Bombardier announced today its financial results for the second quarter of 2021 and raised its full year guidance, confirming that aircraft deliveries, revenues, profitability and cash usage are all expected to outperform previously communicated targets.
“Bombardier’s raised guidance stems from all-around solid execution in the first half of 2021, greater confidence in market momentum, and our ability to accelerate initiatives supporting our recurring savings objective,” said Éric Martel, President and Chief Executive Officer, Bombardier. “Our team’s concerted efforts have already supported stronger full year margins and have allowed us to focus diligently on our priorities of maturing the Global 7500 aircraft program, executing our aftermarket growth strategy and deleveraging our balance sheet.”
“We are well on our way to reposition Bombardier as the world’s business jet manufacturer of choice, and confident our passenger-experience-centric aircraft portfolio and expanding service offerings are well suited to meet growing interest, demand and utilization in private aviation,” added Martel.
Second Quarter 2021 Financial Performance
Business jet revenues during the second quarter of 2021 climbed to $1.5 billion, up 50% year over year, fueled by increases in both aircraft deliveries and services. Aircraft deliveries totaled 29 in Q2, up 45% year over year, reflecting strong demand for large-category jets. Worldwide business jet utilization continued to rise, nearly reaching pre-pandemic levels in North America and Europe, buoying revenue contribution from services activities to $295 million, up 29% year over year. Aircraft sales equally accelerated, reaching a unit book-to-bill ratio of approximately 1.8 for the quarter, further highlighting strong interest in business aviation.
Adjusted EBITDA for the quarter was up $112 million year over year to $143 million, reflecting favourable aircraft deliveries and mix, improved cost structure, disciplined implementation of cost-reduction programs and consistent progression through the Global 7500 aircraft’s learning curve. In addition, the increase was boosted by a higher contribution from business aircraft services, mainly due to increased fleet flight hours resulting from easing travel restrictions and progress on vaccinations consistent with the increase in revenues. Reported EBIT from continuing operations for the quarter was $36 million.
The second quarter notably saw strong free cash flow (FCF) generation. The positive $91 million from continuing operations FCF total for the quarter represents an improvement of $841 million year over year and included a negative impact of approximately $60 million in non-recurring cash items.
Continuing Balance Sheet Deleveraging Actions
Pro-forma liquidity at quarter end was ~$2.1 billion and pro-forma net debt was ~$5.3 billion. Over the quarter, Bombardier successfully implemented a series of actions to reduce net debt as well as pay out, or refinance, nearer-term maturities, all as part of the company’s previously announced plan to create debt maturity runway. With $1.0 billion maturing in the next three years, the company can more effectively focus on the execution of its strategy, including learning curve progression for the Global 7500 aircraft and other operational improvements, and will continue managing debt in a pragmatic yet opportunistic manner.
Progress on Strategic Priorities
While progress on the Global 7500 aircraft unit costs and on overall recurring savings initiatives begin to yield bottom line benefit, Bombardier remains focused on expanding its service network and diversifying top-line revenue streams. During the second quarter, the Singapore Service Centre expansion project completed the construction phase and the teams will now focus on maintenance capacity ramp up to fully utilize the facility’s quadrupled footprint.
As construction also progresses on new or expanded facilities in Miami, USA, Melbourne, Australia and Biggin Hill, U.K., Bombardier introduced its Certified Pre-owned Aircraft program to further diversify customer offerings. Under the program, Bombardier will offer a “like-new” experience backed by a one-year warranty(7) and manufacturer-recommended aircraft modifications and updates. This program will deepen Bombardier’s involvement in the fast-moving pre-owned market, which is seeing strong demand coupled with a supply shortage of high-quality, sought-after aircraft.