Q4 2021 Bombardier Inc Earnings Call

Speaker 1: Thank you for your patience. We will be able to answer your questions. The conference will be open. We will be able to answer any questions you have. We will be able to answer your questions. This conference is being recorded. This conference is being recorded.

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This conference is being recorded.

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All participants please standby your conference is ready to begin good morning, ladies and gentlemen, and welcome to the Bombardier.

Speaker 2: Good morning ladies and gentlemen and welcome to the Bombardier 4th quarter and full year of 2021 earnings conference call.

Full year 2021 earnings conference call.

This call is being recorded at this time.

Speaker 2: I'd like to turn the discussion over to Mr. Francis Fichet-Laf

I'd like to turn the discussion over to Mr. Fong.

Speaker 2: Vice President, FBNA and Investor Relations for Bombardier.

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Good morning, everyone and welcome to <unk> earnings call for the fourth quarter and full year ended December 31 2021.

Speaker 3: Good morning everyone and welcome to Bohm Hause's earnings call for the fourth quarter in full year ended December 31st, 2021.

Speaker 3: I wish to remind you that during the course of this call, we may make projections or other forward-looking statements regarding future events or the financial performance of the corporation. There are risks that actual events or results may differ materially from these statements.

I wish to remind you that during the course of this call we may make projections or other forward looking statements regarding future events or the financial performance of the Corporation.

Or is that actual events or results may differ materially from these statements.

Speaker 3: For additional information on forward-looking statements and underlying assumptions, please refer to the MDNA. I'm making this cautionary statement on behalf of each speaker on this call.

For additional information on forward looking statements and underlying assumptions please refer to the MD&A.

Making this cautionary statement on behalf of each speaker on this call.

Speaker 3: With me today is our President and Chief Executive Officer, Eric Mafel, and our Executive Vice President and Chief Financial Officer, Bart Domoski, to review our operations and financial results for the fourth quarter and year-ended December 31st, 2021. I will now turn the discussion to the Executive Vice President and Chief Financial Officer, Bart Domoski,

With me today is our president and Chief Executive Officer, and our Executive Vice President and Chief Financial Officer, Bart Dymovsky to review, our operations and financial results for the fourth quarter and year ended December 31 2021.

I will now turn the discussion over to Eric.

Speaker 4: Thank you, Francis. Good morning and good evening to you. Good morning everyone and we're happy to have you join us today.

Hello.

Yes.

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Good morning, everyone and we're happy to have you join us today.

Speaker 4: 2021 was a strong start to Bombardier's repositioning around business aviation.

2021 was a strong start to Bombardier is repositioning around business aviation.

Speaker 4: It is a testament to the team's expertise, dedication to executing the plan, and the driven mindset behind every individual at Bombard.

It is a testament to the team's expertise dedication to executing the plan.

The driven mindset behind every individual at Bombardier.

Speaker 4: Bart and I are here to tell you how we are planning to grow in 2022. And it is exciting. But first, here are my reflections on our performance and key achievements in 2021. Execution was our motto this year.

Bart and I are ear to tell you Oh, we are planning to grow in 2022 and it is exciting but first here are my reflection on our performance and key achievements in 2021.

Execution was our most of this year.

This approach was the key to our success our team executed to our plan at every level and the plan help us stay focused on our priorities, while proactively managing supply chain pressure as well as restrictions caused by depend emmick clearly we add mark.

Speaker 4: Our team executed to our plan at every level and the plan help us stay focused on our priorities while proactively managing supply chain pressure as well as restriction caused by the pandemic.

Speaker 4: Clearly, we have marked a tailwind, but we are proud to say that, above all, we had the right approach, executed our plans, and delivered.

<unk> tailwind, but we are proud to see that above all we had the right approach executed our plans and deliver.

Speaker 4: We delivered a fantastic year and here are some highlights.

We delivered a fantastic year and here are some highlights.

Speaker 4: We raised our guidance mid-way and then exceeded it.

We raised our guidance mid week, and then exceeded it.

Speaker 4: We introduced the Challenger 3500, the next generation of the market's best-selling super mid-sized jet within our committed capex envelope.

We introduced a challenger 3500, the next generation of the market's best selling Super midsized jet within our committed Capex envelope flight test and certification are on track for production cut in this year.

Speaker 4: Flight test and certification are on track for production cut in this year.

Speaker 4: The aircraft has also been a huge success on the sailfront.

The aircrafts as also been a huge success on the cell from it.

Speaker 4: It has significantly contributed to our team achieving the best order and take in the last 8 years.

It has significantly contributed to our team achieving the best order intake in the last eight years.

Speaker 4: Next, we continue to grow our service network in physical capacity as well as capability.

Next we continue to grow our service network and physical keep capacity as well as capabilities.

Speaker 4: We also delivered our 1000 global and progressed through our learning curve on the global 7500 jet to make it a margin contributor turning now toward an accelerator.

We also delivered our 1000 global and progress through our learning curve on the global 75 under a jet to make it a margin contributor turning now so word an accelerator.

Speaker 4: Our global aircraft also notched a win in the specialized aircraft sphere, securing a six aircraft order with the United States Air Force Bacon program.

Our global aircraft I'll also notched a win in the specialized aircrafts sphere, securing a six aircraft order with the United States Air Force Bacon program.

Speaker 4: This underscores the solid effort we are making to diversify toward defense solutions and leverage our operation in Wichita, Kansas to grow this business with a now capability.

This underscores the solid effort, we are making to diversify towards defense solution and leverage our operation in Wichita, Kansas to grow this business with in house capabilities.

Speaker 4: On a financial front, we cleared the debt maturity runway as we committed and materially reduced our interest expenses.

On the financial front, we cleared that debt maturity runway as we come into it.

And materially reduce our interest expenses.

Speaker 4: We identified and implemented efficiencies and welcome back David Murray, who is moving the Operational Excellence program to its next phase.

We identified and implement efficiencies and welcome back David Murray with moving the operational excellence program to its next phase.

Speaker 4: Finally, we outline clear and achievable ESG goals our employee, stakeholder and partners can be proud of.

Finally, we outline clear and achievable ESG goals, our employee stakeholders and partners can be proud of.

Speaker 4: I believe the words to describe 2021 are planning, execution and prudence.

I believe the word to describe 2021 are planning execution and prudence.

Speaker 4: And for me personally, as the CEO of this great company that is turning 80 this year, pride.

And for me personally as the CEO of this great company that is turning 80 this year price.

Speaker 4: We closed the year with $12.2 billion of backlog. This is a significant increase of $1.5 billion. It comes from a solid unique book-to-bill ratio of more than 1.5 for the full year.

We closed the year with 12 $2 billion of backlog. This is a significant increase of $1 $5 billion. It comes from a solid unit book to bill ratio of more than one five for the full year.

Speaker 4: Overall, our backlog is now bigger and more balanced.

Overall, our backlog is now bigger and more balance.

In the midterm.

Speaker 4: we see a healthy product mix and healthy price.

We see a healthy product mix and pricing.

Speaker 4: two very fundamental elements to maintain predictability and resilience for our business.

Two very fundamental elements to maintain predictability and resilience for our business. Our teams can focus on the right deals and we are largely sold out for 2022 already.

Speaker 4: our teams can focus on the right deals and we are largely sold out for 2022 already.

Speaker 4: As Prudence is serving us well, we are applying the same mindset to the production rate. We will continue to take into account three factors, backlog, pricing and supply chain and won't pressure one in favor of another. That said, we will continue to take into account three factors, backlog, pricing and supply chain and won't pressure one in favor of another.

As Prudence is serving us well we are applying the same mindset to the production rate. We will continue to take into account three factor backlog pricing and supply chain and won't pressure one in favor of another.

That said, we do remain flexible this year's guidance to deliver more than 120 jet reflects well plan increases mostly on our challenger product line.

Speaker 4: This year's guidance to deliver more than 120 jets reflects well-planned increases, mostly on our Challenger product.

Speaker 4: These extra jets will also see us replace volumes we saw coming in through the light jet category in 2021 and come with a more profitable contribution.

These extra jets will also see us replace volumes we saw coming.

Through the light jet category in 2021 and come with a more profitable contribution.

Speaker 4: We see stability in the large segment as it continues to demonstrate resilience to fluctuation.

We see stability in the large segment as it continues to demonstrate resilience to fluctuation.

Speaker 4: Long term, we will ensure we are growing responsibly.

Long term, we will ensure we are growing responsibly.

Speaker 4: We will leverage all efficiencies we have worked on to date to maintain a solid cost run.

We will leverage all efficiencies we have worked on to date to maintain a solid cost structure.

Speaker 4: That said, we are positioning ourselves to accelerate deliveries by another 15 to 20% as soon as 2023, while maintaining a sharp focus on balancing longer-term production increase with the actual pricing environment.

That said, we are positioning ourself to accelerate deliveries by another 15% to 20% as soon as 2023, while maintaining a sharp focus on balance balancing longer term production increase with the actual pricing environment.

Speaker 4: Now coming back to the global 7500 learning curve, I am delighted to confirm that we have reached steady state production.

Now coming back to the global 7500 learning curve I am delighted to confirm that we have reached steady state production.

Speaker 4: we delivered 39 of these industry leading jets.

We delivered 39 of these industry leading jets.

Speaker 4: Like I mentioned before, we are entering a phase where the product is becoming a margin accelerator and is exactly in line with where we were planning to be.

Like I mentioned before we are entering a phase where the product is becoming a margin accelerator and is exactly in line with where we were planning to be.

Speaker 4: The aircraft's performance is simply exceptional, and I'd like to thank the teams for their huge efforts on that front.

The aircrafts performance is simply exceptional and I'd like to thank the teams for their huge efforts on that front.

Speaker 4: It has positioned us for a smooth transition of manufacturing operation from Don's View to Mississauga once construction is complete.

It has positioned us for a smooth transition of manufacturing operation from <unk> to Mississauga once construction is complete.

Speaker 4: We are very excited to make the move to the new state-of-the-art facility. It will further optimize operational efficiency as well as our environmental...

We are very excited to make the move to the new state of the art facility.

It will further optimize operational efficiency as well as our environmental footprint.

Speaker 4: We grew our top-line revenue 7% year-over-year to $6 billion for 2021.

We grew our top line revenue, 7% year over year to $6 billion for 2021.

Speaker 4: Most notably, with business aviation flight hours trending up, our service revenue stream followed suit up 25% and contributing $1.2 billion to our total revenue.

