Capital Allocation Strategy

Non-GAAP measure definitions 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 December 31, 2021 (as filed on SEDAR (www.sedar.com) on February 11, 2022), as well as section 6.1 "Consolidated cash movements" of the financial report for the years ended March 31, 2018, March 31, 2019, March 31, 2020 and March 31, 2021 (as filed on SEDAR (www.sedar.com) on May 25, 2018, May 17, 2019, May 22, 2020, and May 19, 2021 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 adjusted net income or loss 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 December 31, 2021 (as filed on SEDAR (www.sedar.com) on February 11, 2022), as well as section 7.1 "Consolidated capital employed" of the financial report for the years ended March 31, 2018, March 31, 2019, March 31, 2020 and March 31, 2021 (as filed on SEDAR (www.sedar.com) on May 25, 2018, May 17, 2019, May 22, 2020, and May 19, 2021 respectively), which sections are specifically incorporated by reference into this presentation. Non-cash working capital Non-cash working capital is a non-GAAP measure we use to monitor how much money we have committed in the day-to-day operation of our business. We calculate it by taking current assets (not including cash and cash equivalents and assets held for sale) and subtracting current liabilities (not including the current portion of long-term debt and liabilities held for sale). 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 December 31, 2022 (as filed on SEDAR (www.sedar.com) on February 11, 2022), as well as section 7.1 "Consolidated capital employed" of the financial report for the year ended March 31, 2021 (as filed on SEDAR (www.sedar.com) on May 19, 2021), which sections are specifically incorporated by reference into this presentation. Operating income or loss Operating income or loss is an additional GAAP measure that shows us how we have performed before the effects of certain financing decisions, tax structures and discontinued operations. We track it because we believe it facilitates the comparison across reporting periods, and with companies and industries that do not have the same capital structure or tax laws. Order intake and Backlog Order intake Order intake is a non-GAAP measure that represents the expected value of orders we have received: For the Civil Aviation Training Solutions segment, we consider an item part of our order intake when we have a legally binding commercial agreement with a client that includes enough detail about each party's obligations to form the basis for a contract. Additionally, expected future revenues from customers under short-term and long-term training contracts are included when these customers commit to pay us training fees, or when we reasonably expect the revenue to be generated; For the Defence and Security segment, we consider an item part of our order intake when we have a legally binding commercial agreement with a client that includes enough detail about each party's obligations to form the basis for a contract. Defence and Security contracts are usually executed over a long-term period but some of them must be renewed each year. For this segment, we only include a contract item in order intake when the customer has authorized the contract item and has received funding for it; For the Healthcare segment, order intake is typically converted into revenue within one year, therefore we assume that order intake is equal to revenue. The book-to-sales ratio is the total orders divided by total revenue in a given period. Backlog Total backlog is a non-GAAP measure that represents expected future revenues and includes obligated backlog, joint venture backlog and unfunded backlog and options: Obligated backlog represents the value of our order intake not yet executed and is calculated by adding the order intake of the current period to the balance of the obligated backlog at the end of the previous fiscal year, subtracting the revenue recognized in the current period and adding or subtracting backlog adjustments. If the amount of an order already recognized in a previous fiscal year is modified, the backlog is revised through adjustments; Joint venture backlog is obligated backlog that represents the expected value of our share of orders that our joint ventures have received but have not yet executed. Joint venture backlog is determined on the same basis as obligated backlog described above; Unfunded backlog represents firm Defence and Security orders we have received but have not yet executed and for which funding authorization has not yet been obtained. Options are included in backlog when there is a high probability of being exercised, but indefinite-delivery/indefinite-quantity (ID/IQ) contracts are excluded. When an option is exercised, it is considered order intake in that period and it is removed from unfunded backlog and options. For a reconciliation of this non-GAAP measure to the most directly comparable measure under GAAP, refer to Section 4.3 "Consolidated orders and total backlog" of the financial report for the years ended March 31, 2019, March 31, 2020 and March 31, 2021 (as filed on SEDAR (www.sedar.com) on May 17, 2019, May 22, 2020, and May 19, 2021, respectively), which sections are specifically incorporated by reference into this presentation. 36 CAE Inc. 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