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Bombardier Announces Financial Results for the Third Quarter Ended October 31, 2009

December 3, 2009 — Montréal
Corporate

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  • Consolidated revenues of $4.6 billion, in line with last fiscal year
  • EBITDA of $388 million, compared to $435 million last fiscal year
  • EBIT of $262 million, compared to $296 million last fiscal year
  • Net income of $168 million, compared to $226 million last fiscal year
  • Earnings per share of $0.09, compared to $0.12 last fiscal year
  • Free cash flow of $72 million, compared to a usage of $226 million last fiscal year
  • Strong cash position at $3 billion
  • Backlog of $47.4 billion
  • Landmark order to supply 80 ZEFIRO 380 very high speed trains in China
  • Subsequent to quarter end, order for 22 CRJ700 regional jets

Bombardier today reported its financial results for the third quarter ended October 31, 2009. Revenues reached the same level as last year at $4.6 billion. Earnings before financing income, financing expense and income taxes (EBIT) totalled $262 million, compared to $296 million last fiscal year, while the EBIT margin reached 5.7% compared to last year’s 6.5%.

Net income amounted to $168 million, compared to $226 million for the same period last fiscal year. Free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) stood at $72 million for the third quarter, compared to a free cash flow usage of $226 million for the same period last fiscal year. The cash position remains strong at $3 billion, compared to $3.5 billion as at January 31, 2009. The overall backlog stood at $47.4 billion, compared to $48.2 billion as at January 31, 2009.

“Despite early signs of a recovery, the economic environment remains difficult and continued to impact our activities and financial results, especially in Bombardier Aerospace”, said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. “However, Bombardier Transportation continues to improve its revenues, profitability and order intake.

“Our backlog and balance sheet are strong. Both groups continue to look for ways to reduce overall costs in their operations and improve their working capital, while maintaining investments in new product development. We will be ready when the economy recovers”, concluded Mr. Beaudoin.

Bombardier Aerospace
Bombardier Aerospace’s revenues amounted to $2.1 billion, compared to $2.3 billion last fiscal year. EBIT totalled $103 million, or 5% of revenues, compared to $176 million, or 7.7%, for the same period last fiscal year. Free cash flow for the third quarter ended October 31, 2009 reached $61 million compared to $9 million for the same period last fiscal year. The backlog stood at $18.1 billion as at October 31, 2009, compared to $23.5 billion as at January 31, 2009.

Although the business aircraft market is still experiencing difficulties, there are some signs of stabilization. Bombardier Business Aircraft net orders for the third quarter ended October 31, 2009 returned to a positive position for the first time since the third quarter of last fiscal year

Bombardier Commercial Aircraft experienced a low level of order intake during the three-month period ended October 31, 2009 reflecting the significantly reduced demand for commercial aircraft, consistent with the current worldwide economic environment. However, subsequent to quarter end, AMR Eagle Holding Corporation, the parent company of American Eagle Airlines, Inc., signed a firm order agreement for 22 CRJ700 regional jets, for a value of approximately $779 million. The transaction represents the conversion of 22 of the options held by the airline. Despite this recent order, projected CRJ aircraft sales remain insufficient to maintain the current production plan. Bombardier Aerospace thus announced on November 26 a further reduction of the CRJ aircraft production rates.

Total deliveries of 61 aircraft compare to 80 for the same period last fiscal year with the Commercial Aircraft segment contributing 27 of these deliveries compared to 22 last fiscal year.

Bombardier Aerospace continues to invest in products, such as the CRJ1000 NextGen regional jet, the Global Vision flight deck, the Learjet 85 and the CSeries aircraft. Highlights of the CSeries program include the groundbreaking of the new testing facility in Mirabel, Canada, and the construction of a new state-of-the-art aircraft wing manufacturing and assembly facility in Belfast, Northern Ireland.

Bombardier Transportation
Bombardier Transportation revenues rose to $2.5 billion, a $254-million increase over the same period last fiscal year. EBIT reached $159 million, up from $120 million a year ago, while EBIT margin increased to 6.3% versus 5.3%. Free cash flow reached $32 million, compared to a usage of $243 million last fiscal year. The order backlog stood at $29.3 billion as at October 31, 2009, compared to $24.7 billion as at January 31, 2009, mainly due to a positive currency impact.

Economic uncertainty continues to affect the rail industry with low funding availability for the private sector and an ongoing decline in freight traffic. As a result, Bombardier Transportation’s freight locomotives and services segments are seeing a lower level of activity. On a positive note, Bombardier Transportation reported new orders worth $3.6 billion, compared to $2.8 billion last fiscal year, leading to a book-to-bill ratio of 1.4. In September 2009, Bombardier Sifang Transportation won a $4 billion landmark contract to supply 80 ZEFIRO 380 very high speed trains capable of speeds of up to 380 km/h for the Chinese Ministry of Railways. Bombardier’s share of the contract is worth $2 billion.

The group also signed a contract for 99 FLEXITY trams, valued at $431 million, for Berlin’s transport operator BVG (Berliner Verkehrsbetriebe).

Subsequent to the quarter, Bombardier Transportation received an order for 100 E464 locomotives from Trenitalia, Italian Railways, amounting to approximately $383 million.

