Mr. Eric Martel reports

BOMBARDIER REPORTS THIRD QUARTER 2020 FINANCIAL RESULTS, PROVIDES UPDATE ON TRANSITION TO A PURE-PLAY BUSINESS AIRCRAFT COMPANY

Bombardier Inc. has released its financial results for the third quarter of 2020. The company also provided an update on its progress toward achieving its near-term priorities and its transition to a pure-play business aircraft company. All amounts in this press release are in U.S. dollars unless otherwise indicated. Amounts in tables are in millions except per-share amounts, unless otherwise indicated.

"While the ongoing pandemic continues to present unprecedented challenges, Bombardier remains focused on advancing its key priorities, which includes taking great care of our people and customers; ensuring sufficient liquidity to weather the storm; and continuing to move forward with our strategic repositioning of Bombardier as a leaner, focused business aviation company," said Eric Martel, president and chief executive officer, Bombardier. "In the third quarter, we made solid progress on each of these priorities. We secured additional liquidity with a new billion-dollar senior secured credit facility, we kept our divestitures moving forward as planned, and with deliveries ramping up across the businesses, we are still targeting break-even free cash flow for the second half of the year, assuming operations remain uninterrupted by the pandemic."

Third quarter revenues of $3.5-billion reflect the gradual recovery of operations at aviation and transportation from the COVID-19-related disruptions in the first half of 2020. Business aircraft revenues in the quarter were up 10 per cent year over year, driven by a record eight Global 7500 aircraft deliveries, which more than offset lower service revenues as international border restrictions, reduced business activity, and travel continues to pressure business jet utilization.

Total adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted EBIT (earnings before interest and tax) were $176-million and $51-million, respectively, for the quarter. These results reflect an unfavorable aircraft revenue mix at aviation, as well as the impact of several low-margin rolling stock projects, and the lingering impact of the pandemic on transportation's operations and customers. Total EBIT was $15-million for the quarter.

Free cash flow usage for the quarter was $706-million, supporting aviation's working capital requirements for an expected seasonally strong fourth quarter, including approximately a dozen Global 7500 deliveries before year-end. Transportation's free cash flow was near break-even for the quarter. Consolidated cash flow usage from operating activities was $644-million.

Bombardier began the fourth quarter with strong pro forma liquidity of approximately $3.0-billion. This includes $1.9-billion of cash on hand, access to the undrawn amounts of approximately $600-million on transportation's revolving credit facility as of Sept. 30, 2020, $250-million under the new senior secured term loan facility as at Sept. 30, 2020, and $275-million of proceeds from the sale of the aerostructures business. The company expects to further strengthen liquidity with positive cash generation in the fourth quarter, driven by the release of working capital both at aviation and transportation.

With the definitive sale and purchase agreement signed in September, and the Alstom shareholder approval last week, Bombardier believes it is on a solid path to close the Bombardier Transportation sale in the first quarter of 2021. As a result, the transportation business results have been classified as discontinued operations as of Sept. 30, 2020. At closing, the company expects net cash proceeds of approximately $4.0-billion, which will be directed to debt paydown.

"We are very excited about our future as a focused business jet company, about our opportunities to grow the services business, and to leverage our industry-leading product portfolio," Mr. Martel added. "We look forward to sharing the details of our plans in the near future, as we finalize our debt management strategy and cost-cutting initiatives to ensure our profitability in the current market and strong growth once the pandemic subsides."

                                              RESULTS OF THE QUARTER

                                                                   Three-month periods ended Sept. 30      
                                                              2020                               2019  
                                  Continuing  Discontinued          Continuing  Discontinued
                                  operations    operations   Total  operations    operations    Total

Revenues                              $1,405        $2,120  $3,525      $1,547        $2,175    3,722
Gross margin                             168           161     329         220           220      440
Adjusted EBITDA                           84            92     176         111           144      255
Adjusted EBITDA margin (%)               6.0           4.3     5.0         7.2           6.6      6.9
Adjusted EBIT (loss)                     (11)           62      51          49           110      159
Adjusted EBIT margin (loss) (%)         (0.8)          2.9     1.4         3.2           5.1      4.3
EBIT (loss)                              (29)           44      15          55            88      143
EBIT margin (loss) (%)                  (2.1)          2.1     0.4         3.6           4.0      3.8
Net income (loss)                        (24)          216     192        (168)           77      (91)
Diluted EPS (loss) (in dollars)        (0.01)         0.06    0.05       (0.07)         0.01    (0.06)
Adjusted net income (loss)              (210)           (5)   (215)       (155)          100      (55)
Adjusted EPS (loss) (in dollars)       (0.09)        (0.04)  (0.13)      (0.06)         0.02    (0.04)
Net additions to PP&E and
intangible assets                         36            26      62          77            48      125
Cash flows from operating (loss)
activities                              (619)          (25)   (644)       (393)         (164)    (557)
Free cash flow (usage)                  (655)          (51)   (706)       (470)         (212)    (682)

