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spk_0: daily with and gentlemen welcome to the see a fourth quarter conference call please be advised of this call is being recorded i would now like to the meeting over to mature andrew aren't of it please go ahead
spk_1: good afternoon or i should say good morning 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 or if y twenty three unanswered question contain forward looking statements is forward looking statements represent our expectations as of today june first twenty twenty two and accordingly are subject to change such statements are based on assumptions that may not materialize are subject to risks and uncertainties actual results may differ materially unless there's a caution that the place undue reliance on these forward looking statements a description of the risk factors and assumptions that may affect each a result was contained and seed a annual and the in a available on our corporate website and in our filings with the canadian securities administrators on cdr and the us securities exchange commission on edgar on the call with made it up this morning are marked at our seas president and chief executive officer and sony branco or chief financial officer after a mark from arkansas india will take questions from financial analyst and institutional investors following the conclusion that that you in a period will open the called the questions from members of the media let me now too
spk_2: the call over to mark
spk_3: thank you and your to that afternoon federal a good morning and everyone donate on the call before sonia and i get into the results i want to for say how proud i am of our thirteen thousand see a employee who exemplified our one see a culture and delivered a truly outstanding performance in fiscal two thousand twenty two
spk_2: we set a number of ordering take records this here culminating in record bookings a four point one billion dollars and a record backlog of nine point six billion dollars
spk_3: these numbers are especially impressive considering that our industry is still in the early days of a cyclical recovery what winning marketshare by innovating and delighting our customers and this is because the great dedication and other people testament to their passion and commitment is that i'm playing games with has never been i've even with the added complexity of managing through a pandemic auto attack more about the way forward of yellow call but these are some the most important factors that underscore my enthusiasm and outlook or a bigger stronger and more profitable fee in the period head
spk_4: turning out or results
spk_2: article followed it basis we grew fourth quarter revenue by twenty five percent an annual revenue like twenty three percent before the contribution of our ventilator he of humanitarian if he had last year
spk_3: we deliver thirty two percent higher adjusted earnings per share to quarter and for the year it was up seventy nine percent
spk_4: testament to the quality of these results
spk_3: we've generated a healthy one one hundred and eighty eight billion dollars a free cash flow the quarter and three hundred and forty two million dollars or the you
spk_2: in civil we are strong performance would double digit growth in revenue and get to say when operating income and we generated margins north twenty percent for the second quarter in a row
spk_3: despite only problem disruptions during the fall and winter and continued market we is beneath it asia fourth quarter average training center you like they can reach sixty nine percent which is up from fifty five percent last year
spk_4: training the man in the americas and continues to be the strongest in a quarter easily absorbed into capacity with the point you recently it to the region you meet our customers increased neat
spk_3: we also had strong demand for new pilot training with record much the hours long at are like school phoenix arizona pretty like station in europe improve in a quarter what airline having become more confident about the summer travel period asia pacific with a bit better with some easing of travel restrictions to singapore malaysia but remain at a much lower level compared to twenty nine thirty and business aviation training the man was ruled back and reflect the high level of business aircraft flight activity which is well above twenty nine eleven
spk_5: we overcame market and logistical challenge challenges to deliver seven civil put or flight simulators and a quarter and thirty per year
spk_3: we have strong order activities civil overall and a quarter booking training solutions contract value at five hundred and seventeen million dollar for a book sales ratio of one point one nine times including fifteen full flight simulator so annual order to reach two billion dollars for a book sales ratio of one point two five times including comprehensive long term for any agreements what airline and business gets operators worldwide and a total of forty eight for quite similar yourself for the year which is testament to the
spk_5: the that pilot training this is a big step up compared to only eleven orders for all previous fiscal year
spk_3: civil concluded that the year with the order backlog a four point nine million dollars we also expand your horizons journey year by partnering with or of the leading electrical vertical takeoff and landing developers to provide a range of solutions including simulator pilot and maintenance training program and aircraft systems engineering and support additionally we concluded the acquisition of saber airfares airline operation or oil during the quarter giving us a valuable sweet like and crew management and optimization solutions and a highly talent work for who we welcome warmly to see the acquisition is part of a strategy put then civil beyond training and access and even larger portion of the actively leash market that we already address we continuously innovate to earn the right to be or customers training partner trolley and now we're expanding our aperture to also become their technology partner choice
spk_2: i'm very cars but positive customer past with had already with airlines a business share our prayers greetings the as a highly illogical partner or the solution
spk_3: in defence we also had double digit both in a quarter with the contribution of l three hair don't carry train and i'm especially pleased with the acceleration in order in pay with bookings totaling a record seven one hundred and fifty one million dollars in a quarter or at one point six times book
spk_6: thales ratio
