Cae Inc. · TSX:CAE
Cae — Shareholder Meeting (2014)
63 slides from Cae's shareholder meeting presentation, 2014
Slide 1: Passionate, Innovative, Focused, Global, Integrated, Trusted
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Slide 2: Marc Parent, President and Chief Executive Officer
MARC PARENT President and Chief Executive Officer 2
Slide 3: FY2014 Recap: Strong Performance and Solid Earnings
FY2014 RECAP STRONG PERFORMANCE AND SOLID EARNINGS 1 RECORD st RECORD $5B defence company 48 civil simulators total backlog in Canada sold 3
Slide 4: CAE Share Price
FY2014 RECAP CAE SHARE PRICE 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% 05-Aug 05-Sep 05-Oct 05-Nov 05-Dec 05-Jan 05-Feb 05-Mar 05-Apr 05-May 05-Jun 05-Jul 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014 2014 4
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Slide 6: Passion and Dedication
CAE’s DNA PASSION AND DEDICATION 6
Slide 7: Passion and Dedication: Record simulators delivered
PASSIONATE PASSION AND DEDICATION Delivered a record 35 simulators and training devices 7
Slide 8: Record CAESAR trauma patient simulators delivered in 30 days
PASSIONATE PASSION AND DEDICATION Delivered a record 44 CAESAR trauma patient simulators in 30 days 8
Slide 9: Bell instructor developed ground school and simulator course
PASSIONATE PASSION AND DEDICATION Bell 412 instructor developed a ground school and simulator course in just two months 9
Slide 10: $150M in R&D in FY14: New CAE 7000 XR Series
# $150M in R&D in FY14 New CAE 7000 XR Series 10
Slide 11: Invest in R&D: CAE 7000 XR Series
INNOVATIVE INVEST IN R&D CAE 7000 XR Series Redesigned instructor office Upset prevention and recovery training Training data analysis Cloud based monitoring of systems 11
Slide 12: Innovation Challenges
INNOVATIVE INNOVATION CHALLENGES 12
Slide 13: OEM Partners
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Slide 14: CAE's Firsts
INNOVATIVE CAE’s FIRSTS Dassault Falcon 5X AgustaWestland AW169 A350 Mitsubishi Regional Jet CSeries 14
Slide 15: Working Closely with Partners
INNOVATIVE WORKING CLOSELY WITH PARTNERS 15
Slide 16: Tailored Solutions
INNOVATIVE TAILORED SOLUTIONS 16
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Slide 18: Only Pure Play in Simulation and Training
FOCUSED ONLY PURE PLAY IN SIMULATION AND TRAINING First First >2,000 simulator delivery international sale simulators and to customer training devices delivered worldwide 1952 1957 Today 18
Slide 19: CAE Fidelis Maternal Fetal Simulator
FOCUSED CAE FIDELIS MATERNAL FETAL SIMULATOR 19
Slide 20: CAE Fidelis Maternal Fetal Simulator
FOCUSED CAE FIDELIS MATERNAL FETAL SIMULATOR > 60 units sold while still in pre-production 20
Slide 21: Over 60 units sold while still in pre-production
FOCUSED CAE FIDELIS MATERNAL FETAL SIMULATOR > 60 units sold while still in pre- production 21
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Slide 23: Civil Aviation Training Network
GLOBAL CIVIL AVIATION TRAINING NETWORK Oslo Stockholm Stavanger Aberdeen Heathrow Copenhagen Manchester Gatwick Amsterdam London Brussels Prague Paris Sesto Calende Vancouver Montreal Barcelona Madrid Rome Toronto New York Beijing Seoul Oklahoma City Palma de Mallorca San Francisco Charlotte New Del
Slide 24: Defence Worldwide
GLOBAL DEFENCE WORLDWIDE >50 countries >80 military bases 24
Slide 25: CAE Global
GLOBAL CAE GLOBAL Customers in 8,000 190 countries employees Operations and 35 training centres countries in 25
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Slide 27: CAE Brunei Multi-Purpose Training Centre
INTEGRATED CAE BRUNEI MULTI-PURPOSE TRAINING CENTRE Training for Royal Brunei Armed Forces and oil and gas operators 27
Slide 28: CAE Brunei Multi-Purpose Training Centre
