Mr. Pierre Beaudoin reports
BOMBARDIER ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2014
Bombardier Inc. has released its financial results for the second quarter ended June 30, 2014.
(All amounts in this press release are in U.S. dollars unless otherwise indicated. This press release contains both international financial reporting standards and non-generally accepted accounting principles measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measures in the corporation's management's discussion and analysis.)
Highlights:
- Revenues of $4.9-billion, compared with $4.4-billion for the same period
last fiscal year;
- EBIT (earnings before financing expense, financing income and income taxes) before special items of $257-million, or 5.3 per cent of revenues,
compared with $257-million, or 5.8 per cent, for the same period last fiscal year;
- Adjusted net income of $192-million (adjusted earnings per share of 10 cents),
compared with $158-million (adjusted EPS of nine cents) for the same period
last fiscal year;
- Free cash flow usage of $424-million, compared with a usage of $566-million for the same period last fiscal year, including a net investment
of $525-million in property, plant and equipment, and intangible assets;
- Available short-term capital resources of $3.9-billion, including cash
and cash equivalents of $2.5-billion as at June 30, 2014, compared to $4.8-billion and $3.4-billion, respectively, as at Dec. 31, 2013;
- Backlog of $75.7-billion as at June 30, 2014, compared to $69.7-billion
as at Dec. 31, 2013;
- Subsequent to quarter-end, announcement of a new organizational
structure.
Revenues totalled $4.9-billion for the quarter, compared with $4.4-billion for the same period last fiscal year, which represents an increase of 8.9 per cent, excluding currency impacts.
For the second quarter ended June 30, 2014, EBIT totalled $257-million, or 5.3 per cent of revenues, compared with EBIT before special items of $257-million, or 5.8 per cent, and EBIT of $288-million, or 6.5 per cent, for the same period last fiscal year.
On an adjusted basis, net income amounted to $192-million, or EPS of 10 cents, for the second quarter ended June 30, 2014, compared with $158-million, or nine cents, for the same period the previous year. Net income totalled $155-million, or EPS of eight cents, compared with $180-million or 10 cents for the same period the previous year.
For the three-month period ended June 30, 2014, free cash flow usage (cash flows from operating activities less net additions to property, plant and equipment, and intangible assets) amounted to $424-million, compared with a usage of $566-million for the same period last year. As at June 30, 2014, available short-term capital resources of $3.9-billion included cash and cash equivalents of $2.5-billion, compared to $4.8-billion and $3.4-billion, respectively as at Dec. 31, 2013. The overall backlog reached $75.7-billion as at June 30, 2014, compared to $69.7-billion as at Dec. 31, 2013.
On July 23, 2014, Bombardier announced a new organizational structure comprising four business segments: Bombardier Transportation, Bombardier Business Aircraft, Bombardier Commercial Aircraft, and Bombardier Aerostructures and Engineering Services, the heads of which will report directly to Pierre Beaudoin, president and chief executive officer, Bombardier. The creation of the Aerostructures and Engineering Services business segment aims at further marketing the company's expertise in this field to the aerospace industry, thus generating new revenues. A detailed implementation plan will be developed within the next few months, and the new structure will be in place Jan. 1, 2015. The restructuring will result in a reduction of approximately 1,800 indirect positions in Aerospace.
"Overall results for the second quarter were in line with our expectations. Both groups saw an increase in their revenues and a high level of activity for their products," said Mr. Beaudoin. "Bombardier Transportation continued to win a good level of new orders, bringing its total amount to $9.7-billion for the first six months of the year. And further cost reduction measures are being implemented as part of its reorganization initiative to increase profitability over time.
"In Aerospace, the new organizational structure recently announced will make us more agile and flexible in addressing customer needs, while reducing costs and increasing our ability to focus on growth areas. Our strong backlog, combined with this new lighter structure, will allow us to realize the full potential of our investments in new products," concluded Mr. Beaudoin.
Bombardier Aerospace
Bombardier Aerospace's revenues amounted to $2.5-billion for the three-month period ended June 30, 2014, compared with $2.3-billion for the same period last fiscal year. EBIT totalled $141-million, or 5.6 per cent of revenues, for the second quarter ended June 30, 2014, compared with EBIT before special items of $107-million, or 4.7 per cent, and EBIT of $138-million, or 6.1 per cent, for the same period last fiscal year. Free cash flow usage amounted to $363-million (including net additions to PP&E and intangible assets of $509-million) for the second quarter ended June 30, 2014, compared with a usage of $459-million (including net additions to PP&E and intangible assets of $534-million) for the same period last fiscal year.
Bombardier Aerospace delivered a total of 62 aircraft during the second quarter ended June 30, 2014, compared with 57 for the same period last fiscal year, and received 48 net orders, compared with 82 for the same period last fiscal year.
On May 29, 2014, an engine-related incident occurred on the first CS100 flight test vehicle during stationary ground maintenance testing. Bombardier and Pratt & Whitney have worked on a solution and flight tests are expected to resume in the coming weeks. The targeted entry-into-service dates of the CS100 and CS300 aircraft programs remain unchanged.
In June, Bombardier Commercial Aircraft signed a firm order with an undisclosed customer for 16 CRJ900 NextGen aircraft, valued at $727-million based on list price, with options for an additional eight.
Subsequent to quarter-end, at the Farnborough Airshow, Bombardier Aerospace concluded firm orders, conditional purchase agreements and letters of intent for a total of 74 aircraft, valued at more than $4.25-billion. This includes letters of intent and a conditional purchase agreement for a total of 66 CSeries aircraft with five customers, bringing the total CSeries firm orders and other agreements to 513, with 20 customers in 17 countries, including 203 firm orders.
