Skip to main content

Canadian luxury jet maker Bombardier Inc. BBD-B-T reported preliminary results for its fourth quarter that top its own forecasts as it pushes on with a turnaround effort now in its fourth year.

Bombardier shares surged 9 per cent in afternoon trading on the Toronto Stock Exchange, to $62.29. They gained 24.5 per cent in 2022, defying the TSX’s overall 8.7-per-cent decline.

Montreal-based Bombardier said Tuesday it delivered 123 planes to customers in 2022, in line with the minimum of 120 it had signalled to investors. Its backlog of orders stood at US$14.8-billion at the end of December, a rate analysts believe equates to more than two years of production.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at US$930-million, besting the US$825 guidance the company provided in August. Revenue was US$6.9-billion, better than the US$6.5-billion projected, while the US$735-million in free cash flow was also higher than the US$515-million forecast.

Bombardier also announced debt refinancing moves on Tuesday morning. That prompted the early release of earnings results because of the proximity to the scheduled date of Feb. 9, company spokesman Mark Masluch said.

After years of turmoil at Bombardier that saw it teeter on the verge of bankruptcy, chief executive Éric Martel is trying to stage a recovery for the industrial giant that hinges on a slimmed-down business model focused solely on selling and servicing private jets. The company is tapping a strong trend toward private plane travel that took off during the COVID-19 pandemic.

Cash flow from operating activities was about US$1.07-billion for the year, Bombardier said.

Bombardier announced it has launched a new bond offering of US$500-million that comes due in 2029. The company said it intends to use the proceeds of the offering, together with cash on hand, to fund the full redemption of another series of bonds due in 2024 and to finance an offer to purchase up to US$104-million in bonds due in 2025.

“With profitability improving, free cash flow now consistently positive and leverage coming down, we believe 2023 will see more institutional investors showing interest in Bombardier shares,” National Bank analyst Cameron Doerksen said in a research note published this month. “The market cap of the company now sits at about $5.5-billion, which makes it a much more relevant stock to investors.”

Assuming the bond transactions proceed as planned, Bombardier will have no debt maturing until early 2025, when about $1.1-billion comes due, Mr. Doersen said in an update Tuesday.

Moody’s Investors Service in July upgraded Bombardier’s credit rating to B3 from Caa1 with a stable outlook, citing what it said was the plane maker’s “continued progress” in reducing debt and its improved financial performance. The company has generated positive free-cash flow in each quarter since June, 2021, while boosting its adjusted EBITDA margin, booking new orders and repaying debt, Moody’s said.

The company faces pressure on several fronts, however, and supply chain disruption is near the top of the list. Some of its smaller suppliers have faced labour shortages and the company has dispatched a team of its own specialists to different regions to help them identify and fix any problems.

Bombardier has also brought in-house some production previously done by foreign suppliers in a bid to counter that risk. The effort has created 500 jobs at its Saint-Laurent Plant 1 site in Montreal and there is room for more work to be repatriated, Mr. Martel has said.