Bombardier Inc. T.BBD.A

My Highlights

[lb1temporary]

Very strong results:

• Service at 372 M$ in line to achieve the 2 B$ annually in 2025.

• Margin of 14,4% on 1,5 B$ sales. They reaffirm that they are on track for more than 120 deliveries , meaning 45 jets on Q4. The Q4 results will be at 2B$ for revenues and a larger margin (fixed cost covering); it will be a BANG.

• FCF positives despite  works in progress (stocks) up for 567M$.  In the Q4 when these stocks will be delivered to clients, the Works in progress will be deleveraged by the same amount. The FCF will be at 500 M$+ for the quarter and 1B$ + for the year.

• 5 years Committed financing; the 5 years committed aspect of the loan is interesting. We are now far from the CCC risk level. 

[PabloLafortune]

If due to inflation interest rates continue rising, Bombardier may be able to buy back some more bonds at attractive prices even though their credit rating is improving. You could not ask for a better situation in that regard for Bombardier. If this was a year ago, the 2027's for example might be $110 ie a $200M+ premium to buy them all back.   Instead, the bonds are trading below par.

[Truthifest]

And then when rates fall, Bomber's credit rating might be so much improved that they might have the option to refin some of the debt, extending maturities and thus decreasing annual cash drain and increasing flexibility.  

[BBDB859]

I would be happy to see $250M of annual Interest on LTD. That's roughly $3.5B with the current LTD IR. That average ticker rate was given to us be BD on the ER today. Next year these guys will throw $1B on LTD for sure.

[PabloLafortune]

Fortunately they have a good pilot (Demoski) to navigate this bond market Dardanelles. It dawned on me the other day that at current inflation rate, if I buy 10 year Canada and hang on to them until maturity I will receive 3.25% pre tax  income - fine - but my purchasing power might be less than 50% by then akin to losing half my investment!. The Fed knows this and while the cure seems worse

[johnney]

PabloLafortune, if The Bonds are trading below, is this better for them?