CIBC: Q3 preview + target increaseQ3 Deliveries Ahead Of Expectations
Our Conclusion
We have adjusted our Q3 estimates to reflect better-than-expected deliveries. Our third quarter EBITDA goes from $279MM to $295MM and versus consensus at $280MM. BBD continues to execute well, despite supply chain issues, and increasingly gives us confidence in achieving its medium- to long-term financial targets; as such, we increase our target multiple from 7.25x to 8x our 2025 EBITDA. We maintain our Outperformer rating and our price target goes from C$116 to C$134.
Key Points
Q3 Deliveries Ahead Of Expectations: Aviation Week published its September new business aircraft delivery numbers. With this we now have Q3 totals. Aviation Week is reporting BBD delivered 31 aircraft. We were forecasting 27 units and consensus is 29 units. We also note that at our Montreal conference in late September, BBD said order activity was healthy in the summer despite this typically being a seasonally weaker period. Please refer to the Exhibit 1 table of BBD's deliveries for the third quarter
Q3 Expectations: BBD is reporting Q3 results on November 7, 2024 with a call at 8:00 a.m. ET. Dial-in numbers are 514-316-5035 (Montreal), 416-764- 8624 (Toronto), and 1-888-259-6580 (International). We have adjusted our estimates to reflect the higher deliveries. Our Q3 revenue moves to $1.793B from $1.725B (consensus at $1.756B), EBITDA to $295MM from $279MM (consensus $280MM), and FCF to ($25MM) from ($38MM) (consensus at ($62MM)). We do expect BBD to maintain its 2024 guidance of $8.4B-$8.6B in revenue, $1.3B-$1.35B in EBITDA, and $100MM-$400MM in free cash flow. We note that we expect mix to drive a sequential improvement in margins (forecasting Q3 EBITDA margin of 16.5% versus Q2 at 15.2%). In the third quarter, BBD delivered 18 large aircraft or 58% of the total. In Q2 it was 49%. Please refer to the table in Exhibit 2 for our Q3 expectations versus the prior year and consensus.
Key Themes For The Quarter: We expect management to share: 1) an update on the demand environment and industry fundamentals, 2) progress it is making on growing its ancillary revenue streams, 3) an update on the company’s liquidity position and debt refinancing strategy, and 4) the maintenance of its 2024 financial targets.
NOTEs from Tempo:
Their 2025 forecasts are Revenues : 9108 B$ EBITDA : 1 646 B$ (18,1%) FCF 918 B$
A mistake in my Deliveries post : 18 Globals, 13 Challengers.