Bombardier Announces Financial Results for the Fourth Quarter and the Fiscal Year Ended December 31, 2013

(All amounts in this press release are in U.S. dollars 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. Comparative figures have been restated. See Note 1 to the Financial Highlights table.)

• Revenues of $18.2 billion, compared to $16.4 billion last fiscal year
• EBIT of $923 million, or 5.1% of revenues, compared to $666 million, or 4.1%, last fiscal year
• EBIT before special items⁽¹⁾ of $893 million, or 4.9% of revenues, compared to $806 million, or 4.9%, last fiscal year
• Net income of $572 million (diluted EPS of $0.31), compared to $470 million (diluted EPS of $0.25) last fiscal year
• Adjusted net income⁽¹⁾ of $608 million (adjusted EPS⁽¹⁾ of $0.33), compared to $671 million (adjusted EPS of $0.36) last fiscal year
• Net investment of $2.3 billion in property, plant and equipment (PP&E) and intangible assets, including $2.0 billion related to aerospace program tooling, compared to $2.1 billion last fiscal year, including $1.7 billion related to aerospace program tooling
• Free cash flow usage⁽¹⁾ of $907 million, compared to a usage of $636 million last fiscal year
• Available short-term capital resources of $4.8 billion including cash and cash equivalents of $3.4 billion as at December 31, 2013, compared to $4.0 billion and $2.6 billion respectively, as at December 31, 2012
• Record backlog of $69.7 billion, compared to $64.9 billion as at December 31, 2012

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

Bombardier today reported its financial results for the fourth quarter and fiscal year ended December 31, 2013. Revenues totalled $5.3 billion for the fourth quarter ended December 31, 2013, compared to $4.6 billion for the corresponding period last fiscal year. For the year, revenues totalled $18.2 billion, an increase of 11% compared to $16.4 billion last fiscal year.

For the fourth quarter ended December 31, 2013, earnings before financing expense, financing income and income taxes (EBIT) before special items totalled $186 million, or 3.5% of revenues, compared to $164 million, or 3.5%, for the corresponding period the previous year. For the year, EBIT before special items was $893 million, or 4.9% of revenues, compared to $806 million, or 4.9%, last fiscal year. For the fourth quarter ended December 31, 2013, EBIT was $185 million, or 3.5% of revenues, compared to $1 million for the corresponding period the previous year. For the year, EBIT amounted to $923 million or 5.1% of revenues, versus $666 million or 4.1% last fiscal year.

On an adjusted basis, net income amounted to $129 million, or adjusted earnings per share (EPS) of $0.07, for the fourth quarter ended December 31, 2013, compared to $181 million, or $0.10, for the corresponding period the previous year. Adjusted net income for fiscal year 2013 amounted to $608 million, compared to $671 million for the last fiscal year, resulting in an adjusted EPS of $0.33, compared to $0.36 last fiscal year. Net income amounted to $97 million, or diluted EPS of $0.05, for the fourth quarter ended December 31, 2013, compared to a net loss of $4 million, or a loss per share of $0.01, for the corresponding period the previous year. Net income for the year ended December 31, 2013 amounted to $572 million, compared to $470 million for the last fiscal year. Diluted EPS was $0.31, compared to diluted EPS of $0.25 last fiscal year.

For the three-month period ended December 31, 2013, free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) totalled $771 million, compared to $854 million for the corresponding period the previous year. Free cash flow usage totalled $907 million for the year ended December 31, 2013, compared to a free cash flow usage of $636 million last fiscal year. Available short-term capital resources of $4.8 billion included cash and cash equivalents of $3.4 billion as at December 31, 2013, compared to $4.0 billion and $2.6 billion respectively as at December 31, 2012. The overall backlog increased by close to $5 billion since the beginning of the year, reaching a record level of $69.7 billion as at December 31, 2013.

“2013 was a good year for Bombardier with major milestones reached in our product development: the CSeries had its first flight in September and is now well into its extensive flight test program. Both the Learjet 70 and 75 aircraft have entered into-service and in Transportation, the ZEFIRO 380 very high speed train is progressing well towards homologation,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.

“Aerospace as well as Transportation had another year of strong orders bringing our backlog to a record $69.7 billion, offering great visibility on revenues for the next four years. And 2014 is off to an impressive start with more than $5 billion of new orders already obtained since the beginning of the year.”

“We’re both excited and realistic about the next two years. We’ve continued to invest during challenging times to improve our leadership position in the market place. We have one overriding objective and commitment: generating strong, sustainable, profitable growth. And our investments are about to pay off,” concluded Mr. Beaudoin.

Bombardier Aerospace

Bombardier Aerospace’s revenues amounted to $2.9 billion for the three-month period ended December 31, 2013, compared to $2.6 billion for the corresponding period last fiscal year. For the year, revenues totalled $9.4 billion, compared to $8.6 billion last fiscal year.

For the fourth quarter ended December 31, 2013, EBIT totalled $93 million, or 3.2% of revenues ($94 million, or 3.3%, before special items), compared to $84 million, or 3.2%, for the same quarter the previous year. EBIT before special items totalled $388 million or 4.1% of revenues for the year ended December 31, 2013, compared to $367 million, or 4.3% last fiscal year. For the year, EBIT was $418 million, or 4.5% of revenues, compared to $390 million, or 4.5%, last fiscal year.

Free cash flow totalled $87 million for the fourth quarter ended December 31, 2013, compared to $277 million for the corresponding period last fiscal year. For the year ended December 31, 2013, free cash flow usage totalled $1.2 billion compared to a usage of $867 million for the last fiscal year.

A total of 238 aircraft were delivered during the year ended December 31, 2013, compared to 233 for the last fiscal year, mostly in line with guidance.

