Slide 1: 2021 Preliminary Results
BAE Systems 2021 Preliminary Results 1 2021 Preliminary Results 24 February 2022 baesystems.com 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
Slide 2: Sir Roger Carr, Chairman
Sir Roger Carr Chairman Copyright© 2021 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 3: Board Overview - 2021
BAE Systems 2021 Preliminary Results 3 Board Overview - 2021 Backlog & geographic diversity Business shown great strength Defence and Cyber underpin long-term strength • Growth in sales and earnings during • Order book underpins confidence • Helps governments fulfil their turbulence of pandemic prim
Slide 4: Defence and Cyber – helping governments fulfil their primary responsibility
BAE Systems 2021 Preliminary Results 4 Defence and Cyber – helping governments fulfil their primary responsibility Protecting the country and its citizens Threat environment multi-dimensional – protection offered by defence to wider society provides the basis for sustainability We at BAE Systems Inv
Slide 5: 2021 – Year in review
BAE Systems 2021 Preliminary Results 5 2021 – Year in review Charles Woodburn - CEO © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 6: 2021 – Our year in review
BAE Systems 2021 Preliminary Results 6 2021 – Our year in review Focus has been on safety and programme delivery Business Evolving Positively Increased shareholder Strong operational Positioned for sustained returns performance growth dividend and buyback Orders Sales Underlying EBIT Free cash flow
Slide 7: What we look to achieve in the years 2021-23 – one year in
BAE Systems 2021 Preliminary Results 7 What we look to achieve in the 3 years 2021-23 – one year in Strong consistent programme performance Top line growth Efficiency and simplification Margin expansion Portfolio shaping for value creation Strong Attractive cash conversion shareholder Technolo
Slide 8: 2021 – Operational highlights
BAE Systems 2021 Preliminary Results 8 2021 – Operational highlights Strong consistent programme performance Efficiency in working Air • Cost cutting efficiency programmes underway • F-35 production work at full rate • Initial flight of first Qatari Typhoons • Data analytics and benchmarking Electro
Slide 9: Sustaining and advancing our technology & innovation leadership
BAE Systems 2021 Preliminary Results 9 Sustaining and advancing our technology & innovation leadership Technology Investment • Self funded Research and Development (R&D) up over 10% R&D Investment Increasing • Investment in R&D and collaboration to develop and implement discriminating technology Mul
Slide 10: ESG - Accelerating our ambitions
BAE Systems 2021 Preliminary Results 10 ESG - Accelerating our ambitions Environment/Net Zero Social Governance • UN ‘Race to Zero’ • Gender diversity ambition 30% women by 2030 • Accredited Real Living Wage Employer and EC 50% • Scope 1&2 – our operations 2030 • AA (leadership rating) by MSCI • Sco
Slide 11: ESG
BAE Systems 2021 Preliminary Results 11 ESG Well-positioned portfolio Long-term programme visibility MSCI Rating AA Environment Social • Goal to reduce environmental impact of our Sustainability • Our people and values – developing talent operations agenda • Positive social & economic impacts • Comm
Slide 12: Look Ahead
BAE Systems 2021 Preliminary Results 12 Look Ahead © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 13: The Group today and competitive advantage
BAE Systems 2021 Preliminary Results 13 The Group today and competitive advantage Multi-year programmes – Diverse geographic footprint – visibility on value generators deep customer relationships Key competitive Leading defence franchises advantages Differentiated technology Operating model drives s
Slide 14: Multi year programme visibility
BAE Systems 2021 Preliminary Results 14 Multi year programme visibility • £44bn order backlog - incumbent positions on key long term programmes • 2021 orders exceeded expectations - another year of good orders expected in 2022 – further underpinning positive outlook Major Programme/Franchise 2021 Sa
Slide 15: Opportunity Pipeline
BAE Systems 2021 Preliminary Results 15 Opportunity Pipeline • All sectors positioned for growth from backlog and franchise positions • Opportunities to enhance that position in the near and medium term ES P&S Air Maritime C&I Near • US FMS • US FMS • Typhoon sales • Support services to • Digital In
Slide 16: Diverse geographic footprint
BAE Systems 2021 Preliminary Results 16 Diverse geographic footprint 2021 sales by Accessible global destination defence markets (1) Long standing customer relationships © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. 1. Markets inaccessible for business by BAE System