spk_3: notable wins in a quarter include a contract with the government canada to expand and expand the natal fine for any canada program through twenty twenty seven defense also broadly customer access what are us to one hundred and fifty million dollars healing us naval air systems command contract or rapid acquisition prototypey integration and development which is an idea i q with defense concluded the year when a record one point nine billion dollars in order including quitting competitive primal wars are fought all five domain that being era lansky space and cyber this higher level of activity contributor to of or point seven billion our defense backboard representing one point two times book the fill for the year notably issue that first timer annual the facebook the fills ratio has been above one in a left or fiscal years in a t driving higher performance and years ahead we also concluded the year when a record eight point six billion dollars of defense is pending huskers issue turning our healthcare we delivered our fifth consecutive quarter of double digit year over year revenue growth excluding ventilators and we generated sequentially higher profitably in the fourth quarter one noteworthy or order during the or food included a collaboration between health care in defense to win a contract to support the german armed forces by providing patients simulators use your train and maintenance support this collaboration is a great example of fees posh business synergies and is testament to a unique one vehicle a good progress in health care during a year reflects a clear focus on achieving greater scale and the wrap up of our real energized organization we began worldwide delivering of argue arguing pediatric patients similar she a area and we live updates to expand expand the future set and functionality of them are made park solutions including vivid x also found education perform c f lab br and he learning space with that are loud turn to call over sonia will provide a more detail look at our financial performance and i'll return of the other call to comment on our outlook so yeah
spk_7: thank you mark and good morning everyone i forgot i think our stakeholders for their patients and the delay in getting your thoughts out to or auditors required more time than anticipated to complete the technical path of bump in the normal course bought it now a result we deliver the strong performance in the fourth quarter and for the year having worked diligently to overcome the ongoing coded related challenges and delivered double digit revenue and just that segment operating income growth and higher margin we all cogenerated economic free cash flow and help to secure future growth with record order bookings and backlog we have effectively deployed growth capital using on opportunity to expand our market reach and we achieved their targets on restructuring program to lower cost structure of by frightfully seventy million dollars annually
spk_8: we also consider to be on track with integration of our acquisition and the realization of plan costs energy within the fact that frame looking at our results on a consolidated baited revenue of nine hundred and fifty five million dollar with up twenty five percent compared to the fourth quarter last year excluding a hundred thirty million dollars of revenue for ventilator
spk_7: adjusted segment operating income with one hundred and forty two point seven million dollars compared to one hundred and six point two million dollars last year quarterly adjusted net income with any three million dollar or twenty nine cents per share compared to twenty two cents in the fourth quarter last year for the year consolidated revenue with up thirteen percent at three point four billion dollars and was twenty three percent higher excluding two hundred thirty point six million dollars of revenue last year from the vela ventilator contract i just a segment operating income with up fifty eight percent to four hundred and forty four point five million dollars an annual adjusted net income or two hundred and sixty one million dollar or eighty four cents per share with a seventy nine percent compared to forty seven percent last year we encourage restructuring integration and acquisition cost the thirty six million dollars during the quarter related to the lg harith military training and air center acquisition and are enterprise wide restructuring program net has provided by operating activities with two hundred and six point eight million dollars for the quarter compared to one hundred and seventy four point six million dollars in the fourth quarter last year and for the year we four hundred and eighteen point two million dollars from operating activities compared to three hundred and sixty six point six million dollars last year
spk_8: we had a strong free cash flow in the quarter of one hundred and eighty seven point six million dollars and three hundred and forty one point five billion dollars for the year for an annual cash conversion rate of one hundred and thirty one percent
spk_7: youth of of cash involved funding catholic amateurs for seventy four point seven million dollars in the fourth quarter and two hundred and seventy two point two million dollars for the year which is a minute our outlook a total catholic of more than two hundred fifty million dollars paid growth have active mainly driven by the expansion of our civil aviation training network and typically joe generate twenty to thirty percent range of incremental return on capital boy within the first few years with appointment
spk_8: these opportunities traveling with the best example of growth compounding at the
spk_7: looking at fiscal twenty twenty three we continue to expect half act of approximately two hundred and fifty million dollar reflecting a large pipeline of attractive market light expansion investment opportunity on the her other right
spk_8: our that position at the end of the quarter with approximately three point seven billion dollar burnett that he would just that he bit the of three point six time the compared to net death of two point three billion dollars and three point two timed letter just that he but that at the end of the preceding court
spk_7: during a you fiscal year we made several growth investment good band our capabilities and reach including nine acquisition pulling three point one billion dollars and capital expenditures for some three hundred eighty million dollars were continuing to focus on attractive growth opportunities and at the same time we expect to reduce leveraged would method that to adjusted ebitda decreasing to below
spk_8: three time within the next eighteen months
spk_7: and compact offensive quarter with three point seven million dollars representing an effective tax rate of six percent compared to a negative effect of tax rate of twenty one percent for the fourth quarter of the good twenty twenty one
spk_8: the tax rate with mainly impacted by extracting information acquisition costs including effectively element the income tax rate would have been fifteen prevented order and fourteen percent for the year
spk_7: but think that of the recent changes we have a global tax regime we effect effective income tax feet to be approximately twenty two percent going forward