Most notably with business have you shouldn't flight hours trending up our service revenue stream, followed suit up 25% and contributing $1 2 billion to our total revenue.

Speaker 4: As I mentioned before, the business aviation market has firmed up.

As I mentioned before the business aviation market as firmed up low used aircraft inventory remains and flight hours have surpassed pre pandemic levels.

Speaker 4: Low used aircraft inventory remains and flight hours have surpassed pre-pandemic levels.

Speaker 4: Services are absolutely key to our growth and our success.

Services are absolutely key to our growth and our success, we are considering our expansion in keeping the services growth curve steadily trending upward and in line with our 2025 objectives.

Speaker 4: We are continuing our expansion and keeping the services growth curve steadily trending upward. And in line with our 2025 objectives.

Speaker 4: This year, we plan to inaugurate significant expansion in Singapore, Australia, the UK and the US.

This year, we plan to inaugurate significant expansion in Singapore, Australia, the UK and the U S.

Speaker 4: We are where our customers are flying and where they need us.

We are aware, our customer are flying and where they need us to be.

Speaker 4: Our international network and programs are well placed to be key revenue drivers along

Our international network and programs are well placed to be key revenue driver long term.

Speaker 4: Turning to pre-cash flow, 2021 was a standout year overall.

Turning to free cash flow 2021 was a standout year overall.

Speaker 4: We ended $100 million cash positive from continuing operation well ahead of where we wanted to go.

We ended $100 million cash positive from continuing operation.

Well ahead of where we wanted to be.

Speaker 4: Overall, our cash profile has greatly improved and we are guiding a greater than $50 million of positive free cash flow in 2020.

Overall, our cash profile is greatly improved and we are guiding a greater than $50 million of positive free cash flow in 2022.

Speaker 4: We are pleased that all factors have converged to significantly improve our profitability. Our solid internal and execution help us post a 220% improvement in adjusted EBITDA year over year. 2021 saw us reach 640 million in adjusted EBITDA, and 2022 will continue the trend upward as we are implementing further initiatives in our recurring cost savings.

We are pleased that all factors of converge to significantly improve our profitability our solid internal execution help us both a 220% improvement in adjusted EBITDA year over year 2021 saw us reach $640 million in adjusted EBITDA.

And 2022 will come to you to trend upward as we are implementing further initiatives in our recurring cost saving plan we.

Speaker 4: We have made significant progress across the initiative we identified for this year, which are essential to reaching our 2025 objective.

We have made significant progress across the initiative, we identified for this year, which are essential to reaching our 2025 objective looking at the jump we made from 'twenty one to 'twenty. Two we have successfully built the right fundamentals.

Speaker 4: Looking at the jump we made from 21 to 22, we have successfully built the right fundamental.

Speaker 4: We essentially expect to grow our EBIT.29% year over year and we are well positioned to tap into free cash to upside as we progress through the plan.

We essentially expect to grow our EBIT, the 29% year over year, and we are well positioned to tap into free cash flow upside as we progress through the plan.

Speaker 4: BART will detail how this all factors into our plan and overall position, but we will also be delighted to share more long-term view during our February 24th investor day.

Bart will detail out this all factors into our plan an overall position, but we will also be delighted to share more long term view during our February 2000 and for Investor Day.

Speaker 4: Before I pass the floor to Bart, I would like to once again thank all Bombardier team members for their effort in executing our plan, serving our customers and keeping focus on delivering value to our shareholders.

Before I pass the floor to Bart I would like to once again, thank all Bombardier team members for their efforts in executing our plan, serving our customer and keeping focused on delivering value to our shareholders. We continue to be very vigilant on health and safety in every region.

Speaker 4: We continue to be very vigilant on health and safety in every region. We operate and appreciate everyone's buy-in to keeping their fellow colleagues safe for those who cannot work remotely. We have set a solid foundation for Bombardier's future.

We operate and appreciate everyone's buying to keeping their fellow colleague safe for those who cannot work remotely we have set a solid foundation for <unk> future.

Speaker 4: I believe that each person listening to this call, whether an analyst, journalist, employee, or investor, can be extremely proud of Bombardier's performance. Our product, the company's commitment to ESG, and our contribution to R&D that will make our skies and industry even more sustainable. With that, I'll turn the call over to Bart.

I believe that each person listening to this call. We're doing nano this journalists employee or investor can be extremely proud of Bombardier performance, our product the company's commitment to ESG and our contribution to R&D that will make our skies and industry even more sustainable.

That I will turn the call over to Mark.

Thank you, Eric and good morning, everyone.

Speaker 3: 2021 was the starting point of our journey to build a stronger, more profitable, more resilient, and materially de-levered business.

2021 was the starting point of our journey to build a stronger more profitable more resilient and materially de Levered business.

Speaker 3: To that end, I'm very pleased with what we have achieved so far.

To that end I am very pleased with what we've achieved so far.

Speaker 3: We progressed on our strategic priorities, demonstrated solid operational execution, and stayed disciplined in a very dynamic business aviation market. As a result of this, we have exceeded our 2021 revised guidance on revenues, profitability, and free cash flow.

We progressed on our strategic priorities demonstrated solid operational execution and discipline in a very dynamic business aviation market.

As a result of this we have exceeded our 2021 revised guidance on revenues profitability and free cash flow.

Speaker 3: Before talking about the year ahead, I'd like to address our 2021 performance, starting with achievements on our four-year-old team.

Before talking about the year ahead, I'd like to address our 2021 performance starting with achievements on our four strategic priorities.

Speaker 3: First, on the global 7500 learning curve, we have turned a negative EBITDA contributor in 2020 into a positive and a creative EBITDA contributor in 2021.

First on the global 7500 learning curve, we have turned our negative EBITDA contributor in 2020 into a positive and accretive EBITDA contributor in 'twenty one.

Speaker 3: Program margins have improved each quarter this year, and with only a few aircraft remaining before our 100th delivery, we can comfortably say that in the first half of this year, we will achieve the targeted 20% unit cost reduction between the 50th and 100th aircraft.

Graham margins have improved each quarter this year and with only a few aircraft remaining before our 100th delivery. We can comfortably say that in the first half of this year, we will achieve the targeted 20% unit cost reduction between the 50 and 100 aircraft.

Speaker 3: Second, we delivered approximately $135 million in cost savings last year, 35% more than the $100 million included in our original guidance for the year.

Second we delivered approximately $135 million in cost savings last year, 35% more than the $100 million included in our original guidance for the year.

Speaker 3: As we enter 2022, all of the actions required to reach 250 million of savings have already been taken, and we are progressing to plan on delivering 400 million annual recurring savings by 2023.

As we enter 2022 all of the actions required to reach $250 million of savings have already been taken and we are progressing to plan on delivering $400 million annual recurring savings by 2023.

Speaker 3: Third, our aftermarket business recovered well in 2021, supported by fleet flight hours which equaled 2019 levels for the full year.

Third our aftermarket business recovered well in 'twenty, one supported by fleet flight hours, which equaled 2019 levels for the full year.

Speaker 3: Our Q4 21 revenues of 363 million are 44% higher than Q4 2020 and 17% higher than Q4 of 2019.

Our Q4, 'twenty, one revenues of $363 million or 44% higher than Q4, 2020, and 17% higher than Q4 of 2019.

Speaker 3: This puts our aftermarket business on the right trajectory to reach our $2 billion revenue target by 2025.

This puts our aftermarket business on the right trajectory to reach our $2 billion revenue target by 2025.

Speaker 3: The year 2022 will have several important milestones as our footprint rapidly grows with new facilities coming into service and as we continue expanding our service offer.

The year 2022, we will have several several important milestones as our footprint rapidly grows with new facilities coming into service and as we continue expanding our service offering.

Speaker 3: Finally, we have made significant progress over the past year to de-lever our business and improve our debt maturity profile.

Finally, we have made significant progress over the past year to Delever, our business and improve our debt maturity profile in.

Speaker 3: In 2021, we reduced our total debt by approximately $3 billion.

In 'twenty, one we reduced our total debt by approximately $3 billion the.

Speaker 3: The average term to maturity of our bonds has increased from 3 to 5 years, and we have been able to reduce annual interest charges by more than $225 million compared to the prior year.

The average term to maturity of our bonds has increased from three to five years, and we have been able to reduce annual interest charges by more than $225 million compared to the prior year.

Speaker 3: Looking forward, we will continue to be opportunistic in the debt capital markets with regards to pay down and refinance.

Looking forward, we will continue to be opportunistic in the debt capital markets with regards to Paydown and refinancing.

Speaker 3: With approximately $2.1 billion of adjusted liquidity at our disposal heading into this year, we are well positioned to continue making progress on our deleveraging plan.

With approximately $2 1 billion of adjusted liquidity at our disposal heading into this year, we are well positioned to continue making progress on our deleveraging plans.

Speaker 3: On February 1st of this year, we issued a press release that certain bondholders of our 2034 notes are alleging that the company is in breach of certain covenants under the 2034 indenture.

On February one.

This year, we issued a press release that certain bondholders of our 2034 notes are alleging that the company is in breach of certain covenants under the 2034 indenture.

Speaker 3: We believe that this claim is without merit, and Bombardier intends to vigorously defend itself against these claims.

We believe that this claim is without merit and Bombardier intends to vigorously defend itself against these claims.

Speaker 3: It is important to note that the complaint has no impact on our operation.

It is important to note that the complaint has no impact on our operations.

Speaker 3: We believe firmly we have acted in the best interests of our bondholders and many of them have already expressed their support.

We believe firmly we have acted in the best interest of our bondholders and many of them have already expressed their support.

Speaker 3: We are moving ahead with our strategic priorities to grow our company, build a more resilient and profitable business, and have never been in a better position to service and reduce our debt going forward. So let me speak now about our...

We are moving ahead with our strategic priorities to grow our company build a more resilient and profitable business and have never been in a better position to service and reduce our debt going forward.

So let me speak now about our results for a moment.

Speaker 3: Looking specifically at Q4, the most notable change versus 2020 is in free cash flow, where we improved by a full $2 billion.

Looking specifically at Q4, the most notable change versus 2020 is in free cash flow, where we improved by a full $2 billion.

Speaker 3: We had a stellar performance to finish the year with positive cash flow generation of $332 million in the fourth quarter, translating to $100 million of full year free cash flow generation, including approximately $165 million of non-recurring costs.

We had a stellar performance to finish the year with positive cash flow generation of $332 million in the fourth quarter translating to $100 million of full year free cash flow generation, including approximately $165 million of nonrecurring costs.