Financial Highlights
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FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED OCTOBER 31, 2009

ANALYSIS OF RESULTS

Consolidated results
Consolidated revenues totalled $4.6 billion for the third quarters ended October 31, 2009 and 2008. For the nine-month period ended October 31, 2009, consolidated revenues reached $14 billion, compared to $14.3 billion for the same period last year.

For the third quarter ended October 31, 2009, EBIT amounted to $262 million, or 5.7% of revenues, compared to $296 million, or 6.5%, for the same period the previous year. For the nine-month period ended October 31, 2009, EBIT amounted to $810 million, or 5.8% of revenues, compared to $991 million, or 6.9%, for the same period last fiscal year.

Net financing expense came to $41 million for the three-month period ended October 31, 2009, compared to $25 million for the corresponding period last year. For the nine-month period ended October 31, 2009, net financing expense totalled $123 million, compared to $82 million for the same period last year. The $16-million and $41-million increases for the three- and nine-month periods are mainly due to lower interest income, consistent with lower variable interest rates, and a lower average level of cash on hand and a lower level of invested collateral required under the new BT and BA letter of credit facilities; partially offset by lower interest expense on long-term debt, after the effect of hedges, consistent with lower variable interest rates and positive variations in fair value of financial instruments.

The effective income tax rate was 24% and 23.1% respectively for the three- and nine-month periods ended October 31, 2009, compared to the statutory income tax rate of 31.3%. The lower effective tax rates are mainly due to the positive impact of the recognition of tax benefits related to operating losses and temporary differences.

As a result, net income amounted to $168 million, or $0.09 per share, for the third quarter of fiscal year 2010, compared to $226 million, or $0.12 per share, for the same period the previous year. For the nine-month period ended October 31, 2009, net income was $528 million, or $0.29 per share, compared to $714 million, or $0.39 per share, for the same period the previous year.

For the three-month period ended October 31, 2009, free cash flow totalled $72 million, compared to a free cash flow usage of $226 million for the corresponding period the previous year. For the nine-month period ended October 31, 2009, free cash flow usage totalled $727 million, compared to free cash flow of $433 million for the corresponding period the previous year.

As at October 31, 2009, Bombardier’s order backlog stood at $47.4 billion, compared to $48.2 billion as at January 31, 2009.

Bombardier Aerospace

  • Revenues of $2.1 billion
  • EBITDA of $197 million, or 9.5% of revenues
  • EBIT of $103 million, or 5% of revenues
  • Free cash flow of $61 million
  • Net orders of seven aircraft
  • Order backlog of $18.1 billion

Bombardier Aerospace’s revenues amounted to $2.1 billion for the three-month period ended October 31, 2009, compared to $2.3 billion for the same period the previous year. The decrease is mainly due to a decrease in manufacturing revenues reflecting lower deliveries and selling prices for business aircraft, partially offset by a higher percentage of wide-body aircraft deliveries; partially offset by higher revenues for commercial aircraft mainly due to higher deliveries.

For the third quarter ended October 31, 2009, EBIT totalled $103 million, or 5% of revenues, compared to $176 million, or 7.7% of revenues, for the same period the previous year. The 2.7 percentage-point decrease is mainly due to lower selling prices for business aircraft, higher cost of sales per unit, mainly due to price escalations of materials, the mix between business and commercial aircraft deliveries, lower margins for services activities, a provision for the write-down of inventories mainly due to lower market values for pre-owned aircraft, and the net negative impact in other expense (income) from the revaluation at the balance sheet date of certain balance sheet accounts in foreign currencies; partially offset by liquidated damages from customers, mainly as a result of business aircraft order cancellations, a net positive variance on certain financial instruments carried at fair value, lower selling, general and administrative expenses, mainly due to lower business aircraft deliveries, and lower amortization expense due to the aerospace program tooling on some aircraft models being fully amortized.

Free cash flow amounted to $61 million for the third quarter ended October 31, 2009, compared to $9 million for the same period last fiscal year. The free cash flow increase is mainly due to a positive period-over-period variation in net change in non-cash balances related to operations; partially offset by lower profitability, and higher net additions to property, plant and equipment and intangible assets.

For the quarter ended October 31, 2009, Bombardier Aerospace delivered 61 aircraft, compared to 80 for the same period the previous year. The 61 deliveries consisted of 33 business, 27 commercial, and one amphibious aircraft (57 business, 22 commercial and one amphibious aircraft for the corresponding period last fiscal year).

Bombardier Aerospace received seven net orders during the quarter ended October 31, 2009, compared to 68 during the corresponding period the previous year. The seven net orders comprised two business, one commercial and four amphibious aircraft (48 business and 20 commercial aircraft for the corresponding period last fiscal year).

Bombardier Aerospace’s firm order backlog reached $18.1 billion as at October 31, 2009, compared to $23.5 billion as at January 31, 2009. The decrease reflects the significantly higher business aircraft order cancellations, as well as an overall level of new orders lower than revenues in business aircraft and regional jets, partially offset by orders received for the CSeries family of aircraft in the first quarter of the current fiscal year.

