Overall, there are cash savings but in the way free cash flow is defined you won’t see it in the free cash flow metric.īombardier currently has no debt maturing until 2024. So, the $173 million is a measure of how much is available for debt repayment, shareholders and interest payments from operations. One thing to keep in mind is that while free cash flow improvement was attributed to lower interest expenses, free cash flow excludes debt repayment and interest expenses. Over the past twelve, debt was reduced by $3.4 billion reducing the annual interest expenses by over $250 million. During the quarter $400 million in debt was repaid resulting in $30 million in annual interest savings. We're now seeing that the company is using the proceeds from its divestures to reduce the debt load and subsequently reduce the interest due on its debt providing some relief on its cash flow. Those who have followed my Bombardier coverage might remember that one of my concerns was that absence of positive free cash flow, there was no sustainable path ahead for Bombardier to reduce its debt levels. The strong execution on top and bottom line also positively impacted the free cash flow which was $173 million marking a $578 million improvement. This margin expansion was driven by strong revenues in the aftersales market which tends to have strong margins, an improving cost structure and margin improvement on the Global 7500 program.
Overall, despite geopolitical tensions and a slight decrease in deliveries the revenues looked strong.īombardier Q1 2022 earnings (Bombardier )ĭespite lower revenues, earnings trended up which is a very good sign as it shows there's strong margin improvement. The strong uptick in services revenues is driven by increased flight activity. Viewed by segment, there was a 15.6% reduction in manufacturing revenues, a 34.2% increase in services revenues and a 22.7% decrease in other revenues. Absent of the volume reduction, revenues would have grown 22% but a reduction in volume is not something I want to account for as the reduction in volume is a business reality.
The decline was due to the delivery of five fewer business jets during the quarter which had a $182 million impact resulting in a 7% reduction in revenues.
Services accounted for 29% or $361 million of the revenues and $885 million for Manufacturing & Others. Bombardier Revenues Contract, Earnings Improveīombardier Q1 2022 revenues (Bombardier )īombardier revenues actually contracted from $1.3 billion last year to $1.2 billion this year. This provides opportunity for investors, but associated risks should also be kept in mind. It was observed that Bombardier shares have a rather limited trading volume of several thousand shares per day which for me is a reason to provide a word of caution on the volume: Due to the low volume there might be a lack of liquidity, which makes quick buying and selling and constant prices more challenging and could possibly result in higher volatility when buying or selling occurs. So, this move is not necessarily good for the number of shares that are being traded each trading day but could provide a bit of stability as investors are not shaving their positions due to the low prices nor is there a low share price that attracts traders to make a quick buck driven by the psychologically low pricing level.
The reverse split also means that shares are traded in higher dollar increment values, so in some sense people will think twice about selling shares but also about buying shares. Bombardier must have felt reborn as well as it changed its ticker to BBD.A:CA and underwent a 1-to-25 reverse stock split turning 25 shares into 1 share bringing the number of shares in line with that of companies with similar market caps. With its refocus from transportation in a very broad sense to business jet, I do see Bombardier as a new a company or as reborn company. A decision that haven’t been a bad one it seems as I show in an earnings analysis. It became the latter leaving the company as a business jet maker. That left Bombardier with a tough choice to make: Leave the business jet side or the rail business.
The company saw some unsatisfying performance in its rail business and proceeds from commercial aircraft were under pressure due to an aging product line while the C Series project was essentially locked in a position where Bombardier could never reap the rewards of its investments. Years ago, Bombardier was a company with a huge debt load and a lot of disappointment built into it. Bombardier as we know it today is not the Bombardier that I wrote about years ago. Ryan Fletcher/iStock Editorial via Getty Imagesīombardier (BDRBD) has been one of the names that I have been covering for years.