Slide 1: Investor Presentation
Investor Presentation June 2018 Your worldwide training partner of choice
Slide 2: Caution regarding forward looking statements
Caution regarding forward looking statements This presentation contains forward-looking statements about our activities, events and developments that we expect to or anticipate may occur in the future. These forward-looking statements include, without limitation, statements about our vision, strateg
Slide 3: Our vision is to be the recognized global training partner of choice
Our vision is to be the recognized global training partner of choice to enhance safety, efficiency and readiness.
Slide 4: CAE at a glance: Leader in three business segments
CAE at a glance Leader in three business segments Civil Aviation Training Solutions Defence and Security Healthcare ▪ Commercial Aviation ▪ Training Systems Integrator ▪ Patient simulation ▪ Business Aviation ▪ Virtual and live training ▪ Imaging/Interventional simulation ▪ Training equipment ▪ Trai
Slide 5: Diversified base of business with a high degree of recurring revenue
CAE at a glance Diversified base of business with a high degree of recurring revenue U.S.A. 4 37 Asia Australia 38 % 58 % Canada 40 % 36 Central and 60 South America Middle East 27 Approximate value including JV sales Europe Civil Aviation Training Solutions Services Defence and Security Products He
Slide 6: 6 pillars of strength underlie CAE's strategy and investment thesis
6 pillars of strength underlie CAE’s strategy and investment thesis Strong Underlying competitive secular moat tailwinds Headroom Potential in large for superior markets returns High degree Culture of recurring of innovation business 6 CAE Inc. Proprietary Information and/or Confidential
Slide 7: Unmatched global reach
Unmatched global reach Corporate head office Civil Aviation Training Solutions 160+ 35+ 8,500+ Defence & Security Healthcare locations countries employees 7 CAE Inc. Proprietary Information and/or Confidential
Slide 8: Consolidated financial highlights FY18 Results
Consolidated financial highlights FY18 Results $2.8 B $442.7 M $1.11 $3,855 M 1.36 : 1 record annual revenue annual SOI** earnings per share** record annual record annual (up 5% year over year) (up 11% year over year) (vs. $1.03 in FY17*) order intake book-to-sales ratio $7.8 B $288.9 M 12.3% 76% 21
Slide 9: Civil Aviation Training Solutions
Civil Aviation Training Solutions Your worldwide training partner of choice
Slide 10: Market drivers
CIVIL AVIATION TRAINING SOLUTIONS Market drivers Market expansion: ▪ Over the next 10 years, IATA Activity of the 39K COMMERCIAL forecasts passenger trips to installed base 5.2B 27K AVIATION grow by 3.5% annually ▪ Fleet renewal and expansion ▪ Commercial aircraft 3.7B deliveries at historical Activ
Slide 11: Headroom in a large market
CIVIL AVIATION TRAINING SOLUTIONS Headroom in a large market Civil Training Market $4.2B 35% CAE CAE has potential to increase share in a large market 11 CAE Inc. Proprietary Information and/or Confidential
Slide 12: 255,000 new airline first officers needed over next 10 years
CIVIL AVIATION TRAINING SOLUTIONS 255,000 new airline first officers needed over next 10 years 150K 440K Additional Active Pilots Pilots for Growth Europe + = 50K 290K 105K Active Pilots Replacements Americas Asia-Pacific Middle East 85K & Africa 90K 30K 2017 2027 … AND 180,000 NEW CAPTAINS * CAE 10
Slide 13: World's largest civil aviation training network
CIVIL AVIATION TRAINING SOLUTIONS World’s largest civil aviation training network 50+ Training Locations 250+ Full Flight Simulators 9 160+ Academies Aircraft CAE trains 120,000+ pilots every year CAE Inc. Proprietary Information and/or Confidential
Slide 14: Thought leadership and innovation
CIVIL AVIATION TRAINING SOLUTIONS Thought leadership and innovation Trusted partner of regulatory organizations and industry associations Constantly developing training solutions for partners Development of the Next Generation Training System Supported by innovative data collection and analysis tech
Slide 15: Defence And Security
Defence And Security Your worldwide training partner of choice
Slide 16: Market drivers
