CIBC ReportEQUITY RESEARCH
December 22, 2024 Earnings Update
BOMBARDIER INC.
BBD Delivers 16 Aircraft In November
Our Conclusion
Aviation Week Intelligence Network (AWIN) released the November 2024
business jet deliveries and noted that BBD delivered 16 aircraft. QTD, BBD
has delivered 22 planes. With this report, we have adjusted our BBD model
to reflect the risk of Trump tariffs on Canadian exports. While our base case
view is the aerospace sector will be exempt (so no impact on deliveries), we
do see the risk of buyers delaying potential orders. As such, we have moved
our book-to-bill assumption in 2025 to 0.85x from 1.0x, resulting in a
decrease in our FCF estimate for next year to $728MM from $905MM prior
versus BBD’s target of >$900MM. Our price target moves to C$127 from
C$132 and we keep our Outperformer rating.
Key Points
BBD Delivered 16 Aircraft In November: AWIN released its November
business jet delivery numbers. Worldwide business jet deliveries totaled 67
versus 68 the prior year. BBD delivered the most business aircraft at 16 in
November, followed by Embraer with 15 deliveries, Cirrus at 12 deliveries
and Pilatus at eight deliveries. BBD delivered six Challenger 3500s, two
Challenger 650s, two Global 6500s, one Global 5500, and five Global 7500s.
Q4/24 QTD Deliveries: During the October and November period, BBD
delivered 22 aircraft, consisting of nine Challenger 3500s, two Global 6500s,
one Global 5500, seven Global 7500s, and three Challenger 650 models.
Last year, in the October and November period, BBD delivered 17 aircraft,
consisting of nine Challenger 3500s, two Global 6500s, one Global 5500,
three Global 7500s, and two Challenger 650 models. BBD is guiding to 150-
155 deliveries in 2024. Through Q3/24, BBD delivered 89 aircraft. Using the
AWIN data for October/November, that would imply BBD would need to
deliver 39 to 44 units in December to reach its annual target. According to
AWIN, BBD delivered 39 aircraft in December last year. BBD is positioned to
achieve its 2025 delivery target.
Model Update: We have tweaked our model to account for the following: 1)
We are assuming a book-to-bill of 0.85x in 2025 versus our prior assumption
of 1x, which negatively impacts our FCF estimate. 2) We see risk of BBD
missing its EBITDA margin target of 18% next year (our estimate is 17.6%),
reflecting supply chain issues. We do see BBD hitting its 2025 EBITDA target
given the outperformance in its Service revenue. Our 2025E and 2026E
EBITDA move to $1,629MM (from $1,652MM) and $1,705MM (from
$1,738MM). We are assuming 2025E FCF of $728MM versus our prior
estimate of $905MM