Revenues of $4.2 billion, compared to $4.7 billion last fiscal year, Strong backlog of $56.9 billion, compared to $53.9 billion as at December 31, 2011
(All amounts in this press release are in U.S. dollars unless otherwise indicated.)
Bombardier reported its financial results for the second quarter ended June 30, 2012. Revenues totalled $4.2 billion, compared to $4.7 billion for the corresponding period last fiscal year. Earnings before financing expense, financing income and income taxes (EBIT) totalled $220 million, versus $296 million last fiscal year. The EBIT margin was at 5.3%, compared to 6.2% last fiscal year.
Net income for the second quarter ended June 30, 2012 amounted to $182 million, compared to $211 million for the corresponding period last fiscal year. Diluted earnings per share (EPS) was $0.10, compared to diluted EPS of $0.12 last fiscal year. Free cash flow usage (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) totalled $642 million for the second quarter ended June 30, 2012, compared to a usage of $1.1 billion last fiscal year. The strong level of liquidity at $3.9 billion includes cash and cash equivalents of $2.5 billion as at June 30, 2012, compared to $4.1 billion and $3.4 billion respectively as at December 31, 2011. The overall backlog increased by $3 billion since the beginning of the year, reaching $56.9 billion as at June 30, 2012.
"As anticipated, our revenues were lower in the second quarter. However, we expect revenues for the full year to be in line with last year's," said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.
"In Transportation, revenues were lower due to the timing of completion of certain large contracts while major new orders are still in the start-up phase. We continued to see a good level of activity with $2.9 billion of new orders in the quarter, especially in North America and Europe."
"In Aerospace, revenues for the quarter were higher at $2.3 billion compared to $2.1 billion last year, with overall deliveries of 62 aircraft compared to 56. The level of new orders in Business Aircraft was quite strong and the momentum continues in Commercial Aircraft with 174 orders and other agreements announced so far this year. Our new aircraft development programs are achieving major milestones and both the CSeries and the Learjet 85 are driving towards entry into service by the end of 2013."
"Our very large backlog of $56.9 billlion positions us well for the years ahead and is a testament to the success of our overall portfolio of products," concluded Mr. Beaudoin.
Bombardier Aerospace
Bombardier Aerospace's revenues totalled $2.3 billion, compared to $2.1 billion last fiscal year. EBIT totalled $102 million translating into an EBIT margin of 4.5% for the second quarter ended June 30, 2012, compared to $105 million, or 5%, last fiscal year. Free cash flow usage totalled $504 million compared to a usage of $448 million for the corresponding period last fiscal year.
A total of 62 aircraft were delivered during the second quarter ended June 30, 2012 compared to 56 for the corresponding period last fiscal year. Bombardier Aerospace's backlog increased by 14.5% reaching $25.2 billion as at June 30, 2012, compared to $22 billion as at December 31, 2011.
Bombardier Business Aircraft saw a strong level of order intake with 134 net orders compared to 43 for the corresponding period last fiscal year. This includes the conclusion with NetJets Inc. of the largest business aircraft order in Bombardier's history, for 100 aircraft of the Challenger family, with options for 175 aircraft. Based on list prices, the value of the firm order is $2.6 billion and could increase to $7.3 billion if all options are exercised. In addition, NetJets Inc. and Bombardier entered into a long-term service agreement valued at $820 million, or $2.3 billion if all options are exercised.
To date, Bombardier Commercial Aircraft has shown a solid performance with 174 orders and other agreements, including 72 firm orders. These orders cover the wide range of our products, and many regions of the world, such as WestJet's order for 20 Q400 NextGen turboprops, China Express with an order for six CRJ900 NextGen aircraft, Nordic Aviation Capital which ordered 12 CRJ1000 NextGen jets, and finally, Privat Air has placed an order for five CSeries aircraft.
The CSeries and Learjet 85 aircraft development programs are making good progress towards entry-into-service at the end of 2013. On the CSeries programs, substantially all the main systems are up and running on "Aircraft 0", our on-the-ground integrated systems test and certification rig. The progressive commissioning of the systems in "Aircraft 0" allows us to ensure aircraft testing and validation on the ground, prior to first flight.
Our Learjet 85 program is also making good progress. Work on the two first flight test aircraft and on the Complete Aircraft Static Test (CAST) ground test platform is well underway with the production of hundreds of composite components, including the unique 32-foot composite pressure fuselage.
