In Q2 free cash flow will be impacted as Bombardier will make an RVG payment of $105 million out of the $125 million scheduled for the full year. The first half will be impacted from free cash flow perspective as capex in Q1 was a bit higher than usual and there was a payment to the employee incentive plan. In the first quarter that wasn't visible as the company as the company is preparing to ramp up in production this year and that's a backloaded profile where most of the cash will come in by Q4. While the $247 million negative free cash flow compared to a positive free cash flow of $173 million suggests otherwise, the better margins and top line give Bombardier a free cash flow tailwind. So, we're really seeing the combination of higher revenues and optimizing the business coming along nicely. Adjusted EBIT grew by nearly 90% and reported EBIT grew by 65%.
Services revenues grew 17.5% while manufacturing grew 16.3% driven by higher aircraft deliveries and a better mix as Bombardier now focuses on large and medium-sized business jets.Īdjusted EBITDA grew by 27%, 16.6 percentage points of this was driven by revenue growth and the remainder was driven by revenue growth.
So, it will need to continue expanding its services footprint, which it already has been doing with new service centers coming online and more service center such as in Abu Dhabi opening in the future. Over the past year it was driven by improving flight activity but Bombardier also will at some point reach an asymptote on flight utilization driving the aftermarket sales growth. That's also something that we would expect as utilization cannot grow infinitely, the growth of aftermarket sales also is limited. Revenues were up 17% during the quarter to $1.453 billion with the mix between services and manufacturing being stable year-over-year. With a focus on business jets we don't only see the business jet manufacturing and service revenues improving, we also see the margins improving and the debt going down. Focus on one area, sell the other segments and take the associated debt out of the business and use the proceeds to pay off debt, R&D and business optimization. Once Bombardier realized that it had to focus its business rather than being diversified in all directions and failing in all of them, the task was easy. Probably the only thing I regret is not being a shareholder but sometimes analysts are better at analyzing than investing. I've been covering Bombardier for years, and since June last year I have a buy rating on the stock and that paid off with a 196.6% return. Bombardier Stock: Impressive Share Price Return In this report, I will be discussing the Q1 2023 results for Bombardier and provide a valuation of the stock. Bombardier is now a company focused on business jet production and aftermarket support for those jets, and that has been a good choice so far. I've covered Bombardier ( OTCQX:BDRAF) for several years and saw the company putting itself in billions of dollars of debt to develop the C Series, the aircraft that it would never be able to capitalize on as a conflict with Boeing ( BA ) and its dire financial performance forced the company to sell some of its businesses including the commercial airplanes business. Boarding1Now/iStock Editorial via Getty Images
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