Bae Systems Plc · LSE:BA.
Bae Systems — Investor Day (May 2021)
61 slides from Bae Systems's investor day presentation, May 19, 2021
Slide 1: Capital Markets Day
1 Capital Markets Day 19 May 2021 All statements other than statements of historical fact included in this document, including, without limitation, those regarding the financial condition, results, operations and businesses of BAE Systems and its strategy, plans and objectives and the markets and ec
Slide 2: Agenda
2 Agenda • Introduction • Trading Update Brad Greve – CFO • Technology Framework Charles Woodburn – CEO • Inc. Portfolio and Electronic Systems deep dive Tom Arseneault – President & CEO Inc • Q&A © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 3: Trading update
3 Trading update Brad Greve © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 4: Trading Update – Key Points
. 4 Trading Update – Key Points Continue to adapt and perform against pandemic backdrop 2021 Focus has been on safety and programme delivery Guidance confirmed(1) Good operational performance – underlines confidence in execution and guidance Demand outlook good – portfolio well positioned Financial
Slide 5: Trading Update
5 Trading Update Continue to adapt and perform against back drop of pandemic. Focus has been on safety and programme delivery Programme Execution Sustainability • Air, Maritime, Electronic Systems and Intelligence and Security continue • Progressing our 2030 greenhouse gas net zero programme to perf
Slide 6: Demand outlook
6 Demand outlook • US Business growth in coming years from recent high Book to Bill Significant contract wins year to date • Stable defence budget outlook • Opportunity to outperform from NDS portfolio alignment F-16 Support – 10 year IDIQ • Expected spend focus on high-end technology to benefit ES
Slide 7: Framework for technology and future growth
7 Framework for technology and future growth Charles Woodburn © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 8: Introduction
8 Introduction Strong consistent programme performance Top line growth Technology investment Margin expansion Efficiency and simplification in working Attractive Improved cash conversion shareholder Portfolio shaping for value creation returns Balanced and broad capital allocation Secure further opp
Slide 9: Overview
9 Overview • Existing areas of technology advantage – including: • World leader in electronic warfare • Capability to lead next generation combat air system R&D Investment Increasing • One of broadest capabilities in sea and subsea battlespace • Trusted partner in cyber Multi- Sustainable Autonomy S
Slide 10: Addressing the threat environment
10 Addressing the threat environment • Threats in the grey zone mean defence needs to adapt • UK, US and Australia have also stated priorities to defend against new physical threats • Autonomous weapons • Hypersonic weapons • Militarisation of space • Grey zone and physical threats are both critical
Slide 11: One of the broadest portfolios of products and services
11 One of the broadest portfolios of products and services Multi-domain Capabilities Electronic Warfare Well positioned to offer differentiated A leader in full-spectrum electronic warfare solutions in autonomy, networking technology – customers increasing focus and and data exploitation – augments
Slide 12: Data capabilities
12 Data capabilities Current Future Current capabilities and contracts Known support opportunities • TyTAN – Typhoon availability • F35 sustainment contracting • Global support for Type26 • Automatic number plate recognition • UK MoD common support – first-of-its-kind UK database model • Project Nel
Slide 13: Enabling a multi-domain advantage
13 Enabling a multi-domain advantage • Multi – domain capabilities are the ambition of Current platforms in development UK, US, Australia and other allies – we are helping Unmanned Aerial Unmanned Surface Unmanned Unmanned Ground to solve this Vehicles Vehicles Underwater Vehicles Vehicles • Custome
Slide 14: Our future platforms
14 Our future platforms • Global Combat Ship made for: • Data connectivity • Support for autonomous platforms • Future Combat Air System • A connected system of systems bringing: • Advanced sensing • Data management • Connectivity • Autonomy We are developing platforms now that will be part of a mul
Slide 15: Space
15 Space • Space of growing importance - increasingly militarised • US, UK, Australia - multibillion pound investment in coming years • Five days without GPS could cost the UK £5bn • Our customers need secure, resilient networks • Existing space capabilities through Electronic Systems and UK • We al
Slide 16: Autonomous systems
16 Autonomous systems Riptide Tempest FCAS M113 vehicle variant for Pacific 24 autonomous RIB Australia Investing in our multi-domain autonomous systems © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 17: Sustainability driven product innovation
17 Sustainability driven product innovation • Target of net zero across our operations by 2030 • Actively looking how we can reduce emissions from existing products • Our customers have similar strong positions and we look to help them with product innovations • RAF net zero bases by 2040 • Syntheti
Slide 18: Sustainability driven product innovation
18 Sustainability driven product innovation Current Future Current programmes Example opportunities • Hybrid electric propulsion • Electric flight system • Future defence platforms • bus mass transit • PHASA-35 solar aircraft • maritime use • Commercial partnering • Full electric drives also • Furth
