Cae Inc. · TSX:CAE
Cae — Q4 FY2014 Earnings Presentation
41 slides from Cae's earnings presentation, May 15, 2014
Slide 1: Investor Presentation Q4 FY2014
INVESTOR PRESENTATION Q4 FY2014
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 CAE Inc. Proprietary Information and/or Confidential 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 Healthcare and Mining increase utilization Invest to keep pace with customers and PROTECT preserve first-mover advantages MARKE
Slide 5: About CAE
About CAE Approximately 8,000 employees with ½ international Emerging markets leader Critical mass in aviation training 120,000+ pilots and crewmembers trained by CAE annually Comprehensive solutions provider Largest installed base of civil and defence aviation simulators supplied to industr
Slide 6: Strong Position Across Segments
Strong Position Across Segments CAE Inc. Proprietary Information and/or Confidential 6
Slide 7: Balanced And Diversified Revenue Base
Balanced And Diversified Revenue Base FY2014 Revenue Distribution: $2.1B U.S.A. 5 5 32 Asia Australia % 56 % 48 % 35 Canada Central and 39 47 South America Middle East 33 Europe Civil Simulation and Training Services Defence & Security Products Healthcare and Mining Healthcare and Mining CAE is well
Slide 8: Financial Highlights FY2014
YTD FY2014 Financial Highlights FY2014 Q4 FY14 $583.4M Revenue $2.1B (Record) $60M ($0.23 EPS) Net Income $190M ($0.73 EPS) Achieved high-teens Civil margin Free cash flow of $200.6M for 105% recovery in H2 conversion of net income Q4 SOI at 17.9% Balance sheet even stronger with Defence & Securit
Slide 9: Civil Simulation and Training
Civil Simulation and Training
Slide 10: Strategic Focus
CIVIL Strategic Focus Strengthening Core Leadership Expanding Core Leadership Be the Partner Of Choice in Move up-market with comprehensive aviation training solutions involving greater scope for Deliver best-in-class customer CAE as training partner (i.e., joint experience ventures) Protect clo
Slide 11: Market Drivers
CIVIL Market Drivers Regulations CAE’s operates within • Mandatory Annual Training a 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
Slide 12: Comprehensive Training Solutions
CIVIL Comprehensive Training Solutions Most comprehensive portfolio of products and services and unique end-to-end Type Training training solutions Differentiated Cabin Crew & Maintenance Ab Initio technologies Training Span three aviation markets: Simulation Commercial Products Business Updates
Slide 13: 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 14: CAE's Customers Include Airlines with Some of the Largest Aircraft Fleet Expansion and Renewal Plans
CIVIL CAE’s Customers Include Airlines with Some of the Largest Aircraft Fleet Expansion and Renewal Plans 224 orders 211 orders 202 orders 323 orders 524 orders 186 orders 302 orders 467 orders 257 orders Source of aircraft order data: Ascend - A Flightglobal Advisory Service, as of May 23rd 2014 C
Slide 15: Defence and Security
CAE Defence and Security
Slide 16: Strategic Focus
DEFENCE AND SECURITY Strategic Focus Strengthening Core Leadership Expanding Core Leadership Execute Platform Strategy Position as Training Systems Leverage position on Legacy Aircraft Integrator Platforms Position on Defence & Security Develop positions on New Platforms programs involving: Deve
Slide 17: 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 18: 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 capability
Slide 19: 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 20: Growing Platform Coverage
DEFENCE AND SECURITY Growing Platform Coverage MQ1/9 T44 AW129/169/189 S70i SW4 T6 UH60M T-50 CAE Inc. Proprietary Information and/or Confidential 20
Slide 21: Positioned Globally
DEFENCE AND SECURITY Positioned Globally Americas Europe Asia Pacific Africa and Middle East United States Canada Germany United Kingdom India Indonesia Israel Kuwait Chile Brazil Sweden Turkey Brunei Japan Saudi Arabia Oman Poland Netherlands Taiwan Malaysia UAE Morocco Mexico Colombia Italy Denmar
Slide 22: Global Operations
Global Operations Montreal Burgess Hill Stolberg Ottawa Orlando Tampa Bengaluru UAE Singapore Australia Operations strategically located in key growth markets Plus over 80 other sites where CAE provides training support services 22 CAE Inc. Proprietary Information and/or Confidential
Slide 23: 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 CAE Inc. Proprietary Information and/or Confidential 23
Slide 24: Healthcare and Mining
Healthcare and Mining
Slide 25: Healthcare and Mining
HEALTHCARE AND MINING Healthcare and Mining Leveraging our core capabilities to solve common challenges Skilled Labour in all our markets Shortage Common Challenges Need to Demand from Rehearse and Drivers Across Critical Emerging Markets Missions Modeling CAE’s Markets Simulation Civil Aviation T
Slide 26: Solutions Offering: CAE Healthcare
CAE 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 Fid
Slide 27: CAE Fidelis Maternal Fetal Simulator
CAE 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 CAE Inc. Proprietary Information and/or Confidential 27
Slide 28: Solutions Offering: CAE Mining
CAE MINING Solutions Offering Training Simulation Software Consulting Training delivery Integrate CAE Mine planning and Improve business across a number of simulation and operations outcomes disciplines training expertise in optimization Resources operational mining Induction, safety and Resourc
Slide 29: Capital Allocation Priorities
Capital Allocation Priorities 1 Invest in growth Market-led with a clear path to attractive returns 2 Balance current and long term shareholder returns Increased quarterly dividend three times in last 3 years 3 Maintain strong balance sheet Optimize capital structure vis-à-vis low cost of debt
Slide 30: Why Invest in CAE?
