BOMBARDIER INC. THIRD QUARTERLY REPORT
Three- and nine-month periods ended September 30, 2021
GLOSSARY
The following table shows the abbreviations used in this report.
Term | Description | Term | Description |
ACLP | Airbus Canada Limited Partnership | GAAP | Generally accepted accounting principles |
bps | Basis points | IAS | International Accounting Standard(s) |
BT Holdco | Bombardier Transportation (Investment) UK Limited | IASB | International Accounting Standards Board |
CCTD | Cumulative currency translation difference | IFRS | International Financial Reporting Standard(s) |
CDPQ | Caisse de dépôt et placement du Québec | MD&A | Management's discussion and analysis |
DDHR | Derivative designated in a hedge relationship | n/a | Not applicable |
DSU | Deferred share unit | NCI | Non-controlling interests |
EBIT | Earnings (loss) before financing expense, financing | nmf | Information not meaningful |
income and income taxes | OCI | Other comprehensive income (loss) | |
EBITDA | Earnings (loss) before financing expense, financing | PP&E | Property, plant and equipment |
income, income taxes, amortization and impairment | PSU | Performance share unit | |
charges on PP&E and intangible assets | R&D | Research and development | |
EBT | Earnings (loss) before income taxes | RSU | Restricted share unit |
EPS | Earnings (loss) per share attributable to equity holders of | SG&A | Selling, general and administrative |
Bombardier Inc. | U.K. | United Kingdom | |
FVOCI | Fair value through other comprehensive income (loss) | U.S. | United States of America |
FVTP&L | Fair value through profit and loss |
INDUSTRY AND ECONOMIC ENVIRONMENT | 7 | |||
CONSOLIDATED RESULTS OF OPERATIONS | 9 | |||
CONSOLIDATED FINANCIAL POSITION | 16 | |||
LIQUIDITY AND CAPITAL RESOURCES | 17 | |||
CAPITAL STRUCTURE | 22 | |||
NON-GAAP FINANCIAL MEASURES | 23 | |||
SALE OF THE TRANSPORTATION BUSINESS TO ALSTOM SA | 26 | |||
OTHER | 27 | |||
OFF-BALANCE SHEET ARRANGEMENTS | 27 | |||
RISKS AND UNCERTAINTIES | 27 | |||
CONTROLS AND PROCEDURES | 27 | |||
OTHER | 27 | |||
FOREIGN EXCHANGE RATES | 28 | |||
SELECTED FINANCIAL INFORMATION | 29 | |||
SHAREHOLDER INFORMATION | 30 | |||
INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 31 | |||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 38 |
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MANAGEMENT'S DISCUSSION AND ANALYSIS
All amounts in this report are expressed in U.S. dollars, and all amounts in the tables are in millions of U.S. dollars, unless otherwise indicated.
This MD&A is the responsibility of management and has been reviewed and approved by the Board of Directors of Bombardier Inc. (the "Corporation" or "Bombardier" or "our" or "we"). This MD&A has been prepared in accordance with the requirements of the Canadian Securities Administrators. The Board of Directors is responsible for ensuring that we fulfill our responsibilities for financial reporting and is ultimately responsible for reviewing and approving the MD&A. The Board of Directors carries out this responsibility principally through its Audit and Risk Committee. The Audit and Risk Committee is appointed by the Board of Directors and is comprised entirely of independent and financially literate directors. The Audit and Risk Committee reports its findings to the Board of Directors for its consideration when it approves the MD&A and financial statements for issuance to shareholders.
The data presented in this MD&A is structured under one reportable segment: Bombardier, which is reflective of our organizational structure.
The results of operations and cash flows for the three- and nine-month periods are not necessarily indicative of the results of operations and cash flows for the full fiscal year.
IFRS and non-GAAP measures
This MD&A contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measure (see the Non-GAAP financial measures and Liquidity and capital resources sections in Overview and Analysis of results section).
Materiality for disclosures
We determine whether information is material based on whether we believe a reasonable investor's decision to buy, sell or hold securities of the Corporation would likely be influenced or changed if the information were omitted or misstated.
Certain totals, subtotals and percentages may not agree due to rounding.
