Full Year 2023 Bombardier Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Bombardier fourth quarter earnings. Be advised. If you like the video, click on the thumbs-up and subscribe.

Hey, good morning, ladies and gentlemen, and welcome to the Bumblebee fourth quarter and full year 2023 earnings conference call. Please be advised that this conference call is being recorded at this time I'd like to turn the discussion over to Mr. Costa <unk>, Vice President S. T E N E and Investor Relations.

Operator: Further details and more at www.vintrospektiv.de – and feel free to support me on Patreon, see the video description. At this time, I'd like to turn the discussion over to SPNA, and Investor Relations for Bombardier. Go ahead, Mr. Rishi De La Torre.

Please go ahead, Mr. If you see the luckless.

Rishi De La Torre: Good morning, everyone, and welcome to Bombardier's earnings call for the fourth quarter and full year ended December 31st, 2023. 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, and there are risks that actual events or results may differ materially from these statements.

Good morning, everyone and welcome to <unk> earnings call for the fourth quarter and full year ended December 31 2023.

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.

Rishi De La Torre: For additional information on forward-looking statements and underlying assumptions, please refer to our MD&A in our 2023 Annual Report. I'm making this cautionary statement on behalf of each speaker on this call. With me today is our President and Chief Executive Officer, Eric Martel, and our Executive Vice President and Chief Financial Officer, Bart Domaski, to review our operations and financial results for the fourth quarter and full year 2023. I would now like to turn the discussion over to Eric. So, thank you very much, Francis, and hello and welcome to everyone. Good morning, everyone, and thank you for joining us today.

For additional information on forward looking statements and the underlying assumptions. Please refer to our MD&A and our 2023 annual reports.

This cautionary statement on behalf of each speaker on this call with me today is our president and Chief Executive Officer, Eric Markdown, and our executive Vice President and Chief Financial Officer, Mark Demasi.

To review, our operations and financial results for the fourth quarter and full year 2023.

I would now like to turn over the discussion to Eric.

At our Mississippi Cusco assist the Boswell EBITDA of new attitudes <unk>. Good morning, everyone and thank you for joining us today.

Eric Martel: Before we get started, I would like to express my deepest gratitude to our team members listening around the world for a very successful year. 2023 was a significant turning point for Bombardier. We outperformed on many fronts, and we delivered on the solid foundation we set for ourselves over the past few years. None of this would have been possible without the passion and dedication of more than 18,000 people. Thank you.

Before we get started I would like to express my deepest gratitude to our team members listening around the world for a very successful year.

2023 was a significant.

Turning point for Bombardier, we over performed on many fronts and we delivered on the solid foundation, we set for ourselves over the past few years.

None of it would have been possible without the passion and dedication of our more than 18000 people. Thank you.

Eric Martel: Our 2023 numbers show that the team executed the plan in a very methodical and consistent manner. We met or exceeded our guidance on all fronts for the third year in a row. Revenues were up by 16% year over year, reaching $8 billion, the highest since the company refocused its activities in 2021. Perfectibility also reached new heights.

Our 2023 numbers show that the team executed the plan in a very methodical and consistent manner, we met or exceeded our guidance on all fronts for the third year in a row.

Revenues were up by 16% year over year, reaching $8 billion that I use since the company refocus its activities in 2021.

Profitability also reach new ice we executed on our strategy effectively and this allowed us to achieve a real step change.

Eric Martel: We executed on our strategy effectively, and this allowed us to achieve a real step change. Our adjusted EBITDA rose by 32% year-over-year and reached $1.23 billion, beating our 2023 guidance by more than $100 million. Finally, the most impressive growth metric is our net income. On an adjusted basis, it jumped to $3.94 per share, five times more year over year. Net reported earnings per share hit $4.70, representing not just a swing to the positive but a big leap into the black.

Our adjusted EBITDA rose by 32% year over year, and reached 123 billion, beating our 2023 guidance by more than $100 million.

Our adjusted EBIT stood strong at 799 million finally, the most impressive growth metric is our net income on an adjusted basis it jumped to $3 94 per share.

Five times more year over year.

<unk> reported earnings per share at $4 70.

Representing not just the swing to the positive, but a big leap into the black.

Eric Martel: This great financial performance was driven in part by the 138 deliveries we put on the board. Considering the ongoing pressure on the supply chain and the struggles some have faced in our industry, reaching our delivery target is a major accomplishment. Bombardier products tapped into a consistent and stable demand environment in the medium and large categories.

This great financial performance was driven in part by the 138 deliveries we put on the board considering the ongoing pressure on the supply chain and the struggles somehow phase in our industry, reaching our delivery target is a major accomplishment.

Bombardier products tapped into a consistent and stable demand environment in the medium and large categories.

Eric Martel: We achieved a book-to-bill of one on a higher number of deliveries year-over-year. Not only did we keep our momentum in key markets, but we eclipsed all competitors in our segment when it came to firm orders. With our strong and diversified backlog of $14.2 billion, we have a clear line of sight on our skyline for the upcoming years and can look with confidence at the future. While we are in a more normalized demand environment, we see sustainability across customer types and have the right portfolio of aircraft to continue to lead the industry. Another key driver of our revenues was the aftermarket, which delivered record-high revenues of $1.75 billion for the year.

We achieved a book to bill of one on the higher number of deliveries year over year.

Not only did we keep our momentum in key markets.

But we eclipsed all competitors in our segment when it came to firm orders.

With our strong and diversified backlog of $14 2 billion.

We have a clear line of sight on our skyline for the upcoming years and can look with confidence at the future.

While we are in a more normalized demand environment, we see sustained activity across customer types and have the right portfolio of aircraft to continue to lead the industry.

Another key driver of our revenues was the aftermarket which delivered record revenues of $1 75 billion for the year.

Eric Martel: As you know, we have significantly extended our network. With each year, with each quarter passing, we are seeing a consistent and predictable growing contribution to our business. More importantly, our growth has a tremendous importance in supporting our customers through more touchpoints in their aircraft cycle lifecycle. Before we set our sights on 2024,

As you know we have significantly extended our network.

With each year, which each quarter, passing we are seeing a consistent and predictable growing contribution to our business more importantly, our growth as a tremendous importance in supporting our customer through more touch point in their aircraft cycle lifecycle.

Before we set our sights on 2024.

Eric Martel: I would like to provide a little bit of color on the initiatives we launched in 2020. They are well aligned with our strategic priorities and will help fuel the RAISE 2024 guidance that Bart will explain shortly. First, we ensure that our product continues to meet the highest standards and keep elevating the travels of our clients around the world. On that front, it's abundantly clear that Bombardier leads the industry. Our newly introduced Challenger 3500 stole the show.

I would like to provide a little bit of color on the initiatives, we launched in 2023.

They are well aligned with our strategic priorities and will help fuel the raised 2024 guidance that Bart will explain shortly.

First we ensure that our product continues to meet the eye is tendered and keep elevating the travels of our clients around the world on that front is abundantly clear that Bombardier leads the industry.

Our newly introduced challenger thirty-five Android stole the show.

Eric Martel: It reigns as the topic for fleet operators and is quickly making its way to 100 deliveries. This platform won significant deals with Airshare and EBJets and recorded another large order in December. In the large category, the Global 7500 Airframe continues to woe its clients around the world. It is the largest and fastest certified and in-service jet in the sky.

It rains as the top pick for fleet operators and is quickly making its way to 100 deliveries.

This platform won significant deals with air share and E Jets and recorded another large order in December.

And the largest category the global 7500 airframe continues to simply wall was client around the world. It is the largest and fastest certified and in service jet in the Sky.

Eric Martel: In fact, we delivered the 150th Global 7500 last fall and announced that our fleet as well surpassed 100,000 flying hours. The Global 7500 is now a proven platform that clients choose for its outstanding range and unrivaled smooth ride. In parallel, our global 8,000 development program steadily progressed towards its entry into service in 2025, with all engineering work being on track. The global family of aircraft is also shining bright in the defense sector, with the Global 6500 winning the trust of governments and military entities all around the world. With exceptional range and payload capability, the Global 6500 allows defense customers to fly faster, higher, and longer than legacy intelligence, surveillance, and reconnaissance platforms.

In fact, we delivered the 150 at global 7500, Red last fall and announced that our fleet as well surpassed 100000 flying hours. The global 7500 is now a proven platform that clients choose for its outstanding Rage and unrivaled smooth right.

In parallel our globally thousands development program steadily progress towards its center into service in 2025, with all engineering engineering work being on track.

The global family of aircraft is also shining bright in the defense sector with the global 6500, winning the trust of governments and military entities all around the world with exceptional range and payload capability. The global 6500 allows defense customers to fly fast.

Third higher and longer than legacy intelligence surveillance and reconnaissance platforms.

Eric Martel: This is exactly why the U.S. Army announced in January the purchase of a Global 6500 with options for two more to serve as a prototype for this program. This marks the first time the Army will use a large business jet for intelligence, surveillance, and reconnaissance missions and represents a tremendous show of trust for Bombardier Defense. Over the past year, our team also delivered global aircraft to the U.S. Air Force as part of the Bacon Program and to SAAB as part of the Globalized Solution for the Swedish Air Force. It was a banner year for Bombardier defense, and I look forward to what 2024 will bring for the team. As mentioned earlier, another key driver of performance is our newly expanded service network.

