Bombardier Reports Third Quarter 2019 Results

Provided by Bombardier Inc/Globe Newswire

  • Consolidated revenues of $3.7 billion, representing 8% organic growth(1)
  • Consolidated adjusted EBITDA(2) and adjusted EBIT(2) of $255 million and $159 million, respectively; $143 million of reported EBIT
  • Free cash flow usage(2) of $682 million, supporting Global 7500 and Transportation ramp-up; $557 million operating cash flow usage
  • Clear roadmap to full year revenues, earnings(4) and free cash flow guidance supported by planned fourth quarter delivery schedules at Aviation and Transportation(3)

All amounts in this press release are in U.S. dollars unless otherwise indicated. Amounts in tables are in millions except per share amounts, unless otherwise indicated.

MONTRÉAL, Oct. 31, 2019 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) today reported its third quarter 2019 financial results, highlighting continued progress on its turnaround.

Among its achievements in the third quarter, Bombardier obtained Transport Canada and European Aviation Safety Agency (EASA) certification for its new Global 5500 and Global 6500 aircraft, with the Global 6500 also entering service. Bombardier Transportation made steady progress addressing its challenging projects, while also growing and improving the quality of its backlog.

Bombardier’s consolidated revenues for the quarter were $3.7 billion, representing 8% organic growth year-over-year, driven mainly by a favourable delivery mix of large business aircraft and progress on rail projects. Order activity remained solid in the quarter, and the Company reported strong backlogs at Transportation and for business aircraft of $35.1 billion and $15.3 billion, respectively.

Consolidated adjusted EBITDA and adjusted EBIT for the quarter were $255 million and $159 million, respectively. Adjusted EBIT margin in Aviation was 6.0%, in line with expectations and driven by Global 7500 aircraft ramp-up and the dilutive effect of commercial aircraft activities. Adjusted EBIT margin in Transportation was 5.1%, reflecting a concentration of large, late-stage projects and planned investments in manufacturing and engineering capacity announced earlier this year. On a reported basis, EBIT for the quarter was $143 million.

Free cash flow usage was $682 million for the quarter, reflecting the intense ramp-up of the Global 7500 production and lower cash inflows associated with train deliveries and milestones payments that have moved into the fourth quarter. Cash flows usage from operating activities during the quarter was $557 million.

The Company continues to expect full-year free cash flow usage to be approximately $500 million, driven by seasonally strong fourth quarter cash flows, the acceleration of Global 7500 deliveries and the partial release of excess working capital at Transportation.(3) As we move beyond short-term challenges, Bombardier is positioned for 2020 earnings(3) growth and positive cash flow generation.(3)(5)

“We continue to make progress driving our turnaround,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “At Aviation, the recent certification of our new Global 5500 and Global 6500 aircraft, and the outstanding in-service performance of our new Global 7500, highlight the strength of our business jet franchise. At Transportation, we are turning the corner. We are making steady progress working through our legacy projects, giving us confidence in our ability to deliver stronger financial performance.”

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SEGMENTED RESULTS AND HIGHLIGHTS

Following the strategic formation of Bombardier Aviation, effective July 1, 2019, Business Aircraft, Commercial Aircraft and Aerostructures and Engineering Services are reported under Aviation. Prior periods have been restated to reflect this new reporting structure. The Corporation’s interest in Airbus Canada Limited Partnership (ACLP) is treated as a corporately held investment and therefore is not included in Aviation.

  • Revenues of $1.6 billion during the quarter reflect double-digit organic growth year-over-year (excluding the Q400 and training activities divestitures completed earlier this year), driven by the Global 7500, external aerostructures revenues and stronger aftermarket services.
  • Deliveries during the quarter totalled 37 aircraft, including 6 CRJ and 31 business aircraft. Revenue grew mainly because of a favourable mix of large business aircraft sales led by 2 Global 7500 deliveries and the entry into service of the first Global 6500 aircraft.
  • On September 24, 2019, the Global 5500 and Global 6500 aircraft were awarded Transport Canada Type Certification, followed by EASA certification. The Global 5500 and Global 6500 aircraft showcase the ingenuity of innovation by bringing value to customers with segment-leading ranges and reduced operating costs.
  • As the pace of deliveries accelerates into the fourth quarter, Aviation is on track to reach 175 to 180 aircraft deliveries for the full-year on revenues of approximately $8.0 billion(3). Production ramp-up of the Global 7500 continues to make steady progress with an estimated 10 to 15 aircraft deliveries in the fourth quarter(3).
  • Order momentum remained healthy during the quarter for business aircraft, with backlog stable at an  industry-leading $15.3 billion. For the first nine months, business aircraft backlog increased by $1.0 billion.
  • Adjusted EBIT margin for the third quarter was 6.0% (6.2% EBIT margin), in line with expectations as the ramp-up of the Global 7500 aircraft and the dilutive effect of commercial aircraft activities weigh on Aviation margins. Year-to-date, adjusted EBIT margin was 7.6% (21.6% reported EBIT margin), tracking to full year margin guidance of 7.0%.(3)

