Q2 2025 Bombardier Inc Earnings Call

Good morning, ladies and gentlemen, and welcome to the second quarter 2025 earnings Conference call. Please be advised that this call is being recorded at this time I would like to turn the discussion over to Miss your closest sushi. The Leftish Vice President of P N E and Investor relations, but my body.

Go ahead Sir.

Francis Richer de La Fleche: Good morning, everyone, and welcome to Bombardier Inc.'s earnings call for the second quarter of 2025. 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 is that actual events or results may differ materially from these statements. For additional information on forward-looking statements and underlying assumptions, please refer to the MDNA. I am making this cautionary statement on behalf of each speaker on this call. With me today is our President and Chief Executive Officer, Éric Martel, and our Executive Vice President and Chief Financial Officer, Bart Demosky, to review our operations and financial results for the second quarter ended June 30, 2025. I would now like to turn over the discussion to Éric.

Good morning, everyone and welcome to both of these earnings call for the second quarter of 2025.

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

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

For additional information on forward looking statements and underlying assumptions. Please refer to the MD&A I'm, making this cautionary statement on behalf of each speaker on this call.

With me today is our president and Chief Executive Officer, and our Executive Vice President and Chief Financial Officer, Martha Marquee to review our operations. If actual results for the second quarter ended June 30th 2025, I would now like to turn over the discussion to it.

Eric Martel: Alors, merci, Francis, et bon matin à tous, et bienvenue à toutes et à tous. Good morning, everyone. Good afternoon, and maybe even good evening for some of you, and thanks for joining us today. Bombardier Inc. is in an excellent position. Our results put us on a clear and confident path to meet 2025 guidance. Before Bart and I go into specific details, I want to provide some color on how the last quarter was meaningful in the context of our long-term strategy. Clearly, it's easy to be optimistic in any quarter where we receive a firm order for 50 aircraft in one transaction. This was a big win for the whole Bombardier Inc. team. We look forward to welcoming a new customer who will also carry a long-term and very comprehensive service agreement. I'll answer a few questions I've been getting almost every day. Who is it?

Hello, Ms Stacey <unk>.

Yes.

Good morning, everyone. Good afternoon, and maybe even good evening for some of you and thanks for joining us today.

Bombardier is in an excellent position our results put us on a clear and confident path to meet 2025 guidance.

Before Bart and I go into specific details.

I want to provide some color on how the last quarter was meaningful in the context of our long term strategy.

Clearly, it's easy to be optimistic in any quarter, where we received a firm order for 50 aircraft in one transaction. This was a big win for the whole Bombardier C.

We look forward to welcoming a new customer who will also carry a long term and very comprehensive service agreement.

I'll answer a few questions I've been getting almost everyday.

Eric Martel: What planes did they buy? What makes their maintenance agreement so significant? The answer to all of those is simple. When our new customer is ready to unveil their offering, we will support them in doing so. Until then, no wins. The entire Bombardier Inc. team will respect their wish to remain confidential for now. This order does contribute in a significant way to our large backlog jump. Overall, it's really half the story behind our solid unit book-to-bill ratio of 2.3. We are seeing sustained demand and consistent flight utilization for business jets. This is also reflected in the low availability level of pre-owned Challenger and Global aircraft. On top of this great activity in the traditional business jet market, Bombardier Defense is putting points on the board. This past quarter, we received a notable order for two Global 6500 jets from Saab.

Is it what players that they buy and what makes their maintenance agreements. So significant the answer to all of those is simple when our new customer is ready to unveil their offering we will support them in doing so.

Until then no wins the entire Bombardier team will respect their wish to remain confidential for now.

This order does contribute in a significant way to our large backlog jump overall, it's really half the story behind our solid unit book to Bill ratio of 2.3, we are seeing sustained demand and consistent slight utilization or business Jets. This is also this is all.

Also reflected in the low availability level of pre owned challenger and global aircrafts.

On top of this great activity in the traditional business jet market bombarded defense is putting points on the board. This past quarter. We received a notable order for two global 6500 Jets from SAP. This is an important relationship for Bombardier, which we established more than.

Eric Martel: This is an important relationship for Bombardier Inc., which we established more than a decade ago. It's a great example of how to succeed in the defense market. You need strong capabilities, you need a very long-term vision, and you need to be flexible with partners and customers. When I look at where Bombardier Defense is today, I see all of those ingredients coming together. In fact, at the Paris Air Show, we also announced an MOU to explore using the Global 6500 for maritime patrol missions with Italy's Leonardo. They are a well-respected aircraft and system manufacturer, and we are thrilled to embark on this project with them. I was also delighted to welcome my Safran counterpart to our chalet as we signed a strategic pact to begin exploring common defense goals and technologies.

A decade ago. It's a great example of how to succeed in the defense market you need strong capabilities you need a very long term vision and you need to be flexible with partners and customers.

When I look at where Bombardier defense is today I see all of those ingredients coming together in fact at the Paris Air Show, We also announced an Mou to explore using the global 65 under Red for Maritime patrol missions with it'll easily R&R.

They are a well respected aircraft and system manufacturer and we are thrilled to embark on this project with them.

I was also delighted to welcome Mike that's why I counterpart to our shallow as we signed a strategic path to begin exploring common defense goals and technologies.

Eric Martel: These are just two more examples of how Bombardier Defense is creating new pathways to address growing needs in the defense industry around the world. It's important to be present, and that's why we have brought the Bombardier Defense flag to many, many more events. Being present is also important for our services team. Providing our customer care and convenience starts with being at the right place at the right time. We are progressing very well on active projects. Most recently, we showcased the structure of our new paint facility at the London Biggin Hill Airport. Our next maintenance facility is set to be located in Abu Dhabi and is under construction in that key region. We have been consistent in executing our international service expansion, delighting our customers, and growing our service revenues.

These are just two more examples of album Bharti defense is creating new pathways to address growing needs in the defense industry around the world.

It's important to be present, and that's why we brought the bombardier decent slag to many many more events.

The President is also important for our services.

Providing our customer care and convenience it starts with being at the right place at the right time, we are progressing very well on active projects. Most recently, we showcase the structure of our new paint facility at the London Big in the airport.

Our next maintenance facility set to be located in Abu Dhabi is under construction in that key region.

We have been consistent in executing our international service expansion delighting, our customer and growing our service revenues.

Eric Martel: We have to continue at this pace, not only for our growth ambition, but to ensure we meet or exceed the high standard our customers expect from the OEM. There are opportunities for us to expand further. Our facilities are full, and the fleet is growing. As we evaluate the next step, it's clear we will need to focus on geographies like the U.S. as a near-term priority. With services growth top of mind, let me return to the Q2 results themselves. Our $2 billion in revenue featured an exceptional contribution from services of $590 million, which is up 16% year over year. We also tracked our fleet flight hours as a leading indicator for services. They have continued to climb steadily, which reflects how reliable our planes are and that our customers are very active.

We have to continue at this pace not only for our growth ambition, but to ensure we meet or exceed the high standards our customers expect from the Oems.

There are unfortunate these for us to extend further our facilities are full and the fleet is growing as we evaluate next step it's clear we will need to focus on geographies like the U S. As a near term priority.

With services grow top of mind, let me return to the Q2 results themselves.

Our $2 billion in revenue featured an exceptional contribution from services.

$590 million, which is up 16% year over year. We also track our fleets flight hours as a leading indicator for services.

The climb steadily which reflects a reliable our planes are that our customers are very active.

Eric Martel: Our 36 deliveries bring our first half of the year to total 59, the same level as 2024, and exactly our plan for the year. This past quarter, also noteworthy Challenger 3500 deliveries to a strategic customer base in the United Kingdom of Saudi Arabia. It represents an important milestone for us. Their planes are the first Challenger 3500 registered in the Kingdom, which, of course, is an important market we are focused on growing and being present in. We also continue to mitigate supply chain impacts on our operations proactively. As it stands, we will once again see a more backloaded delivery profile as we progress through Q3 and Q4. We have built up to $850 million of inventory so far this year to enable our strong delivery schedule in the second half of the year. Our facilities and service network are primed and operating very efficiently.

36 deliveries, bringing our first half of the year to total 259, the same level as 2024 and exactly our plan for the year. This past quarter also noteworthy challenger 3500 deliveries to a strategic customer base in the United Kingdom of Saudi Arabia.

Abi It represents an important milestone for us their planes are the first challenger 35, and the rest of registered in the Kingdom, which of course is an important market. We are focused on growing and being present.