This is exactly why the U S Army announced in January the purchase of a global 6500 with options for two more to serve as a prototype for this program.

This marks the first time the army will use a large business jet for intelligence surveillance and reconnaissance missions and it represents a tremendous show of trusts for Bombardier defense over.

Over the past year. Our team also delivered global aircraft to the U S Air Force as part of the Bacon program and to SAB as part of the globalized solution for the Swedish Air Force. It was a banner year for Bombardier Defense and I look forward to what 2024 will bring for the team.

As mentioned earlier another key pillars of performance is our newly expanded service network over the past year, we focused on integrating our new and expanded facilities for the Bombardier family and we continue to refine our offer in order to meet the needs of our clients at <unk>.

Eric Martel: Over the past year, we focused on integrating our new and expanded facilities into the Bombardier family, and we continue to refine our offer in order to meet the needs of our clients at every point of their journey. We are already starting to see the return of those efforts as an increasing number of Bombardier clients choose to bring their jet home. Over the last two years, our aftermarket revenue has increased by more than 40 percent.

Every points of their journey.

Okay.

We are already starting to see the return of those efforts as an increasing number of bombardier clients choose to bring their gen. One.

Over the last two years, our after market revenue increased by more than 40%, we remain on track to reach or exceed our goal of $2 billion in revenue by 2025, and there is clear opportunity for growth beyond that point.

Eric Martel: We remain on track to reach or exceed our goal of $2 billion in revenue by 2025, and there is clear opportunity for growth beyond that point. Another highlight was the introduction of our Certified Pre-Owned Program, which has been met with great enthusiasm. This premium class of pre-owned Learjet Challenger and Global Aircraft offers refurbished and upgraded jets that meet Bombardier's highest quality and safety standards.

Another I lied was the introduction of our certified pre owned program, which has been met with great enthusiasm.

This premium class of pre owned Learjet Challenger and global aircraft offers refurbished and upgraded jets that means Bombardier is highest quality and safety standard with this program. We created a new segment in the market and continue to have value throughout our client's journey.

Eric Martel: With this program, we created a new segment in the market and continue to add value throughout our client's journey. And finally, let's discuss sustainability. We demonstrated Bombardier's deep commitment to a greener future and our company's undeniable leadership on that front. Our Ecojet research project reached significant milestones and is steadily progressing toward the goal of dramatically reducing aircraft emissions.

And finally <unk>.

Let's discuss sustainability.

We demonstrated Bombardier is deep commitment to a greener future as well as our company's undeniable leadership on that front.

Our <unk> research project reached significant milestones and is steadily progressing toward the goal of dramatically reducing aircraft emissions.

Eric Martel: This project doesn't only exist on paper. Our teams are currently ramping up our second phase of flight testing with an 18-foot wide blended wing body prototype. We also revealed a first partner, the University of Victoria and its renowned Center of Aerospace Research. Innovation is part of Bombardier's DNA and will continue to channel our company's unrivaled talent to build the aircraft of the future. Sustainability is also top of mind when it comes to our operations, and we are committed to continuously improving the energy efficiency of our sites around the world. Our newly built Pearson Airport manufacturing facility in Toronto is a perfect example. It will use 60% less energy than our previous site.

This project doesn't only exist on paper. Our teams are currently ramping up our second phase of flight testing with an 18 foot wide blended wing body prototype. We also revealed our first partner the University of Victoria and its Reno Centre of Aerospace research.

<unk> is part of Bombardier <unk> DNA and will continue to channel. Our company is unrivalled talent to build the aircraft of the future.

Yeah.

Sustainability is also top of mind when it comes to our operations and we are committed to continuously improve the energy efficiency of our sites around the world.

Our Uni newly build Pearson Airport manufacturing facility in Toronto is a perfect example, it will use 60% less energy than our previous site. Once the move is completed more than 2000 of our employees will work at this state of the art facility.

Eric Martel: Once the move is completed, more than 2,000 of our employees will work at this state-of-the-art facility. I had the pleasure of visiting the site at the end of January, and I want to commend the team for executing this historic move without impacting our operations. Speaking of operations, I want to acknowledge their remarkable performance in meeting their targets despite the notable pressure coming from the supply chain. The actions we have put in place since the pandemic have allowed us to mitigate the impact and deliver strong results year after year.

I had the pleasure of visiting the site at the end of January and I want to commend the team for executing this historic move without impacting our operations.

Speaking of operation I wanted to acknowledge their remarkable performance in meeting their targets. Despite the notable pressure coming from the supply chain. The actions we have put in place since the pandemic I've allowed us to mitigate the impact and deliver strong results year. After year. It is a waiver important to ignore.

Eric Martel: It is, however, important to acknowledge that we are still in turbulence and need to remain highly focused on monitoring and proactively supporting our supply chain. I also want to touch on some key levers that shape how we are navigating through 2024 and allow us to confidently maintain our 2025 objectives. First and foremost, we have delivered step changes in profitability, deleveraging, and aftermarket growth. We are well ahead of plan when it comes to delivery.

All of those that we are still any turbulence and need to remain highly focused on monitoring and proactively supporting our supply chain.

I also want to touch on some key leavers that shape, how we are navigating through 2024 and allow us to consistently maintain our 2025 objectives.

First and foremost we have delivered step changes in profitability deleveraging and aftermarket growth. We are well ahead of plan when it comes to deliveries our healthy backlog of $14 two billions provide us with predictability and visibility in the short term and well into 2002.

Eric Martel: Our healthy backlog of $14.2 billion provides us with predictability and visibility in the short term and well into 2025. Just looking at 2024, we're increasing our delivery targets, aiming to put between 150 and 155 new aircraft in the sky this year. The one area of short-term focus that merits comments is the supply chain.

One five.

Just looking at 2024, we're increasing our delivery targets aiming to put between 150 and 155 new aircraft in the Sky This year.

The one area of short term focus that merits comments as supply chain, while we have everything in place to achieve our objective I want to highlight that all.

Eric Martel: While we have everything in place to achieve our objective, I want to highlight that our delivery profile for the year is largely set by the pace at which we receive parts from our supplier. We are in an environment where we continue to play the cards we are dealt versus planning an ideal production schedule. This, of course, will mean we must build more inventories in the first place to then deliver higher volumes through the back of the ear. All this being said, our team has a firm grasp on this, and the man remains strong for our aircraft.

Re profile for the year is largely set by the pace at which we receive parts from our suppliers. We are in an environment, where we continue to play the cards, we are delta versus planning an ideal production schedule. This of course will mean, we must build more inventories in the first.

To then deliver higher volumes through the back of the year.

All this being said our team as firm grasp on this and demand remains strong for our aircraft we.

Bart Domaski: We expect a steady influx of sales in 2024. We will continue to raise the bar by offering the best aircraft, building our aftermarket and defense business, investing in innovation, and fortifying our position as an industry leader. Before turning to Bart to take a closer look at our financial performance, I want to highlight the incredible strength that lies in our team's collective effort. The pure talent of our employees is what drives us forward and what will allow us to reach new heights in 2024. Bart, it's over to you.

We expect a steady influx of sales in 2024, we will continue to raise the bar by offering the best aircraft Bill our aftermarket and defense business invest in innovation and fortify our position as an industry leader.

Before turning to Bart to take a closer look at our financial performance I want to highlight the incredible strength that lives in our team's collective effort. The pure talent of our employees is what drives us to word forward and what will allow us to reach new heights.

In 2024 part over to you.

Bart Domaski: Thank you, Eric. And good morning, everyone. 2023 was another excellent year for Bombardier. It seems that every time we get together for our quarterly call, we are talking about how our company is reaching new heights, and today is no exception. We've once again met or exceeded all of the expectations we set for ourselves and our position for another strong growth year in 2024. So, let me start with my comments by recapping just a few of the financial achievements we delivered last year. First, we've now crossed the $8 billion threshold of revenue. Our aftermarket revenues grew by 16% versus last year and are more than 75% higher than 2020. Our adjusted EBITDA increased by $300 million, or 32%, in just the past 12 months.

Thank you, Eric and good morning, everyone.

2023 was another excellent year for Bombardier it.

It seems that every time, we get together for our quarterly call. We are talking about how our company is reaching new heights.

And today is no exception.

And we once again met or exceeded all of the expectations. We set for ourselves and are positioned for another strong growth year in 2024.

So let me start with my comments by Recapping a few of the financial achievements, we delivered last year.

First we've now crossed the $8 billion threshold of revenue.

Our aftermarket revenues grew by 16% versus last year and are more than 75% higher than 2020.

Our adjusted EBITDA increased by $300 million or 32% in just the past 12 months.

Bart Domaski: Our EBITDA margins are now above 15%, a 180 basis point improvement versus 2022 and a remarkable 1,220 basis point improvement versus 2020. Our adjusted earnings per share were $3.17 higher than the previous year, and over the past three years, our business has generated $1.1 billion of free cash flow.

Our EBITA margins are now above 15%.

Aw 180 basis point improvement versus 2022.

And a remarkable 1220 basis point improvement versus 2020.

Our adjusted earnings per share were $3.17 higher than the previous year and over the past three years, our business has generated $1 $1 billion of free cash flow.

