Bombardier Inc. (BBDB) Earnings Call Transcript & Summary

[Interpreted]. Ladies and gentlemen, good morning. My name is Pierre Beaudoin and I am Chair of the Board of Bombardier. I would like to welcome you to Bombardier Annual Shareholder Meeting. Bombardier entered 2024 on a high note. Since our last annual meeting, we have taken a decisive step towards profitability while continuing to reduce our debt. Bombardier's success is proof of its ability to thrive as a world-class business in aviation. We celebrated a new tanker by unveiling our new brand identity, our new logo, which pays tribute to our history, represents the Bombardier of today and underscores the caliber of our products and services as well as the exceptional work done by all of our employees. In a few days, we will be inaugurating our new aircraft assembly center at the Pearson Airport, a state-of-the-art manufacturing facility. Our meeting today will be conducted in mainly in France but I'd like to say a few words of welcome in English. Ladies and gentlemen, good morning. My name is Pierre Beaudoin and I am the Chair of the Board of Directors. Welcome to Bombardier's 2024 Annual Meeting of Shareholders. While our meeting will be held mainly in French, a simultaneous translation is available on the live webcast, and you may ask questions either in French or English. The stream is on the right of the platform. At the top of the detection, you can choose to listen to the meeting in French, in English or stay in the original stream without any translation. [Interpreted] On behalf of the Board and our management team, we are delighted to count to among our shareholders. Thank you for your continued support. I'll now provide you with a few instruction to help you to participate fully and enjoy this meeting. The webcast of this meeting will be posted on our website for some time after the meeting. I do remind you that you must be connected to the Internet at all times to be able to ask any questions and so that you don't miss anything, and so the 2 are able to vote at the appropriate time. I remind you that only registered shareholders is really pointed proxy holders may ask questions and. The left-hand section of the webcast platform is designed to enable you to exercise your shareholder right, i.e., ask questions and vote. During the meeting, I do invite you to refer to the pound at the top of the screen. The home tab allows you to see information instructions present to me including questions and how to vote. The messages allows you to ask questions by cast or self. The vote tab, which will appear when the voting period opens allows you to do the motion and vote on each one of them. And the document tab allows you to consult documents related to this meeting. I'd like to point out that there is a delay in the webcast of the meeting. It is therefore important that registered shareholders and duly appointed proxy holders submit their questions as soon as possible so that we can answer them at the appropriate time during the meeting. If you recast the question, you can do so by clicking on the messages tab on the webcast platform. And it will also be possible to ask the questions verbally by telephone. To ask a question verbally, the registered shareholder and proxy holder must submit his or her telephone number using the dialogue box provided in the messages had in RMD connected. Your telephone number will not be shared with others attending the meeting. we had the instructions under the home tab before submitting your questions. In particular please indicate whether your question concerns a motion that is part of the official meeting agenda or whether it is of a more general nature. We will attempt to address questions that we make directly to a motion on the agenda at the appropriate time during the meeting. So questions of a more general nature will be saved for the question-and-answer period following the adjournment of the meeting. Once again, for those shareholders who wish to detail, I invite you to submit your questions now. As always, questions should relate to Bombardier's business activities. We will not answer questions that do not relate to business of the Bombardier. And we won't answer any questions that also relates to information about Bombardier that is not in the public domain. We will not answer questions that are repetitive or have already been asked by other shareholders. We won't answer any derogatory questions to individuals or otherwise a sensitive questions to third parties. We won't answer questions that relate to personal grievances are asked for the personal or commercial benefit of a shareholder or irregular or inappropriate. Our webcast platform provider will keep a complete record of all QC. To the extent that your questions could not be addressed due to time constraints, we will endeavor to respond to your questions after the meeting. Questions and answers will be available on our website as soon as possible after the meeting and will remain available for 1 week after their posting. The voting procedure will be explained in a few minutes by Mr. Pierre Gagnon, Secretary of the meeting. Before we begin, I would like to draw your attention to the notices and cautions that appear on the screen. I'd like to remind you that over the course of the presentation, including the presentation by our President and CEO, we may make projections, forecasts or other forward-looking statements concerning future events or about the company's future financial performance. Many assumptions have been made in the preparation of forward-looking statements, and we would supply it that there are risks that actual events or results may differ from these forward-looking statements. For further details, shareholders are invited to consult the notice regarding forward-looking statements in the company's financial report for the 3-month period ended March 31, '24. I make this statement on behalf of the stakeholders whose remarks today contain forward-looking statements. In addition, during the presentation by the President and CEO, certain financial measures presented are non-GAAP financial measures. For further details, shareholders are invited to consult the non-GAAP and other financial measures section of the company's financial report for the 3-month period ended March 31, 2024. Allow me now to begin this meeting by introducing the company's senior executives core officials here today, Éric Martel, President and CEO; Bart Demosky, Executive Vice President and Chief Financial Officer; and Pierre Gagnon, Senior Vice President, Legal Affairs and Corporate Secretary. I would like as Chairman of this meeting, and Mr. Gagnon will act as Secretary. As last year, we'll be adding a moderator who doubled be through the form of the meeting of the questions we received online. Mark Masluch, Senior Director of Communications, will act as our moderator for questions and comments submitted via the meeting broadcast platform. The topics on our agenda here today are as follows: one, to receive our consolidated financial statements for the year ended December 31, 2023, and the auditor's report to us; 2, to appoint Ernst Young as the company's independent auditors and so the next Annual Meeting of Shareholders and to authorize the directors to fix and set their remuneration; 3, to elect each of the nominees for election to our Board of Directors until the next Annual Meeting of Shareholders, 4, to adopt the nonbinding advisory resolution on our approach to executive compensation, 5 to vote on shareholder proposals received from a shareholder and 6, consider any other matters that may properly come before the meeting. I'll now turn the floor over to the company's Secretary for further information on this meeting.

