Bombardier has updated its 2025 objectives. The company is now targeting more than US$9 billion in annual revenue by 2025, with an adjusted EBITDA of more than US$1,625 million and a healthy adjusted EBITDA margin of approximately 18%. Bombardier also expects to generate significant free cash flow in the coming years, to the tune of more than US$900 million per year by 2025 and will continue to de-lever its business, now expecting to reach a net leverage ratio in the range of 2.0x to 2.5x.
Between 2020 and 2022, Bombardier’s revenues grew 23%, to US$6.9 billion. The expanded aftermarket business was an important contributor, with revenues increasing by more than 50% in the same period. The company more than quadrupled its profitability to US$930 million in adjusted EBITDA and generated US$835 million in free cash flow over the last two years. In terms of deleveraging, Bombardier kept up its opportunistic and proactive approach and has reduced its total debt by US$4.5 billion, when including this year’s debt-related transactions, a 45% reduction compared to 2020. This also resulted in credit rating upgrades from both S&P and Moody’s in 2022.
Bombardier will continue to focus on strengthening its balance sheet, optimising its liquidity requirements and improving its leverage level. The company is revising its net leverage ratio objective to a range of 2.0x – 2.5x by 2025, from the previous approximately 3.0x target, which would be approaching investment grade credit levels.
On the back of improved business fundamentals, Bombardier now expects to generate more than US$900 million per year in free cash flow by 2025. This gives Bombardier ample flexibility and sets it up for significant capital allocation optionality in the future. (£1.00 = US$1.22 at time of publication).