Bart Domaski: And last but not least, our leverage improved 28% versus last year and now stands at 3.3 times. We met or exceeded our guidance commitments across the board, demonstrating strong resilience despite a more volatile environment and a difficult supply chain. We've accomplished all of this while making significant progress on our strategic priorities, which Eric just covered in detail. Our 138 deliveries led the industry, and our unmatched portfolio commands a significant market share. As well, our $14.2 billion backlog provides us with strong visibility into our skyline and the future financial performance of our company. On the defense front, we made great progress towards growing the business, both by securing orders for new government programs.

And last but not least our leverage has improved 28% versus last year and now stands at three three times.

We met or exceeded our guidance commitments across the board demonstrating strong resilience, despite a more volatile environment and a difficult supply chain we've.

We've accomplished all of this while making significant progress on our strategic priorities, which Eric just covered in detail.

Our 138 deliveries led the industry and our unmatched portfolio of commands a significant market share.

As well our $14 $2 billion backlog provides us with strong visibility into our skyline and the future financial performance of our company.

On the defense front, we made great progress towards growing the business both by securing orders for new government programs as well as continuing to deliver aircraft on existing platforms.

Bart Domaski: As well as continuing to deliver aircraft on existing platforms, we have visibility into a significant pool of opportunities to grow this business, and our Global 6500 aircraft is very well positioned to win many campaigns. Our aftermarket revenues again grew at a double-digit annual growth rate of 16%.

We have visibility into a significant pool of opportunities to grow this business and our global 6500 aircraft is very well positioned to win many campaigns.

Our aftermarket revenues again grew at a double digit annual growth rate of 16%.

Bart Domaski: As we continue to capture market share and benefit from the ramp-up of the facilities we opened last year. We see great potential for continued growth in this business and are delighted with the regular and recurring revenues and cash flows it brings. 2023 saw us make significant strides in improving our balance, with $400 million of debt repayment in the year, an extension of our maturity runway so that we have no maturities for approximately the next 30 months, and receipt of credit rating upgrades from both Moody's and S&P during the year. We finished the year with $1.8 billion in liquidity, a net debt of $4 billion, and to top it all off, our net leverage resoundingly broke the four times level to finish the year at 3.3 times.

As we continue to capture market share and benefit from the ramp up of the facilities, we opened last year.

We see great potential for continued growth in this business and are delighted with the regular and recurring revenues and cash flows it brings.

2023 source make significant strides in improving our balance sheet with $400 million of debt repayment in the year extension of our maturity runway. So that we have no maturities for approximately the next 30 months.

And receipt of credit rating upgrades from both Moody's and S&P during the year.

We finished the year with $1 8 billion in liquidity and net debt of $4 billion and to top the year off our net leverage resoundingly broke the four times level to finish the year at three three times.

Bart Domaski: We are on track to retire an incremental $1 billion of debt over the next two years, bringing us to our long-term leverage target of two to two and a half times. It is abundantly clear to me that Bombardier's performance is not purely the result of market cycles. We've designed ourselves to be resilient and deliver strong results in many different market backdrops. We are performing at a high level. We are meeting and exceeding our commitments. We are continuing to raise the bar, and we are poised to continue to create tremendous value for all of our stakeholders. Turning to our financial performance for the year, as I mentioned earlier, we saw a 16% growth in revenues, reaching just over $8 billion, driven by 138 aircraft deliveries, as well as $1.75 billion in aftermarket revenue.

We are on track to retire an incremental $1 billion of debt over the next two years, bringing us to our long term leverage target of two to two and a half times.

It is abundantly clear to me that Bombardier is performance is not purely the result of market cycles, we've designed ourselves to be resilient and deliver strong results in many different market backdrops we.

We are performing at a high level, we are meeting and exceeding our commitments.

We continue raising the bar and we are poised to continue to create tremendous value for all of our stakeholders.

Okay.

Turning to our financial performance for the year as I mentioned earlier, we saw 16% growth in revenues, reaching just over $8 billion.

Driven by 138 aircraft deliveries as well as $1 75 billion and aftermarket revenues.

Bart Domaski: Our aircraft manufacturing and other revenues grew by $916 million, largely the result of 15 incremental deliveries, improved aircraft mix, as well as better pricing. Shifting to profitability, adjusted EBITDA for the year soared to an impressive $1.23 billion, representing a strong adjusted EBITDA margin of 15.3% and a 180 basis point margin expansion compared to the previous year. The robust growth in adjusted EBITDA is mostly attributed to strong conversion of incremental revenue, including those in our aftermarket, the continued margin expansion on our aircraft platform, all the while managing a challenging supply chain. Our adjusted EBIT for the year grew to $799 million, a remarkable 55% rise compared to the $515 million result the year prior.

Our aircraft manufacturing and other revenues grew by $916 million.

Largely the result of 15 incremental deliveries in.

Proved aircraft mix as well as better pricing.

Shifting to profitability adjusted EBITDA for the year soared to an impressive 123 billion, representing a strong adjusted EBITDA margin of 15, 3%.

A 180 basis point margin expansion compared to the previous year.

The robust growth in adjusted EBITDA is mostly attributed to strong conversion on our incremental revenues.

Including those in our aftermarket the continued margin expansion on our aircraft platforms.

All the while managing a challenging supply chain.

Our adjusted EBIT for the year grew to 799 million a remarkable 55% rise compared to the 515 million result, the year prior.

Bart Domaski: Our adjusted net income is now squarely positive, rising to $416 million compared to $104 million the prior year. As you can see from these results, our business has reached a stage where it is generating substantial profit, and we expect continued profitability growth next year. Looking at our free cash flow, we finished the year on a strong note by generating $646 million in the fourth quarter, due largely to the $45 million in EBITDA we generated in the quarter, as well as from positive working capital, mainly attributable to a decrease in inventory as we delivered 56 aircraft. For the full year, this translates into a free cash flow generation of $257 million, right in line with our full year guidance of more than $250 million.

Our adjusted net income is now squarely positive rising to $416 million compared to 104 million the prior year.

As you can see from these results our business has reached the stage, where it is generating substantial profits.

And we expect continued profitability growth next year.

Looking at our free cash flow, we finished the year on a strong note by generating $646 million in the fourth quarter.

Due largely to the $450 million in EBITDA, we generated in the quarter as well as from positive working capital mainly attributable to a decrease in inventory as we delivered 56 aircrafts.

For the full year this translates into a free cash flow generation of $257 million.

In line with our full year guidance of more than 250.

Bart Domaski: Now, looking ahead to 2024, we are well positioned for continued growth. We expect to deliver between 150 and 155 aircraft, with the growth versus 2023 coming from our Challenger platform. We expect global deliveries to remain stable in 2024 before growing in 2025. Our free cash flow guidance of $100 million to $400 million reflects working capital investment. Supporting the anticipated growth in deliveries in both 2024 and 2025, as well as to support continued aftermarket growth. We also expect CapEx to now be below $300 million for the year.

Now looking ahead to 2024, we are well positioned for continued growth we expect to deliver between 150 and 155 aircraft with the growth versus 2023 coming from our challenger platform.

We expect global deliveries to remain stable in 2024 before growing in 2025.

Our free cash flow guidance of 100 to 400 million reflects working capital investments supporting the anticipated growth in deliveries in both 2024 and 2025 as well as to support continued aftermarket growth.

We also expect capex to now be below $300 million for the year.

Bart Domaski: Moving to the P&L, we expect revenues to be between $8.4 and $8.6 billion, mirroring the anticipated increase in deliveries, improvements in pricing, and the continued growth of our aftermarket business. In terms of profitability, we expect growth once again in 2024, projecting adjusted EBITDA to be in a range of $1.3 billion to $1.35 billion. This is driven by margin conversion on the incremental revenues, as well as continued margin expansion on our new aircraft, including the positive effect of pricing over inflation. We do anticipate some headwinds, which partly offset our growth drivers, including continued supply chain disruption, along with strategic investments that we're making in R&D, IT, and the support of our growth opportunities in defense and certified pre-owned. We expect our quarterly delivery and free cash flow profile in 2024 will be similar to what we saw in 2023, with deliveries to be heavily skewed to Q4, along with material inventory billed over the rest of the year. This will result in free cash flow usage in the first half, including several hundred million dollars in Q1.

Moving to the P&L, we expect revenues to be between $8, four and $8 6 billion mirroring the anticipated increase in deliveries improvements in pricing and the continued growth of our aftermarket business.

In terms of profitability, we expect growth once again in 2020 for projecting adjusted EBITDA to be in a range of $1 3 billion to 135 billion.

This is driven by margin conversion on the incremental revenues as well as continued margin expansion on our new aircraft, including the positive effect of pricing over inflation.

We do anticipate some headwinds, which partly offset our growth drivers, including continued supply chain disruption.

Along with strategic investments that we're making in R&D.

And the support of our growth opportunities in defense and certified preowned.

We expect our quarterly delivery and free cash flow profile in 2024 will be similar to what we saw in 2023 with deliveries to be heavily skewed to Q4.

Along with material inventory build over the rest of the year.

This will result in free cash flow usage in the first half, including several hundred million dollars in Q1.

Bart Domaski: This profile is not ideal, but it does reflect the supply chain's current ability to deliver. So to conclude, we delivered another outstanding year in 2023. We are on track with all of our 2025 objectives, and I look forward to our company continuing to set new heights in 2024 while creating value for all of our stakeholders. With that, I'm pleased to turn it back over to Frances to begin the Q&A.

