Quietly amid all the chaos of Donald Trump’s surprise victory, Bombardier, Inc. (TSX:BBD.B) released quarterly earnings on Thursday.

Results were much better than expected. The company lost $0.04 per share, but that number was closer to break even on an adjusted basis. That beat analyst expectations of a loss of $0.03 per share. Revenue was down approximately 10% compared with the same quarter last year, but that was expected.

What really excited investors was the company’s outlook. It told the market that earnings before interest and taxes for the year would be between US$350 million and US$400 million–in the upper range of its previous guidance, which was between US$200 million and US$400 million.

Revenue guidance wasn’t quite as robust; that number was projected to come in at US$16.5 billion, which is in the bottom part of the previous guidance range.

Although the company cut its remaining CSeries production target from 15 to seven in 2016 because of shortages from its engine supplier, it remains on track to hit 2017 production guidance, which calls for it to build 30-35 CSeries jets.

In short, it was a solid quarter and good guidance from a company that could desperately use a little good news. That made investors happy, who responded by sending shares soaring nearly 10%.

The bigger picture

Bombardier took on a ton of debt when it built out the CSeries program. It currently owes nearly US$9 billion to creditors–a massive amount for a company projected to only earn $400 million in earnings before interest and taxes this year.

And remember, the company did recently get a cash injection from the Quebec government for US$2.5 billion.

The good news is that the days of Bombardier burning large amounts of cash each quarter appear to be over. It ended the second quarter with US$3.81 billion in the bank. After the third quarter, it had $3.77 billion in cash. Debt even went down during the same period, dropping from $9 billion to $8.96 billion.

That’s what investors want to see, even if it does appear to just be baby steps.

There’s even the possibility of it starting to generate some free cash flow in 2017. The company is halfway through an ambitious cost-cutting program, which will eliminate some 15,000 jobs and save it between US$500 and US$600 million per year. Bombardier has small margins at the best of times, so anything that can save it money will really help.

In short, Bombardier has promised investors it would turn things around, and it looks like the plan is working.

A word of caution

There are plenty of reasons to be bullish on Bombardier, but to borrow a baseball analogy, we’re in about the third inning of a turnaround.

It has a long way to go. While initial reports from CSeries customers are good, Bombardier still needs to ramp up production to compete with its larger rivals–30 to 35 jets per year isn’t going to impress big customers.

Both its business jet and transportation divisions are experiencing some difficulties, including an issue with Metrolinx, the Ontario government’s transportation agency, which said it intends to cancel a $700 million rail contract.

Debt also remains a huge issue. The company must pay down its debt and improve its credit rating. If it can get its interest rate down just 1%, that translates into annual savings of close to $100 million. If the debt remains high, so does the risk of bankruptcy.

The bottom line

Investors should be encouraged by Bombardier’s recent results. The cash burn was nonexistent, guidance was good, and cost cuts are proceeding nicely.

But we still need to be cautious. The company is on the right track. But it’s not out of the woods yet.