Bombardier Reports Second Quarter 2017 Results

Bombardier has reported its second quarter 2017 results and highlighted the progress it is making transforming the company and building earnings power. 

"We continue to make solid progress executing our five-year turnaround plan," said Alain Bellemare, president and chief executive officer, Bombardier Inc. "We are improving our operating margins, transforming our operations and executing on our growth programs, which will allow us to deliver long-term sustainable value to our customers and shareholders. With our strong performance over the first half of the year, we are well positioned to achieve our full-year guidance and expect EBIT before special items at high end of our range, between $580 million and $630 million."

For the quarter, Bombardier reported revenues of $4.1 billion. EBIT before special items grew to $164 million, up 55 percent over the same period last year. EBIT margins before special items(1) were 8.2 percent for Transportation, a robust 8.9 percent at Business Aircraft and 7.7 percent at Aerostructures. Commercial Aircraft recorded an EBIT loss in line with the C Series ramp-up plan. Free cash flow usage(1) was also in line with plan at $570 million for the quarter.
Highlighting the Company's performance in the second quarter were strong orders at Transportation, which reported a book-to-bill(3) of 1.4. Transportation's operational transformation and site specialization strategy also continues to gain traction, with key milestones announced in the quarter for its operations in Germany, Switzerland and Belgium. In Business Aircraft, Bombardier's all new, class-defining, ultra-long range business jet, the Global 7000, exceeded 500 flight-test hours, and remains on schedule to enter service in the second half of 2018.

Bombardier also announced that Mrs. Sheila Fraser expressed her intention to resign from the Company's Board of Directors for personal reasons. The Board accepted Fraser's resignation and thanks her for her five years of dedicated service and the insight and wisdom she brought to Bombardier during her tenure.

Selected Results

Results of the Quarter

Three-month periods ended June 30 2017 2016 Variance
Revenues $ 4,092 $ 4,309 (5 ) percent
EBIT $ (123 ) $ (251 ) 51 percent
EBIT margin (3.0 ) percent (5.8 ) percent 280 bps
EBIT before special items $ 164 $ 106 55 percent
EBIT margin before special items 4.0 percent 2.5 percent 150 bps
EBITDA before special items(1) $ 247 $ 204 21 percent
EBITDA margin before special items(1) 6.0 percent 4.7 percent 130 bps
Net loss $ (296 ) $ (490 ) 40 percent
Diluted EPS (in dollars) $ (0.13 ) $ (0.24 ) 46 percent
Adjusted net income (loss)(1) $ 39 $ (83 ) 147 percent
Adjusted EPS (in dollars)(1) $ 0.02 $ (0.06 ) 133 percent
Net additions to PP&E and intangible assets $ 389 $ 332 17 percent
Free cash flow usage(1) $ (570 ) $ (490 ) (16 ) percent

Results Year-to-Date

Six-month periods ended June 30 2017 2016 Variance
Revenues $ 7,668 $ 8,223 (7 ) percent
EBIT $ (18 ) $ (195 ) 91 percent
EBIT margin (0.2 ) percent (2.4 ) percent 220 bps
EBIT before special items $ 292 $ 236 24 percent
EBIT margin before special items 3.8 percent 2.9 percent 90 bps
EBITDA before special items $ 453 $ 423 7 percent
EBITDA margin before special items 5.9 percent 5.1 percent 80 bps
Net loss $ (327 ) $ (628 ) 48 percent
Diluted EPS (in dollars) $ (0.15 ) $ (0.32 ) 53 percent
Adjusted net income (loss) $ 41 $ (117 ) 135 percent
Adjusted EPS (in dollars) $ 0.02 $ (0.09 ) 122 percent
Net additions to PP&E and intangible assets $ 665 $ 626 6 percent
Free cash flow usage $ (1,163 ) $ (1,240 ) 6 percent
As at June 30, 2017 December 31, 2016
Available short-term capital resources(4) $ 3,290 $ 4,477 (27 )percent

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.
Bombardier reported consolidated revenues of $4.1 billion in the quarter and $7.7 billion for the first six-month period, relative to $4.3 billion and $8.2 billion for the same periods last year, mainly as a result of previously-announced production rate adjustments in aerospace segments, consistent with market demand and continued growth in Transportation. EBIT before special items was $164 million and $292 million respectively for the quarter and year-to-date, up 55 percent and 24 percent from the same periods last year. This growth was driven by significant margin improvements at Transportation and Business Aircraft, which reached 8.2 percent and 8.9 percent respectively in the quarter. Free cash flow usage was $570 million in the quarter and $1.2 billion year-to-date, mainly as a result of the Global 7000 test program coupled with the C Series working capital and production ramp up. These results lead Bombardier to reiterate its full year guidance of revenue growth in the low-single digits, excluding currency impacts, EBIT before special items at the top half of the range, between $580 million to $630 million and free cash flow usage between $1.0 billion and $750 million.

Segmented Results and Highlights

Transportation
Results of the quarter

Three-month periods ended June 30 2017 2016 Variance
Revenues $ 1,975 $ 1,964 1 percent
Order intake (in billions of dollars) $ 2.7 $ 2.1 29 percent
Book-to-bill ratio(3) 1.4 1.1 0.3
EBIT $ (52 ) $ 87 (160 )percent
EBIT margin (2.6 ) percent 4.4 percent (700) bps
EBIT before special items $ 161 $ 124 30 percent
EBIT margin before special items 8.2 percent 6.3 percent 190 bps
EBITDA before special items $ 188 $ 149 26 percent
EBITDA margin before special items 9.5 percent 7.6 percent 190 bps
Net additions to PP&E and intangible assets $ 18 $ 29 (38 ) percent
As at June 30, 2017 December 31, 2016
Order backlog (in billions of dollars) $ 32.7 $ 30.1 9 percent

• Bombardier is reaffirming its revenue guidance and increasing our EBIT margin before special items guidance to approximately 8.0 percent for the year. 
• Revenue growth is gaining momentum as execution of key projects progresses, increasing 3.6% in the second quarter compared to the same period last fiscal year excluding the currency impact, and 4.4 percent on a year-to-date basis. 
• EBIT margin before special items increased by 1.9 percentage points in the second quarter compared to the same period last fiscal year, reaching 8.2 percent in the second quarter, including the positive impacts of transformation initiatives. EBIT margin before special items for the six-month period reached 8.1 percent. 
• • During the second quarter of 2017, we won several significant orders in Europe, mainly in the U.K. and France, resulting in a book-to-bill ratio of 1.4. The majority of our order intake in the second quarter of 2017 is based on current product platforms, supporting the re-use of existing technologies. 
• Significant progress was made during the quarter towards our ongoing structural transformation, which will enable the multi-year site specialization strategy. Key milestones were reached with Supervisory Boards and unions in Germany, Switzerland and Belgium, which will lead to gradual manpower adjustments of up to 2,200 positions in Germany, 650 in Switzerland and 160 in Belgium. In connection with those organizational changes, severance costs of $181 million and asset write-downs of $32 million were recorded as restructuring charges in the second quarter in special items.