This profile is not ideal, but does reflect the supply chains current ability to deliver.

So to conclude we delivered another outstanding year in 2023, we are on track with all of our 2025 objectives and I look forward to our company continuing to set new heights in 2024, while creating value for all of our stakeholders.

With that I'm pleased to turn it back over to Frances to begin the Q&A practice.

Frances: Thanks, Bart. I'd like to remind you that the Bombardier Investor Relations team is available following the call and in the coming days to answer any questions you may have. For the question period, please limit yourself to one question and one follow-up. With that, we will open it up to questions. Operator? Thank you. Ladies and gentlemen, should you have a question, please press the star followed by the number on your touchtone phone.

Thanks Bart.

I'd like to remind you that the RDA Investor Relations team is available following the call and in the coming days to answer any questions you may have.

Our question period, please limit yourself to one question and one follow up with that we will open it up for questions operator.

Thank you ladies and gentlemen should you have a question. Please press the star followed by the one on your Touchtone phone if you'd like to withdraw your question. Please press the star followed by the Q, if you're using a speakerphone. Please pick up the handset before pressing any keys.

Operator: If you'd like to withdraw your question, please press the star followed by the... If you're using a speakerphone, please leave the handset before pressing any. One moment, please, for your first question. Your first question comes from Walter Spracklin from RBC Capital Markets. Please go ahead. Thanks very much. Good morning, everyone.

Please for your first question.

Your first question comes from Walter sparkling from RBC capital markets. Please go ahead.

Yes, thanks, very much good morning, everyone.

Walter Spracklin: Congratulations on a great quarter and a good end to the year here. Turning my focus on your free cash flow, I heard you indicated that there would be a higher working capital spend that would negatively impact your free cash flow for 2024, and that's to support the higher delivery schedule and the supply chain uncertainty that's out there. Is that to suggest, then, that you're buying more this year than you need to support the 150 to 155? Because I'm trying to understand, your free cash flow for next year is above $900 million, so I want to understand... You know, are we getting over our skis with the 900 million now, given this year is just 100 to 400, or is this really just kind of a big inventory bill that might carry you several years and you So, good morning, Walter, and thanks for your question.

Congratulations on a great quarter and a good into the year here.

Turning your turning my focus on on.

On your free cash flow.

You indicated that the.

There would be a higher working capital spend that would negatively impact your free cash flow for 2024, and that's to support the <unk>.

Higher delivery schedule in the supply chain.

Certainty that's out there.

Is that to suggest then that you're you're buying more this year than what you need to support the $1 50 to $1 55.

Because I'm trying to understand.

Your free cash flow for next year is above $900 million, so I want to understand.

Are we getting over our skis with the 900 million now given this year is just a 100 to 400 or is this really just kind of a big.

A big inventory build that might carry you several years and youre doing that given the uncertainty around the supply chain.

Yes.

Yeah, I can I can get started and maybe Bart you go on so good morning, and Walter and thanks for them.

Question.

And I think I said that.

Eric Martel: And I think I said that, you know, a few minutes ago. And Bart, also, we are clearly facing some supply chain challenges, and he also said we're playing with the cards we have. Last year we had to make decisions, I would say probably in Q3, about slowing down some of the programs, accelerating some others based on, you know, whatever the supply chain was capable of giving us. So this has created, of course, a situation this year where, you know, on some programs, we reduced the number that we were initially anticipating, but increased on some others. So in the end, we're delivering what we committed to do in terms of our number, but it's creating the fact that we're going to have to re-accelerate some of the line that we reduced last year, some of the programs, to, you know, deliver more of these programs in 2025. So these accelerations, as you know, are happening earlier.

Few minutes ago in part also we are facing clearly some supply chain challenge and he also said we're playing with the cards we have.

Last year, we had to make decision I would say probably in Q3 about slowing down some of the program accelerating some others based on you know whatever.

Supply chain was capable of giving us. So this has created of course a situation. This year, where you know on some program. We are we have reduced the number of that we were initially anticipating an increase on some others. So at the end, we're delivering what we committed to do in terms of our or a number but.

It's creating the fact that we're going to have to Reaccelerate. Some of the line that we reduced last year some of the program to <unk>.

Deliver more of these program in 2025. So these acceleration as you know are happening earlier, so they're happening basically in 24, so that we can improve our product mix and deliver even further and better EBITDA in our numbers for 2025. So this has an impact.

Eric Martel: So they're happening basically in 2024 so that we can improve our product mix and deliver even more and better EBITDA and numbers for 2025. So this has an impact on this year, of course, but that's how we've been thinking about it. Yeah, and just one point to add to that, Walter, with the growing earnings as well and the basically 100% conversion to free cash flow that we see coming both in 24 and 25. We have, and we remain absolutely confident in achieving our 2025 objectives. This is purely to do with the variability of the production line, as Eric highlighted, and the need to build working capital to make all the deliveries. We have a forecast and plan for the next two years. Hey, that's a great color; I appreciate that.

Onto this year of course, but that's how we've been we've been thinking about it.

Yeah, and just just one point to add to that Walter with the with the growing earnings as well and the basically 100% conversion to free cash flow that we see coming both in 'twenty four 'twenty five we have we remain absolutely confident in achieving our 2025 objectives. This is purely to do with <unk>.

The ability of the of the production line as Eric highlighted and the need to build working capital to make all the deliveries we have forecasts and plan over the next two years.

Okay. That's great color I appreciate that and then as my follow up it's really on.

Walter Spracklin: And as a follow-up, it's really on..., your guidance for 24, and when I compare it to 25, given that you've hit your aircraft deliveries of 150 to 155, I think that's fairly close to where your 2025 guide was, where you had kind of indicated your deliveries would be in 2025. You know, correct me if I'm wrong there, but really looking at the compared difference between the revenue that you're projecting in 25, EBITDA you're projecting in 25, given that you've kind of hit your aircraft delivery run rate. Is it just in non-aircraft, you know, your services revenue that you're going to see continue to ramp up other areas as well, or maybe a little bit more color on bridging So, you know, we're still aiming for our 2025 objective. That's clearly not something we want to revisit.

On your guidance for 'twenty, four and when I compare it to 25, given that you've you've hit your.

Your aircraft deliveries of 150 to $1 55.

I think that's fairly close to where your 2025 guide was where you had kind of indicated your deliveries would be in 2025. So.

Confer correct me, if I'm wrong, there, but really looking at the compare difference therefore in revenue that you're projecting in 25, EBITDA youre projecting in 'twenty five.

Given that you've kind of hit your aircraft delivery run rate is it just a non aircraft what your services revenue that youre going to see continued to ramp up other areas as well or maybe a little bit more color on bridging between 24 and 25 on that on those metrics.

So.

We're still we're still.

Aiming for our 2025 objective, that's clearly not something we want to revisit.

Eric Martel: It could be a bit of a different product mix as we progress. You know, so the number of airplanes will be around what we said. It could be, as an example, the same number of challengers, more global, whatever, you know, the market and the supply chain will allow us. But we are still, you know, aiming for these numbers. And, you know, today, you know, of course, we're talking more about 2023 and the positive outlook for 24. And, of course, we will eventually, Walter, provide some 2025.

It could be a bit of a different product mix as we progress and also the number of airplane will be around what we said.

It could be as an example, a same number of challenger more global whatever you know.

The market in the supply chain will allow us, but we are still you know we're aiming.

<unk> for these number and.

Today of.

Of course, we're talking more about the 2023 and the positive outlook for 'twenty four and of course, we will.

<unk> Walter provide some 2025 and we're still thinking about having an investor day are also coming up sometime in the in the in Q2, and we will announce the detail of that fairly soon but you know in 2025, we still see.

Walter Spracklin: And we're still thinking about having an investor day also coming up sometime in Q2. We will announce the details of that fairly soon. But, you know, in 2025, we still see deliveries, margin expansion, aftermarket growth, and better contribution also from the defense business. And we will be continuing the leveraging. As Bart said earlier, we are still planning to shave another billion dollars roughly from our debt between 24 and 25, color, and I appreciate it, and I congratulate you again on a great. Thank you, Walter. Your next question comes from Sadi Shamoun from BMO Capital Markets. Please go ahead. Yes, good morning. Thanks for taking my,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 24 versus 2023. It's kind of modest, I think, 30 or 40 pieces.

The deliveries the margin expansion the aftermarket growth.

The better contribution also again as a by the defense business and we will be consuming the deleveraging as Bart said earlier, we are still planning to shave another $1 billion roughly from our debt between 'twenty four and 'twenty five.

That's great color I appreciate it and congrats again on a great quarter there.

Thank you Walter.

Your next question comes from <unk> Sherman from BMO capital markets. Please go ahead.

Yes. Good morning, Thanks for taking my question.

<unk>.

Basically.

Just looking at a couple of things one.

Yeah.

The step improvement in margin and 24 versus 2023.

It's kind of modest I think 30 or 40 basis points.

Sadi Shamoun: Despite, you know, higher production, higher revenue, it feels like something is holding the margin back. I know you mentioned some of the strategic investment in R&D and defense. This is what's holding the margins back because then your guidance for 25 implies a very large step-up basically to 18% margin, I think. 15.3% in 2024.

Despite.

