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

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Shares of Embraer S.A. ERJ declined 1.8% to $16.49 on Nov 5, following the third-quarter 2021 results.

Embraer reported third-quarter 2021 adjusted loss of 18 cents per American Depository share (ADS), which was wider than the Zacks Consensus Estimate of a loss of 14 cents. However, the figure reported was narrower than the year-ago quarter’s loss of 81 cents per share.

Total Revenues

Embraer’s third-quarter revenues were $958.1 million, up 26.3% year over year. The improvement can be attributed to growth witnessed in Commercial Aviation, Executive Aviation, Defense & Security and Services & Support segments.

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

Order and Delivery

Embraer delivered 30 jets in the reported quarter. The company delivered nine commercial and 21 executive (14 light and seven large) jets compared to 14 commercial and 20 executive (12 light and eight large) jets in the prior quarter.

Backlog at the end of the third quarter was $16.8 billion compared with $15.9 billion in the prior quarter.

Operational Highlight

Embraer’s adjusted EBIT improved massively from a loss of $45.3 million in third-quarter 2020 to $35.7 million in third-quarter 2021.

The company posted a quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $79.2 million versus a loss of $8.2 million in the year-earlier quarter.

Financial Update

As of Sep 30, 2021, Embraer’s cash and cash equivalents amounted to $2.5 billion compared with $1.9 billion as of Dec 31, 2020.

The company had net debt of $1,803.6 million as of Sep 30, 2021, up from $1,695.7 million as of Dec 31, 2020.

Its adjusted free cash flow in the first nine months of 2021 was $21.3 million against a free cash outflow of $566.5 million in the same period last year. The improvement came primarily on the back of better profitability and working capital efficiencies.

Guidance

Embraer reaffirmed its guidance for 2021. Its Commercial Aviation deliveries are projected to be 45-50 jets, while the Executive Aviation deliveries are expected to be 90-95 aircrafts.

The company expects to generate revenues in the range of $4.0 billion to $4.5 billion during 2021.

Embraer anticipates adjusted EBIT margin in the range of 3.0% to 4.0%, and adjusted EBITDA margin in the band of 8.5% to 9.5% in 2021.

The company updated its guidance for free cash flow driven by better-than-expected free cash flow performance over the first nine months of 2021. It anticipates free cash flow without M&A or divestitures in the range of $100 million or more, which is an improvement from the prior range of free cash outflow of $150 million to breakeven.

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

Curtiss-Wright CW reported third-quarter 2021 adjusted earnings of $1.88 per share, which surpassed the Zacks Consensus Estimate of $1.80 by 4.4%.Its total sales exceeded the Zacks Consensus Estimate of $601 million by 3.3%.

Curtiss-Wright updated its financial guidance for 2021 and now expects adjusted earnings in the range of $7.20-$7.35 per share, compared with the prior guidance range of $7.15-$7.35 per share.In the last six months shares of Curtiss-Wright have returned 9.7%.

Raytheon Technologies’ RTX third-quarter 2021 adjusted earnings per share (EPS) of $1.26 outpaced the Zacks Consensus Estimate of $1.07 by 17.8%.The company’s third-quarter sales of $16,213 million missed the Zacks Consensus Estimate of $16,494 million by 1.7%.

Raytheon Technologies raised the earnings guidance range for 2021 and tweaked revenue expectations. It currently projects adjusted EPS in the range of $4.10-$4.20, compared with the prior outlook of $3.85-$4.00.The company expects to record revenues worth approximately $64.50 billion compared with the earlier projection of $64.4-$65.4 billion.In the last six months,shares of Raytheon Technologies have appreciated 9.6%.

Hexcel Corporation HXL reported third-quarter 2021 adjusted earnings of 13 cents per share, which outpaced the Zacks Consensus Estimate of 8 cents by 62.5%. Net sales for Hexcel totaled $333.8 million, which missed the Zacks Consensus Estimate of $353 million by 5.3%.

Hexcel continues to withhold its financial guidance citing the market uncertainties stemming from the pandemic.The Zacks Consensus Estimate for 2021 has increased 13.6% to 25 cents per share in the last 60 days. Hexel’s shares have returned 22.8% in the last six months.


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