Bae Systems Plc · LSE:BA.
Bae Systems — Investor Day (May 2018)
75 slides from Bae Systems's investor day presentation, May 14, 2018
Slide 1: BAE Systems Investor Day 2018 Electronic Systems
1 BAE Systems Investor Day 2018 Electronic Systems May 14 - 15, 2018 BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 2: Cautionary Statement
2 Plc Cautionary Statement All statements other than statements of historical fact included in this statement are forward- looking statements. Such forward-looking statements, which reflect management's assumptions made on the basis of information available to it at this time, involve known and unkn
Slide 3: Safety
3 Safety • There are no planned fire alarms • In the event of a fire or other event requiring evacuation • Distinct alarms will sound • Quickly and calmly proceed to the nearest exit (lighted EXIT sign) • Follow egress routes and directions from Emergency Personnel BAE SYSTEMS Non-export controlled.
Slide 4: Agenda
4 Agenda • 08:00 Introduction Charles Woodburn Auditorium • 08:05 Business Update Peter Lynas Auditorium • 08:15 Q&A Auditorium • 08:45 US Operations & Market Overview Jerry DeMuro Auditorium • 09:05 BAE Systems Inc. Portfolio Tom Arseneault Auditorium • 09:30 Overview of Electronic Systems Terry Cr
Slide 5: Product Demo Schedule
5 Product Demo Schedule • Attendees will break up into two pre-determined groups from 12:00 – 14:30 • Each product demonstration will be 8 minutes and 2 minutes to transition to the next demo Group 1 Group 2 • Product Demonstrations – Nashua • Coach Bus ride • Precision Munitions • Product Demonstra
Slide 6: Charles Woodburn, Chief Executive
6 Charles Woodburn Chief Executive BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 7: Introduction
7 Introduction • First in a series of Investor events over the next couple of years covering our major divisions • Focus of this event is the Electronic Systems business • Aim to demonstrate: • Portfolio well aligned to US budget growth • Strength and depth of our portfolio • Investment in technolog
Slide 8: Strategic Priorities
8 Strategic Priorities • Electronic Systems demonstrates our strategic priorities in action • Operational Excellence • Improving competitiveness and efficiency • Advancing and further leveraging our technology BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2
Slide 9: Peter Lynas, Finance Director
9 Peter Lynas Finance Director BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 10: Business Update
10 Business Update • Guidance for the year confirmed in trading update • UK – outlook stable from long term contracted positions • Furthered by Astute Boat 7 award and Dreadnought funding • Modernising Defence Programme review • KSA Typhoon - Memorandum of Intent – negotiations progressing • Strong
Slide 11: Q&A Session
11 Q&A Session BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 12: US Operations and Market Overview
12 US Operations and Market Overview Jerry DeMuro President and CEO BAE Systems Inc. BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 13: Current Landscape
13 Current Landscape • Recent budget agreement provides stability and growth • Two year increase of $300B above budget caps • DoD Investment accounts increase by 21% • National Defense Strategy Issued • Emphasis on peer threats • Priorities well defined • Core programs and adjacent markets well supp
Slide 14: Strong near-term uplift to defense budget
14 Strong near-term uplift to defense budget National Defense (050) Top-line Budget Authority, Then Year $B • Bipartisan agreement raised defense Actual FY19 President’s Request budget caps for FY18 and FY19 $B +11% 778 800 716 733 743 760 • FY18-19 increases will result in higher 701 700 industry s
Slide 15: Portfolio well aligned with DoD budget growth
15 Portfolio well aligned with DoD budget growth Estimated DoD Spending by Category FY17-19 FY19 Budget % BA E Programs & Opportunities ($B) Growth Nuclear Modernization 135% $6.7 ICBM systems engineering, submarine missile tubes Combat Vehicles 102% $6.8 Combat vehicles for Army, Marine Corps, part
Slide 16: One of the world's largest defense companies
16 One of the world’s largest defense companies BAE Systems, Inc. The Honorable Michael Chertoff Chairman • Operates under a Special former Secretary of the U.S. Department of Security Agreement for over 25 Homeland Security years The Honorable Kelly A. Ayotte General John Campbell (US Army, Retired
Slide 17: BAE Systems, Inc. Rich Heritage
17 BAE Systems, Inc. Rich Heritage Electronic Systems Platforms & Services Intelligence & Security BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 18: BAE Systems Inc. US major site locations
