Bombardier (TSX: BBD.B) today will host its virtual Investor Day, during which the company’s leadership team will provide its 2025 financial targets and market outlook, as well as highlight progress on the company’s actions to drive earnings growth and cash generation. These actions include capturing the value associated with progressing through the Global 7500 aircraft’s learning curve; delivering on the previously announced productivity and profitability initiative; executing on the company’s aftermarket growth strategy and deleveraging its balance sheet.
Presenters at Investor Day will include:
- Éric Martel, President and Chief Executive Officer;
- Bart Demosky, Executive Vice President, and Chief Financial Officer; and
- Jean-Christophe Gallagher, Executive Vice President for Services, Support, and Corporate Strategy.
Market Outlook and 2025 Financial Targets1
Bombardier expects business jet deliveries to begin a gradual recovery this year. While the company estimates that it will take several years for the market to return to 2019 delivery levels, Bombardier is well positioned in the faster growing large and medium aircraft segments with its Global and Challenger aircraft families. As a result of its past investments, Bombardier is poised to deliver solid financial performance, highlighted by strong earnings growth over the next five years. The company also expects to turn free-cash-flow positive next year and generate more than $500 million in 20252. Specific 2025 financial targets include:
|Bombardier 2025 Targets|
|Total Revenues||~$7.5 billion|
|Adjusted EBITDA2||~$1.5 billion|
|Adjusted EBITDA margin2||~20%|
|Year-end net leverage||~3x|
The company’s outlook assumes the continued successful roll-out of COVID-19 vaccines, a gradual lifting of international border restrictions and a continued economic recovery. This conservative outlook does not include the potential positive impact from the surge of new customers to private air travel following the onset of the global pandemic.
Balance Sheet Deleveraging
During the Investor Day presentations, the company will provide further details on its debt management strategy. Under its strategy, Bombardier intends to deploy the proceeds from the sale of Bombardier Transportation, prioritizing the pay down of near-term maturities with a focus on 2021 and 2022 tranches. The company is also considering various options to address other debt maturities in an opportunistic manner. The focus will be on clearing a minimum three-year maturity runway, providing the Company a clear path to execute its strategy.
With respect to its aftermarket growth strategy, Bombardier will describe how past investments in expanding its worldwide services network and capabilities position the company to capture a greater share of a growing market and further diversify its overall revenues with more resilient and profitable aftermarket revenues. Specifically, the company expects to diversify its revenue mix by growing aftermarket services from ~18% of its revenues in 2020 to ~27% of its revenues by 20253.
Global 7500 Learning Curve
The company will also provide a program update on its flagship Global 7500 aircraft and explain that 2021 marks a significant milestone for the program as it transitions from negatively impacting earnings to being the biggest EBITDA contributor over the next five years. The company is nearing its 50thGlobal 7500 jet delivery and expects to achieve a 20% reduction in unit cost between the 50th and 100th delivery3.
Productivity and Profitability Initiative
Finally, during Investor Day, Bombardier will provide an update on its productivity and profitability initiative announced last month. The overall goal of this initiative is to make the company more efficient, agile and capable of delivering stronger financial performance under current market conditions, while also establishing a lower cost base for growth once the market recovers. Importantly, the company expects to achieve $400 million in recurring savings by 20233 through labor productivity improvements, reduced corporate costs and indirect spending, and by optimizing its manufacturing footprint.
Bombardier’s Investor Day will begin at 9:00 a.m. (EST) and can be streamed live on Bombardier’s Investor Relations website: https://bombardier.com/en/investors/investor-events/2021/investor-day-2021
Bombardier is a global leader in aviation, creating innovative and game-changing planes. Our products and services provide world-class experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.
Headquartered in Montréal, Canada, Bombardier is present in more than 12 countries including its production/engineering sites and its customer support network. The Corporation supports a worldwide fleet of approximately 4,900 aircraft in service with a wide variety of multinational corporations, charter and fractional ownership providers, governments and private individuals.
