Bombardier confirms its turnaround plan is on track

  • Targets EBIT growth before special items(1) of approximately 50%, to $530 million – $630 million
  • Anticipates year-over-year free cash flow usage(1) improvement by approximately $400 million, to $750 million – $1.0 billion
  • Expects low single digit revenue growth
  • Affirms revised 2016 guidance and 2018-2020 financial objectives

All amounts in this press release are in U.S. dollars unless otherwise indicated.

Refer to the Forward-looking statements and assumptions section at the end of this press release.

Montréal, 2016-Dec-16 — /Travel PR News/ — Bombardier (TSX: BBD.B) today released its 2017 guidance and confirmed that its turnaround plan is on track. The announcement came ahead of Bombardier’s Investor Day event, where the Company will provide an update on its business outlook, highlight its 2016 accomplishments and reaffirm both its 2018 free cash flow breakeven goal and its 2020 revenue target of $25 billion.

“The strong momentum achieved in 2016 will continue into 2017,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “Our turnaround plan is in full motion and the early benefits can be seen in our 2016 results. We’ve set a strong foundation for growth, and our focus in 2017 will be on unleashing the value of our portfolio and creating shareholder value through solid execution.”

Bombardier is targeting consolidated EBIT before special items in the range of $530 million – $630 million for 2017, which represents a year-over-year improvement of approximately 50% at the mid-point of the range. This targeted profit growth will primarily be driven by transformation initiatives already in place, including the previously announced restructuring actions. In 2017, the company expects to spend $250 million – $300 million on restructuring to further improve efficiency, reduce costs and optimize its operations. This charge will be categorized as a special item.

Bombardier also anticipates a significant improvement in its free cash flow usage for 2017, which is targeted to be in the range of $750 million to $1.0 billion, representing a year-over-year improvement of more than $400 million at the mid-point of the range. Consolidated revenue is expected to grow by low single digits, driven by growth in the rail business and the ramp up of the C Series aircraft program.

“As we look ahead to 2017, we are confident in our strategy, our turnaround plan and in our ability to achieve our operational and financial goals,” Mr. Bellemare continued. “We have successfully completed the de-risking phase of our turnaround plan and have positioned the Company to accelerate revenue, earnings and free cash flow growth in line with our plan.”

Along with releasing its 2017 guidance, Bombardier also affirmed its 2016 guidance, as revised with the announcement of its third quarter 2016 results.

Guidance for 2017
Consolidated Revenues Low single digit growth
EBIT EBIT before special items in the range of $530 million – $630 million
FCF Free Cash Flow usage in the range of $750 million – $1.0 billion
Restructuring In the range of $250 million – $300 million, to be recorded as special items
Transportation Revenues Revenues of approximately $8.5 billion
EBIT margin EBIT margin before special items(1) of approximately 7.5%
Business Aircraft Revenues Revenues of approximately $5.0 billion
EBIT margin EBIT margin before special items of approximately 7.5%
Deliveries Approximately 135 deliveries
Commercial Aircraft Revenues Revenues of approximately $2.9 billion
EBIT Margin EBIT before special items of approximately ($400 million)
Deliveries Approximately 80-85 deliveries
Aerostructures and Engineering Services Revenues Revenues of approximately $1.7 billion
EBIT Margin EBIT margin before special items greater than 8.5%

A live webcast of Bombardier’s Investor Day, along with the corresponding presentation, will be available on the Company’s website at www.ir.bombardier.com. The webcast will begin at 8:00 am EST on Thursday, December 15, 2016 and will be archived on the website afterwards.

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. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability North America Index. In the fiscal year ended December 31, 2015, we posted revenues of $18.2 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.

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

Bombardier, CRJ Series, C Series, Global 7000, Global 8000, Q400 and The Evolution of Mobility are trademarks of Bombardier Inc. or its subsidiaries.

SOURCE:  Bombardier

For Information

Simon Letendre
Senior Advisor, Public Affairs
Bombardier Inc.
+514 861 9481
Patrick Ghoche
Vice President, Investor Relations
Bombardier Inc.
+514 861 5727

CAUTION REGARDING NON-GAAP MEASURES

This press release includes non-GAAP financial measures, including EBIT before special items, EBIT margin before special items, free cash flow and free cash flow usage. These non-GAAP measures are mainly derived from measures in accordance with International Financial Reporting Standards (IFRS) but do not have standardized meanings prescribed by IFRS. The exclusion of certain items from non-GAAP performance measures does not imply that these items are necessarily non-recurring. From time to time, we may exclude additional items if we believe doing so would result in a more transparent and comparable disclosure. Other entities in our industry may define similarly-named non-GAAP measures differently than we do. In those cases, it may be difficult to compare the performance of those entities to ours based on these similarly-named non-GAAP measures.

Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides an enhanced understanding of our results and related trends and increases the transparency and clarity of the core results of our business. For these reasons, a significant number of users of our financial reports analyze our results based on these performance measures. For instance, EBIT before special items excludes items that do not reflect our core performance or where their exclusion will assist users in understanding our results for the period. Management believes these measure help users of our financial report and of this press release to better analyze results, enabling better comparability of our results from one period to another and with peers.

