Cae Inc. · TSX:CAE
Cae — Investor Day (December 2011)
34 slides from Cae's investor day presentation, Dec 7, 2011
Slide 1: Investor Day: Introduction to CAE USA
Investor Day Introduction to CAE USA Tampa, FL December 7, 2011 CAE Inc. and/or Proprietary Information Confidential
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements made in this presentation, including, but not limited to, statements that are not historical facts, are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements
Slide 3: Agenda
Agenda 1• John Lenyo, President, CAE USA ► CAE Defense business overview ► CAE USA highlights 2• John Branin, Director, Training Services, CAE USA and USAF Lt. Col. (ret.) ► U.S. budget process commentary ► Outlook for simulation industry 3• John Lenyo, President, CAE USA ► Conclusion and facility t
Slide 4: Defense
Defense Page 4 CAE Inc. and/or Proprietary Information Confidential
Slide 5: Defense Strategic Focus
Defense Strategic Focus Maintaining Core Leadership Expanding Core Simulation Products for Air Domain Land and Naval Domain simulation Full-Mission Simulators, Training and modelling solutions Devices Unmanned Aerial Systems Aviation Training Services Decision Support Solutions Maintenance Services
Slide 6: Defense Market Drivers
Defense Market Drivers Training and maintenance services sourcing from industry Mission rehearsal Lower cost Modeling and Simulation use across defense lifecycle Our strategy involves positioning on platforms with long legs and in key regions to grow our revenue from simulation products and long-ter
Slide 7: The cost advantages of simulation-based training are widely understood…
The cost advantages of simulation-based training are widely understood… 7 CAE Inc. and/or Proprietary Information Confidential
Slide 8: …and the buy-in to move more hours into simulators preceded the current austerity measures
…and the buy-in to move more hours into simulators preceded the current austerity measures “We intend to take the numbers dramatically higher in the simulator, not because it’s cheaper, but because the training is that much better.” Command Master Chief L.W. Long, U.S. Navy 8 Source: Flight Internat
Slide 9: We have begun to see more use of simulation: P-3C vs. P-8A
We have begun to see more use of simulation U.S. Navy P-3C Orion vs. P-8A Poseidon New P-8A Poseidon multi-mission Legacy P-3C maritime aircraft maritime aircraft In-service since 1962; P-3C variant since Replacing P-3C; initial operating capability 1969 planned for 2013 Fleet size – as of 2010, fle
Slide 10: Defense Key Wins in H1 FY12 Involved Several Orders in US
Defense Key Wins in H1 FY12 Involved Several Orders in US CAE Military: $416M orders (H1) and $2.2B backlog MH-60R Seahawk flight trainers C130J Hercules contracts with AW139 helicopter simulators for for US Navy Lockheed Martin for USAF customers in Malaysia and Middle East US Air Force Maintenance
Slide 11: CAE is Broadly Diversified in Defense Global Operations
CAE is Broadly Diversified in Defense Global Operations • Plus over 70 other sites where CAE provides training support services We serve more than 50 national defense forces in markets that account for the majority of the world’s defense expenditures Page 11 CAE Inc. and/or Proprietary Information C
Slide 12: Established Global Defense Business Diversified Revenue Base
Established Global Defense Business Diversified Revenue Base FY2011 combined Military segment revenue Page 12 CAE Inc. and/or Proprietary Information Confidential
Slide 13: Go-to-market Approach in Defense
Go-to-market Approach in Defense Products and recurring, long-tail services Upgrades Training Additional Professional Products and Support Services Products/Services COTS Services Full-mission Upgrades Maintenance and In-service support Modeling and Modeling and Simulators Support Services Simulatio
Slide 14: Market Leadership: CAE's Defense Market Position
Market Leadership CAE’s Defense Market Position #1 in virtual air with 25% market share Exposure to aircraft platforms with long legs Expanding core into CAE is part of the solution to maintaining readiness and lowering training costs Page 14 CAE Inc. and/or Proprietary Information Confidential
Slide 15: CAE USA
CAE USA Headquartered in Tampa, FL with additional operating locations in Orlando (FL), Durham (NC) and Little Rock (AR) Modeling, simulation, training, and mission rehearsal solutions to U.S. government agencies and international customers Professional services, training services, training systems
Slide 16: CAE USA Overview
CAE USA Overview Approximately 1,000 employees Business grown three-fold since 2003 #2 in U.S. DoD virtual air simulation and training Largest C-130 simulation and training provider Largest supplier of flight simulators to the U.S. Navy Prime on KC-135 USAF aircrew training system program Page 16 CA
Slide 17: CAE USA Governance Structure
CAE USA Governance Structure • CAE USA Inc. operates under a US DoD Secret Level Special Security Agreement • Fully qualified to execute US DoD classified programs Page 17 CAE Inc. and/or Proprietary Information Confidential
Slide 18: CAE USA Business Base
CAE USA Business Base Professional Services Engineering, Technical and Analytical Services focused on the application of modeling & simulation across the entire defense life cycle Flight Training Systems Focus on simulators for military platforms Advanced technology developments Ground Trainin
