November 2, 2017 Montréal Bombardier Inc., Press Release
Bombardier (TSX: BBD.B) today reported its third quarter 2017 results, highlighting continued progress transforming the company and building earnings power. The company now expects consolidated full-year EBIT before special items to be at least $630 million, the high end of its previous guidance.
“This was a very exciting quarter for Bombardier as we welcomed Airbus to the C Series program,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “This is a game-changing step for Bombardier. It positions the C Series program for long-term commercial success and will generate new and sustainable value for our customers, suppliers and shareholders.”
“We also continue to make solid progress executing our turnaround plan, and are very much on track to achieve the goals we set out in November 2015,” Bellemare continued. “We have clearly demonstrated our ability to reduce costs, improve productivity and grow margins. We have executed on our growth programs and we are taking big strategic steps necessary to unlock the full value of our portfolio.”
For the quarter, Bombardier reported revenues of $3.8 billion. EBIT before special items grew to $165 million, nearly doubling the third quarter 2016 amount. EBIT margins before special items were 8.5% for Transportation; 8.8% for Business Aircraft; and 9.3% for Aerostructures. Commercial Aircraft recorded EBIT before special items in line with the C Series ramp-up plan. Free cash flow usage was also in line with guidance at $495 million for the quarter.
Along with its third quarter results, Bombardier announced that a European customer has signed a letter of intent (LOI) for up to 61 C Series, including 31 firm aircraft and options for an additional 30 aircraft. The LOI is subject to the execution of a purchase agreement which is expected before year end. Based on the list price, a firm order would be valued at approximately $2.4 billion. This amount would increase to nearly $4.8 billion should all 30 options be exercised.
“This significant new order confirms the increasing confidence customers have in the C Series,” said Bellemare. “Looking forward, as Airbus joins the program, and with the C Series continuing to prove itself in service, we expect sales momentum to accelerate quickly.”
Other highlights of the Company’s performance in the third quarter include a 20% revenue growth at Transportation compared to the same period last year, along with margin expansion and strong orders. Business Aircraft also delivered margin expansion as it continues to improve productivity and operational efficiency, demonstrating its ability to perform in any market environment. The Global 7000 made progress toward its certification with the fourth test aircraft entering flight-testing in the quarter. This new ultra-long range aircraft remains on schedule to enter service in the second half of 2018.
Bombardier also announced the appointment of Douglas R. Oberhelman to its Board of Directors. Mr. Oberhelman spent 41 years at Caterpillar Inc., where he held various executive positions, including Executive Chairman, a role he held until his retirement in March 2017. Mr. Oberhelman replaces Patrick Pichette, who expressed his intention to resign from Bombardier’s Board of Directors for personal reasons. The Board accepted Mr. Pichette’s resignation and thanks him for his four years of dedicated service and the insight and energy he brought to the Company during his tenure.
Bombardier reported consolidated revenues of $3.8 billion in the quarter and $11.5 billion in the nine-month period, relative to $3.7 billion and $12.0 billion for the same periods last year, mainly as a result of continued growth in Transportation and previously announced adjusted volumes in Aerospace segments, consistent with market demand. EBIT before special items was $165 million and $457 million respectively for the quarter and nine-month period, up 90% and 41% for the same periods last year. This growth was driven by continued significant margin improvements at Transportation, Business Aircraft and Aerostructures, which all reached 8.5% or above in the quarter. Free cash flow usage was $495 million in the quarter and $1.7 billion in the nine-month period as a result of an increase in Transportation’s ramp-up in production ahead of deliveries coupled with the production ramp-up in aerospace for the Global 7000 and C Series programs. The financial performance year-to-date supports consolidated EBIT guidance before special items for the full year of at least $630 million, the upper end of our previous guidance range. Consolidated revenue and free cash flow usage guidance for the year are revised to approximately $16.3 billion and $1.0 billion respectively to align with approximately 20 to 22 C Series deliveries due to engine delivery delays from Pratt & Whitney. Certain engines originally designated for production aircraft in the fourth quarter will be redirected to support spare engine requirements of current C Series customers.
