Bombardier Inc.

Good morning, ladies and gentlemen, and welcome to the Bombardier Third Quarter 2022 Financial Results 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 Bombardier. Please go ahead, Mr. Richer de la Fleche.

Good morning, everyone, and welcome to Bombardier's earnings call for the third quarter ended September 30th, 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 MD&A. 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 third 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 you need to know that I'm speaking to you today from Miami, Florida. where we have just finished a very successful week. We inaugurated the latest addition to our service network, a brand-new, ultra-modern service center. This is one of the key pillars to our aftermarket growth strategy. I'll speak to how this event marked a key milestone in our expansion in a moment because it illustrates the types of initiatives we have put in place to deliver service revenue growth. But first, I wanted to reflect on the month that just passed. The center opening came at the end of a busy October. We introduced an innovative new interior option for the Global 7500 and Global 8000 called the Executive Cabin, which was very well received by corporate customers. Finally, we made one of the biggest commitments in business aviation to sustainable fuels. Sustainability is at the heart of all discussion when it comes to business aviation and the future. This is why we took the bold and decisive step to transition all of our flight operations to SAF. Yes, we pay a slight premium to do so, but it is well worth the 25% annual net carbon emission reduction that will come with it. We have found a capable partner in Signature Aviation to help us on this journey. For anyone saying that we need higher demand before broader SAF production can begin, let me make it clear. Demand is here and companies like Bombardier are signing the check when it comes to preserving our future. We are all very passionate about this topic within our company and I can talk about it all morning. But first, Let's get to third quarter results, as I am also eager to show how well the team performed in the context of our greater plan. You know, when we began Bombardier's journey as a company focused on business, Jet, you heard me repeat that we were going to focus on building backlog and remaining disciplined. We have done just that, and that's why I can confidentially tell you today that that we are well equipped to face any market condition that will be ahead of us. I am even prouder to say that the fundamentals you will see in our Q3 results, things like liquidity, free cash flow, profitability, our debt management, have all showed that the foundation for how we expect to perform in 2025 has been firmly set. First, let me start with debt. Simply put, we have less of it. We have less costs associated with it, and we received another credit rating upgrade since we last spoke in August, this time from S&P upgrading us to B- with a stable outlook. Bart's team has done an excellent job managing maturities and setting us up for success. Bart will speak to some of this in detail shortly, but being able to pay $100 million back during a quarter that is traditionally light on deliveries due to seasonality, to me, is very noteworthy. Overall, we are on track to deliver more than 120 jets this year. We saw a healthy and stable $1.5 billion in revenue in Q3, and I would like to particularly highlight the contribution from our service business. We grew by 20% year over year. A portion of this can for sure be attributed to flight hours continuing to increase, but we are starting to see the benefits of our newly built or expanded facilities coming online. The team has kept all these complex projects on track through the pandemic, and we are ready for them to continue to give us tailwind as customers continue to choose to bring their jets home to the OEM. We have also seen very positive feedback on market acceptance on our certified pre-owned offering. Each aircraft is carefully cared for by Bombardier experts who create a product that is very appealing. And they have been, on average, selling 50% faster than other jets. helping keep our inventories at good levels and balance sheet clean in turn. This is a margin-accreditive business, and we will keep steadily progressing once again with discipline. When it comes to the market as a whole, we have seen activity stabilize after a huge surge the past quarters, and we are reaching what I would call a cruising altitude of around one on our book-to-bill going forward. This is right where we want to be to maintain a good balance of operational predictability and aircraft availability. We now have the luxury of looking to the future with a $15 billion backlog to work with and can continue to make prudent and disciplined decisions when it comes to production to continue protecting pricing. When it comes to macroeconomic factors, we see a lot of varying prediction on what the coming months and year will bring. But remember that we have gained some upside this year, especially on free cash flow, where we ended at $2 million for the quarter and are well on track to meet the guidance we raised just last August. We have further given ourselves flexibility by securing a revolver facility that Bart will detail shortly. All in all, we are well positioned to maintain our growth curve steadily as outlined in our investor date this year towards 2025. If you look at Bombardier's Q3 adjusted EBITDA, it's another encouraging statistic that boils down to execution. It rose $210 million. which represent a 48 year-over-year improvement. With an adjusted EBITDA margin of 14.4, we are in a great place and are seeing our hard work on the global 7500 learning curve mature. We are seeing service contribution grow and finalizing and implementing recurring savings initiatives. I do want to reiterate that when it comes to capital allocation, debt reduction remains our top priority. When you factor our restricted cash, which we expect to have access to early next year, we're already at $4.5 billion of adjusted net debt, which we initially thought we would reach in 2025. We are well ahead of schedule. In regards to supply chain, we have a good visibility on what we have to achieve to meet our commitment. This includes our planned 15% to 20% production increase next year, which we have previously discussed together. Our teams continue to be deployed around the world to identify and mitigate risk. It is not without its challenges, but bold and decisive moves to bring work in-house continue to pay off for us in terms of stabilizing our product. I am very proud of our performance. Looking at our balance sheet, it reflects the vision we set out for our company, and we have demonstrated we can perform. I'll now hand it over to Bart to dive deeper into the details.