Good day, ladies and gentlemen. Welcome to the CAE Fourth 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 outlook for fiscal year 2019 and answers to questions, contain forward-looking statements. These forward-looking statements represent our expectations as of today, May 25, 2018, and accordingly are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risks, factors and assumptions that may affect future results is contained in CAE’s annual MD&A available on our corporate website and in our filings with the Canadian Securities Administrators on SEDAR and the U.S. Securities and Exchange commission on EDGAR. On the call with me this afternoon are Marc Parent, CAE’s President and Chief Executive Officer, and Sonya Branco, our Chief Financial Officer. After remarks from Marc and Sonya, we will take questions from financial analysts and institutional investors. Following the conclusion of that Q&A period, we will open the call to questions from members of the media. For your added convenience, we have posted a presentation on CAE’s website to accompany this discussion of our performance and outlook. It also provides some highlights of the adoption by CAE of the new revenue standard, IFRS 15. You can download this document entitled Supplemental Q4 FY2018 Presentation at www.cae.com/investors. Let me now turn the call over to Marc.

Thank you, Andrew, and good afternoon to everyone joining us on the call. As usual, I will first discuss some highlights of the quarter and then the year, and then Sonya will review the detailed financials. I will come back at the end to comment on our outlook for the new fiscal year. We had strong results in the fourth quarter and the full year, having delivered on our growth outlook in all our segments. I’m especially pleased with the increased momentum we have gained from our training strategy, as underscored by a record $3.9 billion order intake for the year and a record $7.8 billion backlog. We grew earnings per share by 8% over last year and we made good progress on our return targets, with return on capital employed growing to above 12%, all in all, a very good performance. Looking specifically at Civil, we booked $545 million of orders during the quarter, for a 1.2 times book-to-sales ratio, including long-term training services in Europe and the Americas, and the sale of five more full-flight simulators. For the year, Civil booked a record $2.3 billion in orders for a 1.44 times book-to-sales ratio, giving it a record backlog of $4 billion, which is 21% higher than last year. This is a good indication of the considerable momentum we have gained just in the last year towards realizing our vision to be the recognized global training partner of choice. Orders for the year included 50 full-flight simulator sales and comprehensive long-term training agreements with airlines including Air Asia, Jazz Aviation, Air Transat and Virgin Atlantic, just to name a few. As well on business aviation, Civil won long-term training contracts with customers worldwide, including Elit’Avia and Flexjet. Overall, for the year, Civil grew segment operating income by 12% and…

Thank you, Marc, and good afternoon, everyone. Consolidated revenue for the fourth quarter was up 6% to $780.7 million and quarterly net income was $100.1 million or $0.37 per share, which is up 19%, compared to $0.31 in the fourth quarter last year, before specific items. For the year, consolidated revenue was up 5% to $2.8 billion and annual net income was $347 million or $1.29 per share. Excluding the impacts of the income tax recovery related to the U.S. Tax Reform and net gains on strategic transactions involving our Asian joint ventures, net income would have been $297.3 million or $1.11 per share. This compares to net income last year of $278.4 million or $1.03 per share before specific items. On this basis, annual EPS was up 8%. We generated $117.3 million of free cash flow in the quarter and $288.9 million for the year, which represents an annual cash conversion rate of 97%, excluding the impact of the aforementioned items. This is in line with our annual average conversion target of 100%. In fiscal 2018, we generated higher earnings, which converted into higher cash provided by continuing operating activities. This was partially offset by an investment in non-cash working capital in support of our growth, and mainly as a result of timing on accounts payable and work in progress. Overall, a good year from a cash flow standpoint and we expect to continue our focus on improving non-cash working capital efficiency in the year ahead. Uses of cash involved funding capital expenditures for $57.4 million in the fourth quarter and $173.9 million for the year, mainly for the deployment of new simulators to our global network in support of customer-led growth opportunities. This figure also includes the acquisition of existing simulators from third parties. In line with the…

