Bombardier Inc. (BBDB) Earnings Call Transcript & Summary

[Interpreted] Good morning, ladies and gentlemen. My name is Pierre Beaudoin. I'm the Chairman of the Board of Bombardier. I would like to welcome you to Bombardier's 2025 Annual Meeting of Shareholders. As you have seen over the past few years, Bombardier is as resilient as it is innovative. We've come a long way since 2020. After refocusing our activities on business aviation, we diversified our revenues within the industry. Today, our service and defense activities are booming, and we're preparing for the entry into service of our Global 8000 aircraft, which will help promote Canadian ingenuity worldwide. While Bombardier's momentum is excellent, it's impossible to ignore the current geopolitical situation, which is creating uncertainty for many Canadian industries. There are many things that we are unable to control. But what I can say with complete confidence is that today's Bombardier is solid. With a flexible and proactive management team, Bombardier's future is extremely bright. Our strength is in our relationships, with our people, our customers and with several governments around the world. It's a global philosophy, just like our long-range aircraft. And here, in our country, we have an important role to play in creating a stronger Canada. Our meeting will be conducted mainly in French, but I would 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, and welcome to Bombardier's 2025 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 in either French or English. The stream is on the right of the platform. To the left of this section, you can choose to listen to the meeting in French, in English or stay in the original stream without any translation. On behalf of our Board of Directors and our management team, we are delighted to count you among our shareholders. Thank you for your continued support. Let me now begin the meeting by introducing the company's senior executives who are with me here today: Éric Martel, President and CEO; Bart Demosky, Executive Vice President and Chief Financial Officer; Pierre Gagnon, Senior Vice President, Legal Affairs and Corporate Secretary. And I would like to now invite Mr. Pierre Gagnon to come and give you some instructions so that you can fully appreciate and participate in this meeting.

[Interpreted] Thank you, Mr. Chairman. I'd like to remind all participants and guests that you must be connected to the internet at all times to not miss anything, if necessary, to be able to ask questions and vote at appropriate times. I remind you that only registered shareholders and duly appointed proxyholders may ask questions or vote at this meeting. The left-hand section of the webcast is in place to help you exercise your shareholder rights, i.e., ask questions and vote. Over the course of the meeting, I invite you to refer to the tabs to the left of your screen. The Home tab displays information and instructions on the meeting, including how to ask questions and vote. The Messages tab allows you to ask questions by chat or by phone. The Votes tab, which will appear when voting opens, will allow you to see the proposals and to vote on each of them. And the Documents tab allows you to consult documents related to the meeting. There is a delay in the webcast of the meeting. Therefore, it's important that registered shareholders and duly appointed proxyholders submit their questions as soon as possible so that we can, in fact, answer at the appropriate time during the meeting. If you wish to ask a question, you can click on the Messages tab on the webcast platform. It's also possible to ask questions verbally by telephone. To ask a question verbally, the registered shareholder must submit his or her phone number using the dialog box provided in your Messages tab to be able to be connected. Your phone number will not be shared with other people attending the meeting. Please read the instructions under the Home tab before submitting your question. In particular, please indicate whether your question is related to a proposal that is part of the official portion of the meeting or if it is of a more general nature. We will attempt to address questions that relate directly to proposals on the agenda at the appropriate time during the meeting. More general questions will be saved for the question-and-answer period following the adjournment of the meeting. Once again, for shareholders who so wish, I invite you to submit your questions as of now. As always, questions will or should relate to Bombardier's business activities. We will not be answering questions that are not related to business or affairs of Bombardier, that relate to information about Bombardier that is not of the public domain, that are repetitive or have already been asked by other shareholders or derogatory to individuals or otherwise offensive to third-parties relating to personal grievances or are irregular or inappropriate or are asked by shareholders for personal or business benefit. Our webcast platform provider will keep a complete record of all the questions received. If we cannot answer, we will endeavor to answer after the meeting, and all questions and answers will be available on the website and available for a week after they have been posted. Before proceeding, I'd like to draw your attention to the warnings and cautions that appear on the screen. Over the course of the presentation, including during the President and CEO's presentation, we may make forecasts or forward-looking statements concerning future events or about the company's future financial performance. A number of assumptions have been made in the preparation of forward-looking statements, and we wish to point out 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 cautionary note regarding forward-looking statements in the company's financial report for the 3-month period ending March 31, 2025. I'm making the statement on behalf of myself and on behalf of each of the shareholders, whose remarks today -- or stakeholders who are making comments today. In addition, during the presentation -- via the presentation, certain financial measures presented are non-GAAP financial measures. For further details, shareholders are invited to consult the section, Non-GAAP Financial Measures and Other Financial Measures, in the company's financial report for the 3 months' period ended March 31, 2025. And finally, this webcast will be posted on our website for a certain amount of time after the meeting.

