world for their dedication, their grit, their belief and passion for what we do. As I always like to say, without our employees, we're merely a collection of billings with logos on it. When you put our employees anywhere in the world, you have CAE. That's what we are. So as I hand over the torch this morning to Matt Bromberg, someone I've known and observed and admired for the last 15 years because we are both from the industry on both sides, both in aerospace and defense, civil defense, I do so with great confidence. Matt brings the experience, the vision, the leadership and emotional intelligence that this company needs for what's next. He understands the responsibility and the scale of the opportunity ahead. And I am very, very confident that he will carry CAE forward with the same sense of purpose that has always guided us. So now it's time to start the next leg of the journey. There's no better person to take the yoke over for me, and that's Matt Bromberg. Matt, over to you.

[Foreign Language] It's an honor to follow you and build on everything you've achieved. [Foreign Language] It's a privilege to speak to you today for the first time as CAE's incoming President and CEO, a role I will formally assume following this meeting. CAE is an extraordinary company with a proud history and a clear sense of purpose, a company I've admired for my entire career. First, I want to thank the Board for their confidence in Calin for your partnership. I look forward to working alongside the Board and Calin, and Calin is Executive Chairman. His insight and experience will be invaluable. I also want to thank Marc Parent once more for his partnership in this transition. Over the past few months, Marc has not only shared his insight, but truly opened the doors of CAE's inner workings. He introduced me to the teams behind the scenes where the execution happens. He walked me through the critical decisions that have shaped this company and partner closely with me to ensure a smooth handoff. Marc, your leadership over 16 years has made CAE a company admired around the world, and I am grateful for the guidance you've given me throughout this transition. Since joining CAE in June, I've been listening and learning. I've had the privilege to join at the Paris Air Show, which is the largest aviation and aerospace event in the world. And what really impressed me is that every conversation, every conversation with partners, suppliers and other stakeholders and most importantly, our customers, they consistently spoke to CAE's professionalism, their technical leadership and their customer focus. I've met teams in Montreal and across the world, engaged with customers and partners and joined strategic discussions with leadership. Everywhere I've been, I've seen the same qualities, professionalism, pride and a deep commitment to excellence. It reminds me why I chose to join this company, a mission that matters and people who care about delivering it. My focus now is on understanding where we can go further. That means building on what works, continuing to improve operational performance and to keep innovating. We will focus on operational efficiency and capital allocation and on generating strong cash flow, and we will create sustainable value for our shareholders. I see the real potential to leverage our advanced defense technologies more broadly across CAE's portfolio, including commercial aviation. At the same time, we can drive greater efficiency by applying commercial best practices within our defense business. The cross-pollination of innovation and efficiency can lock new value, enhance customer outcomes and support higher returns. And as we focus on efficiency, we will relentlessly maintain our commitment to our customers, to quality and to safety. With my background in defense, including service as a U.S. Navy Submarine Officer, I understand how critical CAE's role is in mission readiness for allied forces. That is not only a responsibility, but it's an extraordinary opportunity and one that I care deeply about. [Foreign Language] I'm looking forward also to calling Montreal, home. It's one of the world's greatest aerospace hubs, one of the world's greatest cities, and I'm learning it's one of the world's greatest communities. My family and I are excited to be here. To our employees, thank you for the warm welcome. You are CAE's strength. To our customers and partners, thank you for your trust. We will keep earning it. And to our shareholders, thank you for your confidence. I'm committed to creating sustainable value through strong execution and smart growth. This is an exciting time for CAE. We have a clear mission, solid fundamentals and the talent to capture the opportunities ahead. It is my honor, my absolute honor to lead this next phase, and I look forward to what we'll accomplish together.

Thank you very much, Matt. [Foreign Language] Samantha?

Thank you, Mr. Chairman. We will start with questions from the audience. I see we have someone at the microphone. Please go ahead.

My name is [indiscernible]. I'm a shareholder and an employee at CAE. So you briefly talked about this during the meeting, but I would like to better understand the role of the Executive Chair and how you will collaborate with Matthew Bromberg in the next year, please.

Thank you very much for your question. We have established already a great partnership, Matthew and myself working together these last few months. The idea is that Matthew is the President and Chief Executive Officer and has responsibility for the running of the company. As Executive Chair, my responsibilities in addition to chairing the Board and the governance responsibilities that come with -- typically with being a Chairman of the Board, I will also stay involved with the long-term strategy, capital allocation, which is a very important topic for many of our investors with some of the key stakeholders like governments, especially as we evolve our strategy on defense. And as you saw, there's a big emphasis on governments in Canada, Europe and the United States and with some of our investors. And so that is the way we expect to see each other. We will see more of each other than you would typically see of a nonexecutive Chair. And I think I look forward to a fantastic working relationship to make sure it's highly successful.

Thank you, Mr. Chair. The next question comes from the online platform from shareholder, [indiscernible], and it reads as follows: How will the newly imposed American tariffs on Canada impact CAE?

Thank you for the question. We are quite well positioned on the tariff dynamic as of right now. Of course, it continues to evolve as you know and as everybody reads about on an almost daily basis. Approximately 70% of the work that CAE does is in country and therefore, not exempt to -- not subject to tariff. And in addition, the key product of CAE being the simulators are subject to the USMCA and therefore, exempt under that -- those provisions as that agreement now stands. Of course, that agreement is subject to negotiation. We all know that. But as of right now, CAE is extremely well positioned on the tariff situation compared to many other Canadian companies. I don't know, Marc, if you want to comment further on that.

No, I think you've covered. I mean the only thing I would add is, of course, we have a peripheral effect with regards to general economy, but that's obviously, a second order effect.

