Good day, ladies and gentlemen, and welcome to the CAE First Quarter Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Andrew Arnovitz. You may proceed, Mr. Arnovitz.

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, August 14, 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 www.sedar.com 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. Let me now turn the call over to Marc.

Thank you, Andrew, and good afternoon to everyone joining us on the call. I will first discuss some highlights of the quarter and then Sonya will review the detailed financials. I will come back at the end to talk about our outlook. CAE's performance in the first quarter was led by Civil, which had double-digit growth and saw a strong customer demand for our innovative training solutions. Defense and Healthcare more variable on a quarterly basis and the first quarter reflects this tendency. Overall, we had solid order intake of $689 million giving us the total of CAE backlog of $8 billion at the end of the quarter. We grew revenue by 10% on a year-over-year basis and earnings per share of $0.26 was up 18% over Q1 last year. Our overall performance in the quarter supports our outlook which was further reinforced by some of the positive development since the end of the quarter. Looking specifically at Civil, we booked $499 million dollars of orders in Q1 plus additional contract evolving joint ventures including exclusive long term pilot training agreement with Asiana Airlines. We also announced the new joint venture in training outsourcing for Avianca Airlines in Colombia and then exclusive training agreement with the Volaris of Mexico. In business aviation, Civil find an exclusive long term pilot training contract with OJets. And in products, we sold 18 full-flight simulators to customer across call all regions. Training Center utilization during the quarter what 80%. Turning to Defense. During the quarter, we booked orders for $166.9 million including a contract from the U.S. Navy to provide instruction at five naval air stations to support primary, intermediate and advanced pilot training. We also signed contracts involving training for the Brunei Ministry of Defense's S-70i Black Hawk simulator, upgrades on German Air Force Tornado simulators, and support solutions for the Royal Canadian Air Force's CF-18 aircraft. And finally, in Healthcare, we launched the CAE Ares emergency care manikin during the quarter, which is designed to meet the life support training requirements of emergency care providers worldwide. As well, Healthcare, together with the American Society of Anesthesiologists launched the Anastesia SimSTAT Appendectomy module, the latest in a series of interactive screen-based courses approved for Maintenance of Certification credits. With that I'll turn the call over to Sonya, who will provide a detailed look at financial performance and I'll return at the end of the call to comment on our outlook. Sonya?

Thank you, Marc and good afternoon, everyone. Consolidated revenue for the first quarter was $722 million and quarterly net income with $69.4 million or $0.26 per share. This compared to $0.22 from the first quarter of last year. Income taxes this quarter was $10.9 million representing an effective tax rate of 13% compared to 16% for the first quarter last year. Excluding the effect of tax audits in Canada, the income tax rate would have been 19% this quarter. Free cash flow was typical of CAE start of the fiscal year in the sense that we usually see higher level investment in non-cash working capital during the first half. The investment this quarter was higher than in Q1 last year and I would note the five week work interruption in Canada that began in June cause some delays in reaching billing and cash collection milestones. As such, first quarter free cash flow from continuing operations was negative $85.8 million compared to negative $37.9 million last year. As in previous years, we expect the portion on non-cash working capital investment to reverse in the second half. Uses of cash in Q1 included funding capital expenditures for $53.1 million mainly for growth and we distributed $23.1 million in cash dividends. We used another $6.5 million to buy back stock under the NCIB program. Now looking at a segmented performance. In Civil, first quarter revenue was up 16% percent year-over-year to $430.9 million and operating income was up 14% to $78.3 million for margin of 18.2%. On the order front, the civil book to sales ratio for the quarter was 1.16 times and the trailing 12 month period, it was 1.45 times. Civil backlog at the end of the quarter was $4.1 billion. In Defense, first quarter revenue of $268.3 million was up…

