Bombardier Q3 Earnings Call Highlights

Key Points

• Bombardier raised its 2026 free cash flow forecast for the second time this year, to more than $1.3 billion from more than $1 billion, citing strong performance and confidence in fourth-quarter deliveries.
• Third-quarter revenue increased 3% to $2.4 billion and free cash flow rose 20% to $183 million. Services revenue hit a record $701 million, while the backlog grew 27% from year-end 2025 to $22.2 billion.
• The company is weighing higher production rates but says supplier capacity and supply-chain costs could constrain its plans. Bombardier also expects to expand manufacturing and services capabilities through infrastructure investments and its planned MHI Canada Aerospace acquisition.

Bombardier TSE: BBD.A raised its 2026 free cash flow forecast for the second time this year after record services revenue and strong aircraft orders helped lift third-quarter results.

The business jet manufacturer now expects full-year free cash flow of more than $1.3 billion, up from its previous forecast of more than $1 billion. Executives said the outlook reflects year-to-date performance, strong demand and confidence in completing a busy fourth-quarter delivery schedule.

Third-quarter revenue rose 3% from a year earlier to $2.4 billion, while free cash flow increased 20% to $183 million. Bombardier delivered 33 aircraft, one fewer than in the same period last year, with higher pricing and services growth supporting revenue.

Services and orders drive growth

Services revenue climbed 19% to a quarterly record of $701 million, exceeding $700 million for the first time. Chief Financial Officer Bart Demosky attributed the increase to high aircraft utilization, fleet growth and the ramp-up of Bombardier’s expanded service network.

Adjusted earnings before interest, taxes, depreciation and amortization rose 7% to $382 million. The adjusted EBITDA margin expanded by 70 basis points to 16.1%, primarily because of services growth and lower research and development expenses, partly offset by higher selling, general and administrative expenses and supply chain pressures, Demosky said.

Adjusted net income was $182 million, or $1.72 per share. Reported net income was $81 million, with diluted earnings per share of $0.73.

Bombardier’s backlog reached $22.2 billion, up 27% from the end of 2025 and 34% from a year earlier. The company recorded a unit book-to-bill ratio of 1.7 times in the quarter and 2.1 times for the first nine months, indicating that orders exceeded deliveries.

Chief Executive Officer Éric Martel said demand was strong across most regions, although the Middle East had experienced a slowdown in recent months. He also cited low pre-owned aircraft inventories as a source of confidence in the market.

Fourth-quarter execution and production plans

Bombardier generated $771 million in free cash flow in the first nine months of 2026, compared with $316 million of cash usage a year earlier. Demosky said aircraft mix, including higher defense content, and continued services growth should support fourth-quarter revenue and earnings. Inventory conversion and customer advances are also expected to support cash flow.

The company reiterated its full-year adjusted EBITDA margin guidance of more than 16.25%. Demosky said the fourth quarter would include a significant number of Global deliveries, particularly Global 8000 aircraft, and that he expected strong margins for the period.

Martel said Bombardier is considering higher production rates in response to its backlog and demand, but is assessing supplier capacity before making decisions. He said the company may need to give suppliers more time to ramp up, potentially delaying increases in output.

Construction of a new Montreal-area facility remains on track to open by the end of 2027. Demosky said it will support Challenger 3500 production growth, with incremental deliveries beginning in 2028. He expects capital expenditures of approximately $300 million in 2026 and said spending should rise over time as the company expands its capabilities.

Investment in services, defense and supply chain

Bombardier recently announced $270 million in infrastructure investments over time to expand its U.S. manufacturing and service capabilities. Demosky said the services expansion fits within existing capital investment plans.

The company also expects to close its acquisition of MHI Canada Aerospace, which manufactures wings for the Challenger 3500, Global 5500 and Global 6500. Martel said the deal would give Bombardier control over wing production across its aircraft portfolio and could improve costs and delivery performance over the longer term. He added that integration will require some short-term spending, primarily next year.

In defense, Martel highlighted NATO’s selection of Saab’s GlobalEye solution and Canada’s selection of the same platform for its defense needs. Bombardier and Saab are discussing the potential for aircraft modifications in Canada, with a decision on a location targeted for the first quarter, he said.

Martel identified geopolitical developments and supply chain constraints as his principal concerns. Supply chain costs remain a drag on margins, and Demosky said recovering a material portion of those costs could take several years.

Bombardier ended the quarter with approximately $2.4 billion in available liquidity, including $1.6 billion in cash, and a net leverage ratio of 1.5 times. The company plans to provide more detail on its investment and production plans at its Investor Day on February 18.

About Bombardier (TSE:BBD.A)

At Bombardier (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.

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