Bombardier provided forward-looking financial guidance to investors earlier today, and the company is planning a turnaround in its fiscal health by 2025. Revenues are projected to grow from $5.6B in 2020 to $7.5B in 2025, with an EBITDA of $1.5B in 2025 versus $0.2B in 2020.
The growth in both revenues and profitability will be primarily driven by the Global 7500, the company’s flagship aircraft. Bombardier will deliver the 50th Global 7500 later in the first quarter, and work on the 100th fuselage has already begun. The combination of growing deliveries as well as growing services revenues will increase revenue growth over time, with about half of the revenue growth coming from each area.
The company is well down the learning curve in production, and President and CEO Éric Martel indicated “we’ve already achieved a 40% reduction” and “many of the typical early growing pains and ramp-up risks are now in the rearview mirror.” The company also estimates that production costs will decrease by another 20% over the next 50 aircraft, improving margins. The company indicates that the Global 7500 program has reached the break-even point and will turn profitable this year.
Bombardier currently has a firm order backlog of $10.7B but will hold production steady for 2021, but sees $1B annually in revenue growth from aircraft manufacturing by 2025. Aftermarket revenues, on an overall basis, are expected to grow from 18% to 27% of total revenues by 2025, reflecting the larger in-service fleet.
A summary of Bombardier’s 2025 financial targets include:
- Total Revenues of $7.5B
- Adjusted EBITDA of $1.5B
- Adjusted EBITDA margin of 20%
- Free Cash Flow of $500M
- Year-End net leverage of 3X
The company is deleveraging its balance sheet, focusing on short-term maturities with 2021 and 2022 tranches. By the end of the forecast period, the company expects to clear at minimum a three-year runway that will provide a clear path for future strategic execution.
The improved projections are in part based on the productivity and profitability initiative that was announced last month. The company expects to achieve $400 million in recurring annual savings by 2023 through labor productivity improvements, reduced corporate costs and indirect spending, and by optimizing its manufacturing footprint.
The projection for a fiscally, as well as a program healthy, Bombardier is important to the business aircraft industry as well as to Quebec.
President AirInsight Group LLC