Bombardier Announces Financial Results for the 3Q Ended September 30, 2012

Bombardier-China

  • Revenues of $4.3 billion, compared to $4.6 billion last fiscal year
  • EBIT of $248 million, or 5.7% of revenues, compared to $301 million, or 6.5%, last fiscal year
  • Net income of $212 million, compared to $192 million last fiscal year
  • Diluted earnings per share of $0.12, compared to $0.11 last fiscal year
  • Free cash flow usage of $237 million, compared to a usage of $346 million last fiscal year
  • Liquidity at $3.5 billion, including cash and cash equivalents of $2.1 billion, compared to $4.1 billion and $3.4 billion respectively as at December 31, 2011
  • Strong backlog of $58.6 billion, compared to $53.9 billion as at December 31, 2011
  • CSeries program making solid progress with first flight now scheduled by the end of June 2013

Bombardier today reported its financial results for the third quarter ended September 30, 2012. Revenues totalled $4.3 billion, compared to $4.6 billion for the corresponding period last fiscal year. Earnings before financing expense, financing income and income taxes (EBIT) totalled $248 million, versus $301 million last fiscal year. The EBIT margin was at 5.7%, compared to 6.5% last fiscal year.

Net income for the third quarter ended September 30, 2012 amounted to $212 million, compared to $192 million for the corresponding period last fiscal year. Diluted earnings per share (EPS) was $0.12, compared to diluted EPS of $0.11 last fiscal year. Free cash flow usage (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) totalled $237 million for the third quarter ended September 30, 2012, compared to a usage of $346 million last fiscal year. The level of liquidity at $3.5 billion includes cash and cash equivalents of $2.1 billion as at September 30, 2012, compared to $4.1 billion and $3.4 billion respectively as at December 31, 2011. The overall backlog increased by $4.7 billion since the beginning of the year, reaching $58.6 billion as at September 30, 2012.

“In Aerospace, since the beginning of the year, substantial headway has been made in theCSeries development program and testing is progressing well,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. “We have used the momentum gained over the last few months to meet a number of key milestones, however, some areas require more time. Together with our suppliers, we have now fully harmonized all commitments to the program’s schedule. Therefore, the CS100 aircraft’s first flight will now occur by the end of June 2013 – a timeline that all parties have agreed is achievable. We will continue to give regular updates on the program, with a more detailed review during the first quarter of next year.”

“Transportation, again this quarter, benefited from its wide market reach with a good level of new orders across all its segments. With a book-to-bill ratio of 1.1 so far this year, its backlog reached $32.5 billion as at September 30, 2012. In Aerospace, revenues for the quarter were stable at $2.3 billion with overall deliveries reaching 57 aircraft compared to 68 last year. Demand for our products has proven solid with a total of 297 firm orders since the beginning of the year compared to 206 last year.”

“Although the economy remains sluggish, our product and geographic diversification have allowed us to continue building a strong backlog of $58.6 billion while investing in new platforms and maintaining stable results. The years ahead promise to be exciting as we start seeing our new products come to life,” concluded Mr. Beaudoin.

The CSeries aircraft development program is making solid progress. The build for both the Complete Airframe Static Test (CAST) and the first flight test aircraft is progressing well. Results from the on-the-ground integrated systems test and certification rig (CIASTA/Aircraft 0) are as expected. A number of key milestones have already been met, but at this point in the program the Aerospace group has encountered certain issues, mainly related to some suppliers. Therefore, first flight will now take place by the end of June 2013 and it is expected that entry-into-service (EIS) of the CS100 aircraft will occur approximately one year after first flight.

The timeline for the CS300 aircraft, which represents a significant portion of the program’s orders and commitments, remains unchanged with EIS scheduled for the end of 2014.

Bombardier Aerospace
Bombardier Aerospace’s revenues totalled $2.3 billion, the same level as last fiscal year. EBIT totalled $123 million translating into an EBIT margin of 5.4% for the third quarter ended September 30, 2012, compared to $129 million, or 5.6%, last fiscal year. Free cash flow usage totalled $68 million compared to a free cash flow of $53 million for the corresponding period last fiscal year.

A total of 57 aircraft were delivered during the third quarter ended September 30, 2012 compared to 68 for the corresponding period last fiscal year. Bombardier Aerospace’s backlog increased by 18.6% reaching $26.1 billion as at September 30, 2012, compared to $22.0 billion as at December 31, 2011.

Bombardier Business Aircraft saw a strong level of order intake with 45 net orders compared to 30 for the corresponding period last fiscal year. This includes three multi-aircraft firm orders totalling 19 aircraft of the Global family, valued at $1.2 billion, based on list prices.

Bombardier Commercial Aircraft received 38 firm orders during the third quarter ending September 30, 2012, including a conversion of the conditional order placed by WestJet for 20Q400 NextGen turboprops into a firm purchase order valued at $683 million, based on list prices. It also included the conversion into firm orders for six CRJ900 NextGen regional jets and 12 Q400 NextGen turboprops. The value of these firm orders is $643 million.

