Bombardier Inc.

Good morning, ladies and gentlemen, and welcome to the Bombardier second quarter 2023 earnings conference call. Please be advised that this call is being recorded. At this time, I would 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 second quarter ended June 30th, 2023. I wish to remind you that during the course of this call, we may for 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 second quarter of 2023. I would now like to turn over the discussion to Eric. Thank you, Francis.

Hello and welcome everyone. Good morning, everyone, and thank you for joining us today. I am delighted to share some key highlights from Bombardier's busy summer and, of course, everything that contributed to a solid second quarter. It was marked by an 8% revenue growth year over year and was even better across the board when it comes to profitability. Most importantly, our team has executed to plan. The step change we saw to start the year as carried well into the second quarter. Consistently raising the bar on the net income and adjusted EBITDA has been just as important to our leadership team as predictably delivering on the current deliveries ramp up. In terms of the ramp up itself, BART will provide more color on how it has factored into our cash consumptions. Before that, I will cover how we are managing supply chain to support our 2000 delivery target through a busy second half of the year. But first, let's look at what fundamentally contributed to a very solid second quarter. As I mentioned moments ago, profitability has seen a step change. Our adjusted EBITDA grew 37% year over year. This double-digit improvement is largely driven by double-digit growth in service activities. Our team is putting big numbers on the board and executing the plan. Services consistently delivering quarters in excess of $400 million revenue is well in line with our 2025 objectives, but also helping predictably deliver our plan on an annual basis. It is important to note that this growth is largely organic and driven by the footprint expansion we've talked about in this forum so many times. I know there's also been a lot of interest and excitement in our certified pre-owned offering. This is good news for us and a sign of good interest for aircraft across the pre-owned community. However, I do really want to stress that the growth trend of our core services business has been on a steady and predictable curve in terms of both the top and bottom line. Our plan is in full motion to execute that growth and fully operationalize newly expanded facilities with one more large-scale inauguration ahead of us in the Middle East. Turning now to deliveries, again, steady performance to plan. I do want to pause to recognize that the team has achieved this while balancing major initiatives. On the other end, we need to ensure supply chain stability. On the other, we are preparing to begin our move later this quarter into a newly built manufacturing facility for our global jet in Ontario at the Toronto Pearson Airport. None of this happened without dedicated effort and focus around having the right strategies at all levels of the team and the same drive to execute the plan. Supply chain will remain a key area of focus for the foreseeable quarters. As you know, our success has been marked by focusing on what we control. In some cases, that has meant broadening it by placing people on-site, deeper upstream, or simply integrating components back to Bombardier where it makes sense. As a recent example of this was making the decision to retain electrical harness activities in our Mexico operations. We smoothly reacquired the business from La Tecae and welcomed the team member to Bombardier. When I think about all the strategic operational capabilities we have with aerostructures, subsystem, and even raw material in Saint-Laurent, Quebec, for example, I do believe we have a unique leg up on this front when it comes to managing the current landscape. All this to say, inventory buildup for the second half is progressing. As I look at everything we have in work today on the lines, I am very comfortable with our more than 138 total delivery targets, and certainly we look forward to monetizing our inventories in Q3 and Q4 to reach our greater than $250 million free cash flow objective. Through all of this, we are fully on track to where we expected to be on a book to build and backlog. Backlog and predictability go hand in hand. at 14.9 billion dollars in backlog we are in good shape as it averages out to around 18 to 24 months depending on the platform our book to bill is also performing to plan maintaining that cruising altitude around one is very encouraging in fact we achieve a book to bill of 1.1 in the second quarter bringing up the first half of the year slightly above one this reflects the steady demand we expected. We are also in a position where demand and our backlog are well diversified by customer type and region. This contributes to overall health and predictability. Certainly, thus recording any cancellation in the second quarter was also a very positive. To maintain this balanced profile and overall operational predictability, we will continue to be proactive in monitoring the market and will stand ready to make opportune adjustments if needed. This could, for example, include leveraging on flexibility and reconsidering our long-term delivery mix should we need to capitalize on segment strength as they emerge or edge areas where demand may shift. Having a portfolio with well-positioned product that are proven market performers is what fuels our confidence. Overall, Bombardier has a few key differentiators that further contribute to a long-term balance in our outlook. First, our growing defense business. Then, fleet customer health and success. And finally, a strengthening Asia-Pacific region where we have put down deep roots. We have invested in our presence in Singapore with the region's flagship service facility and a second one in Australia. Our sales team is well established and serves customers with a local, tailored approach. And most importantly, we are well placed with our product to capture demand stemming from increased flight hours year over years. If you recall, APAC was slow out of the gate post-pandemic. That is now normalizing with year-over-year double-digit growth flight hours. Another area trending positively is demand with large fleet operators. In my opinion, they are the biggest winner of the past 24 to 36 months. Demand for fractional charter or jet card access to aircraft has reached a higher new normal. When you look at how Bombardier aircraft are performing with this customer type, the numbers are really telling. Bombardier's specific hours across fleet operators are up 51% versus June 2019. And year over year, hours are 14% up, further highlighting the trend. We are in a very good position to continue serving this market, as we have well-established fleets with the biggest brands. We are mutually committed to one another's success. This was underscored last week when Bombardier and Airshare jointly issued the news that they will be planning on doubling down their fleet of Challengers. Airshare originally entered the super mid-sized space with a commitment for up 20 Challenger in 21. Today, They are working through that order, exercising options, and entering into a new order for up to 20 more. They are a great recent example of a company that has found a niche with the right product, built a solid customer-centric business model, and executed. In terms of the pipelines, It's great advantage to have a flagship product like the Global 7500 performing so well in service. It is simply unmatched when it comes to an aircraft of that size flying so far, so smoothly, and with its cabin volume. Even when or if competitor enters service, the Global 7500 will continue to do things that others can't. And right behind it, the Global 8000 is progressing well to be the only Mach 0.94 large jet on the market with the planned 2025 entry into service just around the corner. We continue to push innovation and flexibility, especially on the defense front. We have been very active over the past months. While we've been very vocal about our capabilities to replace maritime patrol planes for Canada, the team has continued to work and deliver global aircraft for programs in the US and Europe. We also launched our first virtual showroom to showcase the breadth of our capabilities ranging from VIP and medevac transport to fully equipped surveillance and patrol. Response has been excellent. We will continue to position BusinessJet Platform as the ideal solution for countries around the world. These foundational initiatives will give us lift through the second half of the year in terms of bookings and revenue. They will also provide a fundamentally evolved business foundation for years to come as we expand our product offering and capabilities. Finally, heading back to our balance sheet and debt management, I am happy to confirm we remain on a solid path. Last time we spoke, I highlighted the rating upgrade from Moody's. Not too long after, S&P Global Rating also upgraded our company to be with a stable outlook. Now, I'd like to turn the call over to Bart to walk you through some more specific with regards to this quarter's excellent performance and how we are moving confidently into the second half of 2023. Bart, the floor is yours.