DEFENCE & SECURITY Market drivers Increased Requirement to Increased use of Propensity to increase Defence spending maintain simulation for outsourcing of in all major markets mission readiness Integrated Mission training solutions Training 16 CAE Inc. Proprietary Information and/or Confidential
Slide 17: Global defence growth cycle
DEFENCE & SECURITY Global defence growth cycle ▪ 70% spending increase over 10 years ▪ Acquisition of Major Capital Assets ▪ Significant unmet needs ▪ Reliant on US technology ▪ Persistent Defence budget increases 1% Canada ▪ Aerospace & Defence firms are ▪ Shaping portfolio to focus on core 20% Eur
Slide 18: A truly global defence footprint in key markets
DEFENCE & SECURITY A truly global defence footprint in key markets 35 Countries COLD LAKE HOLZDORF MOOSE JAW Burgess Hill Stolberg Ottawa Montreal RAF BENSON FAßBERG BÜCKEBURG PETAWAWA SESTO CALENDE TRENTON Rome 50+ HOLLOMAN DOTHAN Defence Agencies Orlando Abu Dhabi Tampa ABU DHABI AL TAWEELAH Benga
Slide 19: Training System Integration
DEFENCE & SECURITY Training System Integration • Live Operators Increased outsourcing and the integration of • Real Platforms Live Flight Training Constructive Virtual Live • Simulated Operators • Live Operators • Simulated Platforms • Simulated Platforms TSI TSI Increased fidelity of the Interopera
Slide 20: Headroom in a large market
DEFENCE & SECURITY Headroom in a large market Training Systems Integration Live Target Market $17B+ Virtual $1.09B Constructive CAE CAE is well positioned to increase share in a $17B+ market 20 CAE Inc. Proprietary Information and/or Confidential
Slide 21: Thought leadership and innovation
DEFENCE & SECURITY Thought leadership and innovation U.S. Army U.S. Navy U.S. Air Force Royal Canadian Air Force • Fixed-Wing Flight Training Program • CNATRA Contract Instruction Services • MQ-1/MQ-9 Aircrew Training • NATO Flying Training in Canada (NFTC) • Lakota Training System for T-45 and T-6
Slide 22: Healthcare
Healthcare Your worldwide training partner of choice
Slide 23: Why Healthcare
CAE HEALTHCARE Why Healthcare Digitization of healthcare Synergies with CAE Explicit desire to adopt training and education augmented / virtual / aviation best practices with potential for mixed reality increased regulation Opportunity to lead in a potentially much larger market as regulations take
Slide 24: Factors driving simulation-based training in Healthcare
CAE HEALTHCARE Factors driving simulation-based training in Healthcare Increasing use of simulation Growing emphasis on in healthcare patient safety Digital transformation of Reducing medical errors* healthcare training Limited access to live Medical technology patients during training revolution Ad
Slide 25: Broadest portfolio of training solutions
CAE HEALTHCARE Broadest portfolio of training solutions Patient simulators Courseware Ultrasound simulators Surgical simulators Simulation centre management solutions 25 CAE Inc. Proprietary Information and/or Confidential
Slide 26: Culture of innovation
CAE HEALTHCARE Culture of innovation CAE Healthcare …by using the became the first Microsoft Hololens, company to bring a the CAE VimedixAR commercial Microsoft ultrasound simulator HoloLens mixed- integrates real-time reality application to interactive holograms the medical of the human simulation
Slide 27: Thought leadership and innovation
CAE HEALTHCARE Thought leadership and innovation screen-based simulation used for maintenance of certification ▪ Scenario-based eLearning created in collaboration by American Society of Anesthesiologists (ASA) and CAE Healthcare deployed via the ASA Education Center ▪ Allow users to explore high-sta
Slide 28: Financial highlights and capital priorities
Financial highlights and capital priorities Your worldwide training partner of choice
Slide 29: Capital allocation priorities
CAPITAL ALLOCATION PRIORITIES Priorities Invest in superior and sustainable growth 1 Market/customer-led investments in core and close adjacencies with a clear path to market share gains and attractive returns Provide current shareholder returns while generating long term growth 2 Current shareholde
Slide 30: Investment in accretive growth remains a priority
CAPITAL ALLOCATION PRIORITIES Investment in accretive growth remains a priority given attractive return potential 1 40% Incremental Pre-tax DOI Return % on Capital Deployed in Civil Training (FY14-FY18) 31% 30% 30% 28% 27% 25% ~$316M capital 24% investment from 20% 19% FY14-FY18 to 15% deploy 47 FFS
