Press Releases

Bombardier Announces Strong Financial Results for the Fourth Quarter and the Year Ended January 31, 2009


April 2, 2009 — Montréal


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

  • Consolidated revenues of $19.7 billion, compared to $17.5 billion last fiscal year
  • EBITDA of $2 billion, compared to $1.4 billion before special item last fiscal year
  • EBIT of $1.4 billion, compared to $902 million before special item last fiscal year
  • Net income of $1 billion, compared to $317 million last fiscal year
  • Diluted EPS of $0.56, compared to $0.16 last fiscal year
  • Free cash flow of $342 million, compared to $2 billion last fiscal year
  • Strong cash position at $3.5 billion
  • Successful negotiation of a 3.75 billion euros letter of credit facility
  • Backlog of $48.2 billion
  • In the context of the continued economic downturn, further production rate decrease and layoffs at Bombardier Aerospace
  • CSeries aircraft firm purchase agreements with Deutsche Lufthansa AG and Lease Corporation International

Bombardier today reported strong financial results for the fourth quarter and the year ended January 31, 2009 showing improvements in revenues, profitability and a robust cash position. Revenues increased by 13% to reach $19.7 billion. Earnings before financing income, financing expense and income taxes (EBIT) reached $1.4 billion, up 56% compared to $902 million before special item last fiscal year ($1.2 billion before excess-over-average production cost (EOAPC) charge last fiscal year). EBIT margin at 7.2% compares to last year’s 5.2% before special item (6.7% before EOAPC charge). Diluted earnings per share (EPS) reached $0.56, compared to $0.16 ($0.26 before special item) last fiscal year. Net income reached $1 billion, compared to $317 million last fiscal year. 

Free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) totalled $342 million compared to $2 billion last fiscal year. The cash position remained strong at $3.5 billion as at January 31, 2009, compared to $3.6 billion as at January 31, 2008. Last December, notwithstanding the difficult credit environment, a 3.75 billion euros letter of credit facility agreement was negotiated for Bombardier Transportation with a syndicate of first quality international financial institutions. 

The overall backlog stood at $48.2 billion as at January 31, 2009 compared to $53.6 billion as at January 31, 2008. The decrease is due to the impact of the weakening of foreign currencies compared to the U.S. dollar on Bombardier Transportation’s backlog.

“During the past year, we more than held our own as the world’s financial markets tumbled and the global economy weakened. In fact, we reached a milestone with net income rising to $1 billion, for the first time in our history and our EPS more than doubled to reach $0.56 from $0.16 last fiscal year,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. 

“We continued to make progress with both Bombardier Aerospace and Bombardier Transportation delivering an excellent financial performance in fiscal year 2009. Our Aerospace group had an EBIT margin of 9% for the year, exceeding its goal of 8%. Transportation is well on its way to achieving its 6% target for fiscal year 2010 having reached 6.2% EBIT margin in the fourth quarter, and 5.3% for the full fiscal year.”  

“There is no doubt that we are going through challenging times and our business environment is changing fast. There’s a need for prudent execution, clear priorities and decisive action in the current context. However, we believe we are well positioned to face this difficult economic environment with a strong balance sheet, high level of liquidity as well as a large and diversified backlog, both by product and geographies,” added Mr. Beaudoin.

Bombardier Aerospace
At Bombardier Aerospace, revenues increased to $10 billion compared to $9.7 billion last fiscal year, while EBIT rose to $896 million, compared to $563 million last fiscal year. This represents an EBIT margin of 9%, versus last year’s 5.8% (8.6% before EOAPC charge).

Bombardier Aerospace’s backlog reached $23.5 billion as at January 31, 2009, compared to $22.7 billion at the same date last year. Since February 5, 2009, the number of net orders and deliveries for fiscal year ended January 31, 2009 has been revised downward. The group registered 367 net orders for business, commercial and amphibious aircraft, compared to 698 aircraft last fiscal year. Deliveries totalled 349 aircraft, versus 361 last fiscal year. In the business aircraft market, Bombardier Aerospace maintained its leadership, on a revenue basis, with 235 deliveries as well as 251 net orders, for a book-to-bill ratio of 1.1. Commercial aircraft net orders totalled 114 aircraft, while 110 aircraft were delivered during the year, for a book-to-bill ratio of 1.0.   