spk_8: aka below the line nonconforming interests with two million dollars for the quarter and eight point three million dollars for the year we effect and the i to continue to increase commensurate with the growth rate of the that the segment operating income now to briefly recap our segment performance
spk_7: and developed fourth quarter revenue with up eleven percent year over year to four hundred thirty two point seven billion dollars and adjusted segment operating come with up forty five percent year over year to ninety six point three million dollars for a margin of twenty two point three percent for the year civil revenue about fifteen percent to one point six billion dollars and just that segment operating income but that ninety percent to three hundred and fourteen seven million dollars for an annual margin of nineteen point five percent and the fan fourth quarter revenue and four hundred sixty nine point five million dollars with up forty percent over queue for last year which includes one hundred forty six point nine million dollars from the integration of all three hara kiri training in our financial i just that segment operating income with up fifty nine percent over last year to thirty six point eight million dollars for an operating margin of seven point eight percent for the year the fence revenue was up thirty two percent to one point six billion dollar including four hundred nine point nine million dollars from the integration of l three harris military training and adjust the segment operating income with up thirty seven percent to one hundred ninety eighty point two million dollar representing a margin of seven point four percent and in health care fourth quarter revenue with fifty two point eight million dollar appointee front seven percent excluding the ventilator contract last year i just that big of an operating income with nine point six million dollars in the quarter compared to sixteen for
spk_8: four million dollars you for last year for the year healthcare revenue with one hundred and fifty one point four million dollars a twenty five percent excluding the ventilator contract last year and the the segment operating income with ten point six million dollars for margin of seven percent with that i will ask market that got the way for
spk_9: thanks on it
spk_3: as we look for we continue to see a clear path to emerge from the pandemic a bigger stronger and more profitable he in the years ahead
spk_2: we're definitely playing office in a disrupted market by seizing on a highly strategic group opportunity to expand our capabilities the market reach a girl we've been effectively lowering it would think of a loner off base continue to innovate ways to revolutionize or customers twentieth critical operations with digitally immersive solutions delivery they'd be efficiency and ready
spk_3: despite his still challenging environment there's no doubt or strategies bearing fruit with several written record milestone already reached in the early stages of a cyclical industry recovery
spk_4: our recent result
spk_3: any benefit of opportunities before us add to my conviction that clearly points to experience new light as we recovered from the cyclical bouncer and ultimately benefit from secular growth in our in mark in civil wifi pent up demand for air travel as an important driver in the near term and the rate of civil recovery the pre pandemic leveled and the on is expected to continue to be driven in large part by the easy to travel restrictions particularly in our key asian mark we also expect more demand from airline customers wanting speed support at of choice to secure and training pilots the of a cute needs arising rising from the challenges associated with story and growing like the past for the in a competitive market for pilots and flight crew
spk_10: this dynamic
spk_3: the strength of civil training recovery the americas and the sharply higher for quite similar order activity is past year provide a compelling blueprint for the potential for a broader global recovery and the business aviation we remain bullish on the long term and we believe the market is experiences experiencing a structural expansion as evidenced by the record three point three million flight worldwide last year in fiscal two thousand twenty three in addition to growing could need to go or or steer religion training market and expanding our position in aviation digital solutions we've back to maintain our leading share of foreplay them later filled and to deliver upwards of forty book like the layers customers worldwide
spk_5: i'm a profiling fan point we're planning planning a higher proportion of delivery in the second half of the fiscal year
spk_3: overall we fit continued recovery and grow in civil in the year ahead
spk_11: in defence
spk_1: we're on a multiyear journey to becoming bigger and more profitable and the first and most critical lincoln a chain evolve winning orders
spk_3: our record ordering take this past year makes it clear that were indeed on the right path to grow
spk_5: furthermore or record level of defense built and proposal is a result of bidding more and bidding a larger
spk_3: with our increase capabilities across all five domain and a critical mass that are transformed defense business now possesses there's no program in our growth market that's too large or too complex for the bid on with a high probability of success our defense business is now closely align with our custom the customers utmost priority which at their foundation are about defending freedom in the face of nuclear threat
spk_5: wow we could that not have known how or when such geopolitical threat would manifest they have
spk_3: and we're extremely proud of his role in helping prepare nato and allegations to defend freedom are also very proud of our noble purpose they help take the world safer and then left two year defense has the that purpose by establish his position as the world leading platform agnostic global training and simulation pure played defense business russia's invasion of ukraine over last three months has galvanized national defense priory and we fact increased spending the specifically the position on defense readiness to translate into additional up to the first the in the years ahead we also expect continues from the momentum with the integration of three harris built your training in the your head and to fully realized thirty five to forty five million dollars of caught interviewed by fiscal year twenty twenty four
spk_2: we look forward to continued growth in the year ahead
spk_4: a few head when still exist for the international the feds business in terms of travel restrictions but we view them at temporary
spk_3: we're also continuing to work our way through some of the lagging effects of a historic less than one book the sales ratio beyond which we expect cairo from integration synergy and a translation of our recent record ordering cake and bit activity into revenue
