Operational Installed Fleet – stable for next 10 years Over the next ten years, the geographical distribution of the B&GA fleet is expected to Macro remain broadly unchanged Economic Drivers B&GA fleet development by region, 2017-27 [% of global fleet] 1)2) 63% 63% North America Europe Asia 3) 2017: 20,100 2017: 3,700 2017: 2,100 Macro 12% 12% 2027: 22,800 2027: 4,500 2027: 2,600 7% 7% Economic Drivers CAGR: 1.3% CAGR: 2.1% CAGR: 1.9% 2017 2027 2017 2027 2017 2027 Aircraft Operational Latin America Middle East and Africa Utilisation Installed Fleet 2017: 4,300 2017: 1,600 13% 13% 2027: 4,900 2027: 1,800 5% 5% CAGR: 1.4% CAGR: 1.5% 2017 2027 2017 2027 1) Excludes migration effects; 2) Fleet with unknown operating region excluded from analysis; Source: Teal, ACAS, 3) Asia includes Pacific Rim Honeywell, Roland Berger 18 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Signature Market Drivers - Aircraft Utilisation Flight Hours by Certificate Type Flight Hours per Aircraft per year Macro Economic Drivers Part 135 Charter – Part 91k 600 on-demand operators Fractionals – e.g. Wheels-Up, Vistajet e.g. Netjets 500 14% 35% 400 Macro Economic Drivers 51% 300 Aircraft Operational Utilisation Installed Part 91 200 Fleet Corporate / Private Owner Operators 100 Part 135 Part 91 Part 91K 0 Part 91K Part 135 Part 91 Source: ARG/US based on US market for last 12 months ending Sep 2018 19 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Leveraging our Signature network to deliver more value New services and 4 asset utilisation Non-fuel 3 revenue growth - New passenger services Core revenue (e.g., Elite, black car, 2 source optimisation hotels) - Flight related 1 Organic Growth (e.g., catering, credit card, - Customer stickiness maintenance) - Network agreements - Aircraft operator loyalty - Market leadership - Aircrew - Alignment with customer - Passenger loyalty (e.g., rental car, hotels) segments - Competitive strengths - Real estate - Pricing optimisation - Flexible operating model (e.g., hangar, advertising) (incl. real estate) - Service enhancements 20 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
www.bbaaviation.com Ontic 21 BBA Aviation 02/10/2018 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Balanced portfolio and business structured to deliver growth $235M global business – proforma for Firstmark acquisition 3% 13% 7% 47% 24% 58% 22% 40% Cheltenham, UK 18% 40% 28% Plainview, NY Creedmoor, NC Military Electronics/Avionics Chatsworth, CA New Spares Commercial New OE Electro/Hydro-Mechanical B&GA R&O Engine Comp Singapore Other Land Gear Scalable structure and strong product competency enabling growth potential 22 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Large addressable market for Ontic Global Aircraft MRO Spend In Service Fleets $153B Component & Engine Spend $40B Active Legacy Aircraft & Sunset 38,000 Rotorcraft Legacy Opportunity Space Military BG&A $9.6B aircraft >25Yrs Commercial In Service Aircraft – 156,000 Huge opportunity for Ontic, significant room for growth 23 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
High quality earnings through proprietary and sole source positions Proprietary Revenue Sole Source Revenue Non-Prop Non Sole Source Sole Source $2M $26M $183M 1% 13% 87% Prop $207M 99% Sole source positions drive long term recurring revenue streams 24 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
BBA Aviation – our investment case Clear market leadership positions in end markets with long-term structural growth drivers 1 2 Significant barriers to entry underpin sustainable competitive advantage Low fixed cost base with flexible cash investment requirements 3 4 Multiple organic and inorganic growth opportunities across Signature and Ontic 5 Attractive financial model with strong free cash flow generation 25 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Disciplined capital allocation framework – Executing to Plan Strategic Growth $100-110m Capital expenditure Initiatives (1x depreciation) Fortified Network & Expanded Portfolio FCF of $250-300m Ontic licences $30-35m Data Operational 1100 Empowered Efficiency & 101100 Growth 011010 Decision Process 10 Making Improvement and Value M&A opportunities $100-150m Creation Core dividend – c.$140m sustainable growth Improved Technology Customer Solutions for Experience Customers To maintain 2.5x leverage Return to shareholders 26 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
