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Embraer (ERJ) Q2 Earnings Miss Estimates, Revenues Fall Y/Y

Zacks Equity Research
·4 min read

Embraer SA ERJ incurred second-quarter 2020 adjusted loss of $1.08 per American Depository Share (ADS), wider than the Zacks Consensus Estimate of a loss of 56 cents and the year-ago quarter loss of 8 cents.

Including one-time items, the company incurred a GAAP loss of $1.71 per share compared with a loss of 4 cents in the year-ago quarter.

Revenues

Embraer’s second-quarter revenues came in at $537.2 million, plunging 61% year over year. The decline was due to lower revenues in each of the company’s segments during the quarter.

Order and Delivery

Embraer delivered a total of 17 jets in the reported quarter, down 66.7% year over year. The company delivered 4 commercial and 13 executive (9 light and 4 large) jets during the second quarter compared with 26 commercial and 25 executive (19 light and 6 large) jets in the second quarter of 2019.

Embraer’s backlog at the end of the quarter was $15.4 billion, down from $16.9 billion in the year-ago quarter.

Operational Highlights

In the second quarter, the company’s cost of sales and services totaled $520.8 million, down from $1,180.1 million in the prior-year quarter.

Also, Embraer’s gross profit slumped 91.7% year over year to $16.4 million.

Segment Result

Segment-wise, revenues in the Commercial Aviation segment were $108.6 million, which declined 82.8% on a year-over-year basis due to lower deliveries in the current quarter.

Revenues in the Executive Jets segment were $149.9 million, which declined 49.5% year over year on lower deliveries in the second quarter of 2020.

Revenues in the Defense & Security segment were $85.8 million, which declined 39.4% from the figure reported in the second quarter of 2019.

Revenues in the Services & Support segment were $191.9 million, which plunged 37.9% year over year.

EmbraerEmpresa Brasileira de Aeronautica Price, Consensus and EPS Surprise

EmbraerEmpresa Brasileira de Aeronautica Price, Consensus and EPS Surprise
EmbraerEmpresa Brasileira de Aeronautica Price, Consensus and EPS Surprise

EmbraerEmpresa Brasileira de Aeronautica price-consensus-eps-surprise-chart | EmbraerEmpresa Brasileira de Aeronautica Quote

Financial Update

As of Jun 30, 2020, the company’s cash and cash equivalents amounted to $1,872.8 million compared with $2,307.7 million as of Dec 31, 2019.

Embraer had net debt of $1,800.7 million as of Jun 30, 2020, up from $612.4 million as of Dec 31, 2019.

Adjusted net cash used in operating activities was $501.3 million at the end of second-quarter 2020 against the net cash inflow of $26.7 million at second-quarter 2019-end.

The company’s adjusted free cash outflow at the end of the second quarter was $476.2 million against the free cash inflow of $1.5 million at the end of second-quarter 2019.

Guidance

Due to the uncertainty related to the impact of COVID-19, Embraer has kept its 2020 guidance suspended for the time being.

Zacks Rank

Embraer currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Teledyne Technologies TDY reported second-quarter 2020 adjusted earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate of $2.01 by 20.9%.

Lockheed Martin Corp. LMT reported second-quarter 2020 adjusted earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.71 by 7.4%.

Curtiss-Wright Corporation CW reported second-quarter 2020 adjusted earnings of $1.31 per share, which surpassed the Zacks Consensus Estimate of $1.29 by 1.6%.

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