Bombardier Transportation

  • Revenues of $2.5 billion
  • EBITDA of $191 million, or 7.5% of revenues
  • EBIT of $159 million, or 6.3% of revenues
  • Free cash flow of $32 million
  • New order intake totalling $3.6 billion (book-to-bill ratio of 1.4)
  • Order backlog of $29.3 billion

Bombardier Transportation’s revenues rose to $2.5 billion for the three-month period ended October 31, 2009, up from $2.3 billion for the same period last year. The $254-million improvement is mainly due to increased activity in rolling stock in the commuter and regional trains segment and in the metro segment, mainly in France, Germany, India, Sweden and Denmark, in the intercity, high speed and very high speed segment in China, and in the propulsion and controls segment in China; partially offset by the completion of an intercity contract in the Netherlands, and lower activities in the locomotive segment.

For the third quarter ended October 31, 2009, EBIT totalled $159 million, or 6.3% of revenues, compared to $120 million, or 5.3% of revenues, for the same quarter the previous year. The 1 percentage-point increase is mainly due to better contract execution, mainly in North America, and better absorption of fixed costs as a result of the ramp-up in production; partially offset by a lower net gain compared to the same period last fiscal year related to foreign exchange fluctuations and certain financial instruments carried at fair value.

Free cash flow was $32 million for the quarter ended October 31, 2009, compared to free cash flow usage of $243 million for the same period last fiscal year. The $275-million increase is mainly due to a positive period-over-period variation in net change in non-cash balances related to operations and higher profitability.

The order intake for the third quarter ended October 31, 2009 was $3.6 billion, compared to $2.8 billion for the same period last fiscal year, for a book-to-bill ratio of 1.4. The increase is mainly due to higher order intake in rolling stock in Asia, and in system and signalling in North America; partially offset by fewer large orders received in services in Europe as some customers are postponing orders given the current economic situation.

Bombardier Transportation’s backlog stood at $29.3 billion as at October 31, 2009, compared to $24.7 billion as at January 31, 2009. The increase is due to the strengthening of foreign currencies as at October 31, 2009 compared to January 31, 2009, mainly the euro and pound sterling compared to the U.S. dollar, and order intake being higher than revenues recorded.

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 January 31, 2010 to the shareholders of record at the close of business on January 15, 2010.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on January 15, 2010 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 $0.04688 Cdn per share on Series 2 Preferred Shares has been paid on September 15, on October 15, and on November 15, 2009.

Series 3 Preferred Shares
A quarterly dividend of $0.32919 Cdn per share on Series 3 Preferred Shares is payable on January 31, 2010 to the shareholders of record at the close of business on January 15, 2010.

Series 4 Preferred Shares
A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on January 31, 2010 to the shareholders of record at the close of business on January 15, 2010.

About Bombardier
A world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services, Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2009, were $19.7 billion US, and its shares are traded on the Toronto Stock Exchange (BBD). Bombardier is listed as an index component to the Dow Jones Sustainability World and North America indexes. News and information are available at www.bombardier.com.

CRJ, CRJ700, CRJ1000, CSeries, FLEXITY, Global Vision, Learjet, Learjet 85, NextGen and ZEFIRO are trademarks of Bombardier Inc. or its subsidiaries.

For Information

Isabelle Rondeau
Director, Communications
+514-861-9481

Shirley Chénier
Senior Director, Investor Relations
+514-861-9481

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

FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe” or “continue” or the negatives of these terms or variations of them or similar terminology. By their nature, forward-looking statements require Bombardier Inc. (the “Corporation”) to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause the Corporation’s actual results in future periods to differ materially from forecasted results. While the Corporation considers its assumptions to be reasonable and appropriate based on current information 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 Forward-looking statements sections in BA and BT in the Management’s Discussion and Analysis (“MD&A”) of the Corporation’s annual report for fiscal year 2009.

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 the Corporation’s business environment (such as the financial condition of the airline industry), operational risks (such as risks involved in developing new products and services, risks in doing business with partners, risks relating to product performance warranty, casualty claim losses, risks from regulatory and legal proceedings, environmental risks, risks relating to the Corporation’s dependence on certain customers and suppliers, human resource risks and risks resulting from fixed-term commitments), financing risks (such as risks resulting from reliance on government support, risks relating to financing support provided on behalf of certain customers and to reliance on government support, risks relating to liquidity and access to capital markets, risks relating to the terms of certain restrictive debt covenants) and market risks (including foreign currency fluctuations, changing interest rates and commodity pricing risk). For more details, see the Risks and Uncertainties section of the MD&A of the Corporation’s annual report for fiscal year 2009. 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 the Corporation’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 Corporation 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.

CAUTION REGARDING NON-GAAP EARNINGS MEASURES
This press release is based on reported earnings in accordance with Canadian generally accepted accounting principles (GAAP). It is also based on EBITDA, and Free Cash Flow. These non-GAAP measures are directly derived from the Consolidated Financial Statements, but do not have a standardized meaning prescribed by GAAP; therefore, others using these terms may calculate them differently. Management believes that a significant number of the users of its MD&A analyze the Corporation’s results based on these performance measures.

 

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