Press Releases

Bombardier Announces Financial Results for the Second Quarter Ended July 31, 2010


September 1, 2010 — Montréal


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

  • Consolidated revenues of $4.1 billion, compared to $4.9 billion last fiscal year
  • EBITDA of $331 million, compared to $436 million last fiscal year
  • EBIT of $231 million, or 5.7% of revenues, compared to $313 million, or 6.3%, last fiscal year
  • Net income of $148 million, compared to $202 million last fiscal year
  • Earnings per share of $0.08, compared to $0.11 last fiscal year
  • Free cash flow usage of $508 million, compared to a free cash flow of $18 million last fiscal year
  • Good cash position of $2.8 billion
  • Strong backlog of $47.4 billion

Bombardier today reported financial results for the second quarter of fiscal year 2011. Revenues totalled $4.1 billion, compared to $4.9 billion for the corresponding period last fiscal year. Earnings before financing income, financing expense and income taxes (EBIT) totalled $231 million, versus $313 million last fiscal year. EBIT margin was 5.7% compared to last fiscal year's 6.3%.

Net income for the second quarter ended July 31, 2010 amounted to $148 million, compared to $202 million for the same period last fiscal year. Diluted earnings per share (EPS) was $0.08, compared to $0.11 last fiscal year. Free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) usage totalled $508 million for the second quarter ended July 31, 2010, compared to a free cash flow of $18 million last fiscal year. The cash position amounted to $2.8 billion as at July 31, 2010, compared to $3.4 billion as at January 31, 2010. The overall backlog stands at $47.4 billion, as at July 31, 2010, compared to $43.8 billion as at January 31, 2010.

"During this quarter, Transportation has shown a strong level of order activity, benefitting from its wide portfolio of products and its enviable global market position. The group improved its profitability while signing $4.3 billion of new orders for a book-to-bill ratio of 2.0, bringing its order backlog to $30.3 billion," said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.

"The uncertain economic environment continues to be reflected in Aerospace's financial results. However, the group is starting to see signs of recovery as shown by the significant reduction in business aircraft order cancellations."

"Overall, our long-term prospects are strong, our new product developments on track and we remain focused on managing our cost structure and improving our cash flow generation," concluded Mr. Beaudoin.

Bombardier Aerospace
Bombardier Aerospace's revenues totalled $2 billion, compared to $2.4 billion last fiscal year. EBIT totalled $91 million translating into an EBIT margin of 4.6% for the second quarter ended July 31, 2010, compared to $154 million, or 6.4%, last fiscal year. Free cash flow usage totalled $287 million compared to a usage of $10 million for the same period last fiscal year. Bombardier Aerospace's backlog totalled $17.1 billion as at July 31, 2010, compared to $16.7 billion as at January 31, 2010.

According to the latest General Aviation Manufacturers Association (GAMA) report, Bombardier Aerospace was again the leader in business aircraft both in terms of revenues and units delivered. In the commercial aircraft division, Bombardier's orders during the second quarter of fiscal year 2011 included an order for eight CRJ900 NextGen aircraft from Deutsche Lufthansa AG of Germany for a value of $317 million, based on the list price, and an order for seven Q400 NextGen turboprops from Qantas Airlines valued at $218 million, based on the list price.

Bombardier Transportation
Bombardier Transportation revenues totalled $2.1 billion for the second quarter ended July 31, 2010, compared to $2.5 billion for the same period last fiscal year. EBIT was $140 million, compared to $159 million last fiscal year, while EBIT margin reached 6.6% versus 6.2% last fiscal year. Free cash flow usage amounted to $132 million for the second quarter ended July 31, 2010, compared to a free cash flow of $149 million for the same period last fiscal year. The order backlog totalled $30.3 billion as at July 31, 2010, compared to $27.1 billion as at January 31, 2010.

During the second quarter, Bombardier Transportation reported $4.3 billion of new orders compared to $3 billion last fiscal year, leading to a book-to-bill ratio of 2.0, compared to 1.2 for the same period last fiscal year. Originating from various regions of the world, the orders included a contract to supply 59 TWINDEXX double-deck trains to SBB, the Swiss Federal Railways, for a total value of $1.6 billion. This constitutes the largest vehicle order in SBB's history.

