Slide 1: Investor Presentation Q1 FY2016
Investor Presentation Q1 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: 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 services* * Approx
Slide 8: Q1 FY2016 Highlights
ABOUT CAE Q1 FY2016 HIGHLIGHTS Q1F16 revenue $557.0M vs. $526.2M Q1F15 EPS $0.17 ($0.19 before restructuring) vs. $ $0.17 in prior year Q1FY16 Revenue SOI SOI% Performance vs. outlook Civil +9% +15% 17.0% Growth with higher margin Y/Y Defence -0.5% +8% 12.0% Income growth with margin in 12-13% range
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 completed
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 solutions Business Helicopter Commercial that span the entire lifecycle Aviation Aviation Aviation of a professional pilot Training Training Training
Slide 13: 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 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: Civil Aviation Training 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 keep p
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 $20,00
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 currently p
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: Defence and Security 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 solid base o
Slide 24: Healthcare
HEALTHCARE 24
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: Position: 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: 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 five times in last 5 years 3 Maintain str
Slide 31: 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 32: Appendix
CAE APPENDIX
Slide 33: Competition
COMPETITION Civil Simulation and Training Defence and Security Healthcare 33
Slide 34: Consolidated Financial Results
Q1 FY2016 CONSOLIDATED FINANCIAL RESULTS Three months ended Summary of Consolidated Results June 30 (amounts in millions) 2015 2014 Revenue 557.0 526.2 Gross profit 157.6 136.5 Operating profit 73.5 71.7 As % of revenue 13.2% 13.6% Earnings from continuing operations 45.0 43.6 Net income attributabl
Slide 35: Cash Movements
Q1 FY2016 CASH MOVEMENTS Three months ended Consolidated Cash Movements June 30 (amounts in millions) 2015 2014 Cash provided by operating activities $ 66.8 $ 85.5 (before changes in non-cash W/C) Changes in non-cash working capital (113.2) (82.7) Maintenance capex and others assets (14.6) (17.0) Pr
Slide 36: 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 37: CAE
CAE