Bombardier Inc. T.BBD.A

Alternate Symbol(s): BDRPF | T.BBD.PR.B | BDRXF | T.BBD.PR.C | T.BBD.PR.D | BOMBF | BDRAF | T.BBD.B | BDRBF

Industrials Aerospace & Defense

Bombardier Inc. is a Canada-based manufacturer of business aircraft with a global network of service centers. The Company is focused on designing, manufacturing and servicing business jets. The Company has a worldwide fleet of more than 5,000 aircraft in service with a variety of multinational corporations, charter and fractional ownership providers, governments and private individuals. It operates aerostructure, assembly and completion facilities in Canada, the United States and Mexico. Its robust customer support network services the Learjet, Challenger and Global families of aircraft, and includes facilities in strategic locations in the United States and Canada, as well as in the United Kingdom, Germany, France, Switzerland, Austria, the United Arab Emirates, Singapore, China and Australia. The Company's jets include Challenger 350, Challenger 3500, Challenger 650, Global 5500, Global 6500, Global 7500 and Global 8000.

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Bombardier Inc.

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Post by lb1temporaryon Nov 03, 2022 8:55am

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Post# 35069145

TD: First look

Event

Bombardier reported Q3/22 Adjusted EBITDA of $210 million, compared to our forecast of $193 million and consensus of $202 million.

Impact: SLIGHTLY POSITIVE

We view the stronger-than-forecast Adjusted EBITDA, FCF, and greater-than 1x book-to-bill ratio positively. We believe that sentiment towards the stock is currently more closely aligned with cash flow, order activity, and debt repayment plans in the short-term, all of which were strong in Q3/22. While full year guidance was unchanged, we believe that the company could potentially exceed it, while moving steadily towards 2025 financial targets.

Revenue of $1.455 billion was flat y/y, in-line with our $1.416 billion forecast and below consensus estimate of $1.575 billion. Deliveries of 25 aircraft compared to our forecast of 26, with the company delivering one less medium cabin aircraft than estimated. Services revenue increased 20% y/y to $372 million, above our forecast of $327 million.

Adjusted EBITDA margin increased 460 bps y/y to 14.4%, above our 13.6% forecast. The y/y improvement is primarily due to Global 7500 margin expansion, growth in aftermarket services, and execution on cost saving initiatives.

Orders: Book-to-bill (in units) was 1.3x, a good result and an expected moderation from the levels (>1.5x) of recent quarters. Backlog increased $300 million sequentially to $15 billion, supportive of our expectations for deliveries through 2023 and 2024.

Free cash flow was $52 million, above our forecast for usage of $197 million, with the difference due to greater-than-expected cash earnings, trade payables, and contract liabilities (related to strong order activity), partially offset by higher-than-expected inventories (related to increase in production) and capex.

Balance Sheet: The company has reduced debt by $100 million, bringing its net debt-to-Adjusted EBITDA to 5.5x (TD forecast of 6.3x). The company has $1.7 billion of liquidity, of which $1.3 billion is cash and cash equivalents.

2022 Guidance: No change to full year guidance of >120 deliveries, Adjusted EBITDA >$825 million, and FCF >$515 million. Historical precedents would suggest that the FCF guidance is conservative. YTD FCF is $566 million with Q4 historically coming in FCF accretive.