Slide 17: Geographically Diverse Portfolio
BAE Systems 2021 Preliminary Results 17 Geographically Diverse Portfolio Defence Budget outlook Meeting customer requirements • US portfolio well aligned to enduring customer priority areas Growing • Products and capabilities well positioned to benefit from export & FMS • Largest RDT&E budget: >5% v
Slide 18: One of the broadest portfolios of products and services
BAE Systems 2021 Preliminary Results 18 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 technologies – customers increasing focu
Slide 19: Value creating operating model
BAE Systems 2021 Preliminary Results 19 Value creating operating model Efficient R&D model – Balanced mix of CAPEX – self and customer customer, self and Advance Payments production & aftermarket funded – franchise specific collaboration funded Strong operating model © 2022 BAE Systems. All Rights R
Slide 20: Inflation and Supply Chain
BAE Systems 2021 Preliminary Results 20 Inflation and Supply Chain Not immune to inflation or supply chain pressures - monitoring and managing the major risks Inflation Mitigations Supply Chain Environment • Long term supplier agreements • COVID driven labour shortages in US – will remain in near te
Slide 21: Outlook Summary
BAE Systems 2021 Preliminary Results 21 Outlook Summary • Order backlog and multi year programme positions supports top line growth and cash flow • Leading defence franchises Strong Fundamentals • Differentiated technology • Wide geographic footprint with deep customer relationships • Strong operati
Slide 22: Brad Greve, CFO
BAE Systems 2021 Preliminary Results 22 Brad Greve CFO © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 23: 2021 financial highlights
BAE Systems 2021 Preliminary Results 23 2021 financial highlights Sales Improved Increased Earnings Capital Growth Cash Demand Growth Allocation Generation Orders Sales Underlying EBIT Free Cash Flow Dividend £21.5bn £21.3bn £2,205m £1.9bn up 6% Order Backlog Underlying EPS(1) £500m share £44bn 47.8
Slide 24: 2021 summary financials
BAE Systems 2021 Preliminary Results 24 2021 summary financials Constant 2021 2020 Currency Reported Average $ rate: 2021 $1.38, 2020 $1.28 Order Intake £21,458m £20,915m Sales £21,310m £20,862m +5% +2% Underlying EBIT (1) £2,205m £2,037m +13% +8% Margin 10.3% 9.8% +60bps +50bps Underlying EPS (1,2)
Slide 25: Order intake
BAE Systems 2021 Preliminary Results 25 Order intake £21.5bn – ahead of expectations US Air Maritime ES P&S I&S $6.8bn $4.5bn $1.7bn £7.2bn £4.3bn Electronic combat $1.7bn FCAS £0.4bn Submarines £2.2bn C4ISR $1.4bn F-35 £1.1bn UK ship support £0.6bn Precision strike $1.4bn Typhoon Support £0.6bn RBS
Slide 26: Sales
BAE Systems 2021 Preliminary Results 26 Sales Group By reporting segment* £8.3bn £21.3bn £4.5bn +5% £3.4bn £3.4bn £1.8bn (constant currency) ES P&S Air Maritime C&I Growth: Constant Currency +5% +5% +3% +6% +5% +2% Growth: Reported +2% (1)% (3)% +5% +5% (3)% * excludes HQ & eliminations © 2022 BAE S
Slide 27: Underlying EBIT/margin
BAE Systems 2021 Preliminary Results 27 Underlying EBIT/margin Group By reporting segment Margin 10.3% 17.1% 7.6% 10.3% 8.4% 8.9% £856m £766m £2,205m £259m £288m +13% £156m (constant currency) £(120)m ES P&S Air Maritime C&I HQ Growth: Constant Currency +13% +22% +44% (4)% +3% +23% +18%* Growth: Rep
Slide 28: Operating business cash flow
BAE Systems 2021 Preliminary Results 28 Operating business cash flow Group By reporting segment £774m £628m £2,322m £321m +£496m £287m £173m (variance to 2020*) £139m ES P&S Air Maritime C&I HQ Variance to 2020 +£496m +£194m £(95)m £(90)m +£78m £(48)m +£457m * variance to 2020 excludes the £1bn one-
Slide 29: Net debt (£m)
BAE Systems 2021 Preliminary Results 29 Net debt(1) (£m) Free cash flow £1,864m (458) (777) (2,160) (2,718) 2,322 (368) (161) Net debt Operating Interest Equity Share Net debt & tax Other 1 January cash flow dividends buyback 31 December (1) Net debt excludes lease liabilities © 2022 BAE Systems. Al
Slide 30: 2022 Group guidance
BAE Systems 2021 Preliminary Results 30 2022 Group guidance(1) Guidance is provided based on $1.38:£1 Sales Underlying EBIT Underlying EPS +2% to +4% +4% to +6% +4% to +6% (2021 £21,310m) (2021 £2,205m) (2021 47.8p(2)) 2022 Free cash flow (FCF) 3 year FCF (2022 – 2024) Other Underlying >£1bn >£4bn S
Slide 31: 3 year free cash flow guidance
BAE Systems 2021 Preliminary Results 31 3 year free cash flow guidance(1) 2019 2020(2) 2021 2022 2023 2024 2019 – 2021 £850m £1,367m £1,864m In excess of £3bn £4.1bn 2020 – 2022 In excess of £4bn £1,367m £1,864m >£1bn (prev: £3.5bn - £3.8bn) 2021 – 2023 £1,864m >£1bn In excess of £4bn 2022 –