SEGMENTED RESULTS AND HIGHLIGHTS
Business Aircraft
Commercial Aircraft
Aerostructures and Engineering Services
Transportation
Warrants in connection with the Airbus partnership
In connection with the private placement to Airbus of warrants to acquire up to 100,000,000 Class B shares (subordinate voting) of Bombardier, the TSX has determined to accept notice of the private placement of such warrants and has conditionally approved the listing of the Class B Shares issuable pursuant to the terms of the warrants on the TSX. Listing will be subject to Bombardier fulfilling all of the listing requirements of the TSX. Security holder approval is required under TSX rules due to the fact that the warrants will be issued later than 45 days from the date upon which the exercise price was established, as set out in Section 607(f)(i) of the TSX Company Manual. Such approval has been obtained, as agreed with the TSX and in reliance on the exemption contemplated by Section 604(d) of the TSX Company Manual, by way of written consent of shareholders holding more than 50% of the voting rights attached to all of Bombardier’s issued and outstanding shares.
About Bombardier
Bombardier is the world’s leading manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.
Bombardier is headquartered in Montréal, Canada and our shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2016, we posted revenues of $16.3 billion. News and information are available at www.bombardier.com or follow us on Twitter @Bombardier.
Bombardier, CRJ Series, CS100, CS300, C Series, Global, Global 7000, Q400 and Smart Services are trademarks of Bombardier Inc. or its subsidiaries.
For Information
| Simon Letendre Senior Advisor, Media Relations and Public Affairs Bombardier Inc. +514 861 9481 |
Patrick Ghoche Vice President, Investor Relations Bombardier Inc. +514 861 5727 |
The Management’s Discussion and Analysis and the Interim Consolidated Financial Statements are available at ir.bombardier.com.
bps: basis points
nmf: information not meaningful
(1) Margin refers to EBIT before special items or EBIT margin before special items. Non-GAAP financial measures. See Caution regarding non-GAAP measures at the end of this press release.
(2) See the forward-looking statements disclaimer and each reportable segment’s Guidance and forward-looking statements section in the 2016 Financial Report for details regarding the assumptions on which the guidance is based.
(3) Non-GAAP financial measures. See Caution regarding non-GAAP measures at the end of this press release.
(4) Defined as cash and cash equivalents plus the amount available under the revolving credit facilities.
(5) Defined as net orders received over aircraft deliveries, in units.
(6) See the forward-looking statements disclaimer at the end of this press release.
(7) Available on Bombardier’s dedicated investor relations website at ir.bombardier.com. Refer to the forward-looking statements disclaimer at the end of this press release.
(8) Defined as new external orders over external revenues.
(9) Defined as new orders over revenues.
CAUTION REGARDING NON-GAAP MEASURES
This press release is based on reported earnings in accordance with International Financial Reporting Standards (IFRS). Reference to generally accepted accounting principles (GAAP) means IFRS, unless indicated otherwise. This press release is also based on non-GAAP financial measures including EBITDA, EBIT before special items and EBITDA before special items, adjusted net income, adjusted earnings per share and free cash flow. These non-GAAP measures are mainly derived from the consolidated financial statements but do not have standardized meanings prescribed by IFRS; therefore, others using these terms may define them differently. Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of our Financial Report with enhanced understanding of our results and related trends and increases the transparency and clarity of the core results of our business. Refer to the Non-GAAP financial measures and Liquidity and capital resources sections in Overview and each reporting segments’ Analysis of results sections in the Corporation’s MD&A for definitions of these metrics and reconciliations to the most comparable IFRS measures.
