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

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Embraer SA (ERJ - Free Report) incurred third-quarter 2020 adjusted loss of 81 cents per American Depository Share (ADS), wider than the Zacks Consensus Estimate of a loss of 47 cents and the year-ago quarter loss of 26 cents.

Including one-time items, the company incurred a GAAP loss of 66 cents per share compared with a loss of 42 cents in the year-ago quarter.

Revenues

Embraer’s third-quarter revenues came in at $758.7 million, down 35.5% year over year. The decline was due to lower revenues in each of the company’s segments, except for Defense & Security.

Order and Delivery

Embraer delivered a total of 28 jets in the reported quarter, down 36.4% year over year. The company delivered 7 commercial and 21 executive (19 light and 2 large) jets during the third quarter compared with 17 commercial and 27 executive (15 light and 12 large) jets in third-quarter 2019.

Embraer’s backlog at the end of the third quarter was $15.1 billion, down from $16.2 billion a year ago.

Operational Highlights

In the third quarter, the company’s cost of sales and services totaled $703.9 million, down from $1,021.2 million in the prior-year quarter.

Also, Embraer’s gross profit slumped 64.5% year over year to $54.8 million.

Segment Result

Segment-wise, revenues in the Commercial Aviation segment were $177.2 million, which declined 56.5% on a year-over-year basis due to lower deliveries in the current quarter.

Revenues at the Executive Jets segment were $212.3 million, down 41.5% year over year on lower deliveries in third-quarter 2020.

Revenues at the Defense & Security segment were $154.7 million, up 47.3% from the figure reported in the third quarter of 2019, led by growth across several platforms, including the KC-390 and Super Tucanos.

Revenues at the Services & Support segment were $212.9 million, which plunged 28.4% year over year.

EmbraerEmpresa Brasileira de Aeronautica Price, Consensus and EPS Surprise

 

Financial Update

As of Sep 30, 2020, the company’s cash and cash equivalents amounted to $1,701.1 million compared with $2,307.7 million as of Dec 31, 2019.

Embraer had net debt of $2,365.1 million as of Sep 30, 2020, up from $612.4 million as of Dec 31, 2019.

Adjusted net cash used in operating activities was $1,883 million at the end of third-quarter 2020 against net cash outflow of $115.7 million at the end of third-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 carries a Zacks Rank #5 (Strong Sell).

Recent Defense Releases

Lockheed Martin (LMT - Free Report) , a Zacks Rank #3 (Hold) company, reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Boeing Company (BA - Free Report) , a Zacks Rank #3 company, incurred adjusted loss of $1.39 per share for third-quarter 2020, narrower than the consensus estimate of a loss of $2.33.

General Dynamics (GD - Free Report) , also a Zacks Rank #3 company, reported third-quarter 2020 earnings from continuing operations of $2.90 per share, which beat the Zacks Consensus Estimate of $2.85 by 1.8%.

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