Bombardier Q3 2026 Earnings Results & Report

Bombardier EPS Results

• Actual EPS: C$2.45
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Bombardier Revenue Results

• Actual Revenue: C$3.38 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

At Bombardier (TSE:BBD.A) (BBD-B.TO), we design, build, modify and maintain the world's best-performing aircraft for the world's most discerning people and businesses, governments and militaries. That means not simply exceeding standards, but understanding customers well enough to anticipate their unspoken needs. For them, we are committed to pioneering the future of aviation - innovating to make flying more reliable, efficient and sustainable. And we are passionate about delivering unrivaled craftsmanship and care, giving our customers greater confidence and the elevated experience they deserve and expect. Because people who shape the world will always need the most productive and responsible ways to move through it. Bombardier customers operate a fleet of approximately 5,200 aircraft, supported by a vast network of Bombardier team members worldwide and 10 service facilities across six countries.

Bombardier Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Bombardier reported Q3 revenue of $2.4 billion, up 3%, with adjusted EBITDA up 7% to $382 million and margin improving 70 basis points to 16.1%. Services revenue reached a record $701 million, up 19%, while backlog grew to $22.2 billion on a 1.7x quarterly book-to-bill ratio.
• Positive Sentiment: The company raised its 2026 free cash flow outlook for a second time, to more than $1.3 billion, after generating $771 million in the first nine months. Bombardier ended the quarter with about $2.4 billion in available liquidity and net leverage of 1.5x, its stated long-term target.
• Negative Sentiment: Supply-chain constraints remain an ongoing headwind, with management estimating they are currently affecting costs by about 150 basis points; meaningful recovery may take several years. Executives said supplier capacity could also slow the pace of future production increases, though they remain confident in the planned Q4 deliveries.
• Positive Sentiment: Management pointed to broad demand, a growing defense pipeline and potential to increase aircraft production, while noting that any rate decisions depend on supply-chain capacity. The company is investing in U.S. facilities and services, a new Montreal facility, and greater control of wing production through its planned MHI Canada Aerospace acquisition.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the Bombardier Third Quarter 2026 Earnings Conference Call. Please be advised that this call is being recorded. At this time, I'd like to turn the discussion over to Mr. Francis Richer de La Flèche, Vice President, FP&A and Investor Relations for Bombardier. Please go ahead, Mr. Richer de La Flèche.

[Francis Richer de La Flèche, VP of FP&A and Investor Relations at Bombardier]

Good morning, everyone, and welcome to Bombardier's earnings call for the third quarter 2026. 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. 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, Éric Martel, and our Executive Vice President and Chief Financial Officer, Bart Demosky, to review our operations and financial results for the third quarter ended September 30th, 2026. I would now like to turn over the discussion to Éric.

[Éric Martel, President and CEO at Bombardier]

Merci Francis. [Non-English content]. Good morning, everyone, and thank you for joining us today. Bombardier delivered another strong quarter as we continue to make progress across key metrics. We've achieved record revenues in our services business, grew our strong backlog even further, and generated free cash flow for a fifth consecutive quarter. Before Bart and I dive into the numbers, I want to take a moment to reflect on some major achievements that tell an important story about where Bombardier is today and where we're heading. For the first time in our history, quarterly services revenues exceeded $700 million. For years, we've been investing in our service network, expanding our capabilities, and bringing ourselves closer to our customers around the world. But we're not done yet, and there are still many more opportunities to capture with the service business.

[Éric Martel, President and CEO at Bombardier]

Quarter after quarter, our investments have strengthened our position, and in this quarter, they help us reach a new height. Our reputation for excellent service has become part of what defines the Bombardier brand, and our customers continue to tell us that we're on track. Once again, Bombardier ranked number one in leading industry product support surveys against all competitors. These rankings come directly from the people who operate our aircraft every day. They reflect the level of support we deliver, the product reliability our customers count on, and most importantly, the trust and the confidence we continue to earn each day. The same can be said for the growing momentum we're seeing in Bombardier Defense.

[Éric Martel, President and CEO at Bombardier]

Beyond the solid activity in the quarter, we continue to see our long-term pipeline taking shape with important strategic wins, including NATO's selection of the GlobalEye solution supplied by our longtime partner, Saab, and more recently, the Canadian government down selecting the same platform for its defense needs. We have an exceptional portfolio of aircraft, and we continue to advance a number of projects around the world, including PEGASUS in Germany or HADES in the U.S., that open new mission type opportunities for Bombardier. This is exactly where we wanted to take this business when we laid out our strategy, and we believe there is much more ahead of us as we look to invest in further diversifying our core offering.

[Éric Martel, President and CEO at Bombardier]

We also took an important step forward in broadening and accelerating our U.S. expansion through an announcement of $270 million in infrastructures investment and hiring of hundreds of people. This will strengthen our manufacturing and service capabilities in the world's largest business aviation market while bringing us closer to our customers in the regions across the country, like in Kansas, Texas for the first time, and Indiana. All in all, we continue to proactively invest where we see opportunities to support growth, create meaningful employment and economic impact, improve the customer experience and Bombardier's position for the years ahead across the United States. Supply chains still remain an area where we monitor closely as it continues to require attention every day and will continue for some time. Our teams have built tremendous experience in managing through this environment.

