2018 was a year of solid progress
- EBIT before special items(1) up 42% year-over-year to more than $1.0B on revenues of $16.2B for the year; EBIT increased 235% year-over-year to $1.0 billion
- 2018 EBIT margin before special items(1) up 180 bps year-over-year to 6.3%; EBIT margin of 6.2%
- Full year free cash flow(1) of $182M, comprising proceeds from certain transactions, including $1.0B of cash generation in the fourth quarter; full year cash flows from operating activities of $597M
- Strong backlog growth at Business Aircraft and Transportation, with full year book-to-bill ratios(2) of 1.1 at both segments, and a consolidated backlog of $53.1B
- 2019 guidance affirmed, clear path to achieve 2020 objectives
MONTRÉAL – BUSINESS – Bombardier (TSX: BBD.B) today reported its fourth quarter and full year 2018 results, highlighting solid margin growth, improved cash flows and continued progress executing its turnaround plan. The successful entry-into-service of the Global 7500 business jet in the fourth quarter also marked the completion of Bombardier’s heavy investment cycle, a key milestone in the company’s turnaround plan.
“2018 was a year of solid progress,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “We continued to strengthen our business and set a strong foundation for growth. A foundation that includes a refreshed portfolio of best-in-class products, industry-leading backlogs and a more streamlined cost structure, all of which gives us a clear path to achieve our 2020 objectives.”
“As we begin the fourth year of our turnaround journey, Bombardier is a much stronger company,” continued Bellemare. “Our major program risks are retired, our heavy investment cycle is behind us and our franchises are well positioned for growth. For 2019, we are focused on flawless execution of our rail projects, the ramp-up of the Global 7500 and entry-into-service of the Global 5500 and Global 6500. We will also continue to drive financial performance through disciplined capital allocation and improved productivity and efficiency across the organization.”
Bombardier’s 2018 consolidated revenues reached $16.2 billion, reflecting 3% average year-over-year growth across Transportation, Business Aircraft and Aerostructures, excluding currency impact. Book-to-bill ratios(2) at Transportation and Business Aircraft both equalled 1.1 for the year, demonstrating strong demand for Bombardier’s products and services. Bombardier’s consolidated backlog reached $53.1 billion at the end of 2018, supporting future growth targets.
EBIT before special items continued to improve in 2018, increasing 42% year-over-year from $725 million to more than $1.0 billion, the top-end of the company’s guidance. The 6.3% EBIT margin before special items in 2018 represents a strong 330 bps increase since the start of the turnaround plan in 2015, well above the 5-6% range originally targeted. On a reported basis, EBIT increased 235% year-over-year to $1.0 billion, representing a margin of 6.2%.
Bombardier generated $1.0 billion of free cash flow in the fourth quarter of 2018. Full year free cash flow generation equalled $182 million, at the high end of the company’s revised guidance. This amount includes aggregate net proceeds of approximately $750 million from the sale of the Downsview property and the monetization of royalties associated with the previously announced CAE transaction. Cash flows from operating activities amounted to $597 million for the full year, and to $1.3 billion in the fourth quarter. Bombardier ended the year in a solid cash position, with $3.2 billion in cash and cash equivalents.
