Bombardier, Inc. :BDRBF-US: Earnings Analysis: Q2, 2017 By the Numbers : August 3, 2017

Bombardier, Inc. reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of Bombardier, Inc. – Kratos Defense & Security Solutions, Inc. and Kaman Corporation Class A (KTOS-US and KAMN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 4092 million, Net Earnings of USD -289 million.
  • Gross margins widened from 9.98% to 10.12% compared to the same period last year, operating (EBITDA) margins now 3.10% from 4.46%.
  • Year-on-year change in operating cash flow of 0.43% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 4092 3576 4380 3736 4309
Revenue Growth (%YOY) -5.04 -8.64 -12.7 -9.71 -6.73
Earnings (mil) -289 -28 -251 -79 -531
Earnings Growth (%YOY) 45.57 82.61 63.03 98.38 -524.8
Net Margin (%) -7.06 -0.78 -5.73 -2.11 -12.32
EPS -0.13 -0.02 -0.12 -0.04 -0.24
Return on Equity (%) N/A N/A N/A N/A N/A
Return on Assets (%) -4.97 -0.49 -4.3 -1.32 -8.94

Access our Ratings and Scores for Bombardier, Inc.

Market Share Versus Profits

Revenues History
Earnings History

BDRBF-US‘s change in revenue this period compared to the same period last year of -5.04% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that BDRBF-US is holding onto its market share. Also, for comparison purposes, revenues changed by 14.43% and earnings by -932.14% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 9.98% to 10.12%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

BDRBF-US‘s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days have declined to 20.39 days from 31.80 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

BDRBF-US‘s change in operating cash flow of 0.43% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s operating (EBIT) margins contracted from 2.18% to 1.20%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from -10.33% to -8.80%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Bombardier, Inc.

Company Profile

Bombardier, Inc. manufactures planes and trains. It operates through the following segments: Business Aircraft; Commercial Aircraft; Aerostructures and Engineering Services; and Transportation. The Business Aircraft segment designs, manufactures and provides aftermarket support for three families of business jets, spanning from the light to large categories. The Commercial Aircraft segment designs and manufactures a broad portfolio of commercial aircrafts. The Aerostructures and Engineering Services segment designs and manufactures major aircraft structural components such as engine nacelles, fuselages and wings and provides aftermarket component repair and overhaul as well as other engineering services for both internal and external clients. The Transportation segment offers the broadest portfolio in the rail industry and delivers innovative products and services that set new standards in sustainable mobility. Bombardier was founded on June 19, 1902 and is headquartered in Montreal, Canada.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of BDRBF-US.