[Éric Martel, President and CEO at Bombardier]

We continue to very proactively mitigate disruption and support customer commitments, staying focused on what we can control and making sure we have the right capabilities in the right places to support our customers. Over and above this, where it makes sense, we will continue to integrate our core capability to our network to help drive further growth and flexibility. With that in mind, the acquisition of MHI Canada Aerospace based in Mississauga was a strategic move. MHI Canada Aerospace has been manufacturing the wings for our Challenger 3500, Global 5500, and Global 6500 aircraft. When this acquisition closes later this year, we have full control over wing production across our aircraft portfolio, including our Global 8000 wing plant in Red Oak, Texas. This is another important step in bringing critical capabilities in-house, strengthening our vertical integration, and enhancing our operational resilience.

[Éric Martel, President and CEO at Bombardier]

Ultimately, it gives us greater control over our production processes and position us to better support our ramp-up over the long term. We're also preparing our production operations for the growth ahead. Construction of our new facility in Montreal remains on track to open by the end of 2027. It remains an important step in creating the additional capacity we will need to support higher production in the future. It's another example of how we're investing today to make sure the business is ready for the opportunities we see ahead. I'd like to turn now to the market. Demand remains healthy across all our segments. The fact that our backlog reached $22.2 billion and that we delivered a 1.7x book-to-bill ratio this quarter speaks to the confidence customers continue to have in our product, in our people, and our long-term outlook.

[Éric Martel, President and CEO at Bombardier]

That confidence is particularly important as we enter the final months of the year. In the fourth quarter, we expect deliveries to follow the same profile we saw in 2025. Our teams are laser-focused on managing a tight schedule. We are in the same position as we were last year. We have the parts, the people, and the processes to succeed, and we have excellent visibility on everything we need to achieve our year-end goal. With that in mind, let me return to the Q3 results themselves. When you look at our performance this quarter, you can see the investments we've been making for years coming through in the results. We delivered 33 aircraft. Services reached a record $701 million in revenue, and total revenue grew by 3% to $2.4 billion.

[Éric Martel, President and CEO at Bombardier]

We're adding more recurring revenues, getting closer to customer, and importantly, translating that growth into stronger earnings and margins, with adjusted EBITDA increasing 7% year-over-year and adjusted EBITDA margin reaching 16.1%. Bart will take you through the details, but we remain focused on continuing that execution through year-end. Our free cash flow, we had another outstanding quarter. Free cash flow reached $183 million, up 20% from a year ago. We're continuing to demonstrate our ability to generate strong and increasingly predictable cash flow. That financial flexibility allows us to be disciplined in how we manage the balance sheet while continuing to invest behind our strategic priorities and further grow, giving us options.

[Éric Martel, President and CEO at Bombardier]

That performance, combined with the progress we've made throughout the first nine months of the year, gives us the confidence that for a second time this year, to raise our free cash flow guidance to greater than $1.3 billion. We are entering the final stretch of 2026 with a robust backlog, strong demand, and solid visibility on our remaining deliveries for the year. We've also begun generating meaningful cash flow ahead of what we expect will be a very strong fourth quarter for deliveries. With that momentum, the Bombardier team remains focused on execution and is well-positioned to finish the year on a very strong note. Bart, on that note, over to you to deliver deeper into the numbers.

[Bart Demosky, EVP and CFO at Bombardier]

Thank you, Éric, and good morning, everyone. The third quarter was another strong one for Bombardier. Aircraft demand remained robust, services delivered record results, and aircraft deliveries were in line with our expectations. These factors, along with strong cost control, resulted in higher revenues, higher margins, and stronger free cash flow than the previous year. Based on our year-to-date performance, continued strong demand, and confidence in executing our Q4 delivery plan, today we announced a re-raise of our full-year free cash flow guidance to greater than $1.3 billion, up from greater than $1 billion. In the third quarter, we recorded a unit book-to-bill of 1.7x, and our year-to-date book-to-bill currently sits at 2.1x. Strong order activity translated into a solid order book, with our backlog reaching $22.2 billion. That's up 27% from year-end 2025 and up 34% year-over-year.

[Bart Demosky, EVP and CFO at Bombardier]

Our multi-year backlog across all aircraft types clearly supports the future production growth and investments Éric spoke about earlier. Our balance sheet is also in a very strong position. We ended the quarter with approximately $2.4 billion of available liquidity, including $1.6 billion of cash and $750 million of committed revolver, up from $450 million last quarter. The $300 million increase to our undrawn revolver comes via a new $750 million five-year committed facility we closed in July. Our net leverage ratio improved to 1.5x, reaching the new long-term target we set earlier this year. We also note that Moody's upgraded our credit rating from Ba3 to Ba2 in August, while maintaining a positive outlook. With no debt maturing before November 2030, we have flexibility when it comes to capital allocation, allowing us to invest in the business while continuing to opportunistically manage our debt structure.

[Bart Demosky, EVP and CFO at Bombardier]

Our capital allocation priorities remain clear. We will continue to be consistent in our approach and focus on high ROI investments. We see significant growth opportunities in all our businesses, including higher aircraft output, improving our product positioning, driving continued expansion of our services network, and growing our defense business. We are in a great position to achieve these objectives while still having flexibility to continue strengthening our balance sheet, pursue accretive M&A, and return cash to shareholders over time. A clear example of this disciplined approach is our services network expansion, where we continue to break revenue and profitability records almost every quarter. Over the past year, we've announced the opening of a new service center in Fort Wayne, Indiana, the acquisition of Velocity Maintenance Solutions, and the opening of a line maintenance station in Sydney, Australia.