www.bbaaviation.com Tony Lefebvre Signature Chief Operating Officer 27 BBA Aviation 02/10/2018 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Leveraging our Signature network to deliver more value Focus areas – detail to follow New services and 4 asset utilisation Non-fuel 3 revenue growth - New passenger services Core revenue (e.g., Elite, black car, 2 source optimisation hotels) - Flight related 1 Organic Growth (e.g., catering, credit card, - Customer stickiness maintenance) - Network agreements - Aircraft operator loyalty - Market leadership - Aircrew - Alignment with customer - Passenger loyalty (e.g., rental car, hotels) segments - Competitive strengths - Real estate - Pricing optimisation (incl. real - Flexible operating model (e.g., hangar, advertising) estate) - Service enhancements 28 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
What is an FBO? Real Estate Anchor FBO stands for “Fixed Base Operator”. Signature FBOs provide premium flight support services including: - GA Aircraft ground support and fuelling - Hangar and office leasing - Concierge services - De-icing - Line maintenance - Ground handling for transport-category aircraft - Airline fuelling in select markets 29 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Highlights - Luton FBO London Luton - #4 busiest B&GA Airport in Europe - 13,400 movements p.a. - 3 FBOs on the field (2 Signature) Redevelopment - 45 year lease extension - $34m redevelopment project - New FBO 15% larger with 50% more parking - Increased hangarage of 190 square metres 30 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Highlights - Teterboro FBO Teterboro New Jersey (TEB) - Busiest B&GA Airport in the world - Signature - 3 FBO facilities - 5.2 acres aircraft ramp - ~142k movements - 80k sq ft hangars - Airport lease through 2035 - 15k sq ft office / shop space Signature Signature East West Signature South 31 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
The Signature FBO Network Signature Signature Select EPIC Opportunities to: - Harmonise the branding and store fronts - Transition to a single loyalty programme - Leverage common technology and customer data management 32 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
The world’s largest FBO network FBO Locations Geographic base locations Signature Select 19 180 Signature EPIC 205 205 EPIC 19 Select 180 Select EPIC 70 30 29 17 14 Signature Atlantic Million Air Jet Aviation Sheltair Tac Air Operated Epic Select 33 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Not just the most dots on a map…but the right dots on the map Unmatched Network Signature is at top 10 B & GA airports # of operations % of total US Locations in 2017 movements - FBOs at 37 of the top 50 US General Teterboro (TEB) 141,865 3.7% Aviation markets by flight count Westchester County (HPN) 61,958 1.6% - including all 10 of the top 10 Dallas (DAL) 58,955 1.6% - Industry leading network relevancy Washington (IAD) 57,176 1.5% - Large scale infrastructure and Las Vegas (LAS) 51,768 1.4% facilities capable of handling high volume operations up transport Van Nuys (VNY) 51,424 1.4% category aircraft Palm Beach (PBI) 50,440 1.3% - Exclusive presence in markets Houston (HOU) 50,415 1.3% Chicago (MDW) 47,968 1.1% DeKalb-Peachtree (PDK) 41,372 1.1% Total top 10 US FBOs 613,341 16.2% 34 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Signature - the most relevant network in the FBO space Relevancy Network relevance: FBO presence at top 200 US FBO locations by fuel burn 68% 38% 19% 9% 6% 5% 5% 1% Signature Flight Atlantic Jet Aviation Million Air Ross TAC Air Sheltai r Cutter Support 35 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
FBO network secured with long term agreements 17+ years average remaining term Typical FBO Minimum Standards - Experienced operators - Large initial investments - Required offering of non-fuel services such as aircraft maintenance or charter - Fuel farm infrastructure - Commercial Fuelling - Maintenance - Other services 36 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Signature network grows to over 400 locations with EPIC… 1. Network - 205 EPIC branded locations plus c.100 unbranded locations 2. Credit Card - Signature and EPIC fuel purchasing cards • Options to expand 3. Military Defense Logistics Agency (DLA) - Extensive Experience 4. Procurement - Over 500 million gallons of combined buying power with Signature • Allows us to move upstream 5. Technology - More than 1600 Self- fuelling stations – product differentiation 205 1600+ with an alternative way to support EPIC Locations Self Service Pods Asset-lite network extension 37 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Delivering personalised customer experiences Team members - Delivered through highly trained service professionals - New tools and flexibility to support the customer’s journey Technology - CRM database provides team with customer preferences Improved - Options for customers to do business with us the way they want Customer Facilities Experience - Speed - 96% of passengers spend less than an hour with us - Efficiency - upgraded facilities and ramps to move quickly in and out of the FBO Amenities - High speed internet, business facilities, amenities and concierge services 38 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Moving the business forward with investments in technology 1100 10110 00110 1010 Improve over From 2,400 to Reduce 1M 65K+ just over 100 Technology transactions reconciliations total products solutions for (annually) customers Data empowered decision making New Global FBO management system… - Invested $10M in purpose built FBO point of sale and reporting system - Simplified interface – significantly reduces employee training time - Visibility to labour efficiency and productivity - Enhanced data on customer behaviour and preferences 39 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Significant growth opportunities to leverage our assets Focus Area Focus areas – detail to follow Aircrew Real estate Flight Catering Rental car Hangars Lavatory/ water Airline Badging/ ramp access Spare aircraft Hotel Advertising De-ice Co-branded club Maintenance Offices Credit card Cleaning Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 40
San Jose – attractive new hangar development Real Estate San Jose (SJC) – Third party funded Capital intensive hangar development & funded by our customers; secures airport lease through 2063 - Satisfies ~$30m capital investment lease obligation - Will generate incremental property management revenue & fuel sales margin 41 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Teterboro – significant pipeline of hangar development Real Estate Teterboro (TEB) - Wetlands development Only available development land left at TEB within Signature's leasehold - Two parcels to develop - Shopping the development now – high interest by Corporates and HNW individuals - Requires handling and fuelling to be done by Signature 42 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Signature involved in the community local and national level Community Engagement 43 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Building a long term sustainable operating platform SAFETY - Paramount to our customers - Everything we do has safety as our first priority PEOPLE - World class people trained to deliver personalised customer experiences . REAL ESTATE - Global portfolio of long term assets in the locations where customers want to fly OPERATIONAL EFFICIENCY - Speed and efficiency in everything we do for our customers - Technology enabled operations CUSTOMERS - Delivering individualised customer experiences . 44 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
www.bbaaviation.com Shawn Hall Signature CCO 45 BBA Aviation 02/10/2018 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Leveraging our Signature network to deliver more value Focus areas – detail to follow New services and 4 asset utilisation Non-fuel 3 revenue growth - New passenger services Core revenue (e.g., Elite, black car, 2 source optimisation hotels) - Flight related 1 Organic Growth (e.g., catering, credit card, - Customer stickiness maintenance) - Network agreements - Aircraft operator loyalty - Market leadership - Aircrew - Alignment with customer - Passenger loyalty (e.g., rental car, hotels) segments - Competitive strengths - Real estate - Pricing optimisation (incl. real - Flexible operating model (e.g., hangar, advertising) estate) - Service enhancements Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 46
Three focus areas will drive increased performance from core revenue Core revenue streams Alignment with customer segments • Four behavioral segments identified • Commercial group aligning Marketing, Sales and Revenue Management to segments Other Pricing optimisation Handling • Central pricing engine in place beginning of Q4FY18 to automate manual processes • Allows for greater management of ~65% of revenue base (incl. demand-based pricing) Real estate Formal network agreements • 50% of revenue under commercial agreement Fuel • Contracts anchored to loyalty and volume • Contract management 1100 10110001 101010 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 47
Deeper customer understanding enables more effective go to market FAA segments in Behavioral segments Behavioral filter SFS network 1 in SFS network 1 o General characteristics - Seeking luxury travel experience Prestige - Low utilisation - Fly for revenue Commercial - High utilisation - Focus on passenger time efficiency Efficiency - High utilisation Part 91 (owner operator) Prestige Commercial Part 135 (charter) - Price sensitive Efficiency Value Fractional Value - Low utilisation 1 SFS transaction data - % of US revenue Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 48
