BAN's World GazetteerCanada
Bombardier has announced its financial results for the second quarter of 2021 and raised its full year guidance, confirming that aircraft deliveries, revenues, profitability and cash usage are all expected to outperform previously communicated targets.
“Bombardier's raised guidance stems from all-around solid execution in the first half of 2021, greater confidence in market momentum and our ability to accelerate initiatives supporting our recurring savings objective,” says Éric Martel, president and CEO. “Our team's concerted efforts have already supported stronger full year margins and have allowed us to focus diligently on our priorities of maturing the Global 7500 aircraft programme, executing our aftermarket growth strategy and deleveraging our balance sheet.
“We are well on our way to reposition Bombardier as the world's business jet manufacturer of choice and are confident our passenger-experience-centric aircraft portfolio and expanding service offerings are well suited to meet growing interest, demand and utilisation in private aviation.”
Business jet revenues during the second quarter of 2021 climbed to $1.5 billion, up 50 per cent year over year, fuelled by increases in both aircraft deliveries and services. Deliveries totalled 29 in Q2, up 45 per cent year over year, reflecting strong demand for large-category jets. Worldwide business jet utilisation continued to rise, nearly reaching pre-pandemic levels in North America and Europe, buoying revenue contribution from services activities to $295 million, up 29 per cent year over year. Aircraft sales equally accelerated, reaching a unit book-to-bill ratio of approximately 1.8 for the quarter, further highlighting strong interest in business aviation.
Adjusted EBITDA for the quarter was up $112 million year over year to $143 million, reflecting favourable aircraft deliveries and mix, improved cost structure, disciplined implementation of cost-reduction programmes and consistent progression through the Global 7500 aircraft's learning curve. In addition, the increase was boosted by a higher contribution from business aircraft services, mainly due to increased fleet flight hours resulting from easing travel restrictions and progress on vaccinations consistent with the increase in revenues. Reported EBIT from continuing operations for the quarter was $36 million.
The second quarter notably saw strong free cash flow generation. The positive $91 million from continuing operations FCF total for the quarter represents an improvement of $841 million year over year and included a negative impact of approximately $60 million in non-recurring cash items.
Pro-forma liquidity at quarter end was ~$2.1 billion and pro-forma net debt was ~$5.3 billion. Over the quarter, Bombardier successfully implemented a series of actions to reduce net debt as well as pay out or refinance nearer-term maturities, all as part of the company's previously announced plan to create debt maturity runway. With $1.0 billion maturing in the next three years, the company can more effectively focus on the execution of its strategy, including learning curve progression for the Global 7500 aircraft and other operational improvements, and will continue managing debt in a pragmatic yet opportunistic manner.
While progress on the Global 7500 aircraft unit costs and on overall recurring savings initiatives begin to yield bottom line benefits, Bombardier remains focused on expanding its service network and diversifying top-line revenue streams. During the second quarter, its Singapore service centre expansion project completed the construction phase and the teams will now focus on maintenance capacity ramp up to fully utilise the facility's quadrupled footprint.