Bombardier Inc. T.BBD.A

CIBC: Q4 Preview

[Tempo1]

Names We Like Heading Into Q4/23 Earnings Season ( amongst 20 names): We like CPKC (peer-leading EPS growth for 2024); TFII (upside from potential split between TL and LTL/P&C/Logistics); GFL (positive commentary on deleveraging); WCN (positive outlook for 2024 and expectations of a less “noisy” year); CJT (positive update on FCF trajectory); and BBD (we expect Q4 to be a strong FCF period).


Q4/23 Preview

For the quarter, we are forecasting revenue of US$2.84B, up from US$2.66B a year ago and versus consensus of US$2.89B. We expect adj. EBITDA of US$426MM, up from US$352MM a year ago and versus consensus of US$424MM. Key items we are looking for on the call are:

1. Outlook For 2024: We expect BBD to provide its outlook for 2024. Our expectations are that the company will guide to revenue of more than US$8B (we are forecasting US$8.21B and consensus is at US$8.32B), adj. EBIT of more than US$825MM (we are forecasting US$840MM and consensus is US$911MM), and FCF of more than US$500MM (we are forecasting US$513MM and consensus is US$582MM). We also expect the company to guide to ~140 deliveries for 2024 (we are forecasting deliveries of 140 and consensus is 143). We also expect BBD to maintain its 2025 targets.

2. Business Jet Industry Outlook And Comment On Demand Environment: We will be looking for comments on the business jet industry and expect BBD will look to maintain a book-to-bill of 1x. The company exited 2023 on a strong note with a firm order of 12 Challenger 3500 aircraft. We continue to see flight activity track above pre-pandemic levels, backlogs provide a multi-year cushion for the OEMs, and used aircraft inventory still remains low by historical standards.

3. Update On Deleveraging: We expect to hear comments around BBD’s continuing deleveraging plan. Gross debt at the end of Q3/23 was US$5.58B and net leverage came in at 4.1x. BBD continues to target leverage of 2.0x–2.5x by 2025.

4. Update On Supply Chain: We expect BBD to continue to point to a challenging supply chain condition, but one through which it is managing fairly well. That said, we expect this to remain a headwind in 2024, weighing on margins and working capital.

BBD Model Adjustment: We have adjusted our BBD model primarily to reflect supply chain issues and have tweaked our delivery expectations for 2024. We expect BBD to deliver 140 units this year, versus our previous expectation of 145. Our 2025 estimates are generally unchanged and we see the path toward BBD hitting its 2025 targets as significantly de-risked. Our price target moves from $62 to $60 to reflect adjustments to our pro forma net debt assumption. We rate BBD Neutral. Major Variances Versus Consensus (+/- ~5%): We are below consensus on NFI (~27%) and BOS (~6%).


CIBC put its target at 62$ (up 2$)

Note from Tempo 1 : The CIBC's numbers are as positive as the others but for their target they consider a high capex expenses period post 2025. 

[BBDB859]

Is it my imagination, or does it say at the bottom of the Preview that they are reducing their target from $62 t0 $60??? "Our price target moves from $62 to $60 to reflect adjustments to our pro forma net debt assumption." Then they say at the bottom that they increasing it from $60 to $62. "CIBC put its target at 62$ (up 2$)" Weird???

[Tempo1]

Sorry,   it my natural biais to Bombardier fault. Sometimes the brain doesn't read what its written. 

[BBDB859]

No problem Temp. I'm biased too. So you probably wrote that in then. That the "CIBC put its target at 62$ (up 2$)??? Is that right

[BBDB859]

The problem with CIBC is that not only are they too conservative, they are constantly shorting it with their customers. It's easy to see whose doing the shorting with these institutions. UBS, CIBC etc

[Noredneck]

CIBC alwas been one of the worst with Bombardier and mostly short the stock.... Could someone post their most favorite stock so I can short it to the ground... will repost...  TY... 

[Lukegermany]

I think there is one point that we dont see. I dont know which analyst ask this last year, but in my memories there were a Info from Eric that there are evaluating to sell or  develop there properties and that this will bring between 0,8-1.3 billion for rhe Bomber. So 1 question last year..i think at nbaa one anlyst ask about this case. Eric said they are still looking for options.  So

[BestGoldigger]

Use your Google translator Luke https://www.lapresse.ca/affaires/entreprises/2021-08-21/transformation-de-l-usine-de-bombardier/le-processus-est-en-marche.php

[Lukegermany]

3 year old...thats what i mean...what are there Plans? When will the Bomber decide what they want do with that

[PabloLafortune]

Underlying what the CIBC analyst is saying is that to carry a lot of debt and pay a lot of interest isn't a successful business model long-term in a capital intensive and cyclical business. And underlying what the CIBC analyst didn't say IMO but are assuredly disproportionately taking into account is that if a recession materializes, Bombardier's best laid plans for 2024 and 2025 may

[Nordico]

Are the nitwits at CIBC getting to you?