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Bombardier Announces Financial Results for the Third Quarter Ended September 30, 2013

October 31, 2013 Montréal Bombardier Inc.,  Press Release

(All amounts in this press release are in U.S. dollars unless otherwise indicated. This press release contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measures in the Corporation’s MD&A. See Caution regarding non-GAAP measures at the end of this press release. Comparative figures have been restated. See Note 1 to the Financial Highlights table.)

  • Revenues of $4.1 billion, compared to $4.2 billion last fiscal year
  • EBIT of $210 million, or 5.2% of revenues, compared to $240 million, or 5.7%, last fiscal year
  • Adjusted net income(1) of $165 million (adjusted EPS(1) of $0.09), compared to $173 million (adjusted EPS of $0.09) for the same period last fiscal year
  • Net income of $147 million (diluted EPS of $0.08), compared to $172 million (diluted EPS of $0.09) for the same period last fiscal year
  • Free cash flow usage(1) of $522 million, compared to a usage of $187 million last fiscal year
  • Available short-term capital resources of $4.0 billion, including cash and cash equivalents of $2.6 billion as at September 30, 2013, the same levels as compared to December 31, 2012
  • Backlog of $65.5 billion as at September 30, 2013, compared to $64.9 billion as at December 31, 2012

 (1)        See Caution regarding non-GAAP measures at the end of this press release.

Bombardier today reported its financial results for the third quarter ended September 30, 2013. Revenues totalled $4.1 billion for the quarter, compared to $4.2 billion for the same period last fiscal year.

For the third quarter ended September 30, 2013, earnings before financing expense, financing income and income taxes (EBIT) totalled $210 million, or 5.2% of revenues, compared to $240 million, or 5.7%, for the same period last year.

On an adjusted basis, net income amounted to $165 million, or earnings per share (EPS) of $0.09, for the third quarter ended September 30, 2013, compared to $173 million, or EPS of $0.09, for the same period the previous year.

For the three-month period ended September 30, 2013, free cash flow usage (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) amounted to $522 million, compared to a usage of $187 million for the same period last year. As at September 30, 2013, available short-term capital resources of $4.0 billion included cash and cash equivalents of $2.6 billion, the same levels as compared to December 31, 2012. The overall backlog reached $65.5 billion as at September 30, 2013, compared to $64.9 billion as at December 31, 2012.

In Aerospace, results were in line with our guidance, but the low order intake and overall market conditions were a disappointment,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. “And in September, the CSeries had its first flight thus starting the extensive flight test program.”

“Our revenues in Transportation have increased and free cash flow has also slightly improved. The overall market remains resilient and as illustrated by some order wins during the quarter, our penetration of new regions continues to be strong.”

“Our significant ongoing investments in the development of new products, combined with our $65.5 billion backlog, represent the core elements for our strong growth story to take shape,” concluded Mr. Beaudoin.

Bombardier Inc. also announced the appointment of Mr. Patrick Pichette to its Board of Directors. Mr. Pichette is Chief Financial Officer at Google Inc. He was at Bell Canada from 2001 to 2008, during which time he held various executive positions including Chief Financial Officer. Prior to joining Bell Canada, Mr. Pichette was a partner at McKinsey & Company. He earned a bachelor’s degree in business administration from Université du Québec à Montréal. He also holds a master’s degree in philosophy, politics and economics from Oxford University, where he attended as a Rhodes Scholar.

Bombardier Aerospace

Bombardier Aerospace’s revenues amounted to $2.0 billion for the three-month period ended September 30, 2013, compared to $2.3 billion for the same period last fiscal year. EBIT totalled $86 million or 4.3% of revenues for the third quarter ended September 30, 2013, compared to $118 million, or 5.2%, last fiscal year.

Free cash flow usage amounted to $406 million (including net additions to property, plant and equipment (PP&E) and intangible assets of $585 million) for the third quarter ended September 30, 2013, compared to a usage of $68 million (including net additions to PP&E and intangible assets of $543 million) for the same period last fiscal year.

Bombardier Aerospace delivered a total of 45 aircraft during the third quarter ended September 30, 2013, compared to 57 for the same period last fiscal year, and received 26 net orders during the third quarter, compared to 83 for the same period last fiscal year.

In Commercial Aircraft, a memorandum of understanding was signed with Rosteckhnologii (Rostec), a state corporation controlled by the Russian Federation, to validate the opportunity to set up a Q400 NextGen final assembly line in Russia. In parallel, a letter of intent (LOI) was signed with Rostec for the sale of 50 Q400 NextGen turboprop aircraft. A LOI has also been signed with Ilyushin Finance Co. for the sale of 50 Q400 NextGen turboprop aircraft. Based on list price, the LOIs for 100 Q400 NextGen turboprop aircraft are valued at $3.4 billion.

During the third quarter, Bombardier signed an agreement for the sale of Flexjet’s activities to a newly-created company, Flexjet, LLC, owned by a group led by Directional Aviation Capital. The purchase price is $185 million and the transaction, subject to regulatory approvals and the usual closing conditions, is expected to close before the end of the year.

In connection with this transaction, Flexjet, LLC placed conditional orders for 85 aircraft of the Learjet family and 30 aircraft of the Challenger family, with options for 150 additional business aircraft. Based on list prices, the value of the conditional orders is $2.4 billion, excluding the options.