We also continue to mitigate supply chain impacts on our operations proactively.

It stands we will once again see a more back loaded delivery profile as we progress through Q3 and Q4.

We ask built up to $850 million of inventory. So far this year to enable our strong daily reschedule in the second half of the year, our facilities and service networks are prime and operating very efficiently overall this puts us in a strong position.

Eric Martel: Overall, this puts us in a strong position to generate more than a billion dollars in EBITDA in the second half of the year. I am also happy to confirm that our second half deliveries will include the first Global 8000 aircraft. It is progressing well through the process towards certification. In the meantime, the Global 7500 continues to set the bar for the industry. It has just achieved its 135th speed record. It is a significant number because it is also a record of records. The Global 7500 now owns the most city pair speed record of any business jet type. Before I turn the floor over to Bart Demosky to discuss the detailed numbers, I want to highlight that the major effort to clean up our balance sheet continues to progress very well. This past quarter, we successfully refinanced $500 million of senior notes.

And to generate more than $1 billion in EBIT.

In the second half of the year.

I am also happy to confirm that our second half deliveries will include the first global 8000 aircrafts. It is progressing well through the process. The word certification in the meantime, the global 7500 since she used to set the bar for the industry. Yeah. That's just achieve its 135th speed record.

It's significant number because it's also a record of records. The global 75 underwritten owes the most city pair speeds record of any business jet type.

Before I turn the floor over to Bart to discuss the detailed numbers I want to highlight that the major effort. The major effort to clean up our balance sheet continues to progress very well. This past quarter. We successfully refinanced 500 million of senior notes. This of course is in line with our strategy this trend at all.

Eric Martel: This, of course, is in line with our strategy to strengthen our balance sheet and have a very comfortable debt maturity runway. Our efforts also yielded more credit rating upgrades from S&P Global Ratings, as well as from Moody's Rating. All in all, we are on a very solid track, and the team has performed at a very high level in the first half of the year. Bart Demosky, on that note, over to you.

Balance sheet and I've, a very comfortable debt maturity runway.

Our efforts also yielded more credits rating upgrade from S&P global ratings as well as from Moody's rating.

All in all we are on a very solid track and the team performed at a very high level in the first half of the year Mark on that loan already.

Francis Richer de La Fleche: Thank you, Éric, and good morning, everyone. The entire team at Bombardier Inc. is very proud of the company's achievements through the first half of this year. We are organically growing in high ROIC areas, such as services and defense, and our aircraft portfolio continues to set the bar for the industry. This was once again confirmed by our recent announcement of a milestone 50 aircraft order and long-term service agreement. Our operational execution has been solid, and we are confident that we will be meeting our full-year guidance once again in 2025. As Éric outlined, this quarter was marked with a string of key commercial wins from both new and existing customers. As a result, our backlog has grown past the $16 billion mark, ending Q2 at $16.1 billion, bolstered by our 2.3 times unit book-to-bill.

Thank you, Eric and good morning, everyone.

The entire team at Bombardier is very proud of the company's achievements through the first half of this year.

We are organically growing and high ROIC C areas, such as services and defense and our aircraft portfolio continues to set the bar for the industry.

This was once again confirmed by our recent announcement of a milestone 50 aircraft order and long term service agreement.

Our operational execution has been solid and we are confident that we will be meeting our full year guidance once again in 2025.

As Eric outlined this quarter was marked with a string of key commercial wins from both new and existing customers. As a result, our backlog has grown past the $16 billion Mark ending Q2 at $16 1 billion bolstered by our two three times unit book to Bill or.

Francis Richer de La Fleche: Our services business also delivered another strong quarter, with revenues up 16% year over year, contributing 29% of total revenue for the quarter, and demonstrating clearly the continued success of our revenue diversification and aftermarket expansion strategies. We continued to be opportunistic in the debt capital markets in Q2 and further strengthened our balance sheet by completing another $500 million debt refinancing transaction, extending maturities into 2033, and reducing the average coupon on our total long-term debt by 11 basis points. S&P Global also upgraded our credit rating to double B minus from B plus, while Moody's changed their outlook on our credit rating from stable to positive, a reflection of our strong earnings and cash flow growth supported by increased aircraft deliveries, along with a growing backlog and aftermarket services expansion. The upgrades also reflect our consistent execution across business segments, effective deleveraging, and improved liquidity position.

Our services business also delivered another strong quarter with revenues up 16% year over year contributing 29% of total revenue for the quarter and.

And demonstrating clearly the continued success of our revenue diversification and aftermarket expansion strategies.

We continue to be opportunistic in the debt capital markets in Q2, and further strengthened our balance sheet by completing another 500 million debt refinancing transaction.

Standing maturities into 'twenty, thirty-three and reducing the average coupon on our total long term debt by 11 basis points.

S&P Global also upgraded our credit rating to double B minus from B, plus while Moody's changed their outlook on our credit rating from stable to positive a reflection of our strong earnings and cash flow growth supported by increased aircraft deliveries along with a growing backlog and aftermarket services expansion.

The upgrades also reflect our consistent execution across business segments effective deleveraging and improved liquidity position.

Francis Richer de La Fleche: Regarding the latter, our liquidity stands at $1.2 billion in the middle of our targeted liquidity range. We also had a very busy quarter engaging with investors and have seen strong and incremental support from institutional investors across the globe. With this context in mind, I'll now walk you through our quarterly results. For the quarter, total revenues reached $2 billion, representing a solid performance despite a $175 million or 8% year-over-year decline. Aircraft manufacturing delivered a planned 36 aircraft in the quarter, three fewer than last year, and resulting in $255 million less revenue compared to the same period in 2024. During the quarter, we delivered 21 medium aircraft and 15 large aircraft. This brings our total deliveries for the first half of the year to 59 units, matching the delivery volume recorded in the first half of 2024.

Regarding the latter our liquidity stands at $1 2 billion in the middle of our targeted liquidity range.

We also had a very busy quarter engaging with investors and have seen strong and incremental support from institutional investors across the globe.

With this context in mind I'll now walk you through our quarterly results.

For the quarter total revenues reached 2 billion, representing a solid performance, despite a 175 million or 8% year over year decline.

Aircraft manufacturing delivered our planned 36 aircrafts into quarter three.

Three fewer than last year, and resulting in 255 million less revenue compared to the same period and 24.

During the quarter, we delivered 21 medium aircraft and 15 large aircraft.

And this brings our total deliveries for the first half of the year to 59, new units matching the delivery volume recorded in the first half of 'twenty four.

Francis Richer de La Fleche: Our services business delivered another strong quarter, with revenue up 16% year over year to $590 million. When we last spoke, I explained that the work in progress, or WIP, in our service facilities was significantly higher at the end of the first quarter. The double-digit revenue growth in Q2 is a direct result from that higher WIP. With over $1 billion in services revenue generated in the first half of the year, the business is well positioned for sustained growth throughout the remainder of the year and beyond. Turning to profitability, adjusted EBITDA for the quarter was $297 million, which represents a year-over-year decrease of $38 million, while adjusted EBITDA margin was 14.6%. These year-over-year reductions are largely the result of our production plan to deliver four fewer Global aircraft, all of which were Global 7500s.

Our services business delivered another strong quarter with revenue up 16% year over year to $590 million.

When we last spoke I explained that the work in progress or with in our service facilities was significantly higher at the end of the first quarter of double digit revenue growth in Q2 is a direct result from that higher with.

With over 1 billion in services revenue generated in the first half of the year. The business is well positioned for sustained growth throughout the remainder of the year and beyond.

Turning to profitability adjusted EBITDA for the quarter was 297 million, which represents a year over year decrease of 38 million, while adjusted EBITDA margin was 14, 6%.

These year over year reductions are largely the result of our production plan to deliver four fewer global aircraft all of which were global 75. Hundreds are first half margin reflected an aircraft delivery mix more skewed towards challengers with 56% of deliveries being medium size aircrafts. This still.

Francis Richer de La Fleche: Our first half margin reflected an aircraft delivery mix more skewed towards Challengers, with 56% of deliveries being medium-sized aircraft. This delivery mix will reverse in the second half, meaning a lot more Global deliveries and EBITDA to materialize in the second half of the year. Looking at other margin drivers for Q2, our pricing was stronger year over year, but was offset by continued supply chain disruption costs, including some tariff-related costs, which are all fully reflected in our guidance. Turning to our other profitability metrics, our adjusted EBITDA for the quarter came in at $205 million, down $11 million from last year, while our adjusted net income came in at $117 million, a 5% increase from the previous year. Finally, our adjusted earnings per share also grew to $1.11 for the quarter, representing year-over-year growth of around 7%.