[Bart Demosky, EVP and CFO at Bombardier]

Two weeks ago, we provided an update on our multi-year U.S. services expansion strategy, announcing additional investments of $270 million over time to expand capacity and bring our capabilities closer to customers. Importantly, this expansion fits directly within our existing capital investment plans. We have several other compelling growth investment opportunities across our business that Éric and I look forward to sharing with you at our upcoming Investor Day. With that, let me take you through our third quarter results in more detail. Total revenues reached $2.4 billion in the quarter, up 3% year-over-year. We delivered 33 aircraft, one fewer than in the same period last year. Revenue growth was driven by higher pricing and continued services growth. Services delivered record quarterly revenues of $701 million, up 19%, reflecting high aircraft utilization, continued fleet growth, and the ramp-up of our expanded global service network.

[Bart Demosky, EVP and CFO at Bombardier]

Turning to profitability, adjusted EBITDA reached $382 million, up 7% year-over-year, with an adjusted EBITDA margin of 16.1%. The 70 basis point margin increase primarily reflected services growth and lower R&D expenses, partially offset by higher SG&A and some continued supply chain pressures. Adjusted net income was $182 million for the quarter, with adjusted earnings per share of $1.72. Reported net income was $81 million, and diluted earnings per share were $0.73, primarily reflecting our improved operating performance. Now, moving on to cash flow. Free cash flow was $183 million in the quarter, an improvement of $31 million, or 20% year-over-year. Strong earnings, together with a positive working capital contribution from lower supplier payments, supported solid cash flow generation while we continued to invest in inventory to support higher aircraft production. CapEx in the quarter was $76 million, right in line with our plan.

[Bart Demosky, EVP and CFO at Bombardier]

Over the first nine months of 2026, we generated $771 million of free cash flow, compared with cash usage of $316 million over the same period last year, a year-over-year improvement of almost $1.1 billion. Looking ahead, we are set up to execute on our fourth quarter plans. Today, we raised our free cash flow guidance for the second time this year to more than $1.3 billion, and we remain on track to deliver our guidance across all other metrics. Our teams are managing an active Q4 delivery schedule with a clear focus on aircraft completion, supply chain coordination, and quality. Aircraft mix, including higher defense content and continued services growth, are expected to support revenues and earnings. The planned conversion of inventory and customer advances will also support strong free cash flow generation through year-end.

[Bart Demosky, EVP and CFO at Bombardier]

Overall, the quarter demonstrates continued strong execution across the business, and we enter the final stretch of 2026 well-positioned to deliver on our plans and improved guidance. With that, let me turn it back over to Francis to start the Q&A. Francis?

[Francis Richer de La Flèche, VP of FP&A and Investor Relations at Bombardier]

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 up for questions. Operator, please go ahead.

[Operator]

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. If you'd like to withdraw your question, press star two. One moment, please, for your first question. Your first question comes from Benoit Poirier from Desjardins Capital Markets. Please go ahead.

[Benoit Poirier, Analyst at Desjardins Capital Markets]

Yeah, thank you very much, and good morning, everyone. Congratulations for the good quarter. Could you maybe provide an update on the supply chain issues versus some minor hiccups you experienced last quarter? How much of a headwind does it represent in terms of additional costs, and what kind of improvement could we see going into 2027? Thank you.

[Éric Martel, President and CEO at Bombardier]

Bonjour, Benoit. Thanks for your comments and for attending the call. Clearly, the supply chain remain an industry-wide issue. We have some pretty good improvement in some areas. We also have some that just come and go. We are clearly confident on executing our production ramp-up in this environment, despite the challenge that it's offering. There are some meaningful cost recoveries opportunity that we are going after, of course, with a more stable environment. Clearly gradual improvements have to be expected over the years. As you know, some of them have a bit of an impact of about 150 basis point right now, are kind of permanent at this stage. We're looking forward for these improvement to come in at some point.

[Benoit Poirier, Analyst at Desjardins Capital Markets]

That's great. Just in terms of follow-up, obviously the new facility seems to be on track for 2027 that will be focusing on the Challenger platform. Gulfstream at the NBAA made some comments about the desire to increase their annualized deliveries from 160 to 200 down the road. Any thoughts about your desire to increase Global production in light of the strong backlog you're currently dealing with?

[Éric Martel, President and CEO at Bombardier]

No, I think clearly, there's strong consideration. I think as you just highlighted, we're making some investment in infrastructure right now that will allow us to increase our rate. We are also assessing other possibility. I think the main question reside also the possibility and the capability of the whole supply chain. There's clearly a serious potential here for us to consider increasing our rate. The backlog is strong, the demand remains strong. We want to make sure that we continue to protect our market share also. The pricing environment is solid. I guess all this together gives us a lot of good reason why we should do that. As we just announced this morning, as you know, we'll be doing an Investor Day on February 18, and I'm sure we're going to be having the opportunity there to share a bit more.

[Éric Martel, President and CEO at Bombardier]

But we're pretty bullish right now about our environment. We feel good about all our businesses.