Thanks, Sonya. CAE continues to benefit from steady, secular tailwinds in each of our three core markets of Civil, Defence and Healthcare, and we are well-positioned for sustainable, profitable growth. The macro environment is highly supportive and just as encouraging, if not more so, is the momentum we currently have in the market as a credible training partner for our customers. As we look to the year ahead, we expect CAE to exceed the growth rate of our end markets as our large pipeline translates into even more opportunities for market share gains and new customer partnerships. In Civil, the market fundamentals are well-supported by continued passenger traffic growth and the expanding global in-service fleet of aircraft. So far in 2018, we have seen continued high rates of commercial passenger traffic growth, especially in high growth regions like Asia-Pacific, where CAE is highly active as a training partner. The growth continues to be well in excess of the long-term global average of about 4%. Pilot training demand is fundamentally driven by regulations governing the flight crews who operate the global in-service fleet, and incrementally, by the large number of new pilots who need to be trained over the next decade. I remain highly encouraged by CAE’s prospects in this environment. CAE is a pure-play, training services company that is well-defined as an innovation leader, with the largest and broadest global training network and the most comprehensive offering of cadet-to-captain training solutions. We are harnessing the latest and augmented and virtual reality and the power of digital, with new data-driven solutions. For example, we commercialized, CAE Rise in fiscal 2018 to provide our training customers with a powerful new tool capable of objective pilot assessment and providing much deeper training insights than previously thought possible. We currently have an active pipeline…

Thank you, Marc. Operator, we would now be pleased to take questions from analysts and institutional investors.

Certainly. Thanks. [Operator Instructions] And we will get to our first question in the line from the line of Fadi Chamoun, BMO Capital Markets. Please go ahead.

Thank you. Good afternoon.

Hi, Fadi.

And congratulations on the good results.

Thank you.

I wanted to ask first on the Civil side, the guidance, is this off of the base of - restated EBIT base of $311 million?

Yes. So, the guidance is based on the normalized which excludes the transactions during the year and restated for IFRS 15, so all of the guidance that we have provided is on an apples-to-apples basis, so on the restated FY 2018 numbers.

Okay. And so, I mean, this year, you had pretty decent conversion from revenue to operating income in Civil, I think, revenue growth $5, operating income growth was $12, almost twice the conversion we are seeing in the prior three years. Was there something specific helping this year? And just secondly, related to that, what can this segment do in operating margin ultimately as you continue to benefit from the strong cycle? Can we see a 20%, 21%, like what’s the possibility on the operating margin in this segment?

A lot of it comes from the utilization, I think, increase utilization, Fadi, that does it, you look at, for example, 82% back in this latest quarter, that obviously has an effect as we throw more revenue at [indiscernible] fixed cost assets. The other thing that comes into play, which holds promise for margin in the future is the yield, the extra yield provided by throwing more revenue off the same asset, in not only utilization but by us doing a wet training and that’s a goal we’ve had and we have been successful this year. And finally, mix is a big issue, because we have a number of components in the business depending on so utilization comes from business aircraft rather than the commercial or even the commercial there is different parts of the world and so there is a lot of things that play and that explains that. Most of them positive this year as you have seen and yeah, I think, for the future, I think, we just basically take to our outlook in terms of the income growth, that’s really what we should focus on, not that margin is not important, we are quite happy with those margins, but I think we really hang our hat on SOI percentage growth itself, because we have a better view on that one with any precision and really that’s really what comes into play on – when we look at return on capital employed of course.

Okay. Just one quick one on the CapEx, I mean, you have generated more cash flow in the last couple of years then what the market opportunities to reinvest have been and your balance sheet is pretty strong at this point. Are you seeing more opportunities to grow or to invest for growth or is there kind of an opportunity here to look at distribution a little bit differently in the next year.

Well, I mean, our priorities don’t change, which is always like growth is number two -- is number one and your answer to are you seeing more opportunities, yes, and accretive opportunities, I mean, we -- we look at them specifically on that. I think our results on the return on capital employed growth proves that we are focusing on that in accretive nature, yes, we see more opportunities out there. I see, I think, I’ve singled that before, but I’m seeing more of an appetite for airline specifically to want to turn over more of their training to us specifically. And as you know, I don’t see that abating. So, I think, there will be opportunities for us. But sometimes they are episodic, right, we can’t predict exactly when we might close them, but on a large -- on a macro base, I think, there is opportunities for us to do that, and of course, still maintain kind of distribution that although there’s never any guarantees but you have seen our pattern on distribution, on cash return to shareholders, now with the dividend and the buybacks that we have done I don’t see any reason to expect that we will change that materially, but we will see, we will see, depending on how successful we are on deploying that cash, we haven’t – we will hold our powder dry and take it when we get to that point. But coming back to it, there are opportunities in market for us to deploy that capital accretively.

