Bombardier Provides Preliminary Fourth Quarter and Full Year 2019 Financial Results and Updates on Accelerating Deleveraging Phase of Turnaround Plan

  • Financial results expected to be below guidance, driven largely by actions at Transportation to resolve challenging projects
  • Aviation financial results largely on track
  • Company actively pursuing strategic options to accelerate deleveraging
  • Bombardier reassessing future participation in Airbus Canada Limited Partnership

All amounts in this press release are in U.S. dollars unless otherwise indicated.

MONTREAL, Jan. 16, 2020 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) today announced its preliminary results for the fourth quarter and full year 2019. The Company now expects lower than previously guided financial performance, mainly as a result of actions taken to resolve challenging rail projects, the timing of milestone payments and new orders at Transportation, and the delivery of four Global 7500 aircraft slipping into the first quarter of 2020.

Preliminary Results for the Fourth Quarter and Full Year 2019

Fourth Quarter 2019
Expected Results
Full Year 2019
Expected Results
Consolidated Revenues ~$4.2B ~$15.8B
Aviation ~$2.4B ~$7.5B
Transportation ~$1.8B ~$8.3B
Consolidated Adjusted EBIT1,2 ~$(130)M ~$400M
Aviation ~6% ~7%
Transportation ~(13)% ~1%
Consolidated Adjusted EBITDA1,2 ~$0M ~$830M
Free Cash Flow1 ~$1.0B ~$(1.2)B
Aircraft deliveries (in units) 58 175
Business Aircraft 52
Incl. 6 Global 7500
Incl. 11 Global 7500
Commercial Aircraft 6 33

Backlog as at December 31, 2019
Business aircraft ~$14.4B
Transportation ~$35.7B

1 Non–GAAP financial measures. Refer to the Caution regarding Non–GAAP financial measures below for definitions of these metrics.

2 Excludes Airbus Canada Limited Partnership (ACLP) equity pick–up.

Aviation deliveries were strong in the quarter, totalling 58 aircraft in the fourth quarter for a total of 175 aircraft for the full year. This included 11 Global 7500, six of which were delivered in the fourth quarter. The remaining Global 7500 aircraft originally scheduled for delivery in the final days of 2019 are now expected to be delivered in the first quarter of 2020. As Aviation made good progress ramping up the Global 7500, its full year adjusted EBIT margin is still expected to be approximately 7.0%, in line with full year guidance.

At Transportation, the fourth quarter adjusted EBIT loss is anticipated to be approximately $230 million. This includes a charge of approximately $350 million related to certain projects in the UK (the Aventra platform), commercial negotiations with Swiss Federal Railways (SBB), and increased production and manufacturing costs for projects in Germany.

Delays in achieving technical milestones, including multi–unit software homologation for the London Overground's LoTrain project (an Aventra project), and execution of production ramp–up required the Company to re–align certain delivery schedules with customers and absorb additional costs. Having achieved these milestones in the fourth quarter, Bombardier has entered into commercial negotiations with customers "" to reset schedules, resolve late delivery penalties, and address related provisions and costs.

Consolidated free cash flow for the fourth quarter is estimated at approximately $1.0 billion, approximately $650 million lower than anticipated. This is largely due to the timing of cash inflows from milestone payments on large Transportation projects, and the later–than–anticipated closing of certain orders and call–offs. While the free cash flow shortfall is largely expected to be recovered in 2020, the recovery will be offset by the cash flow impact of the incremental costs recognized in the fourth quarter adjustments at Transportation.

While fourth quarter financial performance at Transportation was lower than expected, the Company continues to make significant progress completing legacy projects and to take the right actions to position the business for long–term success.

Airbus Canada Limited Partnership Update (ACLP)
With its exit from Commercial Aerospace, Bombardier is reassessing its ongoing participation in ACLP.

While the A220 program continues to win in the marketplace and demonstrate its value to airlines, the latest indications of the financial plan from ACLP calls for additional cash investments to support production ramp–up, pushes out the break–even timeline, and generates a lower return over the life of the program. This may significantly impact the joint venture value. Bombardier will disclose the amount of any write–down when we complete our analysis and report our final fourth quarter and 2019 financial results.