Thank you, Mr. Chairman. We have deemed an affidavit from our transact Computershare with respect to the mailing of the notice of meeting stating as of March 3, 2024. There's a notice of meeting together with the proxy circular forms of proxy and notice of availability of meeting materials were distributed to all of our shareholders of record as of March 4, '24. This affidavit is available for review by any shareholder and will be attached to the minutes of this meeting. A copy of the notice of meeting, proxy form and circular are also available on Bombardier's website and on SEDAR. I'd like to point out that a simple majority of the votes cast by holders of Class A multiple voting shares and Class B subordinate voting shares, voting together will constitute approval of each of these motions on the agenda. Please also note that to facilitate the meeting, we have a certain employee shareholders of Bombardier to move and second the formal motion. The Chairman will recognize visuals at the appropriate time.

Thank you, Mr. Secretary. If there are no objections, Mr. Steve Gilbert and Ms. Claire Jira of Computershare acts as scrutineers for this meeting. Mr. Chairman, according to the report given to me by the scrutineers at the beginning of the meeting, they confirm that we have the quorum required to hold this meeting. Thank you, Mr. Secretary. I would ask you to place the scrutineers' report in the meeting file. I therefore declare this annual meeting duly and validly convened and constituted. I also request that a copy of the scrutineers' report on quorum be attached to the minutes of this meeting. As we do every year, we encourage you to vote now. If you have already voted, you don't need to do anything. However, any registered shareholder or duly appointed proxy holder who has not yet voted or who wishes to change his or her vote, we'll be able to vote directly on the live webcast platform. I now declare the ballot open. You will see the voting tab on the webcast platform, along with all meeting motions. I'd like to remind you that nonregistered shareholders who have not duly appointed themselves as proxy holders and who have not registered with our transfer agent, Computershare, will not be able to exercise their right to vote during this meeting or ask any questions at this meeting. You may, however, listen to the meeting as a guest. I now invite the Secretary to review the voting procedure with me. Thank you. Those of you who are registered shareholders or proxy holders entitled to vote at the meeting may access the proposals in both Voting on all proposals and motions will be possible at any time during the formal portion of this meeting. You can therefore vote immediately as each motion is processed or wait to vote on all motions before the end of the ballot. Votes can be changed at any time before the ballot closes. All votes represented by registered shareholders or proxy holders entitled to vote at the meeting will be counted and added to those received by proxy, and the preliminary voting results will be presented on screen at the end of the formal portion of the meeting. A report on the final voting results will be available on our platform and the report on the final outcome of the election of directors will be issued by press release. If you have already voted by proxy prior to the meeting, you do not need to vote again as your vote is already included in the total number of proxies this year to date. However, if you wish to change your vote, and you are the person named as proxies in the submitted proxy, the virtual vote will automatically cancel any previously completed and submitted proxy. The first item on our agenda for today is the presentation of the company's annual consolidated financial statements for the year ended December 31, 2023, and the auditor's report. The financial statements and the auditor's report have been filed on SEDAR and on Bombardier's website. So I will not proceed by reading them. Mr. Secretary, please attach a copy of the documents through the minutes of this meeting. Mr. Masluch do we have any questions with regards to this motion?

