Cae Inc. · TSX:CAE
Cae — Q4 FY2015 Earnings Presentation
38 slides from Cae's earnings presentation, May 26, 2015
Slide 1: Investor Presentation Q4 FY2015
Investor Presentation Q4 FY2015 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This document 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 revenues, capital spen
Slide 3: Our Vision
ABOUT CAE > VISION CAE OUR VISION ———f IS TO BE THE RECOGNIZED GLOBAL CAE TRAINING Fan ES OF CHOICE TO ENHANCE SAFETY, < EFFICIENCY AND READINESS.
Slide 4: Market Leader
ABOUT CAE 5 \) MILITARY VIRTUAL AIRTRAINING Customers [7 RST
Slide 5: Focus, Protect, Grow
ABOUT CAE THREE STRATEGIC IMPERATIVES FOR EARNINGS GROWTH AND HIGHER RETURNS ON CAPITAL GROW FOCUS on the core PROTECT market leadership returns on existing assets and invest selectively in new Civil Aviation Training Deliver best-in-class customer Be the recognized global Solutions experience comme
Slide 6: Training Leadership on a Global Scale
ABOUT CAE TRAINING LEADERSHIP ON A GLOBAL SCALE 160 Sites 67 Training locations 120,000 Pilots trained /year 8,000 Employees 6 Values are approximate
Slide 7: Balanced and Diversified Revenue Base
ABOUT CAE BALANCED AND DIVERSIFIED REVENUE BASE FY15 Revenue Distribution: $2.2B U.S.A. 4 33 Asia Australia % 58 % 36 Canada Central and 38 South America Middle East 31 Europe Civil Simulation and Training Defence and Security Healthcare More than half of revenue from training and other services* *
Slide 8: Q4 FY2015 Highlights
ABOUT CAE Q4 FY2015 HIGHLIGHTS Record quarterly and annual revenue of $631.6M and $2.246B Q4 Segment Operating Income (SOI) up 22%; annual up 15% Q4 and annual EPS of $0.24 and $0.76 Q4 FY15 FY15/FY14 SOI% SOI% Revenue Performance Takeaways Low double-digit revenue growth with higher Civil 16.8% 16.
Slide 9: Civil Aviation Training Solutions
CIVIL AVIATION TRAINING SOLUTIONS 9
Slide 10: Market Drivers
CIVIL AVIATION TRAINING SOLUTIONS MARKET DRIVERS Regulations CAE operates within a highly regulated market for pilot certification which is Global Growth driven primarily by the in Air Travel global active fleet and the recurring nature of training requirements New Pilot Demand and We compete by Tur
Slide 11: Position: Largest and Broadest
CIVIL AVIATION TRAINING SOLUTIONS POSITION LARGEST AND BROADEST Largest scale and most comprehensive aviation training solutions World-leading aviation training expertise Commercial Training Civil Cadet Aviation Broadest portfolio of Equipment Training Training aviation training solutions Largest cu
Slide 12: Position: Broadest Reach in Global Training
CIVIL AVIATION TRAINING SOLUTIONS POSITION BROADEST REACH IN GLOBAL TRAINING Stavanger Oslo Stockholm Aberdeen Copenhagen Manchester Oxford Amsterdam Brussels London Paris Vancouver Prague Montreal Minneapolis Toronto Sesto Calende San Francisco Morristown Charlotte Barcelona Phoenix Rome Dallas Mad
Slide 13: Upside in $3.3B Civil Aviation Training Market
CIVIL AVIATION TRAINING SOLUTIONS POSITION UPSIDE IN $3.3B* CIVIL AVIATION TRAINING MARKET CAE market share Market space *Civil aviation training market size and CAE market share based on internal company estimates. We have ~6X Larger considerable headroom in Training! ~25%* ~70%* Simulation Product
Slide 14: Priorities
CIVIL AVIATION TRAINING SOLUTIONS PRIORITIES Uphold the CAE brand and protect our leading position with industry- leading processes and by bringing the most innovative products and services to market Drive higher utilization of our global training centre network while incrementally investing to keep
Slide 15: Defence and Security
CAE DEFENCE AND SECURITY
Slide 16: Market Drivers
DEFENCE AND SECURITY MARKET DRIVERS Defining characteristic of CAE’s Defence business: Installed Base of Enduring Platforms • Intrinsic value of simulation-based training to maintain mission readiness with Need for Mission significant room for Readiness and increased adoption Training Systems • Focu
Slide 17: Rising Use of Simulation
DEFENCE AND SECURITY MARKET DRIVERS RISING USE OF SIMULATION Boom Operator Weapon Systems Trainer for the KC-135 aerial refuelling aircraft KC-135 Stratotanker aircrew training Driven by the need for mission readiness and by economics “A three-hour KC-135 refueling mission costs approximately $20,
Slide 18: Opportunities to Address a Larger Market
MARKET DRIVERS OPPORTUNITIES TO ADDRESS A LARGER MARKET Defence customers looking to industry partners for greater integration of Live-Virtual-Constructive training Need to maintain readiness more cost-effectively, leading to increased use of synthetic training CAE is focused on training and platfor
Slide 19: Training Systems Integrator
DEFENCE AND SECURITY POSITION TRAINING SYSTEMS INTEGRATOR We are moving upmarket by integrating Live-Virtual- Constructive Training ~45% Bigger addressable market Systems ~5.5B* Training Systems Integration Market ~3.8B* Simulation Products and Services Air Training Market *Defence air training mark
Slide 20: Enduring and New Platforms
