RE:RE:RE:RBC: The nov 4 Conclusion (target at 58$ from 49$)Hey, Pablo, If I dig more, i'm not sure that an EBITDA margin of 19% in 2025 means a gross margin of 27%:
If I look at the 2021, the Q3 and the 9 first months of 2022 results, the relation between the EBITDA and the gross margin was +5%. Will the revenues increases will add proportional bigger S&A and R&D expenses ? In a normal situation it would been smaller. So, the gross margin implied is more 23-24%.
The question for me is: Does Bombardier could increase its EBITDA from 14% now (2022) to 19% in 2025 ?
What will happen in the 3 next years ?
Revenues increase: A jet production increase of 15-20% is already in the book. The service revenues was 1092 M$ after 9 months this year; in the last Q4 the services was 363 M$. So, a 1,45 M$ service revenues is expected for 2022. The 2M$ forecast for 2025 will probably be exceeded easily. So, The 8,7 M$ in revenues is not a problem. And this additional volume will contribute to the margin, some costs are fixed.
Margin increase: The 2022 deliveries are from orders signed in 2020-2021. The 2025 deliveries will be from orders signed in 2022 to 2024. There is an biz jet frenzy and the orders are signed at the vendor’s conditions with a significant higher price.
Two new sub-sectors has been developed: the defence and the Certified pre-owned. They will add to the revenues and the margin; specially the latter. At each year, more than 400 used Bombardier jet are sold, Bombardier can take a part of this market.
Finally, for the comparison, don’t forget that the Bombardier peers are in the same market and their margin too will increase.
So, is a margin improvement of 5% is realistic for the next 3 years?
Easy answer.