Network scale presents pricing challenge (and opportunity) Order size Customer (3 tiers) program 300K+ Competitive region Customer = loyalty potential pricing guidance combinations! Customer size (annual gallons) Base market Product attribute Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 49
Signature leveraging technology in pricing to capture incremental value - Extract data using a BI Tool Data Preparation - Normalise Data Segmentation - Split data into market segments Market Price - Estimate the market price in each segment Price Sensitivity - Estimate Price/Volume relationship in each segment - Make price adjustment where advantageous. Optimisation - Fix any broken pricing rules - Predict the financial impact Measure Impact - Measure the results once prices are live in-market Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 50
Scale and location create significant non-fuel revenue opportunities Focus areas – detail to follow New services and 4 asset utilisation Non-fuel 3 revenue growth - New passenger services Core revenue (e.g., Elite, black car, 2 source optimisation hotels) - Flight related 1 Organic Growth (e.g., catering, credit card, - Customer stickiness maintenance) - Network agreements - Aircraft operator loyalty - Market leadership - Aircrew - Alignment with customer - Passenger loyalty (e.g., rental car, hotels) segments - Competitive strengths - Real estate - Pricing optimisation (incl. real - Flexible operating model (e.g., hangar, advertising) estate) - Service enhancements Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 51
Signature’s position at centre of B&GA transactions underpins growth Tenants Operators Trip/Flight Spare planners aircraft Maintenance Cleaning providers Car Catering Service Rental Hotel Car Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 52
Non-fuel revenue opportunities Focus Area Focus areas – detail to follow Aircrew Real estate Flight Catering Rental car Hangars Lavatory/ water Airline Badging/ ramp access Spare aircraft Hotel Advertising De-ice Co-branded club Maintenance Offices Credit card Cleaning Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 53
Opportunity with Signature / Epic credit card now in-house Context and opportunity Signature’s existing credit card supplied by Epic Signature benefits - Cost savings (transaction fee) - Revenue generation - Customer stickiness (incl. tie to Loyalty programme) Customer benefits - Simplified/streamlined billing for all flight needs (1 bill vs. 10-15 invoices) - Single card across 463 combined SFS/Epic locations (49 states and 28 countries) 1100 10110001 101010 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 54
Deeper penetration of branded fuel card worth $4-8M Split of fuel revenue (present) Split of fuel revenue (future) Opportunity assumptions - $1.5B in SFS revenue - 25% penetration (current penetration in Epic network) - Standard rates and fees $4-8M underlying operating profit opportunity Direct Bill Card C Direct Bill …Incremental value Other Card D Other possible with broader Card A Card E Cards A-E use Signature card Card B Signature card Signature card Source: SFS transaction data Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 55
Pivoting network advertising worth $3-6M and indirect benefits Key passenger stats Summary of benefits Avg. annual Annual passenger Avg. net worth - Increase from ~$1M discretionary income volume operating profit today by focusing on passengers and national/spot contracts - Elevated passenger experience level - Stronger luxury brand affiliation 1.7M 1 $67M – 1.5B 2 $728K – 11.8M 3 $3-6M underlying operating profit opportunity 1 NBAA, SFS operations data; 2 Jet Traveler Report 2018; 3 Wealth-X 2015 UHNWI Luxury Spend Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 56
Opportunities exist to drive growth through new services and asset utilisation Focus areas – detail to follow New services and 4 asset utilisation Non-fuel 3 revenue growth - New passenger services Core revenue (e.g., Elite, black car, 2 source optimisation hotels) - Flight related 1 Organic Growth (e.g., catering, credit card, - Customer stickiness maintenance) - Network agreements - Aircraft operator loyalty - Market leadership - Aircrew - Alignment with customer - Passenger loyalty (e.g., rental car, hotels) segments - Competitive strengths - Real estate - Pricing optimisation (incl. real - Flexible operating model (e.g., hangar, advertising) estate) - Service enhancements Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 57
