Bombardier Reports Third Quarter 2020 Financial Results, Provides Update on Transition to a Pure-Play Business Aircraft Company

• Total revenues⁽¹⁾ of $3.5 billion, lower by 5% year-over-year due to pandemic-related disruptions and divestitures; Business Aircraft revenues reached $1.2 billion on 24 deliveries, growing 10% year-over-year, driven by accelerating Global 7500 deliveries
• Total adjusted EBITDA⁽¹⁾⁽²⁾ of $176 million; $15 million of reported total EBIT⁽¹⁾⁽²⁾
• Free cash flow usage⁽²⁾ of $0.7 billion, continuing to target breakeven for the second half of the year; operating cash flow usage of $0.6 billion
• Pro-forma⁽³⁾ liquidity⁽⁴⁾ of ~ $3.0 billion, including $1.9 billion of cash on hand and $275 million from the recently closed sale of aerostructures business
• Sale of Bombardier Transportation to Alstom still expected to close in the first quarter of 2021
• Transitioning to a pure-play business aircraft company; addressing cost structure to drive stronger profitability at current market conditions

Details can be found here.

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, Nov. 05, 2020 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) announced today its financial results for the third quarter of 2020. The Company also provided an update on its progress towards achieving its near-term priorities and its transition to a pure-play business aircraft company.

“While the ongoing pandemic continues to present unprecedented challenges, Bombardier remains focused on advancing its key priorities, which includes taking great care of our people and customers; ensuring sufficient liquidity to weather the storm; and continuing to move forward with our strategic repositioning of Bombardier as a leaner, focused business aviation company,” said Éric Martel, President and Chief Executive Officer, Bombardier Inc. “In the third quarter, we made solid progress on each of these priorities. We secured additional liquidity with a new billion dollar senior secured credit facility, we kept our divestitures moving forward as planned, and with deliveries ramping up across the businesses, we are still targeting break-even free-cash-flow for the second half of the year, assuming operations remain uninterrupted by the pandemic.”

Third quarter revenues of $3.5 billion reflect the gradual recovery of operations at Aviation and Transportation from the COVID-19 related disruptions in the first half of 2020. Business aircraft revenues in the quarter were up 10% year-over-year, driven by a record 8 Global 7500 aircraft deliveries, which more than offset lower service revenues as international border restrictions, reduced business activity, and travel continues to pressure business jet utilization.

Total adjusted EBITDA and adjusted EBIT were $176 million and $51 million, respectively, for the quarter. These results reflect an unfavorable aircraft revenue mix at Aviation, as well as the impact of several low-margin rolling stock projects, and the lingering impact of the pandemic on Transportation’s operations and customers. Total EBIT was $15 million for the quarter.

Free cash flow usage for the quarter was $706 million, supporting Aviation’s working capital requirements for an expected seasonally strong fourth quarter, including approximately a dozen Global 7500 deliveries before year end⁽³⁾. Transportation’s free cash flow was near break-even for the quarter. Consolidated cash flow usage from operating activities was $644 million.

Bombardier began the fourth quarter with strong pro-forma liquidity⁽⁴⁾ of approximately $3.0 billion. This includes $1.9 billion of cash on hand, access to the undrawn amounts of approximately $600 million on Transportation’s revolving credit facility as of September 30, 2020, $250 million under the new senior secured term loan facility as at September 30, 2020, and $275 million of proceeds from the sale of the Aerostructures business. The Company expects to further strengthen liquidity with positive cash generation in the fourth quarter, driven by the release of working capital both at Aviation and Transportation⁽³⁾.

With the definitive Sale and Purchase Agreement signed in September, and the Alstom shareholder approval last week, Bombardier believes it is on a solid path to close the Bombardier Transportation sale in the first quarter of 2021. As a result, the Transportation business results have been classified as discontinued operations as of September 30, 2020. At closing, the Company expects net cash proceeds of approximately $4.0 billion, which will be directed to debt paydown⁽³⁾.

“We are very excited about our future as a focused business jet company, about our opportunities to grow the services business, and to leverage our industry-leading product portfolio,” Martel added. “We look forward to sharing the details of our plans in the near future, as we finalize our debt management strategy and cost-cutting initiatives to ensure our profitability in the current market and strong growth once the pandemic subsides.”

SEGMENTED RESULTS AND HIGHLIGHTS

Aviation

• Revenues of $1.4 billion reflect a 22% year-over-year growth from business aircraft manufacturing activities driven by stronger Global 7500 deliveries. This growth was offset by lower services and aerostructures activities impacted by the COVID-19 pandemic and the wind-down of commercial aviation activities following the completion of the sale of the CRJ program in the second quarter. 
  
• Aviation delivered 24 aircraft during the quarter, lower year-over-year due to the realignment of production to the lower demand environment caused by the COVID-19 pandemic. The third quarter featured an unprecedented 8 class-defining Global 7500 aircraft deliveries, in-line with the goal to double deliveries in the second half of the year, relative to the first six months. Aircraft deliveries are expected to seasonally peak in the fourth quarter supported by a $12.2 billion business aircraft backlog.⁽³⁾

• Quarterly adjusted EBITDA and adjusted EBIT margins of 8.1% and 1.4%, respectively, reflect lower aircraft deliveries and services activities, combined with low contribution of early Global 7500 units as the program continues to progress on its production learning curve. Reported EBIT margin during the quarter of 0.6%.
  
