Bombardier – profit curve finally on upside

Bombardier reported their quarterly results today. They’re slowly digging themselves from the financial gravesite a couple years ago – reporting $70 million in accounting profits, and that makes $114 million for the half. This doesn’t quite translate into cash positive results, but they should achieve cash flow positivity in 2019 and beyond, once all of the C-series related expenditures are consumed and happily handed to Airbus. This will not include the half billion injection they will receive whenever the outstanding warrants are exercised (not likely until closer to expiration – but they’re deeply in the money at present).

Management will probably use some of that capital to slightly de-leverage but after that they have options, including the re-initiation of a very small common stock dividend (they have diluted their common equity considerably over the past couple years).

Their preferred shares trade at a yield between 670 and 730 basis points and are likely to continue paying off into the indefinite future. I will be holding onto mine.