– Consolidated earnings and cash performance(1) exceeded 2016 guidance
– Full-year margin(1) targets exceeded at Transportation, Business and Commercial Aircraft
– All new program milestones met; CS100 and CS300 in service, Global 7000 in flight testing
– 2017 guidance affirmed, on track to achieve all 2018 and 2020 targets
– Liquidity(2) secured, turnaround plan in full motion
MONTRÉAL -BUSINESS – Bombardier (TSX:BBD.A)(TSX:BBD.B)(OTCQX:BDRBF) today reported its fourth quarter and full year 2016 results. The Company also affirmed its guidance for 2017 and highlighted another quarter of solid performance as it executes its turnaround plan.
“Our turnaround plan is in full motion,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “In 2016, Bombardier delivered on its financial commitments. We met our program milestones and we’ve positioned the Company to achieve all of the financial goals in our five-year turnaround plan, including being cash flow break-even in 2018.”
On a consolidated basis, Bombardier exceeded its 2016 guidance range for EBIT before special items(3); improved its year-over-year cash performance by $778 million; and delivered approximately 200 basis points of margin improvement at its Transportation, Business Aircraft and Aerostructures segments. With the successful refinancing of $1.4 billion of senior notes in the fourth quarter, the Company also successfully completed the de-risking phase of its turnaround plan in 2016, securing the liquidity necessary to fully execute the final two phases of the plan: building earnings and cash flow and de-leveraging its balance sheet.
Further highlighting the Company’s progress in the fourth quarter was the successful entry-into-service of the CS300 aircraft with airBaltic, which followed the strong performance of the CS100 aircraft with SWISS since starting commercial operations over six months ago. Bombardier’s all-new, class-defining, ultra-long range business jet, the Global 7000, also began flight testing in the fourth quarter and remains on schedule to enter service in the second half of 2018.
“As we begin 2017, we are confident in our strategy, our turnaround plan and in our ability to unleash the full value of the Bombardier portfolio,” Bellemare continued. “We remain focused on improving operational efficiency, flawlessly ramping up our new programs and maintaining a disciplined and proactive approach to deliver value to customers and shareholders in any market environment.”
For 2017, as per guidance introduced in December 2016, the Company expects to resume revenue growth in the low-single digits, driven by an increase in Transportation revenues and an acceleration of C Series aircraft deliveries. EBIT before special items for 2017 is forecast to increase by 35% at the mid-point of the $530 million to $630 million range, with margins improving across all business segments. Free cash flow usage should continue to improve by up to $300 million, falling in the range of $750 million to $1.0 billion as the Company continues to come down the learning curve on the C Series aircraft.
Selected results
| For the fiscal years ended December 31 | 2016 | 2015 | ||||
| Revenues | $ | 16,339 | $ | 18,172 | ||
| EBIT | $ | (58 | ) | $ | (4,838 | ) |
| EBIT margin | (0.4 | )% | (26.6 | )% | ||
| EBIT before special items | $ | 427 | $ | 554 | ||
| EBIT margin before special items(3) | 2.6 | % | 3.0 | % | ||
| EBITDA before special items(3) | $ | 798 | $ | 992 | ||
| EBITDA margin before special items(3) | 4.9 | % | 5.5 | % | ||
| Net loss | $ | (981 | ) | $ | (5,340 | ) |
| Diluted EPS (in dollars) | $ | (0.48 | ) | $ | (2.58 | ) |
| Adjusted net income (loss)(3) | $ | (268 | ) | $ | 326 | |
| Adjusted EPS (in dollars)(3) | $ | (0.15 | ) | $ | 0.14 | |
| Net additions to PP&E and intangible assets | $ | 1,201 | $ | 1,862 | ||
| Free cash flow usage(3) | $ | (1,064 | ) | $ | (1,842 | ) |
| As at December 31 | 2016 | 2015 | ||||
| Available short-term capital resources(2) | $ | 4,477 | $ | 4,014 | ||
| For the fourth quarters ended December 31 | 2016 | 2015 | ||||
| Revenues | $ | 4,380 | $ | 5,017 | ||
| EBIT | $ | 74 | $ | (657 | ) | |
| EBIT margin | 1.7 | % | (13.1 | )% | ||
| EBIT before special items | $ | 104 | $ | 16 | ||
| EBIT margin before special items | 2.4 | % | 0.3 | % | ||
| EBITDA before special items | $ | 203 | $ | 139 | ||
| EBITDA margin before special items | 4.6 | % | 2.8 | % | ||
| Net loss | $ | (259 | ) | $ | (677 | ) |
| Diluted EPS (in dollars) | $ | (0.12 | ) | $ | (0.31 | ) |
| Adjusted net income (loss) | $ | (141 | ) | $ | 9 | |
| Adjusted EPS (in dollars) | $ | (0.07 | ) | $ | 0.00 | |