And just if I – to add Fadi, so, like when I said we continue to see good market opportunity and the asset that we have deployed so far in last few years, there are market that have ramped up quite quickly to generate accretive returns, support growth and just add to the recurring cash flow generation. So to the extent we continue to see that, we will continue to do so to invest. And we often look at the CapEx as an absolute number, absolute value, but the company has grown. And if we look at it from a capital intensity perspective, the CapEx as a proportion of operating cash flows, the intensity actually is decreasing, right. And so the investment and growth continues to be our first priority. Of course we always balance it with a view on the return to shareholders and as Marc mentioned, pretty good track record there with seven years of dividend increase and the NCIB in a year and $135 million of cash return to shareholders this year which is 10% increase year-over-year.

Okay. Thank you.

Thank you very much. We will go to our next question on the line from the line of Kevin Chiang with CIBC. Please go ahead with your question.

Hi. Thanks for taking my question and congrats on the good quarter there and good end to the year. Maybe just follow on Fadi’s question there around where margins can go, you spoke about the opportunity to improve yields shifted from dry hours to wet hours; with the utilization of 82% are you finding it to – are you able to accelerate that shift, I guess, to improve that yield, given your utilization is so high now or are you able to push it or is it more fluid and kind of comes and goes depending what the customer chooses you are your service offering?

Well, I think, it does and we – I mean, 82% is high, can it get higher, I guess, theoretically, yes, because 100% -- we define 100% depending on the market, a 6000 hours in commercial aircraft, for example, 4500 hours on business aircraft a year, but I can tell you and I am sure this is in the past that some of our training centers are operating significantly above 100%. So is it possible, yes, but of course, our training centers are recently distributed all over the world, and we have had a pretty good market, so it really depends on, how the market continues to go across the world that really is part of the answer on utilization. And more than that as well as, as you were saying, yes, just in your question, the mix of customer, like for example, business aviation. In the past where we – I mean, if we go back, I mean, business aviation is a bit -- is a little bit better than we have seen in the past – recent past, anyway, but it’s still nowhere near, the level it was prior to financial crisis of 2008. So, if you see business aircraft coming back in any material way then that could have a quite significant benefit to, not necessary margin, but margin growth, yes, but operating income growth.

That’s helpful. And maybe just a quick one for me on Healthcare, I noted from your disclosure, you talked about a lower R&D is helping boost operating income, shall I read that assign that you had a maybe a maturity level within your product profile there and maybe conversely assign that fiscal 2019 we should start seeing maybe a more significant improvement in profitability within Healthcare, is that something we can look forward to over the next kind of 12 months to 18 months?

Well, we are focus – we are focusing on growth on – in Healthcare, that hasn’t change. We believe the potential for the market is significantly larger than the business we have today, the market opportunity and a lot of it has to do with gain share in the markets that really hold a large pool of value today that’s being served today like, for example, nursing. So we have launched two products, CAE Juno, specifically, that -- that’s the market receptivity to that product has been very good. Your question about R&D, no, we haven’t taken our foot off the paddle. We continue to invest both there and in SG&A, mainly sales force marketing expenses to continue to grow the business. But with topline growth, bottomline growth will come, because as I said in the past, that the margin of the products we have is very good. I would say so. We room to do both top and bottom, and that’s our expectation.

And to add to that, so R&D expense did go down a little bit this year, but really it’s a reflection of the cycle we were in some of our product development. So you will note that the capitalize R&D is higher because we were in development mode, because we did product, launch quite a few product this year. So that R&D expense will go down, but what I would argue is it got replace to – with added investment in our product launch, expenses, marketing and also on the SG&A and our sales force to launch this new products.

That’s very helpful. Thank you for the color.

Thank you very much. We will go to our next on the line from the line of Cameron Doerksen with National Bank Financial. Please go ahead.

Hey. Thanks. Good afternoon. Just to follow-up on Kevin’s question on the Healthcare, I think, one of the things you cited also in the margin in Q4 was a remeasurement of royalty obligation. I am wondering if you can describe that impact was in, I guess, what I’m trying to get a sense of is what kind of a more normalized margin for Healthcare at this type of revenue level at $35 million, obviously, revenue is going to continue to track higher and I want to get a sense where the margins can go?

