Bombardier Reports Financial Results for the Third Quarter Ended October 31, 2011

1 december 2011 Bombardier Inc. / Bombardier Reports Financial Results for the Third Quarter Ended October 31, 2011 . Processed and transmitted by Thomson Reuters ONE. The issuer is solely responsible for the content of this announcement. MONTREAL, QUEBEC--(Marketwire - December 1, 2011) - (TSX: BBD.A)(TSX: BBD.B) (All amounts in this press release are in U.S. dollars unless otherwise indicated.) --  Consolidated revenues of $4.6 billion, an increase of 16% compared to last fiscal year --  EBITDA of $394 million, compared to $343 million last fiscal year --  EBIT of $301 million, or 6.5% of revenues, compared to $250 million, or 6.3%, last fiscal year --  Net income of $192 million, compared to $147 million last fiscal year --  Earnings per share of $0.11, compared to $0.08 last fiscal year --  Free cash flow usage of $346 million, compared to a usage of $108 million last fiscal year --  Cash position of $2.7 billion --  Strong backlog of $55.3 billion Bombardier (TSX: BBD.A)(TSX: BBD.B) today reported its financial results for the third quarter ended October 31, 2011. This is the third interim reporting period under IFRS(i). Revenues increased to $4.6 billion, compared to $4 billion last fiscal year. Earnings before financing income, financing expense and income taxes (EBIT) totalled $301 million, compared to $250 million last fiscal year, while the EBIT margin reached 6.5%, compared to 6.3% last year. Net income amounted to $192 million for the third quarter ended October 31, 2011, compared to $147 million for the same period last fiscal year. Diluted earnings per share (EPS) was $0.11, compared to $0.08 last fiscal year. Free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) usage totalled $346 million for the third quarter, compared to a usage of $108 million for the same period last fiscal year. The cash position amounted to $2.7 billion as at October 31, 2011, a level similar to last year, compared to $4.2 billion as at January 31, 2011. The overall backlog stood at a strong $55.3 billion as at October 31, 2011, compared to $52.7 billion as at January 31, 2011. "Again this quarter, both groups delivered good results as reflected by a consolidated EBIT margin of 6.5% in a still volatile economic environment," said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. "At Bombardier Transportation our strong backlog gives us good visibility on revenues going forward." "Bombardier Aerospace has seen a good level of deliveries and the backlog increased by 16% since the beginning of the year, proving the popularity of our families of aircraft, especially in the large business jet category. The signature of a memorandum of understanding to establish a manufacturing facility in Morocco illustrates our commitment to keep on developing a global competitive manufacturing footprint. Our focus on execution permits us to continue to deliver good results in these uncertain economic times," concluded Mr Beaudoin. On November 30, 2011, the Board of Directors approved the change of financial year-end from January 31 to December 31, effective December 31, 2011. This change has no impact on Bombardier Transportation's financial reporting as this group already reports on a calendar year basis. As a result of the change, the fourth quarter ending December 31, 2011 will include two months and the annual period ending December 31, 2011 will contain eleven months of Bombardier Aerospace's results. Bombardier Aerospace Bombardier Aerospace's revenues amounted to $2.3 billion, compared to $1.8 billion last fiscal year. EBIT totalled $129 million, or 5.6% of revenues, compared to $98 million, or 5.4%, for the same period last fiscal year. Free cash flow reached $53 million for the third quarter ended October 31, 2011, compared to a free cash flow usage of $209 million for the same period last fiscal year. The group delivered 68 aircraft, compared to 51 last fiscal year while receiving 34 net orders during the third quarter ended October 31, 2011, compared to 23 for the same period last fiscal year. The backlog increased by 16% to $22.3 billion as at October 31, 2011, compared to $19.2 billion as at January 31, 2011. In the business aircraft segment, according to the latest General Aviation Manufacturers Association (GAMA) report for the first nine months of calendar year 2011, Bombardier Aerospace kept its industry leadership both in terms of revenues and units delivered in the market categories in which it competes. For the third quarter ended October 31, 2011, the group delivered 43 business aircraft, compared to 31 for the same period last fiscal year. Commercial aircraft continues to be affected by the economic uncertainty in the U.S. and in Europe but has seen a renewed level of activity as the group received an order for four Q400 NextGen turboprop airliners from Luxair, with options for an additional four. The firm