| Net additions to PP&E and intangible assets | $ | 327 | $ | 543 | ||
| Free cash flow(3) | $ | 496 | $ | 527 |
| 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. |
SEGMENTED RESULTS AND HIGHLIGHTS
Business Aircraft
| For the fiscal years ended December 31 | 2016 | 2015 | Variance | |||||
| Revenues | $ | 5,741 | $ | 6,996 | (18 | )% | ||
| Aircraft deliveries (in units) | 163 | 199 | (36 | ) | ||||
| Net orders (in units) | 114 | (24 | ) | 138 | ||||
| Book-to-bill ratio(4) | 0.7 | nmf | nmf | |||||
| EBIT | $ | 477 | $ | (1,252 | ) | nmf | ||
| EBIT margin | 8.3 | % | (17.9 | )% | nmf | |||
| EBIT before special items | $ | 369 | $ | 308 | 20 | % | ||
| EBIT margin before special items | 6.4 | % | 4.4 | % | 200 bps | |||
| EBITDA before special items | $ | 528 | $ | 492 | 7 | % | ||
| EBITDA margin before special items | 9.2 | % | 7.0 | % | 220 bps | |||
| Net additions to PP&E and intangible assets | $ | 721 | $ | 722 | – | % | ||
| As at December 31 | 2016 | 2015 | ||||||
| Order backlog (in billions of dollars) | $ | 15.4 | $ | 17.2 | (10 | )% |
- Business Aircraft’s 2016 financial performance exceeded guidance on all fronts, delivering a total of 163 aircraft, while reaching revenues of $5.7 billion and EBIT margins before special items of 6.4%, a 200-basis point improvement over the prior year.
- Financial results for 2016 demonstrated our continued focus on driving sustainable margin expansion through increasing production efficiency, transforming our cost structure, improving our production agility and the enhancement to our pre-owned aircraft business.
- We also made significant progress on the development of the Global 7000 and Global 8000 aircraft program, setting the standard for a new category of large business jets. We successfully completed, on November 4, 2016, the maiden flight of the first Global 7000 FTV, dedicated to testing basic system functionality and assessing the handling and flying qualities of the aircraft. The Global 7000 aircraft is the first and only clean-sheet business jet with four living spaces. Engineered with a next-generation transonic wing design, the aircraft offers a steep approach capability and short field performance, coupled with highly efficient engines, the largest cabin in this category and a highly advanced cockpit.(5)
Commercial Aircraft
| For the fiscal years ended December 31 | 2016 | 2015 | Variance | |||||
| Revenues | $ | 2,617 | $ | 2,395 | 9 | % | ||
| Aircraft deliveries (in units) | 86 | 76 | 10 | |||||
| Net orders (in units) | 161 | 51 | 110 | |||||
| Book-to-bill ratio(4) | 1.9 | 0.7 | 1.2 | |||||
| EBIT | $ | (903 | ) | $ | (3,970 | ) | nmf | |
| EBIT margin | (34.5 | )% | nmf | nmf | ||||
| EBIT before special items | $ | (417 | ) | $ | (170 | ) | (145 | )% |
| EBIT margin before special items | (15.9 | )% | (7.1 | )% | (880) bps | |||
| EBITDA before special items | $ | (353 | ) | $ | (66 | ) | nmf | |
| EBITDA margin before special items | (13.5 | )% | (2.8 | )% | (1070) bps | |||
| Net additions to PP&E and intangible assets | $ | 392 | $ | 963 | (59 | )% | ||
| As at December 31 | 2016 | 2015 | ||||||
| Order backlog (in units) | 436 | 361 | 75 |
- Commercial aircraft’s financial performance for 2016 was marked by the production ramp-up and the start of the revenue-generating phase of the C Series aircraft program. Revenues and deliveries were in line with guidance. The EBIT loss compares favourably relative to guidance, stemming from strong execution while ramping up production and cost control during the initial months following EIS and supported by the reliability of the aircraft in service. Our focus is now on improving efficiency while ramping up to full production, continuing to increase our order backlog, delivering the C Series aircraft and providing customer support.
- Commercial Aircraft reached a historic milestone in 2016 as it certified and brought to market both variants of the C Series aircraft, the first all-new clean-sheet designed family of single-aisle aircraft in the 100- to 150-seat segment in nearly 30 years. With a total of seven aircraft delivered by year end, both the CS100 and CS300 aircraft are delivering on their operating cost advantage, superior operating flexibility, exceptional performance and range, as well as passenger comfort.
- During the year, significant orders solidified the C Series aircraft program in the 100- to 150-seat category. A total of 129 firm orders and 80 options were added to the backlog, from Delta Air Lines, Air Canada, airBaltic and Air Tanzania, with a combined value of $10.1 billion at list prices.