Every mix will reverse in the second half, meaning a lot more global deliveries and EBITDA to materialize in the second half of the year.

Looking at other margin drivers for Q2, our pricing was stronger year over year, but was offset by continued supply chain disruption costs, including some tariff related costs, which are all fully reflected in our guidance.

Turning to our other profitability metrics, our adjusted EBIT for the quarter came in at $205 million down 11 million from last year, while our adjusted net income came in at $117 million, a 5% increase from the previous year.

Finally, our adjusted earnings per share also grew to $1 11 for the quarter representing year over year growth of around 7%.

Francis Richer de La Fleche: Moving to free cash flow, free cash flow usage in the quarter totaled $164 million. This was primarily driven by a $280 million investment in inventory to support higher deliveries in the second half of this year, along with cash interest of $125 million and CapEx investment of $36 million. In the first half of the year, we've invested nearly $850 million in inventory in order to support greater than 91 deliveries in the second half. Looking ahead to the second half of the year, we are on track to achieve our full-year guidance. The first half-year results were consistent with our expectations, and we've made the inventory investments required to achieve the significant number of planned deliveries in the second half of the year, including a higher mix of large cabin aircraft compared to the first half of the year.

Moving to free cash flow, our cash flow our free.

Free cash flow usage in the quarter totaled 164 million. This was primarily driven by a 280 million dollar investment in inventory to support higher deliveries in the second half of this year, along with cash interest of $125 million and Capex investment of $36 million.

In the first half of the year, we've invested nearly $850 million in inventory in order to support greater than 91 deliveries in the second half.

And looking ahead to the second half of the year, we are on track to achieve our full year guidance.

The first half year results were consistent with our expectations and we've made the inventory investments required to achieve the significant number of planned deliveries in the second half of the year, including a higher mix of large cabin aircraft compared to the first half of the year.

Francis Richer de La Fleche: By association, this means higher revenues, higher profitability, and free cash flow coming in the second half of the year, particularly in the fourth quarter. In addition, we do expect to have a few more deliveries this quarter than in Q3 of last year, as well to generate positive free cash flow. In conclusion, the first half of this year has set the stage for a strong finish to 2025 and for continued success well into the future. I look forward to continuing to share our progress with you in a few months' time. With that, let me turn it back over to Francis, and we can begin the Q&A.

By Association this means higher revenues higher profitability and free cash flow coming in the second half of the year, particularly in the fourth quarter.

In addition, we do expect to have a few more deliveries this quarter than in Q3 of last year as well to generate positive free cash flow.

In conclusion, the first half of this year has set the stage for a strong finish to 2025 and for continued success well into the future I look forward to continuing to share our progress with you in a few months time.

With that let me turn it back over to Francis then we can begin the Q&A.

Francis Richer de La Fleche: Thanks, Bart. I would like to remind you that the Bombardier Investor Relations team is available following the call 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 for questions. Operator.

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

For the question period, please limit yourselves to one question and one follow up.

With that we'll open it up for questions operator.

Operator: Thank you. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touch-tone phone. You will then hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, you will need to lift the handsets first before pressing any keys. Please go ahead and press star one now if you have any questions. Your first question will be from Cameron Doerksen at National Bank Financial. Please go ahead.

Thank you ladies and gentlemen, if you don't have any questions. At this time. Please press star followed by one on you touched on something we will then hear a prompt that Johan has been raised and should you wish to decline from the polling process. Please press star followed by two if you're using a speaker phone well need to lift the handset first before pressing any keys. Please.

Go ahead and press Star one now if you have any questions.

And your first question will be from Kevin in Texas at National Bank Financial. Please go ahead.

Cameron Doerksen: Yeah, thanks. Good morning. I guess a question on the free cash flow guidance unchanged. You know, it was a fairly wide range that you provided earlier in the year, I guess, sort of predicated on how order activity played out for the remainder of the year. You had a very strong Q2, obviously. I am just wondering if you can talk a little bit about how the free cash flow for the full year is kind of trending. Are we thinking that it could be towards the higher end of the range, just based on the order activity that we have seen?

Yeah. Thanks, Good morning, I guess a question on the I guess, the free cash flow guidance.

<unk> it was a fairly wide range that you provided earlier in the year I guess sort of predicated on how order activity played out for the remainder of year would be in a very strong Q2, obviously, so I'm just wondering if you could talk a little bit about.

How the free cash flow for the full year is kind of trending are we thinking that it could be towards the higher end of the range just based on the order activity that we've seen.

Francis Richer de La Fleche: Yeah, good morning, Cameron, and thanks for the question. Look, we are performing right on track this year to our expectations. I think one of the things to keep in mind, including the very strong order activity we have seen, is that we are looking at a greater than 55% increase in deliveries in the second half of the year, with basically a lot more Global aircraft being delivered than Challengers. So we are going to have two things contributing to a much stronger free cash flow in the second half of the year: the order book, and as well, a very strong delivery increase. So when I look at our guidance for the year, we have stated that we are going to stick with guidance. I think all the building blocks are there for us to achieve potentially the higher end of the guidance.

Yeah, Good morning, Cameron and thanks for the question.

Look we've we're performing right on track this year to our expectations I think one of the things to keep in mind, including the the very strong order activity we've seen.

Is that where we're looking at a greater than 55% increase in deliveries in the second half of the year with a basically are a lot more global skiing delivered than challenges challenges. So we're gonna have two things contributing to a stronger much stronger free cash flow in the second half of the year the order the order book.

And and as well a very strong delivery increase so when I look at our guidance for the year, where we've we've stated that we're going to stick with guidance I think all the building blocks are there for us to achieve potentially the higher end of the guidance, but as we sit today our guidance remains.

Francis Richer de La Fleche: But as we sit today, the guidance remains as we provided earlier in the year.

So as we provided earlier in the year.

Yeah.

Cameron Doerksen: Okay. So if I understand you correctly, if order activity kind of continues to be pretty strong, then maybe reaching that towards the high end of the guidance is certainly a possibility.

Okay. So if I understand you correctly, if I could just maybe if order activity kind of continues to be pretty strong and maybe reaching that towards the high end of the guidance is certainly a possibility.

Francis Richer de La Fleche: Yep, absolutely. And I think, as you know, the initial payments that come with those orders are what really drive our free cash flow variability during the year.

Yeah, absolutely and I think that's a as you know the the initial payments that come with with those orders are what really drive our our free cash flow.

The ability during the year.

Cameron Doerksen: Okay. If I could just follow up on, I guess, in the quarter, you had this large fleet order. Were there significant cash deposits associated with that order? I know it's somewhat sometimes different with a large fleet order versus individual orders.

Okay, and if I could just follow up just on I guess in the quarter. You. Just this large fleet order, where there's significant I guess cash deposits associated with that order I know, it's somewhat sometimes different with a large lead over versus individual orders.

Eric Martel: Yes. No, you are absolutely right. The dynamic here was that deliveries are only starting in 2027, probably with that contract. This is two years down the road. We will start to see some benefit of cash inflow, actually, a little bit this year, but also next year, a year before delivery starting. Delivery will start ramping up in 2027, and then I think we are going to be seeing, of course, more progress payment and things come up.

Yeah, no you're right.

You're absolutely right. So what are the dynamic here was that.

Deliveries are only starting in 2007, probably would that contract. So you know this is a.

Two years down the road. So we'll start to see some some benefits of cash inflow actually a little bit this year, but also next year a year before delivery starting so so that everyone's start ramping up in 'twenty seven and then I think we're gonna be seeing of course more progress payment and things to come up.

Cameron Doerksen: Okay. That's great. Thanks very much.

Okay, that's great thanks very much.

Eric Martel: Thank you, Cameron.

Francis Richer de La Fleche: Thanks, Cameron.

Thank you Tamara.

Operator: Next question will be from Benoit Poirier at Desjardins Capital Markets. Please go ahead, Benoit.

Next question will be from Paul E Capital markets. Please go ahead.

Benoit Poirier: Yeah, good morning, Bart. Good morning, Éric. Now that you have over two years of production in your backlog, what should we expect in terms of booking environment in the second half, especially in light of the 100% bonus depreciation? Do you see potential for other sizable orders in the second half?