Opportunity exists to monetise services provided to passengers Focus Area Flight Aircrew Real estate Passenger Catering Rental car Hangars Concierge Lavatory/ water Airline Badging/ ramp access Security Spare aircraft Hotel Advertising Elite De-ice Co-branded club Hotel Maintenance Offices Black car Credit card Cleaning Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 58
Signature positioned to satisfy demand for differentiated airline experience Source: JD Power; Capgemini Financial Services Analysis, 2018 Demand for differentiated airport - Airport accessibility, check-in/baggage, and security check key airport rating factors experience CAGR Growth Description 2010-16 2016-17 $30m+ Ultra-HNWI 7.4% 11.2% Growing wealthy population $5-30m Mid-tier Millionaires 7.3% 10.4% Millionaires next door $1-5m 7.2% 9.4% - Near 100% overlap with hubs of largest US airlines Existing real estate and know how - Existing experience in providing differentiated level of service - Proven Elite concept (EMEA and Caribbean) Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 59
Elite provides private jet experience through airline during departure… Departure Security 1 Greeting Light Private jet service boarding Luxury Airliner shuttle boarding 1 Security requirements vary across locations Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 60
…and arrival Arrival Private jet Border/ Luggage deplaning Customs Airliner Luxury deplaning shuttle Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 61
Beyond right real estate, key by-airport needs in place Location A Location B Location C Location D Location E Location F Location G ✓ ✓ ✓ ✓ ✓ ✓ ✓ Badged Employees ✓ ✓ ✓ ✓ ✓ ✓ 24/7 Staffing ✓ ✓ ✓ ✓ ✓ ✓ ✓ Security Cameras ✓ ✓ ✓ ✓ ✓ ✓ ✓ Airside Access ✓ ✓ ✓ ✓ ✓ ✓ Private Lounge ✓ ✓ ✓ ✓ ✓ ✓ ✓ Conference Room ✓ ✓ ✓ ✓ ✓ ✓ ✓ Airport Approved Vehicles Customs & Immigration On Airport On Site On Site On Site On Site On Airport On Airport Long Term Parking On Site Off Site On Site On Site Off Site Off Site Off Site Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 62
Elite worth $5-10M in underlying operating profit 50M/ year 1 Passengers 5M/ year 2 $500- 0.10% 3 $1.5K 1 st Class 5-10 Elite $5-10M OP FBOs opportunity 1 Commercial airline traffic in average target airport 2 Assumed 10% First Class traffic 3 Assumed daily capture Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 63
Signature focused on new ways to influence upstream decisions Tech Influence Hub of Incentivise Loyalty Ease of Network enabled upstream decision based doing aviation Operators relevance service decisions maker pricing business needs delivery Traditional focus area Differen- All air Influence Brand Passengers tiated travel upstream New focus area awareness experience needs decisions Detail to follow Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 64
Signature moving to influence upstream FBO decisions… Timing Method to book FBO Historical focus Advance Commercial agreement Charter booking Trip / Flight planning Pre-takeoff / in-flight / post-landing Real-time Detail to follow Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 65
…by exploring relationships with upstream enablers Sample flight timeline Options to move upstream - Equity investment - Commercial agreement D-10 D-9 D-3 D-1 D0 Passenger Flight Flight/Trip Service Aircraft requests flight secured planned providers arrives notified at FBO 3 rd Party trip planners Charter broker Key enabler(s) Operator dispatcher to step Flight planning tools 1100 10110001 101010 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 66
Leveraging our Signature network to deliver more value (2-5 yrs) (2-4 yrs) (1-2 yrs) New services and 4 asset utilisation Non-fuel 3 revenue growth Core revenue 2 Elite source optimisation 1 Organic Growth Credit card Advertising Pricing optimisation >50% >50% >50% Drop through ~10 7-14 5-10 Underlying operating profit ($M) Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic 67
www.bbaaviation.com Gareth Hall Ontic President 68 BBA Aviation 02/10/2018 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Overview of Ontic presentation Future 4 Growth Historical 3 Performance Competitive 2 advantage 1 What we do 69 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
