Bombardier has released its 2019 business unit guidance and confirmed that it remains on track to achieve its 2020 financial objectives. The 2019 guidance reflects the anticipated closing of the sale of both Business Aircraft’s flight and technical training activities and the Q Series aircraft programme as of September 30, 2019.
For 2019, Bombardier is targeting revenues of USD 18 billion or more, representing a year-over-year increase of approximately 10 percent over 2018 guidance. This growth is expected to be driven by: (i) the entry-into-service of the Global 7500 aircraft, which is sold out through 2021; (ii) execution on Bombardier’s strong USD 34-billion rail backlog, which covers more than 80 percent of Transportation’s targeted 2019 and 2020 revenues; and (iii) an increased focus on aftermarket services across the portfolio. Aftermarket revenues are estimated to grow from approximately USD 3.5 billion in 2018 to approximately USD 4.0 billion in 2020 as the company continues to optimise its aftermarket and services operations, leveraging its large installed base which includes over 100,000 rail cars, more than 4,700 business jets and approximately 1,250 regional jets.
Profitability is anticipated to grow faster than the top line, and is expected to be driven by solid conversion on revenue growth and the strategic reshaping of Commercial Aircraft. EBITDA before special items is targeted to grow by approximately 30 percent over 2018 guidance to a range of USD 1.65 billion to USD 1.80 billion, while EBIT before special items is targeted to increase by approximately 20 percent over 2018 guidance to a range of USD 1.15 billion to USD 1.25 billion.
From a free cash flow perspective, 2019 is expected to mark the transition from a heavy investment cycle to a strong growth and cash generation cycle. Sustainable capital expenditures are projected to decrease to approximately USD 800 million or less on an annualised basis, which represents a decrease of approximately 50 percent from the previous five-year average.
On a normalised basis, before one-time items, Bombardier estimates free cash flow in a range of USD 250 million to USD 500 million for 2019. One-time items that are expected to impact free cash flow in 2019 include; (i) a USD 250-million charge for the previously announced restructuring; and (ii) a working capital contingency of USD 250 million largely associated with the intense ramp-up of the Global 7500 program. Free cash flow including these one-time items is targeted to be breakeven plus or minus USD 250 million, resulting in an estimated cash on hand exceeding USD 3.0 billion by year end.
Along with announcing its 2019 business unit guidance, Bombardier reaffirmed its 2020 objectives of revenues in excess of USD 20 billion, EBITDA before special items over USD 2.25 billion, EBIT before special items over USD 1.6 billion and free cash flow between USD 750 million and USD 1 billion. In addition to generating strong cash flow from operations, Bombardier anticipates ending 2020 with strong liquidity, including more than USD 3.5 billion of cash on hand and a significantly improved leverage ratio.
“Three years into our turnaround plan and Bombardier is a much stronger company,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “We are confident in achieving our 2020 objectives and see tremendous opportunities beyond 2020. As we continue to execute our turnaround plan, we are building a company with great products, strong backlogs and an efficient cost structure, capable of delivering superior financial performance well into the future.”
2019 Guidance And 2020 Objectives (in USD)
Other Estimates For 2019 And 2020 (in USD)
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