Bombardier Announces 2018 Guidance, Targeting Revenue Growth, Continued Earnings Improvement and FCF Breakeven

NEW YORK CITY, NEW YORK–(Marketwired – Dec. 14, 2017) –

All amounts in this press release are in U.S. dollars unless otherwise indicated.

Refer to the Caution Regarding Forward-Looking Statements, Caution Regarding Non-GAAP Measures and Assumptions sections at the end of this press release.

Bombardier (TSX:BBD.A)(TSX:BBD.B)(OTCQX:BDRBF) today released its 2018 guidance and confirmed that its five-year turnaround plan remains on track. The Company also affirmed its 2017 guidance, as revised with the announcement of its third quarter 2017 results.

“As we approach the half-way point of our five-year turnaround plan, we continue to meet our commitments and build a strong foundation for generating sustainable profit growth,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “We remain very much on track to achieve our 2017 guidance, our 2018 free cash flow goal, and see a clear path to deliver on our 2020 objectives.”

For 2018, Bombardier is targeting revenues in the range of .0 billion to .5 billion,⁽²⁾ which represents a year-over-year increase of approximately .0 billion over 2017 guidance, at the mid-point of the range. This growth is expected to be driven by the ramp-up of key projects at Bombardier Transportation and higher C Series aircraft deliveries.

With the Company’s transformation efforts driving stronger performance across the portfolio, EBITDA before special items for 2018 is anticipated to be in the range of .15 billion to .25 billion.⁽²⁾ For the same year, EBIT before special items is anticipated to be between 0 million and 0 million,⁽²⁾ representing an improvement of approximately 20% over 2017 guidance, at the mid-point of the range, assuming the adoption of IFRS 15 standards.⁽³⁾

Bombardier is targeting to achieve free cash flow breakeven in 2018, plus or minus 0 million,⁽²⁾ mainly driven by improving working capital investments and lower development costs as the Company’s heavy investment cycle comes to an end with the Global 7000 expected to enter service in the second half of 2018. Breakeven free cash flow represents an improvement of approximately .0 billion over Bombardier’s 2017 guidance.

“There is tremendous value in the Bombardier portfolio and we are confident that we have the right strategy and team to fully unleash this value for our customers and shareholders,” Mr. Bellemare continued. “As we close out 2017, we remain focused on execution and driving transformation across the portfolio to achieve our 2020 objectives.”

Over the next three years, the Company’s objective is to grow revenues by .0 billion, which represents a 7% compound annual growth rate. Over the same period, Bombardier’s objective is to more than double EBITDA before special items to more than .25 billion, and to achieve EBIT before special items in excess of 8%, or .6 billion. The Company also aims to deliver free cash flow of 0 million to .0 billion by 2020.

The Company will provide an update on its turnaround plan and discuss its 2018 guidance and 2020 objectives at its annual Investor Conference later this afternoon. A live webcast of Bombardier’s Investor Day, along with the corresponding presentation, will be available on the Company’s website at www.ir.bombardier.com. The webcast will begin at 3:00 pm EST on Thursday, December 14, 2017 and will be available on the website afterwards.

Following the closing of its C Series partnership with Airbus, Bombardier will deconsolidate the C Series program. While 2018 guidance assumes the continued consolidation by the Company of the C Series program for the entire year, 2020 objectives reflect the deconsolidation of the C Series program. Should the closing of the C Series partnership with Airbus occur before the end of 2018, the resulting deconsolidation will have an impact on the Company’s reported results.

It should also be noted that Bombardier’s 2018 guidance and 2020 objectives are both based on the adoption of IFRS 15 standards. Under IFRS 15, the Company’s 2017 EBIT guidance before special items would increase from at least 0 million to at least 0 million.

2018 Guidance and 2020 Objectives

About Bombardier

Bombardier is the world’s leading manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.

Bombardier is headquartered in Montréal, Canada and our shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2016, we posted revenues of .3 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.

Bombardier, CRJ Series, C Series, Global, Global 7000 and Q400 are trademarks of Bombardier Inc. or its subsidiaries.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, guidance, targets, goals, priorities, market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; competitive position; the expected impact of the legislative and regulatory environment and legal proceedings on our business and operations; available liquidities and ongoing review of strategic and financial alternatives; the completion, anticipated timing of the transaction with Airbus SE (Airbus) and the receipt of regulatory and other approvals required with respect to this transaction and the anticipated timing thereof; the governance, funding and liquidity of C Series Aircraft Limited Partnership (CSALP); the impact and expected benefits of the transaction with Airbus on our operations, infrastructure, capabilities, development, growth and other opportunities, geographic reach, scale, footprint, financial condition, access to capital and overall strategy; and the impact of such transaction and investments on our balance sheet and liquidity position.

Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “shall”, “can, “expect”, “estimate”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. Forward-looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of our current objectives, strategic priorities, expectations and plans, and in obtaining a better understanding of our business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecast results set forth in forward-looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate.

Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with our business environment (such as risks associated with “Brexit”, the financial condition of the airline industry, business aircraft customers, and of the rail industry; trade policy; increased competition; political instability and force majeure events or natural disasters), operational risks (such as risks related to developing new products and services; development of new business; the certification and homologation of products and services; fixed-price and fixed-term commitments and production and project execution; pressures on cash flows and capital expenditures based on project-cycle fluctuations and seasonality; our ability to successfully implement and execute our strategy and transformation plan; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; environmental, health and safety risks; dependence on certain customers and suppliers; human resources; reliance on information systems; reliance on and protection of intellectual property rights; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; substantial existing debt and interest payment requirements; certain restrictive debt covenants and minimum cash levels; financing support provided for the benefit of certain customers; and reliance on government support), market risks (such as risks related to foreign currency fluctuations; changing interest rates; decreases in residual values; increases in commodity prices; and inflation rate fluctuations). For more details, see the Risks and uncertainties section in Other in the Management’s Discussion and Analysis (MD&A) of our financial report for the fiscal year ended December 31, 2016 (2016 Financial Report).

For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to our disclosure regarding assumptions further in this press release and, for more details, see the Strategic Priorities and Guidance and forward-looking statements sections in the MD&A of our 2016 Financial Report, and the Guidance and forward-looking statements section in the MD&A of our financial report for the third quarter ended September 30, 2017 (Third Quarter Financial Report), as well as the risks factors described in our 2016 Financial Report and Third Quarter Financial Report.

Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. In addition, there can be no assurance that the proposed transaction with Airbus will occur or that the anticipated strategic benefits and operational, competitive and cost synergies will be realized in their entirety, in part or at all. The forward-looking statements set forth herein reflect management’s expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

All amounts in this press release are expressed in U.S. dollars unless otherwise indicated. This press release contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measures in our MD&A. See Caution regarding non-GAAP measures further in this press release.

Bombardier Inc. and its subsidiaries’ names, abbreviations thereof, logos, and product and service designators are all either the registered or unregistered trademarks or trade names of Bombardier Inc. and its subsidiaries. Names, abbreviations of names, logos, and product and service designators of other companies are either the registered or unregistered trademarks or trade names of their respective owners. Use of names, abbreviations of names, logos, and product and service designators of other companies does not imply any endorsement by any other such company.

AIRCRAFT PROGRAM DISCLAIMER

The Global 7000 and Global 8000 aircraft programs are currently in development, and as such are subject to changes in family strategy, branding, capacity, performance, design and/or systems. All specifications and data are approximate, may change without notice and are subject to certain operating rules, assumptions and other conditions. This document does not constitute an offer, commitment, representation, guarantee or warranty of any kind.

CAUTION REGARDING NON-GAAP MEASURES

Management believes that providing certain non-GAAP performance measures in addition to IFRS measures provides users of our financial reports with enhanced understanding of our results and related trends and increases the transparency and clarity of the core results of our business. EBIT before special items, EBITDA before special items, free cash flow and free cash flow usage exclude items that do not reflect our core performance or where their exclusion will assist users in understanding our results for the period. Management believes these measures help users of our financial reports to better analyze results, enabling better comparability of our results from one period to another and with peers.

Non-GAAP measures are mainly derived from the consolidated financial statements but do not have standardized meanings prescribed by IFRS. The exclusion of certain items from non-GAAP performance measures does not imply that these items are necessarily non-recurring. From time to time, we may exclude additional items if we believe doing so would result in a more transparent and comparable disclosure. Other entities in our industry may define the above measures differently than we do. In those cases, it may be difficult to compare the performance of those entities to ours based on these similarly-named non-GAAP measures.

Refer to the Non-GAAP financial measures sections in Overview in the MD&A of our Third Quarter Financial Report and of our 2016 Financial Report for definitions of these metrics and reconciliations to the most comparable IFRS measures.