order is valued at $126 million based on the list price. The group also signed a conditional purchase agreement with a Chinese airline for six CRJ900 NextGen aircraft with options for an additional five. Based on the list price, the value of the conditional order is $264 million, increasing to $491 million if all options are converted. After the end of the quarter, Atlasjet Havacilik A.S. of Istanbul, Turkey became the 10th customer for the CSeries with a letter of intent for 10 CS300 airliners and options on a further five. Based on the list price of the CS300 airliner, the letter of intent is valued at $776 million and could increase to $1.2 billion if the five options are exercised. In November 2011, Bombardier Aerospace signed a memorandum of understanding with the Government of the Kingdom of Morocco for the establishment of a manufacturing facility in Morocco, reducing its reliance on third parties for structural aircraft components. Bombardier Transportation Bombardier Transportation revenues amounted to $2.3 billion, compared to $2.2 billion for the same period last fiscal year. EBIT totalled $172 million, compared to $152 million a year ago, while EBIT margin increased to 7.4% from 7% last fiscal year. Free cash flow usage totalled $347 million, compared to a free cash flow of $98 million last fiscal year. The order backlog totalled $33 billion as at October 31, 2011, a level similar to January 31, 2011. The order intake for the quarter totalled $1.6 billion including numerous follow-on orders from existing customers, such as an order from the Chicago Transit Authority (CTA), U.S., for 300 additional rapid transit cars valued at $331 million. Bombardier Transportation also received an order for 76 additional MOVIA metro cars from the Delhi Metro Rail Corporation Ltd, India, valued at $120 million as well as an order for a CITYFLO 650 complete mass transit solution valued at $96 million from Companhia do Metropolitano de Sao Paulo in Brazil. Subsequent to quarter-end, Bombardier Transportation received an order for 54 MultiLevel commuter rail vehicles from the Maryland Transit Administration, valued at $154 million. FINANCIAL HIGHLIGHTS (In millions of U.S. dollars, except per share amounts, which are shown in dollars) ------------------------------------------------------------------------------- Three-month periods   ended October 31 -------------------------------------------------------------------------------                 2011               2010 -------------------------------------------------------------------------------     BA     BT     Total     BA     BT   Total ------------------------------------------------------------------------------- Results of operations Revenues $ 2,305   $ 2,318   $ 4,623   $ 1,829   $ 2,168 $ 3,997 Cost of sales   1,978     1,908     3,886     1,571     1,771   3,342 ------------------------------------------------------------------------------- Gross margin   327     410     737     258     397   655 SG&A   172     201     373     135     182   317 R&D   38     36     74     45     35   80 Other expense (income)   (12 )   1     (11 )   (20 )   28   8 ------------------------------------------------------------------------------- EBIT $ 129   $ 172     301   $ 98   $ 152   250 Financing expense               192               182 Financing income               (134 )             (121 ) ------------------------------------------------------------------------------- EBT               243               189 Income taxes               51               42 ------------------------------------------------------------------------------- Net income             $ 192             $ 147 ------------------------------------------------------------------------------- Attributable to :   Equity holders of Bombardier Inc.             $ 194             $ 145   Non-controlling interests               (2 )             2 -------------------------------------------------------------------------------               $ 192             $ 147 ------------------------------------------------------------------------------- EPS (in dollars)   Basic and diluted             $ 0.11             $ 0.08 ----------------------------------------------------------------------------- ------------------------------------------------------------------------------- Segmented free cash flow $ 53   $ (347 ) $ (294 ) $ (209 ) $ 98 $ (111 ) Net income taxes and net interest paid               (52 )             3 ------------------------------------------------------------------------------- Free cash flow usage             $ (346 )           $ (108 ) ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Nine-month periods     ended October 31 -------------------------------------------------------------------------------                 2011                 2010 -------------------------------------------------------------------------------     BA     BT     Total     BA     BT     