Bombardier Transportation also concluded an agreement with Metrolinx of Toronto to supply 182 FLEXITY trams for a value of $745 million and signed its first contract in the Kingdom of Saudi Arabia for the supply, installation, operation and maintenance of a 3.6 km INNOVIA Monorail 300 system for a value of $241 million.

Subsequent to quarter-end, our Chinese joint venture Sifang (Qingdao) Transportation Ltd. was awarded an order for 40 CRH1 high speed trainsets from the Chinese Ministry of Railways (MOR) for a value of $761 million. Bombardier Transportation's share represents $373 million.

Financial Highlights
PDF Version

Financial Results for the Second Quarter Ended July 31, 2010

ANALYSIS OF RESULTS

Consolidated results
Consolidated revenues totalled $4.1 billion for the second quarter ended July 31, 2010, compared to $ 4.9 billion for the same period last year. For the six-month period ended July 31, 2010, consolidated revenues amounted to $8.3 billion, compared to $9.4 billion for the same period last year.

For the second quarter ended July 31, 2010, EBIT totalled $231 million, or 5.7% of revenues, compared to an EBIT of $313 million, or 6.3% of revenues, for the same period the previous year. For the semester ended July 31, 2010, EBIT amounted to $455 million, or 5.5% of revenues, compared to an EBIT of $548 million, or 5.8% of revenues, for the same period last fiscal year.

Net financing expense amounted to $44 million for the second quarter of fiscal year 2011, compared to $49 million for the corresponding period last year. The $5-million decrease is mainly due to lower interest expense on long-term debt, consistent with lower variable interest rates. For the six-month period ended July 31, 2010, net financing expense amounted to $72 million, compared to $82 million for the same period last year. The $10-million decrease is mainly due to a gain of $15 million on long-term debt repayments in connection with our refinancing plan, partially offset by lower interest income on cash and cash equivalents, consistent with lower variable interest rates.

The effective income tax rate was 20.9% and 21.4% respectively for the three- and six-month periods ending July 31, 2010, compared to the statutory income tax rate of 30%. 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, partially offset by permanent differences.

As a result, net income amounted to $148 million, or $0.08 per share, for the second quarter of fiscal year 2011, compared to $202 million, or $0.11 per share, for the same period the previous year. For the first semester of fiscal year 2011, net income was $301 million, or $0.16 per share, compared to $360 million, or $0.20 per share, for the same period the previous year.

For the three-month period ended July 31, 2010, free cash flow usage totalled $508 million, compared to a free cash flow of $18 million for the corresponding period the previous year. For the semester ended July 31, 2010, free cash flow usage totalled $725 million, compared to a usage of $799 million for the corresponding period the previous year.

As at July 31, 2010, Bombardier's order backlog stood at $47.4 billion, compared to $43.8 billion as at January 31, 2010.

Bombardier Aerospace

  • Revenues of $2 billion
  • EBITDA of $161 million, or 8.2% of revenues
  • EBIT of $91 million, or 4.6% of revenues
  • Free cash flow usage of $287 million
  • 46 aircraft deliveries
  • 29 aircraft net orders
  • Order backlog of $17.1 billion

Bombardier Aerospace's revenues amounted to $2 billion for the three-month period ended July 31, 2010, compared to $2.4 billion for the same period the previous year. The decrease is mainly due to a decrease in manufacturing revenues due to lower deliveries of business aircraft, partially offset by a favourable mix and higher net selling prices for medium and large business aircraft and lower deliveries of commercial aircraft, partially offset by higher net selling prices.

For the second quarter ended July 31, 2010, EBIT totalled $91 million, or 4.6% of revenues, compared to $154 million, or 6.4% of revenues, for the same period the previous year. The 1.8 percentage-point decrease is mainly due to higher cost of sales per unit, mainly due to price escalations of materials, lower liquidated damages from customers as a result of fewer business aircraft order cancellations, a net negative variance on financial instruments carried at fair value and lower absorption of selling, general and administrative (SG&A) expenses; partially offset by higher net selling prices for medium and large business aircraft and for commercial aircraft, lower amortization expense, mainly due to the program tooling on some aircraft models being fully amortized, and lower write-downs of pre-owned business aircraft inventories.

Free cash flow usage totalled $287 million for the second quarter ended July 31, 2010, compared to free cash flow usage of $10 million for the same period last fiscal year. The $277-million decrease is mainly due to higher net additions to property, plant and equipment (PP&E) and intangible assets, a lower EBITDA, and a negative period-over-period variation in net change in non-cash balances related to operations.