DEFENCE AND SECURITY POSITION ENDURING AND NEW PLATFORMS Enduring Platforms Position Includes KC-135 ATS CH-47 DMS C-130J FMS MH-60 OFT P-8A OFT M-346 AW 139 Hawk 128 FMS New Platforms Position Includes 20
Slide 21: Diverse Global Reach
DEFENCE & SECURITY POSITION DIVERSE GLOBAL REACH Montréal London Stolberg Ottawa Tampa Bengaluru Singapore Sydney CAE serves the training needs of 50 defence agencies at over 80 sites in 30 countries 21
Slide 22: Priorities
DEFENCE AND SECURITY PRIORITIES Protect our leading position on legacy aircraft platforms with innovative products and services solutions Develop positions on new enduring platforms Continue to grow share as a Training Systems Integrator Pursue long term recurring contracts Continue to build a solid
Slide 23: Healthcare
HEALTHCARE 23
Slide 24: Market Drivers: Confluence of Circumstances
HEALTHCARE MARKET DRIVERS CONFLUENCE OF CIRCUMSTANCES Exponential Technological growth in complexity of Revolution medical devices and procedures Education Revolution Reduced access to 440,000 avoidable real patients deaths/year must be addressed Healthcare necessitates a change in education pedagog
Slide 25: A Leader Within a Nascent Market
HEALTHCARE POSITION A LEADER WITHIN A NASCENT MARKET CAE market share Global market *Healthcare simulation market size, expected growth rate and CAE market shares based on Significant opportunity internal data, Meticulous to increase scale Research and Markets and ~860M* Global Healthcare within a h
Slide 26: Broadest Solutions Offering
HEALTHCARE POSITION BROADEST SOLUTIONS OFFERING Patient Simulation Imaging Simulation Interventional Simulation Centre Management Solutions HPS EndoVR iStan VIMEDIX cardiac ultrasound simulator LearningSpace METIman CathLabVR Replay Caesar VIMEDIX Ob/Gyn Ob/Gyn ultrasound simulator PediaSIM LapVR Co
Slide 27: Innovative Simulation-Based Solutions
HEALTHCARE POSITION INNOVATIVE SIMULATION-BASED SOLUTIONS CAE Fidelis Maternal Fetal Simulator – “Lucina” Advanced tools for inter-professional training to prepare teams of healthcare professionals to manage emergencies requiring rapid response, technical skills, teamwork and communication 27
Slide 28: Management Focus on Return on Capital
CAE STRATEGIC PRIORITIES MANAGEMENT FOCUS ON RETURN ON CAPITAL ROCE Drivers Higher utilization of training assets Higher market penetration by moving upmarket EBIT Innovative processes, products Levers and services to reduce costs ROCE Lower CAPEX intensity Market-led investment discipline
Slide 29: Management Capital Allocation Priorities
CAE STRATEGIC PRIORITIES MANAGEMENT CAPITAL ALLOCATION PRIORITIES 1 Invest in growth Market/customer-led investments with a clear path to attractive returns 2 Provide current returns in addition to generating long term growth Increased quarterly dividend four times in last 4 years 3 Maintain str
Slide 30: Positioned for Growth and Higher Returns
CAE INVESTMENT THESIS POSITIONED FOR GROWTH AND HIGHER RETURNS Excellent brand and reputation in training and simulation Leader in highly regulated Civil Aviation training market, underpinned by strong long-term industry fundamentals Comprehensive and integrated Defence and Security training solutio
Slide 31: Appendix
CAE APPENDIX
Slide 32: Competition
COMPETITION Civil Simulation and Training Defence and Security Healthcare 32
Slide 33: Consolidated Financial Results Q4 FY2015
Q4 FY2015 CONSOLIDATED FINANCIAL RESULTS Three months ended Summary of Consolidated Results March 31 (amounts in millions) 2015 2014 Revenue 631.6 575.7 Gross profit 182.0 160.0 Operating profit 105.4 86.7 As % of revenue 16.7% 15.1% Earnings from continuing operations 66.9 59.8 Net income attributa
Slide 34: Consolidated Financial Results FY2015
FY2015 CONSOLIDATED FINANCIAL RESULTS Twelve months Summary of Consolidated Results ended March 31 (amounts in millions) 2015 2014 Revenue 2,246.3 2,077.9 Gross profit 603.7 565.1 Operating profit 332.8 289.3 As % of revenue 14.8% 13.9% Earnings from continuing operations 204.1 189.4 Net income attr
Slide 35: Cash Movements Q4 FY2015
Q4 FY2015 CASH MOVEMENTS Three months ended Consolidated Cash Movements March 31 (amounts in millions) 2015 2014 Cash provided by operating activities $ 101.1 $ 98.4 (before changes in non-cash W/C) Changes in non-cash working capital 59.5 29.1 Maintenance capex and others assets (16.7) (20.4) Proce
Slide 36: Cash Movements FY2015
FY2015 CASH MOVEMENTS Twelve months ended Consolidated Cash Movements March 31 (amounts in millions) 2015 2014 Cash provided by operating activities $ 337.8 $ 296.3 (before changes in non-cash W/C) Changes in non-cash working capital (69.2) (20.4) Maintenance capex and others assets (64.3) (69.9) Pr
Slide 37: Foreign Exchange Sensitivity
FOREIGN EXCHANGE SENSITIVITY The approximate annual impact of a one cent change in the Canadian dollar against each of our other three main operating currencies Exposure Net Revenue Op. Income Hedging (amounts in millions) Exposure U.S. dollar (US$ or USD) 11.5 3.1 (2.5) 0.6 Euro € 3.4 0.4 (0.2) 0.2
Slide 38: CAE
CAE