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Embraer SA (ERJ - Free Report) reported second-quarter 2016 adjusted earnings of 24 cents per American Depository Share (ADS), missing the Zacks Consensus Estimate of 40 cents by 40%. Earnings were also down 64.2% from 67 cents per ADS in the year-ago quarter.
Total Revenue
In second-quarter 2016, Embraer posted total revenue of $1,366.4 million, missing the Zacks Consensus Estimate of $1,583 million by 13.7%. Reported revenues also declined 9.7% year over year owing to lower deliveries across all segments, primarily in the Executive Jets segment.
Specifically, revenues at Commercial Aviation, Executive Jets and Defense & Security were down 2.9%, 27.5% and 3.2%, respectively.
Order and Delivery
The company made deliveries of a total of 52 jets in the quarter, down 13.3% year over year.
The company delivered 26 jets to each of the commercial aviation and business aviation markets.
In comparison, in the second quarter of 2015, the company had delivered 27 jets to the commercial aviation market and 33 jets to the business aviation market. In total, the company had delivered of 60 jets.
In the second quarter of 2016, under Commercial Aviation, Embraer supplied 21 E175s, 4 E190s and 1 E195 jets. The rest were delivered to Business Aviation, which included 23 light and 3 large jets.
Embraer reported an order backlog of $21.9 billion as of Jun 30, 2016. The figure reflects no change from the prior quarter but indicates a 4.4% decline from $22.9 billion recorded a year ago.
Operational Highlights
In the quarter under review, Embraer’s cost of sales and services was $1,082.6 million, down from $1,226.5 million a year ago.
The company’s gross profit declined 4% to $283.8 million in the second quarter.
The company reported quarterly adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $152.3 million, down from $177.6 million in the prior-year quarter.
Cash and cash equivalents were $1,223.2 million as of Jun 30, 2016, compared with $2,165.5 million as of Dec 31, 2015.
As of Jun 30, 2016, the company had total debt of $3,669.3 million.
In the reported quarter, net cash used in operating activities was $199.9 million, compared with cash inflow of $244.8 million a year ago.
In the second quarter 2016, the company’s capital expenditure was around $61.5 million, while free cash outflow was $438.9 million. Free cash inflow in second-quarter 2015 had been $72.7 million.
Guidance
Embraer revised its 2016 revenue guidance in the range of $5.8–$6.2 billion from the prior range of $6.0–$6.4 billion. Defense & Security revenues are still expected to be in the $700–$750 million band.
The company expects to deliver 105–110 jets in Commercial Aviation along with 35–45 large jets (prior guidance 40–50) and 70–80 light jets (prior guidance 75–85) in Executive Jets.
It expects EBIT margin of 7–8% (prior guidance 8–8.5%) and EBITDA margin of 12.7–13.7% (prior guidance 13.3–13.7%).
For 2016, the company reaffirmed its plans to invest $650 million, including capital expenditure of $275 million.
Other Releases in the Sector
The Boeing Company (BA - Free Report) delivered second-quarter 2016 adjusted loss of 44 cents per share, narrower than the Zacks Consensus Estimate of loss of 88 cents. In the prior-year quarter, however, the company had reported earnings of $1.62.
Northrop Grumman Corporation (NOC - Free Report) reported second-quarter 2016 adjusted earnings of $2.60 per share, beating the Zacks Consensus Estimate of $2.50 by 4%. Reported earnings were also up 5.3% from $2.47 recorded in the year-ago quarter.
Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings were also up 12.9% from the year-ago level.
Zacks Rank
Embraer currently has a Zacks Rank #4 (Sell).
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Embraer (ERJ) Misses Q2 Earnings Estimates, Updates View
Embraer SA (ERJ - Free Report) reported second-quarter 2016 adjusted earnings of 24 cents per American Depository Share (ADS), missing the Zacks Consensus Estimate of 40 cents by 40%. Earnings were also down 64.2% from 67 cents per ADS in the year-ago quarter.
Total Revenue
In second-quarter 2016, Embraer posted total revenue of $1,366.4 million, missing the Zacks Consensus Estimate of $1,583 million by 13.7%. Reported revenues also declined 9.7% year over year owing to lower deliveries across all segments, primarily in the Executive Jets segment.
Specifically, revenues at Commercial Aviation, Executive Jets and Defense & Security were down 2.9%, 27.5% and 3.2%, respectively.
Order and Delivery
The company made deliveries of a total of 52 jets in the quarter, down 13.3% year over year.
The company delivered 26 jets to each of the commercial aviation and business aviation markets.
In comparison, in the second quarter of 2015, the company had delivered 27 jets to the commercial aviation market and 33 jets to the business aviation market. In total, the company had delivered of 60 jets.
In the second quarter of 2016, under Commercial Aviation, Embraer supplied 21 E175s, 4 E190s and 1 E195 jets. The rest were delivered to Business Aviation, which included 23 light and 3 large jets.
Embraer reported an order backlog of $21.9 billion as of Jun 30, 2016. The figure reflects no change from the prior quarter but indicates a 4.4% decline from $22.9 billion recorded a year ago.
Operational Highlights
In the quarter under review, Embraer’s cost of sales and services was $1,082.6 million, down from $1,226.5 million a year ago.
The company’s gross profit declined 4% to $283.8 million in the second quarter.
The company reported quarterly adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $152.3 million, down from $177.6 million in the prior-year quarter.
EMBRAER AIR-ADR Price, Consensus and EPS Surprise
EMBRAER AIR-ADR Price, Consensus and EPS Surprise | EMBRAER AIR-ADR Quote
Financial Update
Cash and cash equivalents were $1,223.2 million as of Jun 30, 2016, compared with $2,165.5 million as of Dec 31, 2015.
As of Jun 30, 2016, the company had total debt of $3,669.3 million.
In the reported quarter, net cash used in operating activities was $199.9 million, compared with cash inflow of $244.8 million a year ago.
In the second quarter 2016, the company’s capital expenditure was around $61.5 million, while free cash outflow was $438.9 million. Free cash inflow in second-quarter 2015 had been $72.7 million.
Guidance
Embraer revised its 2016 revenue guidance in the range of $5.8–$6.2 billion from the prior range of $6.0–$6.4 billion. Defense & Security revenues are still expected to be in the $700–$750 million band.
The company expects to deliver 105–110 jets in Commercial Aviation along with 35–45 large jets (prior guidance 40–50) and 70–80 light jets (prior guidance 75–85) in Executive Jets.
It expects EBIT margin of 7–8% (prior guidance 8–8.5%) and EBITDA margin of 12.7–13.7% (prior guidance 13.3–13.7%).
For 2016, the company reaffirmed its plans to invest $650 million, including capital expenditure of $275 million.
Other Releases in the Sector
The Boeing Company (BA - Free Report) delivered second-quarter 2016 adjusted loss of 44 cents per share, narrower than the Zacks Consensus Estimate of loss of 88 cents. In the prior-year quarter, however, the company had reported earnings of $1.62.
Northrop Grumman Corporation (NOC - Free Report) reported second-quarter 2016 adjusted earnings of $2.60 per share, beating the Zacks Consensus Estimate of $2.50 by 4%. Reported earnings were also up 5.3% from $2.47 recorded in the year-ago quarter.
Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings were also up 12.9% from the year-ago level.
Zacks Rank
Embraer currently has a Zacks Rank #4 (Sell).
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