spk_2: and lastly in healthcare the long term potential is increasingly evident for this is you become a more material and proper i'm part of the as we gave here in the healthcare stimulation and training market and could get it to build on a great momentum created by the real and are energized came over the last eighteen months
spk_4: for she'll see a overall based on everything we see at present
spk_3: we're targeting consolidated adjusted segment operating income growth in the mid thirty percent range it just got twenty twenty three waited more heavily in the second half of the
spk_12: in summary
spk_4: are opportunities that for see is highly attractive and that continue to be very excited about our future
spk_3: we expect the continue making excellent progress than a your head and beyond and will have or sharing more about this with you at our best to they are seven in new york the see management team and i will be on have to prevent why we believe she is so well positioned superior growth and higher profitability well we'll offer showcase of of
spk_5: police picked out a solutions
spk_3: and provide a view on yeas maathai year growth potential
spk_5: she is a highly unique company whose cutting edge training and critical operations solutions that and pilot crew members defense forces and healthcare practitioners to perform at their best everyday and when the stakes are high we put those in critical role with the skills and expertise needed to move our world for safely
spk_3: we also enable our customers to perform their complex task more efficiently and what a lower carbon footprint
spk_5: at the very core the a mission is to make the world safer
spk_3: in addition to sharing a compelling a natural picture we hope investors will come away from our best for the with an even greater appreciation of she's no purpose a major driver for all with that i thank you for extension without ready answer with
spk_1: thank you mark operator will now be ready to take questions from analysts and institutional investors
spk_0: thank you if you have to register a question or comment please press for one followed by the for on your telephone you hear a sweet home 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 one moment please the first question consummate kevin time aside he could go ahead
spk_13: oh good good morning thinks that's what taking my my question just to for move the forsworn on all of is your recorded as a wide margin target is it's doctor the seventy percent on which is what about star as as as you're reading his recovery care but what that number has change that the over the past few quarters here are obviously the inflationary environment
spk_14: them just wondering
spk_13: how how do people like an aggressive get given the current production environment of the composition of that seventy percent that has that changed or or do you feel like the restructuring up more than offset the inflationary pressures are only be pricing power of of with another leverage just just wondered how how that everything that comes about in a higher visionary blinded here
spk_3: it hasn't changed much gathered know it yet although western a not unaffected like anyone else that the if they fear varmint but we've taken steps to protect ourselves from that you to various expected them some of the to mention which is being able to pass on some of the year caught onto price increases upset some of them with we relentlessly reduce our cost that helps as well as we have built in yet elia measured in our contract or to the for to relocate up with that as well i'm either in a car normalized passion and i think in terms of composition really change who we were expecting you have higher peak margins a civil engineer with back certainly get a with our playing horizon to a load of did it so martin defense or the that composition hasn't really changed that the north that are
spk_13: that said that super helpful and maybe just a second one for me a lot a lot of headlines around the pilot shortage especially especially in the us and and one of your partner's jet blue recently in noted that no one way they're combating the is and leverages i guess a gateway program which i believe you have a partnership with their that and believe they felt that we're focusing on on boarding cadets early what was helping them get it but i believe a bottleneck and so what are you at other our think of pilot shortage issue are you saying no increase in competitions are setting up gateway programs with other
spk_15: or the us airlines or global airlines would go with the idea how to get the cadet in the early that might help alleviate the pilot shortage you know as as well
spk_13: like all looked down of have double supply chain
spk_3: well i think versa we're very proud of the relationship we have we jet blue it as well as other airlines you need that in a in and the you're around the world with a pile of programs like the gateway poland where we get blue and at gatwick think stronger than as i mentioned in my nose so the enrollment in our flight schools the liquid one it we added phoenix that caters for or jet blue up amongst other of american for example seen a record order and take in terms of kid as a solo we we are basically saying airlines being impacted by pilots you certainly in the united states strongly right now and we're doing everything we can to be able to support them with the i feel providing piles true or park aviation business for example which we do we supply park pilots the that things have tried them and were also yoshi as as i mentioned a role but not by the school and look i i think this is something that will continue to be a factor guy in the fact that airlines heard what are in great need a pile the is to me it's a nice long term business for he is the largest your provider pilot training in the world so we're going to get you don't to our help or airline customers and expand those program and the the are are old focus our own actually forecasts for lad is that big with that of before that we estimate that there were two hundred your order to hundred sixty four thousand new pilots are gonna have to be created over the next seventy years to accommodate your their retirement that we've seen yet christian and we see as well as a new growth that going to come with but just filming kind of the growth that you've that i add a is the at just barely so look at it people and have a lot of business on or on it
spk_13: actually they keep people taking my question
spk_16: thank you
spk_0: the next question cut some corners group that scotiabank go ahead
spk_17: running in the thanks on
spk_18: step one we going to follow up on kansas question of a shortage of is it away
spk_17: to to quantify the population of the current population a pilot's going through training at this time was since what it was five of the pandemic is trying to get a fan on you don't like it if the by the shortage is there is that hurting the airline
spk_18: from going above and beyond the pandemic out as it