Thanks Sonia. Our outlook continues to be positive and we're well positioned for sustainable and profitable growth over the long term. In keeping with our capital allocation priorities and echoing our positive long term outlook, CAE's Board of Directors this morning approved a $0.01 or 11% increase to CAE;'s quarterly dividend which become $0.10 per share effective September 28, 2018. Over the last several quarters, we've made reference to our increased momentum as a credible training partner for our customers. We've recently made significant enrolls with our training strategy as evidenced by several new and expanded customer outsourcing agreements. And we continue to see a large pipeline of training opportunity to increase our share of the market and to form you entering customer partnerships. In Civil, our customers value the fact that we're pure play training company and they recognize CAE as an innovation leader with the largest and broadest global training network and the most comprehensive offering up at cadet-to-captain training solutions. As testimony tomorrow momentum in recent months, we find a series of important long term airline training partnerships which taken together speak to see its credibility and market reach. To recap our progress, these include our joint venture with Singapore Airlines which is now operational and our new joint venture in Colombia with Avianca Airlines which further strengthens our position in Latin America. We find long term exclusive training agreements with Jetstar Japan and Asiana Airlines, both of which select CAE as an innovation leader, offering capabilities like CAE Rise trading system. These wins serve to give CAE increased recurring revenue and cash flows and the opportunity to make an accretive growth investments right in our core market of training. Our pipeline of airline outsourcing opportunities were made highly active and I believe our well differentiated position…

Thank you. [Operator Instructions] Our first question comes from the line of Cameron Doerksen with National Bank Financial. Please proceed.

Thanks and good afternoon. I guess my just first question just on the R&D program that you announced recently, I mean CAE has always spent a lot of money on innovation in R&D, but this maybe feels like an acceleration of the spend and I'm just wondering if there's going to be sort of noticeable impact on I guess the cash flow or margins as a result of that?

Hi Cameron, Sonya. So great announcement I think great for continued investment in CAE and in Canada and Quebec. Now well this is really a focus of our R&D resources and skill set to more digital technology and innovation. In terms of level of R&D, it will not necessarily have a significant impact on our run rates and pretty much incorporated into our outlook. In terms of cash flow, this will not have an impact on the run rate.

Okay, very good. And just maybe just quickly a question about the AOCE business that you just recently purchased, I am wondering if you could just talk a bit about the margin profile of that business, is does look like it's I guess predominantly a services business?

Yeah. So this is a great bolt-on acquisition and it's a great strategic bid and that brings along a backlog of a contract that broaden the spectrum of defense platform like fighter aircraft and higher security contracts. The general run rate about $100 million plus of revenue, it is a pure play services entity and therefore margins reflect that. It's expected to be accretive and it's full year of operations. For the year, it will be slightly accretive, but we will be taking into account some integration costs and cost that synergize into our own operations. For the year, it will be just like accretive.

Okay. Thanks very much.

Our next question comes from the line up by Chris Murray with AltaCorp Capital. Please proceed.

Thanks. Good morning or good afternoon. I'm just looking at the defense margins, they were a little bit lighter than I think we would have expected and I think you know part of that was maybe some of the higher R&D expenses. Can you just maybe walk through kind of the moving parts on margins in defense and how we should think about mix as we move through the year?

May I'll start it off, it's Marc. I think what you're seeing here, I mean part of the answer is what you just mentioned is higher R&D spend in the quarter. The bulk of it is you know we've said in the past and I think we've come to who hit it the space in the quarter but this business is better looked at on 12 month basis because you know in an individual quarter, you can have you know programs being executed or in this case just you know we missed some milestones for a completion of a couple of programs and that makes a big difference in terms of how much income, revenue and income you can basically generate in the quarter. And we'll recuperate that because program is not loss, it just booked in so in a different quarter. And that's what happening here is lumpiness in the quarter that's the bulk of it and you throw on top of that the lack of the revenue and income on those program coupled with a higher level of R&D spend and you kind of get the result. But when we look at the year as a whole, you know we're not concerned about the outlook that we've given, it's really the mix that we had in the quarter program that we executed. And I don't know if you want to add anything on that Sonya?

