MONTREAL — Bombardier Inc. (TSX:BBD.B) says its third-quarter revenues were up about 20 per cent from the same time last year, rising to US$4.9 billion.
However, Bombardier’s third quarter also included US$63 million of expenses related to a reorganization announced in July, including US$57 million for workforce reductions at its Aerospace and Transportation rail divisions.
As a result, Bombardier’s net income fell to US$74 million or three cents per share, down from $147 million or eight cents per share in the third quarter of 2013.
Excluding special items, Bombardier’s adjusted net income rose by 35 per cent from a year earlier to US$222 million or 12 cents per share — beating analyst estimates by three cents per share.
Analysts had estimated nine cents per share of adjusted profit and 10 cents before adjustments with $4.8 billion of revenue, according to Thomson Reuters data.
Bombardier, which reports its results in U.S. currency, is Canada’s largest aerospace company and one of the world’s largest manufacturers of commuter rail equipment. It’s the world’s only manufacturer of both planes and trains.
“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 Bombardier president and CEO Pierre Beaudoin.
“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.”
Beaudoin said Bombardier’s “new lighter structure” will result in a more nimble organization and reduce costs.
The company said that the workforce reduction at Aerospace took place in recent weeks and is expected to generate US$200 million in annual cost savings. The rail division is expected to received $68 million of annual cost savings from its workforce reduction.
Walter Spracklin of RBC Capital Markets said that he’ll be looking for more information about Bombardier’s CSeries testing program, which is necessary before the new generation of commercial passenger jet can go into full production.
Spracklin has said previously that long-term risks remain high even though the aerospace division has received new orders for the CSeries, which resumed test flights after a three-month pause following an engine failure during ground maintenance testing.
“Given the results we say this morning, we are relieved that the company came in slightly ahead on operating results and only modestly below on cash flow,” Spracklin wrote in a note after the results were issued early Thursday.
Bombardier reported it used up $368 million of free cash flow, down from $522 million a year earlier. About $180 million of the free cash flow was used by Aerospace, $81 million by Transportation and $107 million by income taxes and interest payments in this year’s third quarter.
In the third quarter, Bombardier Aerospace revenue increased by 29 per cent to $2.6 billion from $2 billion. It delivered 71 aircraft, up from 45 in the same period a year before. It also received 76 additional orders, compared with 26 in the third quarter of fiscal 2013.
Bombardier Transportation, the rail division, generated $2.3 billion of revenue, up 12 per cent from $2.1 billion excluding the impact of currency fluctuations. New orders reached $1.1 billion, resulting in an order backlog of $34.5 million as of Sept. 30, up from $32.4 billion as of Dec. 31, 2013
