RE:RE:RE:RE:Q3/24 Revs Hey Lets
I'll try to get you up to speed, just because you're new here.
Your numbers aren't wrong and neither are mine. What is happening here is a little different than a normal company's calculation of FCF. I only pay attention to the bottom line of +FCF (Positive FCF left over after everythig is paid including Interest for the year, or quarterly, depending on what I'm calculating) and go by what management says, to realize the value of +FCF for the fiscal year. This is a rough #, and I know why. Here are the factors that change the normality of this calculation.The company has a very small Line of Credit if you notice, of $300M? They have a huge expense in the first 2 Quarters of each year, just for parts, or Inventory allocation for the year. That's why they deliver the # of planes they do on time every year. They pre-pay for the parts required in the year in Q1, and use some of their own cash reserves, to finance themselves for the year. So Q1 and Q2 of every year, may include a lot of cash Reserves of their own, of which they re-capture at the end of each year, some in Q3 and most of it in Q4.
Since you're new, you don't know how this company operates, so I hope this helps you understand the company's strategy. You have to take the overall picture. I know it's a little different, but that's the key take away here. They pre-pay a lot of these unexpected commitments, and they recapture them at the heaviest fourth quarter. So to use the normal FCF doesn't work here. It also helps when they're doing their taxes. Even though they have 12 years of tax free earnings (gained from the CSeries lossses) They keep large reserves, so they don't have to pay heavy interest on Operating Expenses. Hope this makes sense to you? In the past 3 years, they used their the Reserves to pay many of their one time commitments like RVG's, and early discharge penalties, as well as development costs for Pearson (the best and newest BJ Manufacturing facility), & R&D's. But the key expense is, the heavy PARTS pre-payment for inventory, for Q1 & Q2.
The stock used to tank everytime, for no reason at all. Just Manipulation by the "powers that be". Mostly because they show losses in the first half. Or whenever there was a Micro or Macro reason? The shorters/manipulators took the opportunity to take the stock down because they find the the first half FCF losses as excuses. That is changing soon, as you are lucky to enter at the right time, when all this is ending slowly.
The reason why things are changing in 2025 are many. But the main ones are that the company has slowly finished all their financial commitments. The RVG's, the Service Centers, the Manufacturing facility, the Junk Bond Bond re-juggling, is all completed in 2024. The transformation is complete. And now, the company will start to become more predictable. So for these reasons, there will be a lot of POSITIVE changes of how this company will start to operate going forward in 2025. They really don't have any major developments for a new plane for a clean sheet design either. So all indicators point to INVESTMENT GRADE cashcow, going forward from 2025 onwards.
There are a couple of variables for LTD re-payment in 2025 as well. One is freeing up some cash from reserves to pay off LTD, on top of strong +FCF from Earnings every year going forward. I estimate that they roll over about $1.9B in reserves at any one time, yearly. If they take out a LOC of say $700M they can easily free up $400M to pay down the LTD. Then there is the $450M of Honeywell money too. These are some of the things that they could easily take advantage of in 2025. Then there is the real tough process of, balancing out the DELIVERIES from Q1 to Q4 in the year, instead of a heavy year end of 60 plus deliveries, and very light first half.They'll figure this it out going forward, starting in 2025. This balancing of quarter deliveries will free up even more cash, and Balance the company's Financials, as far as EBITDA/FCF goes quarter by quarter every year.
So overall, they will be an "Investment grade" powerhouse of +FCF, year in & year out, led by a strong Management team that knows what they're doing. With leading developments in the BJ Industry, with such developments as the ECO-JET. This is why BART DEMOSKI, the CEO of the company is the real Genius IMHO. But he couldn't get all these things done without the LEADERSHIP of Eric Martel. This company will grow to be the top developer of technology in the BJ industry. Innovation is what Bombardier is known for, (Bicente). The CSeries was not a mistake. The cashflow was always the weakness of this company. There was never enough cash to support the new Innovations and developments. Now things are changed, thanks to BD and EM. Hopefully the two Families, will keep Pierre Beaudoin (PB) out of the running of the company going forward, so that this management team can complete the job.
Btw, the Bomber sold Belfast to Spirit 3 years ago, and they know everything there is to know about it, since owning it for 30 years prior. I thought I'd never say this, these past 7 years. But if I was young? I would just stay here, and enjoy the fruits of my investment. I intend to keep some profits in the company. That's why I'm hoping for a 3 for 1 split at $200 to $250 range, to play around with some of the shares. I just don't understand one thing. Why this company isn't in the NYSE? Going to the US is just an no brainer move, to where the cash is. Maybe they're just not ready? Hope this helps. It's tiring writting all this constantly for new people, but I enjoy educating some. Hope this is of help to you. I'm not and accountant either, but I think I know what's going on with this company from experiencing their near financial ruin to becoming this strong outfit, for the past 7 years of watching the happenings here.
Cheers