Benoit Poirier • Desjardins Capital Markets

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EVP and CFO Vito Culmone noted the tax change is a positive but said it was too early to quantify the cash flow impact. He also reported that the Pune delivery center now has approximately 1,400-1,500 employees and that the company continues to see significant opportunities for growth and operational support from the center.

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Executive Gordon Johnston explained that U.S. organic growth of 2.4% was compared against a tough 10% comp from a major project in the prior year, and he reiterated confidence in achieving mid- to high single-digit growth for the full year. Executive Vito Culmone added that guidance was maintained pending the closing of acquisitions, not due to a lack of confidence. Culmone also noted that stock-based compensation is now hedged, leading to less earnings volatility.

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Executive Gordon Johnston confirmed they expect an uptick in work from the California fires, leveraging existing master service agreements for a quick response. On tariffs, he noted they are seeing some client inbounds about relocating manufacturing to the U.S. Executive Vito Culmone stated the Pune headcount is around 1,200-1,300 and expects 2025 free cash flow to be strong, targeting greater than 1x net income, with a continued focus on DSO management.

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CFO Theresa B. Jang explained the E&R retraction is due to a persistent delay in the ramp-up of new projects combined with the wind-down of large projects from last year. She noted Canada's lower margin was due to tough comparisons against prior-year high-margin projects, not E&R weakness. CEO Gordon Johnston identified transportation in Australia and community development in the U.K. as the primary areas being monitored for slower activity.

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CEO Matthew Bromberg stated that CAE is well-positioned to capitalize on a generational growth cycle in defense, leverage its technology across its commercial business, and create scalable solutions. Chairman Calin Rovinescu added that increased Canadian defense spending presents an 'exponential' long-term opportunity for CAE in areas like new platform training and international programs.

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Interim CFO Constantino Malatesta stated that CAE is targeting a net debt-to-adjusted EBITDA ratio below 2.5x in the next fiscal year, with a continued disciplined approach to capital deployment. CEO Marc Parent indicated that fiscal 2026 Defense margins should be 'a little bit higher' as accretive new backlog replaces legacy contracts, describing the 10% margin level as a 'waypoint, not a destination,' but deferred a formal outlook to the next quarter.

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CEO Marc Parent and COO Nick Leontidis noted the SaaS conversion involves 'heavy lifting' over an 18-24 month timeline but pointed to a growing pipeline with ~$700M in orders as a positive indicator. Parent sees acceleration, not delays, in Canadian defense programs. CFO Sonya Branco added that the FAcT contract is capital-light, with contributions expected to ramp up in the second half of the year.

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Alain Bedard, President, CEO & Chairman, stated the plan is to end 2025 with a leverage ratio of around 2.1x. For a large deal, he said the company could go up to 3.0x leverage before quickly deleveraging. He noted it was too early to give 2026 guidance but mentioned that the Logistics segment's operating income could be $200-$220 million in a normal environment, versus a likely $160 million this year.

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Executive Alain Bedard clarified Daseke's Q1 OR was closer to 96%, not 99%, attributing the weakness to a 15% drop in miles and excess assets, not cultural issues. He stated the goal is to improve profitability by reducing assets and instilling a stronger business focus. Regarding imports, he explained that TFI's specialty truckload business is more exposed to U.S. industrial activity, which is affected by tariff uncertainty and interest rates, rather than retail goods from Asia.

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Executive Alain Bedard stated that 2025 CapEx will be $50-$100 million lower than in 2024, and that free cash flow should be sufficient to cover dividends, $400-$500 million in debt repayment, and $200 million in M&A. He clarified that TForce Freight's ongoing issues would not stop a strategic M&A transaction, as a deal could be part of the solution. He added that no major asset monetization is planned, aside from potentially some real estate.

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CEO Alain Bedard identified a recovery in consumer spending, spurred by lower interest rates and inflation, as the key driver for a freight market rebound. For a large M&A deal, he named U.S. LTL and high-margin Logistics as preferred segments, with a particular interest in an asset-light LTL model. He expressed comfort with leverage going up to 3.0x for the right deal, citing TFI's proven ability to deleverage quickly.

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CFO Sebastien Martel expressed comfort with consensus expectations for H2, driven by new product launches and wholesale aligning with retail. He anticipates EBITDA margins will improve but remain below long-term targets due to asset underutilization and sales programs. For capital deployment, the near-term priority is organic growth and the dividend, with share buybacks paused until the economic outlook becomes clearer.

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CFO Sebastien Martel described the promotional environment as higher than pre-COVID levels and likely to persist into the first half of next year. He stated it is too early for an FY26 target but assumes current market softness will continue. Martel expressed high comfort with the balance sheet due to a covenant-light debt structure and said the board will be prudent regarding future buybacks.

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CEO Jose Boisjoli reported that the MAX Deck platform, enabled by the Rotax stealth engine, has been well-received by consumers, though the timing of the launch was not ideal. He affirmed BRP's commitment to its long-term Marine strategy. Regarding PWC, he noted that Canada has always been a strong market where BRP has high market share, but cautioned it's too early in the season (May, June, July are key months) to draw firm conclusions about the U.S. market.

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Executives detailed a nimble and data-driven approach. Derek Taylor, Chief Field Operations Officer, noted furloughs can be implemented within a week. Patrick Whitehead, Chief Network Operations Officer, explained they closely monitor network health metrics (train speed, dwell, velocity) and resource productivity metrics (GTMs per horsepower, GTMs per employee) to make quick decisions on idling assets and adjusting staffing.

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CFO Ghislain Houle explained that while FX affects U.S. dollar-denominated debt, the sensitivity to the overall leverage ratio is very small and managed within their 2.5x target. CCO Remi Lalonde noted that inbound traffic is driven more by service reliability and shifting ocean carrier alliances than by currency fluctuations.

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Chief Field Operations Officer Derek Taylor described the Falcon service as 'solid' and a 'long game' to build customer trust. Chief Commercial Officer Remi Lalonde noted that the domestic intermodal and trucking business faces challenges from an oversupply of truck capacity but is expected to improve sequentially from Q3.

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EVP & CMO John Brooks noted minimal reaction to the surcharges so far, believing steamship lines will adjust. He confirmed strong momentum at Saint John, driven by the Gemini ramp-up and new export opportunities for products traditionally shipped from the U.S. He expressed ongoing positivity about the growth prospects at the port.

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EVP and CMO John Brooks stated that while there was some pull-forward ahead of the company's own labor stoppage, he believes the situation has since normalized. Regarding the 3% RTM impact from the strike, he explained that the bulk of that business (coal, grain, potash) was not lost but simply deferred. This deferral is a key reason for the record demand being seen in Q4 for those commodities, ensuring the volume will be recovered.

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