Slide 1: Investor Presentation March 2021
Investor Presentation March 2021
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by CAE Inc. (“CAE” or the “Company”) solely for information purposes. External Sources and Data (including Financial) Where this presentation quotes any information or statistics from any external source, it should not be interpreted that the Company ha
Slide 3: Disclaimer: Caution Regarding Forward-Looking Statements
Disclaimer Caution Regarding Forward-Looking Statements This presentation includes forward-looking statements, which include, without limitation, statements relating to the acquisition of L3Harris Technologies’ Military training business (“Acquisition”) and the related private placements, available
Slide 4: We are a high-tech company with a noble purpose focused on safety
OVERVIEW We are a high-tech company with a noble purpose focused on safety Our mission To lead at the frontier of digital immersion with high-tech training and operational support solutions to make the world a safer place. Our vision To be the worldwide partner of choice in civil aviation, defence a
Slide 5: CAE is a world leader in training and operational support solutions
OVERVIEW CAE is a world leader in training and operational support solutions with three core business units Civil Aviation Training Defence and Security Healthcare Solutions We train and support We play a key role in allied forces around We help make making air travel safer the world for critical he
Slide 6: Diversified global business
OVERVIEW Diversified global business Total Revenue Healthcare For the year ended, March 31, 2020. Metrics not reflective of recently announced Military Training and Simulation acquisition. Defence and 3 Security 37 % 60 Civil Aviation Training Solutions Products/Service Mix* Products 40 % 60 Service
Slide 7: We are a global leader in immersive synthetic training environments
OVERVIEW We are a global leader in immersive synthetic training environments Knowledge Leadership Industrial Champion Advanced Technologies ▪ 2,000+ engineers ▪ Best-in-class global supply ▪ Deep technology expertise ▪ Electronics chain ▪ Virtual and Augmented Reality ▪ Systems ▪ Broad global Footpr
Slide 8: CAE's 8 pillars of strength
OVERVIEW CAE’s 8 pillars of strength Industry leader with a Potential for compound strong competitive growth and superior moat returns over the long term ‘8 Pillars of Strength’ underlie CAE’s High degree compelling investment of recurring Solid financial position and business highly cash generative
Slide 9: Recently announced highly strategic acquisition with significant financial benefits
OVERVIEW Recently announced highly strategic acquisition with significant financial benefits 1 Accelerates CAE’s Defence & Security growth strategy 2 Enhances alignment with key US National Defence Strategy priorities and next gen platforms 3 Creates end-to-end suite of capabilities in military air
Slide 10: Civil Aviation Training Solutions
Civil Aviation Training Solutions
Slide 11: The world's largest civil aviation training network
CIVIL AVIATION TRAINING SOLUTIONS The world’s largest civil aviation training network Stockholm • Oslo Stavanger • 170+ Manchester London Burgess Hill • Copenhagen Rev: 364.5M Aircraft Dublin • Shannon Oxford • Amsterdam Brussels London Gatwick •Prague 300+* Frankfurt • Milan Full Flight Simulators
Slide 12: Market drivers
CIVIL AVIATION TRAINING SOLUTIONS Market drivers Demand Drivers Profitability Drivers • Rigorous industry • Favourable business mix regulations and secular drivers, including large market CAE’s Civil growth in air travel headroom in training services Aviation Training • Safety and efficiency • Poten
Slide 13: Headroom in a large market
CIVIL AVIATION TRAINING SOLUTIONS Headroom in a large market Civil Addressable Market ~$6.2B* ~30%* CAE CAE has potential to increase share in a large and growing market Source: CAE internal analysis * Market share metrics based on FY20 revenue 13 CAE Inc. Proprietary Information and/or Confidential