Bombardier Transportation
Bombardier Transportation's revenues totalled $1.9 billion for the second quarter ended June 30, 2012, compared to $2.7 billion for the same period last fiscal year. EBIT was $118 million, compared to $191 million last fiscal year, translating into an EBIT margin of 6.2% versus 7.2% last fiscal year. Free cash flow usage amounted to $78 million for the second quarter ended June 30, 2012, compared to a usage of $473 million for the same period last fiscal year. The order backlog totalled $31.7 billion as at June 30, 2012, compared to $31.9 billion as at December 31, 2011 due to the weakening of most foreign currencies versus the U.S. dollar.
During the second quarter of 2012, Bombardier Transportation reported $2.9 billion of new orders, representing a book-to-bill ratio of 1.5. The group confirmed its leadership in North America with the signature of a contract for 410 rail cars with the San Francisco Bay Area Rapid Transit District (BART), valued at $897 million, as well as for 300 subway cars with the Metropolitan Transportation Authority (MTA) to be delivered to New York City Transit, valued at $599 million.
The framework agreements and options represent a good potential for new orders as illustrated by the order for an additional 39 FLEXITY Berlin trams from a framework agreement for a maximum of 206 vehicles. Bombardier Transportation also received an order for 210 double-deck commuter train cars for the RER, the Greater Paris commuter network, of which Bombardier's share is valued at $417 million. This new order is an option exercised under a contract signed in April 2009.
The group is making good progress on many key contracts around the world with the ZEFIRO 380 train successfully starting trial runs in Beijing, demonstrating excellent dynamic behavior. The assembly of the first ZEFIROV300 train for Italy has begun and the first Regio 2N train has been presented to the French regions and to SNCF in Crespin and is now in test.
The rail industry markets remain resilient in spite of the challenges of the global economy. Many tender activities are on the horizon, such as metros in India, commuter trains in the U.K., locomotives in Germany and high speed coaches in the U.S.
| For the three-month periods ended(1) | June 30, 2012 | July 31, 2011 | |||||||||||||||||
| BA | BT | Total | BA | BT | Total | ||||||||||||||
| Results of operations | |||||||||||||||||||
| Revenues | $ | 2,265 | $ | 1,905 | $ | 4,170 | $ | 2,085 | $ | 2,662 | $ | 4,747 | |||||||
| Cost of sales | 1,932 | 1,591 | 3,523 | 1,803 | 2,229 | 4,032 | |||||||||||||
| Gross margin | 333 | 314 | 647 | 282 | 433 | 715 | |||||||||||||
| SG&A | 178 | 193 | 371 | 157 | 207 | 364 | |||||||||||||
| R&D | 35 | 27 | 62 | 24 | 34 | 58 | |||||||||||||
| Other expense (income) | 18 | (24 | ) | (6 | ) | (4 | ) | 1 | (3 | ) | |||||||||
| EBIT | $ | 102 | $ | 118 | 220 | $ | 105 | $ | 191 | 296 | |||||||||
| Financing expense | 155 | 179 | |||||||||||||||||
| Financing income | (166 | ) | (144 | ) | |||||||||||||||
| EBT | 231 | 261 | |||||||||||||||||
| Income taxes | 49 | 50 | |||||||||||||||||
| Net income | $ | 182 | $ | 211 | |||||||||||||||
| Attributable to : | |||||||||||||||||||
| Equity holders of Bombardier Inc. | $ | 182 | $ | 210 | |||||||||||||||
| Non-controlling interests | - | 1 | |||||||||||||||||
| $ | 182 | $ | 211 | ||||||||||||||||
| EPS (in dollars): | |||||||||||||||||||
| Basic and diluted | $ | 0.10 | $ | 0.12 | |||||||||||||||
| Segmented free cash flow usage | $ | (504 | ) | $ | (78 | ) | $ | (582 | ) | $ | (448 | ) | $ | (473 | ) | $ | (921 | ) | |
| Net income taxes and net interest paid | (60 | ) | (146 | ) | |||||||||||||||
| Free cash flow usage | $ | (642 | ) | $ | (1,067 | ) | |||||||||||||
| For the six-month periods ended(1) | June 30, 2012 | July 31, 2011 | |||||||||||||||||
| BA | BT | Total | BA | BT | Total | ||||||||||||||
| Results of operations | |||||||||||||||||||
| Revenues | $ | 3,764 | $ | 3,911 | $ | 7,675 | $ | 4,273 | $ | 5,135 | $ | 9,408 | |||||||
| Cost of sales | 3,192 | 3,238 | 6,430 | 3,660 | 4,297 | 7,957 | |||||||||||||