Total ------------------------------------------------------------------------------- Results of operations Revenues $ 6,578   $ 7,453   $ 14,031   $ 5,718   $ 6,588   $ 12,306 Cost of sales   5,638     6,205     11,843     4,860     5,459     10,319 ------------------------------------------------------------------------------- Gross margin   940     1,248     2,188     858     1,129     1,987 SG&A   489     611     1,100     441     564     1,005 R&D   95     101     196     133     100     233 Other expense (income)   (19 )   2     (17 )   (48 )   19     (29 ) ------------------------------------------------------------------------------- EBIT $ 375   $ 534     909   $ 332   $ 446     778 Financing expense               531                 519 Financing income               (402 )               (349 ) ------------------------------------------------------------------------------- EBT               780                 608 Income taxes               157                 128 ------------------------------------------------------------------------------- Net income             $ 623               $ 480 ------------------------------------------------------------------------------- Attributable to : Equity holders   of Bombardier Inc.             $ 624               $ 473 Non-   controlling interests               (1 )               7 -------------------------------------------------------------------------------               $ 623               $ 480 ------------------------------------------------------------------------------- EPS (in dollars)   Basic and diluted             $ 0.35               $ 0.26 ----------------------------------------------------------------------------- ------------------------------------------------------------------------------- Segmented free cash flow $ (563 ) $ (988 ) $ (1,551 ) $ (757 ) $ (58 ) $ (815 ) Net income taxes and net interest paid               (271 )               (72 ) ------------------------------------------------------------------------------- Free cash flow usage             $ (1,822 )             $ (887 ) ------------------------------------------------------------------------------- BA : Bombardier Aerospace; BT : Bombardier Transportation FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED OCTOBER 31, 2011 ANALYSIS OF RESULTS Consolidated results Consolidated revenues totalled $4.6 billion for the third quarter ended October 31, 2011, compared to $4 billion for the corresponding period last fiscal year. For the nine-month period ended October 31, 2011, consolidated revenues reached $14 billion, compared to $12 3 billion for the same period last year. For the third quarter ended October 31, 2011, EBIT amounted to $301 million, or 6.5% of revenues, compared to $250 million, or 6.3%, for the same period the previous year. For the nine-month period ended October 31, 2011, EBIT amounted to $909 million, or 6.5% of revenues, compared to $778 million, or 6.3%, for the same period last fiscal year. Net financing expense amounted to $58 million for the three-month period ended October 31, 2011, compared to $61 million for the corresponding period last year. For the nine-month period ended October 31, 2011, net financing expense totalled $129 million, compared to $170 million for the same period last year. The decreases are mainly due to lower net financing expense related to retirement benefits and provisions as well as higher interest income on cash and cash equivalents and loans and lease receivables, partially offset by higher net financing expense related to certain financial instruments. The effective income tax rate was 21% and 20.1%, respectively, for the three- and nine-month periods ended October 31, 2011, compared to the statutory income tax rate of 28.4%. The lower effective income tax rates are mainly due to the positive impact of the recognition of income tax benefits related to operating losses and temporary differences. As a result, net income amounted to $192 million, or $0.11 per share, for the third quarter ended October 31, 2011, compared to $147 million, or $0.08 per share, for the same period the previous year. For the nine-month period ended October 31, 2011, net income was $623 million, or $0.35 per share, compared to $480 million, or $0.26 per share, for the same period the previous year. For the three-month period ended October 31, 2011, free cash flow usage totalled $346 million, compared to a usage of $108 million for the corresponding period the previous year. For the nine-month period ended October 31, 2011, free cash flow usage totalled $1.8 billion, compared to a usage of $887 million for the corresponding period the previous year. As at October 31, 2011, Bombardier's order backlog increased to $55.3 billion, compared to $52.7 billion as at January 31, 2011. Bombardier Aerospace --  Revenues of $2.3 billion --  EBITDA of $186 million, or 8.1% of revenues --  EBIT of $129 million, or 5.6% of revenues --  Free