Slide 19: Video
19 Video © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 20: BAE Systems, Inc.
20 BAE Systems, Inc. Tom Arseneault, President & CEO © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 21: We Protect Those Who Protect Us
21 Our mission: We Protect Those Who Protect Us® © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per INC-2021-00677
Slide 22: Building on strong 2020 performance
22 Building on strong 2020 performance • Demonstrated resilience to deliver strong performance in a most challenging year • Our people persevered, dedicated to our customers’ missions and adapting to new ways of working • Growing orders both organically and through two high-technology acquisitions •
Slide 23: Our people are sustaining our technology & innovation leadership
23 Our people are sustaining our technology & innovation leadership • Focused on fostering a high-performance, innovative culture • Hold approximately 2,000 U.S. and foreign patents across technology domains • Invest in R&D and collaboration to develop and implement discriminating technology capabil
Slide 24: Leveraging differentiated capabilities through collaboration
24 Leveraging differentiated capabilities through collaboration Collaborating across the enterprise to apply discriminating technologies to develop customer solutions and to optimize returns on R&D investments, breakthroughs and expertise Case study: Dreadnought Alliance • On the Active Vehicle Cont
Slide 25: Our diverse Inc. portfolio
25 Our diverse Inc. portfolio We are supporting our customers’ missions of 2020 Revenue today and tomorrow … $11.9B from the depths of the oceans, to the far reaches of space. © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlle
Slide 26: U.S. business is aligned with the U.S. National Defense Strategy
26 U.S. business is aligned with the U.S. National Defense Strategy • Alignment to U.S. National Defense Strategy priorities • Defense program positions underpin good growth • Key defense and national security programs expected to remain supported under the Biden Administration © 2021 BAE Systems. A
Slide 27: Inc. sales across market and customer segments
27 Inc. sales across market and customer segments 2020 Inc. Sales 2020 U.S. Government Sales by Market by Military Service 7% 4% 11% 15% Non-DoD Agencies 35% Defense-wide & Intel US Government Air Force International Defense 15% Army Commercial Marine Corps Navy 2% 82% 29% © 2021 BAE Systems. All Ri
Slide 28: International markets and export opportunities drive further sales growth
28 International markets and export opportunities drive further sales growth Established franchise positions present additional opportunities through exports and Foreign Military Sales Capabilities in action: APKWS®, tactical radios, aircraft survivability and electronic warfare systems, flight and
Slide 29: Platforms & Services
29 Platforms & Services © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per INC-2021-00677
Slide 30: Platforms & Services
30 Platforms & Services • 2020 Revenues: $4.5bn • Broad network of operations across 20 primary U.S. and international sites • Key provider of combat vehicles, weapons and munitions, and services and sustainment supporting readiness and modernization priorities • International customer base of more
Slide 31: Building an extensive portfolio of highly capable combat vehicles
31 Building an extensive portfolio of highly capable combat vehicles Combat CombatMission Systems, Mission Systems Hägglunds Hägglunds M109 – Self-propelled Howitzer • Producing vehicles under 2020 Full Rate Production contract • U.S. Army acquisition plan of 689 vehicles AMPV – Armored Multi-Purpos
Slide 32: Platforms & Services: Positioned to deliver with excellence
32 Platforms & Services: Positioned to deliver with excellence Driving operational excellence improvements: • Ramping to rate across combat vehicle portfolio using innovative production techniques • Incorporating virtual design modeling and simulation technology to drive efficient and cost-effective