Subsequent to the end of the quarter, Bombardier Aerospace announced that CDB Leasing Co., Ltd. of China, is the previously undisclosed customer that signed a conditional purchase agreement for 5 CS100 and 10 CS300 aircraft. This agreement also includes options for an additional 5 CS100 and 10 CS300 aircraft for a total of up to 30 CSeries aircraft. Based on list prices, the conditional order is valued at approximately $1 billion and could increase to $2.1 billion should all 15 options be exercised. This brings the total orders and commitments for the CSeries program to 403 aircraft with 15 customers and operators.

Bombardier Aerospace’s backlog totalled $32.9 billion as at September 30, 2013, the same level as at December 31, 2012.

Bombardier Transportation

Bombardier Transportation’s revenues amounted to $2.1 billion for the three-month period ended September 30, 2013, compared to $1.9 billion for the same period last year. EBIT totalled $124 million, or 6.0% of revenues, compared to $122 million, or 6.3%, for the same quarter the previous year. Free cash flow usage totalled $5 million for the quarter ended September 30, 2013, compared to a usage of $58 million for the same period last fiscal year.

New orders reached $1.7 billion (book-to-bill ratio of 0.8), compared to $2.2 billion for the same quarter last fiscal year. The order backlog totalled $32.6 billion as at September 30, 2013, compared to $32.0 billion as at December 31, 2012.

During the third quarter, Bombardier Transportation won several orders across all divisions and geographies, including, as a member of the ArRiyadh New Mobility Consortium, a contract to deliver technology for the new line 3 in Riyadh, Kingdom of Saudi Arabia. The contract includes system interface management, project management and design, as well as the delivery of 47 two-car driverless INNOVIA Metro 300 trains equipped with the MITRAC propulsion technology. Bombardier Transportation’s share of the contract is valued at approximately $383 million. 

Bombardier Transportation also received orders from Deutsche Bahn AG, Germany, for 18 TWINDEXX electric double-deck trains, valued at $289 million as well as from Southern Railway, U.K., for 116 ELECTROSTAR cars, valued at $274 million, including a spares supply agreement.

Financial Highlights

Selected Financial Information

DIVIDENDS ON COMMON SHARES

Class A and Class B Shares

A quarterly dividend of $0.025 Cdn per share on Class A Shares (Multiple Voting) and of $0.025 Cdn per share on Class B Shares (Subordinate Voting) is payable on December 31, 2013 to the shareholders of record at the close of business on December 13, 2013.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on December 13, 2013 also have a right to a priority quarterly dividend of $0.000390625 Cdn per share.

DIVIDENDS ON PREFERRED SHARES

Series 2 Preferred Shares

A monthly dividend of $0.0625 Cdn per share on Series 2 Preferred Shares has been paid on August 15, September 15 and October 15, 2013.

Series 3 Preferred Shares

A quarterly dividend of $0.195875 Cdn per share on Series 3 Preferred Shares is payable on January 31, 2014 to the shareholders of record at the close of business on January 17, 2014.

Series 4 Preferred Shares

A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on January 31, 2014 to the shareholders of record at the close of business on January 17, 2014.

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 indexes. In the fiscal year ended December 31, 2012, we posted revenues of $16.8 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.

Bombardier, Challenger, CS100, CS300, CSeries, ELECTROSTAR, Flexjet, INNOVIA, Learjet, MITRAC, NextGen, Q400, The Evolution of Mobility and TWINDEXX are trademarks of Bombardier Inc. or its subsidiaries.

For Information

Isabelle Rondeau
Director, Communications
Bombardier Inc.
+514 861 9481
Shirley Chénier
Senior Director, Investor Relations
Bombardier Inc.
+514 861 9481

The Management’s Discussion and Analysis and the interim consolidated financial statements are available at ir.bombardier.com.

FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, guidance, targets, goals, priorities, our 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; our competitive position; and the expected impact of the legislative and regulatory environment and legal proceedings on our business and operations. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. While we consider our assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release refer to the respective Guidance and forward-looking statements sections in Overview, Bombardier Aerospace and Bombardier Transportation sections in the Management’s Discussion and Analysis (“MD&A”) in the Corporation’s annual report for the fiscal year ended December 31, 2012.

Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry and major rail operators), operational risks (such as risks related to developing new products and services; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; the environment; dependence on certain customers and suppliers; human resources; fixed-price commitments and production and project execution), financing risks (such as risks related to liquidity and access to capital markets, exposure to credit risk, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance on government support) and market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual values and increases in commodity prices). For more details, see the Risks and uncertainties section in Other in the MD&A of the Corporation’s annual report for the fiscal year ended December 31, 2012. 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. The forward-looking statements set forth herein reflect our expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, we 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.

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, EBIT margin before special items, adjusted net income, adjusted earnings per share and free cash flow. These non-GAAP measures are mainly derived from the interim consolidated financial statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of our interim consolidated financial statements with enhanced understanding of our results and related trends and increases transparency and clarity into the core results of our business. Refer to the Non-GAAP financial measures and Liquidity and capital resources sections in the Corporation’s MD&A for definitions of these metrics and reconciliations to the most comparable IFRS measures.

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