| Gross margin | 572 | 673 | 1,245 | 613 | 838 | 1,451 | |||||||||||||
| SG&A | 339 | 396 | 735 | 317 | 410 | 727 | |||||||||||||
| R&D | 66 | 61 | 127 | 57 | 65 | 122 | |||||||||||||
| Other expense (income) | (26 | ) | (26 | ) | (52 | ) | (7 | ) | 1 | (6 | ) | ||||||||
| EBIT | $ | 193 | $ | 242 | 435 | $ | 246 | $ | 362 | 608 | |||||||||
| Financing expense | 307 | 352 | |||||||||||||||||
| Financing income | (318 | ) | (281 | ) | |||||||||||||||
| EBT | 446 | 537 | |||||||||||||||||
| Income taxes | 74 | 106 | |||||||||||||||||
| Net income | $ | 372 | $ | 431 | |||||||||||||||
| Attributable to : | |||||||||||||||||||
| Equity holders of Bombardier Inc. | $ | 367 | $ | 430 | |||||||||||||||
| Non-controlling interests | 5 | 1 | |||||||||||||||||
| $ | 372 | $ | 431 | ||||||||||||||||
| EPS (in dollars): | |||||||||||||||||||
| Basic | $ | 0.21 | $ | 0.24 | |||||||||||||||
| Diluted | $ | 0.20 | $ | 0.24 | |||||||||||||||
| Segmented free cash flow usage | $ | (1,076 | ) | $ | (178 | ) | $ | (1,254 | ) | $ | (616 | ) | $ | (641 | ) | $ | (1,257 | ) | |
| Net income taxes and net interest paid | (100 | ) | (219 | ) | |||||||||||||||
| Free cash flow usage | $ | (1,354 | ) | $ | (1,476 | ) | |||||||||||||
Financial Results for the Second Quarter Ended June 30, 2012
ANALYSIS OF RESULTS
Consolidated results
Consolidated revenues totalled $4.2 billion for the second quarter ended June 30, 2012, compared to $4.7 billion for the corresponding period last fiscal year. For the six-month period ended June 30, 2012, consolidated revenues amounted to $7.7 billion, compared to $9.4 billion for the corresponding period last fiscal year.
For the second quarter ended June 30, 2012, EBIT totalled $220 million, or 5.3% of revenues, compared to an EBIT of $296 million, or 6.2%, for the corresponding period the previous year. For the semester ended June 30, 2012, EBIT amounted to $435 million, or 5.7% of revenues, compared to an EBIT of $608 million, or 6.5%, for the corresponding period last fiscal year.
Net financing income amounted to $11 million for the second quarter ended June 30, 2012, compared to net financing expense of $35 million for the corresponding period last fiscal year. The $46-million improvement is mainly due to a gain on the sale of securities, higher net gain on certain financial instruments and lower amortization of letter of credit facility costs. For the six-month period ended June 30, 2012, net financing income amounted to $11 million, compared to net financing expense of $71 million for the corresponding period last year. The $82-million improvement is mainly due to the gain on the sale of securities, interest income representing the interest portion of a gain upon the successful resolution of litigation with Canada Revenue Agency, lower amortization of letter of credit facility costs, lower interest expense on long-term debt after the effect of hedges, and lower accretion on provisions.
The effective income tax rate was 21.2% and 16.6% respectively for the three- and six-month periods ended June 30, 2012, compared to the statutory income tax rate of 26.8%. The lower effective income tax rates are mainly due to the positive impact of the recognition of previously unrecognized income tax benefits as well as permanent differences, partially offset by unrecognized tax benefits.
As a result, net income amounted to $182 million, or diluted EPS of $0.10, for the second quarter ended June 30, 2012, compared to $211 million, or diluted EPS of $0.12, for the corresponding period the previous year. For the first semester ended June 30, 2012, net income was $372 million, or diluted EPS of $0.20, compared to $431 million, or diluted EPS of $0.24, for the corresponding period the previous year.
For the three-month period ended June 30, 2012, free cash flow usage totalled $642 million, compared to a usage of $1.1 billion for the corresponding period the previous year. For the semester ended June 30, 2012, free cash flow usage totalled $1.4 billion, compared to a usage of $1.5 billion for the corresponding period the previous year.