[Benoit Poirier, Analyst at Desjardins Capital Markets]

Thank you very much for the time.

[Éric Martel, President and CEO at Bombardier]

Thank you. Thank you, Benoit.

[Operator]

Your next question comes from Konark Gupta from Scotiabank. Please go ahead.

[Konark Gupta, Analyst at Scotiabank]

Thanks, and morning everyone. Maybe just to begin with on CapEx side first. You guys have obviously the Montreal facility underway right now, and you are obviously expanding some services footprint. On the U.S. expansion that you just recently announced, and also the GlobalEye opportunities you see, do you see the CapEx envelope to go higher over time as you embed these capital investments?

[Bart Demosky, EVP and CFO at Bombardier]

Hey, good morning, Konark. It is Bart here. Thank you for the question. This year, let me talk about this year, and then give you a little bit of insight as we look forward. We will share some more information on CapEx profile at our Investor Day and into the new year. This year, we are going to be up this year as we did begin development of our new facility here in Dorval. So, we are planning to be closer to $300 million at year end. That is our planned number for the year. That will support future production growth. I think as we have talked about in the past, it will be centered on the 3500 production growth, starting with incremental deliveries in 2028. Beyond that, yes, as we look to expand our capabilities across all of our businesses, that will take investment. So, you should expect CapEx to rise.

[Bart Demosky, EVP and CFO at Bombardier]

However, we are going to remain very, very disciplined on this when it comes to capital investment and the ROIC focus that we bring to the table. The investments will be very well planned, they will be telegraphed, and they will be managed with excellence. So, we are not concerned about it. Our free cash flow has grown to a level now that we will continue to deliver significant free cash flow beyond any capital needs and be able to pay for our investments from our operational cash flows. So, we are in a great place.

[Konark Gupta, Analyst at Scotiabank]

Okay. Thanks, Bart. That is comforting. If I can follow up on the GlobalEye timing. Have you guys figured out when the new plant will be set up, and what kind of agreement are you going to be signing with Saab actually on GlobalEye production?

[Éric Martel, President and CEO at Bombardier]

Yeah. There's clearly a discussion going on right now with our partner, Saab, on our ability to do the modification here in Canada, which will be with the high demand that the GlobalEye is facing right now. Clearly, there's capacity needed, and I think it's clearly understood by our partner and us that we're probably the best positioned company to be able to do it as we would be working on our own product. In terms of making that decision, I think in terms of where, we're looking forward to make that decision, as I said before, sometime in Q1 about the location in Canada. We're still targeting that. Sometime in Q1, we'll be able to say where. Then in terms of the whole building itself, we're going to look at different options. There could be an option where we start building right away.

[Éric Martel, President and CEO at Bombardier]

There could be options where, as we ramp up, maybe we could lease space to get started. I guess, to echo what Bart just said about CapEx, we are extremely focused as an organization on our return on invested capital. There's always options. If you look around, we've been investing a lot in our service group this year, over the last five, six years, and most of them are not using our own CapEx. We usually do a lease back of a building made for us. We still have all these options. We're going to make that decision based on where the return on invested capital is the best for the company, and that's how we're going to be looking at it. But we're still tracking to make that decision, and things are progressing well.

[Konark Gupta, Analyst at Scotiabank]

Great. Appreciate the time. Thank you.

[Éric Martel, President and CEO at Bombardier]

Thank you, Konark.

[Operator]

Your next question comes from James McGarragle from RBC Capital Markets. Please go ahead.

[James McGarragle, Analyst at RBC Capital Markets]

Hey, guys. Thanks for having me on, and congrats on the strong quarter. I just wanted to ask a follow-up question on the first question that was asked on the call in terms of Gulfstream ramping up production. Obviously, you guys have kind of alluded to that as well. Can you just give us some color on some of the key metrics that you're tracking? Obviously, demand's really strong now, but what gives you confidence in 2029, 2030 that demand and pricing is going to be able to support meaningfully higher production across the industry? Just any color you can share regarding that.

[Éric Martel, President and CEO at Bombardier]

Yeah. Clearly, backlog is there, and I think the backlog is not a very long debate. The backlog is already in place. The demand remains very strong for all our platforms, actually. We also look, as you know, very in detail at the pre-owned market, which the inventory remains pretty low. So those are clearly giving us the comfort that the demand is going to remain strong and the backlog, of course. We don't make those decisions lightly when we decide to increase, because you just don't want to do that for a couple of months. You do it, usually, you want to have years ahead of you that you feel you can maintain these increased rates. So we have a very strong environment for that right now.

[Éric Martel, President and CEO at Bombardier]

Of course, the other criteria, my team is extremely meticulous at assessing every supplier from initial raw material to capability, workforce, machining capacity across all the supply chain so that we can make a decision that we have strong confidence that we can achieve the results we committed to. So, we're going through that process right now, and of course, I feel that in Investor Day, we're going to have probably more color on that, but we feel pretty good about the environment. Now, it probably relates to assessing the whole supply chain capability, including ours, getting the right manpower, getting the space, and being more efficient at the same time. All this to say that the environment is certainly there, but we're working on making sure that we can sustain these rates for a while.