Thank you, Mr. Gagnon. I will act as Chairman for this meeting and Mr. Gagnon as the Secretary. As last year, we will be adding a moderator whose task will be to inform the meeting of questions received online. Mr. Mark Masluch, Senior Director of Communications, will act as moderator for requests, questions and comments submitted via the meeting's broadcast platform. The subject on the agenda for the meeting today are as follows: number one, receiving our consolidated financial statements for the year ended December 31, 2024, and the auditor's report thereon; two, to appoint Ernst & Young as the company's independent auditors until the next Annual Meeting of Shareholders and to authorize the directors to fix their remuneration; three, to elect each of the nominees for election to our Board of Directors until the next Annual Meeting of Shareholders; four, adopting a nonbinding advisory resolution on our approach to executive compensation; five, voting on shareholder proposals received from a shareholder; and six, considering any other matters that may appear before the meeting. I would now like to turn the floor over to the Company Secretary for further information on this meeting.

[Interpreted] Mr. Chairman, we have obtained from our transfer agent, Computershare, an affidavit dated April 9, 2025, confirming that the notice of meeting accompanied by the proxy circular, the forms of proxy and the notice of availability of meeting materials were distributed to our shareholders of record as of March 3, 2025. 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 forms and circular are also available on Bombardier's website and on SEDAR+. I would 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 the proposals of the agenda. Please note as well that to facilitate the meeting, we have asked certain employee shareholders of Bombardier to present and second the formal proposals. The Chairman will recognize these people at the appropriate time.

[Interpreted] Thank you, Mr. Secretary. If there are no objections, Mr. Steve Gilbert and Ms. Carine Laberge of Computershare will act as Scrutineers for this meeting.

[Interpreted] Mr. Chair, according to the report given to me by the Scrutineers at the beginning of the meeting, we have confirmed that we have quorum required to hold this meeting.

[Interpreted] Thank you, Mr. Secretary. I would now ask you to table the Scrutineers' report.

[Interpreted] 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.

[Interpreted] As we do every year, we encourage you to vote now. If you have already voted, you do not need to do anything. This said, any registered shareholder or a duly appointed proxyholder who has not yet voted or who wishes to change his or her vote will be able to vote directly on the live webcast platform. I now declare the ballots open. You will see the Voting tab on the webcast platform along with all meeting proposals. I'd like to remind you that nonregistered shareholders who have not duly appointed themselves as proxyholders and who have not registered with our transfer agent, Computershare, will not be able to vote or ask 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 you.

[Interpreted] Those of you who are registered shareholders or proxies entitled to vote at the meeting may access the proposals and vote. Voting on all proposals will be possible at any time during the formal portion of the meeting. You can, therefore, vote immediately as and when you wish or you can wait and vote before closing the ballot. Votes can be changed at any time before the ballot closes. All votes represented by registered shareholders or proxyholders 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 the screen at the end of the formal portion of the meeting. A report on the final voting results will be available on SEDAR+, and a report on the final outcome of the election of directors will be issued by press release. If you have already voted by proxy before this meeting, you do not need to vote again today because your vote is already included in the total number of proxies received to date. They said if you wish to change your vote and you are the person designated as proxy in the submitted proxy, the virtual vote will automatically cancel any previously completed and submitted proxy vote.

[Interpreted] The first item on the agenda is the presentation of the company's annual consolidated financial statements for the year ended December 31, 2024, and the auditor's report. The financial statements and the auditor's report have been filed on SEDAR+ and on Bombardier's website. Therefore, I will not be reading them. Mr. Secretary, please attach a copy of these documents to the minutes of this meeting. Mr. Masluch, do we have any questions with regards to this proposal?

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

[Interpreted] The next item on the agenda is the appointment of 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. 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 fix the auditor's remuneration?

[Interpreted] Mr. Chairman, my name is [ Julie Jacob ], and I'm a shareholder of Bombardier. I move that Ernst & Young be appointed as independent auditors of Bombardier until the next annual meeting or until a successor is appointed and that the directors of Bombardier be authorized to fix their remuneration.

[Interpreted] Thank you. Do we have someone who seconds this proposal?

Mr. Chairman, my name is [ Melissa Tate ]. I'm a shareholder of Bombardier. I second this proposal.