Bombardier Transportation
Bombardier Transportation’s revenues totalled $2.1 billion for the third quarter ended September 30, 2012, compared to $2.3 billion for the same period last fiscal year. EBIT was $125 million, compared to $172 million last fiscal year, translating into an EBIT margin of 6.0% versus 7.4% last fiscal year. Free cash flow usage amounted to $109 million for the third quarter ended September 30, 2012, compared to a free cash flow usage of $347 million for the same period last fiscal year. The order backlog totalled $32.5 billion as at September 30, 2012, compared to $31.9 billion as at December 31, 2011.

The group achieved a strong order intake and secured orders across all market segments for a total of $2.3 billion. The group received, among the most important orders, two orders for the FLEXITY platform: one from Basel, Switzerland, and the other from De Lijn in Belgium for a total of $406 million. It also signed contracts with Talgo to develop, supply, and maintain components for 36 very high speed trains for Saudi Arabia, valued at $367 million, as well as with the Port Authority of New York and New Jersey, U.S., for a 10-year operations and maintenance, and capital asset upgrade program, valued at $243 million.

Bombardier Transportation also agreed on a variation order with the Chinese Ministry of Railways (MOR). The original order of 60 16-car and 20 eight-car ZEFIRO 380 trains signed in 2009 was amended to an order for 70 eight-car ZEFIRO 380 very high speed trains, 46ZEFIRO 250 and 60 ZEFIRO 250NG high speed trains. The original contract value of $4 billion remains unchanged and deliveries have restarted at the end of the third quarter. Again in China, the group signed a 10-year technology licence agreement with CSR Puzhen, under which Bombardier Transportation will provide CSR Puzhen with a licence to manufacture and sell low-floor trams with Bombardier technology in China.

Subsequent to the end of the quarter, the group announced measures to improve its competitiveness and cost structure. These measures include the closure of a plant in Aachen, Germany, and the reduction of direct and indirect personnel by approximately 1,200 employees worldwide, including Aachen. The charge for the restructuring activity will be determined and recorded in the fourth quarter, and should not exceed $150 million.

Financial Results for the Third Quarter Ended September 30, 2012

ANALYSIS OF RESULTS

Consolidated results
Consolidated revenues totalled $4.3 billion for the third quarter ended September 30, 2012, compared to $4.6 billion for the corresponding period last fiscal year. For the nine-month period ended September 30, 2012, consolidated revenues amounted to $12.0 billion, compared to $14.0 billion for the corresponding period last fiscal year.

For the third quarter ended September 30, 2012, EBIT totalled $248 million, or 5.7% of revenues, compared to an EBIT of $301 million, or 6.5%, for the corresponding period the previous year. For the nine-month period ended September 30, 2012, EBIT amounted to $683 million, or 5.7% of revenues, compared to an EBIT of $909 million, or 6.5%, for the corresponding period last fiscal year.

Net financing income amounted to $25 million for the third quarter ended September 30, 2012, compared to net financing expense of $58 million for the corresponding period last fiscal year. The $83-million improvement is mainly due to higher net unrealized gain on certain financial instruments and lower interest expense on long-term debt, after effect of hedges. For the nine-month period ended September 30, 2012, net financing income amounted to $36 million, compared to net financing expense of $129 million for the corresponding period last year. The $165-million improvement is mainly due to higher net unrealized gain on certain financial instruments, lower interest expense on long-term debt after effect of hedges, a gain on the sale of investments, lower amortization of letter of credit facility costs and the interest portion of a gain upon the successful resolution of a litigation with Canada Revenue Agency.

The effective income tax rates were 22.3% and 18.8% respectively for the three- and nine-month periods ended September 30, 2012, compared to the statutory income tax rate of 26.8%. The lower effective income tax rates are mainly due to the positive net impact of the recognition of unrecognized income tax benefits.

As a result, net income amounted to $212 million, or diluted EPS of $0.12, for the third quarter ended September 30, 2012, compared to $192 million, or diluted EPS of $0.11, for the corresponding period the previous year. For the nine-month period ended September 30, 2012, net income was $584 million, or diluted EPS of $0.32, compared to $623 million, or diluted EPS of $0.35, for the corresponding period the previous year.

For the three-month period ended September 30, 2012, free cash flow usage totalled $237 million, compared to a usage of $346 million for the corresponding period the previous year. For the nine-month period ended September 30, 2012, free cash flow usage totalled $1.6 billion, compared to a usage of $1.8 billion for the corresponding period the previous year.

As at September 30, 2012, Bombardier’s order backlog stood at $58.6 billion, compared to $53.9 billion as at December 31, 2011.

