MONTREAL — Under the wing of a new logo, Bombardier Inc. said it lengthened its order book last quarter even as global demand for business jets idles.
The company grew its first-quarter backlog by five per cent year-over-year to US$14.9 billion. Its book-to-bill — the ratio of orders received to deliveries billed, a key indicator of near-term demand for a company's products — jumped to 1.6.
The upbeat figures stood in contrast with a year-over-year revenue drop of 12 per cent to US$1.28 billion in the quarter ended March 31, a total that fell below analysts' expectations.
The decrease resulted partly from lower than expected plane deliveries in the quarter — 20 versus 22 a year earlier — but CEO Éric Martel said the number aligned with Bombardier's production plan of 150 to 155 jets this year. Last year, roughly 40 per cent of its new jets landed with clients in the final quarter.
"We are seeing a lot of activity around the Global family," he said, referring to the larger of the two plane series churned out by the Montreal-based company — Challenger is the other, after Bombardier delivered the last of its smaller but world-renowned Learjets in 2022.
Bombardier burned through 57 per cent more cash last quarter than in the year prior, spending US$387 million to support a production ramp-up.
"While we continue to require more working capital investment in the near term, we will be well placed in the second half of the year and well beyond," Martel told analysts on a conference call Thursday.
Bombardier's shares rose $4.74 or eight per cent to $61.74 by day's end, its highest closing price so far this year.
Martel's remarks came one day after the 82-year-old company unveiled a new logo to mark its shift from an erstwhile giant of rail and commercial aviation to a pure-play business jet outfit.
"We went from a large industrial footprint with many businesses and product lines to a streamlined space that's leaner, greener, focused and ultra-modern," said Martel.
Dubbed the Bombardier Mach, the black-and-white symbol features a stylized silhouette of an aircraft breaking the sound barrier, "while the strokes of wind over an aircraft reference the company’s deeply rooted heritage and the Learjet brand’s storied winglet iconography," Bombardier said.
Last year, the company flew its forthcoming Global 8000 ultra-long-range jet at Mach 1 — the speed of sound, or about 1,235 km/h — a first in business aviation, it said.
Short-term demand for business jets has tapered off slightly, edging back toward historical levels after a pandemic-induced spike.
The percentage of used private jets for sale rose 32 per cent year-over-year to 1,094 in February, according to investment research firm Jefferies Group. Typically, more pre-owned planes for sale on the market means lower demand for new jets.
"Older airplanes are available on the market, but if you're looking for an airplane that has five, six, even less than 10 years, it's more difficult to find one," Martel said. "So people are coming towards new airplanes."
Flying activity on Bombardier jets is up seven per cent year-over-year, a "leading indicator that order activity should remain solid," said National Bank analyst Cameron Doerksen.
Consequently, Bombardier boosted its revenue from aftermarket services — maintenance and repairs, for example — by 13 per cent year-over-year to US$477 million.
It also continued to chip away at its heavy debt load. The company said it used excess cash to retire US$100 million worth of red ink last week. As of March 31, it carried US$5.61 billion of debt, according to its interim financial statement.
“Clearly, we are ahead of where we want to be,” said Martel.
Bombardier's ratio of adjusted net debt to adjusted earnings notched 3.6, up from 3.3 last quarter. Typically, ratios under three are the target.
The company reported a first-quarter profit of US$110 million, down from US$302 million a year earlier.
On an adjusted basis, Bombardier says it earned 36 cents US per diluted share, down from an adjusted profit of US$1.06 per diluted share a year earlier. But the figure beat analysts' expectations of 28 cents US per diluted share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published April 25, 2024.
Companies in this story: (TSX:BBD.B)
Christopher Reynolds, The Canadian Press
