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Bombardier Aviation

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Latest financials show Bombardier in strong light
Bombardier has reported strong third quarter 2022 results with solid fundamentals. It has grown liquidity with a secured revolver facility and continues accelerated deleveraging with $100m debt pay down.

Bombardier's 3Q22 financial results are marked by solid revenues, a significant improvement in adjusted EBITDA, continued positive free cash flow generation and a growing backlog that reflects strong order activity. The company also continued to reduce debt, with a further $100 million reduction through cash on balance sheet. Order activity continued to be strong, marked with an increase in backlog and a unit book-to-bill of 1.3.

“Our performance in the third quarter of 2022 demonstrated that our fundamentals are very strong, especially when it comes to profitability, free cash flow, liquidity, as well as continued and steady debt reduction from our balance sheet. We are progressing steadily and confidently toward our long-term objectives,” says president and CEO Éric Martel.

Revenues were at $1.5 billion in the third quarter of 2022, with full-year deliveries on track for more than 120 aircraft. These include a 20 per cent year-over-year increase in aftermarket revenues, which rose to $372 million thanks to an increase in flight hours, but also to the expansion of Bombardier's service centres in strategic locations around the world.

“Our most recent service centre inauguration in Florida strongly emphasises the important contribution of the growing aftermarket business to our bottom line,” says Martel. “With the addition and expansions of our service centres this year, and one more inauguration event to come in the UK this month, we have increased our service centre footprint by no less than one million square feet.”

The company has also seen an impressive margin expansion over the quarter, with adjusted EBITDA rising to $210 million, which represents a 48 per cent year-over-year improvement. Adjusted EBITDA margins rose 460 bps year-over-year, from 9.8 per cent to 14.4 per cent. The main drivers behind this are the margin expansion of the Global 7500, as well as continued progress on cost structure.

Backlog rose to $15 billion over the period, an increase by $300 million since the end of the second quarter 2022.

“While our team has certainly been opportunistic and made the most of the market momentum this quarter, we continue to focus on things we can control, which keeps us well equipped to face any market conditions that may be ahead of us,” he continues.

Free cash flow was at $52 million, on track to meet the revised guidance of greater than $515 million for the year announced in the previous quarter.

The company also unveiled a new five year committed secured revolving credit facility of $300 million subsequent to the quarter end. “This syndicated revolver is another significant step we have made to continue strengthening our balance sheet,” says executive vice president and CFO Bart Demosky. “The incremental liquidity will further enhance our financial position and increase our operating flexibility.”

Bombardier also continued to pay off debt with cash from balance sheet, delivering on another important and continued strategic priority, which brings year-to-date debt repayment to $873 million. Bombardier has now reduced more than $290 million of annualised interest cost for long-term debt compared to the annualised interest cost as at 31 December, 2020, exceeding its 2025 targeted interest cost reduction announced on the Investor Day on 4 March, 2021 of more than $250 million.

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