Although Bombardier Aerospace has the most comprehensive product line of all business aircraft manufacturers, with an offering in 95% of the total market, business aircraft demand has deteriorated rapidly during the second half of calendar 2008 and is expected to remain weak for the foreseeable future. As a result, Bombardier Aerospace now expects to deliver approximately 25% less business aircraft this fiscal year compared to fiscal year 2009, while still expecting to increase deliveries of its commercial aircraft by 10% compared to last fiscal year. 

Bombardier Aerospace is revising downward all of its business and regional jets production rates and implementing measures to meet the continuing challenges facing the aviation industry. This adjustment will result in a further reduction of approximately 10 percent of Bombardier Aerospace’s total workforce, or approximately 3,000 employees, at its facilities in Canada, the United States, Mexico and Northern Ireland by the end of calendar year 2009. This latest manpower reduction is in addition to the 1,360 layoffs announced last February 5 when Bombardier adjusted the production rates of its Learjet and Challenger aircraft. Severance costs associated with these layoffs are expected to total approximately $30 million.

Bombardier Aerospace is well positioned in the regional jet and turboprop categories due to the economic advantage of its products, a large installed customer base and family commonality benefits across the CRJ and the Q-Series aircraft. While the production level for the Q400 turboprop has been increased as demand for this aircraft remains strong, the production rate for the CRJ NextGen regional jets will be reduced in the latter part of fiscal year 2010 to adjust for a slowdown in new orders and deferral requests by some customers. The impact of this reduction on employment is reflected in the above-mentioned layoffs. 

Development of Bombardier’s newly launched aircraft, the CRJ1000, the Learjet 85 and CSeries aircraft programs are progressing as scheduled. In March 2009, two customers signed purchase agreements for the CSeries aircraft: Deutsche Lufthansa AG signed for 30 CS100 aircraft with options for an additional 30 CSeries aircraft and Lease Corporation International (LCI) for three CS100 and 17 CS300 jetliners with options for a further 20 CSeries aircraft. These new product developments will enable Bombardier to re-allocate as many employees as possible who meet the requirements of open positions, thereby reducing the number of layoffs resulting from the decrease in production rates.

Bombardier Aerospace believes that EBIT margin will be negatively impacted until markets return to normal economic conditions, but remains committed to its objective of an EBIT margin of 12% by fiscal year 2013.

Site Layoffs (April 2, 2009) Layoffs (Feb 5, 2009) Permanent employees and Temporary workers Total
Hourly employees Non-unionized and management
Contractual
workers
Unionized
Belfast 665 280 30 300 1,275
Montréal 10 831 189 710 1,740
Toronto -- 420 55 -- 475
United States (incl. Wichita) -- 300 170 350 820
Querétaro 50 -- -- -- 50
Total
(approx.)
3,000 1,360 4,360


Bombardier Transportation
Bombardier Transportation’s revenues totalled $9.8 billion, an increase of 25% over last fiscal year. EBIT reached $515 million, compared to $177 million for last fiscal year. This represents an EBIT margin of 5.3%, versus 2.3% (EBIT before special item totalled $339 million, or 4.4%), last fiscal year. 

The group reported a solid new order intake of $9.8 billion, with a book-to-bill ratio of 1.0 in the context of increasing revenues. The order backlog stood at $24.7 billion as at January 31, 2009. 

Bombardier Transportation’s products and services are the engine to sustainable mobility. The group continued to reap the benefits of its broad product portfolio by winning contracts in diverse regions around the world such as Singapore, Canada, Sweden, India, Germany and the United Kingdom, among others.

By continuously investing in innovative solutions, Bombardier Transportation has a complete product portfolio and is on the leading edge of new technology with, notably, the launch of the ECO4 suite of technologies to maximize energy efficiency and total train performance.

In November 2008, Bombardier Transportation inaugurated a state-of-the-art railway vehicle manufacturing facility in India, the first to be wholly-owned by a global foreign company in this country.

Closely working with its main customers to continue research on modular and flexible train platforms led Bombardier Transportation to sign a framework agreement with Deutsche Bahn AG (DB) in January 2009. This framework agreement, the largest ever awarded by DB to a single supplier, is for 800 new-generation double-deck coaches, valued at approximately $2.1 billion (1.5 billion euros).