[Interpreted] Mr. Masluch, do we have any questions?

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

[Interpreted] Shareholders can now vote on this proposal. Shareholders and others to vote on the appointment of Ernst & Young as independent auditors of Bombardier for a term expiring at the close of the next Annual Meeting of Shareholders of the Company and authorizing the directors to fix their remuneration. If you have already sent your vote in via the proxy form and you do not wish to change your vote, you do not need to vote on the web platform because your vote is already taken into consideration. We will now proceed with 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?

[Interpreted] Mr. Chairman, my name is [ Julie Jacob ], and I'm a shareholder of Bombardier. I move that each of the following 13 people 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 Bombardier, Rose Damen, Bettina Fetzer, Diane Fontaine, Diane Giard, Anthony Graham, Éric Martel, Douglas Oberhelman, Melinda Rogers-Hixson, Allen Smith and Antony Tyler.

[Interpreted] Does anyone wish to support this proposal?

[Interpreted] Mr. Chairman, my name is [ Melissa Tate ], and I am a shareholder of Bombardier. I support this proposal.

[Interpreted] This proposal has been duly made and seconded. Mr. Masluch, do we have any questions connected with this proposal?

[Interpreted] Mr. Chairman, we have not received any questions relating to this proposal.

[Interpreted] Thank you. Shareholders are asked to vote on election of each of the 13 candidates posted for election to the Board of Directors. I would like to ask the Secretary of the meeting to remind us of the voting procedure.

[Interpreted] You can now vote on the election of each of these 13 candidates. The names of the 13 candidates are listed on the webcast platform. If you've already sent your vote via the proxy form and do not wish to change your vote, there is no need to vote via the webcast platform as your vote is already taken into consideration.

[Interpreted] The agenda now calls for shareholders or their proxies to vote on the adoption of the nonbinding resolution relative to Bombardier's approach to executive compensation. You can read the text of this resolution in Section 2 of the 2025 Management Proxy Circular. May I have a proposal for the adoption of this resolution?

[Interpreted] Mr. Chairman, my name is [ Julie Jacob ], and I'm a shareholder of Bombardier. I move the adoption of the nonbinding resolution on Bombardier's approach to executive compensation in Section 2 of the 2025 Management Proxy Circular.

[Interpreted] Any shareholder or proxyholder wish to support this proposal?

[Interpreted] Mr. Chairman, my name is [ Mr. Tate ], and I'm a shareholder of Bombardier. I support this proposal.

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

[Interpreted] Mr. Chairman, I confirm that we have not received any questions relating to this proposal.

[Interpreted] 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 to Bombardier's Board of Directors. This said, the members of the Human Resources and Compensation Committee will take this into consideration following a future review. I now invite shareholders to vote if this has not yet been done and would like to ask the Secretary to remind us of the voting procedure.

[Interpreted] I invite you to vote on the nonbinding resolution concerning Bombardier's approach on the executive compensation. Please remember that if you have already submitted your vote via the proxy form and you do not wish to change your vote, it is not necessary to vote again on the webcast. Your vote has already been taken into consideration.

[Interpreted] This year, Bombardier received 4 shareholder proposals submitted by the Mouvement d’éducation et de défense des actionnaires, the MÉDAC. The full text of the 4 shareholder proposals is in Appendix B of the circular together with the Board of Directors' answers. Following discussions with MÉDAC, it was agreed not to put proposal #4 forward to the vote. The Board of Directors of Bombardier recommends that you reject the 3 other proposals submitted for a vote for the reasons set out in respect of those proposals in Schedule B of the circular. I would like to invite a representative of the MÉDAC to come and give a brief presentation of MÉDAC's proposals. I understand that Mr. Willie Gagnon will be doing this.

[Interpreted] Yes. Mr. Chair, Willie Gagnon on the phone. Can you hear me?

[Interpreted] Yes, we can hear you.

[Interpreted] Okay. Great. Thank you. With us, we have Mr. John Chambers who is a proxyholder, who is there to second the proposals. I don't know if you want to hear from him at this time.

[Interpreted] Yes. Go ahead.

[Interpreted] John Chambers is my name, proxyholder. And I support the 3 MÉDAC proposals.

[Interpreted] Thank you. Okay. Mr. Chair, we have -- I'm sorry, go ahead.

[Interpreted] No, go ahead. Go ahead. We are listening to you.