Yeah. So there was a benefit in the quarter from kind of one-time lower royalty expense. So there was a bit of a bit of the benefit in the quarter, but over the year and as I just mentioned, we did invest lot of one-time costs and SG&A and product launches. So over the year the benefit is basically is neutralized. So the way that I will look at it is over the annual year, the growth in SOI, as little bit more indicative. But, of course, this is a business that have pretty good gross margin and so we are continuing to invest in products and launches and SG&A. But as we grow volume we should see that dropping to the bottomline and to the SOI.

Okay. Okay. Just like a quick question on, I guess, on defence. I mean, obviously there’s a terrific pipeline of opportunities there for you. I’m just wondering if you can maybe just talk about any potential sort of larger, longer term training contracts that you have currently that might be up for rebid. Is there anything that’s at risk in the current revenue stream on defence for this year?

We have a number that will come out over the next few months, when I saw the next few months year and a half approximately, that are specific coming up. I can think of and I have to look in detail here, but I think the KC-135 contract is coming up over the next couple of years and also what they – also the training that we do for the unmanned air vehicles, the Predator and the Reaper, that’s up for rebid, I think, in the next year, next few months, I believe. The -- I’m just consulting my notes as we go here. But, actually, I’m just told that KC-135 is not this year, Predator, Reaper is this year. So those are the ones I can think of. But, having said that, we think we have a pretty good shot as the incumbent on those programs, but it will be competitive. There’s no doubt about that, because they are good contracts. But, at the same time, there’s a lot of contracts that are coming up for bid in other areas, like for example, I will just pick one the C-17 in the United States is coming up and we -- as I said, we have about $4.5 billion of active bids that have been submitted and we are waiting for decisions on those, if you take all of that, it’s basically the nucleus of the outlook that we have for defence this year.

Okay. No. That’s great information. Thanks very much.

Thank you very much. We will get to our next question on the line from the line of Turan Quettawala with Scotiabank. Please go right ahead.

Good afternoon. Thank you for taking my question and congratulations on a great quarter there. I guess, I wanted to just ask, firstly, on the gains, is it possible, Sonya, to divvy those up between the segments?

So not much in the quarter, in fact, we had in that other gains and losses we had a bit of a headwind with FX. The most significant item was essentially a gain on the disposal of an asset in Civil and from our network to a customer and we regularly meet customer needs, either through new simulators, kind of partial builds, of course, custom or from our network. So we consider it part of our normal course operation. It’s simply accounted for out of fixed assets rather than inventory. So that would be the larger item.

That’s helpful. Thank you. No. I understand that, I was just trying to figure out the segment numbers there. That’s helpful. Thank you. And I guess, maybe just one more question for me here in terms of, as you look at the outlook here and we look at sort of all of the segments, things seem to be doing really well on all the segments for the most part. Marc, is there something that you are worried about in terms of a risk, what’s – what do you think could go wrong here potentially?

Well, I mean, obviously, if I’m giving you the outlook for a public company, I’m pretty confident in the outlook, obviously, but there’s always risk, there is, and the risks are the usual ones of competition, I mean, and for example, I was just talking on the previous question with Cameron on the defence bids. I mean, yeah, we have active bids, but although we have a very large backlog, it is still a not insignificant portion of the SOI that we will have to generate this year that’s going to come from the wins we will win this year. So, clearly, we have to win them. But we haven’t -- having said that, talking out of both sides of my mouth, we feel like we have backup plans to make sure we do. So that’s part of the risk I would say. Otherwise there’s competition in Civil as well, a lot of players see the same market as we do so they will be aggressive and there’s price competition. So those are the usual ones. So we expect that we are going to be continuing to be able to win our fair share and I think barring any Black Swan events that we can’t control, I think, it’s mainly competition that is the real issue here.

That’s really helpful. Thank you very much. Congratulations.

Thank you.

Thank you.

Thank you.

And we will proceed to our next question on the line. It’s from the line of Benoit Poirier with Desjardins Capital Markets. Please go right ahead.

Good afternoon and congrats for the good quarter.

Thank you.

Just to come back on the bidding proposal. I mean, it’s been up from $4 billion to $4.5 billion. Could you talk a little bit about the mix inside, just want to get a better understanding of the mix between equipment and services, I know the focus is on TSI, but trying to gauge whether we could some margin expansion from the 11.8% EBIT margin you achieved in fiscal ‘18.

I don’t have the exact -- and actually the number close, I think, we said $4.5 billion, but it’s more like $4.7 billion by, I mean, within the bidding business there in terms of the bids we have out there. Look I can’t really tell you offhand with precision right now, but I may be able to get back to you on the, but -- and in fact, I really don’t know if we ever put that out, the split between products and services, do we?