Mr. Chair, I confirm that we have not received any questions on this item.

The next item on the agenda is the appointment of Ernst & Young as the company's independent auditor until the next Annual Meeting of Shareholders or until a successor is appointed and to authorize the directors to set the auditor's remuneration. May I have a motion to appoint Ernst & Young as the company's independent auditors until the next annual meeting of shareholders or until a successor is appointed and to authorize the directors to set the auditor's remuneration.

Mr. Chen, my name is [indiscernible], and I am a shareholder of Bombardier. I move that Ernst & Young be appointed independent auditors of Bombardier until the next annual meeting or until a successor is appointed and that the directors of Bombardier afford to fix their remuneration.

Thank you. Do we have a supporter for this motion?

Mr. Chairman, my name is Melissa Pat, and I am a shareholder of Bombardier. I second this motion.

Mr. Masluch have we received any questions in connection with this motion?

Mr. Chair, I confirm that we have not received any questions with regards to this motion.

Shareholders can now vote on this motion. Shareholders and proxy holders please vote on this motion for a one-year term of Ernst & Young. And with regards to authorization to be able to authorize the directors of Bombardier to fix their remuneration, remember that if you've not yet sensing your vote via the proxy form and you outwit change your vote, there is no need to vote via the cast platform as you have already been taken into account. Let's now move on to the election of Bombardier's Directors. The Board of Directors of Bombardier on the recommendation of the Corporate Governance and Nominating Committee proposes the election of 13 directors for the current year. May I now have a proposal for the election of these 13 candidates as described in the proxy circular.

My name is [indiscernible] and I am a shareholder of Bombardier. I now that each of the following 13 persons be elected as a Director of Bombardier until the next Annual Meeting of Shareholders of the company or until his or her successor is appointed. Pierre Beaudoin, Joanne Bissonnette, Charles Bombardie, Rose Damen, Diane Fontaine, Ji-Xun Foo, Diane Giard, Antony R. Graham, Éric Martel, Douglas R. Oberhelman, Melinda Rogers-Hixon, Eric Sprunk and Antony N. Tyler.

Does anyone wish to support this motion.

Mr. Chairman, my name is Melissa Pat. I'm a shareholder of Bombardier and I support and second this motion.

The motion has been duly moved and seconded. Mr. Masluch, do we have any questions.

Mr. Chairman, we have not received any questions with regards to this motion.

Thank you. Shareholders are asked to vote on the election of each of the 13 candidates proposed for election to the Board of Directors. I would like the secretary to remind us of the voting procedure.

You can now vote on the election of each of the 13 candidates. The name of the candidate is listed on the webcast platform. If you have already sent in your vote via the proxy form and do not wish to change your vote, it is not necessary to vote via the webcast platform as your vote has already been taken into account.

The agenda now calls for shareholders and their proxies to vote on the adoption of the nonbinding resolution on Bombardier's approach to executive compensation. You can read the text of the resolution Section 2 of the 2024 management proxy circular. May I have a motion for the adoption of this motion.