[Interpreted] Okay. Thank you. As you said, we sent 4 proposals to Bombardier. This year, we have agreed on the last one. First of all, we sent a proposal requesting that Directors' environmental and climate change competencies be in the competency grid on Page 39 of the circular. In your answer, you say with the publication of the circular that you improved the competency grid and that you are looking for corporate social responsibility. And yes, we have a line on social responsibility -- corporate social responsibility. And it's important to talk about the challenges connected with the environment. Therefore, if we look at the competency grid, nowhere is there any information on the environment or the climate. We would have preferred to see a line on that as is the practice in a number of other companies. So we invite shareholders to support this proposal, Proposal #1. Proposal #2, the disclosure of languages mastered by employees. We believe that given that the company has a French certificate, it would have been something easy in Quebec, necessarily the company requires the working languages. And these should be there as well since you've got the French language certificate. But not only that, you should have this on your list given that you hire people who need to master a language, which is -- whether it be French or English. A number of companies have accepted to disclose this information. And we invite shareholders to vote on this proposal. We are aware that we will probably not get good results given what we've gotten elsewhere and given that there is a multiple voting right at the Bombardier. But I ask shareholders to make a decision in light of a legit survey that came out recently, which reveals that most of the population is in favor of this measure. So we believe that, that all of the shareholders should support it. And that's what we invite them to do. Proposal #3, in-person annual meetings. Last year, we submitted the same proposal, which got about 16% support, where they consider the existence of the right to vote. We understand that a number of shareholders are in favor of this. Unfortunately, today, it's unfortunate that I can't see my face at the meeting. I see yours though, when you speak. Therefore, you sitting in a location, which seems to be the Lumi studios where I was Tuesday and where I will be this afternoon. So you could have asked Lumi to put some chairs in the room so that shareholders be there with you where you are in-person. We believe that meetings should be held in-person. You say in your answer that virtual meetings increases accessibility. But in-person doesn't mean that you can't do virtual at the same time. And so you are decreasing accessibility. There are a number of companies who have come back to in-person meetings. Why not you? There are even companies who have multiple voting shares like Power Corporation, who does their meeting in-person. We don't understand why the company does not want to come back to in-person meetings. And so we encourage shareholders to support this proposal. And when it comes to the proposal that we agreed upon, Proposal #4, so requesting that you sign a voluntary code of conduct when it comes to Generative AI systems. Federally, there is a question around AI and standardizing all of this in the rules with regards to this technology are starting to come out. And you say that based on your point of view with regards to AI will be solidly stated. You continue to review policies. And when it comes to AI, it would be a good idea to harmonize policies in the future. The company has committed to assessing that possibility in the future and adhering to the code. And so the company has not said no. We are looking forward to see what will happen next year before we send the same proposal if we feel like it's going to be necessary. So we will not be proceeding to a vote around that. Thank you for your time, Mr. Chairman. And again, I reiterate my criticism with regards to in-person meetings. It would be great to be able to come back to in-person. I would be happy to attend if you and when that happens.

[Interpreted] Thank you, Mr. Gagnon, for your comments and your interest in good governance of Bombardier. Mr. Masluch, have we received any questions in connection with these proposals?

[Interpreted] Mr. Chairman, I confirm that we have not received any questions regarding these proposals.

[Interpreted] Thank you. I'd now like to invite shareholders to vote on the 3 proposals if that has not already been done. I again ask the Secretary to hold the vote.

[Interpreted] I invite you to vote on the 3 proposals. As previously mentioned, don't forget that if you have already sent in your vote with your proxy, then you don't have to vote again unless you wish to change your vote. Your vote has already been taken into account.

[Interpreted] Now that we've covered all items on the agenda, we invite you to vote if that has not yet been done. We'll be closing the ballot in a minute. [Voting]

[Interpreted] I confirm the ballot is now closed. The voting period is now closed. Scrutineers can provide the following preliminary results. Ernst & Young, their mandate has been renewed. A majority of votes were cast in favor of the election of each of the nominees to the Board of Directors. A majority of votes were cast in favor of the nonbinding resolution on Bombardier's approach to executive compensation. And finally, the majority voted against the 3 proposals put forward by the MÉDAC. 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 move that we close the formal portion of the meeting before turning to an address by Bombardier's President and CEO, Mr. Éric Martel, followed by a question-and-answer period. Given that there are no other questions that need to be submitted to the meeting, I will ask for a motion to close the meeting.

[Interpreted] Mr. Chairman. My name is [ Julie Jacob ], and I'm a shareholder of Bombardier. I move that this meeting be adjourned.

[Interpreted] Do we have a seconder?

