MONTREAL - For the third quarter of FY15, ended September 30, Bombardier report revenues of $4.9 billion, up almost 20 percent compared to $4.1 billion for the same period last fiscal year. Net income fell to $74 million compared to $147 million in the year ago period. The income drop was associated with a $63 million restructuring charge taken during the quarter.
Bombardier's New CSeries
Source: Bombardier Aerospace
"During the third quarter, we saw good momentum at Aerospace with improvement on all fronts. The CSeries flight test program resumed in September and is progressing well. Transportation also had good results in the quarter. Its backlog continued to increase with several small and medium orders won across various regions and product segments, thus maintaining its leading position in the rail industry," said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.
"The major restructuring plan announced in July was deployed at Aerospace, while Transportation continued to execute on OneBT, setting the right conditions to continue on our path to profitable growth. Our new lighter structure will result in a more nimble organization with the added benefit of reduced costs. This, in combination with our investments in new products, will ensure our market leadership and improved execution on our strong order backlog of $72.4 billion," concluded Mr. Beaudoin.
Bombardier Aerospace's revenues increased by 29 percent to reach $2.6 billion for the three-month period ended September 30, 2014, compared to $2.0 billion for the same period last fiscal year. EBIT totaled $74 million, or 2.9 percent of revenues, for the third quarter, compared to $86 million, or 4.3 percent, for the same period last fiscal year. EBIT before special items totaled $137 million, or 5.3 percent of revenues, compared to $86 million, or 4.3 percent, for the same period last fiscal year. Free cash flow usage amounted to $180 million (including net investments to PP&E and intangible assets of $415 million) for the third quarter ended September 30, 2014, compared to a usage of $406 million (including net investments to PP&E and intangible assets of $585 million) for the same period last fiscal year.
Bombardier Aerospace delivered a total of 71 aircraft during the third quarter ended September 30, 2014, compared to 45 for the same period last fiscal year, and received 76 net orders, compared to 26 for the same period last fiscal year. Bombardier Aerospace's backlog reached a level of $37.9 billion as at September 30, 2014, compared to $37.3 billion as at December 31, 2013.
In September, the CSeries aircraft resumed flight testing and the program is progressing well. More than 120 hours of flight were recorded since then by two Flight Test Vehicles (FTV), bringing the total number of flight hours to 450. FTV2 is now operating its fly-by-wire in normal mode and flight testing continues as planned. The entry-into-service (EIS) for the CS100 aircraft is targeted for the second half of 2015 and the CS300 aircraft's EIS will follow approximately six months afterwards.
Commercial aircraft received a firm order for 40 CS300 aircraft with options for an additional 10 CS300 aircraft from a wholly owned affiliate of Macquarie AirFinance. The firm order is valued at $3.1 billion based on list price. This order brings the total CSeries firm orders and other commitments to 563, with 21 customers in 18 countries, including 243 firm orders.
As part of the new organizational structure announced on July 23, 2014, a workforce reduction took place over the past weeks and a restructuring charge of $63 million was recorded as a special item. This workforce reduction is expected to generate approximately $200 million in annual cost savings.
Subsequent to the end of the quarter, Bombardier Aerospace launched the new Challenger 650 aircraft, the evolution of the Challenger 605 aircraft. The Challenger 650 aircraft will offer increased performance capabilities from enhanced engines, an entirely new interior and the Bombardier Vision flight deck technology. Its EIS is scheduled for 2015.
Bombardier Transportation's revenues amounted to $2.3 billion for the three-month period ended September 30, 2014, compared to $2.1 billion for the same period last year, an increase of 12 percent excluding currency impacts. EBIT totaled $97 million, or 4.2 percent of revenues, compared to $124 million, or 6.0 percent, for the same quarter the previous year. EBIT before special items amounted to $154 million, or 6.6 percent of revenues, compared to $124 million, or 6.0 percent, for the same quarter the previous year. Free cash flow usage totaled $81 million for the quarter ended September 30, 2014, compared to a usage of $5 million for the same period last fiscal year.
New orders reached $1.1 billion (book-to-bill ratio of 0.5), bringing the total orders to $10.8 billion for the first nine months of the year (book-to-bill ratio of 1.6). This translates into an order backlog of $34.5 billion as at September 30, 2014, compared to $32.4 billion as at December 31, 2013.
Among the significant orders won during the third quarter, Société Nationale des Chemins de fer Français (SNCF) exercised an option for 22 additional Francilien trains. The order is valued at approximately $218 million and is part of the initial 2006 contract with SNCF for up to 372 trains for the Île-de-France. With this order, a total of 194 Francilien trains have been ordered. Bombardier Transportation also signed a new contract with New Jersey Transit Corporation (NJ TRANSIT) to provide operations and maintenance services for NJ TRANSIT's River Line Light Rail system. The contract is valued at approximately $296 million and covers a period of 15 years. The agreement includes an option for an additional five years.
Following the reorganization initiatives announced last July, a restructuring charge of $57 million related to headcount reduction has been recorded as a special item. These measures are expected to generate approximately $68 million of annual cost savings.