spk_3: or is it a hurdle for them to to get back to the old up economic recovery i think it's definitely a head when the right now and i think they're they're better purpose they're barrier better position to be of ask that question than i am but it it really developer the airline and were really you're really seeing that materialized self mainly it features feeders food the main line because largely the main line a have been able to you don't cater it although they're saying the they're see some of that it as well as some of our major partner the in the united states and and at the way i think we're seeing an extraordinary level of the man right now in the united states specifically we talked about that the or which is benefiting are our our market quite substantially that's why you seem very high level the utilization in the united states specifically that the fact that we've been talking about it and there's a lot of young delta training being a have been caused by the fact that you're bringing on more as a lot i think it's something that i don't think so rock shirley's going to affect the recovery overall the market any sustained back and but if there's no doubt that there's no doubt that is having an effect right now it as i can get fed me time before i think it's a great time to start a pile career i think we'll have role for years to come and i think that would be a strong driver for a get or or business the key were the largest predict the trailer pilots in the world right now makes our of a today that by the way it either by the way the in japan the as i would messy and my note the strong demand that we've been for or flight simulator that the all of last year we had eleven full flight simulators feel sale and the past year that we just all with forty five that that that it for the year and that that is a huge ramp up to have actually forty eight for the full year a huge wrap up something that we've never seen in terms of going from a downturn usually that to three years lag with had no lag this little bit a huge be shaped recovery and again there is
spk_18: testimony perry line stocking up on similar to the train provide hyperion new pilot
spk_3: thank you the sitting guess you could deepen actually
spk_17: so late last quarter or and the quarter before like you've seen a pretty significant exploration i thing and defense ordering take and i was you know you have a cat and swell up to that kept facing with a mixture of the of the with pipeline here well what do you have been suggesting it not of eight billion dollar i don't think we have seen those kind of numbers before historically it's probably more than twice what be used to see private the dynamic just trying to figure out if there's any you know momentum and defense or bring take or but pipeline
spk_5: because of the recent announcements by global defense forces to increased spending all that has to to play out like when we are beat them so that cycle for for global defense spending wrapping up
spk_3: and i mean to to question that has no complaints and what you're seeing in the and a much larger backlog of beers is us your bidding more and beating larger with are combined capabilities of you know a lot of calm call it see legacy and our our business come by will free hairs military training the that's what you're seeing here with the much more opera opportunities to be year and to bed and had it my nose is almost there is no contract that you know that too large or too complex in our addressable market for us the bit so i think that very positive that the again as i eddie fuel you seem a much larger be a level of bidding activity and years seen the fruits of that through ebay you look every quarter last year we started out we started a year with left the book to build that you have that the to julia had pretty much want the one did you have over one into the two three and much hired into one you or i think that's and a train them that said it it doesn't have it doesn't turn into revenue immediately
spk_18: but it definitely shows you on that that were on the right that it'll the next few years definitely that will start to make an impact or result has apparently for directly
spk_1: the for me thank you so much
spk_0: up operator just make sure that everybody has a chance the question maybe we asked participants to stick with a single part question and we're happy to take more time permits and just granted you thanks
spk_19: thank you know noted the next question can some common dark them as national bank please go ahead yeah thanks good morning
spk_20: i had a question on the i guess the air center acquisition many clothes that during during the fourth quarter to sort of you can comment on cottier early thoughts on on the business
spk_19: and how it's integrating into the existing see that business and can also be talk a little bit about your through the recovery pace for for that years that or business
spk_3: how does that compare i guess with with kind of the airline pilot training demanded sort of the you're comparing attract those two well as i would say a cameras the the integration preventing it from getting very well as we all get was that march birth as i would be no surprises i'm very excited about the potential it as we move that the pain in my nose from really being a training partner to the world airline to technology partner have been very very happy about the reception of our customers
spk_4: the
spk_3: as we said we talked about the acquisition there's almost it's almost on present overlap between those customers that we serve on a train from the brain more and or the letters that point to those that use any one of saber air centers the what we used to call a rare cerebellum he play services and you software to cool so varied or please how that going a that one of my pup to executives running a business that got ready and we're very excited but will with the up in terms of is golf i think that no surprises there look it's the business very very highly correlated came out of of planes flying him on of cruise flying and is it basically guard performance be in lockstep with those numbers and we're very happy with thing before it are they more to come as the the
spk_20: the fact that to me is like what seemed positive about that if we're adding you know two billion dollars a total assessable market now in civil and in a market where really were talking about just going to level of business that we do with our existing customers
spk_0: so more to come but there are so far great start
spk_21: but it's great here thanks very much thank you the next question cousin a petition bmr please go ahead
spk_22: good morning
spk_23: thanks for taking the question and congrats on stronghold of
spk_21: the
spk_7: civil aviation family i can you qualify for us like how much these are you muslim of royalty and reversal of few of the are now contributed to the aviation in the fourth quarter
