Post by
Jim99999 on Mar 04, 2021 8:39pm
I've got to say I'm a little disappointed
I didn't see the webcast, but I did read through the presentation. A few things kind of trouble me.
First, I was really hoping they would be able to take a more aggressive approach to debt reduction. If I understand it right, they are going to pay out the near term debts with the ~$3B they have, and they intend to raise $1B+ to pay the Jan 2023 debt. Unfortunately, most of that debt (about $3.5B of the ~$4.5B) is also the least expensive debt they have. Depending on what rate they can get the $1B+ at, their interest expense will be north of $450M/yr. I was hoping for closer to $400M. And they don't expect to make much of a dent in their overall debt (net debt to be ~$4.5B in 2025). The good thing is they will have 3+ years before any other debt is due.
Second, are 20% margins realistic? Textron's aviation segment did ~9% in 2018 and 2019. Are any of their competitors able to achieve anywhere near 20%? I don't know for sure but I feel it's a bit of a stretch.
Third, while I do think $1B revenue growth is possible on the aircraft side, I am not sure it is realistic to project doubling aftermarket services from $1B to $2B in five years. Even if covid is done with, and planes are back in the skies, that's a 15% YoY growth rate. Not saying it's impossible, but not sure it's likely, either.
They've set the bar high. I was sort of hoping they would set it a little lower, and then blow past their projections. I feel like this sets us up for further disappointment down the road. Time will tell.
Jim
Comment by
Shamhorish on Mar 04, 2021 10:21pm
jim, most important 1- No Bank ruptcy and 2- no CCAA = no Gov involvement, no IQ, no Fitz, no CDPQ 3- No privitization 4- No Bbd share reverse split 5- paying LTD for 2021, 2022, 2023 about 4.5 billion, i.e clear path to next LTD payment Dec 2024