Yeah, Good morning, Bart good morning.

Now that you have over two years of production in your backlog what should we expect in terms of booking environment in the second half and especially in light of the 100% bonus depreciation do you see potential for other sizable orders in the second half.

Eric Martel: So I think, Benoit, great question. Clearly, the bonus depreciation is good news for the whole industry and, of course, for Bombardier Inc. It has always been historically a stimulator for order, and we believe it will. Actually, there is already a reaction to that, and we can feel that right away. So that is great news for the industry. As you know, we are extremely well positioned as an OEM with the fleet operator. So if you are referring as a bulk order with potential order from other fleet operators, there is always potential. You know, there are things being discussed, and again, we have been successful doing so over the last probably 15 years. We have been dominating that market. So we are well positioned to do that.

Yeah. So I think by the way Great question clearly the bonus depreciation is a good news for for the oil industry and of course by Bombardier.

It's always been historically, a stimulator for older and we believe it will actually theres already a reaction to that and we can we can feel that right away. So so that's great news for the industry.

You know we we as you know we are extremely well positioned as an OEM with the fleet. Operator. So if you are referring is a bulk order with potential order from other fleet operator, there's always potential you know theres things being discussed and and and again, we've been successful you know doing so.

Over the last you know probably 15 years, we've been dominating that market. So we are well positioned to do that I think the example of the order we just now.

Eric Martel: I think the example of the order we just announced a couple of weeks ago is a testimony of our ability here. I think there is a big differentiator for Bombardier Inc. I think our ability to provide maintenance support over and above, you know, the quality, the performance of our plane, the cost of operation of our plane are all important elements. But clearly, a very significant differentiator is also our ability to provide maintenance in a very busy environment because these airplanes, as you know, are flying a lot, and we are capable to support all around the world these types of operations.

Announce a couple of weeks ago is a testimony of our ability here and I think there's a big.

Differentiator for Bombardier I think our ability to provide maintenance support over and above you know the quality of the performance of our plane the cost of operation of our planes are all important element, but clearly a very significant differentiator is also our ability to provide maintenance.

And in a very you know busy environment because these fly these airplanes as you know are flying a lot and we are capable to support all around the world. These type of operations.

Benoit Poirier: Okay. Just in terms of follow-up, capital allocation, we are getting closer to year-end and the targeted leverage of 2 to 2.5 times. I suspect you might have a better idea about capital allocation beyond 2025 following discussion with some key stakeholders. Any thoughts you could share at this point as we approach 2026?

Okay and just in terms of follow up capital allocation, we are getting closer to year end at the targeted leverage of two to two five times. So I suspect you you might have a better idea about capital allocation beyond 2025, following discussion with some key stakeholder.

So any thoughts you could share at this point as we approach 2026.

Francis Richer de La Fleche: Hi, Benoit. It is Bart. Yeah, thank you for the question. First off, I would just like to reiterate what we said earlier, that our plan this year for the, I will call it excess free cash that we are going to generate beyond our kind of liquidity needs is to put it towards debt retirement. You are absolutely right. Our focus is to achieve that 2 to 2.5 times net leverage this year. That implies around about $600 million of incremental debt retirement by the end of this year. Then we will look at what do we do in terms of deployment of cash. We have a number of things, obviously, internally that we are discussing, but we will defer to providing more information on that when we come into next year.

I've been what's its part yeah I think thank you for the question first off I'd, just like to reiterate what we said earlier that our plan. This year for the I'll call. It excess free cash that we're going to generate beyond our kind of liquidity needs is to put it towards debt retirement.

And you're absolutely right.

Our focus is to achieve that two to two and a half times net leverage this year.

That implies that you know around about 600 million of incremental debt retirement are by the end of this year and then we will look at you know what do we do in terms of deployment of cash we have a number of things obviously internally that we're discussing but will will differ.

We are providing more information on that are you know when we come into next year.

Eric Martel: The one thing I would add to that, I think we have said that a year ago at Investor Day, you should think that our capital deployment in the future, we like the two businesses we are growing, services and defense, and definitely, they will get their share for that. So these two businesses are lucrative for us. They generate good profitability, good cash flow generation. So you have to think that our mind is going to be with these two businesses and growing these two businesses. Not to mention also that we will continue to upgrade our product. But I think definitely these two are going to be a focus.

The one thing I would add to that that I think we've said that a year ago at Investor Day, you showed a.

Things that you know our capital deployment in the future. We liked the two business, we're growing in all services and defense and definitely there'll be they'll get their share for that so these two business are you know lucrative for US you know the generate good profitability good cash flow generation.

You have to think that you know our mind is gonna be with these two business and growing use of business not not to mention also that will cause you to do upgrade our product.

But I think definitely this is these two are gonna be a focus.

Benoit Poirier: That's a great call. Thank you for the time.

That's great color. Thank you for the time.

Eric Martel: Merci, Benoit. Thank you, Benoit.

Yes, Stephen I think keeping what next.

Operator: Next question will be from Miles Walton at Wolfe Research. Please go ahead, Miles.

Our next question will be from Myles Walton.

If research. Please go ahead Myles.

Louis Raffetto: Hey, good morning. You have Louis Raffetto on for Miles.

Hey, good morning of Lou Raffetto on for Myles.

Eric Martel: Good morning, Louis.

Good morning.

Maybe you can just.

Louis Raffetto: Maybe, I understand the mix in the quarter had an impact, but were the margins sort of as you thought, or is the supplier situation, I guess, not getting any better? Is it getting worse? Any update on that as well?

Understanding the mix in the quarter had an impact, but where the margins sort of as you thought or is the supplier situation I guess not getting any better or is it getting worse any update on that as well.

Francis Richer de La Fleche: Yeah, margins for us in the quarter, we are right on plan. I think, as both Éric and I mentioned, we had a mix in the quarter that had us delivering quite a few more Challengers relative to Globals. We are going to see a reversal of that in the second half, which will keep us right on track for our full-year guidance. We are expecting a much stronger margin performance in the second half of the year as well. What this means is that we are going to generate more than $1 billion of EBITDA in the second half of the year, with delivery skewed, as I mentioned, more towards the large aircraft as well as more defense. Éric probably will provide some color on that.

Yeah margins are form for us in the quarter.

We're right on our we're right on plan.

I think as both Erik and I mentioned, we we had a mix in the quarter that had us delivering a quite a few more challenges relative to globals.

And we're going to see a reversal of that in the second half, which will keep us right on track for our full year guidance and you know we're expecting a much stronger margin performance in the second half of the year as well. What this means is that we're going to generate more than $1 billion of EBITDA in the.

Half of the year with delivery skewed as I mentioned more towards the large aircraft as well as more defense.

Eric probably will provide some color on that but we're seeing a lot of activity in the defense space and we're very excited about the prospects that we have in the second half.

Francis Richer de La Fleche: We are seeing a lot of activity in the defense space, and we are very excited about the prospects that we have in the second half.

Eric Martel: Yeah, clearly, I think maybe one difference compared to last year, we had defense airplanes delivered in Q2 last year. This year, we had none. But we are definitely contemplating to have quite a few deliveries for defense in the second half of the year. So with what Bart Demosky said, the mix of Global plus defense in the second half of the year would make it a rich second half with about $1 billion of EBITDA.

Yes, Kelly I think maybe one difference compared to last year, we had defense airplanes delivered in Q2 last year. This year, we had none but I think you know where are definitely tempt them bleeding to have quite a few delivery for defense and then the second half of the year. So so with what Bart said you know the mix of global plus defense in the.

In the second half of the year would make it the a rich second half with about $1 billion of EBITDA and Louis just to answer your question on the supply chain, we've made great progress on on the supply chain year over year.

Francis Richer de La Fleche: Yeah. Louis, just to answer your question on supply chain, we've made great progress on the supply chain year over year. I've talked in the past about percentage of parts late to line. We're now well below 1%, which means we're back to a traditional amount of lateness to line. But we still have a couple of challenges that are headwinds and are causing costs that we're absorbing. That's all built into the guidance. There's nothing incremental there. Price improvements that we've seen on aircraft that we've sold, as well as in the services business, is offsetting that. So we're in a good place.

Yeah, I've talked in the past about.

<unk> just a parts late to line, we're now well below 1%, which is what which means we're back to a traditional amount of lateness to line up.

But we still have a couple of challenges or headwinds and are causing our cost that we're absorbing.

