Mr. Alain Bellemare reports
BOMBARDIER ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2015
Bombardier Inc. has released its financial results for the second quarter ended June 30, 2015 (all amounts are in U.S. dollars). Revenues totalled $4.6-billion for the quarter, compared with $4.9-billion for the same period last fiscal year. Excluding foreign exchange impact, revenues are up 2 per cent.
Highlights:
- Revenues of $4.6-billion, an increase of 2 per cent excluding foreign exchange,
compared with the same period last year;
- Earnings before financing expense, financing income and income taxes (EBIT) of $226-million, or 4.9 per cent of revenues;
- Adjusted net income of $145-million (adjusted earnings per share of six cents);
- Free cash flow usage of $808-million, including a net investment of
$439-million in property, plant and equipment (PP&E) and intangible assets;
- Available short-term capital resources of $4.4-billion, including cash
and cash equivalents of $3.1-billion as at June 30, 2015;
- Backlog of $64.8-billion as at June 30, 2015;
- Launch of the Bombardier transformation plan to improve cost and cash;
- Leadership team strengthened with seven new senior executive
appointments, including the appointment of John Di Bert as new chief
financial officer in July;
- C Series aircraft on track for entry into service in the first half of
2016;
- Global 7000 aircraft entry into service in the second half of 2018.
For the second quarter ended June 30, 2015, EBIT totalled $226-million, or 4.9 per cent of revenues, compared with $257-million, or 5.3 per cent, for the same period last fiscal year.
Net income totalled $125-million, or earnings per share of six cents, compared with $155-million, or eight cents, for the same period the previous year. On an adjusted basis, net income amounted to $145-million, or EPS of six cents, for the second quarter ended June 30, 2015, compared with $192-million, or 10 cents, for the same period the previous year.
For the three-month period ended June 30, 2015, free cash flow usage (cash flows from operating activities less net additions to PP&E and intangible assets) amounted to $808-million, compared with a usage of $424-million for the same period last year. As at June 30, 2015, available short-term capital resources of $4.4-billion included cash and cash equivalents of $3.1-billion, compared with $3.8-billion and $2.5-billion, respectively as at Dec. 31, 2014. The overall backlog reached $64.8-billion as at June 30, 2015, compared with $69.1-billion as at Dec. 31, 2014.
"Over all, the second quarter was in line with plan in terms of revenues, EBIT and deliveries, and our liquidity stands at $4.4-billion," said Alain Bellemare, president and chief executive officer, Bombardier. "After five months on the job, I have a better understanding of our challenges and opportunities. We are taking specific action, including the launch of our Bombardier transformation plan, a disciplined approach to cash management, and the strengthening of our leadership team to reshape the company and ensure our long-term success."
Management has largely completed detailed reviews of Bombardier's two major aerospace development programs. The C Series flight testing is progressing rapidly with over 2,000 hours completed and performance is exceeding targets. The aircraft is on track to enter into service in the first half of 2016. Meanwhile, the first Global 7000 flight test vehicle (FTV) is in final assembly and will deliver unmatched performance when the aircraft enters into service in the second half of 2018.
Bombardier transportation boasts a strong $30.4-billion backlog and recorded a good level of orders in the quarter. One of its newly established Chinese joint ventures was awarded its first contract to provide an Innovia APM 300 automated people mover to the Shanghai metro. This contract demonstrates Bombardier transportation's leadership position in the rail industry, a position that will be further strengthened by the OneBT improvement initiative, which is starting to gain traction.
Concurrently, the Bombardier transformation plan is being implemented to drive performance across the entire organization. As a first step, the corporation launched a systematic process to identify and quantify opportunities within each business segment. The main areas of opportunity identified are product cost reduction, better control of working capital and effective use of cash. The plan is now transitioning to the execution phase.
Subsequent to the quarter, Bombardier announced the appointment of John Di Bert as senior vice-president and chief financial officer, effective Aug. 10, 2015. Recognized for his financial discipline, Mr. Di Bert is an accomplished executive who has driven multiple optimization initiatives both in periods of growth and consolidation throughout his career.
Segmented results and highlights
Business aircraft:
- Current economic conditions and geopolitical issues in some regions,
such as China, Latin America and Russia, have had an impact on industry-wide order intake. As a result, Business aircraft announced on May 14,
2015, a reduction in the production rate for the Global 5000 and Global
6000 aircraft.
- Following the softness in demand, EBIT margin guidance is revised to a
range of 5 per cent to 6 per cent for the year.
- David M. Coleal was appointed as president, Bombardier business
aircraft.
- The Global 7000 is a state-of-the-art aircraft with a wing that
optimizes both short-field and long-range performance, coupled with a
highly efficient engine, the largest cabin and most advanced cockpit.
