Bombardier Inc.

Good morning, ladies and gentlemen, and welcome to the Bonvalier's first quarter 2022 earnings conference call. Please be advised that this call is being recorded. At this time, I'd like to turn the discussion over to Mr. Francis Richer de la Fleche, Vice President, FP&A and Investor Relations for Bonvalier. Please go ahead, Mr. Richer de la Fleche.

Good morning, everyone, and welcome to Bonvalier's earnings call for the first quarter ended March 31st, 2022. I wish to remind you that during the course of this call, we may make projections or other forward-looking statements regarding future events or the financial performance of the corporation. There are risks that actual events or results may differ materially from these statements. For additional information on forward-looking statements and underlying assumptions, please refer to the MDNA. I'm making this cautionary statement on behalf of each speaker on this call. With me today is our President and Chief Executive Officer, Eric Martel, and our Executive Vice President and Chief Financial Officer, Bart Demoski, to review our operations and financial results for the first quarter of 2022. I would now like to turn over the discussion to Eric.

Thank you very much, Francis. Hello and welcome everyone. Good morning everyone and we're happy to have you join us today. I am delighted to share details about our strong start to the year. At eye level, I can say that I'm very proud of the team's resilience as well as our ability to execute and deliver on commitments. We certainly continue to monitor factors that are straining the global economy or supply chains. Bart and I will discuss this throughout the call, but business aviation fundamentals are strong and we remain optimistic about our ability to perform. The first quarter showed that the foundation that we have put in place is solid, and we are progressing well towards our 2025 objectives. I have spoken a lot about backlog as something that is key to being a predictable company. In Q1, that backlog grew by $1.3 billion to $13.5 billion. Our unit book to bill was 2.5 for the quarter. That is a testament to the strength of our product portfolio as well as our sales team's ability to be responsive all around the world. We certainly have seen these past year that economic recovery does not happen in a consistent way across all geographies. We have a global presence with solid roots in every region. That capability enables Bombardier to adapt quickly and seize opportunities where they arise. This helps offset markets that are softened due to geopolitical tensions. Despite the situation with Russia and Ukraine, we continue to see strong demand and activities worldwide, including Europe. The United States continues to be the most significant market for our business, which is why it is important for us to have a strong presence there. This was behind our thinking when establishing Wichita as our U.S. headquarters. We indeed have a view to grow our Bombardier defense team as well as services, but no matter through which customer lens you look, the United States is a key market and we are committed to growing talent, creating jobs, and serving civil and military requirements to the best of our ability. Overall, in Q1, we capitalized on the strong markets wherever they presented themselves. When we reset Bombardier to focus specifically on business jets, the goal was to build a predictable cost base so that when we see short or long-term market upswings, we can measure a smooth course correction and not have to make short-term trade-offs on volume or price. That plan is well on track, with first quarter adjusted EBITDA reaching $167 million, which is a 36% improvement year-over-year. This is not by chance. It's how we've planned it, communicated it at our recent investor day, and then executed. On the Global 7500, we celebrated the delivery of Aircraft 100 to VistaJet this past quarter. We continue to have excellent line of sight in terms of upcoming deliveries and the margin they will generate in line with our plans. In the field, the aircraft itself is simply exceptional and continues to set a new standard for large business jets with unmatched performance. On services, we have fully optimized our network and are now moving toward our additional capacity coming online. The first step change this year came in Singapore, where we now have the keys to a site that is four times bigger than the original site. Next, we are operationalizing expansions in London in the United Kingdom, then in Florida where our new Miami Service Centre is taking shape. In between these two events, we'll also be opening a brand new facility in Melbourne, Australia. We are placing a lot of focus on supporting our customers close to their home bases. With all this traction, we are seeing the top and bottom line results we plan for when it comes to the aftermarket. The team generated $361 million in revenue in Q1, which is 34% more than Q1 2021. It's important to note that $361 million of service revenue also sets a new bar at Bombardier for a single quarter when it comes to serving business jets. Perhaps the most important metric to underscore the company's performance in Q1 is free cash flow. Our $173 million positive cash flow performance is $578 million better than last year over the same timeframe. Needless to say, managing our debt proactively has given us flexibility. We have maintained our commitment to prioritize debt reduction as demonstrated in March when we completed a $400 million debt repayment. This focus has helped us lower carrying costs. which already contributed to the free cash upside. This was a significant contributor and was rounded out by order intake, progress payment from aircraft already in our backlog, service growth and overall margin expansion. In short, we are in good position to run the business and allocate capital where it is strategically most beneficial. Keeping a balance between debt repayment and product investment is something I am keeping a close eye on. As we mentioned at Investor Day, we are targeting $600 million of capital flexibility and we are well on our way to building a company that has the ability to deliver and to make strategic moves when the time is right. I will leave the remaining details regarding our maturity runways and repayment for Bart to cover in detail. Now, returning to free cash flow, I do want to emphasize that if you look at the first quarter's performance, again, our free cash flow guidance for 2022 of greater than $50 million, we are clearly tracking well to our free cash flow guidance for 2022. We are opting to take a few months to measure the impact of the current global geopolitical and market context to carefully assess the through-size of any potential upside. We will look to reassess our free cash flow guidance later this year. With regards to the various risks when it comes to selling and delivering airplanes, we are indeed seeing limited exposure in terms of meeting our plans. The team has successfully shifted to areas where demand is strong. Business jet utilization has remained at the above 2019 levels we began to see last year. The good news is that the signs are beginning to point to a through-step change for our industry versus a limited post-pandemic bump. What's more encouraging is that the aggregate volumes are outperforming previous years with some areas still experiencing fluctuation, slower development, or full lockdowns. For example, when we look at Bombardier-specific flying, we saw a 20% overall rise in hours in March alone versus 2021. despite limiting flying due to restrictions related to the war in Ukraine, as well as the bulk of flying stops in China due to the pandemic. Supply chain will remain very actively on our radar. We have been very proactive on this front, and we continue to deploy our people to the field to assess the situation firsthand. This has been a successful formula and allowed us to overcome potential hurdles through planning. As the pressure continues, we will maintain vigilance. We are, however, confident in our delivery profile. With the backlog where it's currently at, a lot of what we need to make the plan is within our control. One thing is for sure, the Challenger 3500 is already shaping up to be a top performer as were its predecessor. We are excited and on track for deliveries this year and smoothly managing the transition from the Challenger 350. The plane has already secured high profile red dot award that speaks to the quality of our designers. Our design have set the standard for a long time and I am delighted they continue to be recognized on the biggest stages. Overall, our plan is on track for 2022. We have a strong momentum in T, surging markets, and our products continue to set Bombardier apart. I am now delighted to turn the call over to Bart to provide some more color on where we stand with our strong start of the year. Bart.