Mr. Chair, my name is [indiscernible], I am a shareholder of Bombardier. I move the adoption of this nonbinding approach to Bombardier when it comes to compensation for upper management in Section 2 of the proxy circular in 2024.

A shareholder or a proxy holder would anybody like to second day?

Ms. Chair, my name is Melissa Pat. I am a shareholder of Bombardier, and I second this motion.

The motion has been duly made and seconded. Mr. Masluch, have we received any questions in connection with this motion?

Mr. Chair, I confirm that we have not received any questions relating to this motion.

Thank you. I'd like to remind you that this is an advisory resolution and that the results of the vote will not be binding on Bombardier's Board of Directors. However, the members of human resources and compensation committee will take it into account in their future review. I now invite shareholders to vote on this motion if they have not already done so. I would now like to ask the Secretary of the meeting to remind you of the voting procedure.

I invite you to vote on the nonbinding resolution on Bombardier's approach to a speculative compensation. Please remember that if you have already submitted your vote via proxy form and do not wish to change or vote, there is no need to vote via the webcast platform as your vote has already been taken into account.

This year, Bombardier received 5 shareholder motions from [indiscernible] MEDAC. The full text of the 5 shareholder motions is reproduced in appendix B of the circular to the other with the Board of Directors responses. The Board of Directors of Bombardier recommends that you reject the 5 motions submitted for a vote for the reasons set out in respect there of Schedule B in a circular. And now let's invite the MEDAC representative to briefly present these motions coming from MEDAC. [ Mr. Luis Gagnon ], can you please present your motions.

Hello, Mr. Chairman, Luis Gagnon for representing the MEDAC. We are shareholders of the company. And not only do we have a proxy to vote, but we also have a proxy for one of our members. So I will consider with your approval, of course, that these motions are duly tabled and approved. So we have submitted 5 motions to the company this year, and we just wanted to understand that we have not been able to agree with the company on any of them. Everything is submitted to a vote, given that we haven't been able to agree. We did expect that we could agree on some of these motions with the company. And for some of these motions, we agreed with all other companies. So incentive compensates for employees, number one, we determined that the company has a similar policy. We would have liked to have more details on the policy as to how long it's been there, the percentage of incentive compensation is the percentage stable. Is it going to increase or…? There's a lot of information that we didn't get in your response. So that's why we arboted that motion. Obviously, we invite all shareholders to support this motion. The other motions I'll move over there very quickly because the vote is open most #2 annual meeting in person. This is the most important motion this year for all companies to whom we sent proposals for the first time since I've been at the MEDAC for more than 17 years. We got the vote on that. It's Metro, Air Canada, CIBC, Bank of Montreal. I don't understand why this company does not want to have any meetings in person. Obviously, you could say that your virtual meeting allows to replicate the participation of people in person. You say in your response, you can look to the left to the right behind you, there's no shareholder that I can speak to. I cannot see who's in line to speak at the mic. The company can do things virtually and they would not be allowed to do in person, virtual meeting allow to deal with topics that the company needs to look at. And the virtual meetings are in place and all the documents and everything could have been sent by mail and the vote could have happened by May. So we deplore the absence of in-person meetings, and we believe it from them will have to do this next year. So we invite shareholders to support this and move this motion. And when we have various pension groups, big investors and in state institutions supported this meeting so this motion why not you? And for the environmental good governance, this is good governance and best practices. The most that we have did not criticize the environmental policies that are the things that are already in place. It's a set tool. The company in its response says that it reduces dialogue with shareholders, we completely disagree. It increases dialogue and at last shareholders to be able to express themselves. We reject the argument relative to the questions of governance and the consulting vote decisions have already been put in place with regards to compensation. So it's a good thing to have a consultation involved on compensation. Why not deal with that with regards to the environmental policy of the company and motion reform with regards to the closure of languages bookend by directors, which we act last year and this year is the languages spoken by leaders. What we are reading in your response, you've responded with several sentences, you talked about Frank. All we want to do is to disclose with the language spoken is the only company out to do this, others have and where there has been a vote, they decided to disclose this. So obviously, there is certain exceptions, but we don't understand why you want to hide the languages spoken by directors and leaders. And we invite all employees to support this motion. In fact, while the 2 motions. In fact, there are some big institutional investors who do support it. And if you see this, we would expect that using the same that all other companies have done. So there we are, thank you for the time that you have given to me. I'd like to make a brief comment on the fact that the Internet voting form not only has numbers but it would be important to have a motion and a description of the motion so that people vote for the topics as opposed to numbers, currently, they're disliking for numbers of their numbers. Generally speaking, this is not how that happens. So that would be nice if that was changed. And so thank you very much for having contact.