18 BAE Systems Inc. US major site locations H udson, N H M errimack, N H Key port, WA N ashua, N H S terling H eights, MI Lexington, M A E ndicott, N Y Burlington, M A G reenlawn, N Y S agamore Bourne, MA A berdeen, S D Rome, N Y M inneapolis, MN Way ne/Totowa, NJ M t. Laurel, N J M iddletown, RI P
Slide 19: Served Markets
19 Served Markets 2017 Sales – Market Breakdown 2017 Sales – Domains 11% Air 42% 16% Land 30% 73% Cyber US Defense, Intel & Civilian Agencies 6% International Defense Maritime 22% Commercial BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 20: Diverse Product/Program Portfolio
20 Diverse Product/Program Portfolio More than 9,500 Active Contracts • Ranging in size from $10k to $1.7B • 75% Firm Fixed Price Contracts • 25% Cost Reimbursable Contracts Diverse Customer Base • 1,400 different commercial and defense customers • 80+ countries BAE SYSTEMS Non-export controlled. Re
Slide 21: BAE Systems, Inc. Sectors
21 BAE Systems, Inc. Sectors Electronic Systems Employees 32,100 HQ Arlington, VA 2017 Rev enue $10.0B Intelligence & Security Platforms & Services BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 22: BAE Systems Inc. Portfolio
22 BAE Systems Inc. Portfolio Tom Arseneault Chief Operating Officer BAE Systems Inc. BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 23: From the depths of the ocean…
23 From the depths of the ocean… An impressive and diverse portfolio of products and technologies BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 24: …to the far reaches of space
24 …to the far reaches of space An impressive and diverse portfolio of products and technologies NASA image BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 25: BAE Systems, Inc. Sectors
25 BAE Systems, Inc. Sectors Electronic Systems Employees 32,100 HQ Arlington, VA 2017 Revenue $10.0B Intelligence & Security Platforms & Services BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 26: On land, at sea, on target
26 On land, at sea, on target BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 27: Platforms & Services
27 Platforms & Services Hägglunds Weapon Systems Employees 11,400 HQ Arlington, VA 2017 Revenue $3.8B Ship Repair Combat Vehicles Amphibious & International Combat Vehicles U.S. BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 28: Combat Vehicles
28 Combat Vehicles Modernization New International Platforms M1 0 9 CV9 0 A CV 1 .1 Br adley A MPV P A R 8 X8 ( FNSS) M8 8 MPF BvS1 0 Beowulf BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 29: M109A7 Self-propelled Howitzer
29 M109A7 Self-propelled Howitzer • Modernized legacy artillery platform for the U.S. Army • Over 500+ sets needed for force modernization Modernized indirect fire platform with increased survivability and capabilities BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018
Slide 30: Armored Multi-Purpose Vehicle (AMPV)
30 Armored Multi-Purpose Vehicle (AMPV) • Multi-variant replacement for legacy M113 armored personnel carrier family • Over 2900 vehicles required to support modernization demands Transitioning to low rate production in 2018 BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSE
Slide 31: Amphibious Combat Vehicle 1.1
31 Amphibious Combat Vehicle 1.1 • Wheeled amphibious vehicle for U.S. Marine Corps • Requirements for 700 vehicles to meet sea and land combat conditions for the Marines Competitive award announcement anticipated in June 2018 timeframe BAE SYSTEMS Non-export controlled. Releasable to non-US persons
Slide 32: Mobile Protected Firepower (MPF)
32 Mobile Protected Firepower (MPF) • Light tank supporting the U.S. Army’s Infantry Brigades • Potential initial demand for over 500 vehicles Competitive down-select anticipated in late 2018 BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 33: Robotic Combat Vehicle – Black Knight
33 Robotic Combat Vehicle – Black Knight • Semi-autonomous combat vehicle • Demonstrates our commitment to investing in future technologies Helping shape the future of unmanned combat vehicles BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 34: Weapon Systems and Technologies
34 Weapon Systems and Technologies BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 35: Precision-Guided Munitions, Weapons and Technology
35 Precision-Guided Munitions, Weapons and Technology BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 36: U.S. Navy Ship Repair - Norfolk
36 U.S. Navy Ship Repair - Norfolk • Lead east coast surface modernization capability • Located with the fleet Supporting the U.S. Navy’s maintenance requirements to meet operational needs BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 37: U.S. Navy Ship Repair – San Diego
