Slide 1: Investor Presentation Second Quarter Fiscal Year 2024
Investor Presentation Second Quarter Fiscal Year 2024 Data as of November 14, 2023
Slide 2: Disclaimer
Disclaimer CAUTION REGARDING FORWARD-LOOKING STATEMENTS This Presentation includes forward-looking statements about our activities, events and developments that we expect to or anticipate may occur in the future including, for example, statements about our vision, strategies, market trends and outlo
Slide 3: Disclaimer
Disclaimer Readers are cautioned that any of the disclosed risks could have a material adverse effect on CAE’s forward-looking statements. Readers are also cautioned that the risks described above and elsewhere in this Presentation are not necessarily the only ones we face; additional risks and unce
Slide 4: Non-IFRS and Other Financial Measures
NON-IFRS AND OTHER FINANCIAL MEASURES This Presentation includes non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures. These measures are not standardized financial measures prescribed under IFRS and therefore should not be confused with, or
Slide 5: CAE is a technology company with a mission and vision focused on safety, efficiency and readiness
OVERVIEW CAE is a technology company with a mission and vision focused on safety, efficiency and readiness To be the worldwide partner of choice in civil aviation and defence & security by revolutionizing our customers’ training and critical operations with digitally immersive solutions to elevate s
Slide 6: We are an essential partner in moving our world forward safely through training and technology
OVERVIEW We are an essential partner in moving our world forward safely through training and technology Civil Aviation Defense & Security Advanced Solutions ▪ Largest global civilian training network ▪ Leading defence training and ▪ Utilizing AI and data analytics to (+1 M hrs/year*) simulation prov
Slide 7: Portfolio shaping: Focus on core markets with announced sale of CAE Healthcare
OVERVIEW Portfolio shaping: Focus on core markets with announced sale of CAE Healthcare Transaction Details • On October 24, 2023, CAE announced that we have reached a definitive agreement to sell CAE’s Healthcare business to Chicago-based Madison Industries for an enterprise value of C$311M, subjec
Slide 8: A world leader in training, mission, and operational support
Total Revenue Healthcare 5 A world leader in Defense 44 % 51 Civil training, mission, and and Aviation Security operational support Products/Services Mix* solutions 34 % 66 $4.2B $890M 40+ 250+ 13,000+ Products Services FY23 Revenue FY23 Adj EBITDA# countries locations employees Geographic Mix U.S.A
Slide 9: Key CAE technologies to define and elevate future standards of training and critical operations
OVERVIEW Key CAE technologies to define and elevate future standards of training and critical operations Enhanced visualization Advanced data analytics Biometrics through Real-time insights with Augmented, mixed, across multiple and optimization with ALETM* CAE RiseTM* and virtual reality simulation
Slide 10: Secular growth and technology drivers
OVERVIEW Secular tailwinds across all markets Secular growth and technology drivers 1.3 million ~31% New civil aviation personnel needed over Civil Aviation 1.1 million the next decade of 2023 pilots total for 2022-23 and growing High demand for new personnel due to retiring by 2032 training insight
Slide 11: Substantial headroom in high growth markets
OVERVIEW Substantial headroom in high growth markets Civil: potential to increase share in a large and Defense & Security* positioned for larger bids across growing market all five domains Civil Total Addressable Market CORE ~$6.5B Land 7% ~$14B Air 75% 7% Sea Training & Simulation 11% Space/Cyber ~
Slide 12: Increasing adjusted backlog underpins growth for a bigger, stronger, more profitable CAE
OVERVIEW Increasing adjusted backlog* underpins growth for a bigger, stronger, more profitable CAE 12,000 CAE adjusted backlog up ~34%** 10,000 8,000 6,000 4,000 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Adjusted Backlog* ($M) *Non-IFRS and other financial measures (See
Slide 13: Balanced approach to capital allocation
CAPITAL ALLOCATION PRIORITIES Balanced approach to capital allocation Priorities Revenue, earnings, and Focus on organic investments for sustainable and accretive cash flow growth growth Strong financial Maintain a strong balance sheet for resiliency and financial 1 position flexibility Capital retu