[James McGarragle, Analyst at RBC Capital Markets]

And then, to my follow-up here is, when we look longer term at the product, at the development roadmap, Bart mentioned that any investments are going to be covered by free cash flow. How are you viewing potential investment in new aircraft programs or just some major upgrades as we look towards the end of the decade? After that, I'll turn the line over. Thank you.

[Éric Martel, President and CEO at Bombardier]

Yeah. Thank you, James, for the question. The way we look, as Bart said earlier, we're going to be generating quite a bit of cash flow over the next five, six years. The way we're thinking about this is, and we have a very important conversation about our capital allocation, and we have optionality about what we're going to be doing with this capital. We do see today that overall, probably half of our capital allocation would probably go to improving our products, staying competitive, which could include a new airplane. As I've always said, we're not going to make that decision lightly. We're going to make that decision based on, hey, what our competitors are doing, what is our customer demanding, and also, what new technology could be offered out there. Those are very long-term decisions.

[Éric Martel, President and CEO at Bombardier]

In terms of how we will be financing a new program, if I think that's kind of the question you're asking, we'll have options there of using a substantial part of that, using our own cash from free cash flow. But there could be also other ways to have a bit of a mix of how we will be financing in terms of our cash availability, what other options do we have with our cash, and if we can get also competitive, maybe either financing or other things to do. I think all the options will be on the table. We haven't made any decision on that, but using our own cash is also one, and we're going to be definitely using some of it for financing a new program and derivative.

[James McGarragle, Analyst at RBC Capital Markets]

Thank you.

[Éric Martel, President and CEO at Bombardier]

Thank you, sir.

[Bart Demosky, EVP and CFO at Bombardier]

Thanks, James.

[Operator]

Your next question comes from Gavin Parsons from UBS Financial. Please go ahead.

[Gavin Parsons, Analyst at UBS Financial]

Thank you. Morning.

[Éric Martel, President and CEO at Bombardier]

Good morning.

[Gavin Parsons, Analyst at UBS Financial]

Bart, is it possible to break down how much of the free cash guidance raised this year is booking strength versus other drivers, and trying to get a sense if the right starting point for growth next year is the $600 million-$1 billion original guide?

[Bart Demosky, EVP and CFO at Bombardier]

Yeah. Good morning, Gavin. Thanks. Look, the whole industry has been enjoying a very strong book-to-bill this year, and year-to-date, ours is 2.1x. I think you know from past guidance that we've provided that when we plan for the year and provide our guidance, we base it on a book-to-bill of 1x, and our expectations, along with expectations around mix. We continue, though, to grow our free cash flow generation capabilities as our services and defense businesses grow as well, and also contributing to that will be increase in production rates, as Éric highlighted. As we move each year forward and our revenues continue to rise, there will continue to be strong cash flow conversion, which means annual guidance based on a book-to-bill of one should go up every year. That's how I would think about it.

[Bart Demosky, EVP and CFO at Bombardier]

We'll obviously give you the numbers each coming year at the traditional time, which is along with our year-end results and obviously Investor Day. We'll be looking forward to sharing that with you then, Gavin.

[Gavin Parsons, Analyst at UBS Financial]

Thank you.

[Bart Demosky, EVP and CFO at Bombardier]

All right, perfect. Thank you.

[Operator]

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

[Tim James, Analyst at TD Cowen]

Thank you very much. Good morning, everyone. My first question, Éric, there are just so many good things going on with the business now, the momentum, the financials, your ability to deploy capital in the future. I am trying to figure out what worries you at this point. What are you watching more closely yourself, or what do you think is still kind of a watch point for the business, whether it has to do with the operation specifically or the environment?

[Éric Martel, President and CEO at Bombardier]

I would say probably two things are on top of mind right now. The whole geopolitical situation in the world, where that could go, and I'm including part of it, the trade discussion, everything. I would say I think these discussion right now on the trade for us kind of are normalized, and I would say we're assessing the risk being much lower than probably we were like two years ago or a year and a half ago. So, I think that this one, the risk has come down. We're focused, and for obvious reasons we've explained before, we believe that aerospace is kind of unique, and we've been demonstrating that over and over, I think, as an industry, over what has been agreed and discussed over the last two years in terms of trade.

[Éric Martel, President and CEO at Bombardier]

I guess, of course, there's tension, as you know, right now with Iran, the U.S., the rest of the world. Still, the situation in Ukraine is top of mind. I guess, overall. Then there's the supply chain, I would say, that we need to continue because everybody's ramping up, everybody has big backlog. I think my team has done amazingly well for the last six years to make sure that we always meet our commitment in terms of delivering first to our financial, but also to our customer, what we've signed and delivered a contract and be able to deliver the plane. I think we've been It's a bit unfortunate, but it became a bit of a new normal in the supply chain to be able to navigate through this environment and perform. And we've been demonstrating that we can do that.

[Éric Martel, President and CEO at Bombardier]

We foresee that it's taking a bit more time than we thought about coming back to a more normal environment, but we've been proving and navigating this. I would say those are the two things, the whole overall geopolitical situation plus supply chain are the two things that are kind of top of mind.

[Bart Demosky, EVP and CFO at Bombardier]

Tim, just to add one thing to Éric's comments, and he reflected on this earlier, taking control of a greater portion of our own supply chain is definitely part of our strategy. The MHI acquisition we're looking to close next month, or expect to close next month, is a perfect example of that. And we want to own our supply chain or be much more close to it and control much more of it to ensure that we meet all of our obligations and commitments to customers. We're in a good place.

