Cae Inc. · TSX:CAE
Cae — Shareholder Meeting (June 2006)
52 slides from Cae's shareholder meeting presentation, Jun 21, 2006
Slide 1: Forward-looking statements disclaimer
Certain statements made in this presentation are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward- looking statements may differ materially from actual results or events. These statements do not reflect the potential
Slide 2: Annual and Special Meeting of Shareholders
Annual and Special Meeting of Shareholders June 21st, 2006 2
Slide 3: Call to Order
Call to Order 3
Slide 4: Constitution of Meeting
Constitution of Meeting 4
Slide 5: Appointment of Scrutineers
Appointment of Scrutineers 5
Slide 6: Establishment of Quorum
Establishment of Quorum 6
Slide 7: Meeting Regularly Constituted and Voting
Meeting Regularly Constituted and Voting 7
Slide 8: Minutes of 2005 Annual Meeting
Minutes of 2005 Annual Meeting 8
Slide 9: Financial Statements and Auditors' Report
Financial Statements and Auditors’ Report 9
Slide 10: Chairman's Remarks
Chairman’s Remarks 10
Slide 11: Election of Directors
Election of Directors 11
Slide 12: Appointment of Auditors
Appointment of Auditors 12
Slide 13: Rights Plan
Rights Plan 13
Slide 14: Termination of Meeting
Termination of Meeting 14
Slide 15: CEO's Address
CEO’s Address 15
Slide 16: Robert E. Brown, President and CEO
Robert E. Brown President and CEO 16
Slide 17: Strategic Review Conclusions
Strategic Review Conclusions Excellent technology base Great products and services Solid global reputation Exceptional people 17
Slide 18: Last Year's Objectives of Action Plan
Last Year’s Objectives of Action Plan Foster synergies Improve return on capital invested Doing the right thing § Restore shareholder value § Protect CAE’s technology § Ensure long-term growth and stability 18
Slide 19: Fiscal 2006: A Year of Transition
Fiscal 2006: A Year of Transition Established a new way of doing business Strengthened financial position Built a solid foundation for creation of shareholder value Majority of restructuring activities Completed or in final stages 19
Slide 20: Financial Milestones
Financial Milestones Finalized sale of Marine Controls business unit Grew revenues by 12% to C$1.1 billion Improved non-cash working capital position Adjusted balance sheet to better reflect assets 20
Slide 21: Financial Milestones (cont'd)
Financial Milestones (cont’d) Secured 5-year revolving bank facility § US$400 million & €100 million Reduced net debt § $285.8 million $190.2 million Generated free cash flow of $73.7 million Achieved cost savings target 21
Slide 22: Organizational Structure
Organizational Structure Established a new structure § Improved synergies between Military and Civil segments Created 4 reporting segments § P&L and balance sheet responsibilities Consolidated Program Management & Engineering Created a Global Strategic Sourcing function 22
Slide 23: Business & Operational Processes
Business & Operational Processes Implemented strict business processes § Specific financial targets § Leaner cost structure Instituted a more disciplined bid review process Realigned workforce Reduced footprint of main plant by more than 10% 23
Slide 24: Business & Operational Processes
Business & Operational Processes Introduced Kaizen workshops & Six Sigma Met objective of building an Airbus A320 civil full-flight simulator (FFS) within 14 months Established Customer Advisory Board Consolidated training centres § USA & Western Europe Currently redeploying 28 FFS § To improve cust
Slide 25: Ensuring Strategic Growth
Ensuring Strategic Growth Introduced $630-million Project Phoenix § Largest R&D project in CAE’s history § Intended to help CAE maintain its world-leading position in key technologies and services § $220.5 million to be invested by the Federal and Quebec Governments Acquired TERREX Continued constru
Slide 26: Simulation Products/Civil Contracts
Simulation Products/Civil Contracts 21 FFS orders, including § Three B737s with electric motion systems for JAL § World’s first ARJ21 for China’s ACAC § Two A320s for AirAsia § Two EMBs for Air Canada 26
Slide 27: Training & Services/Civil Contracts
Training & Services/Civil Contracts 10-year agreement for A340 & B747 training for Virgin Atlantic Airways A320 pilot provisioning services for Vueling Simulator maintenance & engineering support for JetBlue Pilot provisioning, technical services, and simulator maintenance § AirAsia, Ryanair and eas
Slide 28: Military Contracts
Military Contracts EADS CASA C-295 aircraft programs worldwide A330 Multi-Role Tanker Transport Lockheed Martin C130J US Army Synthetic Environment Core Special Ops mission rehearsal German Armed Forces 15 sites worldwide Canada’s Department Simulator maintenance & logistic of Defence support 28
Slide 29: Last Year's Objectives of Action Plan
Last Year’s Objectives of Action Plan Foster synergies ¨ þ Improve return on capital invested ¨ þ Doing the right thing ¨ þ § Restore shareholder value ¨ þ § Protect CAE’s technology ¨ þ § Ensure long-term growth and stability ¨ þ 29
Slide 30: CAE Corporate Video
CAE CAE Corporate Video