That's all built into the guidance there is nothing incremental there and pricing price improvements that we've seen on aircrafts that we sold as well as in the services business is offsetting that so we're in a good place.

Louis Raffetto: Appreciate that. Thank you.

I appreciate that thank you.

Francis Richer de La Fleche: Thank you.

Thank you.

Operator: Next question will be from James McGarragle at RBC Capital Markets. Please go ahead, James.

Next question will be from James Mcgarrigle with RBC capital markets. Please go ahead James.

James McGarragle: Hey, good morning, and thanks for having me on. I just had a question on the services segment. Things came in really strong in the quarter. How should we be thinking about this segment during the remainder of the year compared to where you kind of got it to in the past versus how things are trending kind of in the first half of the year? Any color there would be helpful.

Hey, good morning, and thanks for having me on I just had a question on the services.

Like when you came in really strong in the quarter.

How should we be thinking about this segment during the remainder of the year.

Compared to where you kind of guided towards a pause versus how things are trending kind of in the first half of the year any color there would be helpful.

Eric Martel: I think we are pretty excited. The start of the third quarter is strong. The demand remains very high. The airplanes are flying. The demand for parts is high. Our service centers are very busy. Actually, right now, we are scratching our heads more than to deal with all the volume we are getting. I think it is a positive. It is a nice problem to have, but it is a challenge right now. We are extremely busy, happy how the third quarter is starting, and we are aiming a continuous solid growth for the remaining of the year.

I think you know we're pretty excited at the start of the third quarter is strong the demand remains very high the airplanes are flying the men's for part D is high our service center are very busy actually right, where we're scratching our heads more than to deal with all the volume, we're getting and I think it's.

It's a positive it's a nice problem to have but it's a it's a it's a challenge right now so we're extremely busy happy how the third quarter is starting and we're aiming a continued solid growth for the remaining of the year.

James McGarragle: I appreciate the color there. Just more of a strategic one here. I know on some of these recent trade deals announced between the U.S. and the EU and the U.K., can you talk a little bit about those, your view on the impact to the industry, and more specifically, any relative advantages that you see for Bombardier Inc. versus some of your competitors that are based throughout the world or in the U.S.?

I appreciate the color there.

Just more of a strategic one here I know on some of these recent trade deals announced between the U S than the.

The EU and the U K can you just talk talk a little bit about those.

Our view on the impact to the industry and more specifically any of them relative advantages that you see for Bombardier versus some of your competitors are better debates or the world or in the U S.

Eric Martel: No, I think clearly we haven't changed our mind. Since the beginning, I think we've assessed the risk for trade and tariffs for our plane to be low. I think the market has also made that assessment. It's much less volatile than it was probably in the first three months of the year when there were comments made about tariffs in Canada. I think also we should altogether read a signal that civil aircraft have been excluded from tariffs with the agreement with the European last week, and even yesterday with Brazil having an agreement. I don't know if it can be called an agreement, but having tariffs imposed, that also civil aviation is excluded. So I think clearly our interpretation of all of that is the aerospace industry is so significant for the Americans that having tariffs will probably make more damage to their economy than any other country.

Yes.

I think clearly we haven't changed our mind since the beginning I think we've assessed the risks for trade and tariffs or are planned to be low.

I think the market is also made that assessment you know it's much less volatile than it was probably in the first three months of the year when Theres comments made about the tariff in Canada, but I.

I think also we should altogether read a single that you know civil aircrafts.

Being excluded from tariffs with the agreement with the European last week, and even yesterday with Brazil, having an agreement.

You know I don't know if its going to be called an agreement, but having tariffs imposed.

You know that Oh, so civil aviation is excluded so I think clearly our our interpretation of all of that is as you know the aerospace industry is such so.

Ignace icon is so significant for the American debt, having tariffs you know, we'll probably make more damage to their economy than any other any other country. So.

Eric Martel: So I think we feel comfortable, and our products are selling all around the world on top of it. We're well diversified there. Despite that, the U.S. market remains the strongest market, we feel that the most recent announcements are confirming what we did believe since the beginning.

We feel comfortable and and you know our product called <unk>.

Selling all around the world on top of it you know, we're well diversified there. Despite the you know the U S market remains the strongest market. We feel that you know the most recent announcement are confirming a.

What we did believe since the beginning.

James McGarragle: Thank you, all. I will turn the line over here.

Alright, Thank you all dependent upon the AR line over here.

Eric Martel: Thank you, James. Thank you, James.

Thank you James Thank you James.

Operator: Next question will be from Timothy James at TD Cowen. Please go ahead, Timothy.

Next question will be from Timothy James at PV Cowen. Please go ahead.

Cameron Doerksen: Thank you very much. Good morning. The commentary about the defense activity in the quarter being particularly strong, and I think that was a reflection of orders, it sounds like, as opposed to deliveries. From an order perspective, I am just wondering if you could provide some color on the mission characteristics, the type of special mission aircraft that are in high demand and have been generating orders recently, and maybe any commentary on regional strength that you are seeing in terms of your customer base as well.

Thank you very much good morning.

The commentary about the defense activity in the quarter being particularly strong and I think that was a reflection of orders it sounds like as opposed to deliveries. So from an order perspective I'm just wondering if you could provide some color on.

The mission characteristics of the type of special mission aircraft that are in high demand and had been generating orders recently and maybe any commentary on sort of regional strength that you're seeing in terms of your customer base as well.

Eric Martel: Clearly, I think AWAC is top of mind for us right now. I think the popularity of the AWAC program, there's a couple of processes going on around the world right now. You saw one evolving in France. You've seen there's one also going on in South Korea, and there's a lot of things lining up today for AWAC airplane. I've talked earlier about the maritime patrol missions, you know, which is the maritime MMA system being looked at. So we're looking at it with Leonardo because we both see high demand for those types of mission airplanes. Again, our Global 6500 is so well positioned for both of those types of platforms. We see also, you know, out-of-state demand for our Global 6500. So countries that are adapting the 6500 see value also in canalizing the fleet.

Okay.

Clearly I think a walk as is top of mind for US right now I think popularity of.

The AOR program. There is a couple of process going on around the world right now you saw.

One if all being in France, you've seen there's one also going on in the South Korea, and there's a lot of things lining up to date for a walk airplane I've talked earlier about the maritime patrol missions.

You know, which is my retirement in May system are being looked at so we're looking at it with Leonardo because we both see yeah.

I demand for those type of mission airplanes, and again, our global 65, I know it is so well positioned for both of those those type of platform. We see also you know Ed of state demand for our global 6500. So countries that are have that thing Thats 60, 500th C value also in coming to life in the <unk>.

Eric Martel: Again, I think our maintenance offering is also impressive there as it is for the fleet operators. So we are extremely well positioned. We also, of course, welcome Prime Minister Carney in Canada's position on defense. I think, you know, we are a strong advocate that Canada must implement a national defense industrial strategy, you know, working with its industry, aerospace industry, and defense. Of course, we're well positioned there. We have all kinds of opportunities. Those are probably the main ones right now. It's actually pretty impressive to see how many countries right now knock on our door and asking questions and are starting to engage into further conversation about these products.

And again I think our maintenance offering is also impressive there as it is for the for the fleet operators. So so we are extremely well positioned we also of course welcome a prime Minister regarding Canada position on defense.

I think you know we are we are a strong advocate that Canada must implement a national defense industrial SaaS strategy.

We're working with is what is industry aerospace industry in defence. So of course, we're well positioned there but the.

We have all kind of a fortunate. These those are probably the main one right now, but it's actually pretty impressive to see how many countries right now knock on our door asking question, then and are starting to engage into further conversation.

All of these products.

Yes.

Cameron Doerksen: Great. Thank you very much, Éric.

Great. Thank you very much sir.

Eric Martel: Thank you. Thanks, Tim.

Thank you thanks, Tim.

Operator: Next question will be from Noah Poponak at Goldman Sachs. Please go ahead, Noah.

Next question will be from Noah <unk> of Goldman Sachs. Please go ahead Noah.

Noah Poponak: Hey, good morning, guys. Bart Demosky, I think you had specified that you were operating under the assumption of book-to-bill of one for the year and how you laid out your guidance. I guess just given what you've achieved with backlog in the second quarter here, it looks hard to get to that mathematically. So in reiterating the free cash for the year, I mean, how much of that is something else is worse, or you just need maybe more time to unwind the inventory from the first half versus the deposit on this large order is kind of within your range, and therefore, you'll just wait to see how the back half plays out?