                                       RESULTS OF THE NINE-MONTH PERIOD 
                                                                            Nine-month periods ended Sept. 30
                                                                  2020                                   2019  
                                    Continuing  Discontinued              Continuing  Discontinued
                                    operations    operations     Total    operations    operations      Total

Revenues                                $4,150        $5,768    $9,918        $5,076        $6,476     11,552
Gross margin                               427            17       444           738           654      1,392
Adjusted EBITDA (loss)                     201          (173)       28           425           408        833
Adjusted EBITDA margin (loss) (%)          4.8          (3.0)      0.3           8.4           6.3        7.2
Adjusted EBIT (loss)                       (46)         (270)     (316)          232           304        536
Adjusted EBIT margin (loss) (%)           (1.1)         (4.7)     (3.2)          4.6           4.7        4.6
EBIT (loss)                               (479)         (282)      197           940           258      1,198
EBIT margin (%)                           11.5          (4.9)      2.0          18.5           4.0       10.4
Net income (loss)                         (155)          (76)     (231)          (13)          125        112
Diluted EPS (loss) (in dollars)          (0.07)        (0.12)    (0.19)        (0.01)        (0.01)     (0.02)
Adjusted net income (loss)                (640)         (375)   (1,015)         (417)          193       (224)
Adjusted EPS (loss) (in dollars)         (0.27)        (0.25)    (0.52)        (0.18)         0.02      (0.16)
Net additions to PP&E and
intangible assets                          170            70       240           290           112        402
Cash flows from operating
activities (loss)                       (2,028)       (1,116)   (3,144)         (743)       (1,010)    (1,753)
Free cash flow (usage)                  (2,198)       (1,186)   (3,384)       (1,033)       (1,122)    (2,155)

Segmented results and highlights

Aviation revenues of $1.4-billion reflect a 22-per-cent year-over-year growth from business aircraft manufacturing activities driven by stronger Global 7500 deliveries. This growth was offset by lower services and aerostructures activities impacted by the COVID-19 pandemic and the winddown of commercial aviation activities following the completion of the sale of the CRJ program in the second quarter.

Aviation delivered 24 aircraft during the quarter, lower year-over-year due to the realignment of production to the lower demand environment caused by the COVID-19 pandemic. The third quarter featured an unprecedented eight class-defining Global 7500 aircraft deliveries, in line with the goal to double deliveries in the second half of the year, relative to the first six months. Aircraft deliveries are expected to seasonally peak in the fourth quarter supported by a $12.2-billion business aircraft backlog.

Quarterly adjusted EBITDA and adjusted EBIT margins of 8.1 per cent and 1.4 per cent, respectively, reflect lower aircraft deliveries and services activities, combined with low contribution of early Global 7500 units as the program continues to progress on its production learning curve. Reported EBIT margin during the quarter of 0.6 per cent.

Bombardier's service and support network continued to expand its worldwide presence by entering into an agreement to establish a wholly owned service centre in Berlin following the completion of the acquisition of all the issued and outstanding shares of Lufthansa Bombardier Aviation Services (LBAS) and joining forces with Jetex to establish a world-class fixed-base operator (FBO) experience in Singapore. Subsequent to the quarter, Bombardier also announced the expansion of its service and support network footprint in Asia-Pacific with a new service centre in Melbourne, Australia, slated to be operational in 2022.

On Oct. 6, 2020, the corporation announced the entry into service of the Learjet 75 Liberty light jet. Delivering better performance at operating costs comparable with its competitors, the aircraft offers an exceptional value proposition to light jets customers and operators.

Transportation

Revenues during the quarter totalled $2.1-billion, 5 per cent lower year over year excluding currency translation impact, as operations gradually recover from disruptions across Europe and the Americas during the first half of 2020 due to the COVID-19 pandemic.

Adjusted EBIT margin of 2.9 per cent in the third quarter reflects an unfavourable rolling stock contract mix with approximately a third of revenues not contributing to earnings. Reported EBIT margin during the quarter of 2.1 per cent.

Key projects in the United Kingdom and Germany are gradually being homologated, moving into the critical fleet acceptance process and toward regular delivery phase by year-end. The margin dilution from these contracts is expected to continue through the end of 2020 as the company progresses on these contracts.

The outlook for transportation remains positive and is supported by a $34.1-billion backlog and strong industry fundamentals.

Order intake of $1.5-billion for the quarter reflects project wins across geographies, with notable contract awards in Spain, India and the United States. With several contract awards having been delayed globally over the past six months due to the COVID-19 pandemic, the company now expects a strong order recovery in the final months of 2020 with a healthy mix of options being exercised as well as service contracts.

About Bombardier Inc.

With over 52,000 employees across two business segments, Bombardier is a global leader in the transportation industry, creating innovative and game-changing planes and trains. Its products and services provide world-class transportation experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.

Headquartered in Montreal, Canada, Bombardier has production and engineering sites in over 25 countries across the segments of aviation and transportation. In the fiscal year ended Dec. 31, 2019, Bombardier posted revenues of $15.8-billion.

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