RE:RE:RE:Earnings Estimates for Q3 and Q4Maye it's a mixup because of the name I chose here but I never mentionned any worries about the EPS.
GLTA - keep a straight course my friends, seems like the reward is closer than expected.
BBDB859 wrote: Great post Pablo.
It's worth reading for everyone here.
This dilema of EPS of yours Nobody, isn't going to be resolved this year. The reason being is, is that you're comparing apples to oranges right now. You can't compare 2021 to 2022. Because both years are in a spending cycle and Revenue growth periods. 2021 less so on Revs of course, but higher on Capex spending. 2022 higher on Revs & high on LTD repayment.
So, just relax on the EPS multiple for 2022. This will slowly change to the positive as 2023 rolls on, and then 2024 will be a better comparison with 2023 for EPS compared to 2022/1. Reason for that is that we will have apples to apples to compare because of Capacity increase on the production side for 2023/4. Even then the headwinds of Production Capacity for 2023 will be stronger than 2024.
Operating Cashflow & Backlog is now the important Metric as Pablo says bellow. The point of that is, is that it pays for everything right now. It shows the health of the BJ market & the Bomber's ability to grow to the Guidence plan of 2025. Cheers
PabloLafortune wrote: From the earnings call you would know the analyst knowledge is somewhat limited, it's a specialized field to cover the only true expert I heard was Goldman Sachs. Besides, the devil is in the detail. Earnings per share is the wrong metric. What matters is operating cash-flow and backlog. Here is what I watch:
1 deliveries per quarter - due to supply chain issues it's a challenger to grow this but the hope is 20% in 2023.
2 revenue per business jet delivered - reflects pricing power and product mix. Important.
3 service revenue. YoY we want at least 10%. Diversifies from straight production.
4 gross margins - this will reflect pricing power, mix, deliveries but also cost control. It should rise substantially with higher volumes because a lot of mfg costs are fixed.
5 sg&acand r&d - doesn't change much but still worth following re inflation.
6 interest costs - reflects long term debt repayment.
the operating cash-flow while improving and stabilized (simpler business) is not yet a cash-flow generating machine but supported by the backlog, the investment thesis is that it might become one.
Balance sheet fluctuations is also worth watching, it seems they have changed how deposits are handled more in line with WIP so the cash-flow is smoothed out which the hope is will become so predictable that it will free up cash held in reserve to pay down long term debt.
Still need to keep an eye on "other" - I for one may revisit this in the future.
and last but first, is the backlog. The cash-flow impact is not going to be that significant going forward because the current contract liabilities ie within a year is now integrated with working capital and they will ebb and flow together ( within reason) it seems. The long term contract liabilities is not even 10% of backlog so significant but not that significant. Nonetheless it's the most important metric because it reflects industry health, Bombardier competitive position relative to peers aka market share and it's the foundation of production run rate or cadence which is how Bombardier makes money though will become less reliant because of service revenue increases.