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Friday, June 1, 2007

Bombardier Posts Gains in First Quarter

With congratulations from most investment analysts tuning in to its first quarter results, Bombardier (BBD) reported consolidated revenues totaled $4 billion for the first quarter ended April 30, 2007, compared to $3.5 billion for the same period last year. The $428-million increase was the result of higher manufacturing revenues for both business and regional aircraft, a good mix of pre-owned business aircraft, higher deliveries for pre-owned regional aircraft, and higher service revenues. It also said that it was currently studying increasing aircraft production because lead times stretch out more than 24 months. The lead times are forced by its supply chain and the current question is whether or not capacity exists within the supply chain. While production for the CRJs was reduced recently, the demand remains strong with several new orders this quarter, including Delta (DAL), with the strongest product being the CRJ-900. The challenge now, said Chair and CEO Laurent Beaudoin, is the length of the backlog. He indicated the increased pricing in both the business and regional aviation sectors would be even higher were it not for that. Finally, the company said that its decision on the CSeries must be made next year.
It reported its Aerospace backlog totals $15.1 billion. The backlog, including its Transportation sector, rose from $4.7 billion to $45.4 billion, the highest in its history. EBIT rose to $112 million, an increase of $57 million compared to the first quarter of the previous year. This represents an EBIT margin of five percent, compared to 2.8 percent for the same period last year. Free cash flow was also excellent in the first quarter, improving by $334 million over the same period last fiscal year.
Bombardier Aerospace received 174 net orders during the first quarter, compared to 52 the previous year. Fifty three of the first quarter orders were for regional jets, including an order for 30 CRJ-900s from Delta. Subsequent to the quarter, Delta placed an additional firm order for 14 CRJ-900s. Related Story Thirteen airlines worldwide have now ordered CRJ-900 aircraft.
Meanwhile, the popularity of Bombardier turboprops continues, with 38 orders during the quarter, including two orders of 15 Q400 aircraft each from Horizon Air and Pinnacle (PNCL). Subsequent to the quarter, Flybe also signed a contract to acquire 15 additional Q400 turboprops. Business aircraft revenues also increased, benefiting from a richer mix of larger aircraft deliveries. Business jet deliveries for the quarter more than doubled to 83 aircraft compared to 33 last year while regional aircraft deliveries reached 91 compared to 19 last year. The company reported a strong demand for pre-owned aircraft thanks to ExpressJet (XJT) retaining the 69 aircraft from 25 percent of its Continental Express operation which was terminated at the end of last year. That sent Continental (CAL) into the market. It also said that Bombardier had been successful in developing new markets such as its recent sale to ALMA in Mexico.
Bombardier Aerospace's revenues amounted to $2.3 billion for the three-month period ended April 30, 2007, compared to $2 billion for the same period the previous year.

Consolidated Earnings
Bombardier’s consolidated earnings before financing income, financing expense and income taxes (EBIT) grew by $105 million, to reach $183 million. Net income increased by $55 million to total $79 million, while earnings per share were $0.04, compared to $0.01 for the same period last fiscal year. Similarly, free cash flow (cash flows from operating activities less net additions to property, plant and equipment) usage of $154 million, after payment of a discretionary pension fund contribution of $174 million, compares to a usage of $539 million for the same period last fiscal year.
"We had a strong first quarter, with both groups contributing solid results," observed Beaudoin. "As both groups make progress toward their EBIT targets, we're seeing overall improvement in profitability and cash flow generation. At Aerospace, business aircraft continue to attract a substantial level of new orders. We're now also seeing the U.S. airline industry rebounding, as demonstrated by a higher level of regional aircraft orders compared to last year. "With the combination of our various initiatives yielding improved profitability, and our strong backlog, we are well positioned to pursue our goal of long-term sustainable growth."
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