37 U.S. Navy Ship Repair – San Diego • Lead west coast surface modernization capability • Investments in dry-dock capacity a discriminator for critical naval maintenance and modernization Meeting the Navy’s maintenance needs to support the pivot the Pacific BAE SYSTEMS Non-export controlled. Releasa
Slide 38: Intelligence & Security
38 Intelligence & Security Air Force Solutions Integrated Defense Solutions Employees 6,900 HQ McLean, VA 2017 Rev enue $1.6B Intelligence Solutions BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 39: Air Force Solutions
39 Air Force Solutions BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 40: Intelligence Solutions
40 Intelligence Solutions BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 41: Integrated Defense Solutions
41 Integrated Defense Solutions US Navy image BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 42: Electronic Systems
42 Electronic Systems Electronic Combat Solutions Controls & Avionics Solutions Employees 14,400 HQ Nashua, NH 2017 Rev enue $4.6B Survivability, Targeting & Sensing Solutions Power & Propulsion Solutions FAST Labs TM C4ISR Systems BAE SYSTEMS Non-export controlled. Releasable to non-US persons per
Slide 43: Electronic Systems Overview
43 Electronic Systems Overview Terry Crimmins President, Electronic Systems BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 44: Agenda
44 Agenda • Overview • Business performance • Our portfolio and markets • Moving forward BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 45: Electronic Systems – Our footprint and our people
45 Electronic Systems – Our footprint and our people Rochester, UK 1308 employees 14,400 people 1,000 customers Rokar, Jerusalem, Israel Guaymas, Mexico >6,500 Active Contracts 100 employees Endicott, NY Singapore 1,845 hold advanced degrees 1244 employees 14.5 average years of service Hudson, NH Gr
Slide 46: Our portfolio
46 Our portfolio Business Mix Diverse product/program portfolio US Defense 60% Commercial 22% Over 6,500 active contracts Int. Defense 18% • Ranging in size from $10k to $1.7B 60% • 70% firm fixed price contracts • 30% cost reimbursable Lockheed 15% US Air Force 13% Boeing 13% Our Customers US Navy
Slide 47: How the business has performed
47 How the business has performed 5.5 Revenues • Top-line growth across the period driven by the diversity and 5.0 resiliency of portfolio $b • Closed 2017 with record order 4.5 backlog (> $7b) 4.0 2014 2015 2016 2017 2018E EBITA 900 17% • Track record of consistent ROS delivery 16% 800 • Performanc
Slide 48: Electronic Systems – Our structure
48 Electronic Systems – Our structure Controls & Avionics Electronic Combat Solutions Solutions $0.9b $1.3b Survivability, Targeting Power & Propulsion & Sensing Solutions Solutions $0.8b $0.3b FAST Labs ™ $0.2b Command, Control, Communications, Computers, Intelligence, Surveillance & Reconnaissance
Slide 49: Competitive Landscape
49 Competitive Landscape • Key US Defense • Key • Key Commercial Avionics International Defense • Key Hybrid Power Competitors: Competitors: Competitors: Competitors: Northrop Raytheon, UTAS / Rockwell Grumman, Cummins, Northrop Collins, Allison, many Raytheon, Harris Grumman Honeywell, GE other pla
Slide 50: Electronic Combat Solutions
50 Electronic Combat Solutions 2017 Sales: $1.3b Electronic Support • Rapid detection, identification and tracking • Precision direction finding and geolocation • Passive targeting support Electronic attack • Electronic attack of military and commercial communications, navigation and radar systems •
Slide 51: RF and Optical Electronic Warfare
51 RF and Optical Electronic Warfare The market is strong and growing • Increasing sophistication of adversaries • Growing demand for smaller systems Our capabilities address market drivers • Threat detection, tracking, & situational awareness • Broad-band electronic attack – World leading EW market
Slide 52: Overview of Electronic Warfare
52 Overview of Electronic Warfare BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 53: C4ISR Systems
53 C4ISR Systems 2017 Sales: $1.2b Actionable intelligence for our warfighters through electronic products and innovative technical solutions from the depths of the ocean to outer space and everywhere in between • SIGINT sensors • IFF systems • Mission Workstations • Space Processing • Acoustics • G
Slide 54: Space
55 Space – Technology driving Robust market demand key strategic wins in • Growing threat to U.S. space assets space • Significant funding directed at ‘space security’ Our capabilities are market disruptors • World-class Digital/RF/IR/Optical technologies • Platform protection domain expertise We wi
Slide 55: Space Security