Higher production and higher revenue.

Feels like something is holding the margin back I know you mentioned some of the.

Strategic investments in R&D and the fact that this is what's holding the margins back because then you're you're.

Guidance for 25 employees.

A very large step up basically to 18% margin I think which is $15. Three 824. So I'm just trying to understand kind of the factors that are maybe holding the margin back in point, each four which will be released into 'twenty to 'twenty five.

Sadi Shamoun: So I'm just trying to understand kind of the factors that are maybe holding the margin back. 4, which will be released in 2025. And the kind of follow-up question is, what are you assuming in terms of aftermarket revenues in 2024, if you can provide? Maybe I'll start with the first part of your question. Maybe you can comment on the services part. I think, Fadi, but first of all, thanks for your question.

And the.

Kind of follow up questions. What are you what are you assuming in terms of aftermarket revenues in 2024, if you can provide that.

Maybe I'll start with the first part of your question, maybe you can comment on the services part.

I think if any but first of all thanks for your question I think that we you have to think about this is.

Eric Martel: I think the way you have to think about this is clearly related to product mix. As I said earlier, we had to make a decision in Q3 last year to slow down a bit on some programs which made a large contribution to our margin and were based on the supply chain capability. At some point, you know, this has all kinds of ramifications.

Clearly related to product mix as I said earlier, we had to make decision in Q3 last year to slow down a bit on some program, which have a large contribution to our margin and based on the supply chain capability at some point you know and this all as all kind of ramification of course the euro.

Eric Martel: Of course, the airplane you don't produce, you don't sell it, and it's being pushed to the right. So that's one of the reasons why you see a bit of the situation we're facing right now in 24. Again, good news, we're able to compensate by more on some other programs, but at the end, you know, the highest margins were, you know, maybe had to slow down, and the largest contributor had to slow down a bit in 24, but we are extremely confident that these will come back for 25, which explains a bit the upside we're going to see in 25 on EBITDA. Yeah, and just to add a little bit of color FATI, you know, and we do tend to guide them a little bit conservatively.

You don't produce and sell them and it's being pushed to the right. So that's one of the reason why you see a bit of a.

Of the situation, we're facing right now in 24 again, good news, we're able to compensate by more.

On some other program, but at the end you know the highest margin where you.

Maybe you had to slow down in the and the largest contributor had to slow down a bit in 'twenty four but we are extremely confident that these will come back for 25, which explain a bit the.

The upside we're going to see in 'twenty five on EBITDA.

Yeah.

Just to add a little bit of color on that and to speak to the to the aftermarket side of things, we're still projecting a very very strong growth next year overall fatty and we do tend to as you know guide a little bit conservatively. That's just the way we operate as a company and always have and expect to be consistent with that.

Bart Domaski: That's just the way we operate as a company and always have and expect to be consistent with that. For the aftermarket, we're expecting another strong growth year next year. We've got more capacity in the facilities that we've brought online. We're bringing on all the staff needed to fill those facilities up and to continue to take market share. So we're looking for another year of double-digit growth for the aftermarket. Okay, great. I appreciate the cover art.

For the aftermarket we're expecting another strong growth year next year.

We've got more capacity in the facilities that we brought online we're bringing on all of the all the staff needed to to fill those facilities up and to continue to take market share.

So we're looking for another year of double digit growth for the aftermarket.

Okay. Great appreciate the color maybe if can sneak one in because you mentioned.

Sadi Shamoun: Maybe it's kind of just sneak one in because you mentioned, you know, the competitive landscape and I, C. Can I go? Your backlog, in absolute dollars, declined 4% year-on-year at 14.2%, starting at 14.8 this year. No, there's probably an underlying mix in there, but your peer increased their backlog 5%, and I think they ended up at 1.2 books to bill. Is there a competitive dynamic here? The kind of these numbers.

The competitive landscape.

I see kind of your.

Your backlog in absolute dollar terms declined 4% year on year at $14 two versus starting at $14 eight this year.

Probably some.

The underlying mix in there, but your peers increase their backlog, 5% and I think they ended up at one two book to Bill is there a competitive dynamic here behind.

Eric Martel: Yeah, of course. And I don't want to comment on my competitor. But, of course, if you don't deliver, then that's pretty good to keep your backlog to start. So, of course, you know, you've seen that dynamic.

Kind of these numbers.

Yeah of course, and I don't want to comment on the on my competitor, but of course, if you don't deliver then that's pretty good to keep your backlog.

To start.

So.

Of course, you've seen that dynamic we've delivered you know our guidance.

Eric Martel: We've delivered, you know, our guidance. And so we've delivered the airplane. And the dynamic I was talking about earlier, the fact that, you know, we have slowed down some programs for deliveries, then it means that we couldn't sell these airplanes. But I think, you know, and also you. So I'm very pleased.

And so we've delivered the airplane and the dynamic I was talking about earlier.

The fact that you know we have slowed down.

Some program on deliveries then it means that we couldn't sell these airplane.

But I think you know and also <unk> so.

Eric Martel: That was a bit of a different product mix, of course, on sales due to different reasons, you know, supply chain being one of them. But I think, you know, the demand, and you know, we're all, you know, a couple of weeks already into 2024. And the level of activity remains, you know, in line with what we are expecting, which is to keep roughly a book to bill ratio of around one. So, I guess, you know, it's a difficult thing to compare with other OEMs because we delivered all the airplanes we said we were going to deliver. And that's, that's a main, the main difference, I would say, when you compare it to other OEMs.

I'm very pleased that was a bit of a different product mix of course on sales due to <unk>.

A different reason supply chain being one of them, but I think that the men and were all you know a couple of weeks already into 2024 and the level of activity remains in line with what we are expecting which is to keep roughly.

Book to Bill around one so so I guess.

I know, it's a it's a difficult thing to compare with other OEM because we delivered all of the airplane and we said we were going to deliver.

And that's that's a main the main difference I would say when you compare to other Oems.

Sadi Shamoun: Excellent. I appreciate it. Thank you, sir.

Excellent I appreciate it thank.

Kevin Chiang: Okay. Your next question comes from Kevin Chiang from CIBC. Please go ahead.

Thank you okay. Thanks Patti.

Your next question comes from Kevin Chiang from CIBC. Please go ahead.

Kevin Chiang: Maybe my first question is just on working capital, if I'm looking at the map correctly, it looks like you're calling for an, I guess, one. What drives that $300 million delta? Is it primarily just inventory and supply chain issues, or are you making? What makes it 201? Yeah, hi, Kevin.

Hi, Good morning, Thanks for taking my question here.

Okay.

Maybe my first question is just on working capital.

Looking at the math correctly, it looks like Youre, calling for an investment somewhere between kind of $2 million to $500 million.

Free cash flow guide.

I guess one.

I guess, what drives that 200 million Delta.

Is it primarily just.

Inventory and supply chain issues or are you, making a call a book to bill as well.

Just given the ramp up.

Or is that just.

Bart Domaski: And good morning. And thank you for the question. The first thing I would say is that you model very well. So, you know, the working capital bill that you described is very close to what we're modeling internally as well. As Eric described, last year was a year where we continued to have a supply chain disruption, and that required us to change our production rates a little bit.

What makes it to wonder what makes a 500 million that's kind of go through the year.

Yeah, Hi, Kevin and good morning, and thank you for the question first thing I would say is your modeling very well.

So the working capital build that you described is very close to what we're modeling internally as well as Erik described you know last year was a year, where we continued to have a supply chain disruption and that required us to change our.

Production rates, a little bit and we're now reversing those.

Bart Domaski: And we're now reversing those, which will ultimately lead to a higher inventory bill, along with the growth in overall production to meet our higher delivery plans. So that's where the working capital is coming from. And that is what ultimately is impacting our free cash flow in the year. Of course, as we get to a more stable delivery profile once we've come through this very strong growth period, that allows us to start releasing that free cash flow, which is why we remain very confident in the numbers we've put out for 2025. So we're feeling very good, not only about where we are but where we're going in terms of our projections, and maybe I can ask the EBITDA margin question a little bit differently as we kind of walk through 20. Just given the cadence of delivery.

Will ultimately lead to higher inventory build along with the.

The growth in overall production to meet our higher delivery plants. So that's where the that's where the working capital is coming from and that is what ultimately is is impacting our free cash flow in the year of course, as we get to a more stable delivery profile. Once we've come through this very strong.

Growth period.

That allows us to start releasing that that free cash flow, which is why we remain very confident in the numbers. We've put out for 2025. So we're feeling very good not only about where we're at but but where we're going in terms of our production.

That's helpful.

If I can ask the EBITA margin question, a little bit differently as we kind of walked through 'twenty four.

Kevin Chiang: Would you expect to exit 24 closer to your 25 target? Falcone was very back half involved in this campaign, and it took a while to get processed, and it's a repatriation program. It was a five-year application, then a four-year Jahren's application. The third depended on how you wound up doing it.

The other 25 target out there.

Just given the cadence of deliveries.

Would you expect to exit 'twenty four closer to your 25 target.

It's very back half weighted mix mix is going to be.

You know a constant has to get to these quarters here, but as you think of bridging for 15.3.