Speaker 3: Turning to our full year results, we ended the year with revenues of $6.1 billion resulting from 120 aircraft deliveries and $1.2 billion in aftermarket revenue.

Turning to our full year results. We ended the year with revenues of $6 1 billion, resulting from 120 aircraft deliveries and $1 2 billion and aftermarket revenues.

Speaker 3: This represents a year-over-year improvement of 7% when adjusting for the impact from the divestitures we made in commercial aviation and aerostruct.

This represents a year over year improvement of 7% when adjusting for the impact from the divestitures. We've made in commercial aviation and Aerostructures. Our 2021 business aircraft manufacturing revenue grew as a result of six incremental deliveries and better mix large cabin aircraft accounted for a <unk>.

Speaker 3: Our 2021 business aircraft manufacturing revenue grew as a result of six incremental deliveries and better mix.

Speaker 3: Large cabin aircraft accounted for a higher content of deliveries going from 59 in 2020 to 66 in 2021 including 39 global 7500.

Higher content of deliveries going from 59% in 2020 to 66 and 2021, including 39 global 75 hundreds.

Speaker 3: For our aftermarket business, full year revenues increased by 25% versus the prior year as flight hours increased and activity ramped up across our network.

For our aftermarket business full year revenues increased by 25% versus the prior year as flight hours increased and activity ramped up across our network.

Speaker 3: The rise in flight hours was very significant, with the month of January being approximately 20% lower than pre-COVID levels, followed by an impressive ramp-up during the year to reach approximately 20% higher than pre-COVID levels in the month of December .

The rise in flight hours was very significant with the month of January being approximately 20% lower than pre COVID-19 levels.

Followed by an impressive ramp up during the year to reach approximately 20% higher than pre COVID-19 levels in the month of December .

Speaker 3: we were able to rapidly adjust to the demand and capture a maximum of revenues in that recovery.

We were able to rapidly adjust to the demand and capture a maximum of revenues in that recovery.

Speaker 3: The last two years of COVID have shown the resilience of our aftermarket business, which has demonstrated its flexibility by adjusting to large variations of demand while preserving a high level of profitability. The run rate of the business in Q4 at $363 million shows we are well on our way to reaching our $2 billion goal of annual aftermarket revenues by 2025.

The last two years of Covid have shown the resilience of our aftermarket business, which has demonstrated its flexibility by adjusting for large variations of demand, while preserving a high level of profitability.

The run rate of the business in Q4 at $363 million shows we are well on our way to reaching our $2 billion goal of annual aftermarket revenues by 2025.

Speaker 3: As I've been reporting all year, divestitures in aerostructures and commercial aviation did result in negative year over year revenue impact of $805 million.

As ive been reporting all year divestitures in Aerostructures and commercial aviation did result in negative year over year revenue impact of $805 million.

Speaker 3: Now looking at revenues, we delivered six fewer aircraft resulting in our revenues being down as compared to those for the same period last year, primarily due to fewer global 7500 deliveries. However, this was expected. As we have come down our learning curves and our production line is now more mature resulting in a more even distribution of global 7500 aircraft deliveries throughout the year.

Now looking at revenues, we delivered six fewer aircraft, resulting in our revenues being down as compared to those for the same period last year, primarily due to fewer global 7500 deliveries. However, this was expected as we have come down our learning curves in our production line is now more mature, resulting in a more <unk>.

Even distribution of global 7500 aircraft deliveries throughout the year.

Speaker 3: Moving to profit, total adjusted EBITDA for the year was 640 million, representing an EBITDA margin of 10.5%. This is a 220% improvement year on year, meaningfully expanding from our 2020 EBITDA of 200 million.

Moving to profit total adjusted EBITDA for the year was $640 million Rep.

Representing an EBITDA margin of 10, 5%.

This is a 220% improvement year on year meaningfully expanding from our 2020 EBITDA of $200 million.

Speaker 3: adjusted EBIT was 223 million for an EBIT margin of 3.7%.

Adjusted EBIT was $223 million for an EBIT margin of three 7%.

Speaker 3: The main drivers of our margin expansion were a favorable aircraft mix, higher aftermarket content, and strong performance on our operating costs.

The main drivers of our margin expansion were a favorable aircraft mix higher aftermarket content and strong performance on our operating costs.

Speaker 3: more specifically improvements in the maturing of the Global 7500 learning curve, as well as delivering on our cost reduction plan.

More specifically improvements in the maturing of the global 7500 learning curve as well as delivering on our cost reduction plans.

Speaker 3: In Q4, working capital with a key driver at performance.

In Q4, working capital was a key driver of performance with.

Speaker 3: We further increased and diversified our backlog, which now stands at $12.2 billion.

We further increased and diversified our backlog, which now stands at $12 2 billion.

Speaker 3: Our Q4 unit booked to bill reached approximately 1.6 times.

Our Q4 unit book to Bill reached approximately one six times.

Speaker 3: This helped customer payment levels increase by $434 million versus the third quarter.

This helped customer payment levels increased by $434 million versus the third quarter.

Speaker 3: Our inventory also trended favorably in the fourth quarter, decreasing by 187 million, largely as a result of increased delivery.

Our inventory also trended favorably in the fourth quarter decreasing by $187 million largely as a result of increased deliveries.

Speaker 3: Finally, for three consecutive quarters now, we have generated positive free cash flow. As we continue to build earnings, reduce interest costs, maintain a strong backlog, and manage our working capital, it is clear that we have meaningful cash generation potential ahead of us, including building in capital allocation flexibility. Now let me

Finally for three consecutive quarters now we have generated positive free cash flow as we continue to build earnings reduce interest costs maintain a strong backlog and manage our working capital. It is clear that we have meaningful cash generation potential ahead of us including building in capital.

Allocation flexibility.

Now, let me turn to our 'twenty two guidance.

Speaker 3: Looking ahead, we are confident in our guidance as we step into the year.

Looking ahead, we are confident in our guidance as we stepped into the year.

Speaker 3: Operationally, our priority will be to responsibly manage our backlog, balancing aircraft demand and production rates, and keeping a focus on having the right length of backlog on each platform. This is the key to building predictability and resilience into our business.

Operationally, our priority will be to responsibly manage our backlog balancing aircraft demand and production rates and keeping a focus on having the right length of backlog on each platform.

This is the key to building predictability and resilience into our business.

Speaker 3: We expect aircraft deliveries will be a bit over 120, including the final three Learjet aircraft. This puts our year-over-year production increase, including excluding Learjet soaring, in the high single-ditch...

We expect aircraft deliveries will be a bit over 120, including the final III Lear jet aircraft. This puts our year over year production increase include excluding learjet sorry in the high single digits in terms of mix, we expect a large segment to be relatively flat and see an increase in deliveries in the medium segment.

Speaker 3: In terms of mix, we expect the large segment to be relatively flat and see an increase in deliveries in the medium segment.

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Speaker 3: Revenues are expected to grow to greater than $6.5 billion, representing an approximately 7% year-over-year improvement.

Revenues are expected to grow to greater than $6 5 billion, representing an approximately 7% year over year improvement.

Speaker 3: the more than 400 million increase versus 21 is equally attributable to favorable aircraft mix and continued growth of our aftermarket business.

More than $400 million increase versus 'twenty, one is equally attributable to favorable aircraft mix and continued growth of our aftermarket business.

Speaker 3: From an earnings standpoint, we expect that our EBITDA will continue to grow, going from 640 million in 2021 to more than 825 million in 2022, representing a 29% increase or greater.

From an earnings standpoint, we expect that our EBITDA will continue to grow going from $640 million and 21% to more than $825 million in 'twenty, two representing a 29% increase or greater.

Speaker 3: We also expect adjusted EBIT to be greater than $375 million, and this is largely attributable to three main drivers.

We also expect adjusted EBIT to be greater than $375 million and this is largely attributable to three main drivers.

Speaker 3: First, we will benefit from margin conversion on the incremental revenues versus last year.

First we will benefit from margin conversion on the incremental revenues versus last year.

Speaker 3: In these margins, we have factored in favorable year-over-year pricing on new aircraft, all of which is secured through our backlog.

And these margins we have factored in favorable year over year pricing on new aircraft all of which is secured through our backlog.

Speaker 3: However, this benefit will be offset by cost increases we are seeing in our supply chain as 2022 escalation formulas come into effect.

However, this benefit will be offset by cost increases we are seeing in our supply chain as 2022 escalation formulas come into effect.

Speaker 3: We have also factored the unfavorable impacts from curtailment of eligible support programs, as well as foreign exchange headwinds with regards to the Canadian dollar, which is approximately 3 cents stronger relative to the US dollar and 21, including our hedges.

We have also factored the unfavorable impacts from curtailment of eligible support programs as well as foreign exchange headwinds with regards to the Canadian dollar, which is approximately <unk> stronger relative to the U S dollar in 'twenty, one, including our hedges.

Speaker 3: Second is the benefit from the global 7500 learning curve, bringing margin expansion on similar delivery laws.

Second is the benefit from the global 7500 learning curve, bringing margin expansion on similar delivery volumes.

Speaker 3: Finally, we will continue to progress on our cost production initiatives.

Finally, we will continue to progress on our cost reduction initiatives, we delivered approximately $135 million of savings last year and those savings will increase to $250 million this year.

Speaker 3: We delivered approximately $135 million of savings last year, and those savings will increase to $250 million this year.

Speaker 3: With regards to free cash flow, we plan to deliver more than $50 million of positive free cash flow, including non-recurring costs related to legacy RBG liabilities, estimated at approximately $50 million for the year.

With regards to free cash flow, we plan to deliver more than $50 million of positive free cash flow, including nonrecurring costs related to legacy RPG liabilities estimated at approximately $50 million for the year.

Speaker 3: To achieve this, we will remain responsible with our investment envelope targeting between 200 and 300 million of capex.

To achieve this we will remain responsible with our investment envelope targeting between 200 $300 million of Capex.

Speaker 3: We also expect working capital to be neutral as we continue to capture our share of orders in a constructive market, offset by an increase in inventories to support 2023 delivery increases.

We also expect working capital to be neutral as we continue to capture our share of orders in a constructive market.

Offset by an increase in inventories to support 2023 delivery increases.

Speaker 3: interest costs will remain an important use of cash flows in the year, though they will be materially reduced versus 21.

Interest costs will remain an important use of cash flows in the year, though they will be materially reversed reduced versus 'twenty one.

Speaker 3: So let me wrap up by providing some color on our first quarter of this year.