Slide 14: Strategic investments in sustainable and accretive growth
CAPITAL ALLOCATION PRIORITIES Strategic investments in sustainable and accretive growth Expected leverage of ~3.0x Net Debt/ 4.0x 300% Adjusted EBITDA in FY24** 3.5x 250% 3.0x 2.5x 200% 2.0x 150% 1.5x Continue to 1.0x target 100% FCF conversion** 100% 0.5x 0.0x 50% FY17 FY18 FY19 FY20 FY21 FY22 FY 2
Slide 15: Organic capital driving recurring revenues and accretive compounding growth
CAPITAL ALLOCATION PRIORITIES Organic capital driving recurring revenues and accretive compounding growth 50% Pre-tax Returns on Organic Capital* Deployed 48% Year of FFS in Civil Training (FY17-FY23) $966M+ 45% deployment 40% FY17 organic capital* 35% FY18 35% 33% 31% invested in FY17-FY23 30% FY19
Slide 16: Positive ESG impact is core to CAE's mission
ESG Positive ESG impact is core to CAE’s mission Committed to reduction of GHG emissions Advancing green aviation with the Climate development of an electric conversion kit for All CAE sites are 100% Piper Aircraft and enabling the all-electric action First Canadian aerospace sourced with Advanced A
Slide 17: Civil Aviation
Civil Aviation Elevating and advancing human performance
Slide 18: Market leader with strong cyclical and secular growth dynamics
CIVIL AVIATION Market leader with strong cyclical and secular growth dynamics Aviation Aviation Simulation Training ▪ Simfinity XR Series ▪ Pilot Training ▪ Flight Training Devices ▪ Cadet Academies Leading provider ▪ Full Flight Simulators ▪ CAE Instructor-Led Training poised to benefit ▪ Equipment
Slide 19: Strong demand for new civil aviation professionals
CIVIL AVIATION Strong demand for new civil aviation professionals 1.3 million 284K new pilots 402K new aircraft maintenance technicians 599K new cabin crew Large demand for new personnel due to industry growth and impending retirements Source: CAE 2023 Aviation Talent Forecast 19 Information confide
Slide 20: With the largest aviation footprint, we are always close to our customers
CIVIL AVIATION With the largest aviation footprint, we are always close to our customers #1 in Civil Aviation Training 1,300 + Full Flight Simulators Manufactured 320 + Full Flight Simulators in our Training Network 170+ Aircraft 70+ Locations +1 M hours Simulator Training Delivered Annually* 135,00
Slide 21: Launched new training centres, deployed additional FFS, sold 62 FFS, delivered 46 FFS in FY23
CIVIL AVIATION Launched new training centres, deployed additional FFS to our network, sold 62 FFS, and delivered 46 FFS in FY23 CAE Vienna NEW CAE Las Vegas NEW CAE Minneapolis Expansion CAE Singapore NEW SIMCOM Lake Nona NEW CAE Sydney NEW CAE Savannah NEW CAE Greece NEW 21 Information confidentiel
Slide 22: Margin and adjusted backlog have eclipsed prior peak levels
CIVIL AVIATION Margin and adjusted backlog* have eclipsed prior peak levels, with renewed tailwinds for expansion and growth 6,500 25% 6,000 20% 5,500 15% 5,000 4,500 10% 4,000 5% 3,500 3,000 0% FY20 FY21 FY22 FY23 FYTD 24 Adjusted Backlog ($M)* Adjusted SOI Margin* (%) (RHS) Opportunity for long-te
Slide 23: Defense & Security
Defense & Security Making the world a safer place through enhanced mission readiness
Slide 24: Training, Simulation and Operations Support leader
DEFENSE & SECURITY Training, Simulation and Operations Support leader Training & Simulation Mission Operations ▪ Simulation Products ▪ Prime contractor for digital ecosystems ▪ Broad Range of Training Services ▪ Real-time modeling and simulation ▪ Training Centers ▪ Virtual Command, Control, World’s
Slide 25: Well positioned to address new realities in the defence environment
DEFENSE & SECURITY Well positioned to address new realities in the defence environment The global threat environment and budget priorities are accelerating demand for digital immersion solutions ▪ Focus has shifted from asymmetric to near-peer threats ▪ Budget priorities driving shift from live trai
Slide 26: Our broad global defence market presence
DEFENSE & SECURITY Our broad global defence market presence D&S is headquartered 40+ in Washington, DC and has locations in key Countries growth markets Washington, DC (HQ) 70+ Tampa, FL Arlington, TX Montreal, QC Platforms Ottawa, ON Burgess Hill, UK Stolberg, Germany 145+ Abu Dhabi, UAE Sydney, Au
