NBC: Target at 67$ (from 65$)Note from LB1: Not enough, He will have to upgrade again soon.
Q4 results come in better than expected
Higher than forecast jet deliveries in Q4
Bombardier delivered 123 jets in 2022, implying 49 deliveries in Q4, well ahead of our prior 41-unit delivery forecast. On the strength of the higher deliveries, adjusted EBITDA for 2022 was ~$930 million, implying Q4 EBITDA of ~$354 million, above our prior forecast for $269 million as well as consensus of $310 million. Free cash flow was also ahead of expectations coming in at ~$735 million for the full year implying Q4 FCF of $169 million, much better than our prior estimate of $45 million.
Balance sheet continues to be re-shaped
Bombardier has launched a new debt issue of $500 million due 2029, the proceeds of which will be used to fully repurchase the remaining $396 million of outstanding 2024 notes as well as $104 million notes due in 2025. Assuming the transactions proceed as planned, Bombardier will have no debt maturities until early 2025 (about $1.1 billion due), which we believe Bombardier could repay through existing liquidity and expected free cash flow generation. We forecast that Bombardier’s leverage finished 2022 at 5.4x and we forecast the ratio will fall to 2.8x by 2025.
Solid visibility on 2023
Bombardier also reported that full-year unit book-to-bill was ~1.4 while backlog at year-end was $14.8 billion. The backlog is down from $15.0 billion at the end of Q3, but this was largely expected given the high delivery total in Q4. We believe Bombardier has good visibility on a 15-20% increase in jet deliveries in 2023 supported by the backlog that runs to 2+ years of production.
Maintain OP, target increased to C$67.00
We maintain our Outperform rating on Bombardier and increase our target to C$67.00 from C$65.00 previously. We are encouraged by the better than expected financial performance in Q4 and we maintain our positive view on the stock supported by good visibility on revenue and earnings growth, a still healthy business jet market, and an improving leverage profile.
Note : His 2025 forecasts is 1 359 M$ in EBITDA and 5,45 $ for EPS.