Hey, good morning, guys.

Bart I think you had specified that you were operating under the assumption that book to Bill of one for the year and how you laid out your guidance so.

I guess, just given given what you've achieved with backlog in the second quarter here.

You know it looks it looks hard to get to that mathematically so.

In reiterating the free cash for the year I mean, how much of that is.

Something else is worse or you just need maybe more time to unwind the inventory from the first half.

As you know the deposit on this large order is kind of within your range and therefore, you'll just wait to see how the back half plays out.

Yeah.

Francis Richer de La Fleche: Yeah, good question, Noah, and good morning. There are a few moving parts in there, but the two that are the biggest contributors to free cash flow in the back half of the year, you touched on them both. The first one is, you know, much stronger delivery activity. We have to meet our guidance, we have to deliver greater than 91 aircraft. As I mentioned earlier, that is greater than 55% growth in deliveries relative to the first half of the year. So we have a big delivery pipeline in the second half. The mix on those aircraft is very positive in that we are going to be delivering far more Globals than we will Challengers in the second half of the year. That contributes as well to strong free cash flow and earnings.

Yes, good question and good morning, there's a few moving parts in there, but the two that are the biggest contributors to <unk>.

Free cash flow in the back half of the year you you touched on the boat. So the first one is a much stronger delivery activity, we have with <unk> to meet our guidance, we have to deliver a greater than 91 aircraft as I mentioned earlier.

55, greater than 55% growth in deliveries relative to the first half of the year. So we have a we have a big delivery a pipeline in the second half mix on those aircraft, it's very positive and that we're going to be delivering.

Far more.

<unk> Globals, then we will challenge us in the second half of the year that that contributes as well too to strong free cash flow.

And earnings I mentioned greater than a $1 billion of EBITDA expected in the second half you know with our conversion rate between free cash flow and EBITDA that that means something very positive.

Francis Richer de La Fleche: I mentioned, you know, greater than a billion dollars of EBITDA expected in the second half. With our conversion rate between free cash flow and EBITDA, that means something very positive. And then order activity, as Éric highlighted, we see a strong market out there right now. We have a lot of activity around the globe. Our pipeline is very good, and it covers all aspects of aircraft that we deliver. So it is traditional customers, it is defense customers, and as well, you know, we are talking to the fleets. So it is not a big stretch to look at, you know, where we are at today and see a way to get to a book-to-bill of one, excluding the large 50 aircraft order. We were about a 0.9 book-to-bill for the first half of the year, but on lower deliveries.

And then.

And then order activity as Eric highlighted we see a strong market out there right now we've got a lot of activity around the globe. Our pipeline is very good and it covers all aspects of of aircrafts that we deliver so it's it's a traditional customers.

It's defense customers.

And as well.

Talking to the fleets. So it's not a big stretch to look at where we're at today and see a way to get to a book to bill of one excluding.

The large 50 aircraft order we were about a 0.9 book to Bill for the first half of the year, but on lower deliveries. So all of that adds up to us being in the range and ultimately the.

Francis Richer de La Fleche: All that adds up to us being in the range. Ultimately, a bit of the mix of orders in the back half of the year will influence probably where we land within that range.

A bit of a mix of orders in the back half of the year, we'll influence where we land within that range.

Noah Poponak: Okay. Appreciate that. Then I wanted to ask, you had worked with the framework of 150 or a little more than 150 total deliveries for a little while. I think at one point that using that on a multi-year basis you described as leaving some conservatism relative to the total market. It sounds like the total market is still solid. You are now going to layer on this large order into the delivery profile starting in 2027. How are you thinking about where you want to take supply of new airplanes 2026, 2027, 2028, just over the medium term, given the demand profile, but I assume still wanting to be disciplined on the supply side?

Okay I appreciate that and then.

I wanted to ask.

You had worked with the framework of 150 or a little more than 150 of your total deliveries for a little while I think at one point that using that on a multiyear basis kind of.

You described is leaving some conservatism relative to the total market.

It sounds like the total market is still solid.

You now have you're now going to layer on this large order into the delivery profile starting in 2027.

How are you thinking about where you want to take supply of new airplanes 20, 678, just over the medium term given the demand profile, but I assume still wanting to be disciplined on the supply side.

Eric Martel: No, clearly, I think we want to be disciplined. I think we have said 150 plus, you know, would be probably our target between now and 2030. But of course, there will be potential opportunities coming up. I think, you know, we want to be disciplined in a sense that we want to make sure that the supply chain can follow. So that is, of course, number one and top of mind. But you are right. The market is there. Our backlog is extending right now. So those are the kind of things we have to think about. But again, we want to base our plan not on chasing volume, but on looking at keeping profitability pricing in a good place where it is today, keep growing, and of course, focusing on the other two businesses we talked about.

Yeah, No I clearly I think we want to be disciplined I think we've said 150, plus would be probably our target between now and 2030, but of course, you know there will be potential opportunities coming up I think you know we wanted to be disciplined in a sense that we want to make sure that the supply chain can follow so that.

Of course, our number one and top of mind, but you are right. The market is there our backlog is extending right now.

So those are the kind of things we have to think about but again, you know water base our plan not on chasing volume but on.

You know looking at keeping profitability pricing in a good place where it is today keep growing and of course.

Focusing on the other two business we've talked about.

Noah Poponak: Okay. Thank you.

Okay. Thank you.

Eric Martel: Thank you. Thank you, Noah. Thank you, Noah.

Thank you. Thank you. Thank you.

Operator: Next question will be from Gavin Parsons at UBS. Please go ahead, Gavin.

Next question will be from Gavin Parsons.

Please go ahead Kevin.

James McGarragle: Hey, thank you. Good morning.

Thank you good morning.

Francis Richer de La Fleche: Good morning. Good morning, Gavin.

Good morning, good morning Gautam.

Noah Poponak: Just going into the demand environment, excluding the fleet order, if we could, I think you said 0.9 book-to-bill. Demand environment strong. Was the first half disrupted by COVID and economic uncertainty, and that pushes some orders to the second half, or how do you see demand trending through the rest of the year?

Just going into the demand environment, excluding the fleet order if we could I think you said 0.9 book to Bill just demand environment strong, whereas the first half disrupted by Covid.

Covid and the economic uncertainty that pushes some orders for the second half or how do you see demand trending through the rest of the year.

Eric Martel: No, I think, you know, but clearly, I think we have said that before in Q1, there was a bit of hesitation. I think that is how I would qualify it because of the uncertainty about tariffs. But you have seen our results. You know, it is not like there was a major downside. We have done, you know, close to a book-to-bill of one, excluding the aircraft of 50-order airplanes. I think right now, with the environment, I would say being a little bit more positive and having more clarity, and you know, we talk about, you know, the bonus depreciation impact in the U.S. We feel pretty good, as Bart Demosky just said, over and above the order of 50 to be able to achieve one as a book-to-bill this year.

Yeah, No I think you know, but clearly I think we've said that before in Q1, there was a bit of visitation Ah I think that's how I would quantify it because of the uncertainty.

About tariffs, but you know we.

You've seen our results you know it's not like there was a major down downside we've.

We've done a you know close to a book to Bill of one excluding the aircrafts are 50 order airplanes, and and I think right now with the environment I would say being.

A little bit more positive and having more clarity and we.

We talk about.

The bonus depreciation impact in the U S. We feel pretty good as Bob just said, it's over and above the order of 50 to be able to achieve one as a book to bill. This year. So so it's great to have that order, but at the same time, it's important that we continue to feed the machine on the <unk>.

Eric Martel: So it is great to have that order, but at the same time, it is important we continue to feed the machine on the one-by-one order or more regular order. I think we feel pretty good that this is still achievable toward the end of the year with the current environment.

By one order of more regular order and and I think we feel pretty good that this is still achievable to oh.

Towards the end of the year.

With the current environment.

Noah Poponak: Great. Is the Global 8000 accretive or dilutive to margin when that enters?

Great.

The global 8000 accretive or dilutive to margin when that enters.

Eric Martel: Yeah, no, it's going to be accreted.

Yeah no.

It will.

It's gonna be a create a it's going to be an improvement it's going to be an improvement to the margin.

Bart Demosky: going to be an improvement. It is going to be an improvement to the margin. Yeah.

Operator: Thank you.

Thank you, yes, I think we've been we've been public about that Gavin the list price on the 8000 will be a three.

