Slide 1: Investor Presentation
Investor Presentation November 2018 Your worldwide training partner of choice
Slide 2: Caution regarding forward looking statements
Caution regarding forward looking statements This presentation contains forward-looking statements about our activities, events and developments that we expect to or anticipate may occur in the future. These forward-looking statements include, without limitation, statements about our vision, strateg
Slide 3: Our vision is to be the recognized global training partner of choice
Our vision is to be the recognized global training partner of choice to enhance safety, efficiency and readiness.
Slide 4: CAE at a glance: Leader in three business segments
CAE at a glance Leader in three business segments Civil Aviation Training Solutions Defence and Security Healthcare Commercial Aviation Training Systems Integrator Patient simulation Business Aviation Virtual and live training Imaging/Interventional simulation Training equipment Trai
Slide 5: Diversified base of business with a high degree of recurring revenue
CAE at a glance Diversified base of business with a high degree of recurring revenue U.S.A. 4 36 Asia Australia 40 % 56 % Canada 40 % 36 Central and 60 South America Middle East 28 Approximate value including JV sales Europe Civil Aviation Training Solutions Services Defence and Security Products He
Slide 6: 6 pillars of strength underlie CAE's strategy and investment thesis
6 pillars of strength underlie CAE’s strategy and investment thesis Strong Underlying competitive secular moat tailwinds Headroom Potential in large for superior markets returns High degree Culture of recurring of innovation business 6 CAE Inc. Proprietary Information and/or Confidential
Slide 7: Unmatched global reach
Unmatched global reach Corporate head office Civil Aviation Training Solutions 160+ 35+ 9,000+ Defence & Security Healthcare locations countries employees 7 CAE Inc. Proprietary Information and/or Confidential
Slide 8: FY2018 Select Performance Highlights
FY2018 SELECT PERFORMANCE HIGHLIGHTS $2.8B $2.7B $2.8B +8 % $1.11 +4 % $7.53B $7.85B $1.03 Record Earnings Per Share from Record continuing Revenue FY2017 FY2018 operations1,2 Record Backlog FY2017 FY2018 FY2017 FY2018 12.3 % 11.2% 12.3% 21.5 % 26.5% +10 % $138.7M 21.5% $126.3M Strong Financial High
Slide 9: Civil Aviation Training Solutions
Civil Aviation Training Solutions Your worldwide training partner of choice
Slide 10: Commercial and Business Aviation market drivers
CIVIL AVIATION TRAINING SOLUTIONS Market drivers Market expansion: Over the next 10 years, IATA Activity of the 39K COMMERCIAL forecasts passenger trips to installed base 5.2B 27K AVIATION grow by 3.5% annually Fleet renewal and expansion Commercial aircraft 3.7B deliveries at historical Activ
Slide 11: Headroom in a large market
CIVIL AVIATION TRAINING SOLUTIONS Headroom in a large market Civil Training Market $4.2B 35% CAE CAE has potential to increase share in a large market 11 CAE Inc. Proprietary Information and/or Confidential
Slide 12: 10-Year Airline and Business Jet Pilot Demand Outlook
CIVIL AVIATION TRAINING SOLUTIONS 10-YEAR AIRLINE AND BUSINESS JET PILOT DEMAND OUTLOOK Pilot Population to Exceed ½ Million New Civil Pilots Needed Captain Upgrades Needed Business Additional Commercial Pilots for Growth 10K 530K 300K New Captains 215K 65K Active Pilots New Business Jet in 2028 and
Slide 13: World's largest civil aviation training network
CIVIL AVIATION TRAINING SOLUTIONS World’s largest civil aviation training network 50+ Training Locations 250+ Full Flight Simulators 10 160+ Academies Aircraft CAE trains 180,000 crew members every year CAE Inc. Proprietary Information and/or Confidential
Slide 14: Thought leadership and innovation
CIVIL AVIATION TRAINING SOLUTIONS Thought leadership and innovation Trusted partner of regulatory organizations and industry associations Constantly developing training solutions for partners Development of the Next Generation Training Electronic Training System Suite SOP Management Tool Supported b
Slide 15: Business Aviation Training expansion
Business Aviation Training expansion WORLDWIDE TRAINING PARTNER OF CHOICE CAE to acquire Bombardier’s Business Aircraft Training business for enterprise value of US$645 million to expand its position in the business aviation training market 15 CAE Inc. Proprietary Information and/or Confidential
Slide 16: Acquisition highlights
Acquisition highlights Expands CAE’s addressable market in Business Aviation Training ✔ • Acquires an established and growing business for the provision of flight and maintenance training services for operators of one of the world’s largest and most valuable in-service business jet fleets • Extends
