This article first appeared on GuruFocus .
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Total Revenue:$2.4 billion, up 3% year-over-year, driven by higher pricing and continued services growth.
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Services Revenue:Record $701 million, up 19% year-over-year; first time quarterly services revenue exceeded $700 million.
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Aircraft Deliveries:33 aircraft, one fewer than the same period last year.
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Adjusted EBITDA:$382 million, up 7% year-over-year.
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Adjusted EBITDA Margin:16.1%, up 70 basis points, reflecting services growth and lower R&D expenses, partially offset by higher SG&A and supply chain pressures.
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Adjusted Net Income:$182 million.
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Adjusted EPS:$1.72.
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Reported Net Income:$81 million.
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Diluted EPS:$0.73.
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Free Cash Flow:$183 million in the quarter, up $31 million or 20% year-over-year; fifth consecutive quarter of positive free cash flow.
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Year-to-Date Free Cash Flow:$771 million over first nine months of 2026, versus cash usage of $316 million in the same period last year (improvement of almost $1.1 billion).
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Free Cash Flow Guidance:Raised for the second time this year to greater than $1.3 billion, up from greater than $1 billion.
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CapEx:$76 million in the quarter, in line with plan.
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Backlog:$22.2 billion, up 27% from year-end 2025 and up 34% year-over-year.
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Book-to-Bill:1.7 times in the quarter; 2.1 times year-to-date.
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Available Liquidity:Approximately $2.4 billion, including $1.6 billion of cash and $750 million committed revolver (up from $450 million last quarter).
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Net Leverage Ratio:Improved to 1.5 times, reaching the new long-term target.
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Credit Rating:Moody's upgraded from Ba3 to Ba2 in August, maintaining a positive outlook.
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Debt Maturities:No debt maturing before November 2030.
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US Infrastructure Investment:$270 million announced to expand manufacturing and service capabilities.
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record services revenue of $701 million, up 19% year-over-year, marking the first time quarterly services revenue exceeded $700 million.
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Strong backlog of $22.2 billion, up 27% from year-end 2025 and 34% year-over-year, with a book-to-bill ratio of 1.7 in Q3 and 2.1 year-to-date.
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Free cash flow of $183 million in Q3, up 20% year-over-year, and $771 million generated in the first nine months of 2026, leading to raised full-year guidance of greater than $1.3 billion.
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Adjusted EBITDA grew 7% to $382 million with a margin of 16.1%, driven by services growth and lower R&D expenses.
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Net leverage ratio improved to 1.5 times, reaching the long-term target, with $2.4 billion in available liquidity and no debt maturities before November 2030.
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Strategic acquisitions like MHI Canada Aerospace and infrastructure investments of $270 million in the U.S. to strengthen manufacturing and service capabilities.
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Ranked number one in leading industry product support surveys, reflecting strong customer support and product reliability.
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Growing defense business with NATO selection of GlobalEye and Canadian government selection, opening new mission opportunities.
Negative Points
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Supply chain challenges persist, representing a headwind of about 150 basis points to margins, with gradual improvements expected over years.
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Aircraft deliveries were 33 in Q3, one fewer than the same period last year, indicating flat delivery volume.
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Higher SG&A expenses partially offset margin gains from services growth and lower R&D.
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Geopolitical tensions and trade uncertainties remain top-of-mind risks, potentially impacting demand, especially in the Middle East where a slowdown was noted.
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Integration costs and temporary headwinds expected from the MHI acquisition, including IT system integration and other transition expenses in 2027.
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Potential delays in ramping up production rates due to supply chain constraints, which may require giving suppliers more time to scale.
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Middle East market showed a slowdown in demand, attributed to geopolitical issues, which could affect order momentum.
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CapEx is expected to rise beyond $300 million in 2026 to support growth, which may pressure free cash flow in the near term.
Q & A Highlights
Q: Can you provide an update on supply chain issues versus the minor costs experienced last quarter? How much of a headwind does it represent, and what improvement could we see going into 2027? A: CEO Eric Martel said supply chain remains an industry-wide issue, with improvement in some areas but challenges that "come and go." He noted the impact is about 150 basis points right now and will be "kind of permanent at this stage," though the company is pursuing meaningful cost recovery opportunities and expects gradual improvements over the years.