Bart Demosky: Yeah, I think we've been, we've been public about that, Gavin. The list price on the Global 8000 will be $3 million higher than on the Global 7500. There's a very good margin accretion in that. Okay.

<unk> 3 million higher than than on the 7500 and there is a very good margin accretion in there.

Okay.

Okay.

Okay.

Rachel Smith: Thank you. Next question will be from Ron Epstein at Bank of America. Please go ahead, Ron.

Thank you next question will be from Ron Epstein of Bank of America. Please go ahead Ron.

Operator: Yeah, hey, good morning, guys.

Hey, good morning, guys.

Bart Demosky: Yeah, good morning.

Yeah. Good morning, Ron you talked about this a little bit, but that's what I'm trying to see if I can understand a little bit better.

Operator: He talks about this a little bit, but I just want to try to see if I can understand it a little bit better. When you do get a giant fleet order, how should you think about the deposit structure on something like that? You know, how sticky is it? And you know, how do, if you will, pre-delivery payments work, that kind of thing, when you get an order of that magnitude?

When you do get it the giant fleet order.

How should we think about the deposit structure.

Something like that like how sticky is it.

How do you if you will pre delivery payments work that kind of thing when you're doing an order of that magnitude.

Bart Demosky: Yes, it is a great question, Ron, and good morning. The fleet orders, and this fleet order, the payment structure is very similar, actually, to the vast majority of our fleet orders. They traditionally have a little bit lower upfront deposit, but the profile of progress payments is very good. So as we build the aircraft, we will continue to receive progress payments throughout the build cycle that are similar to a traditional customer. So the cash will be coming in. That will allow us to manage our working capital very tightly. Our goal is to basically have neutral through time so that we are not having to use our own cash and balance sheets. So we are very excited about that. The other thing to keep in mind with all contracts, we typically will have LDs or liquidated damage to involve them with them.

Yeah, Yeah, it's a great question, Ron and good morning.

The fleet orders and this fleet order the payment structure is very similar actually to the vast majority of our fleet orders. They traditionally have a are a little bit lower upfront deposit, but the profile of progress payments is very good so as we build the aircraft we will.

<unk> continued to receive progress payments throughout the build cycle that are similar to a traditional customers. So the cash will be coming in that will allow us to manage.

Our working capital.

Very tightly and you know our goal is to basically have neutral.

Through through time, so that we're not having to use their own cash and balance sheet. So we're very excited about that.

The other thing to keep in mind with our with all contracts. We typically will have LDS are liquidated damages involved with them.

Bart Demosky: With a large fleet order like this, as Éric Martel highlighted, the deliveries do not start for some time. They are in 2027, and that I think explains part of why the deposits are a little bit smaller upfront because they are taking aircraft that start in 2027 and then go out for many years after that. So that is something that our fleet customers are comfortable with and so are we. So we are very excited about this. It is going to be a strong free cash flow provider, this contract, for years to come. We are very excited about working with this new customer as well.

With a large fleet order like this as Erik highlighted the deliveries don't start for some time, though there are seven in that I think explains part of why the deposits are a little bit smaller upfront because theyre taking aircraft with start up <unk> 27, and then go out for many years after that so that's a that's something that's our fleet customers are.

Comfortable with them and so are we still we're very excited about this it's going to be a strong free cash flow provider. This contract for years to come and we're very excited about working with this new customer as well.

Operator: Got it. Got it. If we can, maybe just switching gears to defense, are there any other vectors, if you will, that you all are exploring in defense markets? You know, clearly in electronic surveillance aircraft, your airframes are doing quite well. But is there anything else, like, in the unmanned world or otherwise that you all are thinking about doing?

Got it got it and then and if we can maybe just switching gears to defense.

Are there any other vectors. If you will that you all are exploring and defense markets.

Clearly and you know electronic surveillance aircraft.

Your friends are doing quite well, but is there anything else like in the unmanned world or otherwise that you all are thinking about doing.

Bart Demosky: Yeah. Yeah, we're clearly looking at these possibilities. Unmanned is clearly a subject right now, and we're looking at how we can contribute to that. We know that we have the technical knowledge and depth to do a lot of things as an aerospace company. So we are, of course, benefiting right now from the success of our Global 6500 platform, well positioned in the near term. But it's also important for us to position ourselves. I've mentioned about capital allocation earlier. Some of the capital allocation will definitely go towards things we may want to do with other partners. So unmanned is an example, but there's a few other things also that we're looking at that will require a bit of work for us, but that are amazing possibilities for the long run.

Yeah, Yeah. We're clearly you know looking at these possibilities are unmanned is clearly a subject right now and we're looking at how we can contribute to that we know that we have the technical knowledge and deep to do a lot of things as an aerospace company. So we are.

No of course benefiting right now of the success of our 65 platform well positioned in the near term, but it's also important for us to position ourselves I've mentioned about capital allocation earlier, so some of the capital allocation will definitely go towards.

No things, where we want we may want to do with other partners. So so a man as an example, but there's a few other things also that we're looking at that you know will require a bit of work for us, but that our amazing possibilities for the long run.

Operator: Got it. Thank you very much.

Got it thank you very much.

Bart Demosky: Thanks. Thank you, Ron.

Thank you. Thank you Robin Thank you Rob.

Operator: Thank you, Ron.

Rachel Smith: Next question is from Kevin Chang at CIBC. Please go ahead, Kevin.

Next question is from Kevin Chiang of CIBC. Please go ahead Kevin.

Francis Richer de La Fleche: Thanks for taking my question here. Just back on the service revenue, I know it can be a lumpy quarter to quarter, but if I just annualize your Q2 results here, and I think you've talked about the available market size being about $4 billion today. It feels like your market share is almost 60%, at least in this quarter. One, is that sustainable, I guess, as you look out the next few quarters here? Does that accelerate any investments you need to make to expand your footprint to maybe capture the longer term objectives you put out your investor name, especially the upper end of that target?

Thanks for thanks for taking my question here.

Just back on the service revenue.

I know it can be lumpy quarter to quarter, but if I just annualize your.

Second quarter results here and I think you've talked about about the available market size being about $4 billion today. It feels like your market share is almost almost 60% at least in this quarter.

One is that is that sustainable I guess as you look out the next few quarters here and does that accelerate any investments you need to make to expand your footprint.

Maybe capture the longer term.

Objectives, you put out at your Investor day, especially the upper end of that target.

Bart Demosky: Yeah. No, this is a great question. And clearly, this is top of mind right now. We are looking, and I think I said that in my script here, that we are considering. I think the next priority for us will be to grow into the U.S. because, you know, it's a question we're delivering a lot of airplanes to the U.S., but it's also the fleet is maturing. We know we have clear visibility on how much maintenance these airplanes will need in three years, five years, seven years down the road. So we need to be prepared for that if we want to continue to grow our market share, as we did in the last couple of years. So we need to position ourselves to do that. I'm sure you're going to hear about either expanding sites in the U.S.

Yeah. No. This is a great question and clearly this is top of mind right. Now we are looking at I think I said that in my script ear.

We are considering I think the next priority for us will be to grow into the U S. Because you know it's a question of we're delivering a lot of airplanes to the U S. But it's also the fleet is maturing and we know we have clear visibility on how much maintenance. These airplanes will need and in three years five years seven years down the road. So we need to prepare for that if we want to consume.

The grew our market share.

As we did in the last couple of years, so we need to position ourselves to do that so I'm sure you're going to hear about either expanding sites in the U S or you're going to hear about potentially new site. We have to serve our fleet customer also at the same time that have a deep operation into the United States. So.

Bart Demosky: or you're going to hear about potentially new sites. We have to serve our fleet customer also at the same time that have a deep operation into the United States. So we are clearly on that path and mindset right now, Kevin, for the next couple of months and for the next couple of years.

We are we are we are clearly on that path and mindset right now Kevin for a for the next couple of months in the end for the next couple of years.

Francis Richer de La Fleche: Yeah, that, that, that makes sense. Maybe just a follow-up here. Bart, you mentioned the target is eventually to be working capital neutral. When I look back the past couple of years, inventory has been a drag in 2023 and 2024. Understandably, you have been building up inventory given some of the supply chain issues and as you ramp up production. Do you think inventory can be flat this year, just given the amount of drag it was in the first half of 2025? Or do the supply chain issues just make that difficult this year? Maybe it is more of a 2026, 2027 story when inventory can be less of a drag or maybe even a modest tailwind, as some of these issues subside?