spk_8: sure that he felt so go i feel at the higher level again that quarter and is that came from there we measure of and are royalties and into consideration than the royalty themselves are pretty much a recurring item every year if you go back you for we had some laughter love and it's really kind of based on twenty year plan horizon and so it float all three segments that the larger proportion was and that will now the accounting for them that army you know other gains and losses line what what it doesn't consider that we did have a host of other higher than usual caught that are not necessarily and a single about him that separate lines that are and caught the good old and authentic self sample
spk_24: with the oh crime and the be a two way if there was a significant ramp up in our public protocol and security costs including like higher cost them and productivity from mom impact from absenteeism and also some unusual supply chain like just caught that we see a temporary but that that increase in the quarter so on
spk_3: the whole and what that overly material that the and that civil as a whole rate fell so really not a major impact on a dollar or margin and that while while i were thinking about that i did highlight that
spk_8: you know these games are relatively non cash so the fight that we delivered a pretty strong cash conversion of one hundred thirty one percent so it can cannot be to the operational performance and and the quality of earning in the quarter and the here
spk_21: and maybe i can agree that
spk_23: yeah
spk_21: add as well as a that ill another confidence you might gain is the number that that we have is the baseline for the the growth forecast that we have a thirty percent of that number we start with we don't try to normalize that
spk_23: yeah that the growth outlook that we give our next year in the mid thirty percent range in thought the into the that the why a four hundred and forty five million dollars and that includes all of these item
spk_18: okay and that growth number for next year is apply with ain't gonna be different from a future
spk_8: human yeah thirty thousand growth okay
spk_23: okay is there to get on organic growth number within the aviation but you're assuming i know your you bought gonna
spk_0: aber will have a full contribution next year and you about some
spk_25: we're gonna cost restructuring initiative and all that like what what would be the organic growth you're feeling
spk_8: we've after all of those elements whether it said you know the as we integrate really you'll be driving organic and revenue and caught that aged as well as the impact of the structural cost savings and the ramp up with their on recovery and expansion of of our market position went with customers okay great thanks to see you next week i guess thank you
spk_26: yeah
spk_27: thank you to next question because i'm a bit lapaglia of year of development could go ahead
spk_28: yes hi this is michael on me up have been on congratulations on the good quarter as can have more color on the caught cloud computing and transition adjustment in the for a bit the was just a matter of fact of moving a legacy systems in the software to the to the cloud from from the previous
spk_0: them that you know and not an operational item and all frankly it that if you guide for coming out of i have rest on how to account set of criteria
spk_29: for cloud computing and that as you know that we companies have growing the rp that are either and a health and health or or on on tap applications of so new or provide guidance on that front and so that at we're just applying the updated guidance as an accounting change and oh it's really nonrecurring in each year but not
spk_23: nothing operational
spk_30: thank you appreciate it
spk_3: thank you and the next question comes from been what's that he of there's something please go ahead okay a was finally able to join for the morning everyone and bankrupt or the reporter mark looking at the a global defense budgets are obviously trending upward could you provide some color about the timing of when we might see via the potential implications than what are you see greatest fortunate the either on the service or products i thank you well i think i'll always start that question to say that the day that de the revenues or a proxy for the growth of the us defense budget or a budget or be very happy with oh that's not the case we're still yeah although we're very big in our space i think get the size of that budget dwarfs and he has braces so the fact that they're going up is a good sign that but i think you know we can do very well thank you and grow beyond the the levels of role for those inherent that budget said that certainly our growth outlook i think would would do well well well we're very well in line with the party that are inherent in the defense budget which is i said his it'll be paid make sure that the readiness for at other than here pure fight that's what we do
spk_31: in that it may even much stronger now with our combined business would l three her ex harris elsewhere filter trained as a solo a i think it's going to be combination of both products or services up in a can i when i look at the back was that we the it it it's basically a mix of the to
spk_32: the so i wouldn't feel too much beyond that except that again were were forecasting strong growth and defend them were on well on the path to be able to do that in girl i think don't don't look at the that continue to look at defense that twelve month basis that route i will always look the or
spk_30: ordered that we've won the in the in the past year which is very very and laid back and kidding
spk_0: again look at this summit will not beard be a basis it will translate to revenue
spk_33: the in the upcoming periods and but well on the way to the sorry that we asked or strong growth and low double digit with a margin that depends
spk_34: okay think that you very much of a wealthy of the
spk_18: then what
spk_2: okay that's where color thank you very much ah
spk_18: they for the next question customer know a pop a knock of goldman sachs please go ahead
spk_33: i get morning everybody
spk_18: mourning morning lot lot of questions in the marketplace about the assumptions behind the twenty three marco
spk_3: segment many up mid thirty percent appreciate that you know that run companies are providing different versions of guidance and that you've given us some framework but perhaps you could just put a little more detail behind that in terms of what you're seeing in the segments you know what kind of utilization rates you're assuming are kind of gross you're assuming and in the segments maybe and i guess particular on the margins you know the margins changed through the year a lot last year so you know how to how to maybe the margins compared to the exit rates of twenty twenty two if he or anything that stands out i guess would be helpful well i don't think you when i looked get a basic question and i shirt to work with and but stand out the except maybe of
spk_2: perceive lump enough through quarters you know i've said many times and i've said it again the in the year a note expect more of a backend it's a twenty twenty doing there's a reason for that reason for a fight as i look at civil specifically