So let me wrap up by providing some color on our first quarter of this year.

Speaker 3: Continuing to build on the solid work we did in 2021, we expect EBITDA margins in the first quarter to improve versus the same quarter last year. Aircraft delivery should be around 20 units as we prepare to transition our production over to the Challenger 3500 later this year.

To build on the solid work we did in 'twenty, one we expect EBITDA margins in the first quarter to improve versus the same quarter last year.

Aircraft deliveries should be around 20 units as we prepare to transition our production over to the challenge of 3500 later this year.

Speaker 3: We expect to see free cash flow usage in Q1, but our performance will meaningfully improve versus last year as we benefit from lower interest payments and fewer recurring costs.

We expect to see free cash flow usage in Q1, but our performance will meaningfully improve versus last year as we benefit from lower interest payments and fewer recurring costs.

Speaker 3: To conclude, we have achieved a great deal in 2021 and are confident in maintaining our strong performance into 2022. The longer term we plan at last year's investor day remains on track as we continue to focus on becoming a more profitable and predictable business aviation company.

To conclude we have achieved a great deal in 'twenty, one and are confident in maintaining our strong performance into 2022.

Longer term, we plan share at last year's Investor Day remains on track as we continue to focus on becoming a more profitable and predictable business Aviation company.

Speaker 3: I look forward to sharing more with you at our February 24th Virtual Investor Day about our progress towards our 2025 objective.

I look forward to sharing more with you at our February 24th virtual Investor day about our progress towards our 2025 objectives. Thank you very much with that I'll turn it back over to Francis to begin the Q&A.

Speaker 3: Thank you very much. With that, I'll turn it back over to Francis to begin the Q&A.

Speaker 3: Thanks, Mark. I'd like to remind everyone that the IR team will be available following the call on the coming days to answer any questions you may have. With that, we'll open it up for questions. Operator, we're ready for our first question. Thank you. If you have a question.

Alright, Thanks, Mark I'd like to remind everyone that the IR team will be available following the call in the coming days to answer any questions you may have.

With that we'll open it up for questions operator, we're ready for our first question.

Thank you.

Have a question. Please press star one on your Touchtone telephone if you are using a speaker phone. Please lift your handset and then Crystal one should you wish to cancel your question. Please press star two.

Speaker 2: If you are using a speakerphone, please lift your handset and then press stop.

Speaker 2: If you wish to cancel your question, please press star 2. To allocate time for all participants, please limit yourself to one question.

All participants please limit yourself to one question and one follow up.

Speaker 2: Our first question is from Sally Shamoon from BMO Capital Markets.

Our first question is from from BMO capital markets. Please go ahead.

Speaker 5: Yes, good morning.

Yes, good morning.

Maybe.

Speaker 5: But if you can give us an idea about what are you expecting in terms of contribution from the cost saving program.

If you can give us.

And the idea about what are you expecting in terms of contribution from the cost saving program.

In 2022.

Speaker 3: Yeah, Fadi, good morning and great question. We've made significant progress on our cost reduction plans. I mentioned on the call that we had originally planned to achieve 100 million of full cost savings. This is full EBIT cost savings in 2021 and we actually achieved 135 million.

Yes.

Good morning, and great question.

We made we have made significant progress on our on our cost reduction plans.

I mentioned on the call that.

We had originally planned to achieve a $100 million of full cost savings. This is full EBIT EBITDA cost savings in 'twenty, one and we actually achieved $135 million.

Speaker 3: Our total goal of $400 million, we are absolutely on track towards achieving by 2023. And in 2022, we have already taken all of the actions necessary to achieve a full $250 million of cost savings during the year. We'll give a little bit more color on that on investor day coming up as well, Fadi. And thank you very much for the question.

Our total goal of $400 million, we are absolutely on track towards achieving by 2023 and in 2022.

We have already taken all of the actions necessary to achieve a full $250 million of cost savings during the year, we'll give a little bit more color on that on investor day coming up as well as Saudi and thank you very much for the question.

Speaker 5: And maybe if I squeeze in one follow up, on the production rate increases going into 2023, and I guess this year, I'm guessing this is weighted kind of H2 of 2022, some of the increase in the challenger, but can you give us kind of some color about.

Okay, and maybe squeeze in one follow up.

On the production.

Rate increases going into 2023, and I guess this year I'm guessing. This is a way to kind of each two of 2022 some of the recent in the challenger.

Can you give us kind of on.

Some color about.

Speaker 5: How are you seeing visibility into the supply chain, to ramping up that production? Are there any issues or concerns that you have at this stage as you try to lift those rates up in the next couple of years?

How are you seeing.

<unk> kind of visibility into the supply chain to ramping up that production.

Issues or concerns that you highlight this stage as you are.

I try to look at those rates up in the next couple of years.

Speaker 4: So this is a pretty good question, Fadid, good morning. As I said earlier in my script, I think I've mentioned that we are going to balance our decision between pricing, backlog and supply chain. And none of these is more important than the other. They're all important because we want them to stay in line with our plan. But clearly...

So so this is a pretty good question.

Good morning.

As I said earlier in my script, I think I've mentioned that.

We are going to balance our decision between pricing backlog in and supply chain.

None of these is more important than the other they're all important because we want them to.

Stay in line with our plan.

But clearly.

Speaker 4: You know, the supply chain, I think everybody is reading the news, there's a lot of stress in the supply chain, a lot of recovery that is taking place or trying to. And I mentioned before, we've been extremely fortunate at Bombardier. We were very proactive more than a year ago in deploying extra resources in the field to make sure that we we work on the issue as early as possible and minimizing the impact on our assembly line.

The supply chain that I think everybody is reading the news there was a lot of stress in the supply chain a lot of recovery that is.

Is taking place or trying to.

And I mentioned before we've been extremely fortunate at <unk>, we were very proactive more than a year ago and deploying extra resources in the field to make sure that we work on the issue as it really is possible and minimizing the impact on our assembly line. So we've been able to do that.

Speaker 4: So we've been able to do that. I think you will probably recall that in Q4, we've mentioned that we were adding even extra people again, redeploying them in some area where there is a bit of tension. So this has been done.

I think you will probably recall that in Q4, we've mentioned that we were adding even extra people again.

We're redeploying them in some area, where there is there is a bit of tension. So this has been done.

Speaker 4: Our decision on increasing the rate has been made in looking very diligently to these issues. So there is issue out there. We believe right now that the actions we've put in place are paying off.

Our decision on increasing the rate.

Being made in and looking very diligently to the to these issue so.

There is issue out there we believe right now that you know.

The actions we've put in place are paying off.

Speaker 4: There will probably be new issues coming up, but we are trying to see them as early as possible. So this has been taking into account...

They'll probably be new issue.

Coming up but we are trying to see them as early as possible. So this has been <unk>.

King into account.

Speaker 4: and of course our rate to make our rate increase decision. So we feel pretty good about our 2022 guidance.

Of course, our rate to two to make our rate increase decision. So we feel pretty good about our 2022 guidance.

Speaker 4: We feel pretty good also being able to say that we are going to increase our rate by 15 to 20% going into next year. So, I'll just say that we are managing this proactively and it's been factored in our decision.

Feel pretty good also being able to see that we are going to increase our rate by 15% to 20% going into next year. So all this to say that we're managing this proactively and it has been.

Factored in our decision.

Speaker 5: Okay, thank you and congratulations on a good year. Thank you. Thank you.

Okay. Thank you and congratulations on the good year. Thank you. Thank you.

Speaker 2: Thank you. Our following question is from Walter Sprattling from RBC Cup Dual Markets. Please go ahead. Thanks very much, operator. Good morning.

Thank you. Our following question is from Walter <unk> from RBC capital markets. Please go ahead.

Yeah, Thanks, very much operator, good morning, everyone.

Good morning.

Speaker 3: So maybe we'll start with free cash flow. I notice your capex is trending up a little bit here in the 200 to 300 million range.

So maybe we'll start with free cash flow.

I noticed your capex.

It is trending up a little bit here in the $200 million to $300 million range.

Speaker 3: pre-cash flow, which was excellent in 2021, a little bit muted, at least in preliminary guidance here in 2022, noted that you do have some one-time payments here coming up. But I'm wondering if in that capex envelope, is there any

Free cash flow, which was which was excellent.

In 2021 little bit muted at least preliminary guidance here in 2022.

Noted that you do have some some one time payments here coming up but I'm wondering if in that Capex envelope is there any anything put toward any potential new initiatives or perhaps give us a little bit of color around the.

Speaker 3: anything put toward any potential new initiatives or perhaps give us a little bit of color around the programs that are going to be built into that capex for this.

Programs that are going to be built into that.

Capex for this year.

Speaker 3: Yeah, good morning Walter and thanks for the questions as far as here. Our CapEx in 2021 ended up at 232M, which is pretty much in line with our prior guidance of around 200M plus or minus. Very, very close to that.

Yes, good morning, Walter and thanks for the questions it's far here.

Our capex.

In 'twenty one.

Ended up at $232 million, which is pretty much in line with our prior guidance of around $200 million plus or minus very very close to that.

Speaker 3: Guidance does include

Guidance does include.

Speaker 3: is net of some planned land sales, which do have timing uncertainties. So that's why we've changed the range to 200 to 300 million. So it's not a reflection of a big ramp up in spending. It's more just a reflection of timing of certain items.

Is net of some planned land sales, which do have timing uncertainties. So that's why we've changed the range to $200 million to $300 million. So it's not a.

Not a reflection of a big ramp up in spending its more just a reflection of timing of certain certain items.

Speaker 3: Pearson in the Pearson project in 2022 is the most significant capex expenditure for us. It's in full development right now and absolutely on track for completion at the right timing.

Pearson in the Pearson project in 2022 is the most significant.

Capex expenditure for us it's in full development right now and absolutely on track for completion.

<unk>.

At the right timing.

Speaker 3: We will obviously remain very tightly managed as it comes to CapEx going forward and focused on deploying cash to debt repayments first.

We will obviously remain very tightly managed as it comes to our Capex going forward and focused on deploying.

Deploying our cash.

Cash to debt repayments first.

Speaker 3: The $50 million as you highlighted is definitely positive but consistent with our practice beginning when we came up with our first numbers at our investor day last year. We are being conservative. You should expect to continue to see that from us and we do expect to continue to deliver positive free cash flow going forward.

The $50 million as you highlighted.

As is.

Is definitely positive but.

Consistent with.

Our practice beginning when we came out with our first numbers at.