[Tim James, Analyst at TD Cowen]

Very helpful. Thank you. My second question actually, and it ties in well to what you just mentioned, Bart. Getting MHI closed, I know you're not getting into specifics on 2027 yet, but is there any comment or color you can provide on the initial impact that that business will have on the margins of the consolidated business, either positively or negatively? I assume that the primary value in that is, as you point out, getting control of the supply chain and the longer-term opportunities for margin. But in the short term or in 2027, how should we think about that?

[Tim James, Analyst at TD Cowen]

And then, I guess, as a follow-on to that, if there are other transactions, other capital deployments that involve gaining greater control of your supply chain, again, long term, I'm sure there's financial benefits and strategic benefits, but does that kind of also create temporary headwinds at all, or are they really immaterial for the most part as you look ahead?

[Éric Martel, President and CEO at Bombardier]

I would say, I think you highlight this very well. There is always some short-term integration costs, as an example. You have to think about putting MHI on our IT system, as an example, and a few other things we're going to need to spend next year, which we haven't had to do this year. But, I think for us, those are short-term things that will bring value longer term. We made that acquisition for basically two reasons, a better integration overall, but better managing our costs. I think my team is known and has a good reputation in the supply chain to well manage our bill of material costs and everything. So, we felt that we could get some benefit longer term, mid-term, and long term in that regard, instead of just facing a year-to-year escalation.

[Éric Martel, President and CEO at Bombardier]

I think mid-term, long term, we clearly see some benefit on the cost side compared to if we would have leave it as a status quo. Yes, some short-term investments are necessary to get through that transition, and will, for the majority of them, happen sometime next year. But I would say overall, it's the right thing to do about controlling your own destiny for the long term. So, you realize that we build five different programs at Bombardier, and now we're going to have control on all our wings, from the Challenger 3500 up to the Global 8000. And we feel pretty good about that, and we feel that we can bring value doing that both on cost, but also on delivery performance.

[Tim James, Analyst at TD Cowen]

Great, Éric. Thank you very much.

[Éric Martel, President and CEO at Bombardier]

Thank you, sir.

[Bart Demosky, EVP and CFO at Bombardier]

Thanks, Tim.

[Operator]

Your next question comes from Cameron Doerksen from National Bank. Please go ahead.

[Cameron Doerksen, Analyst at National Bank]

Yeah, thanks. Good morning. Obviously, very strong order environment for you with the book-to-bill at 1.7x in the quarter. Can you just maybe talk a little bit about what you're seeing as far as trends for demand? Are there any signs of weakness anywhere? I mean, how are orders trending into Q4? Just any color on what you're seeing out there in the market.

[Éric Martel, President and CEO at Bombardier]

I would say the market has been very solid across the board, including North America, including Europe. I think the only place where we've seen some slowdown was in the Middle East. I think it's pretty obvious with everything going on over there, people have their attention somewhere else. But still, there's still momentum over there in the long run. I think if you look at this area on the long run, we feel pretty strong that this is going to be one of the fastest-growing region over the next coming years. But I would say overall that demand has been not just focused in North America. I have to highlight, though, that Canada, with the tax modification, the luxury tax being abandoned and everything, has created good momentum in our own country here, which is important. This is a sizable market in business aviation.

[Éric Martel, President and CEO at Bombardier]

But overall, I was very pleased to see also Europe being strong. Asia is performing well. So, it's pretty much across the board, I would say, with a small slowdown in the Middle East for the last few months.

[Cameron Doerksen, Analyst at National Bank]

Okay. No, that's helpful. If I could just squeeze in maybe just a very short-term question, just around the Q4 margin, kind of look at the updated guidance. You kept the EBITDA guidance for the full year unchanged. I guess that kind of, at the low end, it would imply EBITDA margins down year-over-year. Just wondering if you could talk a bit about the puts and takes for Q4. I think maybe last year you had more defense aircraft deliveries that helped, but any other, I guess, color you can provide on the Q4 margin?

[Bart Demosky, EVP and CFO at Bombardier]

Yeah. Hi, Cameron. It's Bart here. I think we can maybe take it offline, but I would maybe disagree with you on the base case having a lower overall margin for the year. I think we're in a really good place from a margin perspective. When it comes to the fourth quarter, we're expecting strong margins for the quarter. We have a significant number of Global aircraft being delivered, particularly the 8000s. As you probably or you may recall from our earlier quarterly calls, we've been running a book-to-bill on the Global 8000 since it came into service in Q3 of 2025 of greater than 2x. So, we're realizing on those deliveries now. It's a very strong market, and we're expecting strong EBITDA margins in Q4.

[Bart Demosky, EVP and CFO at Bombardier]

The one thing that is limiting our full potential right now, and Éric has touched on it a couple times, Cameron, is we still are facing supply chain headwinds. Those costs have not come out of the system yet, and we're expecting that we will recover a material amount of those, but it is going to take a few years to get that fully back in our margin profile.

[Bart Demosky, EVP and CFO at Bombardier]

Our margin last year, I think was Oh, sorry. I was just going to add that our margin at 15.58 last year, we're still, again, we reiterated our guidance of greater than 16.25 and feel solid about that. So, we're looking forward to be on track here.