Slide 14: We have been opportunistic with M&A
CIVIL AVIATION TRAINING SOLUTIONS We have been opportunistic with M&A Canada Amsterdam-based provider of total civil A leading manufacturer of flight simulators A leading civil aviation crew management training solutions as well as instructor and training devices for civil markets and optimization s
Slide 15: Defence & Security
Defence & Security
Slide 16: The global defence business
DEFENCE & SECURITY The global defence business 40+ $1.3B Revenue* Countries $104.8M SOI* 70+ Platforms 7.9% Operating Margin* 100+ Sites Not pro forma for the L3Harris Military Training acquisition Operations strategically located in key growth markets with training support services at 100+ sites 16
Slide 17: Market drivers
DEFENCE & SECURITY Market drivers Demand Drivers Profitability Drivers • Premium on mission readiness driven by global • Increasing mix of international, CAE’s Defence & geopolitical tension and including foreign military sales instability (FMS) Security segment is positioned as • Higher mix of simu
Slide 18: Defence addressable market
DEFENCE & SECURITY Defence addressable market Training Systems Integration (TSI) ~$14B* Military Training & Simulation Market Live Training Virtual Training Land 7% Naval Constructive Training Air 7% 75% 11% Space & Cyber CAE is a world leading Training Systems Integrator with significant headroom i
Slide 19: L3Harris Technologies' Military Training: a leading, full-service training provider
DEFENCE & SECURITY L3Harris technologies’ military training: a leading, full-service training provider with comprehensive solutions across multiple domains Core Business Areas HEADQUARTERS Arlington, TX 9 COUNTRIES Fast Jet Bombers Rotary Ground Submarines 23 LOCATIONS EMPLOYEES 1,600+ ...Provide Co
Slide 20: Acquisition strongly aligned with D&S strategic imperatives
DEFENCE & SECURITY Acquisition strongly aligned with D&S strategic imperatives CAE DEFENCE & SECURITY STRATEGIC IMPERATIVES Alignment to US Develop Strategic Leveraging High Expand & Extend Target Larger National Defense Partnerships on PWIN to Increase Addressable Market Opportunities Strategy (NDS
Slide 21: Adds balance to CAE, with complementary offerings in D&S
DEFENCE & SECURITY Adds balance to CAE, with complementary offerings in D&S L3Harris Military Training provides greater balance to CAE overall, and is complementary to CAE D&S Pro Forma Mix (FY20) Complementary Exposure in Critical Domains Standalone CAE Pro Forma* Domains Military Training AIR Defe
Slide 22: Addressing new realities in the defence environment
DEFENCE & SECURITY Addressing new realities in the defence environment The global threat environment and budget priorities are Commercial flights and accelerating demand for digital immersion solutions training utilization half their usual levels ▪ Focus has shifted from asymmetric to near-peer thre
Slide 23: Transaction summary: L3Harris Technologies' military training
DEFENCE & SECURITY Transaction summary: L3Harris technologies’ military training ▪ All-cash purchase price of US$1.05 billion (C$1.35B) Transaction Consideration ▪ ~13.5x 2020 Adjusted EBITDA of L3Harris Military Training*, or ~10.0x including expected run-rate cost synergies (~C$35-$45M or approxim
Slide 24: Cost Synergies
DEFENCE & SECURITY Identified and reasonably achievable synergies Proven M&A team with track record of success – focused on executing detailed integration roadmap SG&A ✓ Cost reductions from optimizing footprint ~C$35 – C$45M (approximately US$28-$35M) Cost Synergies Run-Rate Cost Synergies Expected
Slide 25: Healthcare
Healthcare
Slide 26: The global healthcare business
HEALTHCARE The global healthcare business 500+ 40+ Simulated clinical experience $1.3B courseware Countries packages1 Revenue* 70+ 50+ Platforms Adjunct faculties, incl. Reproduced $104.8M SOI* nurses, physicians, paramedics and sonographers2 120+ 80+ Sites 7.9% Countries with CAE- Operating Margin*