Slide 32: Margin & long term cash expansion – delivering on the 3 Ps
BAE Systems 2021 Preliminary Results 32 Margin & long term cash expansion – delivering on the 3 Ps Programme performance Margin Business mix expansion Performance – enhanced Efficiency improvements / cost savings Portfolio – building for value creation Margin progression Cash Working capital managem
Slide 33: Capital Allocation
BAE Systems 2021 Preliminary Results 33 Capital Allocation Pension(1) – UK lump sum deficit funding completed Investment in business – included in earnings and cash outlook Free cash flow Dividend M&A Buyback Maintain investment grade credit rating and balance sheet flexibility 1) Per current fundin
Slide 34: Wrap up
BAE Systems 2021 Preliminary Results 34 Wrap up 1) Delivered sales & EPS growth, high cash conversion and increased shareholder returns despite the pandemic 2) Backlog, programme visibility and geographic diversity expected to drive growth in coming years 3) Technology investment, cash deployment an
Slide 35: Q&A
BAE Systems 2021 Preliminary Results 35 Q&A © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 36: Supplementary Information
BAE Systems 2021 Preliminary Results 36 Supplementary Information © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 37: Electronic Systems
BAE Systems 2021 Preliminary Results 37 Electronic Systems 2021 2020 Sales $6,178m $5,848m Underlying EBIT $1,054m $865m Margin 17.1% 14.8% Cash flow $1,065m $744m Order intake $6,773m $6,060m Order backlog $9.7bn $8.8bn • Sales up 5% on a constant currency basis − Driven by Electronic Combat Soluti
Slide 38: Platforms & Services
BAE Systems 2021 Preliminary Results 38 Platforms & Services 2021 2020 Sales $4,670m $4,496m Underlying EBIT $357m $244m Margin 7.6% 5.4% Cash flow $395m $491m Order intake $4,451m $5,309m Order backlog $7.6bn $8.3bn • Sales growth 3% on a constant currency basis − Increased US combat vehicle delive
Slide 39: Air
BAE Systems 2021 Preliminary Results 39 Air 2021 2020 Sales £8,321m £7,910m Underlying EBIT £856m £909m Margin 10.3% 11.5% Cash flow £628m £718m Order intake £7,186m £6,494m Order backlog £20.3bn £22.5bn • Sales up 6% on a constant currency basis − F-35 and Typhoon activity (incl. Qatar ramp-up) − M
Slide 40: Maritime
BAE Systems 2021 Preliminary Results 40 Maritime 2021 2020 Sales £3,416m £3,257m Underlying EBIT £288m £279m Margin 8.4% 8.6% Cash flow £321m £243m Order intake £4,336m £3,772m Order backlog £9.9bn £9.1bn • Sales growth at 5% − Dreadnought and Type 26 activity continues to climb − Support services f
Slide 41: Cyber & Intelligence
BAE Systems 2021 Preliminary Results 41 Cyber & Intelligence 2021 2020 Sales $2,411m $2,326m Underlying EBIT $215m $174m Margin 8.9% 7.5% Cash flow $238m $283m Order intake $2,500m $2,550m Order backlog $2.2bn $2.3bn • Sales up 2% on a constant currency basis − I&S growth of 3% 2021 Sales % − AI sta
Slide 42: 2021 summary salients by reporting segment
BAE Systems 2021 Preliminary Results 42 2021 summary salients by reporting segment Underlying Operating Order Order Sales EBIT Margin Cash Flow Intake Backlog £m £m % £m £m £bn Electronic Systems 4,491 766 17.1% 774 4,923 7.2 Platforms & Services 3,395 259 7.6% 287 3,236 5.6 Air 8,321 856 10.3% 628
Slide 43: 2022 guidance - reporting segments
BAE Systems 2021 Preliminary Results 43 2022 guidance - reporting segments - guidance below assumes a $1.38:£1 exchange rate 2021 Actuals 2022 Guidance (1) Underlying Underlying Sales EBIT margin % Sales EBIT margin % Electronic Systems 4,491 17.1% Up 2% - 4% 16% to 17% Platforms & Services 3,395 7.
Slide 44: 2021 Summarised balance sheet (£m)
BAE Systems 2021 Preliminary Results 44 2021 Summarised balance sheet (£m) 31 Dec 2021 31 Dec 2020 Intangible fixed assets 11,716 11,745 Tangible fixed assets(1) 3,204 3,158 Investments 630 409 Working capital(1) (2,934) (3,021) Pension deficit (2,124) (4,485) Lease liabilities (1,252) (1,203) Tax a
Slide 45: Reconciliation of earnings
BAE Systems 2021 Preliminary Results 45 Reconciliation of earnings (£m / pence EPS) Underlying Reported 2021 2021 (excl. one-off (incl. one-off tax benefit) tax benefit) 2020 2021 2020 Underlying EBIT 2,205 2,205 2,037 2,205 2,037 Other intangible amortisation/impairment (101) (46) Non-recurring ite
Slide 46: 2021 underlying EPS bridge (pence)
BAE Systems 2021 Preliminary Results 46 2021 underlying EPS bridge (pence) 2.9 4.4 0.7 1.4 1.6 50.7p (incl one-off 47.8 tax benefit) 44.3 31 December Covid All 31 December FX Tax rate 2020 – commercial other 2021 © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.