Bombardier unveiled today its fourth quarter and full-year 2022 financial results, confirming an outstanding financial performance that exceeded guidance.
The company also presented its 2023 guidance and announced that it will provide a further update on the execution toward its 2025 strategic objectives at a virtual Investor Day on March 23, 2023.
“The 2022 results we are presenting today are a resoundingly positive culmination of a strong year, and a testament to the team’s effort to execute in the fourth quarter,” said Éric Martel, Bombardier’s President and Chief Executive Officer.
“We exceeded commitments across the board, be it on deliveries, our growing aftermarket business and profitability.
“We are also proud of the fantastic job our team did on deleveraging, with $1.1 billion dollars of debt retired in 2022 thanks to cash from our balance sheet and operations.
“This puts us ahead of our plan and gives us the flexibility to be even more proactive and opportunistic going forward.”
2022 Results Beat Guidance on Key Metrics
Bombardier exceeded its year-end targets on all guided metrics, beating the numbers presented in August 2022 when the company updated its 2022 guidance.
The company reported $6.9 billion in revenues, an increase of 14% year-over-year. The increase comes on the back of higher deliveries and a favourable aircraft mix, but also a significant contribution from aftermarket services, which grew 22% year-over-year to reach $1.5 billion in 2022.
In terms of profitability, the company reported an adjusted EBITDA(2) of $930 million, a 45% increase year-over-year and well over the guidance of greater than $825 million.
The growing contribution of the Global 7500, cost structure improvements, higher aftermarket contribution and a better aircraft mix were among the key factors in this substantial increase. The company also beat guidance on the full-year reported EBIT, which was at $538 million.
The earnings growth, along with the strong order intake, drew an impressive performance on free cash flow(2) generation of $735 million from continuing operations for 2022, which exceeded the updated 2022 guidance and represents a significant improvement of $635 million year-over-year.
The company made the most of the strong demand and competitive product portfolio, and avoided pitfalls related to the pressures on the supply chain to deliver 123 aircraft, 49 of which were delivered in the fourth quarter of 2022.
The healthy backlog(5), which increased $2.6 billion year-over-year to reach $14.8 billion, and a 1.4 full-year unit book-to-bill(6), reflect continued favourable medium- and long-term industry fundamentals and confirm that Bombardier has the right product mix to continue being the leading force in its categories.
The strong performance allowed the company to overperform on another key strategic objective: debt reduction. Over the course of 2022, Bombardier repaid $1.1 billion of debt with cash from balance sheet and operations. The drop in interest costs coming from debt reduction, along with rapid growth in profitability and the recognition of significant tax attributes on balance sheet also led to positive EPS.
2023 Outlook(1)
Bombardier also unveiled today its outlook on guided metrics for 2023. Revenues are expected to be greater than $7.6 billion, driven mainly by increase in deliveries, which are expected to be greater than 138 units. The continued and steady growth of aftermarket services, which the company continued to ramp up in 2022 through a significant expansion of the service centre network and recruitment of skilled technicians, is also to be an important driver in 2023.
The company expects to continue outpacing revenue growth as it expands its margins. An increase in adjusted EBITDA(2) to greater than $1,125 million is expected, representing a 21% increase versus 2022, driven by margin conversion of the incremental revenues, positive tailwinds from the Global 7500 pricing and the near completion of the company’s cost reduction plan. Adjusted EBIT(2) is expected to grow to greater than $695 million, an increase of 36% year-over-year.
Bombardier also expects continued positive free cash flow(2) generation, which is expected to be greater than $250 million in 2023, including one-time payments related to residual value guarantees estimated at approximately $125 million, and net additions to PP&E and intangible assets around $350 million.