55 Space Security BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 56: Controls & Avionics Solutions
56 Controls & Avionics Solutions 2017 Sales: $0.9b • Flight Controls: Fly-by-wire systems, Active Inceptor Systems, Vehicle Management Systems • Engine Controls: Full Authority Digital Engine Controls (FADEC) • Mission Avionics: Defensive Weapon Systems, Stores Management, Mission Computers • Flight
Slide 57: Portfolio of major commercial avionic equipment
57 Portfolio of major commercial avionic equipment 737 N G / M A X 747-8 / 747-400 767 777 777X FC, Cabin/Cockpit FC, Cabin/Cockpit FC, Cabin/Cockpit FC, Cabin/Cockpit FC, FADEC Systems, FADEC Systems, FADEC (exclusive Systems, FADEC Systems, FADEC (exclusive on 747-8) on –F, -300LR, -200ER) A irbus
Slide 58: Portfolio of military avionic equipment
58 Portfolio of military avionic equipment B-2 F -35 F -22 F /A -18 F -15 T-50 FBW FBW / ACS FBW FBW GCAS/FBW FBW / ACS E -2 F -16 C -17 A -10 P -3 JA S 39 AFCS GCAS & DFLCC FBW Integrated Flight & AFCS FBW Fire Control A W609 B525 C H -47 S -92 V -22 Q F -16 FBW FBW AFCS FBW FBW FBW Ty phoon Haw k
Slide 59: Survivability, Targeting & Sensing Solutions
59 Survivability, Targeting & Sensing Solutions 2017 Sales: $0.8b Exploiting the Electro Optical/Infrared spectrum to provide unmatched infrared countermeasures, precision guidance and seeker solutions, advanced targeting solutions, and state-of-the-art tactical imaging systems • Missile threat warn
Slide 60: Precision Munitions
62 Precision Munitions Immediate and long-term market pull • Restoring depleted stockpiles – key US priority – More than 35 years of missile technology development experience, world class seeker • Robust international demand (esp. Middle East) factory & proven IR seeker development and • Need for lo
Slide 61: APKWS Laser-guided Rocket
61 APKWS® Laser-guided Rocket BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 62: Power & Propulsion Solutions
62 Power & Propulsion Solutions 2017 Sales: $0.3b • Delivers propulsion and power management performance with innovative electric products and solutions • Serves a diversified market footprint: Advancing vehicle mobility, efficiency, and capability in markets such as; transit, marine, military and t
Slide 63: FAST Labs
63 FAST Labs™ 2017 Sales: $0.2b Researching, developing, and integrating advanced electronic technologies that provide discriminating capabilities to BAE Systems’ products and services. Advanced Electronics Autonomy Cyber Electronic warfare Sensors and processing BAE SYSTEMS Non-export con
Slide 64: Our technology pipeline sustains our growth trajectory
64 Our technology pipeline sustains our growth trajectory Year 1 Year 2 Year 3 Year 4 Year 5 Market R&D Seedlings BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 65: We leverage our customer base to drive technology forward
68 We leverage our customer base to drive technology forward Our customers supplement our shareholders R&D investment 18 to 1 BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 66: Electronic Systems – Moving Forward
66 Electronic Systems – Moving Forward BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 67: Summary
70 Summary • Electronics portfolio is well-aligned with The U.S. National Defense Strategy and will prosper in the near term budget surge • Our defense products have broad international appeal • Commercial markets provide profitable adjacencies, and fold back capabilities into our defense base • Suc
Slide 68: Thank you
68 Thank you BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 69: Break
69 Break BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 70: Q&A Session
70 Q&A Session BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 71: Closing Remarks
71 Closing Remarks Jerry DeMuro President and CEO BAE Systems, Inc BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 72: Closing Remarks
72 Closing Remarks BAE Systems Inc. holds a strong position in the Defense and Security Market • ES and P&S US very well placed for mid term growth and I&S is stable • Continued investment in the business • Strong profit to cash conversion BAE SYSTEMS Non-export controlled. Releasable to non-US pers
Slide 73: Lunch
73 Lunch BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 74: Thank you
74 Thank you BAE SYSTEMS Non-export controlled. Releasable to non-US persons per INC-DSEA-2018-0081 © 2018 BA E Systems
Slide 75: Acronyms
75 Acronyms • AJ-GPS: Anti-jam Global Positioning System • APKWS: Advanced Precision Kill Weapon System • CRAD: Contract Research and Development • CMWS: Common Missile Warning System • DARPA: Defense Advanced Research Projects Agency • DASALS: Distributed Aperture Semi-active Laser Seeker • FMS: Fo