Bombardier : Announces Financial Results for the First Quarter Ended March 31, 2015

MONTREAL, QUEBEC--(Marketwired - May 7, 2015) - (TSX:BBD.A)(TSX.BBD.B)(OTCQX:BDRBF)

(All amounts in this press release are in U.S. dollars and all amounts in the tables are in millions of U.S. dollars, except per share amounts, unless otherwise indicated. This press release contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measures in the Corporation's MD&A. See Caution regarding non-GAAP measures at the end of this press release.)

• Revenues of $4.4 billion, similar to the same period last fiscal year
  
  
• EBIT before special items⁽¹⁾ of $237 million, or 5.4% of revenues, compared to $219 million, or 5.0%, for the same period last fiscal year
  
  
• Adjusted net income⁽¹⁾ of $170 million (adjusted EPS⁽¹⁾ of $0.09), compared to $151 million (adjusted EPS of $0.08) for the same period last fiscal year
  
  
• Free cash flow usage⁽¹⁾ of $745 million, including a net investment of $379 million in PP&E and intangible assets, compared to a usage of $915 million for the same period last fiscal year, including a net investment of $500 million in PP&E and intangible assets
  
  
• First two components of financing plan successfully completed: available short-term capital resources of $6.0 billion, including cash and cash equivalents of $4.7 billion as at March 31, 2015, compared to $3.8 billion and $2.5 billion, respectively, as at December 31, 2014
  
  
• Backlog of $65.8 billion as at March 31, 2015, compared to $69.1 billion as at December 31, 2014
  
  
• Significant leadership changes at Commercial Aircraft
  

⁽¹⁾ See Caution regarding non-GAAP measures at the end of this press release.

Bombardier today reported its financial results for the first quarter ended March 31, 2015. Revenues totalled $4.4 billion for the quarter, compared to $4.4 billion for the same period last fiscal year.

For the first quarter ended March 31, 2015, earnings before financing expense, financing income and income taxes (EBIT) totalled $228 million, or 5.2% of revenues, compared to $207 million or 4.8% for the same period last fiscal year. EBIT before special items totalled $237 million, or 5.4% of revenues, compared to $219 million or 5.0% for the same period last fiscal year.

Net income totalled $100 million, or diluted earnings per share (EPS) of $0.05, compared to $115 million or $0.06 for the same period the previous year. On an adjusted basis, net income amounted to $170 million, or EPS of $0.09, for the first quarter ended March 31, 2015, compared to $151 million, or $0.08, for the same period the previous year.

For the three-month period ended March 31, 2015, free cash flow usage (cash flows from operating activities less net additions to property, plant and equipment (PP&E) and intangible assets) amounted to $745 million, compared to a usage of $915 million for the same period last year. As at March 31, 2015, available short-term capital resources of $6.0 billion included cash and cash equivalents of $4.7 billion, compared to $3.8 billion and $2.5 billion, respectively as at December 31, 2014. The overall backlog was at $65.8 billion as at March 31, 2015, compared to $69.1 billion as at December 31, 2014.

During the first quarter, as part of the financing plan announced last February, the Corporation closed an $868 million public offering of equity and issued a $2.25 billion aggregate amount of unsecured Senior Notes, both oversubscribed. Of this amount, $750 million of Senior Notes due in 2016 were redeemed in advance on April 29, 2015.

In the financial report for the fiscal year ended December 31, 2014, Bombardier provided liquidity guidance for the fiscal year ended December 31, 2015 for each business segment. In the context of the new organizational structure, the Corporation conducted a benchmark analysis of disclosure. Following this analysis, management decided to change its liquidity guidance by business segment to a consolidated one. Consequently, the segmented liquidity guidance has been withdrawn and will be replaced with consolidated liquidity guidance at a future date.

In Business Aircraft, the market has seen some softness in certain regions, particularly in Latin America, China and Russia, which resulted in a lower order intake. Accordingly, the Corporation is planning to adjust production rates in line with demand and the management team is currently assessing the resulting impact on the workforce.