Slide 31: Alain Raquepas, VP Finance and CFO
Alain Raquepas Vice President, Finance and Chief Financial Officer 31
Slide 32: FY2006 Results
FY2006 Results FY06 FY05 Revenues $1,107.2 M $986.2 M +12% +12% Net earnings $64.9 M ($199.9 M) Normalized earnings from continuing operations $86.8 M $46.9 M Normalized EPS from continuing operations $0.35 $0.19 32
Slide 33: FY2006 Results: Training & Services/Civil
FY2006 Results: Training & Services/Civil $M Stronger business 350 +5% aviation 322.3 300 environment 306.8 250 More “wet” training 200 Increased utilization 150 Productivity gains 100 50 57.9 Revenues 39.8 Operating income 0 FY05 FY06 33
Slide 34: FY2006 Results: Simulation Products/Civil
FY2006 Results: Simulation Products/Civil $M 21 FFS orders 300 +20% Improved business 250 257.0 environment 200 213.4 Improved program execution 150 Increased synergies 100 50 Revenues 7.8 30.2 Operating income 0 FY05 FY06 34
Slide 35: FY2006 Results: Simulation Products/Military
FY2006 Results: Simulation Products/Military $M Ramp-up of NH90 350 +17% program 300 327.4 Integration of TERREX 278.9 250 Important orders 200 received in second half of FY05 150 100 50 Revenues 26.4 27.7 Operating income 0 FY05 FY06 35
Slide 36: FY2006 Results: Training & Services/Military
FY2006 Results: Training & Services/Military $M Higher level of 250 maintenance and +7% support 200 200.5 187.1 Integration of 150 Greenley & Assoc. 100 50 Revenues 20.8 19.1 Operating income 0 FY05 FY06 36
Slide 37: Cash Flow
Cash Flow FY06 FY05 Free cash flow $73.7 M $73.8 M Capital expenditures $130.1 M $118.0 M 37
Slide 38: Financial Position
Financial Position FY06 FY05 Net debt $190.2 M $285.8 M Working capital ($74.5 M) $9.6 M Backlog from cont’d ops $2.5 B $2.5 B 38
Slide 39: Financial Summary
Financial Summary Stronger balance sheet § Reduced debt § Improved working capital position Restructuring charges total $66 million to date § $34 million in FY06 § Total expected to be within 10% of original target • Commensurate with new cost savings opportunities 39
Slide 40: Financial Objectives Met
Financial Objectives Met Improve cost of capital ¨ þ § Debt vs. equity Financial discipline ¨ þ § Bidding process § Investment in capital Q1’06 reporting ¨ þ § Full segmentation: equipment and training 40
Slide 41: Robert E. Brown, President and CEO
Robert E. Brown President and CEO 41
Slide 42: Value restored: ready for growth
Value restored: ready for growth Ready for Growth Solid base to pursue Growth Initiatives Good Market Conditions Airlines recovering / Emerging markets Record aircraft orders / war on terror Several Growth opportunities Restructured the Company Organization / Business and Operational Processes / Cos
Slide 43: Market for Training & Services/Civil
Market for Training & Services/Civil Competitive market Stable pricing Robust business aviation segment Trends in the commercial airline industry continue to improve Shortage of pilots in emerging markets like India & China 43
Slide 44: Looking Ahead: Training & Services/Civil
Looking Ahead: Training & Services/Civil Finalization of redeployment of 28 simulators § Average number of revenue simulator equivalent units (RSEUs) in FY07 comparable to FY06 Simulators to be added to network Finalization of training centre consolidation in Europe New centre to open in North East
Slide 45: Market for Simulation Products/Civil
Market for Simulation Products/Civil Boeing and Airbus announced orders of over 2,000 aircraft for calendar 2005 Extended cycle if US carriers re-equip 45
Slide 46: Looking Ahead: Simulation Products/Civil
Looking Ahead: Simulation Products/Civil Forecast of more than 21 simulator orders § Timing dependent on new aircraft introduction § 7 orders announced in FY07 to date 75% of revenue already in backlog Operating income should increase 46
Slide 47: Market for Military segments
Market for Military segments Global budgets to remain the same Supporting efforts in war on terror New military training requirements Emphasis on Homeland Security Increased outsourcing 47
Slide 48: Looking Ahead: Military Segments
Looking Ahead: Military Segments Modest top line growth in combined segments Well positioned with OEMs § C130J training systems & services contract CF-18 engineering systems support 85% of revenue in backlog Low double-digit margin expected 48
Slide 49: CAE: Fiscal 2007
CAE: Fiscal 2007 CAPEX higher than last year Considering opportunities for growth Joint ventures in emerging markets R&D: new areas of modelling & simulation Innovation group § Identify areas for growth § Develop new markets 49
Slide 50: Objectives for 2007
Objectives for 2007 Complete remaining elements of restructuring plan Continue to strengthen relationships with customers and OEMs Continue to improve our financial performance Continue to re-engage employees Maintain our technological leadership Position CAE for growth in our core markets 50
Slide 51: Thank you
Annual and Special Meeting/ of Shareholders
Slide 52: Annual and Special Meeting of Shareholders
Annual and Special Meeting of Shareholders June 21st, 2006 52