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

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Embraer SA (ERJ - Free Report) 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-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 - Free Report) 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 - Free Report) 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 - Free Report) 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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