Slide 33: Intelligence & Security
33 Intelligence & Security © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per IS-2021-1621
Slide 34: Intelligence & Security
34 Intelligence & Security Providing broad range of systems integration solutions and services to support critical national security missions across air, land, sea, space, and cyber domains to protect those who serve. Business areas aligned to customers: • Department of Defense • Intelligence Commun
Slide 35: Market positions are strong across the portfolio and growing
35 Market positions are strong across the portfolio and growing Platform Readiness & C5ISR Intelligence IT & Cyber Space Solutions Modernization Sustainment and Sensors, Augmented Mission & Radar Range Support, In-Service Applications and Analytics, ISR, Enterprise IT, Modernization, Life Cycle Syst
Slide 36: Electronic Systems
36 Electronic Systems © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per ES-NHQ-05621-0264
Slide 37: Electronic Systems: A leading provider of defense & aerospace electronics
37 Electronic Systems: A leading provider of defense & aerospace electronics A diverse portfolio: • 2020 Sales: $5.8bn • U.S. Defense – 74% • Commercial – 14% • International Defense – 12% NOTE: 2021 growth rate uses a constant currency basis to eliminate impacts of foreign exchange rate translation
Slide 38: Electronic Systems market dynamics
38 Electronic Systems market dynamics Defense market: Commercial market: • Aligned to the National Defense Strategy and enduring • Commercial business right-sized to weather COVID- defense priorities related headwinds • Countering near-peer threats from China, Russia and • Positioning to take advant
Slide 39: FAST Labs Delivering differentiated technology
39 FAST Labs™ Delivering differentiated technology Focus areas: Development of technologies: • Advanced electronics • Underpins strategy • Autonomy • Drives product and service • Artificial intelligence development • Cyber • Gives our customers the advantage they seek • Electronic warfare • Integral
Slide 40: Video: FAST Labs Overview
40 Video: FAST Labs™ Overview © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per ES-NHQ-05621-0264
Slide 41: Electronic Systems business areas and key capabilities
41 Electronic Systems business areas and key capabilities Provider of long-range survivable strike; global leader in RF EW systems for F-35, F-15, F-22, B-2, LRASM; Electronic Combat Solutions and classified work Countermeasure & RF and optical EW solutions enabling next-generation threat detection,
Slide 42: Electronic Systems portfolio favorably aligned to enduring defense priorities
42 Electronic Systems portfolio favorably aligned to enduring defense priorities Autonomy Communication, Navigation, ES thrusts supporting Joint All-Domain Operations (JADO) Identification Advanced Battle Management System Tactical Space Full Spectrum Spectrum Superiority Joint All-Domain C2 Space E
Slide 43: Autonomy
43 Autonomy C4ISR Systems, Controls & Avionics C4ISR Systems Solutions, FAST Labs™ Controls & Avionics Solutions FAST Labs™ • More than 30 years of advanced real-time mission management and precision engagement capability • Dynamic management, routing, and coordination of multiple manned/unmanned pl
Slide 44: Full spectrum EW
44 Full spectrum EW Electronic Combat Electronic Combat Solutions, Countermeasure Solutions and Electromagnetic Countermeasure & Electromagnetic Attack Solutions Attack Solutions • Premier provider of affordable, proven, and effective multi-mode EW capabilities • More than six decades of experience
Slide 45: Video: EW 2040 and beyond
45 Video: EW 2040 and beyond © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per ES-NHQ-05621-0264
Slide 46: Communication, Navigation, Identification
46 Communication, Navigation, Identification C4ISR Systems, Precision Strike Precision C4ISR Systems & Sensing Solutions Strike & Sensing Solutions • Acquired Airborne Tactical Radios and Military GPS businesses in 2020 to strengthen CNI offerings • Actively integrating key capabilities and expertis