cash flow of $53 million --  Net orders of 34 aircraft --  Deliveries of 68 aircraft --  Order backlog of $22.3 billion --  In November 2011, signature of a memorandum of understanding with the Government of the Kingdom of Morocco for the establishment of a manufacturing facility in Morocco Bombardier Aerospace's revenues increased to $2.3 billion for the three-month period ended October 31, 2011, compared to $1.8 billion for the same period the previous year. The increase is mainly due to higher deliveries in both business and commercial aircraft and higher net selling prices in business aircraft. For the third quarter ended October 31, 2011, EBIT totalled $129 million, or 5.6% of revenues, compared to $98 million, or 5.4%, for the same period the previous year. The 0.2 percentage-point increase is mainly due to higher net selling prices for business aircraft, a favourable mix of business aircraft deliveries, and lower research and development (R&D) expenses; partially offset by lower liquidated damage payments from customers upon cancellation of orders and a reduction in other income. Free cash flow amounted to $53 million for the third quarter ended October 31, 2011, compared to a free cash flow usage of $209 million for the same period last fiscal year. The $262-million increase is mainly due to a positive period- over-period variation in net change in non-cash balances related to operations, partially offset by higher net additions to property, plant and equipment and intangible assets, due to our significant investments in new products. For the quarter ended October 31, 2011, Bombardier Aerospace delivered 68 aircraft, compared to 51 for the same period the previous year. The 68 deliveries consisted of 43 business, 24 commercial, and 1 amphibious aircraft (31 business, 19 commercial and 1 amphibious aircraft for the corresponding period last fiscal year). Bombardier Aerospace recorded 34 net orders during the quarter ended October 31, 2011, compared to 23 during the corresponding period the previous year. The 34 net orders consisted in 30 net orders for business aircraft and 4 net orders for commercial aircraft (13 net orders for business aircraft and 10 net orders for commercial aircraft for the corresponding period last fiscal year). Bombardier Aerospace's order backlog stood at $22.3 billion as at October 31, 2011, compared to $19.2 billion as at January 31, 2011. The 16% increase is mainly due to an increase in large business aircraft and CSeries family of aircraft orders, partially offset by a lower order backlog for turboprops and regional jets. Bombardier Transportation --  Revenues of $2.3 billion --  EBITDA of $208 million, or 9% of revenues --  EBIT of $172 million, or 7.4% of revenues --  Free cash flow usage of $347 million --  New order intake totalling $1.6 billion --  Order backlog of $33 billion Bombardier Transportation's revenues totalled $2.3 billion for the three-month period ended October 31, 2011, compared to $2.2 billion for the same period last year. The increase is mainly due to a positive currency impact and higher activities in Services in Europe. For the third quarter ended October 31, 2011, EBIT totalled $172 million, or 7.4% of revenues, compared to $152 million, or 7%, for the same quarter the previous year, an increase of 0.4 percentage point. Excluding the impact of last year's non-recurring items, the EBIT margin decreased by 0.9 percentage point. The decrease mainly results from a lower gross margin due to execution issues in certain projects and higher selling, general and administrative (SG&A) expenses, partially offset by a lower net loss related to foreign exchange fluctuations and certain financial instruments carried at fair value recorded in cost of sales. Free cash flow usage was $347 million for the quarter ended October 31, 2011, compared to a free cash flow of $98 million for the same period last fiscal year. The $445-million decrease is mainly due to a negative period-over-period variation in net change in non-cash balances related to operations, arising from an increase in inventories and the impact of settlements of derivative financial instruments used in roll-forward cash flow hedge relationships. The order intake for the third quarter ended October 31, 2011 totalled $1.6 billion, compared to $3.7 billion for the same period last fiscal year. The level of order intake includes an order from Chicago Transit Authority (CTA), U.S., for rapid transit cars amounting to $331 million. The book-to-bill ratio for the nine-month period ended October 31, 2011 was 0.9. Bombardier Transportation's backlog amounted to $33 billion as at October 31, 2011, compared to $33.5 billion as at January 31, 2011. The $0.5-billion decrease is due to revenues recorded being higher than order intake, partially offset by the strengthening of most foreign currencies versus the U.S. dollar. DIVIDENDS ON COMMON SHARES Class A and Class B Shares A quarterly dividend