Thank you, Ms. Gagnon, for your presence and your interest in Bombardier's good governance. Mr. Gagnon we understand that you are also acting as a proxy holder for another shareholder to move and second this motion.

I'm a proxy holder for Mr. Zack [indiscernible].

Thank you very much. Mr. Masluch do we have any questions with regards to these motions.

Mr. Chairman, we confirm that we have received no questions connected with these motions.

Thank you very much. Now shareholders are invited to vote on these 5 motions if that has not already been done. Again, I ask the Secretary to hold the vote.

I invite you to express yourself on these 5 motions. Remember that if you've already sent your vote via the proxy and if you do not want to change a vote, you do not need to vote via the webcast platform as your vote has already been taken into account. Having covered all the items on the agenda, we invite each to vote if this has not yet and done. We will close the ballot in 1 minute.

[Interpreted] Let the voters now close. Scrutineers are providing us with preliminary results. The Ernst & Young mandate has been rented a majority of votes were cast in favor of the election of each of the nominees to the Board. The majority of votes were cast in favor of the nonbinding resolution on Bombardier's approach to executive compensation. And in the end, a majority voted against the 5 motions put forward by the MEDAC. A report on the final voting results will be available on SEDAR. Now that we have dealt with all the items on the agenda, I propose to close the formal portion of the meeting before moving on to speak by Bombardier's President and CEO, Mr. Éric Martel, followed by a question-and-answer period. Given that there is no further business to come before the meeting, I will ask to adjourn the meeting.

Mr. Chairman, my name is [indiscernible], I'm a shareholder of Bombardier I move that this meeting be adjourned.

Does anyone support this motion?

Mr. Chairman, my name is [ Melissa Pat ] and I am a shareholder of Bombardier, I support this motion.

Therefore, I declare the meeting closed. I now invite Bombardier's President and CEO, Mr. Éric Martel to take the floor to share his vision and the company's objectives.

