Bombardier Inc. T.BBD.A

Backlog deposit

[stockitnow]

Prior to 2008 crash, 2009 for bizz jet market, most OEM required minimum deposit of 5% to secure a bizz jet.  After 2009, deposit went to 20% ( initial) and up as aircraft got built.  Now upfront deposit is 60 to 70%.  The quality of buyers and backlog now is much better and less chances of buyers to back out.

OEM has been very careful not to increase the supply of new jets.  This has caused used jet price to go up, inventory at historic lows and new jet demand high. Resulting in higher deposits.   

Bombardier is well placed to increase margins on new jets, capture the aftermarket and sales on existing jets and upgrading used jets.  This is a control approach to Bombardier's strategy.  The downside is that stock price takes longer time to go up as the net gains are slower to show up initial.  The jump will come when you get few years of positive earnings and constant growth year over year on all fronts.

[FirstOne]

With a 14,8 B$ backlog, the deposits given would be 10,4B$.  Could you tell us where does 10,4 B$ are ?

[bicente]

securing and paying for parts would be my guess, all the suppliers must be in the same predicament , money up front.. ..it's a whole new set of rules out there for business, this industry was tightly run and it is much tighter now ...I am referring to parts supply and turnover not sitting around ... the back end of payment is where you get the profit ... and we will be getting lots of it ;) ..

[FirstOne]

OK. There no sign of these transaction in the Bomber numbers so: With the order, the customer give hundreds of checks to suppliers, two years in advance, (70% of the jet in parts) for the deposits. Bundles of checks with a rubber. Well explained.  One thumb up.

[bicente]

not exactly the way you explained it ... there is a tighter exchange between when you purchase parts and when you pay for them ..so as you build , you get paid and in return you pay the supplier as you build/get parts to do so.....many businesses had a 30 day delay before you paid your supplier and it would cost you ,say 2%, that does not fly well now so you have to pay up front and sometimes

[FirstOne]

No, it's a 70% up front.

[clubhouse19]

 Deposits flow downhill. as i see it.   The manufacturer signs a contract guaranteeing purchase of a said amount  guaranteeing purchase presumably with all kinds of cancellation clauses and time limits especially for dedicated parts same as the potential buyer of the aircraft.  If the demand for the product is high then so is the deposit demand usually also mitigated by the

[stockitnow]

When a company reports on backlog they need to have deposits in hand.  Backlog determines company future income.  This is why Boeing and Airbus report their backlogs as well.  And thanks to regulatory requirements a company cant fudge this numbers.  They are audited.  FYI quarterly report are also audited too.   Do some research and you will learn something. 

[bicente]

and the suppliers have to report their backlog too ... some people think buying parts is like taking a stroll into the convenient store and buying what you need and walking out to go build the plane ...GLTA  

[stockitnow]

Throughout the supply chain.  Did you think all business build parts and assembly them for free until they get paid?

[bicente]

he probably thinks the parts suppliers get paid after the jet client flies for the first time ..smh ..GLTA  

[Truthifest]

But now Bombardier and especially Gulfstream (don't know about Embraer and Dassault) for the first time in awhile are counting on material increases in deliveries.  So those better come thru, and stay elevated thereafter, or the stock prices will surely take big hits.  Even with replenished backlogs, bigger investors are still avoiding the stock, probably because of the recession

[bicente]

Martel addressed the backlog and he sees no problem going forward in general ....should there be a recession , nobody knows what happens but I'm guessing there will be bigger problems than an investment taking a hit ... I see a soft landing in the markets with mainly  horizontal markets , but don't take my advice , you get what you pay for and it's free , sooo...GLTA  

[Truthifest]

Just the threat of recession is helping to keep bigger investors away.  If one actually occurs then essentially every stock goes down, especially higher risk ones and cyclicals, and Bomba is in both groups.  Just a matter of degree, not direction.  But long-term holders, say, 2+ yrs, should be ok IMO as the stk should eventually bounce back and then some.   Any one person'

[bicente]

$ 50 ??? wth ? must be those new nitro cold brews .. I'll have an espresso instead , thanks ;)...GLTA    

[clubhouse19]

  Just another reason that the best option, at least for me, is to keep on trading this stock and not be totally tied to it come hell or high water.    The startegy has been good to me even if on several occasions I had to refill at a higher cost than what I got out at !  This morning may be another one of those occasions since I got out at 67.50 and left some on the table at

[bicente]

I got lucky today and sold almost  all of my daily order at $68.20 except for a measly 90 shares , those only got $67.76 , like seconds later ... I have left some good money on the table last couple of days but my trading account cannot hold shares too long as it is probably going to be used for another investment , well that's the plan anyway ... obviously the best play here is long term

[clubhouse19]

Good..     In an uptrend like this with intermttent major shorting, there is good trading opporunities as there seems to be no major competition from any major institution for now.  I don't expect any such buying by the same at least till the threat of a recession is past...too much risk for those instituions based on their parameters