Slide 1: Investor Presentation
Investor Presentation August 14, 2019 Your worldwide training partner of choice
Slide 2: Caution regarding forward looking statements
Caution regarding forward looking statements This presentation includes forward-looking statements about our activities, events and developments that we expect to or anticipate may occur in the future including, for example, statements about our vision, strategies, market trends and outlook, future
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 ▪ Training Systems Integrator ▪ Patient simulation ▪ Business Aviation Training ▪ Virtual and live training ▪ Imaging/Interventional simulation ▪ Trainin
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 39 Asia Australia 39 % 57 % Canada 40 % 34 Central and 60 South America Middle East 27 Approximate value including JV sales Europe Civil Aviation Training Solutions Services Defence and Security Products He
Slide 6: Six pillars of strength underlie CAE's strategy and investment thesis
Six 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+ 10,000+ Defence & Security Healthcare locations countries employees 7 CAE Inc. Proprietary Information and/or Confidential
Slide 8: FY2019 select performance highlights
FY2019 select performance highlights +18% $2.8B $3.3B +13 % $1.25 +18 % $8.07B $9.49B $1.11 Record Record Earnings Revenue Per Share 1,2 Record Backlog FY2018 FY2019 FY2018 FY2019 FY2018 FY2019 12.9 % 12.7% 12.9% +12 % $288.9M $323.8M +43 % $198.3M $138.7M Higher Return on Capital Free Profits retur
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 5.3B 27K AVIATION grow by 3.6% annually ▪ Fleet renewal and expansion ▪ Commercial aircraft 3.8B deliveries at historical Activ
Slide 11: 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 12: Headroom in a large market
CIVIL AVIATION TRAINING SOLUTIONS Headroom in a large market Civil Training Market $4.3B 38% CAE CAE has potential to increase share in a large and growing market 12 CAE Inc. Proprietary Information and/or Confidential
Slide 13: World's largest civil aviation training network
CIVIL AVIATION TRAINING SOLUTIONS World’s largest civil aviation training network 170+ Aircraft 280+ Full Flight Simulators (FFS) 55+ Training Locations 1M+ hours Annual Training Delivery 135,000+ pilots Trained Every Year 13 CAE Inc. Proprietary Information and/or Confidential
Slide 14: 70+ years of training innovation
CIVIL AVIATION TRAINING SOLUTIONS 70+ years of training innovation Introduced CAE Developed the Launched Project Launched the RiseTM Training Founded in 1947, world's first level- Strengthened Launched the Digital Intelligence Launched a global 7000XR FFS – the System – Real-time created first fligh
Slide 15: Defence & Security
Defence & Security Your worldwide training partner of choice
Slide 16: Defence global presence
DEFENCE & SECURITY DEFENCE GLOBAL PRESENCE Burgess Hill Stolberg 35+ COUNTRIES Montreal Ottawa 4000+ EMPLOYEES Orlando Tampa Abu Dhabi 120+ SITES Singapore 70+ PLATFORMS REPRODUCED Sydney Operations strategically located in key growth markets Providing training support services in 100 plus sites 16
Slide 17: Defence market growth cycle
DEFENCE & SECURITY Defence market 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 ($21B, 5% CAGR) ▪ Aerospace & Defence firms are Europe ($169B, 2% C
Slide 18: 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 Growing budgets,
Slide 19: Defence accessible/addressable market
DEFENCE & SECURITY Defence accessible/addressable market $22B $1.3B CAE Defence Integrated training solutions with Live, Virtual and Constructive components Defence has significant headroom in a $22B addressable market 19 CAE Inc. Proprietary Information and/or Confidential
Slide 20: Proven Training Systems Integration track record
DEFENCE & SECURITY Proven Training Systems Integration track record US Army US Navy US Air Force Royal Canadian Air Force • Fixed-Wing Flight Aircrew Training Centre • T45/T6 Goshawk/ Texan Aircrew Training • KC135 Stratotanker Aircrew Training • NATO Flying Training in Canada (NFTC) • UH72A Lakota
Slide 21: Healthcare
Healthcare Your worldwide training partner of choice
Slide 22: Why CAE entered healthcare simulation
