Bombardier posts 10% increase in Q3 revenues
Bombardier has reported a 10% year-on-year (YoY) increase in business aircraft revenues at $3.5bn for the third quarter (Q3) 2020, thanks to a record eight Global 7500 deliveries. Bombardier said the increase in sales, 24 in total, more than offset the impact of lower service revenues which had dipped due to lower business jet utilisation in the wake of Covid-19.
Total adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) and adjusted EBIT (earnings before interest and taxes) were $176m and $51m, respectively, in Q3, with total EBIT at $15m for the quarter. Whereas for the same quarter in 2019 Bombardier reported consolidated adjusted EBITDA and adjusted EBIT at $255m and $159m, respectively. Whilst EBIT was $143m for the same period.
Bombardier said Q3 2020’s results were a reflection of “an unfavourable aircraft revenue mix in the aviation segment, as well as the impact of several low-margin rolling stock projects” in the transportation segment, on top of the ongoing pandemic related restrictions.
In line with the working capital requirements for an expected seasonally strong fourth quarter, including approximately a dozen Global 7500 deliveries before year end, the Canadian OEM posted free cash flow usage for Q3 2020 at $706m. Whilst consolidated cash flow usage from operating activities was $644m.
Éric Martel, President and CEO , Bombardier Inc. said: “While the ongoing pandemic continues to present unprecedented challenges, Bombardier remains focused on advancing its key priorities, which includes taking great care of our people and customers; ensuring sufficient liquidity to weather the storm; and continuing to move forward with our strategic repositioning of Bombardier as a leaner, focused business aviation company.
“In the third quarter, we made solid progress on each of these priorities. We secured additional liquidity with a new billion dollar senior secured credit facility, we kept our divestitures moving forward as planned, and with deliveries ramping up across the businesses, we are still targeting break-even free-cash-flow for the second half of the year, assuming operations remain uninterrupted by the pandemic.”
Bombardier began the fourth quarter 2020 with strong pro-forma liquidity of about $3bn, this includes $1.9bn of cash on hand. The Canadian OEM said it expects to add to that liquidity with cash generation in the fourth quarter, driven by the release of working capital in both the aviation and transportation segments.
Last week, Alstom shareholders have approved September’s definitive sale of Bombardier Transportation. The company believes it is course to close the Bombardier Transportation sale in the first quarter of 2021. At closing, Bombardier expects net cash proceeds of approximately $4.0bn, which will be directed to debt paydown.
“We are very excited about our future as a focused business jet company, about our opportunities to grow the services business, and to leverage our industry-leading product portfolio,” Martel added. “We look forward to sharing the details of our plans in the near future, as we finalise our debt management strategy and cost-cutting initiatives to ensure our profitability in the current market and strong growth once the pandemic subsides.”
Bombardier Q3 results – at a glance
- Total revenues of $3.5bn, lower by 5% year-over-year due to pandemic-related disruptions and divestitures;
- Business Aircraft revenues reached $1.2bn on 24 deliveries, growing 10% year-over-year, driven by accelerating Global 7500 deliveries
- Total adjusted EBITDA of $176m; $15m of reported total EBIT
- Free cash flow usage of $0.7bn, continuing to target breakeven for the second half of the year; operating cash flow usage of $0.6bn
- Pro-forma liquidity of $3.0bn, including $1.9 billion of cash on hand.