How does Ontic create and capture value? Ensuring availability of high quality products and services to our customers creates significant value Pedigree Availability Value OEM design & quality Exceptional customer service Value to OEM and to “Our Customer” Meet the needs of ‘shared’ Obsolescence management Supply chain specialist customers Ensuring legacy aircraft remain flying OEM regulatory approvals Fleet knowledge demand forecasting Prices reflect the value delivered Long term product and service provision OEMs trust Ontic to meet the needs of the long term customers 70 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Value creation through supply chain execution - GTSU Safran Licence Licence Summary: Exceeding Expectations: - Product: Gas Turbine Starter Unit - Complex, low yield supply chain re-engaged - Platforms: AV8B - Customer relationship established following - Customers: US Marines expiry of incumbent support (Boeing HISS) - Service Life: 2028 - Record parts availability achieved. Highest - Cold supply chain performing supplier on the AV8B programme Fleet readiness record levels and strong investment returns 71 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Balanced portfolio and business structured to deliver growth $209M global business - Revenue mix 3% 13% 7% 47% 24% 58% 22% 40% Cheltenham, UK 18% 40% 28% Plainview, NY Creedmoor, NC Military Electronics/Avionics Chatsworth, CA New Spares Commercial New OE Electro/Hydro-Mechanical B&GA R&O Engine Comp Singapore Other Land Gear Scalable structure and strong product competency enabling growth potential 72 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
How do we expand the product portfolio? 3 phase assessment lense: Intellectual Property Platform Aftermarket Need Drawings Scale – number of active planes Do the parts require to be replaced or repaired? Complex, bespoke test equipment Longevity – how long the aircraft fleet is expected to remain active Knowhow Trusted, long term partner with major aviation OEMs 73 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Why do OEMs choose to licence product lines? - Focus on new aircraft platforms - Products no longer core to strategic focus - Decreasing volume with sporadic demand - Products utilised on maturing or declining fleet - Product support challenges - Contract restrictions prevent desired returns - Footprint / capacity challenges Ontic recognised as a trusted, long term partner 74 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
OEM Partners Key Customers 160 Licences signed, key to success are Ontic’s strong OEM & customer relationships 75 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Complex carve outs – GE Aviation Systems Fuel Measurement 2012 Acquisition summary: - Deal completion: May 2011 - Total investment: $65M - Platforms: B777, A320, Typhoon, Hawk - Customers: Boeing, Airbus, BAE Systems, Airlines - Markets: Civil OEM / Airline MRO / Military Challenges and opportunities: - Establishment of UK footprint - Transfer 50 members of staff (TUPE) - System level responsibility – 777 & A320 - High volume production and aftermarket spares/repairs - Execution of fleet wide upgrade programmes - Developed infrastructure to support licence growth Trusted partner, strong continuing relationships 76 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Complex carve outs - GE Legacy Avionics 2017 Acquisition summary: - Investment: $61.5M acquisition - Investment: $4M capital - Return: $9m Annual EBITDA - Platforms: B737, Hawk, AW101, C130 - Customers: BAE, Boeing, Leonardo - Markets: 74% Military / 26% Civil Transition challenges: - Transfer 83 members of staff (TUPE) - Facility enhancements: - Cleanroom - Temp & humidity controlled workshop - Specialist process areas - Rare skills and demographic challenges - High volume of technically complex parts Creating trust and confidence through execution and delivery 77 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Our People – creating and driving value Our people are: - Proud to work at Ontic – Top quartile engagement - Committed to a future career with Ontic - Keen to develop and undertake new opportunities - Thriving in an entrepreneurial culture We invest in our communities - Participation in youth employment programmes - Employee led engagement programmes - Promote STEM careers and careers in Aviation Engaged global team delivering exceptional results 78 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Ontic is the market leader in its space R&D GROWTH MATURITY SUNSET Transition to Non-Core & Legacy Products DEMAND OEM Maturity OEM Content Authorised Legacy Support Consolidators Ontic Effect Distributers & 3 Unauthorised PMA PL’s NICHE TIME 50+YRS 79 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Large and attractive opportunity space Global Aircraft MRO Spend In Service Fleets $153B Component & Engine Spend Active Legacy $40B Aircraft & Sunset 38,000 Rotorcraft Legacy Opportunity Space Military BG&A $9.6B aircraft >25Yrs Commercial In Service Aircraft – 156,000 Huge opportunity for Ontic, significant room for growth 80 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Intellectual property provides significant barriers to entry Proprietary revenue Sole source revenue Non-Prop Non Sole Source Sole Source $2M $26M $183M 1% 13% 87% Prop $207M 99% Sole source positions drive long term recurring revenue streams 81 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
