Nat bank : Steady progressQ1 deliveries below forecast, but new jet demand
remains healthy
Q1 results slightly below forecast
Bombardier reported Q1 results this morning that were below NBF and
consensus forecasts due to lower than forecasted jet deliveries, but
management indicates that it remains on track to meet its 2024 guidance. For
more detail, see our Q1 results Flash (link to BBD Q1/24 results Flash).
2024 guidance unchanged
While aircraft deliveries were lower than expected in Q1 at 20 versus our
forecast for 24 (largely due to timing), management reiterated its target of
150-155 deliveries for the full year. Financial guidance is also unchanged at
$8.4-$8.6 billion in revenue with EBITDA forecasted in a range of $1.30-$1.35
billion with EBIT of $850-$900 million. Free cash flow usage in Q1 also came
in higher than expected, but management is still guiding to 2024 FCF of $100-
$400 million and $900 million in 2025, which still looks achievable.
Backlog grows nicely and demand looks healthy
Backlog was $14.9 billion at the end of Q1 versus $14.2 billion at the end of
last quarter and the book-to-bill was 1.6x (no cancellations in the quarter).
Bombardier management indicates that demand for new jets remains healthy
with more orders for Global model jets in Q1. Furthermore, global flying
activity on Bombardier model jets is running 7% higher y/y, which we view as a
solid leading indicator that order activity should remain solid.
Maintain OP; target trimmed to C$92.00
We maintain our Outperform rating on Bombardier shares and have trimmed
our target slightly to C$92.00 from C$95.00 previously. Our thesis on
Bombardier is unchanged; we see steady progress towards the company’s
2025 financial targets underpinned by still healthy business jet end market
conditions that we expect will ultimately drive a material increase in the
share price.