Yes that makes sense and maybe just.

Follow up here.

You mentioned the target is eventually to be.

Working capital neutral.

When I look back the past couple of years inventory has been a drag in 'twenty three 'twenty four and understandably you know <unk> been building.

Building up building up inventory different given some of the supply chain issues as you ramp up production.

Do you think inventory can be flat. This year, just given the amount of drag it was in the first half of 'twenty five or what are the supply chain issues, just make that difficult. This year and maybe it's more of a 'twenty six 'twenty seven story when inventory can be be less of a.

Less of a drag or maybe even a modest tailwind.

These issues subside.

Bart Demosky: Yeah, it's a great question. I think there's a couple of things in there, Kevin. One is seasonality. You know, it's very traditional in our industry, particularly with accelerated capital depreciation in the U.S. It's not going away. It's actually a good thing for the business. It's back to 100%. We're always going to have more deliveries in the second half of the year than in the first half. So we're always going to have some inventory build. I don't think we'll ever get to a place where it's equal every quarter, just because of that. As well, seasonality is related to when customers are available. So we're always going to have a bit of that. Our cash bridge is really simple. With the deliveries in the second half, again, greater than 55% growth, we're going to have a very significant inventory release. We mentioned $850 million.

Yeah. So great question I think there's a couple of things in there Kevin one is is it seasonality.

It's very traditional in our industry, particularly with the accelerated capital depreciation in the U S.

Now not going away, it's actually a good thing for the business and it's back to a 100%.

But we're always going to have more deliveries are in the in the second half of the year than in the first half. So we're always going to have some inventory.

Inventory build I don't think it will ever will ever get to a place where it's equal.

Equal every quarter, just because of that and as well Ah seasonality related to when customers are available. It's we're always going to have a bit of that our cash bridge is really simple with the deliveries in the second half again greater than 55% growth, we're going to have a very significant inventory.

Lease, we mentioned $850 million whether.

Bart Demosky: Whether it'll be dollar for dollar or some of that will carry over into the new year. We've always got aircraft that are in progress of being built and assembled. We're always going to carry some over into the new year. But we're going to have a very strong release this year, particularly in the fourth quarter.

Whether it'll be dollar for dollar or some of that will carry over into the new year. We've we've always got aircrafts that are.

In progress of being built and assembled and we're always going to carry some over into the new year, but what kind of a very strong release.

This year, particularly in the fourth quarter.

Francis Richer de La Fleche: Okay. I guess if I just.

Okay.

Bart Demosky: I think we are.

Hi, Jake.

Francis Richer de La Fleche: Sorry, go on.

Sorry go on yes, just quickly.

Bart Demosky: No, just to quickly maybe to just to add on that, Bart was just saying, I think supply chain is, and you mentioned that, we quickly hope that supply chain will stabilize over the next coming years. So if that happened, then I think we will have more stability from a quarter to another quarter. As we right now have lateness and, of course, shorter delay time to make completion at the end for the airplane in the last quarter. But this would definitely be in a different, a different view if we can stabilize that supply chain once and for all, as the rest of the industry is hoping for and, eventually have a more regular flow of deliveries.

Quickly made me too just to add on that Mark was just saying I think supply chain is and you mentioned that you know we are putting the hope that supply chain will stabilize over the next coming years. So if that happens then I think we'll have more stability from a quarter to another quarter.

As we right now you know at lateness and of course.

Sort of the lead time to make completion at the end for the airplane in the last quarter, but this.

This would be definitely be in a different a different view, if we can stabilize that supply chain in one set for all you know as the rest of the industry is hoping for and eventually have a more a.

Regular flow of deliveries.

Francis Richer de La Fleche: That makes a ton of sense. That's it for me. Thank you for taking my questions.

That makes a ton of sense. That's it for me. Thank you for taking my questions.

Bart Demosky: Thanks.

Operator: Thanks, Kevin.

Thank you Kevin.

Yeah.

Rachel Smith: Our last question will be from David Strauss at Barclays. Please go ahead, David.

And our last question will be from David Strauss Barclays. Please go ahead David.

Operator: Hey, good morning. This is Benoit Poirier on for David.

Hey, Good morning, this is Ben <unk> on for David.

Bart Demosky: Yeah, good morning.

Yeah. Good morning, good morning, guys. Good morning.

Operator: Morning, Ben.

Bart Demosky: Good morning.

Operator: Can you provide any more color on the Global 8000 program? You mentioned the first delivery occurring in the second half. How are you seeing demand shape up around there? Any delivery expectations you have going into next year? How should we think about the margin profile there?

Can you provide any more color on the global 8000 program you mentioned the first delivery occurring in the second half.

How are you seeing demand shape up around there and then any delivery expectations.

Going into next year, and then how should we think about the margin profile there.

Bart Demosky: Yeah, so great question. The Global 8000, as we said earlier, is progressing to plan, with one delivery later in the year, in Q4. The airplane we are delivering is assembling extremely well. It is on the assembly line already. We are starting to put the interior in and getting ready for that. In parallel, of course, there is the whole process of certification. We finished flying the airplane. Right now, it is more of an old paperwork exercise that we need to consolidate and go to the authorities. Of course, we are working with our supplier to achieve that. We feel solid about this. To achieve that, I think we have said earlier, the margin next year, we are planning to deliver a similar level of volume of Global 8000 compared to what we do for the Global 7500. We are not increasing or reducing the rate.

Yeah, So great question.

So they are 8000 as we said earlier is progressing to plan. So with are ones that have re later in the year in Q4, so the airplane actually worried that I bring is assembly.

Extremely well it's on the Assembly line already we're starting to put the interior in and getting ready for that.

In parallel of course, there's the whole process of certification. So we finished flying the airplane right now it's more of an all paperwork exercises that we need to consolidate and and go to the authorities and of course, we're working with our supplier to to achieve that so we feel we feel solid about this and and and to achieve that.

I think we've said earlier you know the margin next year, we're planning to deliver a similar level of volume you know of 8000 compared to what we do for the 7500, so we're not increasing or reducing their rates. So you should see us about plus or minus the same kind of volume going into next year with the 8000, but.

Bart Demosky: You should see about plus or minus the same kind of volume going into next year with the Global 8000, but also with the advantage that the margin will be incremental, as we are listing the product for $3 million more per copy. So that is, I think, how you should think about the Global 8000 coming forward.

Also with the advantage that the margin will be incremental.

As we are lifting the product for a $3 million more per copy.

So that's I think how you should think about the 8000 coming forward.

Operator: Yeah. And Ben, just one thing to add as well, because there's a service bulletin available to our existing customers who have Global 7500 who would like to upgrade the performance of their aircraft to the equivalent of Global 8000. We're having a nice flow of customer uptake on that service bulletin as well. So that's accretive for the company. So we get to benefit in two ways.

And then just one thing to add.

As well because there's a service bulletin available to our existing customers, who have 7500, he would like to.

Upgrade the performance of their air aircrafts to the equivalent of 8000, we're having.

A nice flow of customer uptake on that service bulletin as well and so that's that's accretive for the company. So we get a benefit in two ways.

Bart Demosky: Great. That's all.

Great that's all.

Operator: Okay. Thank you, Ben.

Okay. Thank you Beth.

Rachel Smith: Thank you. At this time, I would like to turn the call back over to Éric Martel.

Thank you and at this time I would like to turn the call back over to Eric Mcmahon.

Bart Demosky: Yeah. So thank you all for joining us this morning and for your continued interest in Bombardier Inc. and our team's accomplishment. Before we sign off, I just wanted to highlight that we recently also published our newest sustainability report. It's a topic that remains part of our DNA, and we continue to lead the industry with initiatives like our environmental product declarations, the adoption of SAF, and dedicated R&D projects also, while sticking to our target of lowering our total company footprint. On that note, I will wish you all a restful and relaxing summer and look forward to reconnecting in the fall. Thank you.

So thank you all for joining us this morning and for your continued interest in Bombardier and our team's accomplishment. So before we sign off I just wanted to highlight that we are we recently also publish our newest sustainability report, it's a topic that remains part of our DNA and we continue to lead the industry with initiatives.

Our our environmental products declarations, the adoption of S. C. F S. A F and dedicated R&D project also and while sticking to our target of lowering our total company footprint. So on that note I will wish you all a restful and relaxing summer and look forward to reconnecting in default.

So thank you.

Rachel Smith: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.

Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask could you. Please disconnect your lines.

Yeah.

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