ASSUMPTIONS

The following are the material assumptions underlying the forward-looking information included in this press release:

Aerospace segments

• the alignment of production rates to market demand;
• increased level of aircraft deliveries and improving pricing environment starting post 2018;
• the ability to ramp-up production and deliveries of new programs, focusing on the C Series, and meet scheduled entry-into-service date for the Global 7000 and Global 8000 aircraft program;
• our ability to strengthen our market position and product value proposition for the CRJ Series and Q400 aircraft programs;
• normal execution and delivery of current firm orders and projects in the backlog;
• continued ability to capture and win campaigns and projects based on market forecasts¹, leading to estimated future order intake;
• the ability to understand customer needs and portfolio of products and services to drive increasing market demand and secure key strategic orders;
• continued deployment and execution of growth strategies, including the aftermarket business;
• continued deployment and execution of leading initiatives according to plan to improve revenue conversion into higher earnings and free cash flows, through improved procurement cost, controlled spending and labor efficiency;
• delivering on the transformation plan targets, through restructurings and other initiatives addressing the direct and indirect cost structure, focusing on sustained cost reductions and operational improvements, while reducing working capital consumption;
• the ability to leverage the global manufacturing footprint and transfer best practices and technology across production sites, and by leveraging lower cost geographies and emerging economies;
• the ability of the supply base to support product development and planned production rates;
• the ability to identify and enter into further risk sharing partnerships and initiatives;
• the effectiveness of disciplined capital deployment measures in new programs and products to drive revenue growth;
• the reduction of investments and development spend to normalized levels by 2019-2020;
• the ability to recruit and retain highly skilled resources to deploy the product development strategy;
• competitive global environment and global economic conditions to remain similar;
• the stability of foreign exchange rates at current levels;
• the ability to have sufficient liquidity to execute the strategic plan, to meet financial covenants and to pay down long term debt or refinance bank facilities and maturities starting in 2020;
• the satisfaction of all conditions of closing and the successful completion of the transaction with Airbus within the anticipated timeframe, including receipt of regulatory (including antitrust) and other approvals;
• the fulfillment and performance by each party of its obligations pursuant to the transaction agreement with Airbus and future commercial agreements and absence of significant inefficiencies and other issues in connection therewith;
• the realization of the anticipated benefits and synergies of the transaction with Airbus in the timeframe anticipated;
• our ability to continue with our current funding plan of CSALP and to fund, if required, any cash shortfalls and adequacy of cash planning and management and project funding;

Transportation

• our ability to execute and deliver business model enhancement initiatives;
• revenue conversion and phase out of our legacy contracts;
• a sustained level of public sector spending;
• normal execution and delivery of current firm orders and projects in the backlog;
• the realization of upcoming tenders and our ability to capture them based on market forecasts², leading to estimated future order intake;
• successful deployment and execution of growth strategies, including the value chain approach and the creation of ecosystems, site specialization and the creation of engineering centers of excellence, and the evolution of the revenue mix towards more signaling and systems and operations and maintenance contracts;
• the ability to understand customer needs and portfolio of products and services to drive increasing market demand and secure key strategic orders;
• continued deployment and execution of leading initiatives according to plan to improve revenue conversion into higher earnings and free cash flows, through improved procurement cost, controlled spending and labor efficiency;
• delivering on the transformation plan targets, through restructurings and other initiatives addressing the direct and indirect cost structure, focusing on sustained cost reductions and operational improvements, while reducing working capital consumption;
• the ability to leverage the global manufacturing footprint and transfer best practices and technology across production sites, and by leveraging lower cost geographies and emerging economies;
• the ability of the supply base to support product development and planned production rates;
• the ability to identify and enter into further risk sharing partnerships and initiatives;
• the effectiveness of disciplined capital deployment measures in new programs and products to drive revenue growth;
• the ability to recruit and retain highly skilled resources to deploy the product development strategy;
• competitive global environment and global economic conditions to remain similar;
• the stability of foreign exchange rates at current levels;
• the ability to have sufficient liquidity to execute the strategic plan, to meet financial covenants and to pay down long term debt or refinance bank facilities and maturities starting in 2020;

For a discussion of the material risk factors associated with the forward-looking information included in this press release, please refer to our disclosure regarding forward-looking statements at the beginning of this press release and, for more details, see the Risks and uncertainties sections in Other in the MD&A of our 2016 Financial Report and of our Third Quarter Financial Report.

1. Demand forecast for aerospace segments is based on the analysis of main market indicators, including real GDP growth, industry confidence, wealth creation, corporate profitability within the aerospace customer base, aircraft utilization, pre-owned business jet inventory levels, aircraft shipments and billings, passenger traffic levels, fuel prices, airline profitability, pilot scope clauses, environmental regulations, globalization of trade, installed base and average age of the fleet, replacement demand, new aircraft programs and non-traditional markets and their accessibility. For more details, refer to the market indicators in the Industry and Economic Environment sections in the respective aerospace reportable segments in our 2016 Financial Report.
2. Demand forecast in the Transportation segment is based on sustained level of public sector spending and the continuation of favourable megatrends, including urbanization and environmental awareness trends, the densification of cities and demand for mobility and digitalization solutions. For more details, refer to the market indicators in the Industry and Economic Environment section of the Transportation segment in our 2016 Financial Report.