With the equivalent of 2.5 years worth of revenues already in backlog, the current recession should have a limited impact on Bombardier Transportation as the fundamentals of the industry remain strong. Bombardier Transportation, therefore, reaffirms its goal to improve its EBIT margin to 6% for fiscal 2010.

Financial Highlights

FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE YEAR ENDED JANUARY 31, 2009

ANALYSIS OF RESULTS

Consolidated results
Consolidated revenues totalled $5.4 billion for the fourth quarter ended January 31, 2009, compared to $5.3 billion for the same period last year. For the year ended January 31, 2009, consolidated revenues reached $19.7 billion compared to $17.5 billion last year.

For the fourth quarter ended January 31, 2009, EBIT amounted to $435 million, or 8% of revenues, compared to $305 million, or 5.8%, for the same period the previous year. For the year ended January 31, 2009, EBIT reached $1.4 billion, or 7.2% of revenues, compared to $902 million before special item, or 5.2%, for the previous year.

Net financing expense amounted to $56 million for the fourth quarter of fiscal year 2009, compared to $92 million for the corresponding period of last year. For the year ended January 31, 2009, net financing expense reached $138 million, compared to $301 million for the same period last year. The $36-million and $163-million decreases are mainly due to lower interest expense on long-term debt, a net financing gain realized in the fiscal year 2009 on long-term debt repurchases compared to a financing loss realized in fiscal year 2008; partially offset by a loss related to the write-off of deferred costs in connection with the renewal of the letter of credit facility.

The effective income tax rate was 18.5% for the fourth quarter of fiscal year 2009 compared to a statutory income tax rate of 31.5%. The lower effective tax rate is mainly due to a net change in the recognition of tax benefits relating to operating losses and temporary differences, partially offset by permanent differences and a write-down of deferred income tax assets. For fiscal year 2009, the effective income tax rate was 20.8% compared to the statutory income tax rate of 31.5%. The lower effective tax rate is mainly due to the net change in the recognition of tax benefits related to operating losses and temporary differences and the lower tax rate of foreign investees partially offset by permanent differences and a write-down of deferred income tax assets.

As a result, net income amounted to $309 million, or diluted $0.17 per share, for the fourth quarter of fiscal year 2009, compared to $218 million, or diluted $0.12 per share, for the same period the previous year. For the year ended January 31, 2009, net income was $1 billion, or diluted $0.56 per share, compared to $317 million, or diluted $0.16 per share, for the previous year.

For the three-month period ended January 31, 2009, free cash flow amounted to a usage of $91 million, compared to a free cash flow of $924 million for the corresponding period the previous year. For the year ended January 31, 2009, free cash flow amounted to $342 million, compared to $2 billion last fiscal year.

As at January 31, 2009, Bombardier’s order backlog stood at $48.2 billion, compared to $53.6 billion as at January 31, 2008.

Bombardier Aerospace

  • Revenues of $2.8 billion for the fourth quarter; $10 billion for fiscal year 2009
  • EBITDA of $380 million for the fourth quarter; $1.3 billion for fiscal year 2009
  • EBIT of $271 million, or 9.8% of revenues, for the fourth quarter; $896 million, or 9%, for fiscal year 2009
  • Free cash flow usage of $271 million for the fourth quarter; free cash flow of $128 million for fiscal year 2009
  • Order backlog of $23.5 billion as at January 31, 2009, compared to $22.7 billion as at January 31, 2008
  • Signature of two CSeries firm order agreements totalling 50 aircraft plus 50 options

Bombardier Aerospace’s revenues amounted to $2.8 billion for the three-month period ended January 31, 2009 compared to $2.9 billion for the same period the previous year. The decrease is mainly due to a decrease in service revenues, mainly attributable to lower fractional ownership and hourly flight entitlement programs’ service activities resulting from fewer hours flown by customers, and lower revenues from product support activities, mainly due to lower maintenance revenue from business aircraft customers as a result of lower flight activity and the current economic context. Revenues amounted to $10 billion for the year ended January 31, 2009, compared to $9.7 billion for the previous year. The increase is mainly due to increased manufacturing revenues reflecting increased deliveries for wide-body business aircraft and improved selling prices for business and commercial aircraft, the sale of three additional amphibious aircraft, and higher revenues from the completion of wide-body business aircraft interiors; partially offset by lower deliveries of commercial aircraft. 

