Bombardier Inc.

Good morning, ladies and gentlemen, and welcome to the Bombardier third quarter 2023 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, sir.

Good morning, everyone, and welcome to Bombardier's earnings call for the third quarter and it's September 30th, 2023. 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. The risk 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 the 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 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 pleased to share that Bombardier had an excellent third quarter, powered by exceptional performance on all fronts. The strong results we will review today demonstrate that our plan is working and continue to position us for sustainable and long-term success. These results also show the underlying strength and resilience of our business as well as our ability to deliver on our commitment in any marketplace. Our aircraft consistently meet market demand and position us favorably around the world. Our services are growing with a solid and consistent KGAR. And finally, both our top and bottom line performance has grown year over year. I also want to highlight the incredible work our teams accomplish throughout the quarter. We executed the plan and performed very well in a dynamic business environment faced with geopolitical headwinds. Our rigor and focus have enabled us to record a remarkable revenue increase of $401 million or 28% year over year and put a cash positive quarter on the board. Taking a step back, These results come after a series of consistent years of bombardier that led to the company being ranked on the TSX 30. This prestigious recognition highlights the top 30 performing stock over a three-year period and then June 30th, 2023. Over this time, our share price grew by 522%, while our market cap increased by 533%. This is quite an accomplishment. While we know the share price has been more volatile and pressure over the past months, the TSX-30 ranking demonstrates that we have set the right foundation to deliver impressive returns. We are confident that our plan will drive long-term shareholder value. This is a testament to our team's hard work and especially the disciplined leadership from Bart and his group. Bart will go into the detail of this quarter results in a few minutes. But first, I would like to walk you through some key highlights. Profitability remains a priority of our team and continues on a positive trajectory. Our adjusted EBITDA rose by an impressive 36% year over year. Consistent with the previous quarter, this double-digit growth is largely driven by improving operating margins, a higher contribution from our market aftermarket business, and diligent cost management. Our services team continues to play a key role as we execute on our commitments. They are driving significant and sustained revenue growth. In Q3, they recorded a 11% increase in revenue year over year. If you look at the last nine months, we increased revenue by nearly 16% when compared to the same period in 2022. After a rapid and successful expansion of our service center network in 2022, we are now focused on operationalizing and optimizing our facilities. As more business keeps coming through our new sites, our teams remain active on the recruitment side to ensure we have the workforce to bring more and more of our jets home. The aftermarket team also continue to put customer satisfaction at the forefront and is taking concrete actions to ensure we deliver an exceptional experience. To that end, we recently launched a new smart services elite program the most comprehensive cost per flight hours offering. Turning to the pre-owned market, our certified pre-owned program keeps drawing attention by offering a premium product. With this program, Bombardier created a new segment within the market and an OEM-backed option for clients looking for a pre-owned jet. We meticulously update each of these planes and leverage the expertise of our service center to present our client with a turnkey product. We presented a CPO aircraft to the North American market for the very first time at NBAA two weeks ago. The 2010 Challenger 300 we had on static display sported a new interior and fresh coat of paint, as well as the latest avionics and connectivity offering. It received a tremendous response from attendees and demonstrated once again the significant value of this program. When it comes to new aircraft delivery, we also perform extremely well. With 31 recorded during the third quarter, we remain on track to deliver more than 133 aircraft in 2023. On this front, I want to highlight the efforts from our team and the plans as we ramp up deliveries to end of the year, all while expertly managing the move into our new Pearson Airport facility without creating disruption to our deliveries this and next year. Overall, we have a good line of sight for the fourth quarter and everything is in place to deliver greater than 56 aircraft with some already behind us. Let me also acknowledge our supply chain organization, which has been instrumental in ensuring that we can meet our delivery objectives. When you look at what is going on across the industry, you won't be surprised to hear me say that the supply chain continues to put a considerable amount of pressure on our operation. However, While the global supply chain base is still under the strain of various disruption and challenges, our team is very agile and is able to react to identified problems before they escalate. Thanks to their proactiveness, we have been very successful in mitigating challenges and keeping our delivery projection on track. Speaking of deliveries, our backlog remains solid at $14.7 billion, which translates into an order book that is averaging 18 to 24 months. On top of this, our long-term skyline includes more than 200 order options from large operators. We ended the quarter with a book to bill of 1.1, which provides us with the visibility and predictability required to look at the future with confidence. This is exactly where we said we would be, and I am happy with our consistency. We also benefit from a diversified customer mix, which of course includes large fleet operator, cooperation and individuals, but also companies that are choosing Bombardier aircraft to expand their business and their fleet in a meaningful way. The most recent example is AB Jets based in Phoenix, who jointly celebrated the purchase of three Challenger 3500 jets with us in Las Vegas. This company is growing and has positioned itself well to capture demand from individual customers as well as from large fleets who sometimes require backup flight. These jets will be transformational for them as they open the door to a larger market segment in the super midsize space. Our defense division represents another key example of our diversified customer base. Over the last few weeks, a number of important international defense shows were held in the U.S. and in Asia. Our Global 6500 aircraft garnered a lot of attention and was put forth at the platform of choice for a wide range of missions. In fact, it was reported that the Sierra Nevada Corporation was selected to provide surveillance aircraft that are based on the Global 6500. This is the latest addition to a long list of programs that rely on our global platform to complete defense missions, including the successful Bacon platform operated by the U.S. Air Force, for which we also announced last week the delivery of the seventh airplane. As you might have noticed, our platform are recognized around the world. Our defense division is striving and demonstrating its profound expertise and flexibility with many large scale modern as well as equipped on force. With that said, overall we see steady order activity in a normalized demand environment. Our true four order pipeline looks robust due to continued demand for our Challenger and Global jets. Our increased profitability has allowed us to record a cash flow positive quarter and to generate $80 million. This convincing result puts us on track to deliver on our full year guidance of greater than $250 million in free cash flow for 2023. Our consistency in meeting our objective demonstrate that we have the right business model to deliver strong results and outperform well into the future in any marketplace. We continue to stay focused on delivery of business fundamentals. And with the talented and engaged team we have in place, I am confident that we will continue to meet and exceed expectations. Now, I'd like to invite Bart to share further information regarding our excellent performance over the last quarter and how it paves the way for success in meeting our full-year guidance.