Acceleration of Deleveraging Phase of Turnaround

Liquidity remains strong, with year–end cash on hand of approximately $2.6 billion. The CRJ program sale to Mitsubishi Heavy Industries, Ltd (MHI) and Aerostructures sale to Spirit AeroSystems Holding, Inc., both of which are still tracking to close by mid–year, will provide an additional $1.1 billion of cash subject to customary closing adjustments. The Company has received most of the regulatory approvals required for closing of the CRJ sale.

Consistent with Bombardier's five–year turnaround plan, and following a comprehensive review of strategic alternatives, the Company is actively pursuing options to strengthen its balance sheet and enhance shareholder value.

"Since launching our turnaround plan, we have addressed our underperforming aerospace assets, completed our heavy investment cycle, and put the Company on a solid path toward organic growth and margin expansion while prudently managing our liquidity and heavy debt load," said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. "The final step in our turnaround is to de–lever and solve our capital structure. We are actively pursuing alternatives that would allow us to accelerate our debt paydown. The objective is to position the business for long–term success with greater operating and financial flexibility."

The Company will provide additional information when it reports its fourth quarter and full year 2019 financial results on February 13, 2020.

About Bombardier
With over 68,000 employees, Bombardier is a global leader in the transportation industry, creating innovative and game–changing planes and trains. Our products and services provide world–class transportation experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.

Headquartered in Montreal, Canada, Bombardier has production and engineering sites in 28 countries as well as a broad portfolio of products and services for the business aviation, commercial aviation and rail transportation markets. Bombardier shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2018, Bombardier posted revenues of $16.2 billion US. The company is recognized on the 2019 Global 100 Most Sustainable Corporations in the World Index. News and information are available at or follow us on Twitter @Bombardier.

Bombardier, CRJ and Global 7500 are trademarks of Bombardier Inc. or its subsidiaries.

For information
Jessica McDonald
Advisor, Media Relations and Public Affairs
Bombardier Inc.
+514 861 9481

Patrick Ghoche
Vice President, Corporate Strategy
and Investor Relations
Bombardier Inc.
+514 861 5727


This press release includes forward–looking statements, which may involve, but are not limited to: statements with respect to the Corporation's objectives, anticipations and guidance in respect of various financial and global metrics and sources of contribution thereto; targets, goals, priorities, market and strategies, financial position, market position, capabilities, competitive strengths, credit ratings, 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; growth strategy, including in the business aircraft aftermarket business; 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; expectations regarding working capital recovery across late–stage Transportation projects; expectations regarding revenue and backlog mix; the expected impact of the legislative and regulatory environment and legal proceedings on the Corporation's business and operations; strength of capital profile and balance sheet, creditworthiness, available liquidities and capital resources, expected financial requirements and ongoing review of strategic and financial alternatives; the introduction of productivity enhancements, operational efficiencies and restructuring initiatives and anticipated costs, intended benefits and timing thereof; the expected objectives and financial targets underlying our transformation plan and the timing and progress in execution thereof, including the anticipated business transition to growth cycle and cash generation; expectations and objectives regarding debt repayments, expectations and timing regarding an opportunistic redemption of CDPQ's investment in BT Holdco; intentions and objectives for the Corporation's programs, assets and operations; the funding and liquidity of Airbus Canada Limited Partnership (ACLP); the pursuit of any strategic option to strengthen the Corporation's balance sheet and enhance shareholder value, the anticipated benefits of any transaction resulting therefrom and the expected impact on the Corporation's operations, infrastructure, opportunities, financial condition, business plan and overall strategy. As it relates to the sale of the CRJ aircraft program (the Pending Transaction) and the disposition of the Aerostructures operations, this press release also contains forward–looking statements with respect to: the expected terms, conditions, and timing for completion thereof; the respective anticipated proceeds and use thereof and/or consideration therefor, related costs and expenses, as well as the anticipated benefits of such actions and transactions and their expected impact on the Corporation's guidance and targets; and the fact that closing of these transactions will be conditioned on certain events occurring, including the receipt of necessary regulatory approval.

Forward–looking statements can generally be identified by the use of forward–looking terminology such as "may", "will", "shall", "can", "expect", "estimate", "intend", "anticipate", "plan", "foresee", "believe", "continue", "maintain" or "align", the negative of these terms, variations of them or similar terminology. Forward–looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of the Corporation's current objectives, strategic priorities, expectations and plans, and in obtaining a better understanding of our business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

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 our actual results in future periods to differ materially from forecast results set forth in forward–looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is 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 Strategic Priorities and Guidance and forward–looking statements sections in Overview, Business Aircraft, Commercial Aircraft, Aerostructures and Engineering Services and Transportation in the MD&A of the Corporation's financial report for the fiscal year ended December 31, 2018.