• Bombardier’s service and support network continued to expand its worldwide presence by entering into an agreement to establish a wholly-owned service centre in Berlin following the completion of the acquisition of all the issued and outstanding shares of Lufthansa Bombardier Aviation Services (LBAS) and joining forces with Jetex to establish a world-class fixed-base operator (FBO) experience in Singapore. Subsequent to the quarter, Bombardier also announced the expansion of its service and support network footprint in Asia-Pacific with a new service centre in Melbourne, Australia slated to be operational in 2022.
  
• On October 6, 2020, the Corporation announced the entry-into-service of the Learjet 75 Liberty light jet. Delivering better performance at operating costs comparable to its competitors, the aircraft offers an exceptional value proposition to light jets customers and operators.

Transportation

• Revenues during the quarter totalled $2.1 billion, 5% lower year-over-year excluding currency translation impact, as operations gradually recover from disruptions across Europe and the Americas during the first half of 2020 due to the COVID-19 pandemic.
  
• Adjusted EBIT margin of 2.9% in the third quarter reflects an unfavourable rolling stock contract mix with approximately a third of revenues not contributing to earnings. Reported EBIT margin during the quarter of 2.1%.
  
• Key projects in the U.K. and Germany are gradually being homologated, moving into the critical fleet acceptance process and towards regular delivery phase by year end. The margin dilution from these contracts is expected to continue through the end of 2020 as we progress on these contracts.⁽³⁾
  
• The outlook for Transportation remains positive and is supported by a $34.1 billion backlog and strong industry fundamentals.⁽³⁾
  • Order intake of $1.5 billion for the quarter reflects project wins across geographies, with notable contract awards in Spain, India and the U.S. With several contract awards having been delayed globally over the past six months due to the COVID-19 pandemic, we now expect a strong order recovery in the final months of 2020 with a healthy mix of options being exercised as well as service contracts.⁽³⁾

The Management’s Discussion and Analysis and the Interim Consolidated Financial Statements are available at ir.bombardier.com.

bps: basis points
(1)	Includes the amounts from continuing and discontinued operations.
(2)	Non-GAAP financial measures. Refer to the Non-GAAP financial measures and Liquidity and capital resources section for definitions of these metrics and the Analysis of results section hereafter for 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 and the assumptions following same in Overview in the MD&A of the Corporation’s financial report for the three- and nine-month periods ended September 30, 2020, as well as the Strategic Priorities and Guidance and forward-looking statements sections in the applicable reportable segment in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2019, for details regarding the assumptions on which the forward-looking statements are based.
(4)	Non-GAAP financial measure. Pro-forma liquidity is defined as cash and cash equivalents of $1,870 million plus access to the undrawn amounts of $589 million on Transportation’s revolving credit facility and $250 million under the new senior secured term loan facility as at September 30, 2020, and $275 million of cash consideration from the sale of the aerostructures businesses, received following quarter end.
(5)	Transportation was classified as discontinued operations as of September 30, 2020. As a result, the results of operations have been restated for comparative periods. Refer to Note 21 – Discontinued operations to our Interim consolidated financial statements for more details.
(6)	Includes cash and cash equivalents from the aerostructures businesses totalling $38 million and from Transportation totalling $672 million presented under Assets held for sale as of September 30, 2020, $50 million from the aerostructures businesses as of June 30, 2020 and $51 million from the aerostructures businesses as of December 31, 2019, respectively. Cash and cash equivalents from Transportation as of December 31, 2019 amounted to $540 million. Refer to Reshaping the portfolio section in Aviation section and Sale of Transportation business section of the MD&A for the three and nine month period ended September 30, 2020, Note 18 – Assets held for sale and Note 21 – Discontinued operations to the Interim consolidated financial statements for more details on the transaction and the accounting treatments.
(7)	Defined as cash and cash equivalents including cash and cash equivalents from Transportation plus the undrawn amounts under Transportation’s revolving credit facility and our senior secured term loan.
(8)	Includes the firm orders amounting to $1.1 billion from the aerostructures businesses presented under Assets held for sale as of September 30, 2020 and December 31, 2019. Also included 20 firm orders for CRJ900 as of December 31, 2019. The backlog for the CRJ Series aircraft program amounting to $0.4 billion was removed as a result of the closing of the sale of the CRJ Series aircraft program to Mitsubishi Heavy Industries, Ltd (MHI) on June 1, 2020.
(9)	On May 31, 2019, the Corporation completed the 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). On June 1, 2020, the Corporation completed the sale of the regional jet program to (MHI).
(10)	Ratio of new orders over revenues.
(11)	Including share of income from joint ventures and associates amounting to $29 million for the three-month period ended September 30, 2020 ($20 million for the three-month period ended September 30, 2019).