INTEGRATED CAE BRUNEI MULTI-PURPOSE TRAINING CENTRE Training for Royal Brunei Armed Forces and oil and gas operators Establish emergency and Crisis Management Centre of Excellence for Brunei and ASEAN nations 28
Slide 29: Air Mobility Training Centre at CFB Trenton
INTEGRATED AIR MOBILITY TRAINING CENTRE AT CFB TRENTON Key role in preparing Canadian Forces for mission readiness 29
Slide 30: Delivering on promises, leading-edge technologies, tailored solutions
Delivering on promises Leading-edge technologies Working closely with our customers Offering tailored solutions 30
Slide 31: Long-Term Partnerships in Civil
TRUSTED LONG-TERM PARTNERSHIPS IN CIVIL 31
Slide 32: 20-Year Relationship with Emirates
TRUSTED 20-YEAR RELATIONSHIP WITH EMIRATES 32
Slide 33: Long-Term Partnerships in Defence
TRUSTED LONG-TERM PARTNERSHIPS IN DEFENCE 33
Slide 34: Leader in All Our Markets
TRUSTED LEADER IN ALL OUR MARKETS 34
Slide 35: Stéphane Lefebvre, Chief Financial Officer
Stéphane Lefebvre Chief Financial Officer 35
Slide 36: FY14: CAE
FY14 HIGHLIGHTS FY14: CAE Consolidated revenue of $2.1 billion +4% from FY13 Net income of $190 million $0.73 per share Record total backlog of $5 billion Including our joint venture and unfunded backlog 36
Slide 37: FY14: Civil
FY14 HIGHLIGHTS FY14: CIVIL Revenue of $1.2 billion Operating income of $179.8 million Operating margin of 15.3% 17.9% in fourth quarter Orders valued at $1.5 billion 37
Slide 38: FY14: Defence
FY14 HIGHLIGHTS FY14: DEFENCE Revenue of $822 million Operating income of $107.8 million Operating margin of 13.1% Orders of $757 million 38
Slide 39: FY14: New Core Markets
FY14 HIGHLIGHTS FY14: NEW CORE MARKETS Revenue of $116.2 million Operating income of $4.2 million 39
Slide 40: FY14 Highlights: Free cash flow and capex
FY14 HIGHLIGHTS FY14 Free cash flow of $200.6 million $117 million higher than FY13 105% conversion of net income into free cash flow Capital expenditures of $157.4 million $111.3 million for growth 40
Slide 41: FY14 Overall
FY14 HIGHLIGHTS FY14 OVERALL Capital allocation priorities Continued to invest in market-led growth opportunities Increasing cash returns to shareholders through dividend increase Deleveraging our balance sheet Net debt to capital ratio at 36.6% Achieved operational and strategic milestones
Slide 42: Q1FY15 Highlights
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Slide 43: Q1FY15: CAE
Q1FY15 HIGHLIGHTS Q1FY15: CAE Revenue: $526 million Stable YoY Net income: $43.8 million $0.17 per share Operating profit was $71.7 million Compared to $61.6 million YoY Consolidated operating margin from 11.8% to 13.6% 43
Slide 44: Strategic Review of New Core Markets
Q1FY15 HIGHLIGHTS STRATEGIC REVIEW OF NEW CORE MARKETS Reaffirmed CAE conviction in Healthcare Decision to divest Mining Focus capital and resources on its three core businesses Civil Simulation and Training Defence and Security Healthcare 44
Slide 45: Q1FY15: Civil
Q1FY15 HIGHLIGHTS Q1FY15: CIVIL Operating margin of $49.5 million or 16% +32% YoY Revenue of $309 million +2% YoY Orders of $365 million Book-to-sales 1.18x Trailing twelve months at 1.32x 45
Slide 46: Q1FY15: Defence
Q1FY15 HIGHLIGHTS Q1FY15: DEFENCE Revenue of $198 million Operating margin of 11.1% Mix of programs Persistent delays in government decision-making Orders of $149 million Book to sales of 0.75x Last twelve months at 0.92x $93 million of unfunded orders 46
Slide 47: Q1FY15: Healthcare
Q1FY15 HIGHLIGHTS Q1FY15: HEALTHCARE Revenue of $19.4 million Continue to expand our reach New innovative products Distributor agreements in France, India and South Korea 47
Slide 48: Q1FY15: Mining
Q1FY15 HIGHLIGHTS Q1FY15: MINING Continue to operate as usual Reported as a discontinued operation until sold Recorded operating loss in Q1FY15 Mostly triggered by divestiture process 48
Slide 49: Q1FY15: Income taxes