Bombardier Aerospace

  • Revenues of $2.3 billion
  • EBIT of $123 million, or 5.4% of revenues
  • EBITDA of $182 million, or 8.0% of revenues
  • Free cash flow usage of $68 million
  • 57 aircraft deliveries
  • 83 net orders (book-to-bill ratio of 1.5)
  • Order backlog of $26.1 billion

Bombardier Aerospace’s revenues amounted to $2.3 billion for the three-month period ended September 30, 2012, the same level as the corresponding period the previous year.

For the third quarter ended September 30, 2012, EBIT totalled $123 million, or 5.4% of revenues, compared to $129 million, or 5.6%, for the corresponding period the previous year. The 0.2 percentage-point decrease is mainly due to higher cost of sales per unit mainly due to price escalation of materials and costs incurred in Canadian dollars translated at higher exchange rates after giving effect to hedges; partially offset by higher net selling prices for business aircraft, the mix between business and commercial aircraft deliveries and a net positive variance on provisions for credit and residual value guarantees recorded in other income.

Free cash flow usage totalled $68 million for the third quarter ended September 30, 2012, compared to a free cash flow of $53 million for the corresponding period last fiscal year. The $121-million decrease in free cash flow is mainly due to higher net additions to property, plant and equipment (PP&E) and intangible assets, due to our significant investments in new products mainly the CSeries and Learjet 85 programs; partially offset by a positive period-over-period variation in net change in non-cash balances related to operations.

For the quarter ended September 30, 2012, aircraft deliveries totalled 57, compared to 68 for the corresponding period the previous year. The 57 deliveries consisted of 44 business, 12 commercial and 1 amphibious aircraft (43 business, 24 commercial and 1 amphibious aircraft for the corresponding period last fiscal year).

Bombardier Aerospace recorded 83 net orders (book-to-bill ratio of 1.5) during the quarter ended September 30, 2012, compared to 34 during the corresponding period the previous year. The 83 net orders consisted of 45 net orders for business aircraft and 38 orders for commercial aircraft (30 net orders of business aircraft and 4 orders of commercial aircraft for the corresponding period last fiscal year).

Bombardier Aerospace’s firm order backlog stood at $26.1 billion as at September 30, 2012, compared to $22.0 billion as at December 31, 2011. The 18.6% increase in the order backlog is mainly due to higher order intake than deliveries for the Challenger and Global families of aircraft, as well as for the regional jets and turboprops.

Bombardier Transportation

  • Revenues of $2.1 billion
  • EBIT of $125 million, or 6.0% of revenues
  • EBITDA of $156 million, or 7.5% of revenues
  • Free cash flow usage of $109 million
  • Order intake totalling $2.3 billion (book-to-bill ratio of 1.1)
  • Order backlog of $32.5 billion

Bombardier Transportation’s revenues amounted to $2.1 billion for the three-month period ended September 30, 2012, compared to $2.3 billion for the same period last year. Revenues have been mostly affected by a negative currency impact of $160 million and by the completion of some contracts in Europe and Other regions while major orders received in these regions in the last quarters are still in the start-up phase. Revenues in Asia-Pacific returned to normal levels following an agreement with the Chinese MOR on a variation order and a ramp-up in production on new contracts.

For the third quarter ended September 30, 2012, EBIT totalled $125 million, or 6.0% of revenues, compared to an EBIT of $172 million, or 7.4%, for the same quarter the previous year. The 1.4 percentage-point decrease is mainly due to a lower overall gross margin in rolling stock due to execution issues in some contracts, partially offset by a higher gross margin in system and signalling due to overall better contract execution and a favourable product mix.

Free cash flow usage was $109 million for the quarter ended September 30, 2012, compared to a usage of $347 million for the same period last fiscal year. The $238-million improvement is mainly due to a positive period-over-period variation in net change in non-cash balances related to operations, partially offset by lower earnings before financing expense, financing income, income taxes and amortization (EBITDA).

The order intake for the third quarter ended September 30, 2012 was $2.3 billion, for a book-to-bill ratio of 1.1, compared to $1.6 billion of order intake (book-to-bill of 0.7) for the corresponding period last fiscal year. The order intake reflects negative currency impact of $179 million.

Bombardier Transportation’s backlog stood at $32.5 billion as at September 30, 2012, compared to $31.9 billion as at December 31, 2011. The increase is due to higher order intake than revenues recorded and the strengthening of foreign currencies versus the U.S. dollar as at September 30, 2012, compared to December 31, 2011, mainly the British pound.

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, 2012 to the shareholders of record at the close of business on December 14, 2012.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on December 14, 2012 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, 2012.

Series 3 Preferred Shares
A quarterly dividend of $0.195875 Cdn per share on Series 3 Preferred Shares is payable on January 31, 2013 to the shareholders of record at the close of business on January 18, 2013.

Series 4 Preferred Shares
A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on January 31, 2013 to the shareholders of record at the close of business on January 18, 2013.

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, 2011, we posted revenues of $18.3 billion.