[Cameron Doerksen, Analyst at National Bank]

Perfect. Thanks very much.

[Bart Demosky, EVP and CFO at Bombardier]

Thank you.

[Operator]

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

[Myles Walton, Analyst at Wolfe Research]

Growth and the year-to-date growth of just under 20%. How much of that is the market versus your share growth? Are you getting more comfortable that 70% market share for Bombardier is the right number by 2030 that you laid out in 2024?

[Éric Martel, President and CEO at Bombardier]

I think it's a combination of both. We see right now, clearly our market and overall possibilities growing. If we look ahead in the next five years, we still see some pretty significant growth ahead of us, that's very encouraging. We're working on our strategic plan for the next five years as we speak, and have a pretty good conversation with our board regarding that this week. Defense will clearly continue to be a pivotal point for our growth in the next five years. Again, it comes from just the installed base growing, some of the airplane maturing also, and now facing a more major maintenance event. On top of it, as you highlighted, we're growing our market share with better presence around the globe. We make it very attractive.

[Éric Martel, President and CEO at Bombardier]

I have to highlight, our performance also in services makes it easier for us to attract customer. Customer come to our place. You've seen we've ranked number one for a few years now in a row in the different surveys. Also, the other thing that's quite remarkable, if you look at the Challenger and the Global, of course, we all know since COVID that there's been quite a lot more flight hours happening. You're talking about 45% more hours on the Challenger, but 77% on the Global just before COVID. What's even more important is, we're all excited about the hours a year ago, but we are 7% again better this year on the flight hours on both platform, Challenger and Global. The great news is that there's more airplane out there, they're flying more, the whole installed base is maturing.

[Éric Martel, President and CEO at Bombardier]

When I say maturing, I'm thinking here of the Global 7500 and 8000 that will now start facing more maintenance work, a major package in the next few years. So, we feel pretty strong about our possibility to grow much further, our services business with all those things happening, the market growing, but also our ability to go and capture more market share.

[Myles Walton, Analyst at Wolfe Research]

In the fourth quarter, should we expect top end there, or still in negotiation?

[Bart Demosky, EVP and CFO at Bombardier]

Hey, Myles. We're having a little bit of a difficulty hearing you, but I think your question was about the helicopter company order, when we're expecting that to close, announce something on that. Yeah. The fourth quarter or later.

[Éric Martel, President and CEO at Bombardier]

We are clearly working to progress. This is a significant transaction for both of us. The momentum's still there, and we still feel pretty comfortable that in the near future, we're going to be able to make an announcement to confirm our progress on that transaction.

[Éric Martel, President and CEO at Bombardier]

Thank you. Thanks, Myles.

[Operator]

Your next question comes from Seth Seifman from JPMorgan Chase. Please go ahead.

[Jamie Simonson, Analyst at JPMorgan Chase]

Hi. Good morning, everyone. This is Jamie Simonson on for Seth today. Thanks for taking my question. Lots of topics already covered. Maybe if I could just dig a little bit more into the supply chain. As you think about services obviously showing healthy growth, OE side production ramping as well in the coming years, how do you think about material availability as you're ramping both sides? And what might be the potential trade-offs that you might have to face going forward in terms of supply chain ramping in the coming years?

[Éric Martel, President and CEO at Bombardier]

I think the decision we have made, some of the program that we have made the decision to already increase the rate, it means that we felt pretty good about the supply chain capability, and our initial assessment was good. Of course, we are just continuously monitoring that capability of the supply chain to follow the rate increase we have already put into our plan. For the other one we are assessing, there is clearly a very deep evaluation of the potential of the supply chain to be able to follow the rates we are having in mind in line of the backlog and the market demand. I think I would say the only thing I think that could happen here is we may take a bit longer to ramp up. I think we will make those decision.

[Éric Martel, President and CEO at Bombardier]

I think at the end, when the intention is there, we may have to give a little bit more time to our supplier to ramp up than we would usually do. If we have to do it, we will do it. I think it is important to perform, deliver our airplane on time to our customer, and also be able to guide you properly in terms of our financial performance. We feel pretty good right now. We are assessing a few options in that regard. Of course, I think we will probably try to provide more clarity on this when we get to Investor Day. It is a detailed exercise that we do. To answer your question, the potential impact here could be a small delay on ramping up to give a better chance to our supplier also to succeed in ourselves.

[Jamie Simonson, Analyst at JPMorgan Chase]

Thank you. That makes a lot of sense. Maybe just another quick one here. Looking maybe at the composition of your backlog, maybe less from a regional perspective, appreciate the color earlier on that, but maybe more on a customer type perspective, where are you seeing the orders coming in, and also, how does that compare to maybe how things have been over this year and maybe any margin implications going forward?

[Éric Martel, President and CEO at Bombardier]

I think this is a great question. In terms of the composition of our backlog, as we move forward, we are going to see more deliveries going to the fleet operator, and we are going to see more deliveries going to Bombardier Defense. That is clearly a bit of a shift in our profile in terms of customers. Of course, the defense business, as you know, we like the margin there, but at the same time, we really like the fleet operator business. One of the reason is we kind of saw that coming. About three years ago, we made a conscious decision to renegotiate and attract more fleet operator, as we do believe they are going to be the fastest growth path because of the wealth creation in the world today.