Q1FY15 HIGHLIGHTS Q1FY15 Income taxes of $11.6 million Effective tax rate of 21% vs. nil last year Last year’s tax rate related to one-time tax benefit 49
Slide 50: Q1FY15: Free cash flow and net debt
Q1FY15 HIGHLIGHTS Q1FY15 Free cash flow of ($20.9) million Decrease of $8.8 million YoY • Mainly due to higher working capital accounts Free cash flow generally higher in H2 • Should be the case in FY15 Net debt of $902 million vs. $856 million in Q4FY14 Net debt to total capital at 37.9% Capi
Slide 51: Summary: Well positioned for the future
FINANCIAL HIGHLIGHTS SUMMARY Operating income up 16% Strong performance in Civil Maintained leadership Strong full-flight simulator sales in Civil Resilient in Defence Solid total backlog valued at $4.9 billion Healthy financial position Strong cash flow Solid balance sheet with investment
Slide 52: Looking Forward
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Slide 53: Global Passenger Traffic Growth
LOOKING FORWARD - CIVIL GLOBAL PASSENGER TRAFFIC GROWTH EUROPE USA Demand resuming with Demand for pilot training economic recovery led by re-fleeting and ASIA stricter regulations Strong low-cost carrier segment driving steady growth throughout Asia and robust MIDDLE EAST Chinese domestic ~6% growt
Slide 54: Record Delivery Rate from OEMs
LOOKING FORWARD - CIVIL RECORD DELIVERY RATE FROM OEMS Major commercial OEMs delivering nearly 80 narrow body aircraft per month Up over 20% from five years ago Combined backlog of 10,000 airplanes Eight-year backlog 54
Slide 55: Record Delivery Rate from OEMs
LOOKING FORWARD - CIVIL RECORD DELIVERY RATE FROM OEMS CAE in great position to reap the benefits of this growth Largest array of training solutions Broadest global reach Potential to move up-market with customers 55
Slide 56: Good Start in FY15
LOOKING FORWARD - CIVIL GOOD START IN FY15 11 simulator sales announced Potential for about 40 this year Expect to see double-digit growth with higher margins 56
Slide 57: Challenging Market Conditions
LOOKING FORWARD – DEFENCE CHALLENGING MARKET CONDITIONS Resilient business Expect stronger performance in H2 Executing a strategy to move our customers up-market Offering a higher degree of full solutions Winning business remains priority Continue to develop our pipeline 57
Slide 58: Fundamentals Remain Attractive
LOOKING FORWARD – DEFENCE FUNDAMENTALS REMAIN ATTRACTIVE Solid backlog Well-diversified business geographically Customer base of >50 national defence forces Strategic positions on enduring aircraft platforms Continue to see evidence of defence forces increasing their use of simulation-based training
Slide 59: Quote from Lt.-Gen. Yvan Blondin
LOOKING FORWARD – DEFENCE QUOTE “ I could cut my costs by 30 percent if I had more access to simulators, there are things that I can do in a simulator that I cannot do in flight. ” Lt.-Gen. Yvan Blondin, Commander of the Royal Canadian Air Force Source : The Gazette, February 13, 2014 59
Slide 60: Positive Long-Term Prospects: Healthcare
LOOKING FORWARD – HEALTHCARE POSITIVE LONG-TERM PROSPECTS Grown to become world leader in simulation technology > 8,000 simulators currently used Medical schools Nursing schools Hospitals Allow to practice safely before doing procedures on people Expect double-digit growth and improved margins
Slide 61: Conclusion
LOOKING FORWARD – CAE CONCLUSION Well positioned for earnings growth Leading position in growth markets Strength of dedicated and experienced professionals Board of Directors approved a $0.01 increase to quarterly dividend to $0.07 per share, effective September 30, 2014 Fourth year in a row of di
Slide 62: Thank You
LOOKING FORWARD – CAE THANK YOU Customers Continued trust Employees Dedication Members of our Board Support Shareholders Confidence 62
Slide 63: CAE
CAE PASSIONATE : INNOVATIVE ; Sal FOCUSED Customers §a/2ys eee INTEGRATED fe 63