CIBC: Target at 67$ (from 57$)Note from LB1: Too low; See him in 3 weeks with a new upgrade.
Q4/22 Preview
For the quarter, we are forecasting revenue of US$2.50B, up from US$1.77B a year ago and versus consensus of US$2.302B. We expect adj. EBITDA of US$357MM, up from US$232MM a year ago and versus consensus of US$305MM. We would note that consensus numbers might not be comparable given that BBD recently released its preliminary 2022 results. Key items we are looking for on the call are:
1. 2023 Guidance: We expect BBD to provide its outlook for 2023. Our expectations are that BBD will guide to revenue of more than US$7.5B (we are forecasting US$7.8B and consensus is US$7.55B), adj. EBIT of more than US$700MM (we are forecasting $705MM and consensus is US$702MM), and FCF of more than US$550MM (we are forecasting US$530MM and consensus is US$412MM). We also expect the company to guide to 135-145 deliveries for 2023 (we are forecasting deliveries of 143 and consensus is 139). We also expect BBD to maintain its 2025 targets.
2. Business Jet Industry Outlook And Comment On Demand Environment: We will be looking for comments on the outlook for the business jet industry given the potential of a recession. We expect positive demand comments though as the pre-owned inventory level remains low and the backlog remains strong in the industry, both positive for pricing trends. The biggest bottleneck will be managing supply chain issues.
3. Update On Deleveraging Plans: We will be looking for an update on BBD’s deleveraging plan. The company’s gross debt as of Q3/22 was US$6.2B and is approaching annualized interest savings of ~US$300MM. The company continues to target a 3x leverage ratio by 2023, which suggests net debt of ~US$4.5B, but we see BBD on a faster deleveraging path (sub-2.5x by 2025)
Model Adjustments
We have adjusted our model to reflect BBD’s recently released preliminary 2022 results. Our 2022E EBITDA goes to US$511MM (from US$450MM), 2023E EBITDA goes to US$705M (from US$704MM), 2024E EBITDA goes to US$889MM (from US$887MM), and 2025E EBITDA goes to US$1,109MM (from US$1,107MM). Our price target increases from $57 to $65.
NOTE: For 2025 the CIBC analyst forecast a 1631 M$ EBITDA