Cae Inc. · TSX:CAE
Cae — Investor Presentation (February 2015)
35 slides from Cae's investor presentation, Feb 6, 2015
Slide 1: Investor Presentation Q3 FY2015
Investor Presentation Q3 FY2015
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
Our Vision To be the partner of choice for customers operating in complex, mission-critical environments by providing the most innovative Modeling and Simulation-based solutions to enhance safety and improve efficiency 3
Slide 4: One Core Strategy
ONE CORE STRATEGY FOCUS GROW ON THE CORE RETURNS ON EXISTING ASSETS AND Civil Simulation and Training INVEST IN NEW ONES Defence and Security Ramp up recent investments and increase utilization Healthcare Invest to keep pace with customers and PROTECT preserve first-mover advantages MARKET LEADERSHI
Slide 5: About CAE
ABOUT CAE Approximately 8,000 employees with ½ international Emerging markets leader Expertise and credibility in aviation training 120,000+ pilots and crewmembers trained by CAE annually at nearly 70 sites globally Comprehensive solutions provider Largest installed base of civil and defence
Slide 6: Strong Position Across Segments
STRONG POSITION ACROSS SEGMENTS 6
Slide 7: Balanced and Diversified Revenue Base
BALANCED AND DIVERSIFIED REVENUE BASE YTD Q3 FY15 Revenue Distribution: $1.6B U.S.A. 4 33 Asia Australia % 57 % 34 Canada Central and 39 South America Middle East 33 Europe Civil Simulation and Training Defence and Security Healthcare * CAE is well balanced * Effective Q1FY’15, New Core Markets was
Slide 8: Q3 FY2015 Highlights
Q3 FY2015 HIGHLIGHTS Q3 revenue up 11% over prior year at $559.1 million Q3 EPS of $0.20 vs. $0.17 in prior year $0.20 EPS includes ~$0.014 one-time items Civil SOI of 16.7% (~15% excluding one-time items) Defence SOI% 13.3% up 110bps over Q2 Healthcare SOI at $0.5M, compared to $0.2M last y
Slide 9: Civil Simulation and Training
CIVIL SIMULATION AND TRAINING 9
Slide 10: Civil Market Drivers
CIVIL MARKET DRIVERS Regulations CAE operates within a • Mandatory Annual Training highly regulated • Mandatory Retirements market for pilot certification which is Global Growth in Air Travel driven primarily by the • Emerging and Advanced Economies global active fleet and the recurring nature of Ne
Slide 11: Comprehensive Training Solutions
CIVIL COMPREHENSIVE TRAINING SOLUTIONS Most comprehensive portfolio of products and services and unique end- to-end training solutions Type Training Differentiated technologies Cabin Crew & Span three aviation Maintenance Ab Initio markets: Training Commercial Simulation Business Products Heli
Slide 12: Broadest Reach in Global Training
CIVIL BROADEST REACH IN GLOBAL TRAINING Oslo Stavanger Stockholm Aberdeen Manchester Copenhagen Heathrow Riga Gatwick Amsterdam Londres Vilnius Bruxelles Anchorage Paris Prague Bordeaux Vancouver Sesto Calende Montreal Madrid Barcelone Seattle Toronto Beijing Séoul Oklahoma City New York Rome San Fr
Slide 13: CAE's Customers Include Airlines With Largest Fleet Plans
CIVIL CAE’S CUSTOMERS INCLUDE AIRLINES WITH SOME OF THE LARGEST AIRCRAFT FLEET EXPANSION AND RENEWAL PLANS 540 Firm + 273 Firm + 180Firm + 50 LOI/Option 226 LOI/Option 250 LOI/Option 413 Firm + 217 Firm + 252Firm + 532 LOI/Option 274 LOI/Option 153 LOI/Option 309 Firm + 215 Firm + 211 Firm + 50 LOI/
Slide 14: Defence and Security
CAE DEFENCE AND SECURITY
Slide 15: Defence and Security Market Drivers
DEFENCE AND SECURITY MARKET DRIVERS Three defining characteristic of CAE’s Defence and Security business: Installed Base of Enduring Platforms • Intrinsic value of • New Platform Deliveries simulation-based • Upgrades and Life Extensions to Existing Platforms training to maintain mission readiness i
Slide 16: Increasing Use of Simulation-Based Training
DEFENCE AND SECURITY INCREASING USE OF SIMULATION-BASED TRAINING Driven by economics “A three-hour KC-135 refueling mission costs approximately $20,000 while the same three- hour mission in the Boom Operator Weapons System Trainer costs roughly $900. The use of our simulators enhances our capabili
Slide 17: Positioned on Enduring Aircraft Platforms
DEFENCE AND SECURITY POSITIONED ON ENDURING AIRCRAFT PLATFORMS United States MH-60 OFT P-8A OFT C-130J FMS PREDATOR RPA KC-135 ATS United Kingdom AW-101 OFT C-130J DMS CH-47 DMS Hawk 128 FMS SA 330 DMS Germany EC-135 FFS Tornado FMS CH-53 FMS NH-90 FMS E-3A AWACS Canada C-130J FMS CH-47 WST CP-140 O