Slide 27: Market drivers
HEALTHCARE Market drivers Demand Drivers CAE's Healthcare • Increasing investments in training to prevent medical errors segment is positioned as a • Refocus on disaster preparedness leader in developing • Chronic shortage of medical professionals / rising healthcare enrollments in medical and nursi
Slide 28: Broad portfolio of high-tech training solutions
HEALTHCARE Broad portfolio of high-tech training solutions Imaging Simulation Interventional Simulation Patient Simulation Vimedix Ultrasound Augmented Reality NeuroVR | EndoVR | CathLabVR Blue Phantom Ultrasound Models LapVR | Surgical Cut Suits Center Management Curriculum Learning Space Standard
Slide 29: Capital Allocation Strategy
Capital Allocation Strategy
Slide 30: CAE's three capital allocation priorities
CAPITAL ALLOCATION STRATEGY CAE’s three capital allocation priorities Acquisitions involving existing capacity holders and capability holders to enhance CAE’s global offering and increase market addressability Invest in superior & sustainable Organic capital investment growth in capacity and to deve
Slide 31: Attractive compound growth
CAPITAL ALLOCATION PRIORITIES Attractive compound growth Incremental Pre-tax Return % on Organic Capital 40% Deployed in Civil Training** 35% (FY16-FY20) 35% 32% 31% 30% 29% 29% 27% $510M+ organic 25% capital investment 20% 17% from FY16-FY20 to 15% 14% deploy 60+ FFSs* 15% 11% within CAE’s Civil 10
Slide 32: Strong free cash flow generation
CAPITAL ALLOCATION STRATEGY Strong free cash flow generation Millions FCF conversion $600 120% 115% $500 110% $400 105% $300 100% 95% $200 90% $100 85% $0 80% FY18 FY19 FY20 Free Cash Flow* Net cash provided by operating activities FCF Conversion Rate* * Non-GAAP and other financial measures (see Ap
Slide 33: Maintain solid balance sheet while investing in accretive growth
CAPITAL ALLOCATION STRATEGY Maintain solid balance sheet while investing in accretive growth $1.9B growth capital deployed, including acquisition of Bombardier BAT Net Debt to Millions Capital % $3,500 60.0% $3,000 50.0% $2,500 40.0% $2,000 30.0% $1,500 20.0% $1,000 10.0% $500 $0 0.0% FY18** FY19**
Slide 34: Summary
Summary Compelling secular growth story with exposure to the anticipated Aero recovery ✓ Comprehensive solutions provider to industry-critical partners ✓ Accelerated Defence strategy growth ✓ Poised to capitalize on significant benefits from recent M&A ✓ Proven track record of balanced, opportunisti
Slide 35: Appendix
Appendix
Slide 36: FY21 YTD select financial highlights
SELECT FINANCIAL HIGHLIGHTS FY21 YTD select financial highlights Summary of Financial Highlights Q1 FY21 Q2 FY21 Q3 FY21 YTD FY21 (amounts in millions, except per share amounts, ROCE and book-to-sales) Revenue $550.5 $704.7 $832.4 $2,087.6 Operating (loss) profit (110.3) 28.2 82.9 0.8 Segment operat
Slide 37: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Reconciliation of segment operating income and segment operating income before specific items Q1 FY21 Q2 FY21 Q3 FY21 YTD FY21 (amounts in millions) Operating (loss) profit $(110.3) $28.2 $82.9 $0.8 Restructuring costs - 51.1 14.3 65.4 Segment operating (loss) inc
Slide 38: Non-GAAP measure definitions
Non-GAAP measure definitions Capital employed Capital employed Capital employed is a non-GAAP measure we use to evaluate and monitor how much we are investing in our business. We measure it from two perspectives: Capital used: For the Company as a whole, we take total assets (not including cash and
Slide 39: Non-GAAP measure definitions
Non-GAAP measure definitions Net income or loss before specific items Net income or loss before specific items is a non-GAAP measure we use as an alternate view of our operating results. We calculate it by taking our net income attributable to equity holders of the Company from continuing operations
Slide 40: Thank you!
Thank you!