Yeah. I think, Benoit, you should assume that it’s going to profile pretty much like the other TSI deals that we have brought in as examples, where there is usually a long-tail services component. And it’s one of the reasons why really our guidance, our outlook continues to be based on operating income dollar growth as opposed to margins specifically because depending on how these programs flow through and product service mix will be as much or more of a determinant of margin percentage than anything else. And as we look at our backlog in aggregate in defence, it’s probably about a 12% backlog, if you could process it all at once, which you can’t and so the variations you see from quarter-to-quarter are really described mainly by the differences in product service mix.

I see. Okay. That’s interesting. And when we look at Civil, you finished the year with 50 orders and you are off to a good start. So any thoughts about what type of numbers we could expect for the full year in fiscal ‘19, Marc?

At this point, I would say, look, précising my answer, I would say, the dynamics haven’t changed. It’s really the amount -- we expect to continue to win -- to be a leader in this market, like I would say 60% to 70% market share. We do like to make money when we sell these so that’s why we are saying 60% to 70%. But that – it’s really base, the catalyst here, as you know, is really the production rates at the OEMs and the production rates at OEMs are still very high and they have – they are not going to change materially during this year. So I’d expect in the 40s. That’s what I would expect at this juncture. I can’t give you a lot more precision on that, because a lot of it depends on multiyear purchasing, like some of the ones we won last year are things that people are ordering that they are going to cover for next three years. So depending on the mix of customers we have -- it really depends are they buying for the next couple of years or are they buying for the next 10. So that’s what really it will depend on. So, but, at the moment, I think, last year we pretty much said that and we’d rather stay on the right side of that answer, if you know what I mean.

Okay. Okay. Perfect. And lastly when we look at the U.S. it seems that there is pretty nice opportunities in 2018 looking at the TX, the MQ-25, Boeing also with the MoM. So I was wondering whether you could talk a little bit on CAE’s position on those opportunities and whether it’s part of the $4.7 billion proposal out there that you talked about?

Well, I don’t want to really get into too much detail of what’s in that, because some of it is confidential. That we don’t actually say, what we bid on in all cases, I would tell you it’s all – it’s very international. It’s not only United States, although the pipeline of opportunities in the United States, obviously, is very good, because the U.S. is the biggest defence market in the world and the budget’s just been announced and it’s the largest budget they have had, so that’s all very good. Another noteworthy thing is, I think, we will -- CAE now have -- is now able to bid on top secret programs, which we haven’t been in the past, as a result of us recently obtaining what’s called a proxy, which really allows us to go after again top secret programs. So that opens up another part of the market for us that we haven’t really been able to access before. So, I think, that will be good for us.

Okay. And lastly in terms of, I mean, financial leverage, obviously, you finished the year on a strong note. The focus obviously is on growth. You highlighted the CapEx guidance for this year. But when we look at the free cash flow generation also, should we assume that the debt levels will go down much further still in fiscal ‘19 or any opportunities to, let’s say, deploy capital outside the $200 million you are looking to invest in fiscal ‘19?

Well, I will let Sonya provide a more detailed answer on the leverage. But look we see growth. I mean, the $200 million is based on our assessments of the opportunities that we have imminently in front of us right now either that we have approved, that we have launched or that has a very likelihood of happening. Now, over the next few months, I could see other things happening. If we get, for example, a big opportunity for outsourcing an airline and that makes sense to us that, well, that may increase our CapEx. That’s just an example. So, with that, I will maybe just turn it over to Sonya, do you want to add anything?

Yeah. I will just add, we continually visit our best view of our opportunities but as they firm up or as additional ones come up. There could be opportunities for additional CapEx whether it’s straight-up CapEx and other things or we continue to have conversations on a good pipeline of outsourcing and that we treat kind of like M&As, right. So, that affords us that flexibility, should it be under JV format or otherwise to deploy some capital to deploy some larger outsourcings.

Okay. Perfect. That’s it for me. Thank you very much and congrats again.

Thank you.

Thank you.

Thank you very much. [Operator Instructions] We will get to our next question on the line from the line of Tim James with TD Securities. Please go right ahead.

Thank you. Good afternoon. Just a couple of quick clarifications maybe from you Sonya, the $200 million in CapEx planned for fiscal ‘19, does that include any amounts for capitalized developments costs or is that in addition to that $200 million?