Slide 18: Growing Platform Coverage
DEFENCE AND SECURITY GROWING PLATFORM COVERAGE MQ1/9 T44 AW129/169/189 S70i SW4 T6 UH60M T-50 18
Slide 19: Positioned Globally
DEFENCE AND SECURITY POSITIONED GLOBALLY Americas Europe Asia Pacific Africa and Middle East United States Canada Germany United Kingdom Australia New Zealand Israel Kuwait Chile Brazil Sweden Turkey India Indonesia Saudi Arabia Oman Poland Netherlands Brunei Japan UAE Morocco Mexico Colombia Italy
Slide 20: Multi-Purpose Training Centre in Brunei
DEFENCE AND SECURITY MULTI-PURPOSE TRAINING CENTRE IN BRUNEI Leveraging CAE’s core capabilities beyond traditional defence in order to access more avenues for growth 20
Slide 21: Healthcare
HEALTHCARE 21
Slide 22: Leveraging Capabilities
HEALTHCARE LEVERAGING CAPABILITIES Leveraging our core capabilities to solve common challenges Need for skilled in all our markets Labour Common Challenges Need to Demand from Rehearse and Drivers Across Critical Emerging Markets Missions Modeling CAE’s Markets Simulation Civil Aviation Training G
Slide 23: Solutions Offering
HEALTHCARE SOLUTIONS OFFERING Patient Simulation Imaging Simulation Interventional Simulation Audiovisual Solutions HPS EndoVR iStan VIMEDIX cardiac ultrasound simulator LearningSpace METIman CathLabVR Replay Caesar VIMEDIX Ob/Gyn Ob/Gyn ultrasound simulator PediaSIM LapVR Courseware BabySIM Fidelis
Slide 24: CAE Fidelis Maternal Fetal Simulator
HEALTHCARE CAE FIDELIS MATERNAL FETAL SIMULATOR Advanced tools for inter-professional training to prepare teams of healthcare professionals to manage emergencies requiring rapid response, technical skills, teamwork and communication 24
Slide 25: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES 1 Invest in growth Customer-led 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 strong balance sheet Optimize capital structure vis-à-vi
Slide 26: Priorities Will Drive Return on Capital Employed
PRIORITIES WILL DRIVE RETURN ON CAPITAL EMPLOYED Priorities Grow returns on existing asset Move up-market EBIT Market leadership / Partner of Choice ROCE Customer-led investment discipline Focus on core Capital Optimal capital structure Priorities are linked directly to increasing ROCE 26
Slide 27: CAE Investment Thesis
CAE INVESTMENT THESIS STRONG POSITION Leader in training in a growing and highly regulated civil aviation market that is supported by strong long-term industry dynamics and trends Comprehensive Defence and Security solutions to maintain readiness more effectively and at a lower cost Anticipated use
Slide 28: Appendix
CAE APPENDIX
Slide 29: Competition
COMPETITION Civil Simulation and Training Defence and Security Healthcare 29
Slide 30: Consolidated Financial Results Q3 FY2015
Q3 FY2015 CONSOLIDATED FINANCIAL RESULTS Three months ended Summary of Consolidated Results December 31 (amounts in millions) 2014 2013 Revenue 559.1 503.9 Gross profit 149.0 140.6 Operating profit 82.9 76.4 As % of revenue 14.8% 15.2% Earnings from continuing operations 52.0 47.0 Net income attribu
Slide 31: Consolidated Financial Results YTD FY2015
YTD FY2015 CONSOLIDATED FINANCIAL RESULTS Nine months ended Summary of Consolidated Results December 31 (amounts in millions) 2014 2013 Revenue 1,614.7 1,502.2 Gross profit 421.7 405.1 Operating profit 227.4 202.6 As % of revenue 14.1% 13.5% Earnings from continuing operations 137.2 129.6 Net income
Slide 32: Cash Movements Q3 FY2015
Q3 FY2015 CASH MOVEMENTS Three months ended Consolidated Cash Movements December 31 (amounts in millions) 2014 2013 Cash provided by operating activities $ 82.0 $ 50.1 (before changes in non-cash W/C) Changes in non-cash working capital 9.5 (32.4) Maintenance capex and others assets (9.9) (20.0) Pro
Slide 33: Cash Movements YTD FY2015
YTD FY2015 CASH MOVEMENTS Nine months ended Consolidated Cash Movements December 31 (amounts in millions) 2014 2013 Cash provided by operating activities $ 236.7 $ 197.9 (before changes in non-cash W/C) Changes in non-cash working capital (128.7) (49.5) Maintenance capex and others assets (47.6) (49
Slide 34: 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) 12.6 4.0 (3.4) 0.6 Euro € 3.2 0.6 (0.3) 0.3
Slide 35: CAE
CAE