Kevin Chiang: It was so important, as I said, we really only have a few days before we get our list published, and the staff from GOPRA or other government agencies, they get to make those introductions for that decision whether it's to request demolition court article two, you know, a constant as we get through these quarters here. But as you think of bridging, is the exit rate in 24 closer than at 18? Yeah, we're pulling on all the levers that are going to help us grow margins and as well as grow overall EBITDA. So we are expecting margin expansion in both 24 and 25. Growth in the aftermarket, very strong growth, which, as you know, we've guided that it's over, over 20% EBITDA margin as a business.

18% EBITDA margin in 2005.

Exit rate in 'twenty four closer to that 18% is as you kind of work through some supply chain issues.

When things start to normalize a little bit.

Yeah, we're a we're pulling on all the levers that are going to help us grow margins and as well grow overall EBITDA. So we are expecting margin expansion.

In both 24 and 25 growth in aftermarket very strong growth, which as you know.

So we've guided that it's over.

Over 20% EBITDA margin as a business as well we're growing our defense business that has a very compelling our margin profile.

Kevin Chiang: As well, we're growing our defense business, which has a very compelling margin profile and the continued deleveraging that both Eric and I commented on. So during 24, as I mentioned earlier, we're going to see a delivery and cash flow profile that is not too much different than the profile we saw in 23. So I'm expecting a very, very strong fourth quarter, but on top of that, incremental margin growth of 25% and expansion of other businesses is what will contribute to achieving our 2025 outline. The one other thing I would say, and it's not a guidance number, but to go back to your earlier question, Kevin, we model and our planning basis is on a book to bill of one for the year. Thank you. Yeah, you bet. Thanks, Kevin. Your next question comes from Noah Poponak of Goldman Sachs. Please go ahead. Hey, good morning, everyone.

And the continued deleveraging that that both Eric and I commented on so during 'twenty four.

I mentioned earlier, we're going to see a delivery and cash flow profile that is not too much different than the than the profile. We saw in 2003. So we're expecting a very very strong fourth quarter, but we're on top of that incremental margin growth in 'twenty five and expansion of other businesses is what will.

Contribute to achieving our 2012 2025 outline the one other thing I would say and it's not a guidance number.

But to go back to your early earlier question Kevin.

We are re model and our planning basis is on a book to bill of one for the year.

Perfect. Thank you for taking my questions I appreciate that yeah, you bet. Thanks, Kevin Thanks.

Your next question comes from Noah <unk> from Goldman Sachs. Please go ahead.

Hey, good morning, everyone.

Good morning.

Mark would you be able to just actually quantify the pieces.

Noah Poponak: Good morning. Bart, would you be able to just actually quantify the pieces? between your EBITDA guidance and your free cash flow guidance. You know, one, where's the cash interest at this point? And then, You're citing working capital; how much working capital is just pure? Regular old delivery growth; how much of it is to support the supply chain and maybe, hopefully, will stop after this year. And then I think you mentioned some other items in R&D and elsewhere. So just given the wide range and some of the headwinds you faced this year that are maybe temporary, I think it would be helpful if we all had some numbers on those. Okay, so let me share a few of the items that'll hopefully help you build things out, Noah.

Between your EBITDA guidance and your free cash flow guidance like one.

<unk>, whereas cash interest at this point and then.

You're citing working capital how much working capital is just pure regular old delivery growth how much of it is to support supply chain and maybe hopefully stops. After this year and then I think you mentioned some other items R&D and elsewhere.

<unk>.

Just given the wide range in some of the headwinds you faced this year there may be temporary I think it would be helpful. If we all have some numbers on those pieces.

Okay. So so let me let me share a few of the items that will hopefully help you build things out no us so look first off.

Bart Domaski: So look, first off, we're expecting very constructive and positive free cash flow for next year, for this year, sorry, along with growth in 2025. We're forecasting EBITDA guidance, that's got about a $50 million ban this year. So most of our free cash flow guidance range is for variability in working capital. Kevin earlier, you know, we don't release exact numbers and don't provide exact numbers. But Kevin Chiang earlier on the call mentioned $200 to $500 million.

We're expecting a very constructive and positive free cash flow for next year.

For this year, I mean, sorry, along with growth in 2025.

We're forecasting EBITDA guidance, that's got about a $50 million band this year. So.

Most of our free cash flow guidance range is for variability on working capital.

Kevin earlier, we don't release exact numbers and don't provide exact numbers that Kevin saying earlier on the call mentioned $200 million to $500 million that is a range. This is incremental working capital, which is a headwind on the free cash flow. That's a range that fits with our modeling as well as Eric described it it comes down to.

Bart Domaski: That is a range; this is incremental working capital, which is a headwind on free cash flow. But that's a range that fits with our modeling as well. As Eric described, it comes down to a variability of production mix to meet changing market demand profiles in 23 and 24. And that's there as well. So the planning basis on book to bill is one. And there are some things that come out, you know, RBGs, we don't have those anymore.

Ah variability.

Our production mix to meet changing market demand profiles in.

In 'twenty, three and 'twenty four.

And that's there as well so the planning basis on book to Bill is one and Theres some things that come out Rbg's. We don't have those anymore capex is coming down so that helps with free cash flow.

Bart Domaski: CAPEX is coming down, so that helps with free cash flow. And all of those are combining to give us our guidance of free cash of $100 to $400 million for the year. Okay, appreciate that. And then, as a follow-up.

And all of those are combining to our guidance of free cash for $100 million to $400 million for the year.

Okay I appreciate that and then as a follow up.

Noah Poponak: In this discussion of mix, which seems somewhat significant vis-a-vis margins and where things go from here, any ability to quantify, I guess, how much higher The Globals could go. They've been sort of flattish, and if we look back in time, which isn't the best corollary for this end market, but, you know, they've been much higher. So I guess just how much growth are you looking for in the globals once you're ready to go? And then I always wonder, you know, why is the challenger? Deludive.

In this discussion of mix.

Which seems somewhat significant vis vis margins.

And where things go from here.

Any ability to quantify I guess, how much higher.

The globals could go they've been sort of flattish and if we're lucky.

Looking back in time isn't the best corollary for this end market.

They have been much higher so I guess just how much growth are you looking for on the globals. Once you are ready to go.

And then I always wonder why is the challenger dilutive I mean, I understand higher price airplanes at higher margins because the prices are so much higher than the cost isn't that much different maybe it's just that but we constantly hear from the market that the challenges the best mid cabin airplane out there by far everybody wants it.

Noah Poponak: I mean, I understand higher-priced airplanes have higher margins because the price is so much higher, and the cost isn't that much different. Maybe it's just that. But we constantly hear from the market that the Challenger is the best mid-cabin airplane out there by far. Everybody wants one. You know, look at the delivery growth. That tells you where demand is. But the pricing, channel checks, and data on Challenger never really change very much. So I guess, why aren't you taking significantly more price instead of volume on Challenger? And why couldn't that be, you know, less dilutive or not dilutive to margins if you had a better price? What I think, no, I don't.

Looking at the delivery growth that tells you where demand is but the pricing.

Channel checks and data on challenger never really changed very much. So I guess why aren't you taking significantly more price instead of volume on challenger.

And why couldnt that be less dilutive or not dilutive to margins, if you had better pricing.

But I think.

No I don't.

Eric Martel: Don't get us wrong here; the margin on the Challenger is very good. But you need to realize that, you know, the airplane is sold, as it's listed in the $20 million-ish, $20-some million, or global or sold, if you take the $75 million-ish. So you need to sell three Challengers and deliver three Challengers to get to a global market. And it's about, you know, the same thing on the margin. So it's, you know, they're heading up. So clearly, the product mix is different. So if you do, as an example, a few less global brands, you have to do much more challenger brands to basically equal what a global will give you. But the margins are good on challenger and global, you know, with some very slight differences, of course. But that's still pretty good.

Don't get a strong here the margin on the challenger are very good.

But you need to realize that you know the airplane is sold as it's listed in the in the $20 million ish dollar 20. Some million are global are so if you take the 70 575 million ish.

So you need to sell three challenger and delivered three challenge or to get to a global and it's about the same thing on the margin.

Theyre heading up so so clearly the product mix is different so if you do as an example, a few less global.

You have to do.

Much more challenging.

Basically equal what a global will give you, but the margins are good on challenger and global.

With some very slight differences of course, but.

Noah Poponak: But it's clearly, you know, the size and the price of the airplane according to the market and what we're selling it for and the difference with the global market. Okay, I appreciate that. And anything you could say about where those global units go, 25, 6, 7 versus where they've been the last few years? Well, we don't guide long term on mixed NOAA, but what we can say is that the market today remains and is very strong for both our challenger and our global products. We're expecting a strong, strong market for both this year. So that's, unfortunately, we don't guide on mixed.

Still pretty good but it's clearly.

The size of the price of the airplane according to the market and what we're selling it for.

And the difference with the with the global.

Okay I appreciate that and anything you can say about <unk>.

Were those global units go 20, 567 versus where.

Where they've been in the last few years.

Well, we don't guide long term on.

On mix, Noah, but what we can say is that the market today.

Mains and is <unk>.

Very strong for both our challenger and our global products.

We're expecting a strong a strong market for for both this year. So that's on.

Bart Domaski: Okay, fair enough. Thank you. Okay. Appreciate it. Thank you, Noah. Thank you. Your next question comes from Benoit Poirier from Desjardins Capital Markets. Please go ahead.

Unfortunately, we don't guide on the mix.