So the capitalized development costs would be in addition. The CapEx is really mostly deployments of simulators to support client demand and growing outsourcings.

Okay. Thank you. And then returning to an earlier question that you had in regards to the Civil operating earnings growth guidance for fiscal ‘19, you indicated it was based on an adjusted fiscal ‘18 applying IFRS 15. But when you say adjusted, does that mean, I mean, there were a number of significant one-time benefits in the operating earnings in Civil in fiscal ‘18. Is that included in the base upon which we should think about that growth rate?

No. So there are two elements, so restated for the 2018 IFRS impacts, but also normalized out and we have provided that detail in the supplemental presentation. So there’s the normalized number that remove the impacts of those transactions during the year, so the outlook is on the normalized basis.

Okay. Great. Thank you. Then, Marc, just you were commenting earlier regarding the opportunity that still exists and kind of where the business aircraft training market is. Could you just generally characterize the utilization of your business jet training sims and I’m trying to understand if the opportunity for growth and maybe at some point to return to sort of historic levels, does that require putting more sims into the network or are the existing business jet training simulators in the network underutilized and you can sort of increase the revenue that you get from those assets without investing in additional assets?

So, I think, both. I think, there’s a level of, I think, it’s very rare, although, there are some that are full, there are definitely, especially some of the most recent models. Some older models may not be as full, but they are quite profitable because, for example, they are down the depreciation curve. But there is definitely opportunity to add more business jet sims, for sure, and that’s -- that I think, we have added some and I think we will continue to add some to cater for the increased demand that we see out there in business aircraft. And if I -- I think that, if I look at the utilization of business aircraft itself, it doesn’t give you the whole story, because it -- I think you have got to look at other metrics that I think tell us that there’s still a lot of growth potential to bring us back to anywhere near where we were prior to 2008, like, for example, I think, the -- prior to 2008, I think, business jets were operating north of 500 hours a year and I think now they are operating on average about north of 300 hours to 350 hours a year. But I may be precisely wrong on those numbers, but you get an idea of the difference. So if you get to any kind of utilization for aircraft higher than that will have a pretty significant impact because obviously you will need more pilots.

Okay. That’s helpful. Thank you. So, maybe just to follow on that and if we think about, eventually at some point in time, your business jet training revenue stream or training hours getting back to that pre-2008 level. Can you do that with the existing asset base or would there be some incremental investment required to support that historic level, that pre-2008 level of activity?

No. We will probably add some. We will probably add some.

Okay.

We will fill the ones we have got and probably add some just because there’s more airplanes out there and new models and will require more sims, there’s no doubt in my mind.

Okay. Thank you. And then just a final question, you ended the quarter with over $600 million in cash and you kind of touched on the leverage in your capital priorities. I’m just thinking forward over the long-term here, am I correct in assuming that kind of having that amount of cash on the balance sheet is more than you would ideally like to hold over the long-term or is that level sort of appropriate, do you feel for the business?

To be flippant, I’d say, I like it, Sonya doesn’t. But, no, look, our priority is growth. I will let Sonya talk about it. So we see opportunities, but we are focused on accretiveness and we have been successful at that and the opportunities don’t come, as you say, they don’t come necessarily, we don’t have the luxury of deciding exactly sometimes when they will happen, when customers will want to do it, when they present themselves and whether or not it will be a good opportunity for us to be accretive. But going back to what I said, we see those opportunities and increasingly our priority, we used to have a priority, the priority was to delever. It’s no longer a priority. Do you want add anything, Sonya?

Yeah. Well, we will always maintain a solid financial position, but I think we have the financial flexibility to be able to invest thoughtfully in accretive opportunities and I think we have proved with the investments that we have done that they are successful. They are market led. The market continues to be a demand in opportunities and to the extent that they are accretive to earnings, returns and cash flow, I think, we have the opportunity to deploy that cash into more capital.

Okay. Great. Thank you very much.

Thank you, Tim.

Operator, that’s all the time we seem to have for analysts and investors. I do want to use the last bit of time we have here for members of the media, if there are any questions from members of the media.

Certainly. [Operator Instructions] And Mr. Arnovitz, we seem to have no questions queued up at this time from the media.

Okay. Well, I want to take this occasion to thank everybody who joined us here today on the call and to remind you the transcript of the call will be made available on CAE’s website at cae.com. Thank you.

Thank you. And ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you disconnect your lines. Have a good day everyone.