spk_1: for thought i'll tell you that the higher utilization rate get our a factor was saying the sequentially a higher
spk_3: utilization rate them we're going to continue to be i would very high level of airline based activity in the us seeing much stronger in your we're starting to see although it's much more restarting is the asia open up a very very good that that we she sang shanghai that shanghai but with a single or bring up we see malaysia opening up that's very good although you can well imagine that you know there's a lot of travel that you know china dependent so thats still pretty low with it you all the and lockdowns in shanghai very that are just just now opening up so that's going to have some lag effect for quite a while i think and for that then we we continue to look at the and i had a forecast was the basis or you know our forecasts go which is our pk growth and and that that how that can translate into realization so by come out that stronger utilization as a whole
spk_6: that would definitely seen a leverage effect can if you look at the fact of the margins were making his civil overall at feel a much lower than peak utilization i think you're seeing they're both the benefits of the leverage effect on it at a at all either up off the debt that translating the bottom line their civil and you're also seen the benefit of our cost savings that we put restructuring program that are definitely panic fruit that's very clear that would continue so i think you'll expect to see a higher margins there like would you gotta look the won't have to look at is that
spk_35: a similar delivery from the factory also a big factor that and i see those be more and more buys to the second half is and and that's of the consequences of where there are under pressure line and typically the summer period we have for example we have yeah we we can shut the factory for maintenance that the s
spk_0: i'm really different this year or the other thing is you have to look at that airlines in the first and second quarter of this very much in the second quarter they're flying and therefore they're not trainee that's definitely gonna be a factor this year we haven't seen as seasonality as much during cold with no bra the is really all in a sea of the here
spk_36: so i think of the color i would give it terms the defense what i would be as those orders that we've seen okay they're going to take time may we have this week i'd like to say we have like this you know big animal that make us wait to the snake right now
spk_37: that was the order and that's gonna go to translate that inevitably going to drop the bomb like i suspect that is i didn't happen overnight okay but it definitely going to start affecting the year i think that against the back half and that combine all that that translates into the outlook that we give them in terms of he wrote tight in third
spk_38: thirty percent growth
spk_36: oh on it preserves likely to mark
spk_3: thank you
spk_2: thank you
spk_3: the next question kinds of christine lack of morgan stanley please go ahead a good morning guy more than i mark aviation the local paper form of mass transportation to go but when we can't look at the pilots shortage issue some not advocating for the with that show mobile number pilot and either some of the long haul why or for free on especially with me where automation on the cockpit
spk_5: as the balance out like a thief a requirement of the industry and a shortage issue it can you comment on how credible you thought that shallow pilot will be in that in either the cockpit or the requirement in a flight and if we do see that reduction where are you think that could come out first well look i don't know personally you live near around in the industry for over thirty five years the the before he said i used to design airplanes for airplanes that are transport category airplanes i i'm pretty well versed as you play calling expert in this domain of what's required to certify or blade to be
spk_3: or safety transport passengers it it's fun i would say not the technology that doesn't exist the technology exists than the in the world defense forces do it everyday fact we have i have but he's doing it good you for for for years we've been and we're conducting you're training for or for example and us air force flying predator playing reaper
spk_39: for example we strong capabilities and where we deploy we beat around the world and defense at first what you'd civil aviation you you you deal on the head that the overwhelming priming consideration is the safety the of the traveling public the and this is as you said again the safest modes of transportation
spk_3: that that the reason for that is because a regulatory framework for the design america continues to the relentlessly and that based on the lessons learned of it ola incident that happened reports that come out of national transportation safety board recommendation would translate into changes to your cap by at a by the a by us up for example then as and which to them for the airplanes get safer and see for all the time also inherited that is the safety of the aircrews themselves that's where we come in as we come in and your the see the leader in the world working with the world regulators to ensure that to training of those pilots is at me that the utmost a standard air airlines are not getting airplanes are not getting less complex automation is getting less complex so the pilots have to be trained effectively so if you go straight to your question i don't see anything within a pliant planning horizon which tells me that we will have single the airplanes or certainly no pile arafat in any conceivable future
spk_40: so is a very long time
spk_28: don't forget that i think even if you
spk_0: let's save you to assume that one pilot if you have a plane flying with one pile then you'll have to certify the airplane assuming there is no because
spk_23: the bugs have to use a nice example year one bad hamburger and that pilot to be incapacitated before you have no path so and the fundamental fundamental of concept of design of airplanes for flying pastors around a in the around the world is that no single failure can can result in the last for the orca so obviously if you have one path finder cap and here for she and capacity than you have violated that rule so if i if we do see one day that
spk_3: fixed a long way off i would it take the bait that all will happen on long term long haul flights a by in involved and cargo that's where i could see what that again
spk_18: i don't see that for a long time
spk_8: a part
spk_7: thank you