CAE HEALTHCARE Why CAE entered healthcare simulation $ Digital transformation Synergies with CAE’s Explicit desire Shift to value-based enables data-driven next generation to adopt aviation care aligns practices care and training training solutions best practices with patient outcomes Opportunity to
Slide 23: Shift toward Value-based Care
CAE HEALTHCARE 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 uri
Slide 24: Market drivers
CAE HEALTHCARE Market drivers Increasing use of Growing emphasis on quality simulation 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 25: Broadest portfolio of training solutions
CAE HEALTHCARE Broadest portfolio of training solutions Patient simulators Courseware Ultrasound simulators Surgical simulators Simulation centre management solutions 25 CAE Inc. Proprietary Information and/or Confidential
Slide 26: 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 27: 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 28: Financial highlights and capital priorities
Financial highlights and capital priorities Your worldwide training partner of choice
Slide 29: 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 30: Investment in accretive growth remains a priority
CAPITAL ALLOCATION PRIORITIES Investment in accretive growth remains a priority given attractive return potential 1 Incremental Pre-tax Return % on Organic Capital Deployed in Civil Training (FY15-FY19) 35% 33% 32% 31% 31% 30% 27% 27% 25% 24% $375M+ organic capital investment 20% 18% from FY15-FY19
Slide 31: Current shareholder returns
CAPITAL ALLOCATION PRIORITIES Current shareholder returns 2 Profits returned to shareholders Millions $250 $200 $150 $100 $50 $0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Dividends Share repurchases Growing shareholder returns commensurate with CAE’s growth in earnings and free cash flow 31 CAE Inc. P
Slide 32: Strong balance sheet
CAPITAL ALLOCATION PRIORITIES Strong balance sheet 3 Bombardier Millions BAT Business acquisition $2 000 50% $1 800 $1 600 Optimal Range of Net Debt-to-Capital 40% $1 400 $1 200 $1 000 30% $800 $600 20% $400 $200 $0 10% FY12 * FY13 * FY14 * FY15 FY16 FY17 FY18 FY19 *Not adjusted for IFRS11 impact Ne
Slide 33: Increased proportion of recurring revenue (services)
CAE’s transformation over the last 2 decades had led to an increased proportion of recurring revenue (services) FY2001 FY2008 FY2019 15% 43% 60% Products Services 33 CAE Inc. Proprietary Information and/or Confidential
Slide 34: A resilient business model
A resilient business model CAE Consolidated Segment Operating Income (SOI) Millions $600 SOI down 14% post $500 ‘Financial Crisis’ SOI down 60% $400 post ‘2001 Crisis’ $300 $200 $100 $0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY02 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY19 FY02-FY10
Slide 35: Strong backlog for enhanced visibility
Strong backlog for enhanced visibility 35 CAE Inc. Proprietary Information and/or Confidential
Slide 36: 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 37: Outlook summary for FY2020
Outlook summary for FY2020 Management outlook for fiscal year 2020 CAE’s core markets benefit from secular growth and the Company expects to continue exceeding underlying market growth in fiscal year 2020. In Civil, the Company expects to continue building on its positive momentum in training, incre
Slide 38: Appendix
Appendix Your worldwide training partner of choice
Slide 39: Q1 FY20 Business Highlights
CAE’S PERFORMANCE – Q1 FY20 Q1 FY20 Business Highlights Q1 FY20 EPS $0.24 vs. $0.26 in prior year* Revenue $825.6M (+14% YoY) Operating profit $113.3M (+13% YoY*) ($102.1M) compared to ($85.8M) to last Free cash flow year Book-to-sales 1.14x Total backlog $9.4B *Before specific items 39 CAE Inc. Pro
Slide 40: Consolidated Financial Results
CAE’S PERFORMANCE – Q1 FY20 Consolidated Financial Results Summary of Consolidated Results Three months ended June 30 (amounts in millions, except per share amounts) 2019** 2018 Revenue $ 825.6 $ 722.0 Gross profit 246.1 218.7 Operating profit 113.3 98.5 As % of revenue 13.7% 13.6% Net income 64.7 7
Slide 41: Cash Movements
CAE’S PERFORMANCE – Q1 FY20 Cash Movements Consolidated Cash Movements Three months ended June 30 (amounts in millions) 2019 2018 Cash provided by operating activities $ 137.8 $ 117.2 (before changes in non-cash W/C) Changes in non-cash working capital (197.8) (147.8) Maintenance capex and other ass
Slide 42: 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.