Reconciliations to most comparable IFRS measures (PDF)
FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to the Corporation’s objectives, guidance, targets, goals, priorities, market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; competitive position; the expected impact of the legislative and regulatory environment and legal proceedings on the Corporation’s business and operations; available liquidities and ongoing review of strategic and financial alternatives; the completion, anticipated timing of the transaction with Airbus described herein and the receipt of regulatory and other approvals required with respect to this transaction and the anticipated timing thereof; the governance, funding and liquidity of C Series Aircraft Limited Partnership (CSALP); the impact and expected benefits of each of the transaction with Airbus described herein, the investment by the Government of Québec in CSALP and the private placement of a minority stake in Transportation by the Caisse de dépôt et placement du Québec (CDPQ) on the Corporation’s operations, infrastructure, capabilities, development, growth and other opportunities, geographic reach, scale, footprint, financial condition, access to capital and overall strategy; and the impact of such transaction and investments on its balance sheet and liquidity position.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “shall”, “can”, “expect”, “estimate”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology, as they relate to Bombardier and CSALP. Forward-looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of the Corporation’s current objectives, strategic priorities, expectations and plans, and in obtaining a better understanding of the Corporation’s business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause Bombardier’s and CSALP’s actual results in future periods to differ materially from forecast results set forth in forward-looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate. The assumptions underlying the forward-looking statements made in this press release in relation to the transaction with Airbus discussed herein include the following material assumptions: the satisfaction of all conditions of closing and the successful completion of the transaction within the anticipated timeframe, including receipt of regulatory (including antitrust) and other approvals; the fulfillment and performance by each party of its obligations pursuant to the transaction agreement and future commercial agreements and absence of significant inefficiencies and other issues in connection therewith; the realization of the anticipated benefits and synergies of the transaction in the timeframe anticipated; the Corporation’s ability to continue with its current funding plan of CSALP and to fund, if required, any cash shortfalls; adequacy of cash planning and management and project funding; and the accuracy of its assessment of anticipated growth drivers and sector trends. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to the Strategic Priorities and Guidance and forward-looking statements sections in the Management’s Discussion and Analysis (MD&A) of the Corporation’s financial report for the fiscal year ended December 31, 2016.
With respect to the transaction with Airbus discussed herein specifically, certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with the failure to receive or delay in receiving regulatory (including antitrust) or other approvals or otherwise satisfy the conditions to the completion of the transaction or delay in completing the transaction and uncertainty regarding the length of time required to complete the transaction; changes in the terms of the transaction; the failure by either party to satisfy and perform its obligations pursuant to the transaction agreement and future commercial agreements and/or significant inefficiencies and other issues arising in connection therewith; the impact of the announcement of the transaction on the Corporation’s relationships with third parties, including commercial counterparties, employees and competitors, strategic relationships, operating results and businesses generally; the failure to realize, in the timeframe anticipated or at all, the anticipated benefits and synergies of the transaction; the Corporation’s inability to continue with its current funding plan of CSALP and to fund, if required, the cash shortfalls; inadequacy of cash planning and management and project funding. Certain other factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with the Corporation’s business environment (such as risks associated with “Brexit”, the financial condition of the airline industry, business aircraft customers, and the rail industry; trade policy; increased competition; political instability and force majeure events or natural disasters), operational risks (such as risks related to developing new products and services; development of new business; the certification and homologation of products and services; fixed-price and fixed-term commitments and production and project execution; pressures on cash flows and capital expenditures based on project-cycle fluctuations and seasonality; our ability to successfully implement and execute our strategy and transformation plan; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; environmental, health and safety risks; dependence on certain customers and suppliers; human resources; reliance on information systems; reliance on and protection of intellectual property rights; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; substantial existing debt and interest payment requirements; certain restrictive debt covenants and minimum cash levels; financing support provided for the benefit of certain customers; and reliance on government support), market risks (such as risks related to foreign currency fluctuations; changing interest rates; decreases in residual values; increases in commodity prices; and inflation rate fluctuations). For more details, see the Risks and uncertainties section in Other in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2016.
Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. Other risks and uncertainties not presently known to the Corporation or that it presently believes are not material could also cause actual results or events to differ materially from those expressed or implied in forward-looking statements. In addition, there can be no assurance that the proposed transaction with Airbus will occur or that the anticipated strategic benefits and operational, competitive and cost synergies will be realized in their entirety, in part or at all. The forward-looking statements set forth herein reflect management’s expectations as at the date of this report and are subject to change after such date. Unless otherwise required by applicable securities laws, the Corporation expressly disclaim any intention, and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
The Global 7000 and Global 8000 aircraft program is currently in development, and as such is subject to changes in family strategy, branding, capacity, performance, design and/or systems. All specifications and data are approximate, may change without notice and are subject to certain operating rules, assumptions and other conditions. This document does not constitute an offer, commitment, representation, guarantee or warranty of any kind.
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