[Interpreted] Mr. Chairman, my name is [ Melissa Tate ], and I'm a shareholder of Bombardier. I second this motion.

[Interpreted] I, therefore, declare the meeting closed. I would like to invite Bombardier's President and CEO, Mr. Éric Martel, to take the floor to share his vision of the company's objectives.

[Interpreted] Good day to all. Dear shareholders, thank you for joining us here today. It's a pleasure to update you on Bombardier's evolution and on our company's very promising future. Dear shareholders, thank you for joining us today. It is a pleasure to speak to you about Bombardier's evolution and the bright future ahead of -- for our company. This morning, we announced our financial results for the first quarter of 2025. But before commenting on these results, let me take a few moments to look back at our performance in 2024. For the fourth consecutive year, Bombardier achieved excellent financial results. Our sales were solid. We increased our profitability, and we reduced our debt. Even more importantly, we achieved our $2 billion service revenue target a full year ahead of schedule. We also continued to develop our Defense business, which is another strategic pillar for Bombardier. Overall, we closed 2024 as a more resilient company and in a stronger financial position. I am sure you follow the evolution of our share price, which has been remarkable. In the fall of last year, Bombardier was listed one of the Toronto Stock Exchange Annual TSX30 ranking of top-performing shares for the second year in a row. On that, on both Moody's and S&P Global Ratings, upgraded our credit ratings again in 2024, while Moody's also revised its outlook on our company from stable to positive just last week. [Interpreted] Just a few words now with regards to the beginning of 2025 and our latest financial results. We can all agree that this quarter has been turbulent for a number of businesses. That's why Bombardier's performance is even more impressive. Our revenues and adjusted net income were higher than at the same time last year and our profit margins have increased. We also use less cash as a result. Seeing the excellent results on this slide, I would like to take a moment to thank our employees for performing at such a high level during a period of uncertainty. We have 18,000 team members in Canada, in the United States, in Mexico and around the world, all with different responsibilities. But we are united as we focus on what we can control by maintaining a strong work ethics and in supporting each other. I was very happy today to confirm a strong guidance for 2025. We expect a meaningful increase in revenues, profitability and free cash flow versus 2024, all of which are in line with the journey we began in 2021. We expect to deliver more than 150 aircraft this year and to reach revenue of more than $9.25 billion. We expect our adjusted EBITDA to be greater than $1.55 billion and our adjusted EBIT to surpass $1 billion. Finally, we expect our free cash flow to reach between $500 million and $800 million. These targets also reflect a disciplined approach to the market, which, of course, has undergone a few ups and downs. [Interpreted] I mentioned the uncertainty and the importance of focusing on what we can control. But I would also like to be clear, in this context, we have an extraordinary opportunity here for the Canadian industry and for Bombardier. We have incredible strategic expertise, as the geopolitical landscape evolves. Countries like Canada can contribute to security, not only of our own country, but contribute to the security of countries around the world. Bombardier Defense has much to offer to governments seeking to secure and monitor their borders, for example. These are capacities that we are very proud of. And we see enormous potential for Bombardier Defense to continue to grow. In 2025 and beyond, I am extremely optimistic about Bombardier's future. Later this year, we will debut our newest business jet, the Global 8000, which is the fastest civilian jet since the Concorde. This aircraft is a feat of engineering that no one in the world has been able to match. We have a fantastic portfolio of aircraft that generate strong sales around the world. We're known for our family-like approach, which combined with the exceptional performance of our product sets up apart from everyone else. We have a large award-winning service network that generates a growing proportion of our revenue. We will continue to strategically expand this network, boarding capacity and also new services. Bombardier Defense is in full expansion, and our people are as proud as they've ever been. I had the opportunity to serve as President and CEO of Bombardier for the past 5 years, and it has been incredibly gratifying to see the hard work done by our employees pay off as Bombardier becomes stronger and more diversified. From my perspective, not only we'll be able to weather current storms, but we will also be able to leverage our talents and expertise and help Canada grow stronger. Thank you.

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

[Interpreted] Thank you, Mr. Chairman. The first comment comes from the MÉDAC. As every year, it would be a good practice to hold the question period during the meeting rather than after the formal ending. In that case, questions and answers need to be added to the minutes if we do it that way and that adds to the credibility of the exercise.

[Interpreted] Thank you for your comments. Any other questions?

[Interpreted] Mr. Chairman, I confirm that we do not have any other questions.

[Interpreted] So the question period is now over. On behalf of the company, I thank you for attending this meeting. Thank you for your continued commitment to Bombardier. Thank you, and good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]