Selected results
| RESULTS | |||||||||||||
| For the fiscal years ended December 31 | 2018 | 2017 | Variance | ||||||||||
| restated(3) | |||||||||||||
| Revenues | $ | 16,236 | $ | 16,199 | — | % | |||||||
| EBIT | $ | 1,001 | $ | 299 | 235 | % | |||||||
| EBIT margin | 6.2 | % | 1.8 | % | 440 | bps | |||||||
| EBIT before special items | $ | 1,029 | $ | 725 | 42 | % | |||||||
| EBIT margin before special items | 6.3 | % | 4.5 | % | 180 | bps | |||||||
| EBITDA before special items(1) | $ | 1,304 | $ | 1,046 | 25 | % | |||||||
| EBITDA margin before special items(1) | 8.0 | % | 6.5 | % | 150 | bps | |||||||
| Net income (loss) | $ | 318 | $ | (525 | ) | nmf | |||||||
| Diluted EPS (in dollars) | $ | 0.09 | $ | (0.24 | ) | $ | 0.33 | ||||||
| Adjusted net income(1) | $ | 438 | $ | 91 | 381 | % | |||||||
| Adjusted EPS (in dollars)(1) | $ | 0.14 | $ | 0.04 | $ | 0.10 | |||||||
| Cash flows from operating activities | $ | 597 | $ | 531 | 12 | % | |||||||
| Net additions to PP&E and intangible assets | $ | 415 | $ | 1,317 | (68 | )% | |||||||
| Free cash flow (usage) | $ | 182 | $ | (786 | ) | nmf | |||||||
| As at December 31 | 2018 | 2017 | Variance | ||||||||||
| Cash and cash equivalents(4) | $ | 3,187 | $ | 3,057 | 4 | % | |||||||
| Available short-term capital resources(4)(5) | $ | 4,373 | $ | 4,225 | 4 | % | |||||||
| RESULTS | |||||||||||||
| For the fourth quarters ended December 31 | 2018 | 2017 | Variance | ||||||||||
| restated | |||||||||||||
| Revenues | $ | 4,303 | $ | 4,611 | (7 | )% | |||||||
| EBIT | $ | 342 | $ | 73 | 368 | % | |||||||
| EBIT margin | 7.9 | % | 1.6 | % | 630 | bps | |||||||
| EBIT before special items | $ | 286 | $ | 139 | 106 | % | |||||||
| EBIT margin before special items | 6.6 | % | 3.0 | % | 360 | bps | |||||||
| EBITDA before special items | $ | 370 | $ | 228 | 62 | % | |||||||
| EBITDA margin before special items | 8.6 | % | 4.9 | % | 370 | bps | |||||||
| Net income (loss) | $ | 55 | $ | (188 | ) | nmf | |||||||
| Diluted EPS (in dollars) | $ | 0.02 | $ | (0.09 | ) | $ | 0.11 | ||||||
| Adjusted net income (loss) | $ | 149 | $ | (28 | ) | nmf | |||||||
| Adjusted EPS (in dollars) | $ | 0.05 | $ | (0.02 | ) | $ | 0.07 | ||||||
| Cash flows from operating activities | $ | 1,289 | $ | 1,237 | 4 | % | |||||||
| Net additions to PP&E and intangible assets | $ | 248 | $ | 365 | (32 | )% | |||||||
| Free cash flow | $ | 1,041 | $ | 872 | 19 | % | |||||||
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
| RESULTS | ||||||||||||
| For the fiscal years ended December 31 | 2018 | 2017 | Variance | |||||||||
| restated | ||||||||||||
| Revenues | $ | 4,994 | $ | 4,933 | 1 | % | ||||||
| Aircraft deliveries (in units) | 137 | 138 | (1 | ) | ||||||||
| EBIT | $ | 430 | $ | 394 | 9 | % | ||||||
| EBIT margin | 8.6 | % | 8.0 | % | 60 | bps | ||||||
| EBIT before special items | $ | 420 | $ | 419 | 0 | % | ||||||
| EBIT margin before special items | 8.4 | % | 8.5 | % | (10) | bps | ||||||
| EBITDA before special items | $ | 531 | $ | 516 | 3 | % | ||||||
| EBITDA margin before special items | 10.6 | % | 10.5 | % | 10 | bps | ||||||
| Net additions to PP&E and intangible assets | $ | 866 | $ | 1,075 | (19 | )% | ||||||
| As at December 31 | 2018 | 2017 | Variance | |||||||||
| restated | ||||||||||||
| Order backlog (in billions of dollars) | $ | 14.3 | $ | 13.8 | 4 | % | ||||||
- Business Aircraft achieved a historical milestone in December 2018 with the on plan service entry of the largest and longest range industry flagship Global 7500 aircraft. With a strong backlog and unsurpassed performance in its category, the Global 7500 is expected to be Business Aircraft’s key growth driver for years to come.
- Revenues, EBIT before special items and deliveries were in line with guidance for 2018.
- The segment achieved industry-leading deliveries at 137 aircraft for 2018, including 42 Global, 83 Challenger and 12 Learjet.
- Continued progress on the aftermarket strategy drove a 14.3% revenue increase year-over-year. Further expansion of our service network was also announced with the groundbreaking for a new centre in Miami, Florida to service U.S. and Latin American customers.
