Bombardier Inc.

Good morning, ladies and gentlemen, and welcome to the Bombardier fourth quarter and full year 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 Bombardier. Please go ahead, Mr. Richer de la Fleche.

Good morning, everyone, and welcome to Bombardier's earning call for the fourth quarter and full year ended December 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 results or events 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 fourth quarter and full year of 2022. I would now like to turn over the discussion to Eric.

Alors, merci, Francis. Bonjour et bienvenue à tous et à toutes. Good morning, everyone, and thank you for joining us today. I know that many of you listening today are eager to unpack our guidance figures and discuss where we see the business jet market going. Bart and I are excited to walk you through this in detail and showcase the team's solid work. I do want to take a few moments upfront to reflect on how great the last year has been for Bombardier. No matter how you measure our company, our products, or our people, Bombardier has delivered excellent results and met or exceeded commitment across the board. I look at Bombardier's 2022 success through a few lenses. First, at the core of everything we do is the products. We announced that we are developing the fastest jet in the industry, the Global 8000. We then secured NetJet as a fleet launch customer with a milestone order in Q4. This key customer will transition their entire Global 7500 fleet to Global 8000 aircraft. The team also brought the Challenger 3500 into service on plan. All of this keeps us, our portfolio, at the top of each market we compete in when it comes to quality and performance. Next, services. with not one or even two major announcements, but five major facility projects announced or completed as part of expansion plans in Singapore, Australia, the UK, the US, and the United Arab Emirates. Defence was another key market. We reoriented the offering under a fully integrated Bombardier Defence banner. This team will play a key role in Wichita, which we design as our U.S. headquarters. Defense will also be in Canada and the many other markets where governments and armed forces are proudly selecting Bombardier jets for their missions. On the financial side, I can't talk about 2022 achievement without mentioning the leveraging. What a job the team has done. We repaid $1.1 billion of debt with cash from our balance sheet and operation. $1.1 billion. And finally, ESG. Once again, we can point to efforts by talented Bombardier team members to lead the industry. In 2022, we revealed our EcoJet research project. Simply put, it is a tangible and promising solution for business aviation path to net zero. In the short term, we have adopted sustainable fuel for all of our operations through book and claim, which immediately lower our flight operation emission by 25% on an annual basis. I want to express my sincere thanks to the Bombardier team member who made all of this possible. I also want to recognize the many partners that supported us and our vision along the way. What a simply fantastic way to mark the company's 80th anniversary. All of these achievements also translated to business performance or in the most cases, over performance. I have certainly talked a lot about our proactive supply chain efforts. Let me be clear, managing supply chain has not been easy and will continue to require a lot of focus. The efforts we make allow me to sit here today and confirm 123 deliveries for 2022. This is a testament to our execution, especially considering the work to deliver 49 airplanes in Q4 alone. We have successfully ramped up to deliver the growth we have been forecasting for this year. Bombardier is now expecting to deliver more than 138 units in 2023. This is well in line with the plan we have been sharing. Looking at this more closely, this delivery guidance will represent an increase of at least 15% in our deliveries versus 2022 excluding Learjet. Our facilities have this work in progress at the higher rate. We are also once again in a comfortable position with the skyline full for the year. Our $14.8 billion backlog provides a high degree of comfort with our production plan well into 2024 as well. All this to say, we are operating in a sweet spot that allows us to remain predictable. I do want to pause for a moment here to speak about demand and sustaining a higher delivery profile. It is important to note that our plan is simply as it was presented in 2021 and did not depend on market upside. We did end up getting that upside in 2021 and in the first half of 2022. Now, as we see the market stabilizing, we are not going to over tweak our rates. We are going to stick to the plan and ensure our production remain de-risked. I talked last quarter about reaching a book to build cruising altitude of one. That's where we are at today. You can expect quarter over quarter variances slightly above or below that due to the seasonability of the delivery schedule. The demand itself is stable to the level of full year production and further padded by our healthy backlog. The way to look at this for Bombardier is simple. We are seeing steady demand on a higher production base this year. Industry fundamental remains favorable in the medium and long terms, and Bombardier has the right product mix to compete and win. Turning back to the results, I am delighted to confirm that our $6.9 billion in revenue included impressive $1.5 billion from service activities. We have highlighted potential market share growth in this field, and I'm proud to say the execution as match the ambitions. Opening new facilities and expanding existing one is a significant step. Now the hard work continues to ramp up. Hire more skilled technician and capture the customer through a world-class offering. In 2023, our guided revenue of more than $7.6 billion reflect our increase in deliveries as well as continued and steady growth from services. Overall, steady and predictable growth is at the heart of our success. That approach is accelerating our bottom line growth. In 2022, we came in well over guidance recording adjusted EBITDA of $930 million. This is a year-over-year increase of 45%. Our efforts to tighten our cost structure and generate recurring savings are ahead of plan. with more than 80% of our target already benefiting our P&L. And we have full line of sight on the remaining initiative. In fact, Q4 2022 margin reached the most impressive levels we have seen in a while. Adding to this, we are where we need to be on key programs like the Global 7500 and now setting ourselves up to smoothly cut in the Global 8000 jet ahead of its planned entry into service, in 2025. All in all, this puts us in a solid position to guide more than 1,125,000,000 in adjusted EBITDA for 2023. Making a jump of that proportion in one year is impressive, but a lot of our team members can take pride in their effort because three straight years of significant EBITDA growth is quite an accomplishment. When it comes to free cash flow and liquidity, Bart will go into much more detail shortly. I do want to highlight that overachieving on this metric is really welcome from a management perspective. We beat our revised full-year guidance by $220 million, and we again see positive free cash flow generation in 2023. We have a clear and repeatable ability to generate free cash going forward. The Bombardier team and I will continue to prioritize retiring debt or be opportunistic refinancing maturities. We have made significant moves towards this and in turn lowered the cost of carrying what remains. Like on liquidity, Bart will deep dive into that shortly. But I want to highlight that in the past year, we have retired more than a billion dollars of debt. with cash from our balance sheet. We are ahead of our plan, we have flexibility, we are being proactive and opportunistic, and most importantly, we are succeeding. I am encouraged by the credit rating increases we saw from Moody's and S&P's, as well as the simple positive energy that has surrounded discussion about Bombardier's future over the past months. To conclude, I am proud of how the team executed in 2022. We have built a strong business which can grow volumes, generate cash, and predictability deliver growing EBITDA margin. We are well-placed to capture demand where interest is increasing to offset where it may plateau in the coming months after nearly two years of historical high. Before I leave the floor to Bart for the deep dive into our impressive number, I want to fully recognize all the people behind the results. Today, there are 15,900 women and men at Bombardier that proudly stand behind each of our products and services. They have all played a key part in winning as a team and delivering today's exceptional results. It's also important to note that this is a team that is growing as we recruit all over the world. I am so proud of everyone's passion and commitment, and I am excited for our continued growth centered on our people and our customers. Thank you, and Bart, over to you.