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 our business environment (such as risks associated with "Brexit"); the financial condition of the airline industry, business aircraft customers, and the rail industry; trade policy; increased competition; political instability and force majeure events or global climate change), operational risks (such as risks related to developing new products and services; development of new business and awarding of new contracts; book–to–bill ratio and order backlog; the certification and homologation of products and services; fixed–price and fixed–term commitments and production and project execution, including challenges associated with certain Transportation's legacy projects and the release of working capital therefrom; pressures on cash flows and capital expenditures based on project–cycle fluctuations and seasonality; risks associated with our ability to successfully implement and execute our strategy, transformation plan, productivity enhancements, operational efficiencies and restructuring initiatives; doing business with partners; risks associated with the Corporation's partnership with Airbus and investment in ACLP; risks associated with the Corporation's ability to continue with its funding plan of ACLP and to fund, if required, the cash shortfalls; inadequacy of cash planning and management and project funding; product performance warranty and casualty claim losses; regulatory and legal proceedings; environmental, health and safety risks; dependence on certain customers, contracts and suppliers; supply chain risks; human resources; reliance on information systems; reliance on and protection of intellectual property rights; reputation risks; risk management; tax matters; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; substantial existing debt and interest payment requirements; certain restrictive debt covenants and minimum cash levels; financing support provided for the benefit of certain customers; and reliance on government support), market risks (such as risks related to foreign currency fluctuations; changing interest rates; decreases in residual values; increases in commodity prices; and inflation rate fluctuations). 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, 2018.

With respect to the divestiture of the Corporation's Aerostructures operations discussed herein specifically, certain factors that could cause actual results to differ materially from those anticipated in the forward–looking statements include, but are not limited to: the failure to complete any divestiture or other transaction resulting therefrom within the expected time frame, on commercially satisfactory terms or at all; all or part of the intended benefits therefrom not being realized within the anticipated timeframe, or at all; and the incurrence of related costs and expenses; and negative effects of the announcement or pendency of any such divestiture or other transaction. With respect to the Pending Transaction discussed herein specifically, certain factors that could cause actual results to differ materially from those anticipated in the forward–looking statements include, but are not limited to: the failure to receive or delay in receiving regulatory approvals, or otherwise satisfy the conditions to the completion of the transaction or delay in completing and uncertainty regarding the length of time required to complete such transactions, and the funds and benefits thereof not being available to Bombardier in the time frame anticipated or at all; alternate sources of funding that would be used to replace the anticipated proceeds and savings from such strategic actions and transactions, as the case may be, may not be available when needed, or on desirable terms. Accordingly, there can be no assurance that any divestiture relating to the Corporation's Aerostructures operations, or the Pending Transaction will be undertaken or occur, or of the timing or successful completion thereof, or the amount and use of proceeds therefrom, or that the anticipated benefits will be realized in their entirety, in part or at all. There can also be no assurance as to the completion, the form, or the timing of any BT Holdco buy–back or any other transaction in connection with the pursuit of any strategic option to strengthen the Corporation's balance sheet and enhance shareholder value. 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, 2018.

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. Other risks and uncertainties not presently known to us or that we presently believe are not material could also cause actual results or events to differ materially from those expressed or implied in the Corporation's 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.

This press release is based on reported earnings in accordance with IFRS and on the following non–GAAP financial measures:

Non–GAAP financial measures
Adjusted EBIT EBIT excluding special items. Special items comprise items which do not reflect the Corporation's core performance or where their separate presentation will assist users of the consolidated financial statements in understanding the Corporation's results for the period. Such items include, among others, the impact of restructuring charges and significant impairment charges and reversals.
Adjusted EBITDA Adjusted EBIT plus amortization and impairment charges on PP&E and intangible assets.
Free cash flow (usage) Cash flows from operating activities less net additions to PP&E and intangible assets.