The Corporation has been proactively reviewing its strategic options for its rail business, given the ongoing industry consolidation. Bombardier is announcing today that it is preparing for an initial public offering (IPO) of a minority stake in Bombardier Transportation. When completed, the IPO is expected to crystallize the full value of Bombardier Transportation and further strengthen the Corporation's financial position, while preserving flexibility should it wish to participate in future rail equipment industry consolidation. The IPO is currently expected to take place in the fourth quarter of this year, subject to market conditions, with the primary listing venue likely to be Germany, where the business segment is headquartered. After the IPO, Bombardier Transportation will continue to be controlled by Bombardier Inc. and consolidated in its financial results.

"The past few months have been very busy and much has been accomplished", said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. "The first quarter results were generally positive, with revenues, EBIT and deliveries mostly on target. We've successfully completed two components of our financing plan which brought our liquidity up to $6 billion."

"We also announced this morning Swiss International Air Lines, a division of Lufthansa, as our first customer to take delivery and operate the CS100 aircraft. Lufthansa is a world-class airline with tremendous experience in introducing new aircraft. The CSeries development program is progressing well, as the first CS300 FTV made its inaugural flight last February. Moreover, we've added strong leaders to Commercial Aircraft's management team with the appointment of Fred Cromer as President and Colin Bole as the new head of sales. Both have deep commercial aerospace knowledge and expertise. Finally, we are announcing today that we are preparing for an initial public offering of a minority stake in Bombardier Transportation. Let me be very clear, Bombardier Transportation is not for sale. We like this business and it will remain part of Bombardier Inc.," he added.

"After three months in the job, I recognize we have challenges and a lot of work to do. But as you can see, we are moving fast and taking significant actions to improve performance. Bombardier is a great company, with talented and passionate employees, innovative products, and strong potential. We are taking all the right steps to create value for our customers and shareholders," concluded Mr. Bellemare.

SEGMENTED RESULTS AND HIGHLIGHTS

Business Aircraft

• In January 2015, Bombardier decided to pause the Learjet 85 aircraft program resulting in a workforce reduction of 1,000 employees at the sites in Querétaro, Mexico and Wichita, United States and a severance provision of approximately $13 million was recorded as a special item during the first quarter of 2015.
• The first Challenger 650 production aircraft successfully completed its first flight.
• The assembly of the first Global 7000/8000 flight test vehicle (FTV) is progressing.
• In April, the Corporation announced the appointment of Peter Likoray as Senior Vice President of Sales.

Commercial Aircraft

• The maiden flights of the first CS300 FTV and of the fifth CS100 FTV, fitted with a full interior, were successfully completed. There are now six FTVs in the flight test program and approximately 50% of the planned flight test hours have been logged to date.
• A firm purchase agreement was signed with Chorus Aviation Inc., the parent company of Jazz Aviation LP for 13 Q400 NextGen aircraft, valued at approximately $424 million based on list price, with options for an additional 10, and a purchase agreement was signed with Mesa Airlines, for 7 CRJ900 NextGen aircraft, valued at approximately $326 million, based on list price.
• flymojo, a new airline in Malaysia, signed a letter of intent for 20 CS100 aircraft with options for an additional 20 CS100 aircraft. Based on the list price, a firm order would be valued at approximately $1.5 billion, and could increase to $2.9 billion, should flymojo exercise all its options.
• In April, Bombardier announced the appointment of Fred Cromer as President, Commercial Aircraft and Colin Bole as Senior Vice President, Sales and Asset Management, Commercial Aircraft
• Today, announcement of Swiss International Air Lines (SWISS) as the first airline to take delivery and operate the CSeries aircraft when the CS100 enters into service in the first half of 2016.