For the fourth quarter ended January 31, 2009, EBIT amounted to $271 million, or 9.8% of revenues, compared to $196 million, or 6.8%, for the same period the previous year. The 3.0 percentage-point increase is mainly due to improved selling prices for commercial aircraft and certain business aircraft, EOAPC charge of nil compared to $67 million last fiscal year, a favourable mix for business aircraft, and lower selling, general and administrative (SG&A) expenses; partially offset by a provision for the write-down of pre-owned aircraft, mainly pre-owned business aircraft, higher cost of sales per unit, mainly due to price escalations of materials, higher amortization expense, and a negative variance on certain financial instruments carried at fair value.

For the year ended January 31, 2009, EBIT amounted to $896 million, or 9% of revenues, compared to $563 million, or 5.8%, for the previous year. The 3.2 percentage-point increase is mainly due to EOAPC charge of nil compared to $271 million last fiscal year, improved selling prices and a favourable mix for business aircraft, improved selling prices for commercial aircraft, and the positive impact from the revaluation of certain balance sheet accounts in foreign currencies; partially offset by higher cost of sales per unit, mainly due to price escalations of materials, the negative impact of the higher exchange rates, after giving effect to hedges, for the Canadian dollar against the U.S. dollar, a provision for the write-down of pre-owned aircraft, mainly pre-owned business aircraft, and a negative variance on certain financial instruments carried at fair value.

Free cash flow usage totalled $271 million for the fourth quarter ended January 31, 2009, compared to a free cash flow of $554 million for the same period last fiscal year. The $825-million decrease is mainly due to a negative period-over-period variation in net change in non-cash balances related to operations; partially offset by higher profitability. For the year ended January 31, 2009, free cash flow amounted to $128 million, compared to $1.7 billion for the previous year. The $1.5 billion decrease is mainly due to a negative period-over-period variation in net change in non-cash balances related to operations and higher net additions to property, plant and equipment and intangible assets; partially offset by higher profitability.

For the quarter ended January 31, 2009, aircraft deliveries totalled 93, compared to 115 for the same period the previous year. The 93 deliveries consisted of 54 business aircraft, 37 commercial aircraft and two amphibious aircraft (76, 38 and one aircraft respectively for the corresponding period last fiscal year). During fiscal year 2009, Aerospace delivered 349 aircraft compared to 361 aircraft for fiscal year 2008. Aircraft delivered during fiscal year 2009 consisted of 235 business aircraft, 110 commercial aircraft and four amphibious aircraft (232, 128 and one aircraft respectively last fiscal year).

Aerospace received six net orders during the quarter ended January 31, 2009, compared to 213 during the corresponding period the previous year. The six net orders resulted from 25 orders of commercial aircraft offset by 19 net negative orders of business aircraft (154 business, 51 commercial and eight amphibious aircraft for the corresponding period last fiscal year). During fiscal year 2009, Aerospace received 367 net orders compared to 698 for fiscal year 2008. Net orders during fiscal year 2009 consisted of 251 business aircraft, 114 commercial aircraft and two amphibious aircraft (452, 238 and eight aircraft respectively last fiscal year).

Aerospace’s firm order backlog reached $23.5 billion as at January 31, 2009, compared to $22.7 billion as at January 31, 2008. The increase is mainly attributable to business aircraft.

Bombardier Transportation

  • Revenues of $2.7 billion for the fourth quarter; $9.8 billion for fiscal year 2009
  • EBITDA of $194 million for the fourth quarter; $639 million for fiscal year 2009
  • EBIT of $164 million for the fourth quarter; $515 million for fiscal year 2009
  • Free cash flow of $360 million for the fourth quarter; $480 million for fiscal year 2009
  • New order intake totalling $9.8 billion for fiscal year 2009 (book-to-bill ratio of 1.0)
  • Order backlog of $24.7 billion as at January 31, 2009, compared to $30.9 billion as at January 31, 2008

Bombardier Transportation’s revenues amounted to $2.7 billion for the three-month period ended January 31, 2009, compared to $2.4 billion for the same period last year. The increase is mainly due to increased activity in the rolling stock division reflecting higher activity in the regional train segment, mainly in the Netherlands, the U.K. and France, and in the locomotive segment, mainly in Germany and Spain. The increase was partially offset by a negative currency impact. For the year ended January 31, 2009, revenues totalled $9.8 billion, compared to $7.8 billion for the previous year. The increase is mainly due to higher activity in the rolling stock division reflecting increased activity in the regional train segment, mainly in the Netherlands, France, the U.K., Germany and Sweden, and in the locomotive segment, mainly in Germany, Italy and Spain.