Slide 27: Prime pursuits: increasing in size and quantity across all domains
DEFENSE & SECURITY Prime pursuits: increasing in size and quantity across all domains Average bid size ($M) Quantity of competitive prime pursuits > $100M $120 $100 FY23- FY25* $80 $60 FY20- $40 FY22 $20 - 10 20 30 40 50 $- FY20-FY22 FY23-FY25* Air Land Sea Space Cyber Joint/Other Average bid size f
Slide 28: Transforming and accelerating Defense for profitable growth
DEFENSE & SECURITY Transforming and accelerating Defense for profitable growth through adjusted backlog* renewal and execution 6x increase in Increase in prime 6,000 position on large IDIQ addressable vehicles with total ceiling of $224B market 5,000 4,000 Building order >$2.0B in orders FY23 moment
Slide 29: Transformational wins paving the way forward for Defense
DEFENSE & SECURITY Transformational wins paving the way forward for Defense Future Aircrew Training Program (FAcT) ▪ JV with SkyAlyne ▪ Generational training opportunity covering all aspects of the required training and in-service support to train Canadian military pilots, Air Combat Systems Officer
Slide 30: Financials
Financials
Slide 31: Q2 FY24 financial highlights
FINANCIALS Q2 FY24 financial highlights Performance (amounts in millions, except per share amounts, ROCE and book-to-sales ratio) Q2 FY24 Q2 FY23 Variance % Revenue 1,088.5 993.2 10% Operating income 100.6 102.1 (1%) Adjusted segment operating income (SOI)* 138.5 124.7 11% Net income attributable to
Slide 32: Reconciliation of Non-IFRS Measures
FINANCIALS RECONCILIATION OF NON-IFRS MEASURES Reconciliation of EBITDA, Adjusted EBITDA, net debt-to-EBITDA and net debt- to-adjusted EBITDA (last 12 months ended September 30) 2023 2022 (Amounts in millions, except net debt-to-EBITDA ratios) Operating income $563.2 $300.3 Depreciation and amortiza
Slide 33: Reconciliation of Non-IFRS Measures
FINANCIALS RECONCILIATION OF NON-IFRS MEASURES Reconciliation of adjusted net income and adjusted earnings per share (EPS) (Three months ended September 30) 2023 2022 (Amounts in millions, except per share amounts) Net income attributable to equity holders of the Company $58.4 $44.5 Restructuring, i
Slide 34: Reconciliation of Non-IFRS Measures
FINANCIALS RECONCILIATION OF NON-IFRS MEASURES Reconciliation of adjusted segment operating income Civil Aviation Defense & Security Healthcare Total Three months ended September 30 2023 2022 2023 2022 2023 2022 2023 2022 Amounts in millions Operating income $88.4 $88.4 $9.3 $12.1 $2.9 $1.6 $100.6 $
Slide 35: Definitions of Non-IFRS and Other Financial Measures
DEFINITIONS OF NON-IFRS AND OTHER FINANCIAL MEASURES Non-IFRS and other financial measure definitions This Presentation includes non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures. These measures are not standardized financial measures pres
Slide 36: Definitions of Non-IFRS and Other Financial Measures
DEFINITIONS OF NON-IFRS AND OTHER FINANCIAL MEASURES Adjusted segment operating income margin (or adjusted segment operating income as a % of revenue) Adjusted segment operating income margin is a non-IFRS ratio calculated by dividing our adjusted segment operating income by revenue for a given peri
Slide 37: Definitions of Non-IFRS and Other Financial Measures
DEFINITIONS OF NON-IFRS AND OTHER FINANCIAL MEASURES LIQUIDITY AND CAPITAL STRUCTURE MEASURES Non-cash working capital Non-cash working capital is a non-IFRS financial measure we use to monitor how much money we have committed in the day-to-day operation of our business. We calculate it by taking cu
Slide 38: Definitions of Non-IFRS and Other Financial Measures
DEFINITIONS OF NON-IFRS AND OTHER FINANCIAL MEASURES Net debt-to-EBITDA and net debt-to-adjusted EBITDA Net debt-to-EBITDA and net debt-to-adjusted EBITDA are non-IFRS ratios calculated as net debt divided by the last twelve months EBITDA (or adjusted EBITDA). We use net debt-to-EBITDA and net debt-
Slide 39: Supplementary Non-Financial Information Definitions
SUPPLEMENTARY NON-FINANCIAL INFORMATION DEFINITIONS Full flight simulators (FFSs) in CAE's network A FFS is a full-size replica of a specific make, model and series of an aircraft cockpit, including a motion system. In our count of FFSs in the network, we generally only include FFSs that are of the