[Interpreted] Hello and good morning. At this time of optimism and renewal for Bombardier, it is my pleasure to share with you my perspective on the company's recent results and to talk to you about what lies ahead. After an excellent year in 2023, in which Bombardier reached new heights in revenues and profitability. The management team and I remain fully committed to achieving our financial goals, building lasting relationships with our customers and being a world-class employer. Before I go any further, I'd like to tell you about yesterday's historic announcement of Bombardier's new corporate identity. In recent years, we have changed ourselves in terms of our core business, our employee engagement and our balance sheet, the time had come to transform and change our corporate brand. If you have not yet seen it, dear shareholders, let me introduce you to Bombardier's new brand identity. Reinforces our successful shift towards business adhesion and propel the company forward. We have a beautiful new logo that introduces the symbol we call the MACH. It's forward-facing shape that represent air smoothing flowing over the wing of a jet. For those who know Learjet logos well, you may also spot a similarity. It's a way for us to celebrate our heritage. Of course, our heritage also remains deeply rooted in the name of Bombardier itself. We are very proud of this new visual identity and the way it represents our unique character. Our new brand is truly where Bombardier is today. We have an industry-leading portfolio of business aircraft. Our products sell well, including in the market related to national and casual defense. We have over 5,000 aircraft flying all over the world and an extensive service network that is taking up a growing service market. We have strong links and connections with our customers, and we are leaders in eco responsible aviation. We have more than 18,000 team members around the world who are the best at what they do and who are proud to be part of Bombardier's evolution. I demonstrate the progress we've made together since 2020. Year after year, we are building on our momentum. In 2023, we reached $8 billion in revenues, and we established a step change in profitability. We have also been diligent in our efforts to deleverage the company, and we continue to be opportunistic on this front. The strength of our balance sheet is truly impressive. And I want to thank our teams and their hard work to get this done. [Interpreted] This year in 2024, we released our first quarter financial results early this morning, and I am pleased to report that the year is off to a good start. Here are some highlights from the first quarter 2024. Growth in our order book or so increase in orders, a very favorable ratio of new orders to revenues and improving our margin. 2024 we're going to focus on maintaining a strong multiyear backlog as well as continuing to increase our services revenues. We're also looking to build on our momentum in defense and to grow our participation in pre-owned market. And of course, we're busy shipping Bombardier strategy for the second half of the decade. I'll go into more details about our plans beyond 2025 on Bombardier's Investor Day, which is taking place on May 1. [Interpreted] In the years ahead, sustainability will remain a key priority. A priority that is essential to our continued success. Bombardier is already a leader in this field, and we are committed to business aviation goal of achieving net 0 emissions by 2050. We are a strong advocate of the adoption of sustainable aviation fuel and cover all our flight operations with a 30% blend of sustainable fuel based on a book and claim system. Today, Bombardier is the only business jet manufacturer in the world to make public the environmental impact of all its aircraft through environmental product declarations made EcoJet Research project aims to reduce emissions by up to 50% through a combination of aerodynamics, propulsion and other improvements. You can learn more about our initiatives in Bombardier's environmental, social and governance report that will be published next month. The future is extremely bright. Bombardier is moving through this decade with the world's big performing business set, exceptional customer service and team members who have more pride than anyone in the industry. With the plan that we've put in place and the people we have with us on this journey, I could not be more optimistic. Ladies and gentlemen, thank you for joining us here today. It is a real pleasure to talk about Bombardier's multiple achievements. Thanks for joining us today. It's just a true pleasure to talk about Bombardier's many achievements.

[Interpreted] Thank you, Eric. We would now be pleased to answer your questions and get any comments from shareholders. You can send your question by clicking on the messages tab on the webcast or the platform or by telephone as explained at the beginning of the meeting. As a reminder, questions must relate to Bombardier's business or activities and not be of a personal nature. I will now turn the floor over to Mr. Masluch.

Thank you, Mr. Chair. And the first question comes from the MEDAC, where can we get information on previous minutes are they on start minutes from previous meetings?

Hello, Mr. Gagnon, technically, the minutes are not available on SEDAR. This said, we could provide a copy to any interested shareholder. You simply need to communicate with our investor services department, and they will be happy to send you. Mr. Masluch, thank you. Mr. Masluch, we will have another question.

Mr. Chairman, I confirm that we have a question from a shareholder, Mr. [indiscernible]. Mr. Ji-Xun Foo had a 67% attendance record at Board meetings during 2023 and that the Board reviewed Mr. Foo's attendance record for 2023 and has no concerns about continuing on the Board. It goes without saying that board attendance is critical to the good governance and most large publicly listed companies have a minimum set of governance policies, which include policies applicable to Board members, and those policies state clear exceptions with respect to Board meeting attendance. I have always believed that Mr. Foo's contributions have been positive to the Board. However, can the Chair please elaborate on how the Board came to the conclusion that the 67% 2023 attendance record still contributed toward good governance for the company.

Well, thank you for your question. And we do agree with you that attendance is very important to the good governance of the company. We always take into consideration other reasons why Mr. Foo was or was not able to attend. And given that, we decided that it was appropriate to ask Mr. Foo to stand for reelection. That being said, we know that this percentage of attendance needs to go up.

[Interpreted] Mr. Chair I confirm that we do not have any other questions. So the question period is now over. On behalf of the company, I would like to thank you for attending this meeting and for your continued commitment to Bombardier. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]