Aerostructures and Engineering Services

Bombardier Transportation

• Bombardier-Sifang Transportation, a Chinese entity in which Bombardier holds a 50% interest, delivered the first ZEFIRO 380 very high speed train to its customer, Shanghai Railway Bureau.
• In April, the V300ZEFIRO Italy very high speed train received homologation and successfully completed its maiden trip from Milan to Rome.
• Bombardier Transportation signed an agreement with the New United Group (NUG) to establish a joint venture for Signalling and rail control in China. The new company will focus on rail transportation communication, signalling and integrated monitoring systems for the Chinese mass transit and light rail markets, and be introducing moving-block signalling technology for metro applications.

About Bombardier

Bombardier is the world's leading manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.

Bombardier is headquartered in Montréal, Canada. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability World and North America indexes. In the fiscal year ended December 31, 2014, we posted revenues of $20.1 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.

Bombardier, Challenger, Challenger 650, CRJ, CRJ900, CS100, CS300, CSeries, Global, Global 7000, Global 8000, Learjet, Learjet 85, NextGen, Q400, The Evolution of Mobility and ZEFIRO are trademarks of Bombardier Inc. or its subsidiaries.

The Management's Discussion and Analysis and the interim consolidated financial statements are available at ir.bombardier.com.

FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to the Corporation's objectives, guidance, targets, goals, priorities, market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an 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; competitive position; and the expected impact of the legislative and regulatory environment and legal proceedings on the Corporation's business and operations; the Corporation's available liquidities and the Corporation's ongoing review of strategic and financial alternatives, the launch and completion of an IPO and the proceeds therefrom; the impact of an IPO on the Corporation's operations, infrastructure, opportunities, financial condition, access to capital and overall strategy; the impact of an IPO on the Corporation's share price, the statement that a carveout IPO should help to crystallize share price value, the impact of the sale of equity on the Corporation's balance sheet and liquidity position, the effect of an IPO on the range of options available to the Corporation, the Corporation's participation in future rail equipment industry consolidation, the stock exchange on which an IPO would be effected, and the capital and governance structure of Bombardier Transportation following an IPO. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "intend", "anticipate", "plan", "foresee", "believe", "continue", "maintain" or "align", the negative of these terms, variations of them or similar terminology.

By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from those forecasted. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate. Certain important assumptions by the Corporation or its consultants in making forward-looking statements include, but are not limited to: the decision to launch an IPO and the timing, size and successful completion thereof; and the Corporation's ability to consummate an IPO in favorable market conditions. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to the respective Guidance and forward-looking statements sections in Aerospace and in Transportation in the Management's Discussion and Analysis (MD&A) of the Corporation's financial report for the fiscal year ended December 31, 2014. This press release is not intended to form the basis of any investment decision and there can be no assurance that any IPO or other transaction will be undertaken or completed in whole or in part or of the timing, size and proceeds of any such offering, which will depend on a number of factors, including prevailing market conditions.

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 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; the environment; dependence on certain customers and suppliers; human resources; fixed-price commitments and production and project execution), risks relating to the Corporation's ability to implement strategic and financial alternatives; financing risks (such as risks related to liquidity and access to capital markets, exposure to credit risk, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance on government support); failure to receive regulatory approvals (including stock exchange) or other approvals; failure to launch or complete an IPO on acceptable terms or at all; and market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual values and increases in commodity prices). For more details, see the Risks and uncertainties section in Other in the MD&A of the Corporation's financial report for the fiscal year ended December 31, 2014. 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 management's expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes 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 MEASURES

This press release is based on reported earnings in accordance with International Financial Reporting Standards (IFRS). Reference to generally accepted accounting principles (GAAP) means IFRS, unless indicated otherwise. This press release is also based on non-GAAP financial measures including EBITDA, EBIT before special items and EBITDA before special items, adjusted net income, adjusted earnings per share and free cash flow. These non-GAAP measures are mainly derived from the interim 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 providing certain Non-GAAP performance measures, in addition to IFRS measures, provides users of our financial reports with enhanced understanding of our results and related trends and increases transparency and clarity into the core results of our business. Refer to the Non-GAAP financial measures and Liquidity and capital resources sections in Overview and to the Analysis of results sections in the Corporation's reporting segments' MD&A, for definitions of these metrics and reconciliations to the most comparable IFRS measures.