Transportation

  • Transportation is gradually turning the corner on large, legacy projects as it makes progress against key project milestones.
    °  With deliveries increasing approximately 15% over the previous quarter, this progress positions the business to further accelerate the release of excess working capital starting in the fourth quarter and into 2020 and 2021.(3)
    °  To achieve this result, we are nearing completion of software testing and homologation for U.K. projects while completing production and we continue driving stronger in-service reliability in Switzerland and Germany to trigger customer acceptance of trains in operation.
    °  Longer term, the turnaround at Transportation is supported by the recent redeployment of resources, investments in additional capacity, and a strengthened management team, resting on a solid backlog and quality order intake. This drives our confidence in the long-term prospects of the business.
  • Revenues during the quarter totalled $2.2 billion, delivering 5% growth year-over-year, excluding currency translation, mainly coming from services. Transportation remains on track to the full year revenue guidance of approximately $8.75 billion,(3) assuming a 1.12 Euro to U.S. exchange rate.
  • Adjusted EBIT margin(3) for the quarter of 5.1% is in line with full year guidance of approximately 5.0%, reflecting a concentration of large, late-stage projects and includes the costs associated with planned investments in manufacturing and engineering capacity announced earlier this year. Reported EBIT margin for the quarter is 4.0%.
  • Backlog grew to $35.1 billion during the quarter, supported by $4.5 billion of order intake driving a book-to-bill ratio of 2.1. For the first nine months of the year, Transportation’s order intake was $8.1 billion, with a strong mix of high re-use projects, services and signalling orders as well as significant call-offs. Improving the backlog mix by replacing legacy projects with lower-risk projects is key to return to stronger financial performance.
    °  Highlighting the quarters’ order activity, Transportation is part of a consortium that was awarded a contract to supply and operate two monorail lines in Cairo, Egypt with its share valued at $2.64 billion. This award leverages Transportation’s INNOVIA monorail platform through an integrated offering of rolling stock and systems, signalling and services solutions. This project re-uses the platform operating in Sao Paulo, Brazil, since 2014 and currently under construction in Bangkok, Thailand and Wuhu, China.

bps: basis points
nmf: information not meaningful

(1) Excluding divestitures and currency translation impact.
(2) Non-GAAP financial measures. Refer to the Caution regarding Non-GAAP financial measures below for definitions of these metrics and reconciliations to the most comparable IFRS measures.
(3) See the forward-looking statements disclaimer at the end of this press release as well as the forward-looking statements section in Overview and the Guidance and forward-looking statements section in each reportable segment in the Corporation’s 2018 Financial Report for details regarding the assumptions on which the guidance is based.
(4) Defined as adjusted EBITDA and adjusted EBIT.
(5) Free cash flow target for 2020 excludes cash flow from the CRJ program, as well as payments associated with CRJ retained liabilities such as credit and residual value guarantees.
(6) Refer to Note 2 – Changes in accounting policies, to our interim consolidated financial statements, for the impact of the adoption of IFRS 16, Leases. Under the modified retrospective approach adopted by the Corporation, 2018 figures are not restated.
(7) Defined as cash and cash equivalents plus the amount available under our revolving credit facilities.
(8) Including 32 firm orders for CRJ900 as of September 30, 2019 and 45 firm orders and 4 options for CRJ900 as of December 31, 2018.
(9) On May 31, 2019, the Corporation completed the previously announced sale of the Q Series aircraft program assets, including aftermarket operations and assets, to De Havilland Aircraft of Canada Limited (formerly Longview Aircraft Company of Canada Limited). 2 Q Series aircraft deliveries are included in comparative period of 2018.
(10) Ratio of new orders over revenues.
(11) Including share of income from joint ventures and associates amounting to $20 million for the three-month period ended September 30, 2019 ($22 million for the three-month period ended September 30, 2018).