TD First look: Slightly positive
Event
Bombardier reported Q4/22 Adjusted EBITDA of $352 million, compared to our forecast of $349 million and consensus of $352 million. Bombardier pre-released select Q4/22 financial results on January 18th.
Impact: SLIGHTLY POSITIVE
The pre-release of Q4 shifts the focus of our view, and likely the market reaction, to the introduction of 2023 guidance. We view the guidance positively as it aligns with our existing expectations and the consensus. We believe that Bombardier's outlook is prudently leaving upside that will lead to greater than 12% growth in deliveries, greater than 21% growth in EBITDA and further balance sheet deleveraging. It is important to note that we don't anticipate the size of the outperformance that Bombardier generated in 2022 relative to its initial 2022 outlook.
Revenue increased 50% y/y to $2.66 billion. Deliveries of 49 aircraft vs our forecast of 49. Services revenue increased 15% y/y to $416 million, in-line with our $410 million forecast. Adjusted EBITDA margin increased 20 bps y/y to 13.3%, versus our 13.4% forecast. The y/y improvement is due to aircraft mix, Global 7500 margin expansion, aftermarket services, and execution on cost saving initiatives.
Orders: Book-to-bill (in units) of 1.0x was above our forecast of 0.8x. Backlog declined $200 million sequentially to $14.8 billion, supportive of our expectations for deliveries through 2024.
Balance Sheet: The company reduced debt by $209 million, bringing its net debtto-Adjusted EBITDA to 4.6x (TD forecast of 5.1x). The company has $1.9 billion of liquidity, of which $1.3 billion is cash equivalents and $0.4 billion is restricted cash. 2023 guidance introduced. >138 deliveries vs. TD at 139. Revenue >$7.6 billion vs. TD at $7.7 billion (consensus at $7.6 billion).
Adjusted EBITDA >$1.13 billion vs. TD at $1.28 billion (consensus at $1.18 billion). Adjusted EBIT >$695 million vs TD at $826 million. 2023 FCF >$250 million, or $375 million excluding a nonrecurring payment.
FCF guidance implies a step-down from 2022, though this is not surprising given the significant benefits of strong orders and related deposits that contributed to 2022. The company is hosting an Investor Call on March 23, 2023