In April, the maiden flight of the first Learjet 85 flight test vehicle was successfully completed. Additional flights have since occurred. The flights are proceeding as expected.
Bombardier Aerospace's backlog reached a level of $38.1-billion as at June 30, 2014, compared to $37.3-billion, as at Dec. 31, 2013.
Bombardier Transportation
Bombardier Transportation's revenues amounted to $2.4-billion for the three-month period ended June 30, 2014, compared with $2.2-billion for the same period last year, an increase of 6.3 per cent excluding currency impacts. EBIT totalled $116-million, or 4.9 per cent of revenues, compared with $150-million, or 6.9 per cent, for the same quarter the previous year. Free cash flow usage totalled $47-million for the quarter ended June 30, 2014, compared with a usage of $21-million for the same period last fiscal year.
New orders reached $1.7-billion (book-to-bill ratio of 0.7), bringing the total orders to $9.7-billion for the first six months of the year (book-to-bill ratio of 2.1). This translates into an order backlog of $37.6-billion as at June 30, 2014, compared to $32.4-billion as at Dec. 31, 2013.
During the second quarter, Bombardier Transportation won several small and medium orders across various regions and product segments, including a contract for rolling stock from an undisclosed customer for a value of $338-million. It also signed a framework agreement with Railpool GmbH to provide 65 Traxx locomotives, with a first call-off of 35 locomotives valued at $184-million. Also, Virgin Trains signed a contract to extend the provision of maintenance of its Super Voyager fleet operating on the United Kingdom's West Coast Main Line to March, 2019, valued at approximately $175-million.
FINANCIAL HIGHLIGHTS
(in millions of U.S. dollars, except per share amounts)
For the three-month periods ended June 30,
2014 2013
BA BT Total BA BT Total
Results of operations
Revenues $ 2,512 $ 2,379 $ 4,891 $ 2,255 $ 2,175 $ 4,430
Cost of sales 2,156 2,077 4,233 1,922 1,836 3,758
-------- -------- -------- -------- -------- --------
Gross margin 356 302 658 333 339 672
SG&A 171 183 354 189 193 382
R&D 47 32 79 45 30 75
Share of income of
joint ventures and
associates - (28) (28) - (34) (34)
Other income (3) (1) (4) (8) - (8)
-------- -------- -------- -------- -------- --------
EBIT before special
items 141 116 257 107 150 257
Special items(1) - - - (31) - (31)
-------- -------- -------- -------- -------- --------
EBIT $ 141 $ 116 257 $ 138 $ 150 288
Financing expense 90 83
Financing income (49) (47)
-------- --------
EBT 216 252
Income taxes 61 72
-------- --------
Net income $ 155 $ 180
======== ========
EPS (basic and diluted) $ 0.08 $ 0.10
For the six-month periods ended June 30,
2014 2013
BA BT Total BA BT Total
Results of operations
Revenues $ 4,601 $ 4,644 $ 9,245 $ 4,513 $ 4,256 $ 8,769
Cost of sales 3,958 4,036 7,994 3,873 3,608 7,481
-------- -------- -------- -------- -------- --------
Gross margin 643 608 1,251 640 648 1,288
SG&A 328 364 692 347 379 726
R&D 87 68 155 87 58 145
Share of income of
joint ventures and
associates - (50) (50) - (78) (78)
Other income (18) (4) (22) (2) - (2)
-------- -------- -------- -------- -------- --------
EBIT before special
items 246 230 476 208 289 497
Special items(2) 12 - 12 (31) - (31)
-------- -------- -------- -------- -------- --------
EBIT $ 234 $ 230 464 $ 239 $ 289 528
Financing expense 136 151
Financing income (61) (80)
-------- --------
EBT 389 457
Income taxes 119 129
-------- --------
Net income $ 270 $ 328
======== ========
EPS (basic and diluted) $ 0.14 $ 0.18
(1) The special item for the three-month period ended June 30, 2013, related
to a gain following the successful resolution of a litigation in connection
with Part IV of the Quebec Income Tax Act, the tax on capital.
(2) The special items for the six-month period ended June 30, 2014, relate
to a $22-million expense for the previously announced work force reduction
of approximately 1,700 positions, located mostly in Canada and the United
States, and a $10-million gain following the successful resolution of a
litigation in connection with Part IV of the Quebec Income Tax Act, the tax
on capital. The special item for the three- and six-month periods ended June
30, 2013, relates to a gain following the successful resolution of a
litigation in connection with Part IV of the Quebec Income Tax Act, the tax
on capital.
Dividends on common shares
Class A and Class B shares
A quarterly dividend of 2.5 Canadian cents per share on Class A shares (multiple voting) and of 2.5 Canadian cents per share on Class B shares (subordinate voting) is payable on Sept. 30, 2014, to the shareholders of record at the close of business on Sept. 12, 2014.
Holders of Class B shares (subordinate voting) of record at the close of business on Sept. 12, 2014, also have a right to a priority quarterly dividend of 0.0390625 Canadian cent per share.
Dividends on preferred shares
Series 2 preferred shares
A monthly dividend of 6.25 Canadian cents per share on Series 2 preferred shares has been paid on May 15, June 15 and July 15, 2014.
Series 3 preferred shares
A quarterly dividend of 19.5875 Canadian cents per share on Series 3 preferred shares is payable on Oct. 31, 2014, to the shareholders of record at the close of business on Oct. 17, 2014.
Series 4 preferred shares
A quarterly dividend of 39.0625 Canadian cents per share on Series 4 preferred shares is payable on Oct. 31, 2014, to the shareholders of record at the close of business on Oct. 17, 2014.
We seek Safe Harbor.
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