Embraer (ERJ) Q2 Earnings Surpass Estimates, Revenues Rise Y/Y
Embraer S.A. ERJ shares have fallen 0.7% to reach $14.58, following the company’s second-quarter results on Aug 14, 2023.
The company reported a second-quarter 2023 adjusted income of 32 cents per American Depository Share (“ADS”), beating the Zacks Consensus Estimate of 12 cents per ADS by a solid 166.7%. Moreover, earnings came in higher than 25 cents per ADS reported in the prior-year quarter.
Total Revenues
Embraer’s second-quarter revenues were $1,292.3 million, up 26.8% year over year, primarily due to higher revenues in three out of four business segments. The reported figure beat the Zacks Consensus Estimate of $1,162 million by 11.2%.
Embraer-Empresa Brasileira de Aeronautica Price, Consensus and EPS Surprise
Embraer-Empresa Brasileira de Aeronautica price-consensus-eps-surprise-chart | Embraer-Empresa Brasileira de Aeronautica Quote
Order & Delivery
Embraer delivered 47 jets in the reported quarter. ERJ delivered 17 commercial and 30 executive (19 light and 11 midsize) jets compared with seven commercial and eight executive (six light and two midsize) jets in the prior quarter.
The backlog at the end of the second quarter was $17.3 billion compared with $17.4 billion at the end of the first quarter of 2023.
Operational Highlights
Embraer’s adjusted operating income was $99.9 million in the second quarter of 2023 compared with the $81.2 million reported in the second quarter of 2022.
The company posted a quarterly adjusted EBITDA of $148.9 million, increasing 19.5% from the year-earlier quarter.
Financial Update
As of Jun 30, 2023, ERJ’s cash and cash equivalents amounted to $1,356.8 million compared with $1,816.9 million as of Dec 31, 2022.
The company had net debt of $1,190.4 million as of Jun 30, 2023, up from $721.9 million as of Dec 31, 2022.
Its adjusted free cash outflow in the second quarter was $10.7 million, a significant decline from the free cash inflow of $114.2 million reported in the prior-year period.
Guidance
Embraer reaffirmed its guidance for 2023. Its commercial jet deliveries are projected in the band of 65-70 jets, while Executive Aviation deliveries are expected in the band of 120-130 aircraft.
The company expects to generate revenues in the range of $5.2-$5.7 billion in 2023. Embraer anticipates the adjusted EBIT margin in the range of 6.4%-7.4% and the adjusted EBITDA margin in the band of 10%-11% in 2023. It expects free cash flow of $150 million or more for 2023.
Zacks Rank
Embraer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
Triumph Group, Inc. TGI reported a first-quarter fiscal 2024 (ended Jun 30, 2023) adjusted loss of 10 cents per share, which came in wider than the Zacks Consensus Estimate of a loss of 5 cents per share. The bottom line declined massively from earnings of 12 cents reported in the prior-year quarter.
Triumph Group’s net sales in the quarter under review were $327.1 million, which beat the Zacks Consensus Estimate of $324 million by 0.9%. However, the top line declined 6.4% from $349.4 million in the year-ago quarter.
Leidos Holdings, Inc.’s LDOS second-quarter 2023 adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate of $1.55 by 16.1%. The bottom line also increased 13.2% from $1.59 per share registered a year ago.
Leidos Holdings generated total revenues of $3,810 million in the reported quarter, exceeding the Zacks Consensus Estimate of $3,725.7 million by 2.3%. The top line also improved 6% year over year, driven by increased demand across all customer segments, especially for digital modernization, hypersonics and medical examination solutions.
Lockheed Martin LMT reported second-quarter 2023 adjusted earnings of $6.73 per share, which surpassed the Zacks Consensus Estimate of $6.43 by 4.7%. The bottom line also improved 6.5% from the year-ago quarter's figure.
Net sales amounted to $16.69 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $15.86 billion by 5.3%. The top line rose 8.1% from $15.45 billion in the year-ago quarter.
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