Really it was the mix added with the timing of certain R&D expenses which were a little bit higher this quarter. But overall if we take the backlog as a whole, we continue to see a 12%, but it vary as it flows through income. So we continue to see essentially our outlook which is meant high single digit. It will - given from timing and some services from the work be more backhanded in the second half.

Okay and that was my next question. Sorry, go ahead Marc.

When specifically we talk about mix on the defense we're really talking about, at least I was talking about the mix between products and services because that, the ones that are more lumpy are the products one. And they tend to be typically higher margin little margin as well. So that also explains one of the result in the quarter on defense specifically.

Okay. And I guess that my next question. Just, how should we think about shifts around the strike in the impact of the strike, it kind of feels like you know you talked about working capital a little bit being impacted, should we think about there if there was perhaps some revenue that's getting shifted either into Q2 or into further quarter, is that the right way to think about it? And is there any sort of lost revenue or lost earnings or is just going to be as you said more timing issues in the quarter?

Well, the bulk of it is going to be shifting into the second half that we set into our outlook. If you think about it for a couple of reasons there was something we are saying on the call. If you think about, we were stopped for the better part of five weeks so we shipped a couple of product out the door you know during that time never left. So we have celebrated, we have a recovery plan underway that's making up for that time, working with - work over Christmas for example will have more ships on those kind of activities to recover. So when we look at the year as a whole, we think we have high confidence that we can recuperate the revenue profits up that we've lost. But if you look at you know now we are IFRS 15 specifically on civil simulators for example, we will only be able to recognize revenue and profit at delivery now. So levered in the past where you know we were on a percentage of completion which is what are the best contracts largely are on, which means that you know if we're stopped and no simulators are that are recovery plan now are going to be delivered probably more in the back half in Q3 and Q4 rather in Q2, Q3. And that's really the bulk of what you're going to see. You want to add bit more color to that?

Yes, so whatever revenue and profit that we would have generated in those five weeks is delayed and essentially shifted to the back half. And that's in addition to addition already delivery completion which was already back half due to the new revenue recognition.

Alright, that helps. Thank you very much.

I don't know if I answered this specifically, but I don't think I missed, specifically I don't think we see any revenue profit that is loss.

No.

Thank you.

Our next question comes from the line of a Jean Francois Lavoie with Desjardins Capital Markets. Please proceed.

Yeah, thank you very much. I was wondering if you could provide us with a little bit more details about your expectation for the alter business in terms of revenue back end of the year, please?

Well, I think as we said in our remarks, I was still feeling very confident that we will achieve the outlook that we have for this year which is double-digit growth both in top and bottom line. And as I look at order profile this quarter, this is not a backlog run business, I mean it relies on you know our visibility that we have with customers on their expected buying behavior this year. And based on what we see then I can tell you it's a pretty detailed analysis. We feel pretty good about very good actually that will achieve that outlook that we have. You know we've invested even more in this business, in terms of R&D, we've launched a new product in the market just recently last two weeks CAE Ares in the mid-fidelity market. And so far the activity of our products in that market has been very good and that's what we see, that is where the bulk of this the revenue is being spent in this business is in the mid-fidelity market. So again we're feeling very good about the outlook that we have.

Great, thank you very much. And maybe last one for me. You had a very strong first quarter in terms of full-flight order - full-flight simulator order. I was wondering what's you're outlook or your expectation for the second half in terms of order?

Well, if you look at, we're at as you said we had 26 simulators half way through the second quarter, so I think it's surprised to say we have a good year. It's a bit early for me to get outside what we said already, I think we said the 40 something, and I think that's where we expect to be at the moment.

Okay, perfect. Thank you very much.

The strong market and the market it continues to be strong on simulator sales in terms of the opportunity that we're bidding on. So we feel good about the outlook.

Great, thank you very much.

Thank you.

Ladies and gentlemen, we will now proceed the questions from the press and media. [Operator Instructions]. There are no further questions at this time.

Thank you very much, operator. I want to thank all participants for joining us on the call today and to remind you that transcript of the call will be available on CAE's website.

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation. And ask that you please disconnect your lines. Have a great day everyone.