Slide 31: Current shareholder returns
CAPITAL ALLOCATION PRIORITIES Current shareholder returns 2 Profits returned to shareholders Millions $160 $140 $120 $100 $80 $60 $40 $20 $0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Dividends Share repurchases CAE prioritizes a balance between long-term capital appreciation and cash returns to shareh
Slide 32: Strong balance sheet
CAPITAL ALLOCATION PRIORITIES Strong balance sheet 3 Millions $2,000 50% $1,800 Optimal Net Debt-to-Capital (35-45%) $1,600 40% $1,400 $1,200 $1,000 30% $800 $600 20% $400 $200 $0 10% FY11 * FY12 * FY13 * FY14 FY15 FY16 FY17 FY18 *Not adjusted for IFRS11 impact Net Debt Net Debt-to-Capital CAE’s str
Slide 33: Increased proportion of recurring revenue (services)
Increased proportion of recurring revenue (services) FY2001 FY2008 FY2018 15% 43% 60% Products Services 33 CAE Inc. Proprietary Information and/or Confidential
Slide 34: A resilient business model
A resilient business model CAE Consolidated Segment Operating Income (SOI) Millions $500 SOI down 14% post $450 ‘Financial Crisis’ $400 $350 SOI down 60% post ‘2001 Crisis’ $300 $250 $200 $150 $100 $50 $0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY01-
Slide 35: Strong backlog for enhanced visibility
Strong backlog for enhanced visibility Total Backlog Billion $9.0 $8.0 16% CAGR $7.0 $6.0 9% CAGR $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Civil Defence 35 CAE Inc. Proprietary Information and/or Confidential
Slide 36: Compelling long term investment thesis
Compelling long term investment thesis • Services revenue approx. • Market leader 60% of mix and expected • Large addressable to continue increasing • Unique comprehensive markets in Civil Aviation relative to products Solutions and Defence • Long-term contracts in • Unmatched global reach • Innovat
Slide 37: Outlook summary for FY2019
Outlook summary for FY2019 CIVIL DEFENCE AND SECURITY HEALTHCARE Continued low double-digit Continued mid to high single-digit percentage operating income percentage operating income Resumption of double-digit growth growth growth Continued measured and profitable growth investment mainly in support
Slide 38: Appendix
Appendix Your worldwide training partner of choice
Slide 39: FY18 YTD business highlights
CAE’S PERFORMANCE FY18 YTD business highlights FY18 Q4 FY18 YTD EPS $0.37 vs. $0.25 ($0.31 before specific $1.29 vs. $0.93 ($1.03 before specific from continuing operations items) in prior year items) in prior year Revenue $780.7 M (+6% YoY) $2,830.0 M (+5% YoY) Operating profit $141.1 M (+40% YoY)
Slide 40: FY18 Q4 Consolidated financial results
FY18 Q4 Consolidated financial results Summary of Consolidated Results Three months ended March 31 (amounts in millions, except per share amounts) 2018 2017 Revenue $ 780.7 $ 734.7 Gross profit 260.5 235.0 Operating profit 141.1 100.9 As % of revenue 18.1% 13.7% Earnings from continuing operations 1
Slide 41: FY18 YTD Consolidated financial results
FY18 YTD Consolidated financial results Summary of Consolidated Results Twelve months ended March 31 (amounts in millions, except per share amounts) 2018 2017 Revenue $ 2,830.0 $ 2,704.5 Gross profit 876.9 811.2 Operating profit 461.0 364.7 As % of revenue 16.3% 13.5% Earnings from continuing operat
Slide 42: Cash movements FY18 Q4
FY18 Q4 Cash movements Consolidated Cash Movements Three months ended March 31 (amounts in millions) 2018 2017 Cash provided by continuing operating activities $ 130.8 $ 116.9 (before changes in non-cash W/C) Changes in non-cash working capital 7.0 80.6 Maintenance capex and others assets (22.8) (26
Slide 43: Cash movements FY18 YTD
FY18 YTD Cash movements Consolidated Cash Movements Twelve months ended March 31 (amounts in millions) 2018 2017 Cash provided by continuing operating activities $ 446.4 $ 435.2 (before changes in non-cash W/C) Changes in non-cash working capital (43.1) 29.1 Maintenance capex and others assets (77.6
Slide 44: Our vision is to be the recognized global training partner of choice
Our vision is to be the recognized global training partner of choice to enhance safety, efficiency and readiness.