The portfolio provides high levels of future revenue visibility Ontic firm orderbook + order run rate - Total backlog $270M 300 270 - Firm orders 250 60 $173M + 200 130 150 - Order run rate, 27 ‘known volume’ 80 210 100 60 $60M 30 103 50 57 50 - $130M of 2019 0 Current Year 2019 2020+ Total Order Book Value revenue booked 2018.10 Order Book Known Volume Portfolio allows a significant forward order book to be maintained 82 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Secure long term positions on platforms with significant future lifespan Licence Portfolio - 2017 $m Revenue - Portfolio of 160 licences with 6000 products - Incumbency value very high >10 yrs. with Owned or renewal options Perpetual $31.6M $132.0M - Long life platforms 15% 63% - All licences have renewal options - 100% success rate at licence renewals <10 yrs. with renewal options $45.4M 22% Portfolio assures access to long term attractive and visible revenue streams 83 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Disciplined investment approach key in executing profitable growth Ontic Revenue & EBITDA - Aftermarket focus - IP protected products Revenue EBITDA 209 - Sole Source positions 200 168 - Long term revenue streams 150 - Large ‘legacy’ market - Pipeline of opportunities 100 63 46 48 50 30% 13 29% 28% - 2008 2013 2017 Strong growth performance & future potential 84 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Licence/Product Line opportunity funnel - Disciplined investment EXPLORATORY approach - Deal gestation period often >1year EVOLVING - Average of 1 in 5 opportunities converts - Dedicated teams in place in ACTIVE NEGOTIATION US and UK - Well positioned to deploy FIRSTMARK $35m/annum on value Q4 2018 WOODWARD UTAS SIGNED Q3 2018 creative deals ESTERLINE Q4 2017 HONEYWELL Q4 2017 Q1 2018 32 deals closed since BBA acquisition of Ontic, average multiple 5-8x 85 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Acquisition of Firstmark Corp – Platform for growth Transaction overview - $27m annual revenue generating c $8.5m EBITDA - IP protected aftermarket portfolio - 2 US East Coast locations Growth - Growth through capture of legacy military IP - Pricing potential through additional value creation for customers - Capacity - capable and experienced management team Barriers to entry - Complex aftermarket parts – intellectual property held - The key platforms served are considered ‘sweet spot’ (F15, F16, F18, KC135, C130) Growth opportunities, strong market positions with stable recurring revenue 86 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Execute on opportunity space and deliver Double EBITDA from 2016 by 2021 – Management executing to plan 3 PILLARS OF STRATEGY Market Intelligence Growth Optimisation Data Analytics that drive our decision making - Geographic penetration - Sourcing - Platform - Channels - Expanded platform focus - Footprint - Pricing - Products - Deepening OE relationships - Continuous improvement - Ensure continued pipeline to - $35M of annual investment - Drive value from existing deploy capital portfolio - Targeted M&A e.g. Firstmark - Provides visibility into platform/ market opportunities and risk Strategy execution delivering growth to $100m of EBITDA 87 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Summary Future growth 4 Historical 3 performance - Active and extensive pipeline of opportunities Competitive 2 advantage - 32 licence & M&A deals - Platform & Market analysis What we do 1 signed tools - Sole source positions - Revenue growth from - Scalable organisation ready to $46M to $209M execute on future growth - Licence or acquire IP - OEM relationships - Legacy aftermarket space - EBITDA margins of 30%+ - Integration capability - Ensure availability of parts - Supply chain proficiency and service Market leading position, strong value creation and significant future opportunity 88 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