Refer to the Non-GAAP financial measures section in Overview in the Management’s Discussion and Analysis (MD&A) of the Company’s financial report for the fiscal year ended December 31, 2015 (2015 Financial Report), for definitions of these metrics.

FORWARD-LOOKING STATEMENTS AND ASSUMPTIONS

This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to the Company’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 Company’s business and operations; available liquidities and ongoing review of strategic and financial alternatives.

Forward-looking statements can generally 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 management 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 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.

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 general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry, business aircraft customers, and of the rail industry; trade policy; increased competition; political instability and force majeure), 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 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; the environment; 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; 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 Company’s 2015 Financial Report.

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 management’s expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, the Company’s expressly disclaims any intention, and assumes 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 following are the material assumptions underlying the forward-looking information included in this press release:

Aerospace segments

  • the alignment of production rates to market demand;
  • increased level of aircraft deliveries and improving pricing environment starting in 2018;
  • the ability to ramp up production and deliveries of new programs, focusing on the C Series aircraft program, and meet scheduled entry-into-service date for the Global 7000 and Global 8000 aircraft program;
  • our ability to strengthen our market position and product value proposition for the CRJ Series and Q400 aircraft programs;
  • normal execution and delivery of current firm orders and projects in the backlog;
  • continued ability to capture and win campaigns and projects based on market forecasts(1), leading to estimated future order intake;
  • the ability to understand customer needs and portfolio of products and services to drive increasing market demand and secure key strategic orders;
  • successful deployment and execution of growth strategies, including the aftermarket business;
  • continued deployment and execution of leading initiatives according to plan to improve revenue conversion into higher earnings and free cash flows, through improved procurement cost, controlled spending and labor efficiency;
  • delivering on the transformation plan targets, through restructurings and other initiatives addressing the direct and indirect cost structure, focusing on sustained cost reductions and operational improvements, while reducing working capital consumption;
  • the ability to leverage the global manufacturing footprint and transfer best practices and technology across production sites, and by leveraging lower cost geographies and emerging economies;
  • the ability of the supply base to support product development and planned production rates;
  • the ability to identify and enter into further risk sharing partnerships;
  • the effectiveness of disciplined capital deployment measures in new programs and products to drive revenue growth;
  • the reduction of investments and development spend to normalized levels, in line with depreciation;
  • the ability to recruit and retain highly skilled resources to deploy the product development strategy;
  • competitive global environment and global economic conditions to remain similar;
  • the stability of foreign exchange rates at current levels;
  • the ability to have sufficient liquidity to execute the strategic plan, to meet financial covenants and to pay down long term debt or refinance bank facilities and maturities starting in 2019;

Transportation

  • our ability to execute and deliver business model enhancement initiatives;
  • revenue conversion and phase out of our legacy contracts;
  • the ability to identify and enter into further risk sharing partnerships;
  • a sustained level of public sector spending;
  • normal execution and delivery of current firm orders and projects in the backlog;
  • the realization of upcoming tenders and our ability to capture them based on market forecasts(2), leading to estimated future order intake;
  • successful deployment and execution of growth strategies, including the value chain approach and the creation of ecosystems, site specialization and the creation of engineering centers of excellence, and the evolution of the revenue mix towards more signaling and systems and operations and maintenance contracts;
  • the ability to understand customer needs and portfolio of products and services to drive increasing market demand and secure key strategic orders;
  • continued deployment and execution of leading initiatives according to plan to improve revenue conversion into higher earnings and free cash flows, through improved procurement cost, controlled spending and labor efficiency;
  • delivering on the transformation plan targets, through restructurings and other initiatives addressing the direct and indirect cost structure, focusing on sustained cost reductions and operational improvements, while reducing working capital consumption;
  • the ability of the supply base to support product development and planned production rates;
  • the effectiveness of disciplined capital deployment measures in new programs and products to drive revenue growth;
  • the ability to recruit and retain highly skilled resources to deploy the product development strategy;
  • competitive global environment and global economic conditions to remain similar;
  • the stability of foreign exchange rates at current levels;
  • the ability to have sufficient liquidity to execute the strategic plan, to meet financial covenants and to pay down long term debt or refinance bank facilities and maturities starting in 2019.

For a discussion of the material risk factors associated with the forward-looking information included in this press release, please refer to our disclosure regarding forward-looking statements above and, for more details, see the Risks and uncertainties section in Other in the MD&A of our 2015 Financial Report.

(1) Demand forecast for aerospace segments is based on the analysis of main market indicators, including real GDP growth, industry confidence, wealth creation, corporate profitability within the aerospace customer base, aircraft utilization, pre-owned business jet inventory levels, aircraft shipments and billings, passenger traffic levels, fuel prices, airline profitability, pilot scope clauses, environmental regulations, globalization of trade, installed base and average age of the fleet, replacement demand, new aircraft programs and non-traditional markets and their accessibility. For more details, refer to the market indicators in the Industry and economic environment section of our 2015 Financial Report.

(2) Demand forecast in the Transportation segment is based on sustained level of public sector spending and the continuation of favorable megatrends, including urbanization and environmental awareness trends, the densification of cities and demand for mobility in relation to the liberalization of domestic passenger rail services. For more details, refer to the market indicators in the Industry and economic environment section of our 2015 Financial Report.

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