For the fourth quarter ended January 31, 2009, EBIT totalled $164 million, or 6.2% of revenues, compared to $109 million, or 4.6%, for the same quarter the previous year. The 1.6 percentage-point increase is mainly due to better contract execution in services, better absorption of SG&A due to higher revenues, and a gain on the sale of properties; partially offset by a capacity adjustment in the U.K. For the year ended January 31, 2009, EBIT totalled $515 million, or 5.3% of revenues, compared to $177 million, or 2.3% (EBIT before special item of $339 million, or 4.4%) for the previous year. The 0.9 percentage-point increase for the fiscal year is mainly due to better contract execution in services, better absorption of SG&A due to higher revenues, a net gain related to foreign exchange fluctuations and certain financial instruments carried at fair value, and a gain on the sale of properties; partially offset by a lower margin in rolling stock due to a large number of contracts in the start-up phase and to the settlement of an outstanding customer claim in North America, and a capacity adjustment in the U.K.

Free cash flow for the quarter ended January 31, 2009 was $360 million, compared to $525 million for the same period last fiscal year. The $165-million decrease is mainly due to a negative period-over-period variation in net change in non-cash balances related to operations; partially offset by higher profitability. For the year ended January 31, 2009, free cash flow was $480 million, compared to $688 million for the previous year. The $208-million decrease is mainly due to a negative period-over-period variation in net change in non-cash balances related to operations; partially offset by higher profitability.

The order intake for the fourth quarter ended January 31, 2009 was $2.6 billion compared to $3.9 billion for the same period last fiscal year. The decrease is mainly due to lower order intake in North America for rolling stock and services, in Europe for services, as well as a negative currency impact. During the year ended January 31, 2009, the order intake reached $9.8 billion, compared to $11.3 billion for the same period last year. The decrease is mainly due to lower levels in rolling stock in Europe and Asia.

Bombardier Transportation’s backlog totalled $24.7 billion as at January 31, 2009, compared to $30.9 billion as at January 31, 2008. The decrease is due to the weakening of foreign currencies as at January 31, 2009 compared to January 31, 2008, mainly the euro and the pound sterling compared to the U.S. dollar.

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 May 31, 2009 to the shareholders of record at the close of business on May 15, 2009.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on May 15, 2009 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 $0.08333 Cdn per share on Series 2 Preferred Shares has been paid on December 15, 2008; of $0.07646 Cdn on January 15, 2009; of $0.06896 Cdn on February 15, 2009; and of $0.06250 Cdn on March 15, 2009.

Series 3 Preferred Shares
A quarterly dividend of $0.32919 Cdn per share on Series 3 Preferred Shares is payable on April 30, 2009 to the shareholders of record at the close of business on April 17, 2009.

Series 4 Preferred Shares
A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on April 30, 2009 to the shareholders of record at the close of business on April 17, 2009.

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, 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

Challenger, CRJ, CRJ1000, CSeries, CS100, CS300, ECO4, Learjet, Learjet 85, NextGen, Q400 and Q-Series 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 STATEMENT
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, please refer to the respective Management's Discussion and Analysis ("MD&A") sections of the Corporation's aerospace segment and the Corporation's transportation segment in 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 associated with doing business with partners, risks involved in developing new products and services, product performance warranty, casualty claim losses, risks from regulatory and legal proceedings, environmental risks, risks relating to the Corporation's dependence on certain key customers and key 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, 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 rate and commodity pricing risk). For more details, see the Risks and Uncertainties section in Other 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, EBIT, EBT and EPS before special items and EOAPC charges as well as on 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 and that this presentation is consistent with industry practice. The special item for the year ended January 31, 2008 relates to Transportation's write-off of the carrying value of its investment in Metronet and the EOAPC charges to the use of the average cost method at Aerospace for its aircraft programs, which ended on January 31, 2008.

 

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