RE:RE:LTDHi Temp.
Ya I get your thinking.
I did get optimistic on the Revs a little. On the FCF side the optimism comes from the optimistic Revs assumption on my part. But what I'm basing the Revs # is on the assumtion of the production increases coming, and Service Revs that aren't yet matured as well..
For Example. If we get a 10% to 15% Rev upswing in 2023 on production alone as we're told? Then we're at almost $1B in Revs increase in 2023. Btw, that takes us up to $7.5B in Revs in 2023. Then we've got 2024 when Pearson is fully operational and can increase production further. But the Service isn't matured yet either
So what I see is conservative for 2025 given that we have 2 variables that are strongly in favor for the Bomber. One is the Revs from the new BJ's, and the other is the increase in Revs on the Service side. Remember the Service side is just starting to show us it's ware. We will get steady income from the Service side for Decades to come. We have 5,000 planes out there to Service. So we have both Service & New BJ delivery pushing the Revs curve.
So what will happen to FCF. I anticipate that 25% margins on Revs aren't out of the QUESTION here. Meaning that $8.5B of Revs is conservative in my view given the above moving parts, of production increases & the Service Rev increases coming.
As to the imbalance of % from the Deposit receipts, of the current Backlog orders on your FCF from year to year. I don't look at the FCF as a Year to Year changing phenomena affecting FCF. I look at it as a Year to Year percentage of the Revs. I think the 20% deposit structure set now, balances itself out over a couple of years after the orders were taken & delivered. Remember that the biggest thing to take away from all this is, that the Bombardier is taking enough of a deposit now, and subsequent stage deposits for new BJ' orders, so that they don't have to subsidize these RICH while they're building their BJ's. So the Margins should be in the range of 25% annually, like they are at GD (Gulfstream) righ now.
Btw. The FCF & +FCF senario will tighten up as well. Given that LTD annual payment will go down closer to $250M, and OE will stay close to $100M by 2025. Therefore their FCF will all be available for new aeroplane designs, or acquisitions if needed as well. I know these are optomistic views. But Just saying here enough of the old negativism. This is the new reality. We will outpace Gulfstream. Because we're a pure play.
lb1temporary wrote: 859, I suspect that you are a little bit too optimistic on the FCF side......but Hoping that you're right.
Two reasons:
This year we have an one time phenomenon; the improving conditions of backlog. The cash asked to customers changed, and that change (not the new conditions ) was boosting FCF. But once establish the new conditions will be neutral on the FCF. Explanations:
In 2021, if the cash asked was 5%, at delivery the payment was 95%. When you boocked 120 planes and you deliver 120 planes that don't affect the FCF, you receive 100% of the money for each plane.
In 2022, they asked 20% at the booking and they delivered the already boocked planes with a 95% payment. That is a 115% cash received for each couple (booking and deliveries).
In 2024 ( I am not sure for 2023), back to normal, for each couple of planes they will recieve 100% ( 20%+80%).
The second reason is that this booking frenesy will end, and the booking conditions could become smoother and if that occur, the reverse phenomenom could happen; and the FCF could be affected negatively; 80% at the deliveriy of already boocked planes and only 10% for newly boocked (80%+10%=90%).
Thanks, for your optimism, we like that.