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Bullboard - Stock Discussion Forum Bombardier Inc. T.BBD.A

Alternate Symbol(s):  BDRPF | T.BBD.PR.B | BDRXF | T.BBD.PR.C | T.BBD.PR.D | BOMBF | BDRAF | T.BBD.B | BDRBF

Bombardier Inc. is a Canada-based manufacturer of business aircraft with a global network of service centers. The Company is focused on designing, manufacturing and servicing business jets. The Company has a worldwide fleet of more than 5,000 aircraft in service with a variety of multinational corporations, charter and fractional ownership providers, governments and private individuals. It... see more

TSX:BBD.A - Post Discussion

Bombardier Inc. > Interest on LTD vs EBITDA
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Post by bbdaerospacecnd on Feb 14, 2021 4:43pm

Interest on LTD vs EBITDA

Noah Poponak

So in 2021, even after significant debt pay down with the cash you have, the interest expense will still be higher than EBITDA. And so as we think through the forward, in continuing to repair the balance sheet, the challenges, you can't have positive free cash flow until the interest expense is less than the EBITDA, but you can't pay down the debt until you have positive free cash flow. So one, should - do we need to think about a few years of cash flow that's slightly negative or only slightly positive until you can ramp the EBITDA? And/or is there an opportunity to refinance what you have? It seems like you could have significant interest savings, but I'm not sure where you are with the cost to refinance.

Bart Demosky

Noah, it's Bart. Thank you for the question. And it's a good question. I mean, the first thing I would say is that our goal is to perform and generate free - to be cash flow positive at the lower volumes that we're seeing today. So when you think about the cost reduction activities and the $400 million of benefit that we see by 2023, and that's the full $400 million in 2023, that's how we're describing it, that will bring us a long way towards being free cash flow positive. So obviously, it's somewhere between this year and 2023 is when we start to see ourselves come into a free cash flow positive position. There's a few factors, other factors that are going to support this position.

Obviously, we plan to keep our CapEx relatively low and stable. We're in and around that $200 million level right now. We do expect '22 on a free cash flow basis to be better than '21. And as we start to generate more positive and free cash flow, we'll be in a position to pay down more of our debt and bring the interest expense down. We're working today on our cash deployment plans and how we'll use that money to reduce our debt and bring interest expense down, and we will be in a position to share more on that with you at our Investor Day on the 4th of March. So hopefully, that's helpful.

Noah Poponak

That's helpful. Just one clarification in there for 2021. With the - you've mentioned not all of the proceeds are available, and it sounds like that's at least all or partially related to shares from Alstom. How much of the proceeds are available to deploy in 2021?

Bart Demosky

It will be north of $3 billion will be available. We've got - the shares themselves today are worth about $600 million. Those become available to us in May, and we'll be deploying that cash at that time. There is a little bit of the cash that will be tied up for a period of time in '21 as well, but we'll be working to free that up and deploy into debt repayment as well. So it will be north of $3 billion, but again, a little more color probably on Investor Day for you, okay?

Comment by 1sergedompierre on Feb 14, 2021 5:17pm
I remember that part of those questions asked ...and my conclusion was : dont expect us to make a net profit before end of 2023 ..if everything works as planned -serious ?- and if our Alstom shares are worth our prediction next May -serious ?- Investor Day -March 4 -will bring "a little more color " Bottom line : the next 2 years dont expect net profit ! IMO the stock will keep mouving ...more  
Comment by PabloLafortune on Feb 14, 2021 6:15pm
Thank you for sharing. Reading those transcripts, you might be excused if you didn't realize that AB and JDB have been replaced by EM and BD. They may not have been skating on thin ice like their predecessors but they were skating nonetheless. That said, the way BD was talking you got the sense he had something up his sleeve which he will reveal on March 2nd. Also, never seen the bankers so ...more  
Comment by BBDB859 on Feb 14, 2021 9:00pm
Pablo. When Bart finished answering Noah P's question about EBITDA. EM popped into the convesation to shed a little light on the inventory reduction from 2019 to 2020.. He said that the reason the inventory went down by $1B year to year was from Covid on some of the G7500 deals. In fact I'd estimate that it had to have been about 10 to 13 planes.  But EM's take on it was ...more  
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