- During the year, Business Aircraft unveiled the new Global 5500 and Global 6500 aircraft featuring an all-new Rolls-Royce engine and a newly optimized wing, increasing the aircraft range and fuel burn performance. With flight testing at advanced stages, these performance-leading aircraft are expected to enter into service at the end of 2019.(6)
Commercial Aircraft
| RESULTS | ||||||||||||
| For the fiscal years ended December 31 | 2018 | 2017 | Variance | |||||||||
| restated | ||||||||||||
| Revenues(7) | $ | 1,756 | $ | 2,317 | (24 | )% | ||||||
| Aircraft deliveries (in units)(8) | 35 | 56 | (21 | ) | ||||||||
| Net orders (in units)(9) | 47 | 58 | (11 | ) | ||||||||
| Book-to-bill ratio(10) | 1.3 | 1.0 | 0.3 | |||||||||
| EBIT(11) | $ | (755 | ) | $ | (389 | ) | (94 | )% | ||||
| EBIT margin(11) | (43.0 | )% | (16.8 | )% | (2620 | ) bps | ||||||
| EBIT before special items(11) | $ | (157 | ) | $ | (381 | ) | 59 | % | ||||
| EBIT margin before special items(11) | (8.9 | )% | (16.4 | )% | 750 | bps | ||||||
| EBITDA before special items(11) | $ | (145 | ) | $ | (309 | ) | 53 | % | ||||
| EBITDA margin before special items(11) | (8.3 | )% | (13.3 | )% | 500 | bps | ||||||
| Net additions to PP&E and intangible assets | $ | 53 | $ | 107 | (50 | )% | ||||||
| As at December 31 | 2018 | 2017 | Variance | |||||||||
| Order backlog (in units)(12) | 97 | 85 | 12 | |||||||||
| • | In 2018, Commercial Aircraft significantly reshaped its portfolio, focusing on the CRJ Series program and its aftermarket business, while also participating in the growth of the A220 through its partnership with Airbus: | |
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| • | Revenues and aircraft deliveries for 2018 were in line with guidance on the basis of the deconsolidation of CSALP results from Commercial Aircraft since July 1, 2018. | |
| • | EBIT loss before special items(11) was $157 million reflecting for the most part losses on the C Series program in the first half of the year and the post-closing CSALP equity pickup. EBIT loss of $755 million includes a $616 million pre-tax accounting charge related to the closing of the CSALP transaction. | |
| • | Commercial Aircraft continues to actively participate in the regional aircraft market with the established scope-compliant CRJ Series aircraft, with a focus on reducing costs and increasing volumes while optimizing the aftermarket for the large installed base in service around the world today. As the focus is to return the program to profitability, Bombardier also announced in 2018 it is exploring strategic options for the program. |
Aerostructures and Engineering Services
| RESULTS | ||||||||||||
| For the fiscal years ended December 31 | 2018 | 2017 | Variance | |||||||||
| restated | ||||||||||||
| Revenues | $ | 1,953 | $ | 1,616 | 21 | % | ||||||
| EBIT | $ | 146 | $ | 81 | 80 | % | ||||||
| EBIT margin | 7.5 | % | 5.0 | % | 250 | bps | ||||||
| EBIT before special items | $ | 188 | $ | 88 | 114 | % | ||||||
| EBIT margin before special items | 9.6 | % | 5.4 | % | 420 | bps | ||||||
| EBITDA before special items | $ | 239 | $ | 138 | 73 | % | ||||||
| EBITDA margin before special items | 12.2 | % | 8.5 | % | 370 | bps | ||||||
| Net additions to PP&E and intangible assets | $ | 14 | $ | 22 | (36 | )% | ||||||
- Aerostructures and Engineering Services is positioned as a key supplier on early life cycle growth programs, including the new A220 and Global 7500aircraft, expected to drive sustainable growth.
- In 2018, the segment revenues grew 21% year-over-year to $2.0 billion in line with guidance.
- Focused execution during the ramp-up of these programs and a one-time favorable item (approximately 50 bps) associated with the closing of the C Series Partnership have enabled to deliver 9.6% EBIT before special items, above its guidance. EBIT margin for the segment was 7.5%.
