CAE Inc.

Good day, ladies and gentlemen. Welcome to the CAE second 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 now proceed, Mr. Arnovitz.

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 headbook for fiscal year 20 and answers to questions contained forward-looking statements, These forward-looking statements represent our expectations as of today, November 13, 2019, 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 unless there is a caution not to place undue reliance on these forward-looking statements. A description of the risks, factors, and assumptions that may affect future results is contained in CDA's annual MD&A, available on our corporate website and our filings with the Canadian Securities Administrators on CDAR, and with the U.S. Securities and Exchange Commission on EDGAR. On the call with me this afternoon are Mark Powell, C.S. President and Chief Executive Officer, and Sonia Branco, our Chief Financial Officer. After remarks from Mark and Sonia, we'll take questions from financial analysts and institutional investors. Following the conclusion of that Q&A period, we'll open the lines to calls from members of the media. Let me now turn the call over to Mark.

Thank you, Andrew, and good afternoon to everyone joining us on the call. I'll first discuss some of the highlights of the quarter, and then Sonia will review the detailed financials. I'll come back at the end to talk about our outlook. CAE had good growth in the second quarter, with revenue up 21%, segment operating income up 28%, and we secured nearly $1 billion of orders for a 1.11 times book-to-sales ratio. seized total backlog at the end of the quarter with $9.2 billion. Our performance continues to be led by Civil, which delivered very strong operating income growth, higher margins, and continued to have strong order intake. The integration of the Bombardier business and aircraft training acquisition has gone very well and is substantially complete. And we're continuing to win the confidence of our airline and business customers with our expanded and highly innovative training solutions. Defense performance improved from last quarter. However, it reflects continued delays of orders for our higher margin defense products and the timing of program milestones on contracts that we're currently working on from backlog. These are largely timing issues, and I'm encouraged by the 1.08 times book to sales ratio for the quarter. which gives confidence, to our view, a stronger second half in defense. And in healthcare, our expanded sales force secured a higher level of interest in our latest products, which we'll begin delivering over the next few quarters. Looking more closely at civil, we booked $603 million of orders in Q2, including new long-term training agreements with Sunwing Airlines, Logan Air, and FlightWorks. We also sold 11 full-flight simulators during the quarter for a total of 20 for the first half of the year. To address the global demand for new pilots, we launched a new cadet pilot training program to train more than 700 new professional pilots over the next 10 years for Southwest Airlines' Destination 225 program. And just this week, we signed a long-term exclusive training agreement with EasyJet to train more than 1,000 new EasyJet cadet pilots under a multi-crew pilot license program. Also involving EasyJet, we inaugurated new training facilities during the quarter in Gatwick, Manchester, and Milan in support of our comprehensive 10-year training agreement. In business aviation, we entered a strategic partnership and exclusive 15-year training outsourcing with Directional Aviation Capital and its affiliates. Directional is one of the largest, fastest growing, and the most innovative corporate aviation service companies globally. And in connection with this agreement, just last week, we concluded the acquisition of a 50% stake in SimCom Holdings. Overall training center utilization was 69% this quarter on our network of nearly 300 full flight simulators. Airlines train a bit less during the busy summer travel months, and we've used this opportunity of this usual seasonality to perform some similar updates and relocations coincident with the opening of our new three training centers during the quarter. The utilization rate also reflects the effect of some of our recently added capacity that's just beginning now to ramp up. In defense, we booked orders for $362 million, including KC-135 air crew training services and similar upgrades for the U.S. Air Force. and additional fixed-wing flight training and support services for the U.S. Army at the CAE Dothan Training Center. We also received orders to upgrade the U.S. Navy's MH-60 Seahawk helicopter simulators and to provide air crew training on the Navy's T-44C aircraft. Other notable orders include a contract with Boeing to provide upgrades on P-8A simulators, a contract to upgrade the German Eurofighter and Tornado aircraft simulator and a contract for Abrams Tank Maintenance Trainers for the United States Army. As well, to further bolster our position in the United States, we entered a strategic collaboration with Leonardo to offer integrated helicopter training solutions together. And in healthcare, we continue to pursue larger segments of the healthcare simulation market with our expanded sales force. In line with our strategy to expand our reach within hospitals, we ventured into an agreement with Premier, a leading healthcare improvement company aligned with approximately 4,000 U.S. hospitals and health systems. We also launched new products, including Vinix 3.0 ultrasound simulator, and together with the American Society of Anesthesiologists, we launched a new anesthesia SIMS staff module which is latest in a series of interactive screen-based courses to prove for maintenance of certification in anesthesiology credits. With that, I'll now turn the call over to Sonia, who will provide a detailed look at our financial performance. I'll return at the end of the call to comment on our outlook.