www.bbaaviation.com David Crook Group FD 89 BBA Aviation 02/10/2018 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Operating model built on strong foundations Foundation Foundation US FBO long leases Ontic Proprietary revenue Sole source revenue Non-Prop Non Sole Source Sole Source 19 18 18 18 18 $2M 1% $26M 13% $183M 87% 17 17 Prop 2012 2013 2014 2015 2016 2017 2018 $207M 99% 90 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Flexible operating model Flexibility Flexibility Flexible Cost Base Capital Expenditure 25% 180.0 FBO/Hangar dvpmt 160.0 $110m 140.0 FBO Maintenance 120.0 Ontic 100.0 80.0 ERO 60.0 75% 40.0 Other 20.0 - 2018 guidance Fixed costs - Leases & Variable costs - Fuel & labour other 91 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Debt facilities that support growth and long-term nature of core assets Debt Maturity Profile - Leverage range set at 2.5-3.0x on a covenant basis (2.6x at June 2018) - $650m unsecured RCF refinanced in H1 2018, expiry 800 March 2023 700 600 - In April 2018 issued our inaugural $500m senior unsecured notes due 2026 at 5.375% 500 $m 400 - Proceeds used to repay Facility B acquisition debt and maturing US PP notes 300 200 - Facility C acquisition debt of $450m to be refinanced by 2019 (matures 2020) 100 0 - Weighted average cost of debt c.5% 2018 2019 2020 2021 2022 2023 2024 2025 2026 RCF Usage Term Debt Usage Bond USPP RCF Headroom Headroom of $618 m as at 30 June 2018 92 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Disciplined capital allocation framework – Executing to plan Strategic Growth $100-110m Initiatives Capital expenditure (1x depreciation) Fortified Network & FCF of $250-300m Expanded Portfolio Ontic licences $30-35m Data Operational Empowered Efficiency & 1100 Growth 101100 Decision Process 011010 10 Making Improvement M&A opportunities and Value $100-150m Creation Core dividend – c.$140m sustainable growth Improved Technology To maintain Customer Solutions for Experience Customers Return to shareholders 2.5x leverage 93 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Disciplined capital appraisal based on ROIC ROIC calculated by dividing underlying operating profit by net assets, at the average exchange rate for the last 13 months’ spot rate. The net assets for ROIC are calculated by averaging the net assets over the last 13 months. Screening $m Rationale 12% ROIC threshold St Thomas FBO Arrivals/departures on the field. Length of unexpired lease term. No of FBOs 9 (49% share completed) on the field. Network relevance EPIC Franchise network. Card programme. Broader data capture. Access to direct 88 (Completed) fuel procurement Ontic licences 22 High IP content. Sole source rights. Fleet size and identifiable aftermarket (Completed) Firstmark High IP content. Sole source rights. Fleet size and life cycle. IP development 97 (Completion late in 2018) opportunities. Expandable footprint 94 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Leveraging the Signature network for outperformance (2-5 yrs) (2-4 yrs) (1-2 yrs) New services and 4 asset utilisation Non-fuel 3 revenue growth Core revenue 2 Elite source optimisation 1 Organic Growth Credit card Advertising Pricing optimisation >50% >50% >50% Drop through ~10 7-14 5-10 Underlying operating profit ($M) 95 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Summary - Strong and flexible operating model representing significant barriers to entry - Multiple organic and inorganic growth opportunities support Free Cash Flow generation - Balance sheet in place to support strategy for growth - Disciplined capital appraisal policy - Shareholder returns in alignment with our transparent capital allocation policy. 96 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
www.bbaaviation.com Mark Johnstone Group CEO 97 BBA Aviation 02/10/2018 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
BBA Aviation – our investment case Clear market leadership positions in end markets with long-term structural growth drivers 1 2 Significant barriers to entry underpin sustainable competitive advantage Low fixed cost base with flexible cash investment requirements 3 4 Multiple organic and inorganic growth opportunities across Signature and Ontic 5 Attractive financial model with strong free cash flow generation 98 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
Leveraging our Signature network to deliver more value New services and 4 asset utilisation Non-fuel 3 revenue growth - New passenger services Core revenue (e.g., Elite, black car, 2 source optimisation hotels) - Flight related 1 Organic Growth (e.g., catering, credit card, - Customer stickiness maintenance) - Network agreements - Aircraft operator loyalty - Market leadership - Aircrew - Alignment with customer - Passenger loyalty (e.g., rental car, hotels) segments - Competitive strengths - Real estate - Pricing optimisation (incl. real - Flexible operating model (e.g., hangar, advertising) estate) - Service enhancements 99 Overview Strengths & Competitive Advantages Signature operations Signature commercial Ontic
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