spk_8: the next question custom tim james kitty securities please go ahead which changes your meat we have we are unable to hearing at the time oh quite sure each can games here the song i'm just wondering if you could provide us with additional color on the the cutbacks plans for fiscal twenty three and a lady just talk about a bit of a break out give us a sense or callbacks axiom in defense versus signal and maybe any specifics on certain markets or product lines were where service lines with each within each segment and as as part of that is it possible to get a bit of an idea of what expected growth in in as to uses in and how complex drives that this fiscal year
spk_13: okay well i think the blood of our project a cap at not going to be overly different that what you've been historically the lion's share really goes to civil and expanding our civil aviation network and and i said it in my remarks with say it again that that the at this is growth epic that in lane to
spk_0: two
spk_1: direct market demand customer order and take new new orders that we feel our long term contract that that we'd find that have a creative returns and cashed out though you know wherever we can secure a long term recurring regulated revenues that are are can be twenty to thirty percent increase
spk_0: mental return a creative one and a couple years you know this is that the some of the highest growth a creative investment that we can make in terms of color you know the what getting it be really focused on on the plane that civil or banning that that will network you know a lot of opportunities on the business just fine with with and of significant activity instructional expansion that we receive a large portion on that capek going in business jet including three new training center that were opening out that the vanna and and las they get their with
spk_41: with photo one specifically a larger one
spk_39: and and also a lot of opportunities and commercial type you know market market speaking to the the recovery in that market which is really a blueprint for you know what we hoped that the broader recovery will look like of the other regions and i catch up but both have some commercial deployment on especially on the us time
spk_38: so where we can you know it by the restructuring program we are redeploying under utilized that that that or at that lower recovery profiles and moving them over that us but also deploying new opportunities as were signing contracts with with customers so you know it focused on bad
spk_42: definitely a high proportion of all of that investment being in the american that we see for next year
spk_3: thank you so you it's very helpful
spk_5: thank you that was our final question from financial analyst
spk_3: thank you operator will now open the lines to members of the media and he has a reminder you may proceed one for by the for if you'd like to register a question or comment once again that is the one alibi by the for
spk_41: our first question cause i'm julie enough for know of love high school had we all know much about ask your of it yeah we've met the that they've also an anthropologist yup it's usually just my opinion the should back off that allow did that easier to clear the air yep it's not that healthy his return it is provided available of of the only dated sadly as you put their appetites of get get that he the what's a tier i live a a lot that getting can that that he do three as gets it back get the idea is active that i don't have the addict is a yelp given take over that the ship that getting on that any thought that will have abuse of know much you certainly a pretty good food this the give them i did you did well
spk_3: the oil i could the only on my know of any pills that does
spk_43: apple to really a little go down he did a lot easier for them off but a month of leicester square that almada can i get that you meet these is a different man was shot one fifth back onto the pulled on a car with the personal that's not have to review to walk are whenever average don't like his shoulders war or is it gave them an appeal
spk_5: don't wanna be unable to that afghan opium the can get some pews up with before the than the a little when really important victories up a point you can get do what are adequate or nail polish the kids how long did it have caught that guy with their nikkei you're just around the russian without a
spk_3: make the theater to do that it is a pet the city is inevitable
spk_44: okay that's similar just let it affect other the mischief that have get that would get all about what the
spk_5: we're not do that sort of get walked up there was that we can be that answer the different jobs that they were both i didn't get compensated each sit by the door he i need to get to the golden dawn idea of music for projects or without that on a casual sex textile pledge to you to mop up a do it
spk_42: a calls yeah make have yet to come on to much that you could you kindly
spk_45: is getting just as it ethical about news when old that is just may old text in the finals of what that these year before they can watch it live guy was about all these ultimate gets or got it
spk_5: did and actually a dining apple who don't yank alibi
spk_3: by can with the system for dummies or maybe that some is the so
spk_46: no
spk_44: you could only fit like a t v d the
spk_41: the phone now me at of the murder is it is this is a he quickly canada it is these your pool said prepaid to a lot the novel called he keeps take on it called good games that were there is there a creative ready that appeared that guy that i yeah while yet they thought i get near pierce city usually at these week
spk_47: don't do kind of patriarchy is your the and wires okay to an incubator than the keystone whole ballot know that it's law is sit in the air mom who said he and he still thing is it is the the i'm alexis how you feel that kid put your package elected history
spk_3: fuck that me for national board don't to phone calls the campaign says you can't defend phone call into a sharp painful a file don't older version from on any a down the hill walk out there that a thirty we a real madrid thought of that me calm the
spk_47: he said lab land and a shop a neat one cold feet at least fleet estimate break the is called the punishment should they all come take on a villain canada talks afghanistan
spk_48: the corner reporting by the
spk_49: and he they love affair katy called will let us by hanging or tennis ball down this path a lot longer than that doesn't take long he he had they impartial don't new meant now new via on a plane
spk_50: the armed took a nine year later february a mellow his mask on where are they like like get on the plane sick old woman their care if it's so cold that it has shocked the appeal imagine old man whose so easy or left better known as the creator more thing
spk_0: and he bought they did it isn't a big boy
spk_1: oy vey the or they don't have any capacity elliot mecca the the project the thousand yeah the nine the peak of all these did it and i do any than school or dying mother the
spk_0: a dollar a fee that several push the got available your place that the beginning of mouth about that okay the basic that the city bridget oman
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