Slide 17: Transaction summary
Transaction summary Two main transaction elements (“Transaction”): 1. Acquisition of Bombardier Business Aircraft Training ("BAT") business for enterprise value of US$645 million Transaction • EV / one-year Forward EBITDA(1) (2) multiple of approximately 9x Overview • EV / LTM (Jun-18) Bombardier
Slide 18: Industry-leading Business Aviation Training platforms
Industry-leading Business Aviation Training platforms Bombardier's BAT Business by Aircraft Platform Growth expected from strong demand by Entry Into In # of customers operating a large in-service fleet (4,800 Aircraft Platform Cabin Size business aircraft), additional business jet Service Product
Slide 19: Defence & Security
Defence & Security Your worldwide training partner of choice
Slide 20: Global Presence
DEFENCE & SECURITY Global Presence 3650+ EMPLOYEES London Stolberg 30 COUNTRIES Montreal Ottawa Rome 50+ Washington DEFENCE AGENCIES Orlando Abu Dhabi Tampa Bangalore 80+ SITES Singapore 70+ MILITARY AIRCRAFT TYPES Sydney $1B+ Business strategically located in key growth markets CAE Inc. Proprietary
Slide 21: Defence Growth Cycle
DEFENCE & SECURITY Defence Growth Cycle 70% spending increase over 10 years Acquisition of Major Capital Assets Significant unmet needs Reliant on US defense technology Persistent Defence budget increases 20% Canada Aerospace & Defence firms are Shaping portfolio to focus on core 26% E
Slide 22: Defence Training Market Drivers
DEFENCE & SECURITY Defence Training Market Drivers Increased Requirement to Increased use of Propensity to increase Defence spending maintain Live-Virtual-Constructive outsourcing of in all major markets mission readiness solutions for training solutions Integrated Mission Training Increasing budget
Slide 23: Training Systems Integration (TSI) Strategy
DEFENCE & SECURITY Training Systems Integration (TSI) Strategy Live TSI programs are driven by increased outsourcing in the Live Flight Training portion of the program Flight Training Devices users are focused on increasing the Interoperability and secure fidelity of the connectivity allow for virtu
Slide 24: Strategic Successes
DEFENCE & SECURITY Strategic Successes U.S. Army U.S. Navy U.S. Air Force Royal Canadian Air Force • Fixed-Wing Flight Training Program • CNATRA Contract Instruction Services • MQ-1/MQ-9 Aircrew Training • NATO Flying Training in Canada (NFTC) • Lakota Training System for T-45 and T-6 Aircrew Traini
Slide 25: Headroom in a Large Market
DEFENCE & SECURITY Headroom in a Large Market Training Systems Integration Market $17B+ Live Virtual $1.09B Constructive CAE D&S Traditional Flight Simulation Market Well positioned to increase share in a $17B+ market CAE Inc. Proprietary Information and/or Confidential
Slide 26: Healthcare
Healthcare Your worldwide training partner of choice
Slide 27: The case for CAE healthcare
CAE HEALTHCARE The case for CAE healthcare $ Digital transformation Synergies with CAE’s Explicit desire Shift to value-based enables data-driven next generation to adopt aviation care aligns prices with care and training training solutions best practices patient outcomes Opportunity to lead in a po
Slide 28: Market drivers
CAE HEALTHCARE Market drivers Increasing use of simulation Growing emphasis on quality in healthcare of care and patient safety Digital transformation of Reducing medical errors* healthcare training and improving patient outcomes Limited access to live Medical technology patients during training rev
Slide 29: Regulatory shift toward Value-based Care
Regulatory shift toward Value-based Care US Centers for Medicare and Medicaid Services’ Hospital Acquired Conditions (HAC) • Uses quality of care as a performance metric 6 Quality Measures 1. Patient Safety Indicators 90 Composite 2. Central line bloodstream infections 3. Catheter-associated urinary
Slide 30: Broadest portfolio of training solutions
CAE HEALTHCARE Broadest portfolio of training solutions Patient simulators Courseware Ultrasound simulators Surgical simulators Simulation centre management solutions 30 CAE Inc. Proprietary Information and/or Confidential
Slide 31: Culture of innovation
Culture of innovation CAE Healthcare …by using the became the first Microsoft HoloLens, company to bring a the CAE VimedixAR commercial Microsoft ultrasound simulator HoloLens mixed- integrates real-time reality application to interactive holograms the medical of the human simulation market… anatomy