- During the year, we closed the $1.0-billion equity investment by the Government of Québec (through Investissement Québec) in return for a 49.5% equity stake in a newly-created limited partnership, the C Series Aircraft Limited Partnership (CSALP), which carries on the operations related to our C Series aircraft program and continues to be consolidated in our financial results.
Aerostructures and Engineering Services
| For the fiscal years ended December 31 | 2016 | 2015 | Variance | |||||
| Revenues | $ | 1,549 | $ | 1,797 | (14 | )% | ||
| External order intake | 392 | 474 | (17 | )% | ||||
| External book-to-bill ratio(6) | 0.9 | 0.9 | – | |||||
| EBIT | $ | 128 | $ | 105 | 22 | % | ||
| EBIT margin | 8.3 | % | 5.8 | % | 250 bps | |||
| EBIT before special items | $ | 124 | $ | 104 | 19 | % | ||
| EBIT margin before special items | 8.0 | % | 5.8 | % | 220 bps | |||
| EBITDA before special items | $ | 175 | $ | 154 | 14 | % | ||
| EBITDA margin before special items | 11.3 | % | 8.6 | % | 270 bps | |||
| Net additions to PP&E and intangible assets | $ | 20 | $ | 26 | (23 | )% | ||
| As at December 31 | 2016 | 2015 | ||||||
| External order backlog | $ | 42 | $ | 80 | (48 | )% | ||
- We achieved revenue and profitability(1) in line with guidance for 2016. Margin expansion was driven by strong execution of our transformation initiatives, aiming to optimize our operations.
Bombardier Transportation
| For the fiscal years ended December 31 | 2016 | 2015 | Variance | |||||
| Revenues | $ | 7,574 | $ | 8,281 | (9 | )% | ||
| Order intake (in billions of dollars) | $ | 8.5 | $ | 8.8 | (3 | )% | ||
| Book-to-bill ratio(7) | 1.1 | 1.1 | – | |||||
| EBIT | $ | 396 | $ | 465 | (15 | )% | ||
| EBIT margin | 5.2 | % | 5.6 | % | (40) bps | |||
| EBIT before special items | $ | 560 | $ | 465 | 20 | % | ||
| EBIT margin before special items | 7.4 | % | 5.6 | % | 180 bps | |||
| EBITDA before special items | $ | 657 | $ | 564 | 16 | % | ||
| EBITDA margin before special items | 8.7 | % | 6.8 | % | 190 bps | |||
| Net additions to PP&E and intangible assets | $ | 116 | $ | 155 | (25 | )% | ||
| As at December 31 | 2016 | 2015 | ||||||
| Order backlog (in billions of dollars) | $ | 30.1 | $ | 30.4 | (1 | )% | ||
- Our operational transformation is gaining traction. During 2016, the EBIT margin before special items of 7.4% exceeded our guidance. Our 2016 revenues of $7.6 billion are lower than guidance, which is mainly attributed to our active project management resulting in the continued deferral of certain revenue under long-term contract accounting.
- Strong order intake of $8.5 billion across all product segments and geographic regions led to a book-to-bill ratio of 1.1 for the fiscal year and brought the backlog to $30.1 billion at year end.
- On February 11, 2016, we closed the sale to the CDPQ of a $1.5-billion equity investment in convertible shares representing a 30% stake in Bombardier Transportation (Investment) UK Limited (BT Holdco), which, following the completion of a corporate reorganization, owns essentially all of the assets and liabilities of Bombardier’s Transportation business segment. BT Holdco continues to be controlled by Bombardier Inc. and consolidated in its results.
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, 2016, we posted revenues of $16.3 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.
Bombardier Inc. uses its website as a channel of distribution for material company information. Financial and other material information regarding Bombardier Inc. is routinely posted on its website and accessible at bombardier.com. Investors are hereby notified information about regular dividends declared and paid by Bombardier is only made available through its website, unless otherwise required by applicable securities laws.
Bombardier, CS100, CS300, C Series, Global, Global 7000 and Global 8000 are trademarks of Bombardier Inc. or its subsidiaries.
Readers are strongly advised to view a more detailed discussion of our results by segment in our Management’s Discussion and Analysis and Consolidated financial statements which are posted on our website at ir.bombardier.com.
| bps: basis points |
| nmf: information not meaningful |
| (1) Earnings, profitability, margin and operating margin refer to EBIT before special items or EBIT margin before special items. Cash performance refers to free cash flow usage. Non-GAAP financial measures. See Caution regarding non-GAAP measures at the end of this press release. |
| (2) Defined as cash and cash equivalents plus the amount available under the Corporation’s revolving credit facilities. |
| (3) Non-GAAP financial measures. See Caution regarding non-GAAP measures at the end of this press release. |
| (4) Ratio of net orders received over aircraft deliveries, in units. |
| (5) See the Global 7000 and Global 8000 aircraft program disclaimer in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2016. |
| (6) Ratio of new external orders over external revenues. |
| (7) Ratio of new orders over revenues. |
