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Embraer (ERJ) Q3 Earnings Lag Estimates, Revenues Fall Y/Y

Embraer S.A. ERJ reported third-quarter 2022 adjusted earnings of 13 cents per American Depository Share (“ADS”), missing the Zacks Consensus Estimate of 15 cents per ADS. Moreover, the bottom line declined 27.8% from the 18 cents per ADS reported in the prior-year quarter.

Total Revenues

Embraer’s third-quarter revenues were $929 million, down 3% year over year, primarily due to lower revenues in Defense & Security. The reported figure also lagged the Zacks Consensus Estimate of $1,195 million by 22.3%.

EmbraerEmpresa Brasileira de Aeronautica Price and Consensus

EmbraerEmpresa Brasileira de Aeronautica Price and Consensus
EmbraerEmpresa Brasileira de Aeronautica Price and Consensus

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

Order & Delivery

Embraer delivered 32 jets in the reported quarter. ERJ delivered 10 commercial and 23 executive (15 light and eight mid/super-midsize) jets compared with 11 commercial and 21 executive (12 light and nine large) jets in the prior quarter.

The backlog at the end of the third quarter was $17.8 billion, representing an increase of 6% year over year. The increase was driven by solid order activity.

Operational Highlights

Embraer’s adjusted EBIT was $49.9 million in the third quarter of 2022 compared with the $35.7 million reported in the third quarter of 2021.

The company posted quarterly adjusted EBITDA of $92.9 million, improving 17.3% from the year-earlier quarter.

Financial Update

As of Sep 30, 2022, ERJ’s cash and cash equivalents amounted to $1.31 billion compared with $1.82 billion as of Dec 31, 2021.

The company had net debt of $1,274.9 million as of Sep 30, 2022, down from $1,392.2 million as of Dec 31, 2021.

Its adjusted free cash outflow in the third quarter was $109.4 million, declining massively from free cash flow of $21.3 million in the year-ago period. The decline came primarily due to working capital requirements related to concentrated deliveries.

Guidance

Embraer reaffirmed its guidance for 2022. Its commercial jet deliveries are projected in the band of 60-70 jets, while Executive Aviation deliveries are expected in the band of 100-110 aircraft.

The company expects to generate revenues in the range of $4.5 billion-$5 billion in 2022. The Zacks Consensus Estimate for sales, pegged at $4.72 billion, is slightly lower than the midpoint of the guidance range.

Embraer anticipates the adjusted EBIT margin in the range of 3.5%-4.5% and the adjusted EBITDA margin in the band of 8%-9% in 2022.

It updated its free cash flow guidance. It now expects free cash flow of $150 million or more for 2022 compared with the prior guidance of $50 million or more.

Zacks Rank

Embraer currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Defense Releases

The Boeing Company BA incurred an adjusted loss of $6.18 per share for the third quarter of 2022, wider than the Zacks Consensus Estimate of a loss of a penny. The bottom line also deteriorated from the year-ago quarter’s loss of 60 cents.

Boeing’s backlog at the end of the third quarter of 2022 increased to $381.32 billion from $371.73 billion at the end of the second quarter of 2022.

Textron Inc. TXT reported third-quarter 2022 earnings of $1.06 per share, which surpassed the Zacks Consensus Estimate of 94 cents by 12.8%. The bottom line also improved by 24.7% from the year-ago quarter’s figure.

However, total revenues came in at $3,078 million, which missed the Zacks Consensus Estimate of $3,207.6 million by 4%. However, the reported figure increased 2.9% from the year-ago quarter’s $2,990 million.

Raytheon Technologies Corporation’s RTX third-quarter 2022 adjusted earnings per share of $1.21 beat the Zacks Consensus Estimate of $1.11 by 9%. However, the bottom line dropped 4% from the year-ago quarter’s adjusted earnings of $1.26.

Raytheon Technologies’ third-quarter sales of $16,951 million missed the Zacks Consensus Estimate of $17,003 million by 0.3%. However, the sales figure rose 5% from the $16,213 million recorded in the year-ago quarter.


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