2023 Guidance(1)
| 2022 Full-Year Results | 2023 Guidance | |
| Aircraft deliveries (in units) | 123 | >138 |
| Revenues | $6.9B | > $7.6B |
| Adjusted EBITDA(2) | $930M | > $1,125M |
| Adjusted EBIT(2) | $512M | > $695M |
| Free cash flow(2) | $735M | > $250M |
2023 Investor Day to Showcase Strategic Roadmap
On March 23, 2023, Éric Martel and Bart Demosky, Bombardier’s Executive Vice President and Chief Financial Officer, will be joined by other Bombardier leaders to present, at Bombardier’s 2023 Investor Day, positive progress toward 2025 objectives, but also provide a closer look into strategic pillars such as Bombardier Defense, aftermarket expansion, and give an update on its Environmental, Social and Governance (ESG) objectives.
“We are confidently beginning the new year guiding for growth for a third consecutive year, and look forward to providing a deep dive on our fundamentals and detailed strategic plans next month in our Investor Day, where my colleagues and I will have the opportunity to present our trajectory towards our 2025 objectives compared with our initial expectations when we first laid them out in 2021,” said Martel.
RESULTS
| Fourth quarters ended December 31 | Fiscal years ended December 31 | ||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Revenues | |||||||||||||||||
| Business aircraft | |||||||||||||||||
| Manufacturing and other(1) | $ | 2,226 | $ | 1,385 | $ | 5,345 | $ | 4,759 | |||||||||
| Services(2) | 416 | 363 | 1,508 | 1,237 | |||||||||||||
| Others(3) | 13 | 23 | 60 | 89 | |||||||||||||
| Total revenues | 2,655 | 1,771 | 6,913 | 6,085 | |||||||||||||
| Cost of sales | 2,195 | 1,458 | 5,656 | 5,161 | |||||||||||||
| Gross margin | 460 | 313 | 1,257 | 924 | |||||||||||||
| SG&A | 122 | 102 | 395 | 355 | |||||||||||||
| R&D | 127 | 94 | 360 | 338 | |||||||||||||
| Other expense (income) | — | 4 | (10 | ) | 8 | ||||||||||||
| Adjusted EBIT(4) | 211 | 113 | 512 | 223 | |||||||||||||
| Special items | 4 | (25 | ) | (26 | ) | (18 | ) | ||||||||||
| EBIT | 207 | 138 | 538 | 241 | |||||||||||||
| Financing expense | 146 | 174 | 817 | 936 | |||||||||||||
| Financing income | (59 | ) | (148 | ) | (33 | ) | (324 | ) | |||||||||
| EBT | 120 | 112 | (246 | ) | (371 | ) | |||||||||||
| Income taxes (recovery) | (121 | ) | (127 | ) | (118 | ) | (122 | ) | |||||||||
| Net income (loss) from continuing operations | $ | 241 | $ | 239 | $ | (128 | ) | $ | (249 | ) | |||||||
| Net income (loss) from discontinued operations(5) | — | (1 | ) | (20 | ) | 5,319 | |||||||||||
| Net income (loss) | $ | 241 | $ | 238 | $ | (148 | ) | $ | 5,070 | ||||||||
| Attributable to | |||||||||||||||||
| Equity holders of Bombardier Inc. | $ | 241 | $ | 238 | $ | (148 | ) | $ | 5,041 | ||||||||
| NCI(5) | $ | — | $ | — | $ | — | $ | 29 | |||||||||
| EPS (in dollars)(6) | |||||||||||||||||
| Basic | $ | 2.48 | $ | 2.41 | $ | (1.88 | ) | $ | 52.05 | ||||||||
| Diluted | $ | 2.40 | $ | 2.34 | $ | (1.88 | ) | $ | 50.54 | ||||||||
| EPS from continuing operations (in dollars)(6) | |||||||||||||||||
| Basic | $ | 2.48 | $ | 2.42 | $ | (1.67 | ) | $ | (2.87 | ) | |||||||
| Diluted | $ | 2.40 | $ | 2.35 | $ | (1.67 | ) | $ | (2.87 | ) | |||||||
| As a percentage of total revenues | |||||||||||||||||
| Gross margin(7) | 17.3% | 17.7% | 18.2% | 15.2% | |||||||||||||
| Adjusted EBIT margin(8) | 7.9% | 6.4% | 7.4% | 3.7% | |||||||||||||
| EBIT margin(7) | 7.8% | 7.8% | 7.8% | 4.0% | |||||||||||||