Non–GAAP financial measures are mainly derived from the consolidated financial statements but do not have standardized meanings prescribed by IFRS. The exclusion of certain items from non–GAAP performance measures does not imply that these items are necessarily non–recurring. Other entities in our industry may define the above measures differently than we do. In those cases, it may be difficult to compare the performance of those entities to ours based on these similarly–named non–GAAP measures.

Prior to the first quarter of fiscal year 2019, the Corporation reported non–GAAP measures labelled "EBIT before special items" and "EBITDA before special items". Beginning in the first quarter of fiscal year 2019, the Corporation changed the label of these non–GAAP measures to “adjusted EBIT” and “adjusted EBITDA”, respectively, without making any change to the composition of these non–GAAP measures. The Corporation believes that this new label aligns better with broad market practice in its industry and better distinguishes these measures from the IFRS measurement “EBIT”.

Adjusted EBIT and adjusted EBITDA
Management uses adjusted EBIT and adjusted EBITDA for purposes of evaluating underlying business performance. Management believes these non–GAAP earnings measures in addition to IFRS measures provide readers with enhanced understanding of our results and related trends and increases the transparency and clarity of the core results of our business. Adjusted EBIT and adjusted EBITDA exclude items that do not reflect our core performance or where their exclusion will assist users in understanding our results for the period. For these reasons, a significant number readers analyze our results based on these financial measures. Management believes these measures help readers to better analyze results, enabling better comparability of our results from one period to another and with peers.

Free cash flow (usage)
Free cash flow is defined as cash flows from operating activities, less net additions to PP&E and intangible assets. Management believes that this non–GAAP cash flow measure provides investors with an important perspective on the Corporation's generation of cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long–term value creation. This non–GAAP cash flow measure does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity generation.

Genuine Reform Culture Lacking in Zimbabwe

Zimbabwe needs urgent economic and political reforms to transform its economy amidst a growing national crisis, researchers say as more than 7 million Zimbabwean are food insecure owing to a projected 50 percent fall in the 2019 cereal harvest. Credit: Jeffrey Moyo/IPS

By Busani Bafana
BULAWAYO, Jan 16 2020 (IPS)

Zimbabwe needs urgent economic and political reforms to transform its economy amidst a growing national crisis, researchers say in a new study that urges swift policy changes and a sound financial framework to attract investment.

The country has been reeling from one of the worst droughts in decades, with the United Nation’s World Food Programme (WFP) identifying Zimbabwe as one of the 15 critical emergencies around the world at risk of crisis without rapid intervention.

But the study, G20 Compact with Africa: No Reformers, No Compact- The Zimbabwean Case Study,  states that the G20 Compact with Africa (CwA) investment framework, initiated by the G20 countries in 2017, could support Zimbabwe’s economic transformation only if Zimbabwe was committed to undertaking reforms.

  • The voluntary compact has been signed by 12 African countries to date, including Benin, Burkina Faso, Côte d’Ivoire, Ethiopia, Rwanda, Senegal, Togo and Tunisia. Zimbabwe is not a signatory.
  • The compact seeks to stimulate economic growth, create employment and nurture investment. Through this partnership, African governments are responsible for spearheading reforms that will make their countries attractive to international investors.
  • The focus of the CwA is to promote a sustainable development framework in those African countries that accepted the invitation to be part of the initiative, in an attempt to attract private investors. The framework is a three-tiered approach to reforming three economic fundamentals – macroeconomics, business and finance.

“As a reform strategy, the CwA framework has the potential to support Zimbabwe’s economic transformation agenda,” the study published last week by the South African Institute of International Affairs (SAIIA), an independent public policy think tank, stated. It further noted that the compact was relevant to Zimbabwe’s re-engagement agenda and the Transitional Stabilisation Programme (TSP), which was introduced in 2018 as a blue print to turn around the economy.

But a crisis of governance and financial stewardship has long been stalking Zimbabwe, a Southern African nation that was once a model of economic success and democracy in Africa. Life has become difficult for its citizens who have to battle with a high cost of living and many things are in short supply from water to electricity to monetary currency, jobs, food and even political freedoms.  

The report pointed out that Zimbabwe’s economic woes are multi-faceted — a result of a combination of factors, including economic mismanagement, chaotic land reform, indigenisation policies, political instability and fiscal mismanagement driven by corruption.