Q: With the new Challenger facility on track for 2027 and strong backlog, what are your thoughts on increasing production rates, similar to Gulfstream's stated ambition to raise annual deliveries? A: CEO Eric Martel said there is "clearly a serious potential" to increase rates, citing strong backlog, solid demand, a healthy pricing environment and the need to protect market share. He said the main question is supply chain capability, and that more detail will come at the February 18 Investor Day.
Q: Do you see the CapEx envelope rising over time as you embed investments in the Montreal facility, U.S. services expansion and GlobalEye opportunities? A: CFO Bart Demosky said CapEx will be closer to $300 million this year, supporting 3,500 production growth starting with incremental deliveries in 2028. He said CapEx should rise as capabilities expand across businesses, but investments will remain disciplined and ROIC-focused, well planned and funded from operational cash flow.
Q: Can you break down how much of the raised free cash flow guidance is booking strength versus other drivers, and is the original $600 million to $1 billion guide the right starting point for next year? A: CFO Bart Demosky noted the industry has enjoyed strong book-to-bill, with Bombardier at 2.1 times year-to-date, while guidance is planned on a book-to-bill of one times. He said growing services and defense, plus higher production rates, should drive strong cash conversion, so annual guidance based on a book-to-bill of one "should go up every year."
Q: With so much momentum, what worries you most right now operationally or in the environment? A: CEO Eric Martel cited two things: the overall geopolitical situation, though he sees trade risk as much lower than a year or two ago, and the supply chain, as everyone ramps up with big backlogs. CFO Bart Demosky added that taking greater control of the supply chain is part of the strategy, citing the MHI acquisition expected to close next month.
Q: What initial impact will the MHI Canada Aerospace acquisition have on consolidated margins in 2027, and will other supply chain transactions create temporary headwinds? A: CEO Eric Martel said there will be short-term integration costs, such as putting MHI on Bombardier's IT systems next year, but the deal brings mid- and long-term cost benefits versus status quo escalation. He said controlling wing production across all programs, from the Challenger 3500 to the Global 8000, improves cost and delivery performance.
Q: With book-to-bill at 1.7 times in the quarter, what demand trends are you seeing by region, and are there signs of weakness? A: CEO Eric Martel said demand is solid across the board, including North America and Europe, with the only slowdown in the Middle East due to regional tensions, though he sees it as one of the fastest-growing regions long term. He also highlighted good momentum in Canada after the luxury tax was abandoned, and strong performance in Asia.
Q: On Q4 margins, the unchanged full-year EBITDA guidance could imply margins down year-over-year at the low end. What are the puts and takes? A: CFO Bart Demosky disagreed with the lower-margin base case, saying the company is in a good place and expects strong Q4 margins with significant Global 8000 deliveries, a platform running book-to-bill above 2 times since service entry. He said supply chain headwinds still limit full potential, with material cost recovery expected to take a few years.
Q: Services are growing nearly 20% year-to-date how much is market growth versus share gains, and are you comfortable with the 70% market share target for 2030? A: CEO Eric Martel said it is a combination of both, with significant growth ahead over five years and defense a key pivot. He cited a growing installed base, maturing aircraft facing major maintenance, flight hours up 45% on Challenger and 77% on Global versus pre-COVID, and a further 7% increase this year, supporting further services growth.
Q: As you ramp both services and OE production, how do you think about material availability and potential supply chain trade-offs in coming years? A: CEO Eric Martel said the company already decided to raise rates on some programs after a good initial supply chain assessment, and continues monitoring capability. For other programs, a deep evaluation is underway; the potential impact could be a small delay in ramping up to give suppliers a better chance to succeed, with more clarity expected at Investor Day.
Q: How is the composition of your backlog shifting by customer type, and what are the margin implications? A: CEO Eric Martel said more deliveries will go to fleet operators and defense. About 20% of aircraft now go to fleet operators, a share expected to increase, with the fleet backlog refreshed for the next 10 years. He said fleet operators fly five to six times more than regular customers, driving more services consumption, and the company likes defense margins as well.
Q: Can you elaborate on the recent MOU with BAE and how you are thinking about involvement in Gripen assembly in Canada? A: CEO Eric Martel said the BAE MOU and the Gripen situation are separate topics, with no Canadian government decision yet. With SAAB, the focus is on GlobalEye modifications, and Bombardier prefers not to do pure fighter assembly. The BAE MOU is a longer-term play to explore supplying components, technology and engineering support, not a full fighter program.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