Bombardier Aerospace had another strong year of order intake at 388 net orders for a book-to-bill ratio of 1.6. Bombardier Business Aircraft achieved a net order intake of 305 aircraft, including a firm order from the acquirer of the Flexjet activities for 85 aircraft of the Learjet family and 30 of the Challenger family, valued at $2.4 billion (based on list prices), with options for 150 additional aircraft, as well as an order from an undisclosed customer for 28 aircraft of the Global family and 10Challenger 605 jets for a value of $2.2 billion (based on list prices).

Bombardier Commercial Aircraft received 81 firm orders during the year for a book-to-bill ratio of 1.5 for the year. Some of the largest orders received were from Ilyushin Finance Co. (IFC) of Russia, which placed a firm order for 32 CS300 aircraft valued at $2.6 billion (based on list price) with options for an additional 10 aircraft, and American Airlines Group Inc., from the U.S., which purchased 30 CRJ900 NextGen aircraft valued at $1.4 billion (based on list price), with options for an additional 40 CRJ900 NextGen aircraft.

Subsequent to year-end, the group also received an order from Al Qahtani Aviation Company from the Kingdom of Saudi Arabia for 16 CS300 aircraft, with options for an additional 10. Based on list price, the firm order is valued at $1.2 billion. As of now, Bombardier Aerospace has received 201 firm orders for the CSeries aircraft, with total commitments of 445 aircraft from 17 customers and operators in 14 countries.

Bombardier Aerospace’s backlog reached a record $37.3 billion as at December 31, 2013, compared to $32.9 billion as at December 31, 2012.

The aircraft development programs are progressing well. The CSeries’ aircraft program initial ground and flight test performance results are in line with our expectations. The CS100 aircraft’s entry-into-service is now scheduled for the second half of 2015 and the CS300 aircraft’s entry-into-service will follow approximately six months after. The Learjet 85aircraft program is making solid progress and is preparing for its first flight in the coming weeks.

In 2014, Bombardier Aerospace expects to achieve an EBIT margin of approximately 5%. The cash flows from operating activities should reach between $1.2 billion and $1.6 billion in 2014, while the net additions to property, plant and equipment (PP&E) and intangible assets are expected to be between $1.6 billion and $1.9 billion. In 2015, the level of net additions to PP&E and intangible assets is expected to be between $1.2 billion and $1.5 billion and to be below $1.0 billion in 2016. Finally, during 2014, Bombardier Aerospace expects to deliver approximately 200 business and 80 commercial aircraft, representing a combined increase of close to 20% compared to last year’s deliveries.⁽²⁾

Bombardier Transportation

Bombardier Transportation’s revenues amounted to $2.5 billion for the three-month period ended December 31, 2013, compared to $2.0 billion for the same period last year. Revenues totalled $8.8 billion for the year ended December 31, 2013, compared to $7.8 billion for the last fiscal year.

For the fourth quarter ended December 31, 2013, EBIT totalled $92 million, or 3.8% of revenues, compared to $80 million before special items, or 3.9%, (a loss of $83 million after special items) for the same quarter the previous year. For the year, EBIT was $505 million, translating into an EBIT margin of 5.8% of revenues, compared to $439 million before special items, or 5.6%, ($276 million after special items, or 3.5%) last fiscal year.

Free cash flow totalled $767 million for the quarter ended December 31, 2013, compared to $675 million for the same period last fiscal year. Free cash flow amounted to $668 million for the year ended December 31, 2013, compared to $488 million for the last fiscal year.

New orders reached $8.8 billion for a book-to-bill ratio of 1.0, in the context of increased revenues, compared to $9.2 billion for last fiscal year. The order backlog totalled $32.4 billion as at December 31, 2013, compared to $32.0 billion as at December 31, 2012.

Bombardier Transportation signed significant contracts across all its product segments and geographic regions. The group concluded agreements to deliver 130 TRAXX electric locomotives and 18 electric double-deck multiple units (EMUs) to Deutsche Bahn, for a total value of $1 billion. The Stockholm Public Transport Authority of Sweden granted a contract for 384 MOVIA metro cars valued at $771 million, while S-Bahn Hamburg GMbH signed an agreement for 60 single and dual-voltage commuter trains valued at $427 million. Bombardier Transportation entered the growing tram market in China through its technology-licensing agreement with CSR Nanjing Puzhen Rolling Stock Co. Ltd. (CSR Puzhen). So far, CSR Puzhen has won orders for 18 low-floor trams and 15 catenary-free low-floor trams using Bombardier Transportation’sFLEXITY 2 technology.

Subsequent to year-end, as part of a consortium, Bombardier Transportation entered into a contract valued at approximately $4.1 billion with the State of Queensland, Australia, for the New Generation Rollingstock Project. The group’s share of the contract, consisting in the supply of 75 EMUs, the construction of a purpose-built maintenance centre and 30 years of maintenance services, is valued at $2.7 billion.

Also subsequent to year-end, Bombardier Transportation has been recommended as the winning bidder for the Crossrail rolling stock and depot contract in the United Kingdom.

Excluding currency impacts, revenues in 2014 are expected to be higher than in 2013, with a mid-single digit percentage growth. The group expects a book-to-bill ratio in excess of 1.0 for fiscal year 2014. Its free cash flow is expected to be generally in line with EBIT, although it may vary significantly from quarter to quarter. While an EBIT margin of 8% remains the objective, Bombardier Transportation expects an EBIT margin of approximately 6% in 2014, as it focuses on contract execution improvement.⁽²⁾

⁽²⁾   See Forward-looking statements at the end of this press release

Financial Highlights