Bombardier today reported its first quarter 2018 results, marked by strong top-line growth. Consolidated revenues reached $4.0 billion, a 12% increase over the same period last year, mainly driven by the ramping up of major projects at Transportation and improving market conditions at Business Aircraft.
“We continue to deliver on our financial commitments and make solid progress executing our growth programs and strategic initiatives,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “We’ve successfully reached the halfway point of our turnaround plan with a strengthened balance sheet and a clear focus on execution and growth.”
The main highlights -
- Revenues increase 12% year-over-year to $4B, highlighting top-line growth acceleration
- Strong order activity drives backlog expansion at Transportation, Business Aircraft, and Commercial Aircraft
- Consolidated EBITDA(1) and EBIT before special items(1) of $265M and $201M respectively; EBIT margin(2)increases to 5%
- Free cash flow usage(1) of $721M, in line with plan and full year breakeven target
- Airbus partnership expected to close before the end of the second quarter, ahead of schedule(3)
- Entered into a definitive agreement to sell Downsview property to the Public Sector Pension Investment Board, increasing liquidity by more than $550M
- New Centre of Excellence for Global business aircraft planned at Toronto Pearson International Airport
SEGMENTED RESULTS AND HIGHLIGHTS
Business Aircraft
- During the first quarter of 2018, Business Aircraft returned to growth with a 9% revenue increase, reaching $1.1 billion through the delivery of 31 aircraft and an increase in aftermarket activities.
- EBIT before special items also continued to trend upward, increasing by $16 million year-over-year, to 8.8%. This 20% increase in profitability was driven by an improving mix of aircraft sales and aftermarket services, and a strong discipline in managing costs.
- The stronger order activity experienced in the final weeks of 2017 carried on into the first quarter, driving backlog growth to $14.3 billion.
- The Global 7000 aircraft continued to perform extremely well and to exhibit a high level of reliability towards its expected entry into service during the second half of 2018. On April 15, 2018, Bombardier revealed that the Global 7000 business jet now boasts an outstanding range of 7,700 nautical miles, connecting more city pairs than any other business aircraft. The Global 7000 aircraft is now the largest and the longest range business jet ever built, and is able to fly a full 300 nautical miles farther than initial commitment.
- In the first quarter, Business Aircraft continued to grow its aftermarket portfolio and announced a suite of new products that are available for retrofit, addressing market demand for cabin and cockpit upgrades as well as regulatory compliance among Bombardier’s large installed base of 4,700 jets.
Commercial Aircraft
- The C Series aircraft ramp-up continues to progress, with 5 deliveries during the first quarter. There are currently 31 C Series aircraft in service with Swiss International Air Lines (Swiss), Air Baltic Corporation AS (airBaltic), and Korean Air Lines.
- Nearly all regulatory approvals have been obtained for the announced partnership with Airbus for the C Series aircraft. Completion of the transaction is currently expected before the end of the second quarter of 2018, ahead of originally planned. With the recent increase in Bombardier’s participation in CSALP to 65%, the Corporation is expected to own approximately 33% of the same entity following the closing of the transaction with Airbus.
- We also delivered 6 CRJ Series and 2 Q400 aircraft during the quarter, in line with our lower production output for the year.
- Subsequent to the end of the quarter, we announced that we have signed purchase agreements with Ethiopian Airlines for up to 15 Q400 aircraft and with American Airlines for up to 30 CRJ900 aircraft, increasing the CRJ Series and Q400 backlogs to over 50 aircraft each.
Aerostructures and Engineering Services
Transportation
- Revenues in the first quarter continued to grow, increasing by 21% year-over-year (or 10% excluding currency impact) to $2.4 billion, driven by the ramp-up of key projects. Revenues increased across all segments, comprising rolling stock and systems, services and signalling.
- The major project ramp-up phase initiated mid-2017 continued in the early months of 2018, building working capital to support the increase in production to meet an acceleration of deliveries expected later during the year.
- EBIT before special items increased to $189 million in the first quarter, continuing to trend at or above an 8.0% margin.
- Supporting future growth, our order intake reached $2.3 billion in the first quarter, bringing our book-to-bill ratio(4) to 1.0 for the period, and our backlog to $35.7 billion. Orders were signed across geographies including Europe, North America and Asia-Pacific, and include significant contract extensions and exercise of options by customers. In addition, the majority of new orders were in support of our strategy to re-use existing technologies, increasing our ability to leverage recent investments and grow margins.