For the quarter ended July 31, 2010, aircraft deliveries totalled 46, compared to 80 for the same period the previous year. The 46 deliveries consisted of 27 business, 18 commercial and one amphibious aircraft (51 business and 28 commercial and one amphibious aircraft for the corresponding period last fiscal year).

Bombardier Aerospace recorded 29 net orders during the quarter ended July 31, 2010, compared to 38 negative net orders during the corresponding period the previous year. The 29 net orders consisted in 14 net orders for business aircraft (26 new orders with 12 cancellations), 15 new orders for commercial aircraft (for the corresponding period last fiscal year: 27 new orders and 80 cancellations of business aircraft and 30 new orders and 15 cancellations of commercial aircraft).

Bombardier Aerospace's firm order backlog stood at $17.1 billion as at July 31, 2010, compared to $16.7 billion as at January 31, 2010. The increase in the order backlog is mainly attributable to an order received for the CSeries family of aircraft, partially offset by a lower order backlog in business aircraft.

Bombardier Transportation

  • Revenues of $2.1 billion
  • EBITDA of $170 million, or 8% of revenues
  • EBIT of $140 million, or 6.6% of revenues
  • Free cash flow usage of $132 million
  • Order intake totalling $4.3 billion (book-to-bill ratio of 2.0)
  • Order backlog of $30.3 billion

Bombardier Transportation's revenues amounted to $2.1 billion for the three-month period ended July 31, 2010, compared to $2.5 billion for the same period last year. The decrease is mainly due to rolling stock's lower activities in locomotives in Europe, as a result of the low level of order intake in fiscal year 2010, as well as in intercity, high speed and very high speed trains. The decrease also reflects a negative currency impact.

For the second quarter ended July 31, 2010, EBIT totalled $140 million, or 6.6% of revenues, compared to an EBIT of $159 million, or 6.2% of revenues, for the same quarter the previous year. The 0.4 percentage-point increase is mainly due to better overall contract execution, partially offset by lower absorption of research and development, SG&A and amortization expenses as a result of lower revenues.

Free cash flow usage was $132 million for the quarter ended July 31, 2010, compared to a free cash flow of $149 million for the same period last fiscal year. The $281-million decrease is mainly due to a negative period-over-period variation in net change in non-cash balances related to operations.

The order intake for the second quarter ended July 31, 2010 was $4.3 billion, compared to $3 billion for the same period last fiscal year, for a book-to-bill ratio of 2.0, compared to 1.2 for the corresponding period last fiscal year.

Bombardier Transportation's backlog stood at $30.3 billion as at July 31, 2010, compared to $27.1 billion as at January 31, 2010. The 12% increase is mainly due to order intake being significantly 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 October 31, 2010 to the shareholders of record at the close of business on October 15, 2010.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on October 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 June 15, of $0.05188 Cdn per share on July 15, and of $0.05396 Cdn per share on August 15, 2010.

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

Series 4 Preferred Shares
A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on October 31, 2010 to the shareholders of record at the close of business on October 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, 2010, were $19.4 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.

CRJ, CRJ900, CSeries, FLEXITY, INNOVIA, NextGen, TWINDEXX and Q400 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 interim consolidated financial statements are available at www.bombardier.com.

FORWARD-LOOKING STATEMENT
This press release includes forward-looking statements, which may involve, but are not limited to, statements with respect to our objectives, targets, goals, priorities and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business conditions outlook, prospects and trends of the industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry into service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; competitive position; and expected impact of the legislative and regulatory environment and legal proceedings on our business and operations. 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", the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. While we consider our assumptions to be reasonable and appropriate based on information currently 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 made in Bombardier Aerospace and Bombardier Transportation sections in the Management's Discussion and Analysis ("MD&A") in the Corporation's annual report for fiscal year 2010.

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 our business environment (such as risks associated with the financial condition of the airline industry and major rail operators), operational risks (such as risks related to developing new products and services; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; to the environment; dependence on certain customers and suppliers; human resources; fixed-price commitments and production and project execution), financing risks (such as risks related to liquidity and access to capital markets, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance on government support) and market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual value and increases in commodity prices). For more details, see the Risks and uncertainties section in Other in the Corporation's annual report for fiscal year 2010. 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 our 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. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.


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 and that this presentation is consistent with industry practice.

 

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