Slide 1: Investor Presentation Q2 FY2016
INVESTOR PRESENTATION Q2 FY2016 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: About CAE: Vision
ABOUT CAE VISION are OUR VISION ———f IS TO BE THE RECOGNIZED GLOBAL CAE TRAINING PARTNER OF CHOICE aN a TO ENHANCE SAFETY, 3 EFFICIENCY AND READINESS. CAE 3
Slide 4: Market Leader
ABOUT CAE MARKET LEADER 4
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 Values are approximate 6
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 % 38 % 36 Canada Central and 58 South America Middle East 31 Europe Defence and Security Civil Simulation and Training Healthcare More than half of revenue from training and services* * Approx
Slide 8: Q2 FY2016 Highlights
ABOUT CAE Q2 FY2016 HIGHLIGHTS ► Revenue $617M, up 17% vs. $530M last year ► EPS $0.28 ($0.18 before specific items) vs. $0.16 last year Specific items: $1.8 million restructuring costs and $29.4 million tax recovery SOI Q2FY16 SOI% Y/Y SOI ∆ Performance vs. outlook Double-digit absolute SOI growt
Slide 9: Process Improvement Program
ABOUT CAE PROCESS IMPROVEMENT PROGRAM ► Further enhances competitive position by creating wider gap between CAE and its competitors by transforming production processes and product offering ► Leverages technological advances underlying CAE’s 7000XR Series™ full-flight simulator ► Expected to be comp
Slide 10: Civil Aviation Training Solutions
CIVIL AVIATION TRAINING SOLUTIONS 10
Slide 11: Market Drivers
CIVIL AVIATION TRAINING SOLUTIONS MARKET DRIVERS Regulations CAE operates within a highly regulated market for pilot certification which is driven Global Growth primarily by the global in Air Travel active fleet and the recurring nature of training requirements New Pilot Demand and We compete by off
Slide 12: Position: Largest and Broadest
CIVIL AVIATION TRAINING SOLUTIONS POSITION LARGEST AND BROADEST ► Largest scale and broadest global reach ► Most comprehensive cadet-to-captain training Business Helicopter Commercial solutions that span the Aviation Aviation Aviation Training Training Training entire lifecycle of a professional pil
Slide 13: Position: Broadest Reach in Global Training
CIVIL AVIATION TRAINING SOLUTIONS POSITION BROADEST REACH IN GLOBAL TRAINING 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 Madrid Palma
Slide 14: 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 annual market size and CAE market share based on internal company estimates. We have ~6X Larger considerable headroom in Training! ~25%* ~70%* Simulation
Slide 15: Priorities
CIVIL AVIATION TRAINING SOLUTIONS PRIORITIES ► Uphold CAE’s 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 ke
Slide 16: Defence and Security
CAE DEFENCE AND SECURITY
Slide 17: 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 18: Market Drivers: 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 19: Opportunities to Address a Larger Market
DEFENCE AND SECURITY MARKET DRIVERS OPPORTUNITIES TO ADDRESS A LARGER MARKET ► Defence customers need to maintain readiness more cost-effectively and want greater integration of Live-Virtual-Constructive training ► CAE is focused on training and is platform-agnostic ► Examples of TSI contracts curre
Slide 20: Position: 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 tota
Slide 21: Position: 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 21
Slide 22: Position: Diverse Global Reach
DEFENCE AND 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 22
Slide 23: Priorities
DEFENCE AND SECURITY PRIORITIES ► Protect our leading position on enduring aircraft platforms with innovative products and services solutions ► Develop positions on new platforms ► Continue to grow share as a Training Systems Integrator ► Pursue long term recurring contracts Continue to build a soli
Slide 24: Healthcare
CAE Healthcare HEALTHCARE
Slide 25: 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 26: Position: A Leader Within a Nascent Market
HEALTHCARE POSITION A LEADER WITHIN A NASCENT MARKET CAE market share Global market *Healthcare simulation annual market size, expected growth rate and CAE market shares Significant opportunity based on internal data, to increase scale Meticulous Research and ~860M* Global Healthcare within a highly
Slide 27: Position: 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 28: 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 28
Slide 29: 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 30: Capital Allocation Priorities
CAE STRATEGIC PRIORITIES 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 five times in last 5 years 3► Maintain strong bala
Slide 31: Management's Outlook FY16 Full-Year
MANAGEMENT’S OUTLOOK FY16 FULL-YEAR Civil Defence Healthcare Corporate Revenue - Modest Double-digit - Growth Annual SOI Double-digit Modest Double-digit - Growth% Annual SOI > FY15 Level 12-13% > FY15 Level - Margin% CAPEX - - - Lower at ~$100M Annual - - - Increasing ROCE% FFS* Unit ≈ FY15 level (
Slide 32: 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 s
Slide 33: Appendix
_—_w CAE APPENDIX
Slide 34: Competition
COMPETITION Civil Simulation and Training Defence and Security Healthcare 34
Slide 35: Consolidated Financial Results Q2 FY2016
Q2 FY2016 CONSOLIDATED FINANCIAL RESULTS Three months ended Summary of Consolidated Results September 30 (amounts in millions) 2015 2014 Revenue 616.8 529.4 Gross profit 159.2 136.2 Operating profit 77.6 72.8 As % of revenue 12.6% 13.8% Earnings from continuing operations 75.7 41.6 Net income attrib
Slide 36: Consolidated Financial Results YTD FY2016
YTD FY2016 CONSOLIDATED FINANCIAL RESULTS Six months months Summary of Consolidated Results ended September 30 (amounts in millions) 2015 2014 Revenue 1,173.8 1,055.6 Gross profit 316.8 272.7 Operating profit 151.1 144.5 As % of revenue 12.9% 13.7% Earnings from continuing operations 120.7 85.2 Net
Slide 37: Cash Movements Q2 FY2016
Q2 FY2016 CASH MOVEMENTS Three months Consolidated Cash Movements ended (amounts in millions) September 30 2015 2014 Cash provided by operating activities $ 73.6 $ 69.2 (before changes in non-cash W/C) Changes in non-cash working capital 52.7 (55.5) Maintenance capex and others assets (16.0) (20.7)
Slide 38: Cash Movements YTD FY2016
YTD FY2016 CASH MOVEMENTS Six months ended Consolidated Cash Movements September 30 (amounts in millions) 2015 2014 Cash provided by operating activities $ 140.4 $ 154.7 (before changes in non-cash W/C) Changes in non-cash working capital (60.5) (138.2) Maintenance capex and others assets (30.6) (37
Slide 39: 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 40: CAE
CAE