- On February 6, 2019, the Corporation acquired the Global 7500 aircraft wing program operations and assets from Triumph Group Inc., for a nominal cash consideration. This transaction is expected to strengthen Bombardier’s position as a leading aerostructures manufacturer, to enable the company to leverage its extensive technical expertise to support the ramp-up of the Global 7500 aircraft, and to enhance its long-term success. Bombardier will continue to operate the production line and integrate the employees currently supporting the program at Triumph’s Red Oak, Texas facility.
- On February 7, 2019, Paul Sislian was appointed President, Aerostructures and Engineering Services. Paul brings more than 20 years of aerospace and industrial experience, including serving most recently as Chief Operating Officer for Bombardier Business Aircraft.
Transportation
| RESULTS | ||||||||||||
| For the fiscal years ended December 31 | 2018 | 2017 | Variance | |||||||||
| restated | ||||||||||||
| Revenues | $ | 8,915 | $ | 8,551 | 4 | % | ||||||
| Order intake (in billions of dollars) | $ | 9.9 | $ | 10.2 | (3 | )% | ||||||
| Book-to-bill ratio(2) | 1.1 | 1.2 | (0.1 | ) | ||||||||
| EBIT | $ | 774 | $ | 443 | 75 | % | ||||||
| EBIT margin | 8.7 | % | 5.2 | % | 350 | bps | ||||||
| EBIT before special items | $ | 750 | $ | 738 | 2 | % | ||||||
| EBIT margin before special items | 8.4 | % | 8.6 | % | (20 | ) bps | ||||||
| EBITDA before special items | $ | 851 | $ | 836 | 2 | % | ||||||
| EBITDA margin before special items | 9.5 | % | 9.8 | % | (30 | ) bps | ||||||
| Net additions to PP&E and intangible assets | $ | 108 | $ | 123 | (12 | )% | ||||||
| As at December 31 | 2018 | 2017 | Variance | |||||||||
| restated |
||||||||||||
| Order backlog (in billions of dollars) | $ | 34.5 | $ | 35.1 | (2 | )% | ||||||
| • | On February 7, 2019, Danny Di Perna was appointed President, Bombardier Transportation. Danny brings more than 30 years of industrial experience to this new role. He has a proven record of success leading complex industrial projects and organizations, driving operational efficiency and improving quality. Most recently, Danny led Bombardier’s Aerostructures and Engineering Services segment. | |
| • | In 2018, Transportation recorded orders totaling $9.9 billion, fueled by a $3.3 billion order intake in the fourth quarter. Book-to-bill(2) reached 1.5 for the fourth quarter, resulting in a 1.1 ratio for the full year, continuing to position the segment for growth in revenues and profitability, supported by strong industry fundamentals. | |
|
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| • | Financial performance for 2018 positions Transportation to reach 2019 guidance: | |
|
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| • | As discussed at the Company’s December 2018 Investor Day, Transportation continues to advance a number of legacy projects. The Company has plans in place and is taking actions to finalize system integration, obtain homologation and align delivery schedules with customers. Bombardier expects to substantially complete deliveries on most of these projects and significantly recover working capital through 2019. | |
| • | As the portfolio continues to improve, Transportation anticipates growing EBIT margins before special items to approximately 9% for 2019, in line with guidance. |
CDPQ Investment in BT Holdco
The Company also announced that Transportation’s results in 2018 did not reach the performance targets underlying Caisse de dépôt et placement du Québec’s (CDPQ) investment in BT Holdco. Accordingly, for the 12-month period starting on February 12, 2019, Bombardier’s percentage of ownership on conversion of CDPQ’s shares will decrease by 2.5%, returning to the original 70%; and the preference return entitlement rate on liquidation of its shares will increase from 7.5% to 9.5% for this period. Any dividends paid by BT Holdco to its shareholders during this period will be distributed on the basis of each shareholder’s percentage of ownership upon conversion, being 70% for Bombardier and 30% for CDPQ. These adjustments will become effective once the audited consolidated financial statements of BT Holdco are duly approved by its board of directors.
About Bombardier
With over 68,000 employees across four business segments, Bombardier is a global leader in the transportation industry, creating innovative and game-changing planes and trains. Our products and services provide world-class transportation experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.
Headquartered in Montréal, Canada, Bombardier has production and engineering sites in 28 countries across the segments of Transportation, Business Aircraft, Commercial Aircraft and Aerostructures and Engineering Services. Bombardier shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2018, Bombardier posted revenues of $16.2 billion.