At our Investor Day last year, we are being conservative you should expect to continue to see that from us.

And we do expect to continue to deliver positive free cash flow going forward.

Speaker 3: That's fantastic. Thank you, Bart. And perhaps, Eric, one for you on a broader strategic level. Clearly, you're benefiting from what is outsized demand, spending from COVID-19 in terms of the demand for business or their craft.

Fantastic. Thank you Bert and perhaps Eric one for you on them on a broader strategic level.

Clearly you're benefiting from what is.

Outsized demand stemming from COVID-19 in terms of demand for business jet aircraft.

Speaker 3: The question is obviously whether this is is temporary or is it structural? If it does turn out to be structural, and you see an elevated level of demand for a longer than expected period of time. My question is, what avenue would you use?

The question is obviously, whether this is it.

Temporary or is it structural.

If it does turn out to be structural and you see an elevated level of demand.

For a longer than expected period of time. My question is what avenues would you use.

Speaker 3: to capitalize on that structural improvement? Would it be that you would just raise pricing?

To capitalize on that structural improvement would it be that you would just raise pricing would.

Speaker 3: you raise line rates on existing products or could you start to revisit some of the products or new product lines that perhaps that you left before particularly on the smaller aircraft side.

Could you raise line rates on existing products or could you start to revisit some of the products or new new products product lines.

Perhaps.

That you left before particularly on the smaller aircraft side.

Yes.

Speaker 4: I think one thing, Walter, is that we are extremely clear here, and we made that decision very consciously last year, that we wanted to be focused on the medium and large segment. So there is nothing today, even if there is a more structural, you know, in the midterm forms of what we see right now as an increase, which is quite possible that it's more structural than just, you know, kind of a one-timer.

I think one thing Walter is that we are extremely clear here and we made that decision very consciously last year that we wanted to be focused on the medium and large segment.

So there is no nothing today, even if there is a more structural.

In the mid term forms of what we see right now is an increase which is quite possible that it's more structural than just.

Kind of a one timer.

Speaker 4: But we do strongly believe here that the medium and the large segment do represent 85% to 90% of the dollars in this industry.

What we.

We do strongly believe here that the.

The medium and the large segments do represent.

85% to 90% of the dollars in this industry.

Speaker 4: We do believe that we have the right product portfolio in both. You know, we are global and our challenger competing in the medium and large segment.

We do believe that we have the right product portfolio in both.

Our global and our challenger competing into medium and large segment.

Speaker 4: We do believe also, which was important to us when we made that decision.

We do believe also which was important to us when we made that decision.

Speaker 4: about the resilience of the global market. So yes, we are in a good time, but there could be different things happening in the world that we have no control over, wars, things like that.

About the resilience of the global market. So yes, we are in a good time, but you know there could be different things happening in the world that we have no control over wars things like that.

Speaker 4: And when those things happen, you know, there is an impact. But we know, and history shows, that the large market is extremely resilient.

And when those things happen there is an impact, but we know and history shows that the large market is extremely resilient. We know that the aftermarket business is also much more resilient.

Speaker 4: we know that the aftermarket business is also much more resilient.

Speaker 4: And we know that the challenger is the one that can see some movement, but not as much as the light. The light has always been the one that was the most impacted by any downturn in the economy. So we feel pretty solid about this decision. And again, when we...

And we know that the challenge is the one that can see some movement, but not as much as the light. The light has always been the one that was the most impacted by any downturn in the economy. So we feel pretty solid about this decision and again when we.

Speaker 4: If it's more being structural, you know, in terms of, you know, a new environment and we foresee this kind of volume, you know, for future years too. First of all, we have the capability at Bombardier to even go further. We have capacity available.

If it's more being structural.

In terms of a new environment and we foresee these kind of volume.

For future years to.

First of all we have the capability at Bombardier to even go further we have capacity available.

Speaker 4: And at the same time, it's going to be always a question of balancing, as I said earlier, that's the equation we're working with, you know, pricing versus backlog versus supply chain capabilities.

And at the same time, it's going to be always a question of <unk>.

<unk> as I said earlier, that's the equation, we're working with pricing versus backlog versus supply chain capability supply chain capability, we're going to a bit of a struggle worldwide right now everybody together.

Speaker 4: We're going through a bit of a struggle worldwide right now, everybody together. But as I said earlier, we at Bombardier are in a fairly good place there.

But as I said earlier, we at <unk> are in a fairly good place there, but it's going to be a question that if we feel it's structural and that we can keep some pricing then we'll balance that equation again, but we do feel pretty solid about our decision of being focused on the medium and large segment.

Speaker 4: but it's going to be a question that if we feel it's structural and that we can keep some pricing, then we'll balance that equation again. But we do feel pretty solid about our decision of being focused on the medium and large segment.

Speaker 3: That's fantastic. I really like that answer, Edic. Thank you very much. Great quarter. Thank you, Walter. Thank you.

That's fantastic I really like that answer Eric. Thank you very much great great great quarter. Thanks, Thank you Walter.

Thank you. Our following question is from Tim James from TD Securities. Please go ahead.

Okay.

Speaker 6: Thank you. Good morning, everyone. I'm just wanting to talk about the mixed dynamic that you're looking at in terms of deliveries for 2022. You mentioned the large cabin staying relatively flat, the growth...

Thank you good morning.

Everyone.

I'm just wondering if you could talk about the mix dynamic that youre looking at in terms of deliveries for 2022.

You mentioned, the large cabin staying relatively flat growth coming primarily from the medium sized jets could you talk about what youre seeing in the marketplace that sort of drives greater growth in medium relative to large cabin.

Speaker 6: jets. Could you talk about what you're seeing in the marketplace that sort of drives greater growth in medium relative to large.

I think it is.

Speaker 4: I think it's been interesting. You realize that the reaction time from an AOEM is a bit longer on the larger cabin. So we do foresee a very high level of activity also.

It's been interesting.

Realize that the reaction time from any OEM is a bit longer on the larger cabin. So we do foresee a very high level of activity also I think you also realize that the first one that we saw last year starting to increase was.

Speaker 4: I think you also realize that the first one that we saw last year starting to increase was our medium segment, mainly on our Challenger 3500, but also on the Challenger 650, which we've reacted somehow last year, which explains that we're talking about increasing this year the number of Challenger being delivered. But there's been a pretty strong level of activity also on the large cabin.

Our medium segment, mainly on our Challenger 30, 500 million, but also on the challenge of $6 50, which we've reacted somehow last year, which explain.

We're talking about increasing this year the number of challenge are being delivered but there has been a pretty strong level of activity also on the large cabin.

Speaker 4: Again, the lead time to react to that is a little bit longer and that's why you don't have an immediate impact. But we are definitely thinking that there will be a bit of a mix on our number of airplane and product mix increase between large and medium in 2020.

The lead time to react to that is a little bit longer and Thats. Why you don't have an immediate impact, but we are definitely.

Thinking that there'll be a bit of a mix.

Our number of airplane and product mix increase between large and medium in 2023.

Speaker 6: So thank you, Eric, that's helpful. Then just to clarify, so you don't, it's not that if I'm reading you correctly or understanding things correctly, you don't see sort of a structural difference in the growth rates for the next couple of years. It's more just kind of a.

Thank you that's helpful. And then just to clarify so you don't it's not that if I'm reading you correctly or understanding things correctly, you don't see sort of a structural difference in the growth rates for the next couple of years, it's more just kind of.

Speaker 6: you know, what you've seen in terms of orders last year and sort of a time.

What you've seen in terms of orders last year and sort of that timing.

Yes production timing issue.

Speaker 4: We've seen, as I said earlier, that the large segment is a bit more resilient. You know, in good times, in bad times, it stays pretty much the same. But we've seen good level, very strong level of activity on the large. What I'm saying is it takes a little bit more time also for us and the supply chain to adjust.

We've seen as I said earlier, David that this is the large segment is a bit more resilient in good times or bad times. It stays pretty much the same but we've seen good level very strong level of activity on the large what I'm, saying is it takes a little bit more time also for us in the supply chain to adjust so we're going to again look at our pricing at all.

Speaker 4: So we're going to again look at our pricing at our supply chain, but also at our backlog. And we could potentially also definitely look at increasing if there is a structural improvement in this market.

Our supply chain, but also at our at our backlog and we could potentially also definitely look at increasing it.

There is a structural here improvement in this market.

Speaker 6: Okay, thank you. Then my second question, you know, the margin performance in the, in the fourth quarter was actually

Okay. Thank you then my second question.

The margin performance in the in the fourth quarter.

It was actually was quite quite strong and in particular, when we think about all the supply chain impacts and inflation and various other.

Speaker 6: quite strong and in particular when we think about all the supply chain impacts and inflation and various other.

Speaker 6: developments that I would have thought were impacting your business. Was there a material impact again? Could the margin profile have actually been even better were it not for that in the fourth quarter?

Developments.

That I would've thought were impacting your business.

Was there a material impact again could could the margin profile of actually been even better were it not for that in the fourth quarter.

Speaker 4: I think you know what you see in the fourth quarter first, the number of aircraft was very strong.

I think you know what you see in the fourth quarter first the number of aircraft was it was fairly strong but also I think we're making progress on our learning curve of the 7500 I think we are we said we're going to.

Speaker 4: But also, I think we're making progress on our learning curve of the 7500.

Speaker 4: I think we are, we said, and we're going to give you more detail at investor day on February 24th.

Give you more detail at Investor day on the 20 February 24th, but we are achieving our target. So we've been reducing the learning curve.

Speaker 4: we are achieving our target. So we've been reducing the learning curve on the 7500 and the 7500 became a margin contributor in the fourth quarter. So that was one. The other aspect also is we, you know that we have a, you know, a cost reduction program to reduce $400 million of costs.

On the 7500, and the 7500 became a margin contributor.

The fourth quarter. So that was one the other aspect also is no.

We have a.

Our cost reduction program to reduce $400 million of costs. So as we are progressing towards you know there is more contribution also.

Speaker 4: So as we are progressing towards, you know there is more contribution also from those elements. So it's a bit of a combination of many things, but mainly I would say driven by the 7500 learning curve is a big one and the cost saving initiative progress.

From those from those.

From those elements so.

It's a bit of a combination of many things, but mainly I would say driven by the 7500 learning curve is a big one and.

Cost saving initiatives are progressing.

Speaker 3: Okay, well, great. Congratulations. This is Roger, but Tim, if I could just add one thing to Eric's comments. We also had a record.

