| Bombardier Inc.TSX : BBD.A TSX : BBD.B OTCQX : BDRBF January 15, 2015 07:30 ET |
MONTRÉAL, QUÉBEC–(Marketwired – Jan. 15, 2015) – Bombardier Inc. (TSX:BBD.A)(TSX:BBD.B)(OTCQX:BDRBF)
(All amounts in this press release are in U.S. dollars unless otherwise indicated. This press release contains both IFRS and non-GAAP measures. See Caution regarding non-GAAP measures at the end of this press release.)
Bombardier Inc. announced today the pause of its Learjet 85 business aircraft program. The pause is due to weak demand for the Learjet 85 aircraft and follows a downward revision of Bombardier’s business aircraft market forecast. This reflects the continued weakness of the Light aircraft category since the economic downturn. As a result, the Company will record a pre-tax special charge in the fourth quarter of 2014 of approximately $1.4 billion mainly related to the impairment of the Learjet 85 development costs. Additionally, Bombardier will reduce its workforce by approximately 1,000 employees at its sites in Querétaro, Mexico, and Wichita, United States. A severance provision of approximately $25 million will be recorded as a special item during the first quarter of 2015.
“Bombardier constantly monitors its product strategy and development priorities,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. “Given the weakness of the market, we made the difficult decision to pause the Learjet 85 program at this time. We will focus our resources on our two other clean-sheet aircraft programs under development, CSeries and Global 7000/8000, for which we see tremendous market potential. Both programs are progressing well.”
Bombardier’s Wichita and Querétaro sites remain critical facilities in key markets. Wichita is a multifaceted facility and is the location of final assembly activities for the Learjet 70 and Learjet 75 aircraft, the Bombardier Flight Test Center as well as a Service Center. In addition to contributing to many of Bombardier’s aircraft programs, the Querétaro site recently completed its Global 7000/8000 aft fuselage manufacturing building.
Furthermore, following a review of preliminary results compiled by Bombardier for the fiscal year ended December 31, 2014, it has become clear that certain financial guidance previously provided will not be met. Based on these preliminary results, Bombardier is updating its guidance for 2014.
Earnings before financing expenses, financing income and income taxes (EBIT) before special items(1) at Aerospace (BA) is expected to be approximately 4% compared with a previous guidance of 5%. The variation is mainly due to increased provisions for credit and residual value guarantees, pricing pressure on new aircraft sold, as well as a decrease in fair value of used aircraft. EBIT before special items(1) at Transportation (BT) is expected to be approximately 5% compared to a previous guidance of 6%. This variation is mainly due to revised escalation assumptions for some contracts which impacted estimated future revenues.
Cash flow from operating activities at Aerospace is expected to be approximately $800 million while net additions to property, plant and equipment (PP&E) and intangible assets are expected to be approximately $1.8 billion, compared with a previous guidance for cash flow from operating activities between $1.2 billion and $1.6 billion and net additions to PP&E and intangible assets between $1.6 billion and $1.9 billion. The variation in Aerospace’s cash flow from operating activities is mainly due to a lower level of customer advances, a lower EBIT and an increase in used aircraft inventory. Free cash flow(1) for Transportation is expected to be slightly positive compared with a previous guidance of free cash flow generally in line with EBIT. This variation is mainly due to a different cash flow profile in some contracts and a lower level of advances on options in relation to framework contract agreements. As of December 31, 2014, available short-term capital resources were approximately $3.8 billion, including cash and cash equivalents of approximately $2.4 billion.
Aerospace exceeded its delivery targets with a total of approximately 290 aircraft (204 business, 84 commercial and two amphibious aircraft), compared with a guidance of 200 business and 80 commercial aircraft deliveries. This represents a 22% increase compared with the deliveries of 238 aircraft for the previous year (180 business, 55 commercial and three amphibious aircraft).
Transportation revenues (excluding currency impacts) are expected to increase by approximately 9% in 2014, compared with a guidance of revenue growth in the mid-single digits, with a book-to-bill ratio of approximately 1.3 compared with a guidance in excess of 1.0.
Summary of Guidance for 2014
| Group | Original Guidance | Expected Results(2) | |||||||
| Profitability | BA | EBIT margin of approximately 5% | EBIT margin before special items(1)of approximately 4% | ||||||
| BT | EBIT margin of approximately 6% | EBIT margin before special items(1)of approximately 5% | |||||||
| Liquidity | BA | Cash flow from operating activities between $1.2 billion and $1.6 billion, and net additions to PP&E and intangible assets between $1.6 billion and $1.9 billion | Cash flow from operating activities of approximately $800 million, and net additions to PP&E and intangible assets of approximately $1.8 billion | ||||||
| BT | Free cash flow(1) generally in line with EBIT | Free cash flow(1) expected to be slightly positive | |||||||
| Available short-term capital resources were approximately $3.8 billion as at December 31, 2014, including cash and cash equivalents of approximately $2.4 billion | |||||||||
| Deliveries | BA | Deliveries of approximately 200 business aircraft and 80 commercial aircraft | Deliveries of 204 business aircraft and 84 commercial aircraft | ||||||
| Growth and Order Intake | BT | Revenue growth in the mid-single digits (excluding currency impacts) and a book-to-bill ratio in excess of 1.0 | Revenue growth of approximately 9% (excluding currency impacts) and a book-to-bill ratio of approximately 1.3 | ||||||
| (1) | Non-GAAP financial measure. See Caution regarding non-GAAP measures at the end of this press release. | ||||||||
| (2) | Final results for the fourth quarter and fiscal year ended December 31, 2014 will be disclosed on February 12, 2015 at which time Bombardier will provide its guidance for 2015. | ||||||||
About Bombardier
Bombardier is the world’s only 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. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability World and North America Indices. In the fiscal year ended December 31, 2013, we posted revenues of $18.2 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.
Bombardier, CSeries, Global, Global 7000, Global 8000, Learjet, Learjet 70, Learjet 75, Learjet 85, and The Evolution of Mobility are trademarks of Bombardier Inc. or its subsidiaries.
Note to editors
A conference call intended for investors and financial analysts will be held today at 10:00 a.m., Montréal time, with Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. and Pierre Alary, Senior Vice President and Chief Financial Officer, Bombardier Inc. to discuss the above.
| DATE: | Thursday, January 15, 2015 |
| TIME: | 10:00 a.m., Montréal time |
Diplômé universitaire en histoire, journalisme et relations publiques, en 1993, Philippe Cauchi amorce une carrière de journalisme, analyste et consultant en aérospatiale. En 2013, il fonde avec Daniel Bordeleau, le site d’information aérospatial Info Aéro Québec.
Commentaires