of $0.025 Cdn per share on Class A Shares (Multiple Voting) and of $0.025 Cdn per share on Class B Shares (Subordinate Voting) is payable on January 31, 2012 to the shareholders of record at the close of business on January 13, 2012. Holders of Class B Shares (Subordinate Voting) of record at the close of business on January 13, 2012 also have a right to a priority quarterly dividend of $0.000390625 Cdn per share. DIVIDENDS ON PREFERRED SHARES Series 2 Preferred Shares A monthly dividend of $0.0625 Cdn per share on Series 2 Preferred Shares has been paid on September 15, October 15 and November 15, 2011. Series 3 Preferred Shares A quarterly dividend of $0.32919 Cdn per share on Series 3 Preferred Shares is payable on January 31, 2012 to the shareholders of record at the close of business on January 13, 2012. Series 4 Preferred Shares A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on January 31, 2012 to the shareholders of record at the close of business on January 13, 2012. (i) Comparative figures have been restated to comply with IFRS. About Bombardier A world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services, Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended January 31, 2011, were $17.9 billion, and its shares are traded on the Toronto Stock Exchange (BBD). Bombardier is listed as an index component to the Dow Jones Sustainability World and North America indexes. News and information are available at www.bombardier.com or follow us on Twitter @Bombardier. CITYFLO, CRJ, CRJ900, CS300, CSeries, NextGen, Q400 and MOVIA are trademarks of Bombardier Inc. or its subsidiaries. The Management's Discussion and Analysis and the interim consolidated financial statements are available at www.bombardier.com. FORWARD LOOKING STATEMENTS This press release includes forward-looking statements, which may involve, but are not limited to, statements with respect to our objectives, targets, goals, priorities and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business conditions outlook, prospects and trends of the industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry into service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; our competitive position; and the expected impact of the legislative and regulatory environment and legal proceedings on our business and operations. Forward- looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "anticipate", "plan", "foresee", "believe" or "continue", the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. While we consider our assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to the respective Forward-looking statements sections in Bombardier Aerospace and Bombardier Transportation sections in the Management's Discussion and Analysis ("MD&A") in the Corporation's annual report for the fiscal year ended January 31, 2011. Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry and major rail operators), operational risks (such as risks related to developing new products and services; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; to the environment; dependence on certain customers and suppliers; human resources; fixed-price commitments and production and project execution), financing risks (such as risks related to liquidity and access to capital markets, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance on government support) and market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual value and increases in commodity prices). For more details, see the Risks and uncertainties section in Other in the Corporation's annual report for the fiscal year ended January 31, 2011. Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect our expectations as at the date of the Corporation's most recently published MD&A and are subject to change after such date. Unless otherwise required by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. CAUTION REGARDING NON-GAAP EARNINGS MEASURES This press release is based on reported earnings in accordance with International Financial Reporting Standards (IFRS). It is also based on EBITDA and Free Cash Flow. These non-GAAP measures are directly derived from the Consolidated Financial Statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. Management believes that a significant number of the users of its MD&A analyze the Corporation's results based on these performance measures and this presentation is consistent with industry practice. A reconciliation to the most comparable IFRS measure is provided in the Corporation's most recently published MD&A. Contacts: Isabelle Rondeau Director, Communications +514-861-9481 Shirley Chenier Senior Director, Investor Relations +514-861-9481 www.bombardier.com --- End of Message --- Bombardier Inc. 800 Rene-Levesque Blvd. West Montreal, QC Canada Listed: Open Market (Freiverkehr) in Frankfurter Wertpapierbörse; This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Bombardier Inc. via Thomson Reuters ONE [HUG#1568088]