Okay fair enough. Thank you okay I appreciate it thanks Noah thanks.

Your next question comes from Noah <unk> from Vishal Bank capital markets. Please go ahead.

Benoit Poirier: Yeah, just looking at the bookings, you mentioned a great caller about the book to bill of 1 for 2024. But when we look at the mix, there will be greater exposure to Challenger. Could you maybe provide some color about your operators these days and whether it could be a reason why there's less customer advance given you might have increased exposure to the Fleet Operators and the Challenger 3000? You know, Benoit, thanks for your question. The exposure to the fleet operator is not really greater, it's about always in the same 20%-ish, but, you know, clearly the, you know, mix remains about the same fleet operator versus others We've delivered, of course, a lot of airplanes in the last few years.

Yes, just looking at the booking you mentioned great color about the book to Bill of one for 2024, but when we looked at the mix there will be greater exposure to challenger could you maybe provide some color about your exposure to fleet operators. These days.

And whether it could be a reason why there is less customer advance given you might have increased exposure.

To the fleet operators and the Challenger 3500.

You know what thanks for your question.

Exposure to the fleet operator is not really great or it's about always in the same you know 20% ish, but.

Clearly.

The mix to remain about the same fleet operator versus other.

We've delivered of course, a lot of airplanes in the last few years the fleet operator.

Benoit Poirier: The fleet operator, I would say, keep flying a lot, okay? If you look at the number of flying hours, and I'm quoting here the Bombardier fleet out there, you know, we're actually, you know, if you go back to 2019, they went up by more than 50 percent. You remember last week, last year, we quoted that they were 45% higher. They were another 12% percent higher between 22 and 23.

That would see a key flying a lot. Okay. If you look at the number of flying hours.

I'm quoting here to Bombardier fleet out there.

Yeah.

We're actually.

No. If you go back to 2019, they went up by more than <unk>.

50, some percent you remember last week and I see we quoted that they were 45% higher there were another 12.

Percent higher between 'twenty to 'twenty three so the demand there remains very strong and these guys need the airplane and their key buying so they've been good buyer good Bayer and end and I guess, you know we enjoy doing business with these guys and again I think one of the benefit of them.

Eric Martel: So the demand there remains very strong, and these guys need the airplane, and they keep buying. So they've been good buyers, good payers, and I guess you know we enjoy doing business with these guys. And again, I think one of the benefits of delivering to fleet operators is also the impact it has on our service business in the long term. As these guys are flying quite a bit, you know, you can think of a bit over a thousand hours per year, so they're going to be buying more parts, getting more services.

No.

Turning to fleet operator is also the impact it has on our service business longer term as these guy are flying quite a bit you know you can think of a.

A bit over 1000 hour per year, so theyre going to be buying more parts getting more services, but clearly the fleet operator are important part of our strategy.

Bart Domaski: But clearly, the fleet operators are an important part of our strategy. You know, we've been very successful with all of them, and they keep buying and keep growing. And Benoit, if I could just add, the growth that Eric's commenting on is not just from our historic relationships, but we're adding new relationships as well. And we're very excited about the growth of that whole market. AB Jets and Airshare became new customers in 2023, and we're looking forward to growing our relationship and delivering more aircraft to them as well.

We've been very successful with all of them.

The key buying and grow and keep buying and keep growing.

Okay, well, if I could sorry, if I could just add as well the growth as well that that they're commenting on is not just from our historic relationships, but we're adding new relationships as well and we're very excited about the growth of that whole market 80 Jets and air share became a new customer.

In 2023, and we're looking forward to.

Growing our relationship and delivering more aircraft to them as well.

Benoit Poirier: Okay. And about a year ago, you asked the question about capital deployment opportunities once the leverage would fall around, 5. Obviously, you started working on that probably 12 months ago. I'm just wondering how you have refined your thoughts around the capital deployment opportunity? Do you have more visibility about what you would like to do if you have any preference or what you would like to not do once you'll get that? Yeah, Benoit, so let me go first.

Okay and about a year ago, you've got the question about capital deployment and unfortunately once the leverage would fall around June two five obviously you start working on that.

Probably 12 months ago I'm, just wondering how have you refined your thoughts around the capital.

Capital deployment opportunity.

Do you have more visibility about what you could do if you have any preference or what you would like.

Once youll get that 225.

Yes, Ben was so so let me.

Bart Domaski: I'll comment on that a little bit. We haven't finalized at this point how exactly we want to deploy the cash. However, we are creating, as we speak, many options for ourselves, which includes the potential for a return of cash to shareholders and as well as other investments to continue to grow our business, and Eric and our operations team and our strategy teams are leading that charge. It's a bit premature to share any information there, but we have a number of exciting opportunities that we're working on. We'll provide more color on that when the time is right in the not-too-distant future. Time does fly by more quickly, I think, than we all like.

First I'll comment on that a little bit we havent.

We haven't finalized at this point.

How exactly we want to deploy the cash however, we.

We are creating as we speak many options for ourselves.

Which includes potential for.

Return of cash to shareholders.

And as well other investments to continue to grow our business.

And Eric and our operations team and our strategy teams are leading that charge, it's a bit premature to share any information there but.

But we have a number of exciting opportunities that we're working on will provide more color on that when the time is right.

<unk>.

In the in the not too distant future time does fly by more quickly I think that we all like it to.

Benoit Poirier: Perfect. And congratulations for the strong achievement made in 2023 by Thank you, Benoit. Thank you, Benoit. Your next question comes from Myles Walton from Wolf Research. Please go ahead. Hey, good morning. You have Lewer Federal on for Myles. Good morning. Maybe just to stick with the book-to-bill question for a second. So I assume that's on a unit basis, the one time for 24?

Perfect and congrats for the strong achievement made in 2023 by the way.

Thank you Ben.

Your next question comes from Myles Walton from Wolfe Research. Please go ahead.

Hey, good morning of lower federal on for Myles.

Good morning.

Maybe just to just to stick with the book to Bill question for a second so I assume that's on a unit basis. The one one times for 'twenty four.

Myles Alexander Walton: Yes, it is, Myles. Yeah. And then, I guess, how do you think about the mix of those orders? Is it going to be similar to the delivery pattern that you see for 24, so you do get a little backlog burndown? Yeah, no, no, but I think, you know, we're, You know, I'm not guiding on this, but, of course, we're always assessing the market. So our book to bill will be in line with basically what we're aiming to deliver in 25 and even 26 eventually, because we've got quite a bit of backlog pretty much on our program. So, you know, last year, as I said, we had a bit of a different mix, and it was mainly due to us making a decision to slow down on one program to accommodate and give a chance to our supplier to catch up.

Yes. It is.

Alright, and then I guess, how you think about the mix of those orders is going to be similar to the delivery pattern that you see for 24. So you do get a little backlog burned down or.

Yeah, No no, but I think you know where.

You know I'm not guiding on this but of course, we are.

We're always assessing the market. So our book to Bill will be in line with basically what we're aiming to deliver in 'twenty five and even 26 eventually because we've got quite a bit of backlog pretty much on all program. So.

Last year as I said.

We had a bit of a different mix and it was mainly due to us making a decision thats slowing down on the one program.

To accommodate and give a chance to our supplier to catch up but clearly now this is.

Eric Martel: But clearly now, this is starting to be behind us, that situation, allowing us to ramp up again and sell this airplane. As I said earlier, we cannot sell an airplane that we're not going to manufacture, so that had a bit of a temporary impact last year. Okay, great. Interesting.

Starting to be behind us that situation, allowing us to ramp up again and sell these airplanes as I said earlier, we cannot sell the airplane that we're not going to manufacturers. So that has a bit of a temporary impact last year.

Okay, Great interesting and you kind of brought up the lead times there so.

Myles Alexander Walton: And you kind of brought up the lead times there. So, how far out are the lead times now on the globals and how does that compare to this? I think they're both. You have to think about 18 to 24 months on the different platforms.

Kind of how far out on the lead times now on the globals and how does that compare to the challenges.

I think they are both you have to think about 18 to 24 months on the different platform.

Eric Martel: Thank you very much. Thank you, Myles. Thank you. Your next question comes from Tim James from TD. Please go ahead.

Okay, great. Thank you very much. Thank you Myles Thank you Mike.

Your next question comes from Tim James from TD. Please go ahead.

Tim James: Thank you. I guess I'd like to dive into a little bit more on the supply chain challenges that have been affecting your Production Plans and your delivery outlook for 2019, or it sounds like, obviously, just based on what you're talking about, that it's more of an impact on the global. Is there any more color you can kind of provide on the specifics there of where the pinch points are?

Got it thank you and good morning, everyone.

Yeah.

I guess just wondering.

Wondering if we can dive into a little bit more.

<unk> on the supply chain challenges that they have been influencing your <unk>.

Production plans and your delivery outlook for 2024, it sounds like obviously just based on the mix that you're talking about but it's more of an impact on the global is there any more color you can provide on the specifics there where the pinch points are.

Tim James: Yeah, no, that's a great question. I would say the way I would characterize it is that I think that we've been able, the team has been extremely successful in narrowing the problem we had with the supply chain. If you go back to two years ago, even 12 months ago, we had multiple issues that we were always managing. So I would say we have fewer issues right now, but some of them, you know, were a bit more profound in just a few.