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FORWARD-LOOKING STATEMENTS
This MD&A includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, anticipations and outlook or guidance in respect of various financial and global metrics and sources of contribution thereto, targets, goals, priorities, market and strategies, financial position, financial performance, market position, capabilities, competitive strengths, credit ratings, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; customer value; expected demand for products and services; growth strategy; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and execution of orders in general; competitive position; expectations regarding revenue and backlog mix; the expected impact of the legislative and regulatory environment and legal proceedings; strength of capital profile and balance sheet, creditworthiness, available liquidities and capital resources, expected financial requirements, and ongoing review of strategic and financial alternatives; the introduction of, productivity enhancements, operational efficiencies, cost reduction and restructuring initiatives, and anticipated costs, intended benefits and timing thereof; the anticipated business transition to growth cycle and cash generation; expectations, objectives and strategies regarding debt repayment, refinancing of maturities and interest cost reduction; expectations regarding availability of government assistance programs, compliance with restrictive debt covenants; expectations regarding the declaration and payment of dividends on our preferred shares; intentions and objectives for our programs, assets and operations; and the impact of the COVID-19 pandemic on the foregoing and the effectiveness of plans and measures we have implemented in response thereto; and expectations regarding the strength of the market and economic recovery in the aftermath of the COVID-19 pandemic. As it relates to the sale of the Transportation business to Alstom, this MD&A also contains forward-looking statements with respect to the benefits of such transaction, the use of the proceeds derived from the transaction and its impact on our outlook, guidance and targets, operations, infrastructure, opportunities, financial condition, business plan and overall strategy.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "shall", "can", "expect", "estimate", "intend", "anticipate", "plan", "foresee", "believe", "continue", "maintain" or "align", the negative of these terms, variations of them or similar terminology. Forward-looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of our current objectives, strategic priorities, expectations, outlook and plans, and in obtaining a better understanding of our business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecast results set forth in forward-looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate. The assumptions underlying the forward-looking statements made in this MD&A include the following material assumptions: the deployment of the proceeds from the sale of the Transportation business to Alstom on terms allowing the Corporation, when combined with other financing sources and free cash flow generation, to repay or otherwise manage its financial obligations for the next three years; growth of the business aviation market and increase of the Corporation's share of such market; proper identification of recurring cost savings and executing on our cost reduction plan; optimization of our real estate portfolio, including through the sale or other transaction in respect of real estate assets on favorable terms; and access to working capital facilities on market terms. For additional information, including with respect to other assumptions underlying the forward-looking statements made in this MD&A, refer to the Forward-looking statements - Assumptions section in the MD&A of our financial report for the fiscal year ended December 31, 2020. Given the impact of the changing circumstances surrounding the COVID-19 pandemic and the related response from the Corporation, governments (federal, provincial and municipal), regulatory authorities, businesses, suppliers, customers, counterparties and third-party service providers, there is inherently more uncertainty associated with the Corporation's assumptions as compared to prior years.
Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of business aircraft customers; trade policy; increased competition; political instability and force majeure events or global climate change), operational risks (such as risks related to developing new products and services; development of new business; order backlog; the transition to a pure-play business aviation company; the certification of products and services; the execution of orders; pressures on cash flows and capital expenditures based on seasonality and cyclicality; execution of our strategy, productivity enhancements, operational efficiencies, restructuring and cost reduction initiatives; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; environmental, health and safety risks; dependence on certain customers, contracts and suppliers; supply chain risks; human resources; reliance on information systems; reliance on and protection of intellectual property rights; reputation risks; risk management; tax matters; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; substantial debt and interest payment requirements; restrictive debt covenants; reliance on debt management and interest cost reduction strategies; and reliance on government support), market risks (such as foreign currency fluctuations; changing interest rates; increases in commodity prices; and inflation rate fluctuations). For more details, see the Risks and uncertainties section in Other in this MD&A. Any one or more of the foregoing factors may be exacerbated by the ongoing COVID-19
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outbreak and may have a significantly more severe impact on the Corporation's business, results of operations and financial condition than in the absence of such outbreak. As a result of the current COVID-19 pandemic, additional factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to: risks related to the impact and effects of the COVID-19 pandemic on economic conditions and financial markets and the resulting impact on our business, operations, capital resources, liquidity, financial condition, margins, prospects and results; uncertainty regarding the magnitude and length of economic disruption as a result of the COVID-19 outbreak and the resulting effects on the demand environment for our products and services; uncertainty regarding market and economic recovery in the aftermath of the COVID-19 pandemic; emergency measures and restrictions imposed by public health authorities or governments, fiscal and monetary policy responses by governments and financial institutions; disruptions to global supply chain, customers, workforce, counterparties and third-party service providers; further disruptions to operations, orders and deliveries; technology, privacy, cyber security and reputational risks; and other unforeseen adverse events.
Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. Other risks and uncertainties not presently known to us or that we presently believe are not material could also cause actual results or events to differ materially from those expressed or implied in our forward-looking statements. The forward-looking statements set forth herein reflect management's expectations as at the date of this report and are subject to change after such date. Unless otherwise required by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.
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OVERVIEW
HIGHLIGHTS
On January 29, 2021, the Corporation closed the sale of the Transportation business to Alstom. The results of the Transportation business were classified as discontinued operations for the three- and nine-month periods ended September 30, 2021 and 2020. Refer to Note 17 - Disposal of businesses to our Interim consolidated financial statements for more details.
Results of the quarter
Three-month periods ended September 30 | 2021 | 2020 | Variance | ||||
restated(1) | |||||||
Revenues(2) | $ | 1,449 | $ | 1,405 | 3 % | ||
Adjusted EBITDA(2)(3) | $ | 142 | $ | 84 | 69 % | ||
Adjusted EBITDA margin(2)(3) | 9.8 % | 6.0 % | 380 bps | ||||
Adjusted EBIT(2)(3) | $ | 49 | $ | (11) | nmf | ||
Adjusted EBIT margin(2)(3) | 3.4 % | (0.8)% | 420 bps | ||||
EBIT(2) | $ | 48 | $ | (29) | nmf | ||
EBIT margin(2) | 3.3 % | (2.1)% | 540 bps | ||||
Net loss from continuing operations | $ | (376) | $ | (24) | (1,467)% | ||
Net income (loss) from discontinued operations | $ | (1) | $ | 216 | nmf | ||
Net income (loss) | $ | (377) | $ | 192 | nmf | ||
Diluted EPS from continuing operations (in dollars) | $ | (0.16) | $ | (0.01) | $ | (0.15) | |
Diluted EPS from discontinued operations (in dollars) | $ | - | $ | 0.06 | $ | (0.06) | |
$ | (0.16) | $ | 0.05 | $ | (0.21) | ||
Adjusted net loss(2)(3) | $ | (95) | $ | (210) | 55 % | ||
Adjusted EPS (in dollars)(2)(3) | $ | (0.04) | $ | (0.09) | $ | 0.05 | |
Cash flows from operating activities | |||||||
Continuing operations | $ | 156 | $ | (611) | nmf | ||
Discontinued operations | $ | - | $ | (33) | 100 % | ||
$ | 156 | $ | (644) | nmf | |||
Net additions to PP&E and intangible assets | |||||||
Continuing operations | $ | 56 | $ | 36 | 56 % | ||
Discontinued operations | $ | - | $ | 26 | (100)% | ||
$ | 56 | $ | 62 | (10)% | |||
Free cash flow (usage)(3) | |||||||
Continuing operations | $ | 100 | $ | (647) | nmf | ||
Discontinued operations | $ | - | $ | (59) | 100 % | ||
$ | 100 | $ | (706) | nmf | |||
As at | September 30, 2021 | December 31, 2020 | Variance | ||||
Cash and cash equivalents excluding Transportation | $ | 1,380 | $ | 1,779 | (22)% | ||
Cash and cash equivalents from Transportation | $ | - | $ | 671 | (100)% | ||
$ | 1,380 | $ | 2,450 | (44)% | |||
Available short-term capital resources(4) | $ | 1,380 | $ | 3,203 | (57)% | ||
Aviation order backlog (in billions of dollars) | |||||||
Business aircraft(5) | $ | 11.2 | $ | 10.7 | 5 % |
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Bombardier Inc. published this content on 28 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2021 10:42:08 UTC.