[Éric Martel, President and CEO at Bombardier]

You know that if you look at ultra-high-net-worth individual, we believe the number of people with that profile will grow by about 6%+ per year in the next five, six years. These people don't have access right away, or they don't need sometime their own airplane. The majority of them probably will go to fleet operator. That's a fast pace of growth. We love the business with the fleet operator because they usually fly five, if not six times more than a regular customer, meaning that they will consume more in our services business. We've seen that pattern over and over. As you know, we've been in that business. Three years ago, we made a conscious decision. You're going to see today we're delivering about 20% of our airplane to fleet operator.

[Éric Martel, President and CEO at Bombardier]

We replenish our backlog in terms of fleet operator for the next 10 years, which is great, gives us visibility, but that 20% will definitely increase with creating that significant possibility after for our service business.

[Jamie Simonson, Analyst at JPMorgan Chase]

Excellent. Thanks so much.

[Éric Martel, President and CEO at Bombardier]

Thank you, Jamie. Thank you.

[Operator]

Our last question for today comes from Ron Epstein from Bank of America. Please go ahead.

[Andrew Steinhardt, Analyst at Bank of America]

Good morning. This is Andrew Steinhardt on for Ron. Thanks for taking my question here. Just wondering

[Éric Martel, President and CEO at Bombardier]

Morning

[Andrew Steinhardt, Analyst at Bank of America]

Could you guys just elaborate on any details that can be shared related to the recent MOU with BAE? Also just given Saab's selections on Gripen for production in Canada, how are you guys thinking about being involved in assembly there? Is it a priority or just any color on how you guys are thinking about that would be helpful?

[Éric Martel, President and CEO at Bombardier]

No, it's a great question. Those are, in our mind, the MOU we've signed and the situation with the Gripen here, two different topic. First, the Canadian government has not made a decision yet, so it could be possible. It's a question of priority for us right now, prioritization, I should say, of where we put our effort. Right now with Saab, we've agreed that we would be focusing on the GlobalEye as we are the best position people to be able to do those modification on our own airplane. So it's a question of, again, capital allocation, where do you want to put your effort, manpower availability also to do those things that are pretty complex.

[Éric Martel, President and CEO at Bombardier]

And we foresee if ever the Canadian government would make the decision on the Gripen that there was other people that could do it, and we didn't want to put that extra pressure on us on manpower availability and different things. We've always told Saab, which is a long-term partner, at the end, if ever you need some support in a few area, we'll be there to help you. But we would prefer, and I think that's not to be doing the pure assembly. And for us, the MOU with BAE was interesting in a sense that we have core capability that we can offer our support. Canada became an observer on the program, the Canadian government, and we're the OEM that exists in the country that have the capability, I should say, either engineering or manufacturing-wise to be able to support.

[Éric Martel, President and CEO at Bombardier]

We don't have any ambition here to do a full fighter program ourselves. What we like about this is a possibility, it's a longer-term play in a sense that develop new technology to be supportive to the program, and at the same time, eventually create job here that are supportive of building or manufacturing that technology. We don't even know what it is today, but the MOU says we're going to explore how we can be supportive, and it's a way to bring back some of that portion of a program in our own country regarding fighter jet. Again, I don't want anybody to read that we're getting into the fighter jet. We're getting into maybe some components, some parts, some technology that could be supportive to the program, which our country, as I said earlier, was elected to be an observer on that program.

[Éric Martel, President and CEO at Bombardier]

It's a question of technology learning. It's a question of potentially having a work scope that represent. And I think we have an interesting capability to offer in engineering and manufacturing also that there's not that many people can do. And we're pretty excited about that potential collaboration, which we're going to try to define over the next few months.

[Andrew Steinhardt, Analyst at Bank of America]

Understood. Appreciate the color there. I'll leave it there.

[Éric Martel, President and CEO at Bombardier]

Thank you so much.

[Andrew Steinhardt, Analyst at Bank of America]

Thank you.

[Operator]

This concludes the Q&A session for today. I will turn the call back over to Mr. Éric Martel for closing remarks.

[Éric Martel, President and CEO at Bombardier]

I want to thank you all for joining us today. Your continued interest in Bombardier and in the progress we are making means a great deal to us. Our teams know what we need to deliver over the coming months, and they remain really focused on doing exactly that, while we will be continuing to take care of our customer every single day between now and the end of the year and after. We have accomplished a lot so far this year, but the year is not over. We know that. There is still important work ahead of us, and our focus remain exactly where it needs to be. I want to thank you all, and I look forward to speaking with you again at our next earning call, and also, of course, at the Investor Day at the beginning of the new year. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Participants

Executives

• Francis Richer de La Flèche, VP of FP&A and Investor Relations
• Éric Martel, President and CEO
• Bart Demosky, EVP and CFO

Analysts

• Benoit Poirier, Analyst at Desjardins Capital Markets
• Konark Gupta, Analyst at Scotiabank
• James McGarragle, Analyst at RBC Capital Markets
• Gavin Parsons, Analyst at UBS Financial
• Tim James, Analyst at TD Cowen
• Cameron Doerksen, Analyst at National Bank
• Myles Walton, Analyst at Wolfe Research
• Jamie Simonson, Analyst at JPMorgan Chase
• Andrew Steinhardt, Analyst at Bank of America