Cold reception for compact

Yet despite its relevance, the compact has failed to raise enthusiasm among Zimbabwean policymakers, and few economic stakeholders are aware of it, the study found, pointing out that the Zimbabwe government is desperate and preoccupied with finding a quick solution to the economic crisis.

The study also made a note that there is no reform culture among the custodians of reforms in Zimbabwe.

Besides, the country’s multilateral debt, estimated at over $8,2 billion, has prevented any potential inroads with the international organisations involved with the compact.

“Clearance of multilateral debt arrears: the sanctions rhetoric seems to have taken the centre
stage ahead of reform implementation,” noted the study, adding that, “This behaviour has promoted corruption and stands in the way of reforms; hence there is no CwA for Zimbabwe.”

Economic analyst, John Robertson, said nobody agrees with the government on the point of economic sanctions imposed by the Western countries on individuals accused of human rights abuses in Zimbabwe.

“The sanctions are not applied to the country; the sanctions did not cause the country’s failure. The failure is caused by our decision to close down our biggest industries,” Robertson told IPS, referring to the destruction of the agriculture sector and the collapse of the manufacturing sector.

Poor policy choices

“The policy choices that we made have caused so much damage to our productive sectors starting with agriculture,” said Robertson, adding, “We imposed upon ourselves a serious handicap when we said the land in the country no longer has market value land so [people with] land can no longer borrow against ownership rights to that land because the land is now the property of the state.”

David Moore, researcher and political economist at the University of Johannesburg, told IPS that if the ruling Zimbabwe African National Union – Patriotic Front (ZANU PF) party had maintained its neo-liberal and white-farmer-friendly economic promises it might have kept the “west” on its side.

But cabals and corruption cannot be dismantled – they are the pillars of the party, he said. And so the military-party complex so tight that it cannot be untied: they are integral parts of the country’s political economy.

Academic and social commentator, Rudo Gaidzanwa, concurred saying it will take pushing to get ZANU (PF) ruling party and its military allies to undertake political and social reforms.

“The types of political and economic reforms that the civilians want will undermine the interests of the militarist elements in the state and the security sector,” Gaidzanwa, a Sociology Professor at the University of Zimbabwe, told IPS.

“ZANU won’t stand for anything that undermines their hold over the state and the society. It is not likely that any meaningful reform will occur unless dramatic social and political changes occur in Zimbabwe,” she said, adding that the ZANU PF led-government and elites have used economic sanctions as a convenient excuse to evade responsibility for economic and social crises.

Sanctions have not prevented the president and his cohorts from pillaging mineral resources. The current chaos was ideal for pillaging resources and undermining the rule of law and democracy, she said.

“Rigged elections are an issue because they prevent the will of the people from prevailing,” Gaidzanwa told IPS. “The present situation over contested presidential elections between (Nelson) Chamisa and (Emerson) Mnangagwa is symptomatic of that struggle…These issues have dogged our elections for decades and remain unresolved hence our dire economic and political situation.”

  • After Mugabe was ousted from power Zimbabweans went to the polls in July 2018 to elect a new leader, with Mnangagwa winning 50.8 percent of the voted compared to Chamisa’s 44.3 percent.
  • The results were disputed.

Economist and former parliamentarian, Eddie Cross sees the situation differently, saying Zimbabwe, despite its current challenges, has a good start to turn around its economic fortunes.

“We have a fiscal surplus, government salaries are down to a third of the budget from over 95 percent, we have a balance of payments surplus and nearly $1 billion in bank accounts,” Cross said, adding that Zimbabwe’s domestic debt has been devalued and exports are highly profitable.

“[Political] Stability is no longer an issue – it’s a done deal, what is a problem is financing and this is going to be a challenge because we really have to look after ourselves,” Cross, a member of the Reserve Bank of Zimbabwe’s Monetary Committee, told IPS in an interview. “A couple of billion dollars would be useful. Perhaps we can persuade Mrs. [Grace] Mugabe to bring some money back from abroad.”

Cross believes Zimbabwe can benefit from the G20 CwA even though the country is a pariah state.

“I think Brexit is important and also the IMF and if we play our cards right and get on with reforms I see no reason why we cannot be in a very different place in 2021.”

Terror Attack

NAIROBI, Kenya, Jan 16 2020 (IPS-Partners)

The United Nations Country Team in Kenya is deeply distressed by the rising cases of terrorist attacks on schools, teachers and learners, especially in [...] Read more »