As at June 30, 2012, Bombardier's order backlog stood at $56.9 billion, compared to $53.9 billion as at December 31, 2011.
Bombardier Aerospace
Bombardier Aerospace's revenues amounted to $2.3 billion for the three-month period ended June 30, 2012, compared to $2.1 billion for the corresponding period the previous year. The increase is mainly due to higher deliveries of business aircraft in the medium and the large business jet categories, partially offset by lower deliveries in regional jets mainly due to lower production rates to reflect current demand, and to certain deliveries being pushed to the second half of the year.
For the second quarter ended June 30, 2012, EBIT totalled $102 million, or 4.5% of revenues, compared to $105 million, or 5%, for the corresponding period the previous year. The 0.5 percentage-point decrease is mainly due to lower absorption of higher selling, general and administrative (SG&A) expenses mostly due to higher selling expenses for business aircraft, the negative impact of higher exchange rates for the Canadian dollar against the U.S. dollar after giving effect to hedges, lower net selling prices for commercial aircraft, a net negative variance on financial instruments carried at fair value and provisions for credit and residual value guarantees, and higher research and development (R&D) expenses due to higher amortization of aerospace program tooling; partially offset by higher margins from service activities and the mix between business and commercial aircraft deliveries.
Free cash flow usage totalled $504 million for the second quarter ended June 30, 2012, compared to a usage of $448 million for the corresponding period last fiscal year. The $56-million decrease in free cash flow is mainly due to higher net additions to property, plant and equipment (PP&E) and intangible assets due to our significant investments in new products, partially offset by a positive period-over-period variation in net change in non-cash balances related to operations.
For the quarter ended June 30, 2012, aircraft deliveries totalled 62, compared to 56 for the corresponding period the previous year. The 62 deliveries consisted of 46 business, 15 commercial and 1 amphibious aircraft (35 business, 20 commercial and 1 amphibious aircraft for the corresponding period last fiscal year).
Bombardier Aerospace recorded 146 net orders (book-to-bill ratio of 2.4) during the quarter ended June 30, 2012, compared to 86 during the corresponding period the previous year. The 146 net orders consisted in 134 net orders for business aircraft and 12 orders for commercial aircraft (43 net orders of business aircraft and 43 orders of commercial aircraft for the corresponding period last fiscal year).
Bombardier Aerospace's firm order backlog stood at $25.2 billion as at June 30, 2012, compared to $22 billion as at December 31, 2011. The 14.5% increase in the order backlog is mainly attributable to business aircraft as a result of orders for the Challenger and Global families of aircraft.
Bombardier Transportation
Bombardier Transportation's revenues amounted to $1.9 billion for the three-month period ended June 30, 2012, compared to $2.7 billion for the same period last year. Revenues have been affected by the completion of some contracts, mostly in Asia-Pacific and Europe, while major orders received in these regions in the last quarters are still in the start-up phase. The decrease is mainly due to lower activities in rolling stock, as some commuter and regional train, locomotive, metro, intercity train and propulsion contracts are nearing completion, partially offset by increased production in some light rail vehicle contracts.
For the second quarter ended June 30, 2012, EBIT totalled $118 million, or 6.2% of revenues, compared to an EBIT of $191 million, or 7.2%, for the same quarter the previous year. The 1.0 percentage-point decrease is mainly due to lower absorption of SG&A and R&D expenses and a lower overall gross margin in rolling stock; partially offset by a higher gross margin in services, a $24-million gain following the finalisation of the build-phase of a system and hand-over to the customer recorded in other expense as part of our share of income of associates, and a favourable product mix.
Free cash flow usage was $78 million for the quarter ended June 30, 2012, compared to a usage of $473 million for the same period last fiscal year. The $395-million improvement is mainly due to a positive period-over-period variation in net change in non-cash balances related to operations and lower net additions to PP&E and intangible assets; partially offset by a lower EBITDA.
The order intake for the second quarter ended June 30, 2012 was $2.9 billion, for a book-to-bill ratio of 1.5, compared to $3.9 billion of order intake (book-to-bill of 1.5) for the corresponding period last fiscal year.
Bombardier Transportation's backlog stood at $31.7 billion as at June 30, 2012, compared to $31.9 billion as at December 31, 2011. The decrease is due to the weakening of most foreign currencies versus the U.S. dollar as at June 30, 2012 compared to December 31, 2011, mainly the euro and Brazilian real, partially offset by higher order intake than revenues recorded.