Slide 19: Major Flight Training Systems Programs – Navy
Major Flight Training Systems Programs – Navy Customers ► Naval Air Warfare Center Training Systems Division, U.S. Naval MH-60S/R Air Systems Command and Boeing Programs 19 ► SH-60B, MH-60S and MH-60R Tactical Operational Flight Delivered Trainers ► MH-60R Avionics Maintenance Trainers ► P-8A Poseid
Slide 20: Major Flight Training Systems Programs – C-130
Major Flight Training Systems Programs – C-130 Customers ► Lockheed Martin, NAVAIR, Boeing and U.S. Air Force Programs ► C-130J Maintenance and Aircrew Training System ► C-130 Avionics Modernization Program ► USAF C-130E/H Aircrew Training System ► Air Force Special Operations Command HC/MC-130J Out
Slide 21: Major Flight Training Systems Programs – International
Major Flight Training Systems Programs – International Customers ► Israel, India, Saudi Arabia, Taiwan ► Upcoming opportunities in Australia, Denmark, Kuwait Programs ► C-130H and C-130J ► AWACS ► P-3C and P-8A ► MH-60S/R Outlook ► Example – MH-60R selected by Australia; additional foreign military
Slide 22: Major Training Services Programs
Major Training Services Programs Customers ► Lockheed Martin, U.S. Air Force, U.S. Navy, global C-130 operators Programs ► USAF KC-135 Aircrew Training System (ATS) prime contractor ► USAF C-130 ATS (Lockheed Martin) ► C-130J Maintenance and Aircrew Training System (Lockheed Martin) ► P-8A contracto
Slide 23: Ground Training Systems Programs
Ground Training Systems Programs Customers ► U.S. Army Programs ► Abrams tank desktop virtual maintenance trainers and hands-on trainers ► Bradley fighting vehicle ► High Mobility Artillery Rocket System Outlook ► Opportunities to expand beyond maintenance training in U.S. ground combat systems mark
Slide 24: Agenda
Agenda 1• John Lenyo, President, CAE USA ► CAE Defense business overview ► CAE USA highlights 2• John Branin, Director, Training Services, CAE USA and USAF Lt. Col. (ret.) ► U.S. budget process commentary ► Outlook for simulation industry 3• John Lenyo, President, CAE USA ► Conclusion and facility t
Slide 25: Intro
Intro CAE Perspective Through a Military Lens ► Air Force Background ► Post-Military Career KC-135 Aircrew Training System ► Established CAE USA as a Credible Prime DoD Budget Process ► Effects on the Total Force and those who Support It ► Effects on the Simulation and Training Industry Page 25 CAE
Slide 26: KC-135 Aircrew Training System
KC-135 Aircrew Training System Background ► One of four USAF ATSs competed concurrently KC-135, C-17, C-5, and C-130 Each ATS is a multi-year contract and each valued at over $250M ► CAE awarded KC-135 ATS as Prime ► CAE subcontractor to Lockheed Martin on C-130 ATS ► CAE prime on C-5 WST upgrad
Slide 27: DoD Budget Situation
DoD Budget Situation Government Fiscal Year 2012 Principles Guiding ► Currently operating under Continuing Resolution What DoD Buys: ► Senate recently passed GFY12 budget; now goes to House for approval and is expected to pass 1. Emphasize proven ► President expected to sign in January 2012 technolo
Slide 28: Reduced DoD Budgets
Reduced DoD Budgets Effect on Simulation and Training Industry ► Long-term positive growth expected through continued technological advances ► Incentive to maintain mission readiness at a lower cost We cannot rest on our laurels ► Competition more intense given simulation and training a bright spot
Slide 29: Specific Effects on CAE Programs / Pursuit Philosophy
Specific Effects on CAE Programs / Pursuit Philosophy C-130 ATS ► Reduced Flying for Initial Qualification (RFIQ) moved aircraft sorties into training devices ► Reduced hours in aircraft from 32 to 23 for pilots and from 60 to 37 for flight engineers ► Reduced approximately 3,600 flying training hou
Slide 30: Summary
Summary U.S. DoD budget reductions are a reality Competition remains intense in the Simulation & Training market, but CAE USA is well-positioned and highly regarded as a simulation and training specialist ► Technology leader ► Focus and experience in simulation and training niche means efficiency an
Slide 31: Agenda
Agenda 1• John Lenyo, President, CAE USA ► CAE Defense business overview ► CAE USA highlights 2• John Branin, Director, Training Services, CAE USA and USAF Lt. Col. (ret.) ► U.S. budget process commentary ► Outlook for simulation industry 3• John Lenyo, President, CAE USA ► Conclusion and facility t
Slide 32: CAE USA Summary
CAE USA Summary Well positioned in a challenging macro environment here in the United States Solid track record serving all branches of U.S. military Good position on aircraft platforms with long-legs and expanding core into Ground Training Systems Budget environment more challenging, but will provi
Slide 33: CAE Defense Takeaways
CAE Defense Takeaways Three defining characteristics of CAE’s defense business 1 Platform exposure 2 Geographic diversification 3 Value proposition of simulation-based training We believe we can continue to grow CAE’s defense business in a challenging macro environment Page 33 CAE Inc. and/or Propri
Slide 34: Question Period
Question Period Page 34 CAE Inc. and/or Proprietary Information Confidential