Slide 47: Space
47 Space C4ISR Systems • A world leader in rad-hard electronics for spacecraft and satellites with more than 10,000 cumulative years in orbit • More than 1,000 computers operating aboard more than 300 satellites • Orbital expertise combined with next generation ground resiliency and data analytics s
Slide 48: Precision-guided Munitions
48 Precision-guided Munitions Electronic Combat Electronic Combat Solutions, Precision Solutions Strike Precision Strike&&Sensing Solutions Sensing Solutions • More than 40 years of proven advanced technologies that consistently hit a variety of targets in complex and contested environments from lon
Slide 49: Unmanned Undersea Vehicles
49 Unmanned Undersea Vehicles FAST Labs™ • Acquired Riptide Autonomous Solutions in 2019 to bring next-generation capabilities to the UUV market • Stood up prototype and production site increasing capacity for vehicle development and personnel • Riptide™ Family of Vehicles: Micro-UUV®, UUV-7, UUV-9
Slide 50: Electrification
50 Electrification Controls Controls &&Avionics Avionics Solutions, Solutions Power Power & Propulsion & Propulsion SolutionsSolutions • Global leader in electric drive systems for zero emission bus propulsion with more than 13,000 systems delivered • Our systems are capable of saving more than 28 m
Slide 51: Video: Get to Zero
51 Video: Get to Zero © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per ES-NHQ-05621-0264
Slide 52: Electrification
52 Electrification Controls Controls &&Avionics Avionics Solutions, Solutions Power Power & Propulsion & Propulsion SolutionsSolutions • Global leader in electric drive systems for zero emission bus propulsion with more than 13,000 systems delivered • Our systems are capable of saving more than 28 m
Slide 53: Video: Energizing the Future of Flight
53 Video: Energizing the Future of Flight © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per ES-NHQ-05621-0264
Slide 54: Electronic Systems: Well positioned for growth
54 Electronic Systems: Well positioned for growth • Strengthening portfolio alignment to pressing national security needs • Staying steadfast to our mission to protect those who protect us • Aspiring to be an ESG leader in the defense industry • Developing cutting edge technology across all domains
Slide 55: Building on our rich heritage for future growth and innovation
55 Building on our rich heritage for future growth and innovation • Sustained financial and program performance • Leadership in science, technology, engineering and innovation • Continued advancement and investment across portfolio aligned to customer priorities • Skilled and innovative people, dedi
Slide 56: We Protect Those Who Protect Us
56 We Protect Those Who Protect Us® © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark. Not Export Controlled per INC-2021-00677
Slide 57: Summary
57 Summary • Order backlog – drives top line growth and cash flow • Visibility of long-term value drivers • Leading defence franchises Strong Fundamentals • Wide geographic footprint • Deep customer relationships • Strong operating model • Programme execution Clear Strategic • Investment in technolo
Slide 58: Q&A
58 Q&A © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 59: Supplementary
59 Supplementary © 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS PROPRIETARY BAE SYSTEMS is a registered trademark.
Slide 60: 2021 Group guidance
60 2021 Group guidance (1) Guidance is provided based on a $1.35: £1 exchange rate Sales (2) Underlying EBIT (2) Underlying EPS (3) +3% to +5% +6% to +8% +3% to +5% (2020 £20,862m) (2020 £2,037m) (2020 44.3p) 2021 Free cash flow (FCF) 3 year FCF (2021-2023) Other Sensitivity to 10c Underlying Financ
Slide 61: 2021 Guidance – Reporting Segments
61 2021 Guidance(1) – Reporting Segments Guidance is provided based on a $1.35: £1 exchange rate Electronic Platforms & Cyber & Systems Services (US) Air Maritime Intelligence 2020 Actual Sales £4,557m £3,503m £7,910m £3,257m £1,812m Underlying EBIT margin 14.8% 5.4% 11.5% 8.6% 7.5% Segmental Guidan