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Bombardier Aviation

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Bombardier shows confidence in annual results and expectations
2021 has been a good year for Bombardier, with business jet revenues reaching $6 billion. The outlook this year is for even greater performance, with deliveries to exceed 120 units.
Bombardier credits progress on the Global 7500 learning curve for its EBITDA increase.

Bombardier has presented its fourth quarter and full year 2021 results and provided 2022 guidance. The company reports increased revenues, a major rise in EBITDA and an increased and more diversified backlog among other positive indicators. The trend is set to continue in 2022.

“The words that best sum up 2021 for Bombardier are planning, execution and prudence. A word that also comes to mind is pride. Everyone at Bombardier can be proud of what we achieved as we set out to execute the plan we outlined in March 2021,” says president and CEO Éric Martel. “Overall, the 2021 results are proof that our plan gave us both the structure and the agility to manage any outside obstacles and capitalise on a faster-than-expected industry recovery.”

In the fourth quarter, the company had six fewer deliveries for a total of 38 compared to 44 from the same period last year, mainly due to a more evenly distributed delivery profile on the Global 7500 throughout the rest of the year. Resulting business jet revenues were down $0.5 billion to $1.7 billion. Adjusted EBITDA increased meaningfully from $(1) million to $232 million, driven by higher margins from business aircraft manufacturing and services, mainly due to accretive margins on the Global 7500, reflecting learning curve improvements and execution of the cost reduction plan. Free cash flow of $314 million was $48 million higher from the same period last year.

Business jet revenues for the full year were up seven per cent year-over-year at $6 billion. This was largely due to higher deliveries, a favourable aircraft mix and strong aftermarket performance at $1.2 billion, up 25 per cent compared to last year.

The company reported a significant adjusted EBITDA increase, which more than tripled to $640 million. The increase is a result of a better aircraft mix, combined with the progress on the Global 7500 aircraft learning curve, but also the improvements in the cost structure and higher aftermarket contributions. The 2021 reported EBIT is at $241 million.

The 2021 free cash flow generation of $100 million from continuing operations represents an improvement of $2 billion year-over-year, thanks to earnings growth and a strong order intake. Net additions to PP&E and intangible assets from continuing operations for the full year were $232 million. Adjusted liquidity stands strong at $2.1 billion, and cash and cash equivalents were $1.7 billion as of 31 December, 2021.

The solid 1.53 book-to-bill ratio for the full year led to a $12.2 billion backlog, a $1.5 billion increase from the previous year. “The increased and more balanced backlog is the result of increased demand, which, combined with healthy pricing, is giving us the predictability and resilience at exactly the right time,” adds Martel.

The company also has a positive outlook in the prospect for the upcoming year, which is reflected in the guidance. “In 2022, when this exceptional company celebrates its 80th anniversary, we expect to outperform the previous year in key metrics,” he continues. “While we still have much to do, we are now on firm ground and can look into the future with optimism.”

Revenues are expected to increase versus 2021 to greater than $6.5 billion, based on a better aircraft delivery mix, secured through a largely sold-out 2022 production, as well as a growth in Bombardier's aftermarket business as flight hours continue to rise year-over-year and new aftermarket facilities come into service.

Adjusted EBITDA is expected to be greater than $825 million in 2022, a 29 per cent improvement over 2021. This growth is driven by margin conversion on increased revenues, improved pricing, reaching a mature unit cost on the Global 7500, continued progress on the corporation's cost reduction plan, partly offset by supply chain cost increases, curtailment of eligible support programmes and unfavourable foreign exchange impacts. Adjusted EBIT is expected to be greater than $375 million.

Free cash flow in 2022 is expected to be greater than $50 million, including one-time payments related to residual value guarantees estimated at approximately $50 million, and net additions to PP&E and intangible assets in the range of $200 million to $300 million.

“Looking ahead, we are positioning ourselves to increase the number of deliveries by another 15-20 per cent as soon as 2023, while maintaining a sharp focus on balancing longer-term production increases with the pricing environment,” he concludes.

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