Bombardier Inc. T.BBD.A

TD: Very Positive

[lb1temporary]

Bombardier announced preliminary full-year 2022 financial results.

Impact: POSITIVE

We view the preliminary 2022 results as very positive given that they are stronger than-expected relative to our forecasts, consensus estimates, and previous company guidance. As expected, order activity has slowed from the historically strong levels of 2021 and early 2022. Sentiment towards the stock has improved dramatically due to execution, industry conditions, and the company's ability to generate FCF and repay debt well ahead of schedule. We believe that this positive sentiment should continue due to the backlog strength and quality, FCF, deleveraging, and the ongoing improvement in company credibility. Preliminary results lend further support to our view that the risk to Bombardier achieving its 2025 financial targets is decreasing, and that there is the potential for results to exceed targets. However, we still do not view the current share price and valuation as reflecting the long-term, risk-adjusted value potential for the company.

Full-Year 2022 Preliminary Results:

Revenue of approximately $6.9 billion (previous guidance of >$6.5 billion), implying Q4/22 revenue of approximately $2.6 billion. This represents a 49% y/y increase, and is above TD and the consensus estimate of $2.3 billion. Bombardier expects to deliver 123 aircraft in 2022 (versus guidance of >120 aircraft and TD forecast of 121 aircraft).

Adjusted EBITDA of approximately $930 million (versus guidance of >$825 million), implying Q4/22 Adjusted EBITDA of approximately $352 million. This represents a 52% y/y increase, and is above TD and consensus estimate of $328 million and $294 million, respectively.

Adjusted EBIT of approximately $510 million (versus guidance of >$375 million), implying Q4/22 Adjusted EBIT of approximately $209 million. This represents an 85% y/y increase, and is above TD and consensus estimate of $179 million and $170 million, respectively.

FCF of approximately $735 million (versus guidance of >$515 million), implying Q4/22 FCF of approximately $169 million, above our estimate of $39 million.

2022 unit book-to-bill of approximately 1.4x (in-line with TD forecast) and a yearend backlog of approximately $14.8 billion (above TD forecast of $14.6 billion). Q4/22 implied book-to-bill is 0.7-0.8x.

[Starsearcher80]

 I would agree with TD that there is a lot more upside room for Bombardier, and as for these results, they fully fit in to the "better than expected" category.  Well done Bombardier. While these results do provide a nice pop to the stock today, it does take out some of that normal anticipation buying to what would have been Feb 9th.  As much as I like the pop today, I

[flamingogold]

I like the pre-announcement, it caught shorts off guard. Shorts have been a nemesis for the company over the years so any chance for BBD to strike back at them I am all for it. The good news does not end here. Expect debt reduction news to hit shortly and possibly a higher credit re-rating. Then, expect the big funds to start adding the company to their portfolio. With far fewer shares available

[Starsearcher80]

Yes, these are all valid comments.  While there has been some decent fund buying to date, bombardier still fits into the "Speculative" category.  I think this will change, as per your comments on debt and credit rating.  As this happens, the stock will become attractive to other funds who's investment parameters don't include that speculative category. 

[lb1temporary]

I agre with you, with this disclosure we miss one step; the anticipation. I have mixed sentiments; happy by the results but disappointed by the shortcut taken that prevents the usual price increases by steps  from taking place.  My question is why now? All this is driven by the new debt. They have to disclose the results to the new debt investors, so, according to the rules, they have

[Truthifest]

Here in the US anyway, it is common for public companies to pre announce if the numbers are a lot higher or lower than guidance.  And companies don't have to pre announce to issue debt.  Certainly could help with the pricing of it if it's positive, which it clearly was here for Bombardier. Perhaps the company was expecting the restricted cash of $400M to be available this month,

[Truthifest]

So, some questions for the company Feb 9.  Then the focus shifts to their 2023 guidance as well as update to the 2025 Plan.  

[lb1temporary]

They don't have to pre-announce to issue debt but if they disclose to investor the results in their roadshow, they have to disclose to all. The rule is that if you are an insider ( knowing the future results) you can't move to buy or sell.  So, it was better to disclose the positive results to the investor to have better conditions. Bombardier is rated B-, but with the 2022 results

[Truthifest]

Yep, disclosing getting a better rate on the new debt certainly helps.   For those here interested in pre announcement rules, look into the 8-K rules. The question remains about why refi the 2024 and a bit of the 2025 debt, instead of continuing to pay down w CF?

[MyNameIsNobody]

'Anticipation step' ...Another good observation by our friend lb1 here.  Here's my take on having the 'anticiapation step' cut short by this morning's news from Bombardier. It's fairly simple...I believe only the shorts and traders will get screwed by this, longs will only see the value of the company reflected on the SP a bit faster than expected. ... and since

[Starsearcher80]

I think companies have some market "moral" responsibility to adjust their forward guidance if it is significantly different than what was provided in the previous quarter.  This works both ways...if the guidance is now obviously worse than stated, or in the case of Bombardier, signifcantly better than expected.  I don't know if this is actually a rule per-se, in the same

[flamingogold]

I believe it removes the possibility of shorters taking advantage post earnings. It's no surprise that the numbers would be good. Had they waited that's when the shorts would strike. So, annnouncing early pulls the carpet out from the shorts.

[bicente]

obviously the bomber will have some more positive news to announce at the Q4 results presentation ... under promise and over deliver is in full force and perfectly planned announcements is also in play ... remember that the bomber has to play the institutions also , there are different parameters when servicing the debt and getting it all done right ... I am no expert but this is definately a

[flamingogold]

bicente... very well said. This was well strategicly timed. I do recal that recently BBD changed their head of PR and it's paying off. In the past, this was a weak point for them.