Okay, Congratulates, Tim Bart here, but.

Tim if I could just add one thing to Eric's comments, we also had a record.

Speaker 3: quarter for our aftermarket, which bodes very, very well for our achievement towards $2 billion of revenue from that business by 2025. And that business drives very high margins, and it's been able to keep those margins through what's been quite a rise in demand throughout the year. It's a very strong performance there. Good point. Great. Thanks very much.

Quarter, four our aftermarket, which bodes very very well for us.

For our achievement towards $2 billion of revenue from that business by 2025.

That business drives very high margins and it's been able to keep those margins through through what's been quite a rise in demand throughout the year, It's a very strong performance there.

Good point Greg.

Thanks very much.

Thank you.

Speaker 2: Thank you. Our following question is from Benoit Poirier from Desjardins Capital Market.

Thank you all following question is from Benny Wong.

There's no capital markets. Please go ahead.

Speaker 7: Yes, good morning everyone and congrats for the strong finish.

Yes, good morning, everyone and congrats toward a strong finish.

Speaker 7: Okay, thank you very much. Yes, could you talk about the opportunity to raise production?

Okay.

Yes.

Talk about you're fortunate to raise production beyond the 20% growth expected in 2023, and how accretive is that volume increase on the EBITDA margin.

Speaker 7: 20% growth expected in 2023. And how it created is the volume increase on the EBITDA mark.

Speaker 4: Okay, so let me maybe start answering and maybe Bart can also chip in. So I think we're talking about a 15 to 20 percent next year, next year being 2023.

Okay. So so let me maybe.

Maybe start answering that maybe barb can can also chip in.

So I think we're talking about a 15% to 20% next year.

Next year being 2023.

Speaker 4: In terms of capability, you know, Banuaras, we have capacity to even go further if needed.

In terms of capability.

Whereas we have capacity to even go further if needed again, we'll make that decision. If there is a structural you know real adjustment because of the environment. That's been created and accelerated by the pandemic. If there is a structural that its not for only one year or two years, we'll look and we'll consider that and again we have.

Speaker 4: Again, we'll make that decision, you know, if there's a structural, you know, real adjustment because of the environment that's been created and accelerated by the pandemic. If there is a structural that is not for only one year or two years, we'll look and we'll consider that. And again, we have capability to do that. The main EBITDA driver will remain, you know, will remain our strategic priority. We have a clear...

<unk> ability to do that.

The main EBIT driver will remain.

<unk> will remain a strategic priority, we have a clear view.

Speaker 4: on how we will achieve our 1.5 billion by 2025, which is going to be a mix of cost reduction, improving our learning curve, but also pricing down the road on the 7500.

You know, how we will achieve our $1 5 billion by 2025, which is going to be a mix of cost reduction improving our learning curve, but also pricing down the road on the 7500.

Speaker 4: and of course the contribution, the more significant contribution of our aftermarket business which is going to grow significantly. All these will be contributing.

And of course.

The contribution the more significant contribution of our aftermarket business, which is which is going to grow significantly. So all of these will be will be contributing.

Today.

Speaker 4: yes we will have so we're probably a bit ahead of where we wanted to be but you know there's still a lot of time between now and 2025 and a lot of things that could happen you know we look at the world today all kind of uncertainty not to mention Ukraine and a few other things

Yes, we will have so we're probably a bit ahead of where we wanted to be but there is still a lot of time between now and 2025 and a lot of things that could happen.

Look at the World today, all kinds of uncertainty that you mentioned, Ukraine and a few other things. So all of this factored in.

Speaker 4: So all this factored in, we are still feeling pretty solid and bullish about our 2025 commitment.

We are still.

Feeling pretty solid and bullish about our 2025 commitment but.

Speaker 4: But, you know, if then the market is able to sustain rating 3, then we'll have to make decisions and understand how this will contribute. So we don't need to make this decision yet.

We'll can we do.

No.

If then the market is able to sustain rate increase then we will have to make decisions and understand how this will contribute so we don't need to make this decision yet but of course us and I'm sure as you know we're closely monitoring what's happening.

Speaker 4: I'm sure as you know we're closely monitoring what's happening.

Speaker 7: Okay, that's great color. And just in terms of follow up, with respect to the 50 million free cash loan guidance in 2022, could you walk us through the assumption in terms of book to bill ratio, and also maybe the working capital required to support the 15-20% lift in production for 2020?

Okay, that's great color and just in terms of follow up with respect to this 50 million free cash flow guidance in 2022 could you walk us through the assumption in terms of book to Bill ratio and also maybe the working capital required to support the 15% to 20%.

Production for 2023.

Speaker 4: Maybe one thing just to take up front, our assumption is a book to build of around 1.1 right now. Okay, so for the full year. You know, we could potentially do better than that, but you know, as I said, you know, there's geopolitical tension in the few area right now, which can also slow down some of it. So, but that's kind of the assumption we've been working with so far.

Maybe one thing just to pick up from our assumption is a book to bill of around one one right now okay. So for the full year.

Yes.

We could potentially do better than that but.

As I said, there's geopolitical tension and a few area right now which can also.

Slowdown some of it so so but that's kind of the assumption we have been working with so far.

Speaker 3: Yeah, and then why just on the on the working capital of we achieved basically neutrality this year on working capital and we expect that to continue through this year as order intake offsets some inventory increase requirements for 2023 production and increase.

And then one just on the on the working capital.

We achieved.

Basically neutrality this year on working capital and we expect that to continue.

Through this year as order intake offsets some inventory increase requirements for 2023 production and increases.

Speaker 7: That's great, Carlos. Thanks for the time. Thank you everyone.

That's great color thanks for the time.

Thank you everyone.

Speaker 2: Thank you. Our following question is from Miles Walton from UBS. Please go ahead.

Thank you. Our following question is from Myles Walton from UBS. Please go ahead.

Speaker 3: Thanks. Good morning. I was wondering if you could talk to the demographics in the order book, how those changed year on year and maybe look through the lens of first time buyers with the role of multinationals or

Great. Thanks. Good morning, I was wondering if you could talk to the demographics and the order book, how those changed year on year and maybe look through the lens of first time buyers, what's the role of multinationals or.

Speaker 3: global companies in that mix. Just as you're looking at the data, how are you looking at that customer data set to determine if this is.

Global companies in that mix, just as Youre looking at the data how are you looking at that customer dataset to determine if this is.

And both foundational or not.

Speaker 4: Yeah, so very good question. We have clearly seen, you know, last year in 2025, a strong order booking coming from North America.

Yes, so very good question.

<unk> clearly seen.

Last year in 2025, a strong order book incoming from North America, and we'll share some of the detail of that with you at Investor day on the 24, it actually the geographic distribution.

Speaker 4: And we'll share some of the detail of that with you at investor day on the 24th actually, the geographic distribution. But think about in the 70% mark-ish.

But.

Think about in the <unk>.

70% Mark ish.

Speaker 4: It was slow in the rest of the world in Q1 and Q2 last year, but we've seen a major pickup in Q3 and Q4 in Europe , and I will call it EMEA in Russia.

It was slow in the rest of the world in Q1, and Q2 last year, but we've seen a major pick up in Q3 and Q4 in Europe , and I will call. It EMEA in Russia. So we've seen some pick up taking place.

Speaker 4: So we've seen some pickup taking place in the second half of the year.

In the second half of the year.

Speaker 4: And Asia has been pretty slow last year for pretty much all of us in terms of flying, but in terms of activity also. So that's the picture we have.

And Asia has been pretty slow last year for us.

Pretty much all of us in terms of flying but in terms of activity also so that's the picture we had going into this year it looks.

Speaker 4: Going into this year, it looks, you know, North America, Europe , the MEA remain pretty strong going into this quarter.

North America, Europe , EMEA remained pretty strong going into this quarter and still about there is activity in Asia, but clearly because of the pandemic and the restriction and a lot of things going on over there.

Speaker 4: and still about, you know, there is activity in Asia, but clearly because of the pandemic and the restriction and a lot of things going on over there, it's a little slower. So it hasn't catch up pre-pandemic level.

It's a little slower so it hasnt catch up pre pandemic level.

Speaker 4: Same thing for the flying hours. So that's a little bit how we see that. So which means that there will be, you know, when border, we believe that when border reopen in Asia there'll clearly be a bit of catch-up to do and probably some nice opportunity coming from this region. But clearly North America has been fueling it so far.

Same thing for the flying hours. So so that's a little bit how we see that so which means that there will be no. When border. We believe that when border. We opened in Asia. They will clearly be a bit of catch up to do and probably some some nice a fortunate becoming from this from this region, but clearly.

North America has been fueling it so far.

Speaker 4: In terms of your question about the type of customer, this one also will go into more detail on February 24th, but just to say briefly that, you know, we got about

In terms of your question about the type of customer. This one also will go into more detail on February 24th, but just to say briefly that we got about.

Speaker 4: Call it 20% from fleet operator last year, which is mainly driven by newcomer, new people adapting. So some people are buying new airplane, of course, for the first time, which is a higher percentage than usual.

Call it 20%.

You know from fleet, operator last year, which is mainly driven by new comer.

New people adapting so some people are buying new airplanes.

Of course for the first time.

Which is a higher percentage than usual.

Speaker 4: But clearly, you know, and as you know, Bambardi is extremely well positioned with the big fleet operator around the world.

But clearly you know and.

As you know Bombardier is extremely well positioned with the big fleet operator around the world and we've seen a nice pick up because a lot of people.

Speaker 4: And we've seen a nice pickup because a lot of people have knocked at their door, you know, using private aviation for the first time and they are sticking in. So that's the good news also. It looks like they are continuing to...

Therefore, we are using.

In addition for the first time and they are sticking in so that's the good news also it looks like they are continuing to two to.

Speaker 4: to use these platforms. Clearly, it has been a robust market for the fleet operator and they are probably the first ones that I have seen a major increase by first and early adopters. That's great, thank you. Thank you, sir. Thank you.

To use these platforms. So so clearly it's been a robust market for the fleet operator, and they are probably the first one that I have seen a major increase.

First in early adopter.

Okay. That's great color. Thank you. Thank.

Thank you Sir.

Thank you. Our following question is from Kamran Dutchman from National Bank Financial. Please go ahead.

Speaker 8: Yeah, thanks. Good morning. Maybe just a couple of questions on margins. Just on the Global 7500, I mean, you indicated that you'll basically achieve that 20% cost reduction sometime in mid 2022. Do you have any, I guess, estimate as to when you'll kind of be at a, you know, I guess a full run rate margin on that program? Is it 2023 or is it something beyond that where we would expect to see kind of the full, you know, expected margins on Global 7500?