Developing such an aircraft presents challenges, which have impacted the
program's schedule. Consequently, the aircraft will now enter into
service in the second half of 2018.
- Meanwhile, the first FTV is in final assembly, three additional FTVs are
in various stages of production and assembly, and the integrated systems
test and certification rig has been commissioned.
Commercial aircraft:
- Bombardier commercial aircraft and Swiss International Air Lines announced that Swiss will be the first customer to take delivery and
operate the C Series when the CS100 aircraft enters into service in the
first half of 2016. Swiss, alongside parent company Deutsche Lufthansa
AG (Lufthansa), was previously announced as the launch customer of the C
Series aircraft program when it signed a firm purchase agreement for 30
CS100 aircraft and options for an additional 30 C Series aircraft in
March, 2009. Subsequently, on June 15, 2015, Swiss converted 10 of its 30
firm-ordered CS100 aircraft to the larger CS300 aircraft.
- Based on flight test results, Bombardier commercial aircraft announced
that the CS100 and CS300 aircraft are exceeding their original targets
for fuel burn, payload, range and airfield performance. In addition, the
C Series aircraft are on track to meet noise performance targets.
- Fred Cromer was appointed as president, Bombardier commercial aircraft,
and Colin Bole, senior vice-president, sales and asset management.
- Commercial aircraft's EBIT is expected to be basically in line with
guidance. However, there is some risk depending on the assumptions used
with respect to the level of non-cash provisioning in relation to the
dilutive impact of the C Series initial deliveries.
Aerostructures and engineering services:
- Bombardier aerostructures and engineering services has an EBIT margin
before special items of 8.8 per cent for the first half of 2015, well ahead of
its 4-per-cent EBIT guidance. EBIT margin is now expected to reach approximately
6 per cent for the year.
Transportation:
- The corporation announced that, following a pro-active review of
strategic options for its rail business, it is preparing for an initial
public offering 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 the corporation
wish to participate in future rail equipment industry consolidation. The
corporation intends to file the required documentation with applicable
securities regulators during 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 and
consolidated in its financial results.
- The V300ZEFIRO very high-speed train, built in partnership with
AnsaldoBreda, received homologation and successfully completed its
maiden trip from Milan to Rome.
- Bombardier transportation's newly established Chinese joint venture, CSR
Puzhen Bombardier Transportation Systems Ltd., won its first contract
for an Innovia APM 300 automated people mover to be delivered to
Shanghai Shentong Metro Co. Ltd., further emphasizing the business
segment's strong position in the Chinese rail market.
- Bombardier transportation was awarded a contract in Vienna to supply and
maintain 119 Flexity trams for the Vienna transport authority Wiener
Linien, valued at approximately $480-million. The order includes an
option for an additional 37 trams and further maintenance support.
- Subsequent to the end of the second quarter, Bombardier transportation
signed rolling stock and maintenance contracts for Transport for
London's Lotrain project in the United Kingdom to build and maintain 45 four-car
electrical multiple units. The contracts are valued at approximately
$558-million.
- For the first half of the year, Bombardier transportation has reached a
5.6-per-cent EBIT margin and is on plan to slightly improve its EBIT margin for
the year, as compared with 2014, as per original guidance.
RECONCILIATION OF SEGMENT TO CONSOLIDATED RESULTS
Three-month period Six-month period
ended June 30, ended June 30,
2015 2014 2015 2014
Revenues
Business aircraft $ 1,815 $ 1,624 $ 3,352 $ 3,098
Commercial aircraft 598 754 1,271 1,233
Aerostructures and engineering
services 472 483 943 953
Transportation 2,091 2,380 4,132 4,647
Corporate and eliminations (356) (350) (681) (686)
$ 4,620 $ 4,891 $ 9,017 $ 9,245
EBIT before special items
Business aircraft $ 119 $ 122 $ 226 $ 222
Commercial aircraft (10) 17 (20) 20
Aerostructures and engineering
services 42 22 83 42
Transportation 115 125 233 253
Corporate and eliminations (40) (29) (59) (61)
$ 226 $ 257 $ 463 $ 476
Special items
Business aircraft $ - $ - $ 11 $ 10
Commercial aircraft - - (1) (2)
Aerostructures and engineering
services - - (1) 4
$ - $ - $ 9 $ 12
EBIT
Business aircraft $ 119 $ 122 $ 215 $ 212
Commercial aircraft (10) 17 (19) 22
Aerostructures and engineering
services 42 22 84 38
Transportation 115 125 233 253
Corporate and eliminations (40) (29) (59) (61)
$ 226 $ 257 $ 454 $ 464
Supplemental information
Adjusted net income $ 145 $ 192 $ 315 $ 343
Adjusted EPS $ 0.06 $ 0.10 $ 0.15 $ 0.19
Free cash flow usage $ (808) $ (424) $(1,553) $(1,339)
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.