Bombardier, Challenger, Global and Global 7500 are trademarks of Bombardier Inc. or its subsidiaries.
- This section includes a range of forward-looking statements. See the forward-looking statements disclaimer at the end of this press release as well as the guidance and forward-looking statements section in the Overview section in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2020, for details regarding the assumptions on which the forward-looking statements are based.
- Non-GAAP financial measures. Refer to the Non-GAAP financial measures and Liquidity and capital resources sections in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2020 for definitions of these metrics and the Analysis of results section thereafter for reconciliations to the most comparable IFRS measures.
- See the forward-looking statements disclaimer in the Overview section in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2020, for details regarding the assumptions on which the forward-looking statements are based.
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By their nature, forward-looking statements require the Corporation to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause the Corporation's actual results in future periods to differ materially from forecast results set forth in forward-looking statements. While the Corporation considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate. Assumptions underlying the forward-looking statements made in this press release include the following material assumptions: deployment of the proceeds from the sale of the Transportation business to Alstom on terms allowing the Corporation, when combined to other financing sources and free cash flow generation, to repay or otherwise manage its various maturities for the next three years; growth of the business aviation market and increase of the Corporation’s share of such market; proper identification of recurring cost savings and executing on our cost reduction plan; optimization of our real estate portfolio, including through the sale or other transaction in respect of real estate assets on favorable terms; and access to working capital facilities on market terms. For additional information, including with respect to other assumptions underlying the forward-looking statements made in this press release, refer to the Guidance and forward-looking statements section in the MD&A which may be viewed on SEDAR at www.sedar.com. Given the impact of the changing circumstances surrounding the COVID-19 pandemic and the related response from the Corporation, governments (federal, provincial and municipal), regulatory authorities, businesses, suppliers, customers, counterparties and third-party service providers, there is inherently more uncertainty associated with the Corporation’s assumptions as compared to prior years.
Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with the Corporation's business environment (such as risks associated with the financial condition of business aircraft customers; trade policy; increased competition; political instability and force majeure events or global climate change), operational risks (such as risks related to developing new products and services; development of new business ; order backlog; the transition to a pure-play business aviation company; the certification of products and services; the execution of orders; pressures on cash flows and capital expenditures based on seasonality and cyclicality; execution of the Corporation's strategy, productivity enhancements, operational efficiencies, restructuring and cost reduction initiatives; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; environmental, health and safety risks; dependence on certain customers, contracts and suppliers; supply chain risks; human resources; reliance on information systems; reliance on and protection of intellectual property rights; reputation risks; risk management; tax matters; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; substantial debt and interest payment requirements; restrictive debt covenants; reliance on debt management and interest cost reduction strategies; and reliance on government support), market risks (such as foreign currency fluctuations; changing interest rates; increases in commodity prices; and inflation rate fluctuations). For more details, see the Risks and uncertainties section in Other in the MD&A which may be viewed on SEDAR at www.sedar.com. Any one or more of the foregoing factors may be exacerbated by the ongoing COVID-19 outbreak and may have a significantly more severe impact on the Corporation’s business, results of operations and financial condition than in the absence of such outbreak. As a result of the current COVID-19 pandemic, additional factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to: risks related to the impact and effects of the COVID-19 pandemic on economic conditions and financial markets and the resulting impact on the Corporation's business, operations, capital resources, liquidity, financial condition, margins, prospects and results; uncertainty regarding the magnitude and length of economic disruption as a result of the COVID-19 outbreak and the resulting effects on the demand environment for our products and services; uncertainty regarding market and economic recovery in the aftermath of the COVID-19 pandemic; emergency measures and restrictions imposed by public health authorities or governments, fiscal and monetary policy responses by governments and financial institutions; disruptions to global supply chain, customers, workforce, counterparties and third-party service providers; further disruptions to operations, orders and deliveries; technology, privacy, cyber security and reputational risks; and other unforeseen adverse events.
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