Bombardier expects 2019 revenue of $18B (U.S.)
BOMBARDIER INC. has released its 2019 business unit guidance and has confirmed that it remains on track to achieve its 2020 financial objectives. The 2019 guidance reflects the anticipated closing of the sale of both business aircraft’s flight and technical training activities and the Q Series aircraft program as of Sept. 30, 2019. All amounts in this press release are in U.S. dollars unless otherwise indicated.
For 2019, Bombardier is targeting revenues of $18-billion or more, representing a year-over-year increase of approximately 10 per cent over 2018 guidance. This growth is expected to be driven by: the entry-into-service of the Global 7500 aircraft, which is sold out through 2021; execution on Bombardier’s strong $34-billion rail backlog, which covers more than 80 per cent of transportation’s targeted 2019 and 2020 revenues; and an increased focus on aftermarket services across the portfolio. Aftermarket revenues are estimated to grow from approximately $3.5-billion in 2018 to approximately $4.0-billion in 2020 as the company continues to optimize its aftermarket and services operations, leveraging its large installed base which includes over 100,000 railcars, more than 4,700 business jets and approximately 1,250 regional jets.
Profitability is anticipated to grow faster than the topline, and is expected to be driven by solid conversion on revenue growth and the strategic reshaping of commercial aircraft. EBITDA (earnings before interest, taxes, depreciation and amortization) before special items is targeted to grow by approximately 30 per cent over 2018 guidance to a range of $1.65-billion to $1.80-billion, while EBIT (earnings before interest and tax) before special items is targeted to increase by approximately 20 per cent over 2018 guidance to a range of $1.15-billion to $1.25-billion.
From a free cash flow perspective, 2019 is expected to mark the transition from a heavy investment cycle to a strong growth and cash generation cycle. Sustainable capital expenditures are projected to decrease to approximately $800-million or less on an annualized basis, which represents a decrease of approximately 50 per cent from the previous five-year average.
On a normalized basis, before one-time items, Bombardier estimates free cash flow in a range of $250-million to $500-million for 2019. One-time items that are expected to impact free cash flow in 2019 include: a $250-million charge for the previously announced restructuring; and a working capital contingency of $250-million largely associated with the intense ramp-up of the Global 7500 program. Free cash flow including these one-time items is targeted to be break-even plus or minus $250-million, resulting in an estimated cash on hand exceeding $3.0-billion by year-end.
Along with announcing its
2019 business unit guidance, Bombardier reaffirmed its 2020 objectives of revenues in excess of $20-billion, EBITDA before special items over $2.25-billion, EBIT before special items over $1.6-billion and free cash flow between $750-million and $1-billion. In addition to generating strong cash flow from operations, Bombardier anticipates ending 2020 with strong liquidity, including more than $3.5-billion of cash on hand and a significantly improved leverage ratio.
“Three years into our turnaround plan and Bombardier is a much stronger company,” said Alain Bellemare, president and chief executive officer, Bombardier. “We are confident in achieving our 2020 objectives and see tremendous opportunities beyond 2020. As we continue to execute our turnaround plan, we are building a company with great products, strong backlogs and an efficient cost structure, capable of delivering superior financial performance well into the future.”
The company will provide an update on its turnaround plan and discuss its 2019 guidance and 2020 objectives at its annual investor day later this afternoon. A live webcast of Bombardier’s investor day, along with the corresponding presentation, will be available at the company’s website. The webcast will begin at 2 p.m. Eastern Standard Time on Thursday, Dec. 6, 2018, and will be available on the same website afterward.
(See BBD.B Table 1 on page 34)
About Bombardier Inc.
With over 69,500 employees across four business segments, Bombardier is a global leader in the transportation industry, creating innovative and game-changing planes and trains. The company’s 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 across the segments of transportation, business aircraft, commercial aircraft, and aerostructures and engineering services. In the fiscal year ended Dec. 31, 2017, Bombardier posted revenues of $16.2-billion (U.S.).
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Pierre Beaudoin, Alain Bellemare, Joanne Bissonnette, J R Andre Bombardier, Martha Finn Brooks, Jean-Louis Fontaine, Diane Giard, August W Henningsen, Pierre Marcouiller, Douglas R Oberhelman, Vikram Pandit, Carlos E Represas, Antony N Tyler, Beatrice Weder di Mauro
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