CAE INVESTMENT THESIS Why Invest in CAE? Expect significant annual EPS growth and long term ROCE expansion to be driven mainly by Underlying growth in Civil and Defence and Security markets • Increase addressable market • Pursue larger and more comprehensive opportunities Realizing returns on pr
Slide 31: Strong Position
CAE INVESTMENT THESIS Strong Position Leader in simulation-based 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
Slide 32: Appendix
APPENDIX
Slide 33: Competition
Competition Civil Simulation and Training Defence and Security Healthcare and Mining CAE Inc. Proprietary Information and/or Confidential 33
Slide 34: Segmented Financial Results Q4 FY2014
Q4 FY2014 Segmented Financial Results Simulation Products Training & Services TOTAL (amounts in millions) Actual Prior year Actual Prior year Actual Prior year Revenue 125.1 143.4 198.4 176.1 323.5 319.5 CIVIL SOI 21.1 25.8 36.9 24.9 58.0 50.7 % 16.9% 18.0% 18.6% 14.1% 17.9% 15.9% MILITARY Revenue 1
Slide 35: Segmented Financial Results FY2014
FY2014 Segmented Financial Results Simulation Products Training & Services TOTAL (amounts in millions) Actual Prior year Actual Prior year Actual Prior year Revenue 461.4 456.8 715.3 659.8 1,176.7 1,116.6 CIVIL SOI 83.5 88.2 96.3 100.7 179.8 188.9 % 18.1% 19.3% 13.5% 15.3% 15.3% 16.9% MILITARY Reven
Slide 36: Consolidated Financial Results Q4 FY2014
Q4 FY2014 Consolidated Financial Results Three months ended Summary of Consolidated Results March 31 (amounts in millions) 2014 2013 Revenue $583.4 $565.6 Total segment operating income 166.5 159.0 Operating profit 86.2 66.9 As % of revenue 14.8% 11.8% Net income 59.9 45.7 Net income attributable to
Slide 37: Consolidated Financial Results FY2014
FY2014 Consolidated Financial Results Twelve months Summary of Consolidated Results ended March 31 (amounts in millions) 2014 2013 Revenue $2,114.9 $2,035.2 Total segment operating income 596.9 584.8 Operating profit 291.8 234.0 As % of revenue 13.8% 11.5% Net income 191.1 140.7 Net income attributa
Slide 38: Cash Movements Q4 FY2014
Q4 FY2014 Cash Movements Three months ended Consolidated Cash Movements March 31 (amounts in millions) 2014 2013 Cash provided by operating activities $ 96.4 $ 80.6 (before changes in non-cash W/C) Changes in non-cash working capital 27.9 33.1 Maintenance capex and others assets (20.4) (9.8) Proceed
Slide 39: Cash Movements FY2014
FY2014 Cash Movements Twelve months Consolidated Cash Movements ended March 31 (amounts in millions) 2014 2013 Cash provided by operating activities $ 304.8 $ 239.1 (before changes in non-cash W/C) Changes in non-cash working capital (28.8) (84.6) Maintenance capex and others assets (69.9) (53.6) Pr
Slide 40: 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 41: CAE
CAE