Yeah, No. That's a great question I would say the way I would characterize it is.

I think that we've been able the team has been extremely successful in narrowing the problem. We had with supply chain. If you go back to two years ago. We've been 12 months ago. We had multiple issue that we're always managing so I would say we have less issue right now, but some of them you know we're.

A bit more profound on just a few.

Eric Martel: And that's why, you know, we wanted to give a chance for everybody to catch up. So we've slowed down, actually, one of the lines for that. So now we're, I would say, in a much better position. But I cannot declare that everybody is on schedule, not yet. But some of the significant suppliers, I would say, are still in a catch-up mode. But we have fewer issues, as a lot of them, the majority of our suppliers are back on track, but we still have a few ones that we are monitoring extremely closely. Thank you.

And that's why you know we are we.

We wanted to give a chance to everybody to catch up so we've slowed down actually one of the line for that so now where I would see in a much better position I cannot declare that everybody is on schedule, such yet, but some of the significant supplier.

I would say are still in a catch up mode, but we have less issue.

As a lot of them the majority of our supplier are back on track, but we still have a few one that we are monitoring.

Extremely closely.

Okay. Thank you and then my follow up question just on the new.

Tim James: And then my follow-up question, just on the new Toronto facility. I believe, correct me if I'm wrong, you've more or less moved into that new facility. Could you talk about the implications for profitability and for margin this year? Is there any sort of noticeable benefit or any kind of ongoing non-recurring costs related to that move? How should we think about the impact of that?

Toronto facility.

The lead correct me, if I'm wrong, you've more or less sort of moved into that new facility.

Could you talk about.

Any implications for profitability and for margin. This year is there any sort of noticeable benefit or any kind of ongoing nonrecurring costs related to that new how should we think about the.

Tim James: And maybe it's just in sort of production flows. Has that been fairly seamless? Maybe just a little bit of addition.

The impact of that and maybe it's just on sort of production flows has not been truly seamless.

Bart Domaski: Yeah, thanks, Tim. So, Look, we are very proud of our new global manufacturing center. It's an amazing facility.

Maybe just a little bit of additional color.

Yeah, Thanks, Tim So look.

We are very proud of our new global manufacturing center.

It's an amazing facility.

Bart Domaski: Hopefully, everyone on the call will have the opportunity to come in and visit with us in the not too distant future and just see what a world-class manufacturing facility looks like. We were doing the cutover of production from the old facility in the last quarter of last year, and we've now finished that in the early part of this year. So the spend The vast, vast majority of spend is behind us.

Hopefully everyone on the call, we will have the opportunity to come and visit.

With us in the not too distant future and just see what a world class manufacturing facility. It looks like we were doing the cutover.

Production from <unk>.

From the old facility and the last quarter of last year and we've now finished that in the early part of this year. So the the spend the vast vast majority of spend is behind us. So it won't have any implications for capex going forward from here.

Bart Domaski: So it won't have any implications for CAPEX going forward from here. And that's why I commented on our CAPEX declining year over year to be below 300 million. That's what we're expecting for this year. If you think about the aircraft that were going through the facility towards the end of last year, those will be aircraft that will be delivered this year, not next year. We saw no production issues whatsoever.

That's why I commented on our Capex.

Declining year over year to be below $300 million is what we're expecting for this year. If you think about the aircraft.

With that we're going through the facility.

Towards the end of last year, those will be aircraft that'll be delivered this year not last year, we saw no production.

Bart Domaski: The team has performed absolutely exceptionally. And we're very fortunate, given that the facility is quite close to the old Downsview facility, that virtually all of our workforce has just made the move over with us and has stayed with us. It's an extremely experienced workforce, many of whom have been with us for a long, long time, and they contribute greatly to the ability for us to manage our costs on that platform. So, yeah, it's we're in great shape. Operator, we'll have time for one last question. Your last question comes from Conarch Gupta from Scotia Capital. Please go ahead.

Issues whatsoever. The team has performed absolutely exceptionally and and we're very fortunate given that the facility is <unk>.

Close to the old downs via facility that virtually all of our workforce has just made the move over with US and have stayed with US. It is an extremely experienced workforce, many of whom events with us for a long long time and they contribute greatly to the ability to for us to manage our costs on that platform. So yeah. It's a it's a we're in great shape there.

Operator, we'll have time for one last question.

Your last question comes from <unk> Gupta from.

Scott.

Alright, and sometimes Scotia capital. Please go ahead.

Conarch Gupta: Thanks, and good morning, everyone. And thanks for squeezing me in. I just wanted to understand, you know, I get you're being cautious on working capital because of supply chain issues, etc. But your revenue and delivery guidance was pretty good and probably, delivery guidance, if I had it by one year, at least, let's say, based on your original plans. What portion of this guidance do you think is already secured in your backlog? I mean, in other words, is this guidance overly dependent on orders that you have in one year?

Thanks, Dan and good morning, everyone.

Thanks for squeezing me in and just wanted to understand.

Yeah.

I get it.

We are cautious on working capital because of the supply chain issues and whatnot.

But your revenue and delivery guidance looks pretty good and probably in our delivery guidance. If I had to ahead by one year at least let's say based on your original plans.

What portion of this guidance you think is already secured and your backlog I mean like in other words guidance overly dependent on orders that you haven't been won yet.

Bart Domaski: Yeah, Conarch, thank you for the question and good morning. So the guidance that we provided for 2024 is virtually 100% known to us because we have all the aircraft for the year entirely sold. That's for both the Challengers and the Globals for 2024.

Yeah Conor.

Thank you for the question and good morning.

So the guidance that we provided for 2024.

Is virtually a 100% known to us because we have.

But the aircrafts.

For the year is entirely sold that's in both for the challengers and the globals.

Bart Domaski: So we're very confident in our guidance when it comes to the earnings growth and revenue growth that we're forecasting for the year. But when it comes to cash flow, as we commented earlier, we do have a working capital build. And it's because of the right decisions that we made, quite honestly, to adjust the production schedule or production rates on one of our aircraft, which will be reverting back this year to a higher production rate, and that will require more working capital. So, very confident. It makes sense,

For 2024, so we're very confident in our guidance when it comes to the earnings growth and revenue growth that we're forecasting for the year. When it comes to the cash flows. We commented earlier on we do have a working capital build.

And it's because of the right decisions that we made quite honestly to adjust production schedules our production rates on one of our aircraft.

Which will be reverting back this year to a higher production rate and that will require more working capital so very confident in the world.

Conarch Gupta: And if I can just follow up quickly, and I don't think we discussed a lot of the pricing dynamics on this call today, are there any moving parts on the pricing side on either platform, Challenger or global? I'm especially looking at, you know, potential where, you know, a customer of yours is going through some difficulties. And I think, you know, some investors are kind of considering it if that customer kind of starts putting some aircraft into the remote, No, you know what? Not at all.

And it makes sense and if I can just follow up quickly on I don't know.

We discussed a lot on the pricing dynamics on this call today.

Is there any moving parts on the pricing side on either platform Challenger global.

I'm, especially looking at potential they're a customer of yours.

Just going through some difficulties and I think some investors are kind of considering it if that customer kind of start putting some aircraft ended up leaving the market.

No.

Not at all actually the pricing is remaining to our expectation.

Eric Martel: Actually, the pricing is remaining to our expectations. It's been, you know, the same pattern in the last quarter, and it remains the same pattern this quarter. So, you know, we've been able to increase prices over the years, as you know, and right now, we don't feel any pressure. Actually, you know, the most recent data shows that pre-owned, especially on the airplanes that are less than 10 years old, the pre-owned airplane inventory has decreased slightly.

It's been the same pattern in the last quarter and it remains the same pattern this quarter. So.

We've been able to increase pricing along the years as you know and right now we don't feel any pressure actually.

The most recent data shows that pre owned especially on the <unk>.

<unk>.

Airplane that are less than 10 years Rio an airplane as inventory has decreased slightly so we are we're confident.

Conarch Gupta: So we're confident, you know, and actually, you know, our airplane remains popular. We have a backlog, people are still knocking on the door and looking to buy. So pricing is definitely not a concern at this stage.

And actually.

Our airplane and remain we remain popular we have backlog people still knocking at the door and looking are looking to buy so pricing is definitely not the.

Another concern at this stage.

Eric Martel: I appreciate your time. Thank you. Thank you, Conard. Thank you, Conard. I will now turn the call back over to Eric Martel for his closing remarks. So, thank you all for joining us today. And as you can see, Bombardier has distinguished itself on many fronts in 2023. The foundation we have laid in recent years has enabled us to grow and stand out in the industry. We are looking forward with confidence and have everything in place to maintain our upward strategy trajectory.

Okay. That's great color I appreciate the time thank you.

Thank you Connor.

I will now turn the call back over to Kathy Macdonald for closing remarks.

So thank you all for joining us today and as you can see Bombardier has distinguished itself on many fronts in 2023.

Foundation, we have laid in the recent years and enable us to grow and stand out in the industry. We are looking forward with confidence and have everything in place to maintain our upward strategy trajectory I want to thank you all for your time today and for your continued interest in <unk>.

Eric Martel: I want to thank you all for your time today and for your continued interest in Bombardier. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.

Ladies and gentlemen, this concludes your conference call for today, we thank you for joining and you may now disconnect your lines. Thank you.

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