Bombardier has provided an update on its outlook and the execution of its 2025 financial targets outlined a year ago. On the back of a strong 2021, company executives Éric Martel, President and Chief Executive Officer, Bart Demosky, Executive Vice President and Chief Financial Officer and Jean-Christophe Gallagher, Executive Vice President, Services and Support, and Corporate Strategy have outlined the progress made on the four key pillars of Bombardier’s 2025 plan and provide an update on the steps ahead.
“When we laid out our five-year strategy last year, we set out clear financial and socio-environmental objectives that will ensure Bombardier thrives as a company focused on designing, manufacturing and servicing the world’s best business jets. Today, we are exactly where we wanted to be. Bombardier is a stronger, more predictable company, well on its way toward delivering on our 2025 plan,” said Martel.
“Our fantastic cash performance last year is giving us momentum in debt repayment and is a significant step toward our 2025 free-cash-flow objective of more than $500 million,” added Martel.
“As we grow our earnings, our position will continue to improve. Over and above the $500 million target, we are in parallel building a recurring, incremental capital allocation envelope of up to $600 million per year. This added flexibility would be available to invest in strategic projects or further balance sheet deleveraging. As we get to 2025, we will be well placed to balance both servicing our debt and investing in our products and people.”
In the coming years, the company will prioritize debt reduction to continue de-leveraging the business and build a more resilient company. On the back of a strong foundation forged in 2021, Bombardier was already able to launch repayment of an incremental $400 million of debt, utilizing cash from the balance sheet, and will continue to be opportunistic in its deleveraging strategy, targeting a minimum of 24 months maturity runway and continuing to work to optimize liquidity.
Aftermarket growth steadily reaching significant milestones
With a fleet of approximately 5,000 aircraft globally, Bombardier is steadily growing its share of the lucrative aftermarket business. The aftermarket team delivered a 25% jump in revenues year over year in 2021. In Q4 2021, the business’s revenues reached $363 million, 44% higher than Q4 2020 and 17% higher than in Q4 2019. With business aviation flight hours recovering to surpass pre-pandemic levels and a number of facility expansions under way or reaching completion, aftermarket revenues are expected to continue to grow at a double-digit CAGR, putting the company well on track to reach the goal of $2 billion in aftermarket revenues by 2025. Jean-Christophe Gallagher will provide an overview and data on the decisions the company has made so far to grow the segment, as well as its strong plan for the coming years.
Global 7500 jet margin growing, and overall cost structure improvement on plan
With the imminent delivery of the 100thGlobal 7500 aircraft, the industry flagship continues to redefine the business aviation landscape with significant market acceptance, particularly among fleet operators. In 2021, the program was a positive adjusted EBITDA contributor. The company will outline the continued positive outlook for this program ahead, with expectations to more than double its adjusted EBITDA contribution between 2021 and 2025.
Overall in 2021, the company reached $135 million in cost savings, surpassing its objective by $35 million and bringing it firmly on track towards its 2023 objective of $400 million in recurring savings. Bart Demosky will further outline the current financial performance of the company, its strategy to meaningfully grow earnings over the next years, in line with targets, and the company’s flexible path forward in terms of strategic capital allocation.
“With our core key indicators and plan elements trending positively, our 2025 adjusted EBITDA target of approximately $1.5 billion is well in sight,” added Martel.
“Our leadership team is poised to deliver on everything we control, without requiring additional lift from the market. That said, the market is in great shape today and we expect to compete and maintain our share, while keeping the cost structure we have built.”
|Total Revenues||~$7.5 billion|
|Adjusted EBITDA1||~$1.5 billion|
|Adjusted EBITDA margin3||~20%|
|Adjusted net debt to adjusted EBITDA ratio3||~3x|