Yeah. Thanks, Good morning, maybe just a couple of questions on margins just on the global 7500, I mean, you indicated that you'll basically achieve that 20% cost reduction sometime in mid 2022.

Do you have any estimate as to when you'll kind of be enough.

It's a full run rate margin on that program is it 2023 or is it something beyond that where we would expect to see kind of the full expected margins on global 7500.

Speaker 3: Yeah, good morning, Cam. It's Bart here and thank you for the question.

Yes, good morning, it's Bart here and thank you for the question Yeah. We continued on the learning curve right on track.

Speaker 3: Yeah, we continued on the learning curve right on track through 2021, achieved the vast majority of that incremental 20% that we spoke about. And in terms of.

Through 2021.

Achieved the vast majority of that incremental 20% that we spoke about and in terms of.

Speaker 3: achieving the full 20% incremental cost reduction.

Achieving the full 20% incremental cost reduction.

Speaker 3: We're actually planning to deliver the 100th aircraft. We've said in the first half, but I'll call it midway through the first half of the year. And that's when we targeted to get to the 20%.

Actually planning to deliver the 100 aircraft, we've said in the first half, but I'll call. It midway through the first half of the year and that's when we had targeted to get to the to the 20% full run rates. So it will be earlier in the year than than midyear. So that's a plus in terms of margin expansion for us.

Speaker 3: full run rate. So it will be earlier in the year than mid-year, so that's a plus in terms of margin expansion for us.

Speaker 3: There is a little bit more to do in 2022 beyond that. We think we have some other opportunities we'll continue to work on and we'll be at the full run rate by end of this year and into 2023.

There is a little bit more to do in in 2022 beyond that we think we have some other opportunities. We will continue to work on and we will be at the full run rate.

By end of this year and.

And into 2023.

Speaker 8: Okay, no, that's helpful. And just sort of secondly on margins, I mean, the aftermarket is obviously a key contributor to your 2025 EBITDA target. Are the margins you're achieving in that business...

Okay. That's helpful and just secondly on margins I mean, the aftermarket is obviously a key contributor to your 2025 EBITDA target are the are the margins you are achieving in that business.

Today.

Speaker 8: Basically, at the level you would expect in 2025, or is there more upside presumably perhaps as you open up more of these centers, which maybe in the early days are underutilized and maybe a little bit of a margin drag. Just kind of trying to get a concept of where we are on aftermarket margins today versus where they could.

Basically at the level you would expect in 2025 or is there more upside presumably perhaps as you open up more of these these are centers, which maybe in the early days are underutilized and maybe a little bit of a margin drag just kind of trying to get a concept, where we are on aftermarket margins today versus where they could be yes.

Speaker 4: I think Cameron, the margins are extremely good right now in terms of percentage of sales. I think the margin contribution increase will come up more from the growth we're going to see in that market. So, what we are expecting to maintain the actual percentage of margin that we are foreseeing. So, our assumption is percentage pretty much remain the same. But as you know, that market is growing.

Yes, I think Cameron.

Margin are extremely good right now in terms of percentage of sales I think the margin contribution increase will come up more from the growth we're going to see in that market. So, but we are expecting to to maintain the actual percentage of margin that we are foreseeing. So so our assumption is percentage.

Pretty much remained the same but as you know that market is growing.

Speaker 4: airplanes are flying a lot and as we, as I said earlier, as we put more airplanes with the fleet operator, you know, these operators are also flying much more hours, which is good for our growth and potential growth moving forward. Okay, great. Thanks very much. Thank you.

Airplanes are flying a lot and as we as I said earlier as we put more airplanes with the fleet operator.

These operator also flying much more hours, so which is good for our growth and potential growth moving forward.

Okay, great. Thanks, very much thank you.

Thank you.

Following question is from Stephen Trent from Citigroup. Please go ahead.

Speaker 3: Good morning and thank you very much for taking my question. This is kind of a follow up to, I believe, what Miles asked you earlier. And I know you're going to give a little more detail on it. What we think about sort of longer term, new opportunities for medium and large cabinet business jets. 20 years ago, people may have just looked at North America corporate profits and said, OK, that's the barometer. And now you kind of have jets on.

Good morning, and thank you very much for taking my question.

This is kind of a follow up to I believe what miles last year earlier.

And I know youre going to give a little more detail on it but why do we think about sort of longer term.

<unk>.

New opportunities for medium and large cabin business Jets 20 years ago people may have just looked at North America corporate profits and said, okay. That's the barometer and now you kind of have.

Jensen on demand a fractional ownership some government customers out there are there are kind of.

Speaker 3: fractional ownership, some government customers out there. Are there a kind of

Speaker 3: you know, one or two pockets that you think we could see more return customer flow, you know, over the next several years, just a very high level question.

One or two pockets that you think we could see.

More return customer flow.

Over the next several years.

Just a very high level question on that one.

Okay.

Speaker 4: But I think, you know, thanks for your question, Stephen. But as mentioned earlier, we do believe that, you know, we are in the market that represents the bulk of the industry. Yes, there will be a light market. There will probably be a new customer and potential growth in that market.

But I think.

Thanks for your question, Steve, but as mentioned earlier, we do believe that you know.

Are in the market that represent the bulk of the industry.

Yes, there'll be a light marquette, they'll probably the new customer and potential growth in that market.

Speaker 4: but in our mind it's a less lucrative market. It's also a market that is much more cyclical probably than any other part of our industry. So for all those reasons, despite the fact that there'll be a market, we're not ignoring this, we made the preference and the decision of competing in the medium, large and also growing our services.

Got it.

In our mind, it's a less lucrative market. It's also a market that is much more.

Cyclical probably than any other part of our industry. So for all those reasons.

The fact that there'll be a market we're not ignoring this week, we made the preference and the decision of competing in the medium large and also.

Growing our services business.

Speaker 3: Very helpful, Eric. And just one super quick follow up. When we think about your engineering expertise, you know, high level, how comfortable are you guys with, you know, your pipeline of aerospace engineers? And, you know, generally speaking compensation for them and, you know, what sort of cost pressure may you be be seeing on that side of the fence? Thank you.

That's very helpful. Eric and just one Super quick follow up when we think about.

Your engineering expertise.

High level, how comfortable are you guys with your pipeline.

Aerospace engineers.

And generally speaking compensation for them.

What sort of cost pressure may youll be seeing on that side of the 10 day. Thank you.

Speaker 4: No, this is a pretty good question. This is a question that we ask ourselves all the time.

No. This is this is a pretty good question. This is a question that we ask ourselves all the time, but you know.

Speaker 4: You know, we have a very loyal base of employees at Bombardier. Same thing applies to our engineers. So our capabilities here, either in Montreal or in Wichita, are fairly unique. You know, we can...

We have a very loyal base of employee had bombardier.

Same thing applies to our engineers our capability here.

Either in Montreal are and which are fairly unique we can.

Speaker 4: you know, design and build an airplane here from A to Z.

Designing and build an airplane here from a to Z and I think our people know that eventually we have.

Speaker 4: and I think our people know that eventually, you know, we have...

Speaker 4: you know, program today that we're working on. You know, we just launched the 3500 last year. There's other things we're thinking about on a more medium and longer term. And I think we're keeping our workforce extremely busy right now. We know that this industry is driven, also a booking order is driven by new technology improvement on product at some point.

<unk> today that we're working on we just launched the 3500 last year, there's other things we're thinking about.

On a more medium and longer term and I think we're keeping our workforce extremely busy right now.

Know that this industry is driven also.

Booking order is driven by new technology improvement on product at some point. So we're very mindful of that so we are where we're having.

Speaker 4: So we're very mindful of that. So we're having a pretty solid workforce here and people are staying with us because they see the future. They see our company has made major improvement also last.

No.

Pretty solid workforce here and people are staying with us because they see the future D. C. Our company has made major improvement also.

Last year and I think people are very motivated by this environment This new environment of Bombardier.

Speaker 4: and I think people are very motivated by this environment, this new environment of Bombardier.

Speaker 3: Okay, I really appreciate that and looking forward to hearing more from you guys on February 24th. Thank you. Thank you. Thank you, Steven.

Okay, I really appreciate that and looking forward to hearing more from you guys on February 24. Thank you.

Thank you thank you Steven.

Thank you. Our following question is from Seth <unk> from Jpmorgan. Please go ahead.

Speaker 3: Okay, thanks very much. Good morning and congratulations on a good year. Just wanted to ask about the, you know, the expected production increase that you talked about for 2023. When you think about the market, it sounds like, and correct me if I'm wrong, but it sounds like, um,

Okay.

Thanks, very much good morning, and congratulations on a good year.

Just wanted to ask about the expected.

Production increase that you talked about.

For 2023, when you think about the market it sounds like in the correct me, if I'm wrong, but it sounds like.

Speaker 3: because it takes a little longer to get things ramped on the larger aircraft that more of that production increase would be concentrated in the larger aircraft. When you think about the increases that Goldstream has talked about and

Because it takes a little longer to get them ramped on the larger aircraft that more of that production increase would be concentrated in the larger aircraft and you think about the increases the Gulfstream has talked about and the new aircraft that that's always going to be introducing I guess.

Speaker 9: you know, the new aircraft that Desso is going to be introducing, I guess, you know, how do you think about the demand in that overall market? And, you know, given what should be coming into that market, is it kind of going to be necessary at this point to see that structural increase just to accommodate, you know, the increased production numbers from everyone?

How do you think about the demand in that overall market and given what should be coming into that market is it kind of going to be necessary at this point to see that structural increase just to accommodate.

The increased production numbers from from everyone.

Yes no.

Speaker 4: No, this is a good question and that's the question we're asking ourselves on a regular basis. Again, not to repeat myself, but we'll look at backlog pricing and everything, but also of course we're considering what our competitors are doing. But I think what's important to remind everybody is that we have a very, very, very competitive portfolio today. Our 3500 has done outstanding.

No. This is this is a good question and that's the question, we're asking our self on a regular basis again not to repeat myself, but we will look at backlog pricing and everything but also of course, we're considering what our competitors are doing but I think what's important to remind everybody is that we have a very very very.

The portfolio today.

Our 3500 as being done of tending are 7500 is doing outstanding are.

Speaker 4: Our $7,500 is doing outstanding. Our global, we delivered the 1,000 global a few months ago, and we do continue to sell extremely well the global $6,500 and $5,500.