Slide 32: Thought leadership and Innovation
CAE HEALTHCARE Thought leadership and Innovation Trusted partner of scientific societies Screen-based simulation for Maintenance of Certification in Anesthesiology (MOCA) The Next Generation Training and Certification Created in collaboration with American Society of Anesthesiologists (ASA) and appr
Slide 33: Financial highlights and capital priorities
Financial highlights and capital priorities Your worldwide training partner of choice
Slide 34: Capital allocation priorities
CAPITAL ALLOCATION PRIORITIES Priorities Invest in superior and sustainable growth 1 Market/customer-led investments in core and close adjacencies with a clear path to market share gains and attractive returns Provide current shareholder returns while generating long term growth 2 Current shareholde
Slide 35: Investment in accretive growth remains a priority
CAPITAL ALLOCATION PRIORITIES Investment in accretive growth remains a priority given attractive return potential 1 40% Incremental Pre-tax DOI Return % on Capital Deployed in Civil Training (FY14-FY18) 31% 30% 30% 28% 27% 25% ~$316M capital 24% investment from 20% 19% FY14-FY18 to 15% deploy 47 FFS
Slide 36: Current shareholder returns
CAPITAL ALLOCATION PRIORITIES Current shareholder returns 2 Profits returned to shareholders Millions $160 $140 $120 $100 $80 $60 $40 $20 $0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Dividends Share repurchases CAE prioritizes a balance between long-term capital appreciation and cash returns to shareh
Slide 37: Strong balance sheet
CAPITAL ALLOCATION PRIORITIES Strong balance sheet 3 Millions $2,000 50% $1,800 Optimal Net Debt-to-Capital (35-45%) $1,600 40% $1,400 $1,200 $1,000 30% $800 $600 20% $400 $200 $0 10% FY11 * FY12 * FY13 * FY14 FY15 FY16 FY17 FY18 *Not adjusted for IFRS11 impact Net Debt Net Debt-to-Capital CAE’s str
Slide 38: Increased proportion of recurring revenue (services)
Increased proportion of recurring revenue (services) FY2001 FY2008 FY2018 15% 43% 60% Products Services 38 CAE Inc. Proprietary Information and/or Confidential
Slide 39: A resilient business model
A resilient business model CAE Consolidated Segment Operating Income (SOI) Millions $500 SOI down 14% post $450 ‘Financial Crisis’ $400 SOI down 60% $350 post ‘2001 Crisis’ $300 $250 $200 $150 $100 $50 $0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY01-
Slide 40: Strong backlog for enhanced visibility
Strong backlog for enhanced visibility Total Backlog Billion $9.0 $8.0 16% CAGR $7.0 $6.0 9% CAGR $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Civil Defence 40 CAE Inc. Proprietary Information and/or Confidential
Slide 41: Compelling long term investment thesis
Compelling long term investment thesis • Services revenue approx. • Market leader 60% of mix and expected • Large addressable to continue increasing • Unique comprehensive markets in Civil Aviation relative to products Solutions and Defence • Long-term contracts in • Unmatched global reach • Innovat
Slide 42: Outlook summary for FY2019
Outlook summary for FY2019 CIVIL DEFENCE AND SECURITY HEALTHCARE Continued low double-digit Continued mid to high single-digit percentage operating income percentage operating income Resumption of double-digit growth growth growth Continued measured and profitable growth investment mainly in support
Slide 43: Appendix
Appendix Your worldwide training partner of choice
Slide 44: Q2 FY19 business highlights
CAE’S PERFORMANCE Q2 FY19 business highlights FY19 Q2 EPS $0.23 vs. $0.20 in prior year* Revenue $743.8M (+20% YoY) Operating profit $98.7M (+12% YoY*) Free cash flow $137.7M compared to $63.5M to last year Book-to-sales 1.33x Total backlog $8.67B *Q2 FY18 results exclude the impact of the net gain
Slide 45: Consolidated financial results
FY19 Q2 Consolidated financial results Summary of Consolidated Results Three months ended September 30 (amounts in millions, except per share amounts) 2018 2017 Restated* Revenue $ 743.8 $ 618.2 Gross profit 201.5 181.5 Operating profit 98.7 88.5 As % of revenue 13.3% 14.3% Net income 63.6 55.1 Net
Slide 46: Cash movements
FY19 Q2 Cash movements Consolidated Cash Movements Three months ended September 30 (amounts in millions) 2018 2017 Restated* Cash provided by operating activities $ 123.0 $ 102.4 (before changes in non-cash W/C) Changes in non-cash working capital 54.1 (5.3) Maintenance capex and other assets (17.2)
Slide 47: Our vision is to be the recognized global training partner of choice
Our vision is to be the recognized global training partner of choice to enhance safety, efficiency and readiness.