CAE Financial and Business Overview

Non-GAAP measure definitions Capital employed Capital employed Capital employed is a non-GAAP measure we use to evaluate and monitor how much we are investing in our business. We measure it from two perspectives: Capital used: For the Company as a whole, we take total assets (not including cash and cash equivalents), and subtract total liabilities (not including long-term debt and the current portion of long-term debt); For each segment, we take the total assets (not including cash and cash equivalents, tax accounts and other non-operating assets), and subtract total liabilities (not including tax accounts, long-term debt and the current portion of long-term debt, royalty obligations, employee benefit obligations and other non-operating liabilities). Source of capital: In order to understand our source of capital, we add net debt to total equity. For a reconciliation of this non-GAAP measure to the most directly comparable measure under GAAP, refer to section 9.1 "Consolidated capital employed" of the interim MD&A for the periods ending June 30, 2020, September 30, 2020 and December 31, 2020 (as filed on SEDAR (www.sedar.com) on August 12, 2020, November 10, 2020 and February 11, 2021, respectively), as well as section 7.1 "Consolidated capital employed" of the financial report for the years ended March 31, 2018, March 31, 2019 and March 31, 2020 (as filed on SEDAR (www.sedar.com) on May 25, 2018, May 17, 2019 and May 22, 2020, respectively), which sections are specifically incorporated by reference into this presentation. Return on capital employed (ROCE) ROCE is used to evaluate the profitability of our invested capital. We calculate this ratio over a rolling four-quarter period by taking net income attributable to equity holders of the Company excluding net finance expense, after tax, divided by the average capital employed. Earnings or loss per share (EPS) before specific items Earnings or loss per share before specific items is a non-GAAP measure calculated by excluding restructuring costs, integration costs, acquisition costs and impairments and other gains and losses arising from significant strategic transactions or material events, after tax, as well as significant one-time tax items from the diluted earnings per share from continuing operations attributable to equity holders of the Company. The effect per share is obtained by dividing these restructuring costs, integration costs, acquisition costs, and other gains, after tax, as well as one-time tax items by the average number of diluted shares. We track it because we believe it provides a better indication of our operating performance on a per share basis and makes it easier to compare across reporting periods. EBITDA EBITDA comprises earnings before income taxes, finance expense - net, depreciation and amortization. EBITDA margin in D&S is defined as the EBITDA of the Defense and Security segment expressed as a percentage of the Defense and Security revenues. EBITDA of L3Harris Military Training business comprises earnings before income taxes, finance expense - net, depreciation and amortization. Adjusted EBITDA of L3Harris Military Training business is calculated as EBITDA from L3Harris Military Training, after giving effect to the Acquisition and Acquisition related adjustments from sales type leases accounted for under US GAAP and estimated standalone costs. Free cash flow Free cash flow is a non-GAAP measure that shows us how much cash we have available to invest in growth opportunities, repay debt and meet ongoing financial obligations. We use it as an indicator of our financial strength and liquidity. We calculate it by taking the net cash generated by our continuing operating activities, subtracting maintenance capital expenditures, investment in other assets not related to growth and dividends paid and adding proceeds from the disposal of property, plant and equipment, dividends received from equity accounted investees and proceeds, net of payments, from equity accounted investees. For a reconciliation of this non-GAAP measure to the most directly comparable measure under GAAP, refer to section 8.1 "Consolidated cash movements" of the interim MD&A for the periods ending June 30, 2020, September 30, 2020 and December 31, 2020 (as filed on SEDAR (www.sedar.com) on August 12, 2020, November 10, 2020 and February 11, 2021, respectively), as well as section 6.1 "Consolidated cash movements" of the financial report for the years ended March 31, 2018, March 31, 2019 and March 31, 2020 (as filed on SEDAR (www.sedar.com) on May 25, 2018, May 17, 2019 and May 22, 2020, respectively), which sections are specifically incorporated by reference into this presentation. Cash conversion rate Cash conversion rate is a non-GAAP measure we use to assess our performance in cash flow generation and as a basis for evaluating our capitalization structure. We calculate it by dividing free cash flow by net income before specific items Full-flight simulators (FFSS) in CAE's network A FFS is a full-size replica of a specific make, model and series of an aircraft cockpit, including a motion system. In our count of FFSS in the network, we generally only include FFSs that are of the highest fidelity and do not include any fixed based training devices, or other lower-level devices, as these are typically used in addition to FFSs in the same approved training programs. Net debt Net debt is a non-GAAP measure we use to monitor how much debt we have after taking into account cash and cash equivalents. We use it as an indicator of our overall financial position, and calculate it by taking our total long-term debt, including the current portion of long- term debt, and subtracting cash and cash equivalents. Net debt-to-capital is calculated as net debt divided by the sum of total equity plus net debt. For a reconciliation of this non-GAAP measure to the most directly comparable measure under GAAP, refer to section 9.1 "Consolidated capital employed" of the interim MD&A for the periods ending June 30, 2020, September 30, 2020 and December 31, 2020 (as filed on SEDAR (www.sedar.com) on August 12, 2020, November 10, 2020 and February 11, 2021, respectively), as well as section 7.1 "Consolidated capital employed" of the financial report for the years ended March 31, 2018, March 31, 2019 and March 31, 2020 (as filed on SEDAR (www.sedar.com) on May 25, 2018, May 17, 2019 and May 22, 2020, respectively), which sections are specifically incorporated by reference into this presentation. 38 CAE Inc. Proprietary Information and/or Confidential CAE

View entire presentation