<unk> Global we delivered the 1000 global a.

A few months ago, and we do continue to sell extremely well the global 6500 5500.

Speaker 4: So, you know, the 7500 is the flagship of the industry. I think competitors are trying to catch up.

No.

The 7500 is the flagship of the industry.

I think competitors are trying to catch up.

Speaker 4: The in-service fleet performance for the 7500, yes, is going to face the competition, but the fleet is performing extremely well. I think we offer the finest cabin experience. The performance is unmatched right now in terms of range, in terms of speed, and other programs are still very early in the design phase.

The in service fleet performance for the 7500, yes is going to face.

No.

Position, but.

The fleet is performing extremely well I think we offered the finest cabin experience.

The performance is unmatched right now in terms of range in terms of speed and.

Other program are still very early in the design phase.

Speaker 4: and other competitors, other new airplanes that got announced a few months ago are derivative of an existing plane not really having anything. So we feel very strong. The portfolio we have today is robust, solid. All our airplanes have demonstrated their

And.

Other competitor other new airplane that got announced few months ago are derivative of an existing plain nuts really having anything so we feel very strong.

Portfolio, we have today is robust solid all our airplane have demonstrated there.

Speaker 4: reliability and as you know, we're always innovating in the cabin, which is a very important part, an important piece for our customers.

Strong reliability and as you know, we're always innovating in the cabin, which which is a very important part and important piece for our customer.

Speaker 9: Great, thank you. And then Bart, if I could speak into clarifications or follow up questions. I guess one is, can you break out in the services business how much is parts versus how much is kind of MRO and services and how much those grew? And then can you tell us how far out you're sold on the 7500?

Great. Thank you and then part if I could sneak into clarifications or.

I guess one is can you break out in the in the services business.

How much is parts versus how much is.

Kind of MRO and services.

And how much those grew and then can you tell us how far out your solid on the 7500.

Speaker 3: Sure, thanks. So look, the first thing that I think everybody probably recognizes about our aftermarket business is it's a highly repeated...

Sure sure Seth Thanks.

So look the first thing that I think everybody probably recognizes about our aftermarket business is it's a highly repeat business.

Speaker 3: and a very highly recurring revenue stream. So we really like the business and like the growth that's coming in front of us. That's driven off the fact that we've got almost 5,000 aircraft in service today. Our facilities that we have up and running today are essentially full at all times. And that's why we need to bring on more capacity in more geographies around the world. So we'd expect the same in those new locations.

In a very highly recurring revenue stream. So we really like the business and like the growth that's coming in front of US that's driven off the fact that we've got almost 5000 aircraft in service today.

Our facilities that.

That we have up and running today are essentially full.

At all times.

And that's why we need to bring on more capacity and more geographies around the world. So we'd expect the same in those in those new locations.

Speaker 3: as well. In terms of the split, roughly 80% calendar and flight driven maintenance is the largest part. And then we have about 20% discretionary on modifications and other upgrades to aircraft. So that hopefully gives you a split. The second question was on the 7500 and I, sorry Seth, I didn't quite catch it.

As well in terms of the split roughly 80% calendar in flight driven maintenance.

As the.

The largest part and then we have about 20% discretionary.

On modifications and other upgrades to aircraft. So that hopefully gives you a split the second question was on the 7500, I'm, sorry, Seth I didn't quite catch it.

Speaker 9: Oh, how far out are you sold in terms of the backlog?

How far how far out are you solved.

And in terms of the backlog.

How far out on backlog.

Yes.

Speaker 3: We've talked about this a little bit in the past, I know, but there's a balance that we like to sustain on backlog between having a good, solid, significant backlog and not having a backlog that goes so far out that it reduces demand for aircraft sales because customers are having to wait too long. It's driven in part by the production timelines of the aircraft, but as we sit today, we're very comfortable with the backlog that we have on the 7500.

Okay.

We've talked about this a little bit in the past I know, but there is a balance that we we like to sustain on backlog between having a good solid significant backlog and not having a backlog that goes so far out that.

That it reduces demand for aircraft sales because customers are having to wait too long, it's driven in part by the production timelines of the aircraft, but as we sit today, we're very comfortable with the backlog that we have on the 7500.

Speaker 3: We worked it down, as you know, over several years as we were delivering the launch orders of the aircraft and today we're seeing strong demand, ongoing sales and a backlog that fits very well with where we'd like to be.

<unk> worked it down as you know over several years as we were delivering the the launch orders of the aircraft and today, we're seeing strong demand.

Ongoing sales and a backlog that.

Fits very very well with where we'd like to be and I think as we said earlier, we're pretty much sold out in 'twenty two.

Speaker 4: And I think as we said earlier, we're pretty much sold out on 22. And we're in a very, very good place already for 23. So things have progressed extremely well in the last couple of quarters.

And we have we're in a very very good place already for 23 so.

Things are progressing extremely well in the last couple of quarters.

Speaker 9: Operator, we have time to squeeze in one last question, please. Thank you. Our last question is from...

Operator, we have time to squeeze in one last question. Please.

Our last question is from <unk> Gupta.

From Scotia capital. Please go ahead.

Speaker 5: Thanks and good morning everyone and thanks for squeezing me in here. I think, you know, like, but then like I think there's been a few questions around free cashflow. I want to kind of ask you differently because I am still kind of trying to make sense of the guidance here. What's keeping you from guiding similar or better free cashflow conversion in 2022? Like I understand, obviously you're being prudent, but you know, how much are you putting in and why are you...

Thanks, and good morning, everyone and thanks for squeezing me in here.

I think like Boston like.

I think theres been a few questions on free cash flow I want to kind of ask you differently.

Kind of trying to make sense of the guidance here whats keeping you from guiding to similar or better free cash flow conversion in 2022, I'm like I understand obviously, you got to be prudent but.

How much are you putting that in Wyoming.

Speaker 4: I think I can start and maybe Bart feel free to chip in but I've mentioned earlier that we were prudent on our book to bill ratio. That's one thing and at the same time as you accelerate you realize that you're building also inventory part of it. So there's some of the cash flow that is being useful to pay off for the inventory we're building. So there is some of it also that is being baked into the pot.

I think I can start and maybe Bart feel free to chip in but I've mentioned earlier that we were prudent on our on our book to Bill ratio.

That's one thing and at the same time as you accelerate you realize that Youre building also inventory part of it. So there is some of the cash flow that is being useful to two to pay off all the inventory. We're building. So there is some of it also is.

Is being baked into the plan.

Speaker 3: Eric, I think you've hit the nail on that. That's the key. And then the last thing I would just say, Conarc, is we will continue to be conservative in our estimates as we go forward. It's very important to understand that.

Eric I think you hit the nail on that Thats. The key and then the last thing I would just say <unk>.

As we we will.

To be conservative in our estimates as we go forward, it's very important to understand that.

Speaker 5: kind of make sense and then perhaps a quick follow-up on production rates so you guys pointed out I'm like 2022 is going to be slightly up perhaps

Okay that makes sense and then perhaps a quick follow up on production rates.

As pointed out in the 2022, it's going to be slightly up perhaps it's more for 2023 story. If you have to raise production rate is there like given the backlog and the order activity you saw in 2021, obviously pretty robust.

Speaker 5: It's more of a 2023 story if you have to raise collection rate. Is there like given the backlog and the order activities on 2021 or if you thought pretty robust I'm guessing there must be some orders for you know demand for 2022 deliveries but is there anything you are doing that's intentionally kind of pushing out some deliveries into 2023 just to develop.

Guessing there must be some orders for demand for 2022 deliveries, but is there anything you are doing it that's very intentionally kind of pushing out some deliveries into 2023, just to kind of smoothing out the production curve.

Speaker 5: smoothen out the production rate curve and supply chain.

Apply chain kind of ramp up issues to talk about or is there something else in that production base flat.

Speaker 5: kind of wrap up issues to talk about, or is there something else to that potentially?

Speaker 4: So as I explained, it's a question that we saw clearly last year that the man was very strong.

So as I explained it.

<unk> that we saw clearly last year that did that momentum was very strong, but then by the time you will see the demand you want to observe it a few a few months a few quarter then by the time you make the decision there is.

Speaker 4: But then by the time you see the demand, you want to observe it a few months, a few quarters. Then by the time you make the decision, there's a moment where you will really see the increase coming out of your factory.

No.

A moment, where you will really see the increase coming out of your factory. So so this is the factor of that so clearly we're going to see some of it starting to happen in 2022, and we're going to see the bulk of those decision made in 'twenty one late in 'twenty one.

Speaker 4: So this is the factor of that. So clearly we're gonna see some of it starting to happen in 2022. And we're gonna see the bulk of those decisions made in 2021 starting to show up in 2020.

Starting to to to show up in 2023.

Speaker 5: So thanks, Kunal, for your question. Perfect, thank you. I'm 24.

So thanks for your question.

Perfect. Thank you $2 24.

Thank you.

Sure.

Thank you that's all the time, we have for question I would now like to turn the meeting back over to way to think about that.

Speaker 2: I would not like to turn the meeting back over to you.

Speaker 4: Okay, thank you again everyone for joining us this morning and I would once again like to start.

Okay.

Thank you again, everyone for joining us this morning, and I would once again like to start a state all proud I am of.

Speaker 4: state how proud I am of our team's ability to execute our plan on all fronts.

Our team's ability to execute our plan on all fronts. It has been an amazing start for Bombardier business jet refocusing I am looking forward to seeing you all throughout the year as well, we'll be certain to globe to invigorate, our new and expanded facility.

Speaker 4: It has been an amazing start for Bombardier BusinessJet refocusing. I am looking forward to seeing you all throughout the year as well we'll be circling the globe to inaugurate our new and expanded facility.

Speaker 4: I can't remember any OEM hosting so many ribbon cutting in a single year. This once again also I like that business aviation is a significant catalyst for economies around the world and a large contributor to the local economies that manufacture and support these technology advanced products. So thank you all and thanks for attending. Thank you. Join the conversation here and the conference results now at the Evans Funny Skin explode. I am not sure if Alex is correct about that or not, I don't know. I don't know how to describe it but I certainlybird in an

I can't remember any OEM or things so many ribbon cutting in a single year. This once again also highlight that business aviation as a significant catalyst for economies around the world and a large contributor to the local economies that manufacture and support these technology advanced products. So thank you all.

And thanks for attending.

Thank you.

France has now ended please.

Please disconnect your lines at this time.

Thank you for your participation.

Okay.