Thank you.

[Foreign Language]

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[Foreign Language] Samantha?

So the next question comes from the online platform from shareholder, [indiscernible] and reads as follows. You've talked about the opportunities we currently see in Defense. When will that translate into revenue for CAE?

So we're already seeing it translating into revenue. I think it's an extremely important question and understanding why we like the portfolio of both Civil and Defense. Defense tends to be longer in terms of the contracts coming into place, but also longer duration and therefore, providing a stable revenue stream for a longer period of time. And you've seen this past quarter and last year, the very strong results that is starting to show. So the revenue is there. It's not as if we're developing a business for only future revenue, but it does take longer for these contracts to come into place. And so when we talk about some of these opportunities, for example, in Canada, there is a lead time. There's a procurement process. They have to select an aircraft type that is the, for example, the future fighter aircraft. They have to go through -- the governments have to go through processes like that. And so that does take a bit of time, but the revenues are coming in. And once they're in, they're there for a long period of time. And as I say, I underscore that's why I like the balanced portfolio approach of both Civil and Defense.

Thank you, Mr. Chair. I do not see any more questions. Go ahead.

My name is [indiscernible]. I'm a shareholder. I just drove from a camp side, so I'm sorry, I'm...

It's okay. Welcome.

I look very differently from you guys. So I have a question on the 2 segments. I look at the profitability of the Civil compared to Defense and Defense has always been lower, at least in the last 4 or 5 years. I'm just curious what is the reason behind this? And the appointment of the new CEO and his background, you are from a Defense background mainly. So I'm assuming that CAE wants to continue to focus and strengthen the Defense segment. So I just want to understand the reasons behind the lower profitability and how you can improve in the future.

Let me start and turn it over to you, Matt. Inherently, the difference between profitability and civil defense is to a certain extent by nature, the type of contracts and type of customers that you have -- a lot of times on the defense side, you get government contracts and there'll be -- depending on the type of contracts, limitations with regards to how much profit you can actually make. But on the other hand, what you get out of that, you get guaranteed contracts for a long period of time. So you will offset that limitation that you have in our profitability. But having said that, what we are doing extremely well on Civil. I think the margins of CAE are at the very high end of what you see anywhere in Civil Aerospace. In Defense, we put a target out there that -- of getting to 10%. We've said that's more of a way point, not a destination because you can do better. I mean we'll walk before you can run, and we haven't put a time line on that, but we're executing very well. So I think as you get more revenue and going back to the question -- the previous question about when that translates into revenue? Well, look at the backlog. We have a record backlog. We more than doubled that backlog in the last very short period of time to $20 billion in Defense. That is going to mature in civil as a whole at $11 billion in Defense. That is going to materialize. And inherently, that absorbs more overhead in the company. And inherently, that will transform to higher profitability. But maybe you want to take it from here, Matt?

Thank you, Marc. I've spent about half of my career in Defense and half of it in commercial aviation. So my point of view, standing on the doorstep of the job is based on that experience. There's a huge opportunity to leverage both. You leverage the defense business, the technologies, the investment that is often shared between the company and the government. And actually, they're very good customers, and you use that technology to grow on your commercial side. And then you want to leverage the commercial cost structure, infrastructure efficiency to make your defense contracts better. So that's why a shared business makes sense. Sitting here on the doorstep day 1 to see, I look forward to getting inside and seeing what we can do.

Just can I ask a couple more?

One more, please, because we're actually coming towards the end. One last question.

One more, just on capital allocation. So you have a very stable global top business, but your credit rating is BBB- with a negative outlook. So I'm just wondering why the credit rating is not, I don't know, as strong as your business might be.

Go ahead. Go ahead, Marc.

Look, I think I'm not going to speak for the credit agencies, but I think that when we look at the track record that we have, you've seen us basically achieve the deleveraging targets that we set out last year. We deleveraged quite a lot and actually beat the objectives that we have even at the same time of completing a pretty major acquisition last year at SIMCOM. We've set out targets with regards to deleveraging this year to reach our target 2.5x by the end of the year. I personally am quite confident that the rating agencies will see that progress, and we'll see the light of day.

I'll just add that again, it's an excellent question as was your first. This is a situation where the company takes its objectives. And now I, as Chair, Executive Chair, this deleveraging objective is one that is a major area of focus. The rating agencies look to see as to, a, are you achieving it? Are you on your path to achieving that deleveraging objective? How quickly are you achieving it? Do they believe it can stay at that target once you've achieved it? Or does it slip again? And so part of it is proving the case out, and I think we're extremely well positioned to continue down that path to these deleveraging targets, which is 2.5x by the end of the year.

Thank you. We are at time, and I don't see any more questions on the platform.

Thank you very much. So we're now reaching the conclusion of the meeting. I'd like to extend our sincere thanks to the management team for your strong leadership and dedication. Your efforts have driven our success and set the stage for continued growth and many of the other things that we've talked about here. I also wish to extend our appreciation to all CAE employees for your continued dedication and professionalism. Your contributions are instrumental to our success, and we commend your commitment to excellence as we move forward together. And to our shareholders, thank you for your ongoing support and confidence in our mission to make the world safer. The Board values the input and insights of our investors. We appreciate the importance of engaging with our shareholders to better understand their views, concerns and priorities related to our business operations, performance and executive compensation programs. We look forward to continued dialogue. CAE's excellent reputation, strong technical capabilities, long-standing customer relationships and global presence positions us for continued success and value creation. This officially concludes the meeting. On behalf of CAE, thank you for having participated. Until we meet again, we wish good health to you, your families and your communities. Meeting is now terminated. Thank you very much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]