RE:Conference Call: the most significant responsesWorst case scenario. First the backlog. Assume its 280 aircraft and unit wise it drops to 0.8 ie 55 units for the next 2 years and they deliver 140 aircraft in 2023 and 2024. That leaves the company with a backlog of 18 months (based on 150 units) for 2025 which is manageable I believe (EM said that too). The customer deposits that is current is within the current asset/current liability cashflow management framework so I think we're good there. Probably the aftermarket backlog will go up so we can think of a $200M drop on the long term side - over 2 years. Again manageable. So I think unless there is an economic depression ie unimaginable scenario, Bombardier is in good shape backlog wise operationally and financially.
Also, lets talk profitability. The Q1 EBIT (I don't like to use EBITDA esp this kind of business) was 9.5% on a run rate of $5.7B revenue (ie Q1 x 4). This is actually a very important metric that the stock market seems to have disregarded. Given the nature of Bombardier's costs - quite a lot of fixed I believe - as revenue increases, we should expect the EBIT % to go up. Even at 10% and $8B revenue ($2B run rate or 35% higher than Q1), we're looking at approximately $400M of FCF (Bombardier has tax losses) - perhaps not quite in 2023 but surely in 2024.
All I know for sure is the share price today is $58. Which IMO is a 40% discount to a $8B revenue/10% EBIT/20 PE/100M shares slash valuation model. With upside from revenue above $8B, EBIT above 10% and further debt reduction (as it applies to interest). Probably some downside on the PE multiple though.
Your Mileage may vary. Good luck to all (that's what they say at the casino, LOL).