Under the wing of a new logo, Bombardier reported growth in its first-quarter order book on Thursday even as global demand for business jets slowed.
The company increased its first-quarter backlog by 5% year-over-year to US$14.9 billion. A key indicator of short-term demand for a company’s products – the ratio of orders received to shipments invoiced – rose to 1.6.
These upbeat figures contrast with a year-over-year revenue decline of 12% to US$1.28 billion in the quarter ended March 31, below analysts’ expectations.
The decline was partly explained by lower-than-expected aircraft deliveries in the quarter — 20 versus 22 a year earlier — but President and CEO Éric Martel said the figure was in line with with the objectives for 2024, which are to deliver between 150 and 155 aircraft throughout the year. Last year, about 40% of its new planes landed with customers in the final quarter.
“We are seeing a lot of activity around the Global family,” he said, referring to the larger of the two series of aircraft produced by the Montreal company. The Challenger is the other, after Bombardier delivered the last of its Learjets in 2022.
Bombardier used 57% more cash last quarter than the previous year, spending US$387 million to support ramping up production.
“While we continue to need more working capital investment in the near term, we will be well positioned in the second half and well beyond,” Mr. Martel told analysts on a conference call THURSDAY.
Bombardier’s stock price rose $4.86, or more than 8 percent, to $61.86 early Thursday afternoon.
Mr. Martel’s remarks came a day after the more than 80-year-old company unveiled a new logo to mark its shift from a former rail and commercial aviation giant to a company purely specializing in business jets.
“We went from a large industrial footprint with many companies and product lines to a streamlined, cleaner, greener, focused and state-of-the-art space,” Martel said.
Dubbed Bombardier’s Mach, the black-and-white symbol depicts the stylized silhouette of an aircraft breaking the sound barrier, “while gusts of wind above one wing evoke the company’s heritage.” says Bombardier.
Last year, the company flew its upcoming Global 8000 ultra-long-range aircraft at Mach 1 – the speed of sound, or about 1,235 km/h – a first in business aviation, a- she indicated.
Near-term demand for business jets declined slightly, returning to historic levels after a pandemic-induced surge.
The supply of used aircraft
The number of used private jets for sale increased 32% year-on-year to 1,094 in February, according to investment research firm Jefferies Group. Generally, more used planes sold on the market means less demand for new planes.
“Older planes are available on the market, but if you are looking for a plane that is five, six, or even less than 10 years old, it is more difficult to find one,” argued Mr. Martel. So people are moving to new planes. »
Flight activity on Bombardier jets is up 7% year-over-year, a “leading indicator that orders should remain strong,” said Cameron Doerksen, an analyst at National Bank.
As a result, Bombardier increased its revenues from after-sales services – maintenance and repairs, for example – by 13% year-over-year, to US$477 million.
It also continued to reduce its heavy debt. The company said it used its excess cash to retire US$100 million of red ink last week. As of March 31, its debt stood at US$5.61 billion, according to its interim financial statements.
“Obviously, we are ahead of where we want to be,” said Mr. Martel.
Bombardier’s adjusted net debt to adjusted profit ratio was 3.6, up from 3.3 in the previous quarter. Typically, ratios below three are the target.
On Thursday, the company reported first-quarter profit of US$110 million, down from US$302 million a year earlier.
On an adjusted basis, Bombardier says it earned 36 US cents per share, down from adjusted earnings of US$1.06 per share a year earlier. But that figure beat analysts’ expectations of 28 US cents per share, according to LSEG Data&Analytics.